Whether you are building your dream house or just making improvements to your current home, the average homeowner will need to hire a contractor to do the construction work. Upon hiring a contractor, you will start the procedure of entering into a binding contract and knowing your rights during this process is extremely important!
First, there must be a written contract which establishes the terms of the agreement. The contract must be signed by both spouses before any work is performed on your residence. Finally, the contract must contain a few special provisions as required by Texas law.
In contracts for residential construction over $5,000, the contractor must have attained a construction trust bank account for the project. This trust account will ensure that the homeowner’s money will not be comingled with the company money and instead kept separate for the duration of the project.
The most alarming part of a residential construction contract is a particular portion of a notice which reads “…you may lose your legal ownership rights in your home.” This could occur if you, as the homeowner, did not pay or for some other reason caused the contract to fail. This means a homeowner cannot just get mad at the contractors work and not pay. In this event, the homeowner should be aware of the contractor’s responsibilities and what a contractor may be (or may not be) liable. A contractor may be liable for a construction defect if: (1) negligence occurs by the contractor or an agent, employee, or subcontractor of the contractor; or (2) if the contractor or an agent, employee, or subcontractor of the contractor fails to take reasonable action to mitigate the damages or take reasonable action to maintain the residence. A contractor will not be liable, however, if defects are caused by normal wear, tear, or deterioration; normal shrinkage due to drying or settlement of construction components within the tolerance of building standards; or the contractor relied on false or inaccurate written information obtained from official government records that the contractor did not know and could not reasonably have known of the falsity or inaccuracy of the information.
If a homeowner still believes that he has a claim against the contractor for defective construction, the homeowner must decide if a claim is applicable. The typical causes of action a homeowner will seek are: 1) breach of contract claim; and 2) breach of warranty claim. In a breach of contract claim, the contractor can be liable for defective, incomplete, and sometimes, slow work. Breach of warranty claims can be brought against a contract for breaches of express or implied warranties in the contract. (For more information on claims for breach of warranty, see the post on Implied Warranties.)
Hopefully, nothing goes wrong and the homeowner can enjoy his or her dream house free of complaints. But, in the unfortunate event of defective construction, knowing your rights could save you money, time, and even your house.
THE TAKEAWAY: If you hire a contractor to repair/renovate your residence, you must have written contract which contains certain terms and provisions. In the event a problem arises with the construction, then the contractor may be liable for defective construction. Certain timely notices must be given to the appropriate parties so you must act quickly.
– The Business Team
Scott | Josh | Jeremy