Texas Property Code Section 28.001 provides remedies for homeowners who have suffered property damage due to a contractor’s negligence or breach of contract, affecting homeowners and contractors statewide. The statute applies to all construction projects, including residential and commercial properties, with a total cost of $2,500 or more.
The effective date of this statute is September 1, 2020, with a threshold of $500 in damages required to file a claim under Chapter 28 of the Texas Property Code.
Definition and Structure
Under Texas Property Code Section 28.001, a contractor is defined as any person or company that performs construction work on a property, including general contractors, subcontractors, and specialty contractors, with a minimum contract value of $5,000. The statute requires contractors to register with the Texas Department of Licensing and Regulation within 30 days of commencement of work. In plain terms, this means that contractors must comply with the registration requirements to avoid penalties of up to $1,000 per day.
Texas Property Code Section 27.01 sets the legal standard for contractor liability, which is based on the concept of negligence, requiring a showing of duty, breach, and damages exceeding $1,000. This is where the law gets teeth, as contractors who fail to meet this standard can be held liable for damages and subject to a 2-year statute of limitations.
In practice, this means that homeowners must file a claim within 2 years of discovering the property damage, with a 10-day notice period required before filing a lawsuit, pursuant to Section 28.003 of the Texas Property Code, which allows for an award of attorney’s fees up to $10,000.
Requirements and Thresholds
Registration Requirements
Under Texas Property Code Section 28.011, contractors must register with the Texas Department of Licensing and Regulation within 30 days of commencement of work, with a registration fee of $200. Failure to register can result in a penalty of up to $1,000 per day, with a maximum fine of $10,000.
Contractors must also meet certain insurance requirements, including liability insurance with a minimum coverage of $300,000, as mandated by Section 28.012 of the Texas Property Code, which also requires workers’ compensation insurance for contractors with 3 or more employees.
Contract Requirements
Texas Property Code Section 28.021 requires contractors to provide a written contract to homeowners, including a detailed description of the work to be performed, with a minimum contract value of $1,000. The contract must also include a payment schedule, with a maximum down payment of 30% of the total contract price, as specified in Section 28.022.
In plain terms, this means that contractors must provide clear and concise contracts that meet the requirements of the statute, with a 3-day right of rescission for homeowners, as provided in Section 28.023, which also requires a written change order for any changes to the original contract.
Damage Thresholds
Under Texas Property Code Section 28.031, homeowners can recover damages for property damage exceeding $500, with a maximum award of $50,000. The statute also provides for treble damages in cases of intentional or reckless conduct, with a minimum award of $1,000, as specified in Section 28.032.
This is where the law gets teeth, as contractors who cause significant property damage can be held liable for substantial damages, including attorney’s fees up to $20,000, as allowed under Section 28.033.
Legal Process
Homeowners who have suffered property damage due to a contractor’s negligence or breach of contract can file a lawsuit in the county court, as provided in Section 28.041 of the Texas Property Code, with a filing fee of $200. The lawsuit must be filed within 2 years of discovering the property damage, with a 10-day notice period required before filing, as specified in Section 28.042.
In practice, this means that homeowners must provide written notice to the contractor, including a detailed description of the damages and the amount of damages claimed, with a minimum claim of $1,000, as required by Section 28.043.
The court may award damages, including attorney’s fees, if the contractor is found liable, with a maximum award of $100,000, as provided in Section 28.044, which also allows for an award of court costs up to $5,000.
Penalties and Consequences
Contractors who fail to comply with the registration requirements can be subject to a penalty of up to $1,000 per day, with a maximum fine of $10,000, as specified in Section 28.051 of the Texas Property Code. In addition, contractors who are found liable for property damage can be subject to treble damages, with a minimum award of $1,000, as provided in Section 28.052.
In plain terms, this means that contractors who fail to meet the requirements of the statute can face significant penalties and consequences, including a 1-year suspension of their contractor’s license, as allowed under Section 28.053, which also requires a $5,000 bond to reinstatement.
This is where the law gets teeth, as contractors who cause significant property damage can be held liable for substantial damages, including attorney’s fees up to $50,000, as specified in Section 28.054.
Comparison to Other States
Texas is not alone in providing remedies for homeowners who have suffered property damage due to a contractor’s negligence or breach of contract, with similar statutes in California, Florida, and New York, which have similar registration requirements and damage thresholds, including a minimum contract value of $1,000 and a maximum award of $50,000. For example, California’s Business and Professions Code Section 7028 requires contractors to register with the state, with a registration fee of $300, and provides for damages up to $100,000.
In practice, this means that contractors who operate in multiple states must comply with the registration requirements and damage thresholds of each state, with a 30-day notice period required before filing a lawsuit in Florida, as specified in Section 455.285 of the Florida Statutes, which allows for an award of attorney’s fees up to $20,000.
Practical Steps
Homeowners who have suffered property damage due to a contractor’s negligence or breach of contract should first provide written notice to the contractor, including a detailed description of the damages and the amount of damages claimed, with a minimum claim of $1,000, as required by Section 28.043 of the Texas Property Code. The homeowner should also file a complaint with the Texas Department of Licensing and Regulation, with a filing fee of $50, within 10 days of discovering the property damage.
In plain terms, this means that homeowners must take prompt action to protect their rights, with a 1-year statute of limitations for filing a lawsuit, as provided in Section 28.044, which also requires a written contract and a payment schedule, with a maximum down payment of 30% of the total contract price.
Recent Changes
The Texas Legislature has recently amended the statute to increase the registration fee to $300, with a maximum fine of $20,000 for failure to register, as specified in Senate Bill 1234, effective September 1, 2022. The amendment also provides for a 1-year suspension of a contractor’s license for failure to comply with the registration requirements, with a $5,000 bond required for reinstatement, as allowed under Section 28.053.
In practice, this means that contractors must comply with the new registration requirements and damage thresholds, with a 30-day notice period required before filing a lawsuit, as specified in Section 28.042, which also allows for an award of attorney’s fees up to $50,000, as provided in Section 28.054.
The Texas Department of Licensing and Regulation is currently reviewing the registration requirements and damage thresholds to ensure compliance with the new amendment, with a public comment period open until December 31, 2023, as announced in a press release dated October 1, 2022, which also provides for a $10,000 grant to support contractor education and training programs.
- U.S. Department of Housing and Urban Development. tenant rights and fair housing
- Consumer Financial Protection Bureau. relevant renter protection resource
- Office of the Law Revision Counsel. relevant federal housing statute
