Implied Warranties in Texas – Construction, Repair, and Modification

by | Mar 3, 2015 | Blog, Corporate Law

Texas Implied Warranties – Construction, Repairs, and Modification

In addition to the implied warranties Texas law creates for the sale of goods, Texas common law has developed a number of warranties related to construction, repair, and leasing of real property. These warranties include the implied warranty of good and workmanlike performance, implied warranty of habitability, and implied warranty of suitability.

Warranty of Good and Workmanlike Performance

When you contract with a builder or contract for the construction or repair, there is an expectation the work will be done well. If the work is done poorly, you can use the implied warranty of good and workmanlike performance to ensure compliance with applicable building standards.

To show a breach of the implied warranty of good and workmanlike performance of services a plaintiff must show the following:

  1. The defendant sold services to the plaintiff.
  2. The services consisted of the repair or modification of the plaintiff’s existing tangible goods or property or the construction of residential housing.
  3. The defendant did not perform the services in a good and workmanlike manner.
  4. The plaintiff suffered injury.

 What type of services does the warranty of good and workmanlike performance cover?

  1. A repair is the restoration of something by replacing a part or fixing what is broken.
  2. A modification includes any change or alteration that introduces new elements into the details of the subject matter or cancels some of them, but that leaves the general purpose and effect of the subject matter intact.
  3. The residential property does not have to be completely constructed for the implied warranty to apply. The implied warranty can apply to partially completed property as long as it is clear which portions of a partially completed residence the builder constructed. The implied warranty of good and workmanlike construction has been applied to the following types of residential property:
  • New homes
  • Used homes
  • Townhouses
  • Condominiums

What type of goods are subject to the warranty?

The repair or modification services must be to existing tangible goods or property or new construction of residential property.

What type of performance would breach the warranty?

The implied warranty arises only when the repair or modification work has begun or has been completed. Failure to make repairs is actionable as a breach of contract, but not as a breach of implied warranty of good and workmanlike performance.

Are there any services not covered by the warranty?

The implied warranty of good and workmanlike performance does not cover the following services:

  • Professional services.
  • Services incidental to helicopter maintenance, as opposed to the direct maintenance of helicopters.
  • A real-estate developer’s future development services.
  • Installation of goods.

What does it mean for work not to be done in  good and workmanlike manner?

To prove a breach of the implied warranty of good and workmanlike performance of repair or modification services, the plaintiff must establish the defendant did not perform the services in a good and workmanlike manner. “Good and workmanlike manner” means the quality of work performed by a person who has the knowledge, training, or experience necessary for the successful practice of a trade or occupation, performed in a manner generally considered proficient by those capable of judging the work. Gonzales v. Southwest Olshan Found. Repair Co., 400 S.W.3d 52, 56 (Tex.2013); Melody Home Mfg. v. Barnes, 741 S.W.2d 349, 354 (Tex.1987); see Coulson & Cae, Inc. v. Lake L.B.J. MUD, 734 S.W.2d 649, 651 (Tex.1987) (standard of performance is similar to negligence standard). The focus of the claim is not on the result of the work done, but on how it was done. The warranty does not require workers to guarantee the results of their work. A repeated failure to repair, standing alone, is insufficient to prove that work was not done in a good and workmanlike manner.

What standard of workmanship applies for residential construction?

“Good and workmanlike manner” related to home construction requires the builder to construct the home in the same manner as would a generally proficient builder engaged in similar work and performing under similar circumstances. In residential construction, the implied warranty applies only to latent defects. For a defect to be latent, it must not be discoverable by a reasonably prudent inspection of the building at the time of sale. The reasons for protecting the buyer from latent defects include the following: (1) a builder should be in the business of constructing buildings free of latent defects, (2) the buyer cannot by reasonable inspection or examination discover latent defects, (3) the buyer cannot normally rely on her own judgment in such matters, (4) considering the relations of the parties, the buyer is deemed to have relied on the builder, and (5) the builder is the only person who has or could have knowledge of the manner in which the building was built.

What are some examples of latent defects?

The following are latent defects:

  • Defective slab.
  • Defective plumbing, electrical wiring, and foundation.
  • Defective fireplace and chimney.

What are not considered latent defects?

The following are not latent defects:

  • inadequate fire extinguishers,
  • a hole in the wall, and
  • an improper banister on the stairway.

Implied Warranty of Habitability

While the implied warranty of habitability and implied warranty of good and workmanlike performance have a number of similarities, the Texas Supreme Court has stated they are independent warranties. The elements of a cause of action for breach of the implied warranty of habitability are the following:

  1. The defendant built residential property.
  2. The plaintiff purchased the property.
  3. The defendant created a defect in the property.
  4. The defect was latent.
  5. The defect made the residential property uninhabitable.
  6. The plaintiff suffered injury.

What makes a home uninhabitable?

To be habitable, the residential property must be safe, sanitary, and otherwise fit for human habitation. For a defect to be actionable, the defect must have an effect on the habitable areas of the house. For example, a defect in the slab foundation affected the habitable areas of the house when it caused walls to crack, the roof to leak, and the patio to pull away from the house. Defects in areas of the house that do not affect its habitability will not support a judgment.

Implied Warranty of Suitability

The elements of a cause of action for breach of the implied warranty of suitability as it applies to commercial property are the following:

  1. The defendant leased property to the plaintiff.
  2. The lease covered commercial property.
  3. The leased property had a latent defect.
  4. The defect was in an area that was vital to the property’s commercial purpose.
  5. The defect made the property unsuitable for its intended commercial purpose.
  6. The defendant had a duty to repair the latent defect.
  7. The defendant did not repair the latent defect.
  8. The plaintiff suffered injury.

What types of commercial property does the warranty of suitability apply to?

The implied warranty of suitability has been applied to the following types of commercial property:

  1. A shoe store.
  2. A doctor’s office.
  3. An airport hangar.
  4. A restaurant.

What does it mean for the property to be unsuitable?

Some of the factors to consider when determining whether there has been a breach are (1) the nature of the defect, (2) its effect on the tenant’s use of the premises, (3) the length of time the defect persisted, (4) the age of the structure, (5) the amount of the rent, (6) the area where the premises are located, (7) whether the tenant waived the defect, and (8) whether the defect resulted from any unusual or abnormal use by the tenant.

Can the landlord avoid the responsibility to repair the defect?

Under the implied warranty of suitability, a commercial landlord has a duty to ensure at the start of the lease that there are no latent defects in essential facilities that are vital for the plaintiff’s intended commercial purposes and that the facilities will remain in a suitable condition. The duty to repair these essential facilities may be disclaimed, however, if the duty is allocated to the tenant.