RCLA Defenses, Damages, and Deadlines: What Every Texas Contractor Should Know

Last updated: September 2026

When a homeowner is unhappy over an alleged construction defect, it’s easy to assume you’re at their mercy. You’re not. Texas law gives residential contractors protection, and most contractors never use all of it.

That protection comes from the Residential Construction Liability Act, or RCLA, found in Chapter 27 of the Texas Property Code. Before a homeowner can sue you, the RCLA requires them to send written notice and give you a real shot at inspecting the property, making repairs, or settling. See the full notice-and-cure process in detail in How Right to Repair Laws Shield Residential Contractors

Once you’re inside the RCLA process, what protects you? What can a homeowner recover, and what can’t they touch? How long do they even have to bring a claim? And when can you force the whole thing into mediation instead of a courtroom? Here’s what every residential contractor in Texas needs to know.

Key Takeaways

• The RCLA gives contractors specific statutory defenses under Section 27.003, but you have to raise them. They don’t apply automatically.
• Homeowners who file groundless or bad-faith RCLA claims can be on the hook for your attorney’s fees.
• Most construction defect claims carry a two-year or four-year statute of limitations, and the discovery rule or fraudulent concealment can extend either one.
• The RCLA caps what a homeowner can recover. No treble damages, no emotional distress.
• Make a reasonable settlement offer within 45 days, and you protect yourself even if the homeowner rejects it and sues anyway.
• Once damages exceed $7,500, either side can force mediation.

Contractor Defenses Under RCLA

Most contractors know the RCLA as a notice requirement. Fewer know it also hands you specific defenses under Section 27.003. A contractor is not liable for any percentage of damages caused by:

• Negligence of someone other than the contractor or the contractor’s own agent, employee, or subcontractor
• Another party’s failure to mitigate damages or properly maintain the residence
• Normal wear, tear, or deterioration
• Normal shrinkage from drying or settlement
• The contractor’s reasonable reliance on inaccurate official government records

A good chunk of what a homeowner blames on your work may not legally be yours to pay for. But that only matters if you actually raise it in your response. These defenses don’t apply themselves.

Frivolous Claims Can Hurt the Homeowner

The RCLA also protects contractors against unwarranted claims. Under Section 27.0021, if a homeowner files a claim that’s groundless, brought in bad faith, or filed just to harass you, they can be held liable for your reasonable attorney’s fees and court costs. If a demand letter feels more like a shakedown than a legitimate defect complaint, that’s worth flagging to your attorney right away.

Statute of Limitations Under RCLA

How Long is the Statute of Limitations?

The RCLA notice-and-cure process operates under its own deadlines, but it doesn’t pause or extend the statute of limitations for the homeowner’s underlying claim. That clock starts the moment the alleged defect occurs or is discovered, and it keeps running in the background the entire time you’re exchanging notices, inspections, and settlement offers. 

If a homeowner waits too long to send the RCLA letter, their claim can be invalidated, regardless of how strong it might have been. Knowing both timelines matters just as much for you as it does for them, because it tells you how much exposure you’re facing and for how long.

Here are the two deadlines that govern most construction defect claims in Texas:

• Two years — negligence, negligent misrepresentation, and products claims
• Four years — breach of contract and breach of warranty

In practice, which timeline applies depends on how the claim is framed. If the homeowner is pointing to a specific term in your written contract, you’re usually looking at the four-year timeline. If they’re arguing your workmanship itself was deficient, without tying it to a specific contract term, that’s typically treated as negligence and gets the two-year clock. The same defect can sometimes support either theory, which is why the framing matters.

When the Statute of Limitations Period Begins

The other question is when the clock starts. For a defect you can see right away, like a crack in a driveway, it’s usually the date the work was finished. For a hidden defect, such as a foundation issue or water intrusion behind a wall, courts often start the clock on the date the homeowner discovered, or should have discovered, the problem. That’s the discovery rule: it delays the clock until the homeowner knew, or reasonably should have known, about the problem.

Fraudulent concealment works the same way but for a different reason: it delays the clock if someone deliberately hid the wrongdoing, since the law won’t let a party benefit from covering up their own mistake until time runs out on the other side. Both exceptions get misjudged constantly, by contractors and homeowners alike, so don’t assume a defect from years ago is automatically out of reach.

If the statute of limitations has already run before the homeowner ever sends a notice letter, the entire claim can potentially be thrown out, regardless of how the RCLA process would otherwise play out. That’s a cleaner outcome than even the best settlement offer, which is why checking the timeline should be one of the first things your attorney does the moment a demand letter arrives.

What Damages Can a Homeowner Actually Recover Under RCLA?

The RCLA puts a hard ceiling on what a homeowner can collect from you. It doesn’t leave “damages” open-ended the way an ordinary lawsuit might. Under Section 27.004, a homeowner can only recover:

• The reasonable cost of repairs necessary to cure the construction defect
• The reasonable cost to replace or repair any damaged goods in the residence
• Reasonable and necessary engineering and consulting fees
• Reasonable expenses for temporary housing during the repair period
• Any drop in the home’s market value after the defect is repaired, but only if the defect was structural
• Reasonable and necessary attorney’s fees

Just as important is what’s missing from that list. Before the enactment of the RCLA, a homeowner could potentially collect treble damages — three times their actual losses — plus damages for emotional distress. Today, homeowners get a faster, more certain path to a fix, and contractors get a hard cap on what a defect claim can cost them.

Make a Reasonable Offer to Cap Potential Payouts

Once you receive an RCLA notice letter, you have 45 days to send a written settlement offer by certified mail to the homeowner or their attorney. If the homeowner turns down a reasonable offer and later sues you anyway, and a judge or arbitrator agrees your offer was reasonable, the homeowner’s payout gets capped at whatever you offered, even if they “win.” They also can’t collect attorney’s fees for anything that happened after they turned you down.

If you skip the offer, or offer an unreasonably low amount, none of that protection applies. You’re back to full exposure, plus you lose some of the defenses covered earlier in this article.

Courts decide what is “reasonable” on a case-by-case basis, weighing things like whether the offer was backed by real evidence, whether it reflected a genuine attempt to fix the problem, and whether you were willing to cover at least some of the cost yourself. Offer too low an amount, and you’re gambling with protection you don’t have to give up.

When Mediation Becomes Mandatory

Once damages top $7,500, either side can force mediation by filing a Motion to Compel Mediation within 90 days of the lawsuit being filed, under Section 27.0041. Most RCLA disputes settle long before trial, and mediation is usually the fastest way to get there once the notice period has run.

Protect Your Business Before You Need To

The RCLA rewards contractors who move fast and move thoroughly: request the inspection, document your defenses, make a genuinely reasonable offer, all inside the deadlines. Miss one of those steps and you’re not just weaker in the dispute; you can now waive protections the law hands you for free.

Our construction law attorneys work with residential contractors across Texas on RCLA notices, settlement offers, and defect litigation. If you’ve received a demand letter, don’t sit on it. Contact us as soon as it arrives.