Sometimes, it can feel like the state of Texas is out to get the construction industry. There are slew of different notice requirements, and if any one of them is missed, drastic results could follow. One of these notice requirements is a Residential Disclosure Statement.
In Texas a general contractor is generally not required to give any preliminary notice. However, when a project is residential, a GC must provide a Residential Disclosure Statement, among other information. Let’s break it down:
What Counts as a “Residential Project”?
Residential projects include projects for the construction or repair of a new or existing residence, including improvements in “secondary buildings” to the residence. Improvements in secondary buildings would include work on things such as pool houses and seperate garages.
Be Careful With Texas Residential Liens! That Property May Be a Homestead!
When is the statement sent?
This part’s easy! Before signing the contract.
Exactly what is sent?
The Residential Disclosure Statement is a lot easier than most other notices. It can basically just be copy and pasted from § 53.255 of the Texas Property Code. We like to make life easier for you, so you can download a free copy here: Residential Disclosure Statement.
Wondering what the Residential Disclosure Statement says?
Basically, it informs the property owner of their rights and best practices for handling a construction project. In a disclosure statement, the contractor provides the homeowner with a brief overview of some of their rights, responsibilities, and risks in the construction project transaction. Specifically, regarding risks, it informs the owner that they could potentially become responsible for claims by subcontractors and suppliers if something goes awry.
You May Also Need To Provide a List of Subs and Suppliers
Under § 53.256 of the Texas Property Code, a contractor may also need to provide a list of subcontractors and suppliers prior to the commencement of work. It’s just a written list identifying the name, address, and phone number of each sub and supplier the contractor intends to use on the project.
Of course, jobs can be unpredictable, and the subs and suppliers can change. But this list must be updated if changes are made. Specifically, if a sub or supplier is added or deleted, the list must be updated and provided to the owner within 15 days.
Note, though, that it’s possible for an owner to waive this requirement. But it must be done in specific form – sort of like Texas mechanics lien waivers. The waiver can either be included in the construction contract or can be made in writing afterwards. It must read (substantially) as follows, in at least 10 point bolded font:
“WAIVER OF THE LIST OF SUBCONTRACTORS AND SUPPLIERS. AN OWNER IS NOT REQUIRED TO WAIVE THE RIGHT GRANTED BY SECTION 53.256, PROPERTY CODE, TO RECEIVE FROM THE CONTRACTOR AN ORIGINAL OR UPDATED LIST OF SUBCONTRACTORS AND SUPPLIERS.
“BY SIGNING THIS DOCUMENT, I AGREE TO WAIVE MY RIGHT TO RECEIVE FROM THE CONTRACTOR AN ORIGINAL OR UPDATED LIST OF SUBCONTRACTORS AND SUPPLIERS.
“I UNDERSTAND AND ACKNOWLEDGE THAT, AFTER SIGNING THIS DOCUMENT, THIS WAIVER MAY NOT BE CANCELED AT A LATER DATE.
“I HAVE VOLUNTARILY CONSENTED TO THIS WAIVER.”
So What Other Rights Does a Homeowner Have?
Under Subchapter K of the Texas Property Code, homeowners have other basic rights on residential construction projects. For one, they have the right to know and obtain references for their contractor. They also have the right to have a written agreement with the contractor that includes a description of the work, the required or estimated time for the completion of the work, the cost of the work or how it will be determine, and the procedure and method of payment.
Among these basic rights, the Residential Disclosure Statement also provides information on the roles of lenders and governmental authorities, and how a homeowner should proceed when claims are made by subcontractors or suppliers.
If you’re a GC, don’t forget to provide the residential disclosure notice to the homeowner. It is a crucial step in contracting a new residential construction project that makes your life and the homeowner’s life simplier down the road.