Can I Return a Home I Bought Due to Construction Defects?
Full Question:
Answer:
There is no lemon law for home sales in Texas, however, disclosure and warranty terms will likely govern the situation under contract law principles.
A breach of warranty involves a broken promise about a product made by either a manufacturer or a seller. The term also covers a failure of a statement or agreement by a seller of property which is a part of the contract of sale, when the truth of the statement is necessary to the validity of the contract. Warranties are also express or implied. An express warranty is a particular stipulation introduced into the written contract, by the agreement of the parties; an implied warranty is a guarantee imposed by law in a sale. Even though the seller may not make any explicit promises, the buyer still gets some protection.
Warranties may be either express or implied. Express warranties are created by affirmative acts of the seller that are an affirmation of fact or promise made by the seller which relates to the goods and becomes part of the basis of the bargain. Express warranties can be created when the seller describes the goods or furnishes samples. Express warranties create strict liability for the seller, so that negligence need not be proven. In general, express warranties are based on factual statements rather than opinions about the future. An exception is made when it is a professional opinion which can create a warranty. Under the Uniform Commercial Code (UCC), which has been adopted in some form by almost all states, liability for breach of warranty is based on seller status. Manufacturer, distributor, and retailer could all be jointly and severally liable, so that the full amount of damages could be collected from one or any of them. The distributor and retailer may be able to escape liability if the manufacturer is not bankrupt. Purchasers, consumers, users, and even bystanders are entitled to sue in most states for breach of warranty.
Warranties are governed by contract laws principles. Any claim you may have relating to the defects will likely be governed by contract law. The answer will depend on the type and terms of the warranties involved. The terms of your contract and warranty language with the other parties will generally determine your rights and obligations as well as those of the other parties. You should carefully review the terms of the agreements, to determine your rights and obligations. If you wish to use the legal system to resolve your dispute, you may want to review the following general information regarding contract law and breach of contract actions:
Contracts are agreements that are legally enforceable. A contract is an agreement between two parties that creates an obligation to do or refrain from doing a particular thing. The purpose of a contract is to establish the terms of the agreement by which the parties have fixed their rights and duties. An oral contract is an agreement made with spoken words and either no writing or only partially written. An oral contract may generally be enforced the same as a written agreement. However, it is much more difficult with an oral contract to prove its existence or the terms. Oral contracts also usually have a shorter time period within which a person seeking to enforce their contract right must sue. A written contract generally provides a longer time to sue than for breach of an oral contract. Contracts are mainly governed by state statutory and common (judge-made) law and private law. Private law generally refers to the terms of the agreement between the parties, as parties have freedom to override many state law requirements regarding formalities of contracts. Each state has developed its own common law of contracts, which consists of a body of jurisprudence developed over time by trial and appellate courts on a case-by-case basis.
An unjustifiable failure to perform all or some part of a contractual duty is a breach of contract. A legal action for breach of contract arises when at least one party's performance does not live up to the terms of the contract and causes the other party to suffer economic damage or other types of measurable injury. A lawsuit for breach of contract is a civil action and the remedies awarded are designed to place the injured party in the position they would be in if not for the breach. Remedies for contractual breaches are not designed to punish the breaching party. The five basic remedies for breach of contract include the following: money damages, restitution, rescission, reformation, and specific performance. A money damage award includes a sum of money that is given as compensation for financial losses caused by a breach of contract. Parties injured by a breach are entitled to the benefit of the bargain they entered, or the net gain that would have accrued but for the breach. The type of breach governs the extent of damages that may be recovered.
Restitution is a remedy designed to restore the injured party to the position occupied prior to the formation of the contract. Parties seeking restitution may not request to be compensated for lost profits or other earnings caused by a breach. Instead, restitution aims at returning to the plaintiff any money or property given to the defendant under the contract. Plaintiffs typically seek restitution when contracts they have entered are voided by courts due to a defendant's incompetence or incapacity.
Rescission is the name for the remedy that terminates the contractual duties of both parties, while reformation is the name for the remedy that allows courts to change the substance of a contract to correct inequities that were suffered. In order to have a rescission, both parties to the contract must be placed in the position they occupied before the contract was made. Courts have held that a party may rescind a contract for fraud, incapacity, duress, undue influence, material breach in performance of a promise, or mistake, among other grounds.
Specific performance is an equitable remedy that compels one party to perform, as nearly as practicable, his or her duties specified by the contract. Specific performance is available only when money damages are inadequate to compensate the plaintiff for the breach
Promissory estoppel is a term used in contract law that applies where, although there may not otherwise be an enforceable contract, because one party has relied on the promise of the other, it would be unfair not to enforce the agreement. Promissory estoppel arises from a promise which the promisor should reasonably expect to induce action or forebearance of a definite and substantial character on the part of the promisee and which does induce such action or forebearance in binding if injustice can be avoided only by enforcement of the promise. Detrimental reliance is a term commonly used to force another to perform their obligations under a contract, using the theory of promissory estoppel. Promissory estoppel may apply when a promise was made; reliance on the promise was reasonable or foreseeable; there was actual and reasonable reliance on the promise; the reliance was detrimental; and injustice can only be prevented by enforcing the promise. Detrimental reliance must be shown to involve reliance that is reasonable, which is a determination made on an individual case-by-case basis, taking all factors into consideration. Detrimental means that some type of harm is suffered.
Reasonable reliance is usually referred to as a theory of recovery in contract law. It was what a prudent person might believe and act upon based on something told by another. Sometimes a person acts in reliance on the promise of a profit or other benefit, only to learn that the statements or promises were either incorrect or were exaggerated. The one who acted to their detriment in reasonable reliance may recover damages for the costs of his/her actions or demand performance. Reasonable reliance connotes the use of the standard of an ordinary and average person.
Please see the following Texas statutes:
§ 436.003 PROP. Venue
(a) An arbitration of a dispute involving a construction defect shall
be conducted in the county in which the home alleged to contain the
defect is located.
(b) The requirements of this section may not be waived by contract.
§ 1201.351 OCCUP. CODE Manufacturer's Warranty
(a) The manufacturer of a new HUD-code manufactured home shall warrant,
in a separate written document, that:
(1) the home is constructed or assembled in accordance with all
building codes, standards, requirements, and regulations prescribed by
the United States Department of Housing and Urban Development under the
National Manufactured Housing Construction and Safety Standards Act of
1974 (42 U.S.C. Section 5401 et seq.); and
(2) the home and all appliances and equipment included in the home are
free from defects in materials or workmanship except for cosmetic
defects.
(b) The manufacturer's warranty is in effect until at least the first
anniversary of the date of initial installation of the home at the
consumer's homesite or the closing of the consumer's purchase or
acquisition of an already installed new home, whichever is later.
(c) At the time the manufacturer delivers the home to the retailer, the
manufacturer shall also deliver to the retailer:
(1) the manufacturer's warranty; and
(2) the warranties given by the manufacturers of appliances or
equipment installed in the home.
§ 5.008 PROP. Seller's Disclosure of Property Condition
**Update Notice: This section has been amended by
SENATE BILL No. 1969 OF 81st LEGISLATURE
(a) A seller of residential real property comprising not more than one
dwelling unit located in this state shall give to the purchaser of the
property a written notice as prescribed by this section or a written
notice substantially similar to the notice prescribed by this
section which contains, at a minimum, all of the items in the notice prescribed
by this section.
(b) The notice must be executed and must, at a minimum, read
substantially similar to the following:
SELLER'S DISCLOSURE NOTICE
CONCERNING THE PROPERTY AT _____________________________________
(Street Address and City)
THIS NOTICE IS A DISCLOSURE OF SELLER'S KNOWLEDGE OF THE CONDITION OF THE PROPERTY AS OF THE
DATE SIGNED BY SELLER AND IS NOT A SUBSTITUTE FOR ANY INSPECTIONS OR WARRANTIES THE PURCHASER
MAY WISH TO OBTAIN. IT IS NOT A WARRANTY OF ANY KIND BY SELLER OR SELLER'S AGENTS.
Seller ___ is ___ is not occupying the Property.
If unoccupied, how long since Seller has occupied the Property?
1. The Property has the items checked below:
Write Yes (Y), No (N), or Unknown (U).
__ Range ___ Oven ___ Microwave
__ Dishwasher ___ Trash Compactor ___ Disposal
__ Washer/Dryer Hookups ___ Window Screens ___ Rain Gutters
__ Security System ___ Fire Detection Equipment ___ Intercom System
___ Smoke Detector
___ Smoke Detector — Hearing
Impaired
___ Carbon Monoxide Alarm
___ Emergency Escape Ladder(s)
___ TV Antenna ___ Cable TV Wiring ___ Satellite Dish
___ Ceiling Fan(s) ___ Attic Fan(s) ___ Exhaust Fan(s)
___ Central A/C ___ Central Heating ___ Wall/Window Air Conditioning
___ Plumbing System ___ Septic System ___ Public Sewer System
___ Patio/Decking ___ Outdoor Grill ___ Fences
___ Pool ___ Sauna ___ Spa
___ Hot Tub
__ Pool Equipment ___ Pool Heater ___ Automatic Lawn Sprinkler System
__ Fireplace(s) & Chimney ___ Fireplace(s) & Chimney
(Woodburning) (Mock)
___ Gas Lines (Nat./LP) ___ Gas Fixtures
Garage: ___ Attached ___ Not Attached ___ Carport
Garage Door Opener(s): ___ Electronic ___ Control(s)
Water Heater: ___ Gas ___ Electric
Water Supply: ___ City ___ Well ___ MUD ___ Co-op
Roof Type: _______________________________________________ Age: ________________ (approx)
Are you (Seller) aware of any of the above items that are not in working condition, that have
known defects, or that are in need of repair? __ Yes __ No __ Unknown.
If yes, then describe. (Attach additional sheets if necessary):
_______________________________________________________________________________________________
_______________________________________________________________________________________________
2. Does the property have working smoke detectors installed in accordance with the smoke
detector requirements of Chapter 766, Health and Safety Code? __ Yes __ No __ Unknown.
If the answer to the question above is no or unknown, explain. (Attach additional sheets if
necessary): ___________________________________
_______________________________________________________________________________________________
_______________________________________________________________________________________________
3. Are you (Seller) aware of any known defect/malfunctions in any of the following?
Write Yes (Y) if you are aware, write No (N) if you are not aware.
___ Interior Walls ___ Ceilings ___ Floors
___ Exterior Walls ___ Doors ___ Windows
___ Roof ___ Foundation/Slab(s) ___ Basement
___ Walls/Fences ___ Driveways ___ Sidewalks
___ Plumbing/Sewers/Septics ___ Electrical Systems ___ Lighting Fixtures
___ Other Structural Components (Describe): ___________________________________________________
_______________________________________________________________________________________________
_______________________________________________________________________________________________
_______________________________________________________________________________________________
If the answer to any of the above is yes, explain. (Attach additional sheets if necessary):
_______________________________________________________________________________________________
_______________________________________________________________________________________________
_______________________________________________________________________________________________
4. Are you (Seller) aware of any of the following conditions?
Write Yes (Y) if you are aware, write No (N) if you are not aware.
___ Active Termites (includes wood-destroying
insects) ___ Previous Structural or Roof Repair
___ Termite or Wood Rot Damage Needing Repair ___ Hazardous or Toxic Waste
___ Previous Termite Damage ___ Asbestos Components
___ Previous Termite Treatment ___ Urea formaldehyde Insulation
___ Previous Flooding ___ Radon Gas
___ Improper Drainage ___ Lead Based Paint
___ Water Penetration ___ Aluminum Wiring
___ Located in 100-Year Floodplain ___ Previous Fires
___ Present Flood Insurance Coverage ___ Unplatted Easements
___ Landfill, Settling, Soil Movement, ___ Subsurface Structure or Pits
Fault Lines
___ Previous Use of Premises for Manufacture
of Methamphetamine
If the answer to any of the above is yes, explain. (Attach additional sheets if necessary):
_______________________________________________________________________________________________
_______________________________________________________________________________________________
_______________________________________________________________________________________________
5. Are you (Seller) aware of any item, equipment, or system in or on the property that is in
need of repair? ___ Yes (if you are aware) ___ No (if you are not aware). If yes, explain
(attach additional sheets as necessary). ____________________________________________________
6. Are you (Seller) aware of any of the following?
Write Yes (Y) if you aware, write No (N) if you are not aware.
___ Room additions, structural modifications, or other alterations or repairs made without
necessary permits or not in compliance with building codes in effect at that time.
___ Homeowners' Association or maintenance fees or assessments.
___ Any "common area" (facilities such as pools, tennis courts, walkways, or other areas)
coowned in undivided interest with others.
___ Any notices of violations of deed restrictions or governmental ordinances affecting the
condition or use of the Property.
___ Any lawsuits directly or indirectly affecting the Property.
___ Any condition on the Property which materially affects the physical health or safety of an
individual.
If the answer to any of the above is yes, explain. (Attach additional sheets if necessary):
_______________________________________________________________________________________________
_______________________________________________________________________________________________
_______________________________________________________________________________________________
7. If the property is located in a coastal area that is seaward of the Gulf Intracoastal
Waterway or within 1,000 feet of the mean high tide bordering the Gulf of Mexico, the property
may be subject to the Open Beaches Act or the Dune Protection Act (Chapter 61 or 63, Natural
Resources Code, respectively) and a beachfront construction certificate or dune protection
permit may be required for repairs or improvements. Contact the local government with ordinance
authority over construction adjacent to public beaches for more information.
________________________ ______________________
Date Signature of Seller
The undersigned purchaser hereby acknowledges receipt of the foregoing notice and acknowledges
the property complies with the smoke detector requirements of Chapter 766, Health and Safety
Code, or, if the property does not comply with the smoke detector requirements of Chapter 766,
the buyer waives the buyer's rights to have smoke detectors installed in compliance with
Chapter 766.
_____________________ ______________________
Date Signature of Purchaser
(c) A seller or seller's agent shall have no duty to make a disclosure
or release information related to whether a death by natural causes,
suicide, or accident unrelated to the condition of the property occurred
on the property or whether a previous occupant had, may have had, has, or
may have AIDS, HIV related illnesses, or HIV infection.
(d) The notice shall be completed to the best of seller's belief and
knowledge as of the date the notice is completed and signed by the
seller. If the information required by the notice is unknown to the
seller, the seller shall indicate that fact on the notice, and by that
act is in compliance with this section.
(e) This section does not apply to a transfer:
(1) pursuant to a court order or foreclosure sale;
(2) by a trustee in bankruptcy;
(3) to a mortgagee by a mortgagor or successor in interest, or to a
beneficiary of a deed of trust by a trustor or successor in interest;
(4) by a mortgagee or a beneficiary under a deed of trust who has
acquired the real property at a sale conducted pursuant to a power of
sale under a deed of trust or a sale pursuant to a court ordered
foreclosure or has acquired the real property by a deed in lieu of
foreclosure;
(5) by a fiduciary in the course of the administration of a decedent's
estate, guardianship, conservatorship, or trust;
(6) from one co-owner to one or more other co-owners;
(7) made to a spouse or to a person or persons in the lineal line of
consanguinity of one or more of the transferors;
(8) between spouses resulting from a decree of dissolution of marriage
or a decree of legal separation or from a property settlement agreement
incidental to such a decree;
(9) to or from any governmental entity;
(10) of a new residence of not more than one dwelling unit which has
not previously been occupied for residential purposes; or
(11) of real property where the value of any dwelling does not exceed
five percent of the value of the property.
(f) The notice shall be delivered by the seller to the purchaser on or
before the effective date of an executory contract binding the purchaser
to purchase the property. If a contract is entered without the seller
providing the notice required by this section, the purchaser may terminate
the contract for any reason within seven days after receiving the
notice.