In the past 10 years, more than 25 states have enacted specific builder-friendly construction defect notice and resolution statutes that may affect your subrogation claims. If you are not aware of the provisions in your state, then your otherwise solid subrogation claim could be at risk.

In 1989, Texas enacted the nation’s first Residential Construction Liability Act (RCLA), Tex. Prop. Code §27.001 et seq. Sponsors of RCLA argued that it was needed to remedy an explosion of residential construction litigation brought against home builders under the Texas Deceptive Trade Practices Act (DTPA). Following the passage of the Texas RCLA, builders’ organizations in other states began lobbying for adoption of variations of the RCLA. In 2010, Conn. became the most recent state to enact a version of a RCLA statute.

All of the statutes share a common theme: Before a homeowner may file a legal action—or, in some states, commence an arbitration—against a builder seeking relief for construction defects, the homeowner must give written notice to the builder for the claimed defects and provide a fair opportunity to the builder to remedy the defects. In Colo., S.C., Fla. and Tenn., owners of non-residential property are also subject to the notice requirements of those states’ acts. In many states, such notice must be provided not only to builders but also to design professionals and even material suppliers. In most states, a legal action may be dismissed without prejudice or stayed until the homeowner has complied with the notice provisions of the relevant state’s act. In some states, damages may be limited in the event of non-compliance of the notice provisions.

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