• Failure to Timely Complete Construction of the Home: By far, failure to timely complete construction of the home is the most common complaint we receive from new home tract/production Purchasers. The delay is typically the result of the Builder’s failure to timely commence construction or failure to consistently prosecute the work. The biggest hurdle Purchasers face in raising this type of dispute as a breach of Contract, is that the Contract typically does not guarantee a completion date and at best, might provide an estimated date of completion, along with the express statement that the date of completion is not guaranteed. Moreover, even if a Sales Representatives or Project Manager has verbally promised a completion date, the Contract typically states that such statements do not modify the Contract and are not enforceable against the Builder. Consequently, delayed completion is typically not a breach of Contract. However, if the delays are extreme and the Builder is clearly not consistently providing labor/materials to the Project, without justification, then it may be possible to argue the Builder has essentially abandoned the Project and is in breach. Depending upon the terms of the Contract, we typically send the Builder a Notice of Breach & Request to Cure at this stage of the Project to pressure the Builder and document the delay, which typically has a favorable result.
• Failure to Follow the Plans and Specifications and Provide Upgrades: Given that the Builder is not focused on building just one house and the high turnover in Project Managers, it is common for the Builder to fail to construct the house in accordance with the Purchasers’ expectations. The Contract typically allows the Builder to substitute materials with like or similar materials and slightly deviate from the plans/specifications. However, if the failure is more substantial, then it is likely a breach of the Contract and possibly a basis to terminate the Contract if the Builder refuses to correct the issue.
• Defective or Poor Workmanship: Most tract/production home Purchasers discover late in the process that the quality of the labor/materials being used for their home is in stark contrast to that of the model home. Builders typically include a provision in the Contract which expressly states that the model home is not a true representation of the actual home being built and require the Purchasers to release the Builder from liability for false representations. However, if the quality of the home does not meet “industry standard”, is in violation of the applicable codes, or is clearly defective, then the Builder is likely in breach of the Contract. The Purchaser should retain a home inspector or a forensic inspector who specializes in the type of defect to perform an inspection and prepare a report with findings. A Notice of Breach of Contract & Request to Cure, along with a Chapter 27 Demand (discussed below) should be sent to the Builder.
• Demand to Accept the Property with Defective and Incomplete Work: As a practice, tract/production home Builders expect Purchasers to close on the home even though some items have not been completed, are defective or damaged. In fact, most Contracts expressly state that the Purchaser is required to close despite the defective or incomplete items and failure to do so is a breach of the Contract. These unresolved items then get placed onto a “punch list” to be dealt with at a later time. The problem with this approach, is that once the Purchasers close the Builder tends to ignore them and the issues do not get timely resolved or resolved at all. The punch list items then turn into warranty claims and when they are still not resolved, the Purchasers are forced to contact an attorney to invoke the Chapter 27 process discussed below. As such, if you are in this situation, now is the time to stand firm and force the Builder to correct as many of the problems as possible before closing. However, you may have to retain an attorney to send a formal Notice of Default.
• Price Increases, Reductions and Terminations: In 2021 – 2022, the price of construction and the price of homes rose dramatically over a short period of time. Builders who had entered into Contracts in 2020, realized they were missing out on increased profits or could not afford to build the house for the Contract price, and cancelled thousands of Contracts leaving Purchasers without homes. Builders who took this approach, relied upon a common provision in these types of Contracts that allow the Builder to terminate the Contract for convenience and without cause. During the first half of 2023, interest rates dramatically rose over a short period of time. The result was higher monthly mortgage payments and a severe reduction in demand for new tract/production homes. This caused Builders to reduce purchase prices and offer incentives to increase demand. This was great for Purchasers who had not yet entered into a Contract and devasting for those who had. Unfortunately, since these types of Contracts are very Builder one-sided, these Purchases did not have a direct way to back out of the Contract. However, a potential way out of the Contract might be to identify an unrelated breach and use that to cancel the Contract. We have seen Builders respond to this approach by offering incentives to induce the Purchasers to close. We have also seen Purchasers terminate the Contract, waive their deposits, and then repurchase the same or similar house for a lessor price because it was economically beneficial to do so.

• Disputes Over Project Delays, Completion and Abandonment: It is rare for a construction Project to be completed within the allotted time. Project delays occur for a myriad of different reasons, some are outside of the parties’ control and are therefore excusable (g., persistent bad weather, material supply delays, or delays with obtaining proper permitting), but most serious Project delays are the result of poor Project management or an illegal misappropriation of Project funds resulting in the Builder’s inability to pay subcontractors, suppliers and laborers to continuously prosecute the work leading to termination or abandonment. If your Project is delayed, the first step is to review your Contract to determine the agreed upon completion date. Most Builder industry form Contracts, e.g., the Texas Association of Builders (“TAB”) do not provide a date certain for completion and at best provide an estimated deadline with the express caveat that a completion date is not guaranteed. Moreover, this same one-sided form Contract contains a provision which requires the Property Owners to waive their right to recover indirect or consequential damages (e.g., increased monthly storage fees, rental fees, or increased interest rates) caused by the delays. However, there is potentially a way to circumvent a Builder’s Contract which does not contain a completion date. If there is a construction loan, then the Lender should have required the parties to execute their construction agreement typically referred to as a “Mechanic’s Lien Contract” or a “Residential Construction Contract with Lien Transfer”. This Contract should contain a date of completion which corresponds to the maturity date of the construction loan. Most significantly, the Lender’s Construction Contract should expressly state that the Builder’s Contract is incorporated into it by reference and to the extent the terms of the two Contracts conflict, the Lender’s Contract controls. If neither Contract contains a completion date, then the law imposes a reasonableness standard for completion of the work. The second step is to send the Builder a Notice of Default & Request to Cure, placing the Builder on formal notice of default and demanding a completion schedule. The third step may be to terminate the relationship and retain a new Builder to complete the work, although this typically creates a whole new set of problems.
• Disputes Over Increased Project Costs: Most custom home Builders do a poor job estimating overall Project costs. Some Builders do so intentionally to induce you into the Contract, while other Builder’s fail their due diligence in obtaining bids or forecasting price increases. Whether the Builder has the legal right to pass on the increased costs depends upon the terms of the Contract. Step one: review the Builder Contract to determine whether the Contract Price is a stipulated sum or the cost of the work plus a Builder’s fee. If a stipulated sum, the Builder typically cannot pass on price increases unless: (1) the Property owner has modified the scope of work or exceeded the amount of an allowance, or (2) the Contract contains an escalation provision or an unforeseen conditions provision allowing the Builder to pass on unexpected price increases for certain materials or for unforeseen conditions. When the Property owner is obligated to pay for the “cost of the work plus a Builder’s fee”, the Builder can legally pass on the increased costs unless the Contract contains a guaranteed maximum price (“GMP”) for the overall Project costs. Additionally, most Contracts require the Builder to provide advance written notice of unexpected cost increases once discovered or to obtain a fully executed change order before the costs are incurred and can be passed on to the Property owners.
• Disputes Over Project Accounting: Custom home Builders are notorious for poor record keeping and for withholding proof of Project costs. When the Contract price is for a stipulated sum, the Builder typically cannot pass on increased costs (unless one of the above exceptions apply) and therefore assumes the risk of price increases. If prices increase, the Builder makes less profit. If prices decrease, the Builder makes more profit. As such, with stipulated sum Contracts, Builders typically regard Project costs as confidential. Primarily because they do not want the Property owners to know their actual profit margin (typically because it is much higher than represented or than the Property owner would expect). And Property owners should not care, as long as the Builder produces a quality product in exchange for the agreed upon Contract price. However, when a Builder attempts to increase a stipulated sum Contract price or if the Contract price is for the “cost of the work plus a Builder fee”, then the Builder is obligated to provide proof of the increased costs or the overall Project costs.
• Disputes Over Unpaid Subcontractors and Material Suppliers (Lien Threats): It is not uncommon for the Property owners to receive at least one Notice of Claim (Pre-lien Notice or Intent to Lien) from their Builder’s Subcontractors or Suppliers during the Project. If the Property owners receive a Notice, the first step is to discuss the claim with the Builder to learn why the Claimant has not been paid. Sometimes it is for a legitimate reason, g., the work or material is defective and needs to be corrected, but most of the time it is not. The second step is to withhold the amount of the claim from the Builder’s future payments until the Builder has provided proof that the claim has been resolved. Pursuant to Texas Property Code, Chapter 53, the Builder is required to resolve the Lien claim and defend/indemnify the Property owners from any damages caused by the claim. Moreover, most well drafted Contracts expressly state that the filing of a Lien is an Event of Default and if not timely cured, allow the Property owners to terminate the Contract. Additionally, if the Property owners have already paid the Builder for the Subcontractor/Supplier’s labor/material and the Builder knowingly or with the intent to defraud diverted the funds from the Project to pay for non-Project related debts, the Builder can be prosecuted for a third-degree felony. Lien claims must be resolved before the Lender will allow the construction loan to be converted to a conventional loan.
• Disputes Over Poor Workmanship or Failure to Follow Plans/Specifications: It is difficult to locate a qualified Builder and even if you think you have found one, mistakes and disagreements will still occur. If the work does not conform to the plans/specifications, then the Builder is likely in breach of the Contract. If the work is of poor quality, defective, or not functioning as designed, then the Builder again is likely in breach of the Contract. When any of these events occur, the first step is to bring them to the Builder’s attention and objectively discuss how they can be economically corrected with the least disruption to the overall Project. If doing so does not resolve the issues, then there is a dispute and a material breach of the Contract. Now it is time to consult with a construction attorney who can review and explain the applicable Contract provisions and recommend options and a strategy on how to proceed. Typically, one of the recommendations will be for the Property owner to retain a construction expert who specializes in the type of trade/work in dispute to perform an inspection and prepare a report. The report should identify: (1) the defects or nonconforming work, (2) any code or industry standards violated, (3), the proper way to correct the defective or nonconforming work, and (4) the cost to repair the work. This report will provide the Property owner with support for its claim and a better understanding of the problem and how it can be resolved.
• Disputes Over Project Close Out and Final Releases: If there have not been major disputes throughout the course of Project, then the last 75 days are where they tend to occur. As the parties head toward Project close out, expectations and tensions begin to rise. The Property owners are typically concerned with converting their construction loan to a conventional loan (which has likely been extended more than once), defects that were brought to the Builder’s attention months ago that have still not been corrected, and how to resolve accounting and payment disputes. On the other hand, the Builder is likely experiencing problems with coordinating trades, city inspections, is tired of receiving customer feedback/complaints, and is ready to move on to the next Project. It is hard to say who has the upper hand at Project closeout because there are laws which protect both sides as they attempt to gain leverage to resolve their respective concerns. One of the strongest rights Property owners have, is the good faith exception to payment under the Prompt Payment Act which allows them to withhold 110% of any amount in dispute from the Builder’s final payment. The disputed amount may arise from accounting errors, overbilling/offsets, paying unauthorized work, or the cost to correct defective work. In turn, the Builder has the right to withhold signing the Final All Bills Paid Affidavit or Final Lien Waiver & Release (documents the Lender will require to close out the loan) or to record a mechanic’s Lien against the Property. Project closeout is generally the time to consult with a construction attorney to obtain a better understanding of the parties’ rights and obligations, and recommendations for resolving final disputes.

• Construction Defects: If it is a new home, the defect may have been discovered during construction but was not repaired prior to closing and instead placed on a punch list with the Builder’s promise to correct the problem within 30 – 60 days. Or it is a latent defect that was not discovered until shortly after closing or several years after occupying the home. Regardless, if you are a Homeowner reading this, you have likely already made a warranty claim, the request was delayed, ignored or denied and you are now researching your legal rights and what to do next.Builders want Homeowners to believe that their sole obligation and liability is the express warranty, and although sometimes that is true (i.e., for some low-end tract or production home Builders), typically it is not. That’s because implied within every home purchase or construction Contract is the promise that the house will be built: (1) in a good workmanlike manner and that it is habitable; (2) in accordance with the plans and specifications; and (3) in compliance with all local, state and international building codes (even if constructed outside of the city limits). As such, if you purchased the home directly from the Builder and there are defects, then your primary claim is likely for breach of contract, not necessarily for breach of warranty. The two exceptions to this general rule are if the Builder required the Homeowners to waive all other claims in exchange for the express warranty or if the Contract contains an “AS-IS” provision. Express warranties, unlike Contractual implied obligations, are intentionally limited by the Builder in time (1-2-10 years) and scope (only certain types of defects are covered during the warranty periods) and therefore are not as strong as a breach of Contract claim. Regardless, Homeowners should still assert and pursue a formal breach of warranty claim, but typically the breach of Contract claim is far superior. Although subsequent purchasers have the right to bring a claim against a Builder for construction defects, the claim will not be for breach of Contract since they did not purchase the home directly from the Builder. Instead, a subsequent purchaser’s primary claim will be negligence and if the express warranty was transferred, then a claim for breach of express warranty.

  If the defect has been reported to the Builder and/or to a third-party warranty company and has still not been resolved, then it is time to consult with a construction attorney who can review and explain the applicable Contract provisions and recommend options and a strategy on how to proceed. Typically, one of the recommendations will be for the Property owner to retain a construction expert who specializes in the type of trade/work in dispute to perform an inspection and prepare a report. The report should identify: (1) the defects or nonconforming work, (2) any code violations or industry standards violated, (3), the proper way to correct the defective or nonconforming work, and (4) the cost to repair. This report will provide the Property owner with support for its claim and a better understanding of the problem and how it can be resolved.

  With the report in hand, the next step is to invoke Chapter 27 of the Texas Property Code, also referred to as the Residential Construction Liability Act (see below for a discussion of the Chapter 27 process), which is a mandatory step in bringing a claim against a Builder for defective workmanship. Typically, it is advisable to retain a construction attorney to either consult or assist with this process. If the claim is not resolved through the RCLA, then the next step would be to initiate binding arbitration or civil litigation, depending upon which is required by the Contract.

• Disputes Over Work Performed Without Permits and Licenses: Most residential remodel Projects located within city limits will require city approval (e., a permit) before the work begins and city inspections for code compliance during and upon final completion of the work (i.e., final inspection). The types of work which typically require a permit include roof removal and replacement, room additions, removing walls, replacing windows, new pool construction, exterior decks, electrical, plumbing, and HVAC replacement. Additionally, any Subcontractor performing electrical, plumbing, structural, or HVAC work must be licensed by the governing Board for that specific trade and present that license to the city in order to obtain a permit. Since a lot of residential remodel general contractors use unlicensed Subcontractors (because it is cheaper and easier to find these workers), they intentionally ignore the permitting process unless the Homeowners raise the issue before or during construction. If the city discovers that unpermitted work is being performed, it will shut down the Project until a permit is obtained and the work is inspected. If the work has been concealed (e.g., new wiring behind new drywall), then the city will typically require the work to be removed and redone at the Homeowners’ expense. Although city inspections do not guarantee the work has been done correctly, inspections should decrease the likelihood that the work was improperly performed and in violation of code requirements. If work is completed without a permit, when the Homeowners list their house for sale, they will be required to disclose the unpermitted work (or risk being sued for failing to disclose) on the standard TREC Disclosure Statement, which could result in a diminution of the overall Property value. Another common issue that arises regarding permits, is that only the Contractor who obtained the permit can request inspections. Additionally, permits expire and typically only the party who obtained the permit can request an extension. If a dispute arises between the parties, then the Contractor will typically withhold requesting an inspection or renewing the permit as leverage for resolving the dispute.
• Disputes Over Payment: The most common payment disputes arise when the Contractor: (1) is paid money in advance of doing the work and never returns to the Project (theft) or substantially delays performance; (2) demands payment when payment is not due or when the work performed is defective and not corrected; (3) attempts to pass on cost overruns without first obtaining the Homeowners’ written approval or without the Contractual right to do so; or (4) fails to pay Subcontractors or Material Suppliers who in turn threaten to record a mechanic’s Lien against the Property. The Contractor’s lack of moral character and business management skills can be the root cause of payment disputes. Consequently, most residential remodel general Contractors live job-to-job and take money from the next job to pay for the labor/materials for the last job. Contractors who use Project funds for anything other than Project expenses violate the Texas Trust Fund Statute and can be criminally prosecuted for a third-degree felony and held personally liable for repaying the diverted funds to the Homeowners. Moreover, pursuant to the same statute, for Projects where costs will exceed $5,000.00, the Contractor is required to maintain and deposit the Homeowners’ funds into a checking account wherein the bank labels the statements with the title “construction account”. Homeowners have the right to review statements from this account to confirm the funds paid were used for Project related debts. Failure to maintain this account is a misdemeanor. Further, under the Texas Prompt Payment Act, Homeowners have the legal right to withhold 110% of any amount in dispute from a Contractor’s progress or final payment, upon providing the Contractor with proper Notice as to why the funds are being withheld. Additionally, if the Property is the Homeowners’ primary residence (homestead), then no one has the legal right to record a mechanic’s Lien against the Property unless there is a written Contract executed by both spouses. Moreover, Subcontractors do not have Lien rights if the general Contractor has not satisfied this Contract requirement and if they do not first timely and properly serve a Notice of Claim before recording the Lien. However, the County Clerk will not function as a “gatekeeper” to prevent the recording of invalid Liens and as such, even if the Contractor or Subcontractors are not owed any money or fail to follow the strict Lien laws, the Clerk will still accept the Lien for filing.
• Disputes Over Project Delays and Abandonment: Projects can be delayed for several legitimate reasons, such as extended or unexpected bad weather, the unavailability of qualified Subcontractors, or material supply chain disruptions. However, those types of delays do not tend to last very long and/or are known and discussed before the Project begins. In contrast, when there are extended periods of time where no work takes place and it is difficult if not impossible to reach the Contractor, then the delay is typically because the Contractor ran out of money. The lack of funds could be because the Contractor used the Homeowners’ money to pay non-Project related debts or the Contractor substantially underbid the work. When either event is the cause, sometimes the Contractor will return to the Project after obtaining a deposit from the next upcoming Project which it will use to complete the current Project, thereby repeating the cycle. When a substantial delay occurs, retaining a qualified construction attorney to prepare/send a stern Notice of Breach & Request to Cure Demand Letter to the Contractor may be the best way to increase the probability that the Contractor will return to the Project. If a Contractor abandons the Project or is terminated for cause prior to completion, then the Homeowner may have the right to recover the increased costs and reimbursement of attorneys’ fees from the former Contractor.
• Disputes Over Defective or Non-Conforming Work: Disputes over defective or nonconforming work (e., work not in accordance with the plans, specifications or the Homeowners’ request) typically arise during the Project but might also be discovered sometime after completion (e.g., latent defects) upon the defective condition failing and causing resultant Property damage. For example, improperly installed windows that leak after a heavy rain causing damage to the drywall and floors. If the Parties are unable to informally resolve the problem, then the next step might be to consult with a qualified construction attorney. The Homeowners should retain a forensic expert who has knowledge and experience with the type of defect in dispute to perform an inspection and prepare a report. The report should identify: (1) the defects or nonconforming work, (2) any code violations or industry standards violated, (3), the proper way to correct the defective or nonconforming work, and (4) the cost to repair. This report will provide the Property owner with support for its claim and a better understanding of the problem and how it can be resolved. With the report in hand, the next step is to invoke the Residential Construction Liability Act (see below for a discussion of the RCLA process), which is a mandatory step in bringing a claim against a Builder for defective workmanship. Typically, it is advisable to retain a construction attorney to assist with this process. If the claim is not resolved through the RCLA process, then the next step would be to initiate binding arbitration or civil litigation, depending upon which is required by the Contract.

• Design Defects: Before Homeowners sign a new construction pool Contract, the pool company typically prepares a beautiful rendering or mockup of the pool so the Homeowners can visualize the final product in their own backyard. Despite that, the final product rarely looks or functions as depicted in the drawings. In fact, most well-drafted pool Contracts expressly state that the renderings are not intended to be a true representation of the final product and that the customer waives any claims against the Contractor for deviations in the actual construction of the pool. Additionally, even though the Contract typically incorporates the plans and specifications, it is so common for pool contractors to inadvertently deviate from the plans regarding the pool’s depth, width, and length, that most pool Contracts allow for a 10% deviation. If the deviation is more than 10%, then the Contract typically contains a formula for calculating the limited compensation the Homeowners are entitled to recover for the deviation. The first step in prosecuting a claim for design defects, it to review or have a construction attorney review the terms of the Contract for provisions that waive or limit the Homeowners’ recovery for design defects. The second step is to retain a forensic pool expert to provide an opinion in support of the claim. Once that has been done, then the next step is typically initiation of the Chapter 27 RCLA process.
• Disputes Over Defective Workmanship: Disputes over defective work typically arise during the Project but might also be discovered sometime after Project completion (g., latent defects). If the Parties are unable to informally resolve the disputed issues, then the next step should be to consult with a qualified construction attorney to review the Contract, analyze the claim, and recommend a course of action. The Homeowners should also retain a forensic pool expert to perform an inspection and prepare a report. The report should identify: (1) the defects or nonconforming work, (2) any code violations or industry standards violated, (3), the proper way to correct the defective or nonconforming work, and (4) the cost to repair. This report will provide the Homeowners with support for their claim and a better understanding of the problem and how it can be resolved.  With the report in hand, the next step is to invoke the Residential Construction Liability Act (see below for a discussion of the RCLA process), which is a mandatory step in bringing a claim against a pool Contractor for defective workmanship. Typically, it is advisable to retain a construction attorney to assist with this process. If the claim is not resolved through the RCLA process, then the next step would be to initiate binding arbitration or civil litigation, depending upon which is required by the Contract.

• Disputes Over Work Performed Without Permits and Licenses: All new pool construction located within city limits will require city approval (e., a permit) before the work begins and city inspections for code compliance during and upon final completion of the work (i.e., final inspection). Additionally, any Subcontractor performing electrical or plumbing work must be licensed by the governing Board for that specific trade and present that license to the city in order to obtain a permit. If the city discovers that unpermitted work is being performed, it will shut down the Project until a permit is obtained, and the work is inspected. If the work has been concealed (e.g., plumbing hidden behind gunite or plaster), then the city will typically require the work to be removed and replaced at the Homeowners’ expense. Although city inspections do not guarantee the work has been done correctly, inspections should decrease the likelihood that the work was improperly performed and in violation of code requirements. If work is completed without a permit, when the Homeowners list their house for sale, they will be required to disclose the unpermitted work (or risk being sued for failing to disclose) on the standard TREC Disclosure Statement, which could result in a diminution of the overall Property value. Another common issue that arises regarding permits, is that only the Contractor who obtained the permit can request inspections. Additionally, permits expire and typically only the party who obtained the permit can request an extension. If a dispute arises between the parties, then the Contractor will typically withhold requesting an inspection or renewing the permit as leverage for resolving the dispute.

• Disputes Over Delayed Progress or Completion: Outdoor Projects notoriously take longer to complete than anticipated. Unlike interior construction Projects, rain and bad weather are a common excusable delay for outdoor construction. Further, inclement weather can disrupt a Project way beyond the actual weather event, in that the ground may need to dry before work can recommence and it may be difficult to reschedule already busy Subcontractors. However, substantial delays are likely not caused by an excusable event and are typically related to Project mismanagement, including a lack of available funds to pay Subcontractors and Suppliers. This typically comes as a surprise since most all pool Contracts require payment in advance of the work being performed. This Contractual requirement is problematic because once the Contractor receives payment, it may lack the incentive to quickly return to the Project and may use the funds to pay non-Project related debts. If the Contractor has diverted funds from the Project, then the Contractor is likely in violation of the Texas Trust Fund Statute and may be criminally and personally liable. Another common occurrence for outdoor Projects, especially new pool construction Projects, is when the Contractor has been paid the Contract amount (or almost the entire amount) but fails to complete the final punch list and/or call for a final inspection. Regardless as to when the delay occurs, if it is substantial, then the next step should be to send the Contractor a Notice of Breach & Request to Cure Demand Letter written by a construction attorney.

• Disputes Over Payment: The most common payment disputes arise when the Contractor: (1) is paid money in advance of doing the work and never returns to the Project (theft) or substantially delays performance; (2) demands payment when payment is not due or when the work performed is defective and not corrected; (3) attempts to pass on cost overruns without first obtaining the Homeowners’ written approval or without the Contractual right to do so; or (4) fails to pay Subcontractors or Material Suppliers who in turn threaten to record a mechanic’s Lien against the Property. The Contractor’s lack of moral character and business management skills may be the root causes of the payment dispute. Consequently, most pool Contractors (even the National ones and franchises) live job-to-job and take money from the next job to pay for the labor/materials for the last job. Contractors who use Project funds for anything other than Project expenses violate the Texas Trust Fund Statute and can be criminally prosecuted for a third-degree felony and held personally liable for repaying the diverted funds to the Homeowners. Moreover, pursuant to the same statute, for Projects where costs will exceed $5,000.00, the Contractor is required to maintain and deposit the Homeowners’ funds into a checking account wherein the bank labels the statements with the title “construction account”. Homeowners have the right to review statements from this account to confirm the funds paid were used for Project related debts. Failure to maintain this account is a misdemeanor. Further, under the Texas Prompt Payment Act, Property owners have the legal right to withhold 110% of any amount in dispute from a Contractor’s progress or final payment, upon providing the Contractor with proper Notice as to why the funds are being withheld. Additionally, if the Property is the Property owners’ primary residence (homestead), then no one has the legal right to record a mechanic’s Lien against the Property unless there is a written Contract executed by both spouses. Moreover, Subcontractors do not have Lien rights if the pool Contractor has not satisfied the Contract requirement and if they do not first timely and properly serve a Notice of Claim before recording the Lien. However, the County Clerk will not act as a “gatekeeper” to prevent the recording of invalid Liens and as such, even if the Contractor or Subcontractors are not owed any money or fail to follow the strict Lien laws, the Clerk will still accept the Lien for filing.

(1) passing off goods or services as those of another;
(2) causing confusion or misunderstanding as to the source, sponsorship, approval, or certification of goods or services;
(3) causing confusion or misunderstanding as to affiliation, connection, or association with, or certification by, another;
(4) representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities which they do not have or that a person has a sponsorship, approval, status, affiliation, or connection which the person does not;
(5) representing that goods are original or new if they are deteriorated, reconditioned, reclaimed, used, or secondhand;
(6) representing that goods or services are of a particular standard, quality, or grade, or that goods are of a particular style or model, if they are of another;
(7) advertising goods or services with intent not to sell them as advertised;
(8) representing that an agreement confers or involves rights, remedies, or obligations which it does not have or involve, or which are prohibited by law;
(9) knowingly making false or misleading statements of fact concerning the need for parts, replacement, or repair service;
(10) misrepresenting the authority of a salesman, representative or agent to negotiate the final terms of a consumer transaction;
(11) basing a charge for the repair of any item in whole or in part on a guaranty or warranty instead of on the value of the actual repairs made or work to be performed on the item without stating separately the charges for the work and the charge for the warranty or guaranty, if any;
(12) representing that a guaranty or warranty confers or involves rights or remedies which it does not have or involve;
(13) representing that work or services have been performed on, or parts replaced in, goods when the work or services were not performed or the parts replaced;
(14) failing to disclose information concerning goods or services which was known at the time of the transaction if such failure to disclose such information was intended to induce the consumer into a transaction into which the consumer would not have entered had the information been disclosed; or
(15) using the term “corporation,” “incorporated,” or an abbreviation of either of those terms in the name of a business entity that is not incorporated under the laws of this state or another jurisdiction.