Construction litigation is a lawsuit or arbitration over a building project, usually about defective work, unpaid invoices, delays, or a broken contract. In Texas, most of these cases turn on a statutory deadline that runs before anyone files suit. Miss it, and a strong claim can shrink or disappear.
A homeowner has to give a builder written notice at least 60 days before suing over a defect. A subcontractor chasing an unpaid bill faces a lien deadline counted in calendar months, and that clock started when the work ended. Which of those clocks is running on your project right now?
Kelly Legal Group represents property owners, general contractors, subcontractors, and developers in construction disputes across Austin and Central Texas. Our Austin construction attorneys handle the contract work and the courtroom work, so you keep the same lawyer if a negotiation turns into a lawsuit.
What Counts as Construction Litigation in Texas?
A foundation cracks 14 months after closing. A general contractor stops paying a framing sub after an argument over a draw request. Both situations become construction litigation once negotiation fails.
The term covers any formal claim over a construction project, filed in a Texas district court or heard by an arbitrator under the contract. Construction law is the wider field (contract drafting, licensing, and lien paperwork all fall under it). Litigation is the part that starts when a dispute can’t be settled across the table.
A construction litigation lawyer handles both halves. That’s useful for you, because the contract you signed usually decides whether you end up in court or arbitration and who pays the attorney’s fees.
Which Kind of Construction Dispute Are You In?
Texas construction disputes usually fall into one of seven categories. Each one runs on its own statute and its own first deadline, so start by naming yours.
| Dispute | Who usually brings it | Governing Texas law | First deadline to watch | Detailed guide |
|---|---|---|---|---|
| Construction defects | Homeowners and commercial owners | Residential Construction Liability Act, Texas Property Code Chapter 27 (homes) | Written notice at least 60 days before suit | Texas construction defect rights |
| Nonpayment | Subcontractors, suppliers, and general contractors | Texas Prompt Payment Act, Texas Property Code Chapter 28 | Owner pays within 35 days of a proper request, and a contractor pays its sub within 7 days of being paid | Texas Prompt Payment Act rules for contractors |
| Mechanic's lien | Anyone who furnished labor or materials | Texas Property Code Chapter 53 | Lien affidavit by the 15th day of the 4th month after work ends (3rd month on residential jobs) | mechanic's lien and contractor payment disputes |
| Retainage | Subcontractors | Texas Property Code Chapter 53 | Retainage lien affidavit by the 15th day of the 3rd month after the original contract ends | Texas construction retainage laws |
| Contract breach | Owners and contractors | The contract and Texas common law | Four years from the breach for most contract claims | contractor breach of contract in Texas |
| Project delays | Owners, and contractors facing liquidated damages | The contract | The contract's delay notice clause, often counted in days | Covered in the delay section below |
| Leaving a builder contract | Buyers of new homes | The contract | Cure and termination notice periods in the contract | how to get out of a builder contract in Texas |
Two categories often overlap. An owner who withholds a draw over alleged defects can face a lien claim and a defect counterclaim in the same case. That pattern shows up on Austin custom-home jobs, where one stalled payment can stop a whole project.
How Do Defect Claims Work Under the RCLA?
For a home, the Residential Construction Liability Act (RCLA) controls the first round. You send the contractor written notice describing each defect at least 60 days before you file suit or start arbitration (Texas Property Code §27.004(a)). The statute then sets the order of events.
- The contractor may request up to three inspections during the 35 days after it receives your notice.
- The contractor may make a written offer to repair or pay, generally within 60 days of receiving the notice.
- If you consider the offer unreasonable, you have 25 days to say so in writing and explain why.
- The contractor then has 10 days after receiving your response to make a supplemental offer.
Reject a reasonable offer, and the statute can cap what you recover, including limiting attorney’s fees to those incurred before the rejection. Have a lawyer read any settlement offer before you respond to it.
The RCLA covers residential work. Commercial defect claims skip that statutory notice process (though your contract may impose its own notice-and-cure clause, which works much the same way).
Texas also sets an outer limit. Most defect suits against a contractor must be filed within 10 years after substantial completion of the work (Texas Civil Practice and Remedies Code §16.009). Claims against architects and engineers follow a similar 10-year rule under §16.008. A qualifying written warranty on a new home can cut that to six years for contracts signed on or after June 9, 2023. Our guide to construction defect rights and next steps in Texas covers documentation and damages in more detail.
What Can You Do When a Payment Stops?
Payment claims move on two tracks at once. The first is the Texas Prompt Payment Act (Texas Property Code Chapter 28). An owner has 35 days to pay a contractor after a proper payment request (§28.002). A contractor then has 7 days to pay a sub after receiving the money (§28.003). Late payments accrue interest under the same chapter (§28.004).
The second track is the mechanic’s lien, which secures the debt against the property itself. You file a lien affidavit with the county clerk where the project is located (Travis County for most Austin jobs, Williamson County for Round Rock). The deadline is the 15th day of the fourth month after your work ended, or the third month on a residential job (§53.052).
Filing the affidavit starts a second clock. You generally have until the first anniversary of the last day you could have filed it to sue to foreclose the lien (§53.158). Subcontractors and suppliers also owe monthly notices of unpaid claims while the work is ongoing. A sub who waits until the job ends has often lost lien rights already (§53.056).
Jeff Kelly ran a 23-unit townhome development from financing through the last sale before he practiced law. He has sat on the owner’s side of a draw dispute. That experience shapes how we push a payment claim toward a check instead of a years-long fight. For retainage, see our breakdown of Texas construction retainage laws, and for lien strategy, our guide to mechanic’s lien and contractor payment disputes.
Who Pays When a Project Runs Late?
Delay fights turn on the contract. Most Austin construction contracts set a completion date and a daily liquidated damages rate, and the dollar figures add up fast on a commercial build.
Whoever claims an excusable delay (a late city permit or an owner change order) usually must send written notice within a window the contract sets. Contractors lose valid delay claims by missing that clause. Keep a daily log, save every change order in writing, and send the notice the day the delay starts.
How Does a Texas Construction Lawsuit Move From Demand Letter to Verdict?
In a Texas state court, a construction case usually moves through six stages.
- Demand letter. Your attorney states the claim, the amount owed, and a deadline to respond.
- Pre-suit notice. Residential defect claims require the 60-day RCLA notice first. Your contract may require its own notice or a mediation step.
- Filing the petition. Texas calls the opening pleading a petition, and most construction cases in Austin are filed in a Travis County district court.
- Discovery. Both sides exchange documents, take depositions, and hire experts to explain cause and cost.
- Mediation. Texas courts frequently order mediation before trial.
- Trial and appeal. A judge or jury decides the case, and the losing side may appeal on legal errors.
Most construction cases never reach a verdict. They settle during discovery or at mediation, once both sides have seen the expert reports.
| Forum | Who decides | Speed | Appeal rights | Best fit |
|---|---|---|---|---|
| District court litigation | A judge or jury | Slowest, especially with multiple parties | Full appeal rights | High-value claims and disputes that need a court order, such as a lien foreclosure |
| Arbitration | A private arbitrator chosen under the contract | Usually faster than court | Narrow | Contracts with an arbitration clause, which is common in new-home builder contracts |
| Mediation | The parties themselves, with a neutral mediator's help | Often a single day of sessions | None, and nothing binds you unless both sides sign | Almost any dispute, and often required by the court or the contract |
Check your contract for an arbitration clause the day a dispute starts. It can decide where your case is heard and who pays the arbitrator’s fees.
What Does Construction Litigation Cost in Texas?
Two factors drive most of the cost. The first is expert witnesses, since proving a defect or a delay usually takes an engineer or a building consultant. The second is the number of parties, because a single defect claim can pull in the general contractor, three subcontractors, and their insurers.
A party who wins a breach of contract claim can recover reasonable attorney’s fees from an individual or organization (Texas Civil Practice and Remedies Code §38.001). Your contract may carry its own fee clause, and the RCLA limits fees in some defect cases.
You may worry that legal fees will eat the amount you’re owed. That’s a CFO question as much as a legal one, and Jeff Kelly worked as a CFO before law school. We run the numbers with you at the first meeting, before you commit to anything.
Why Do Builders and Owners in Central Texas Call Kelly Legal Group?
Jeff Kelly spent 15 years in the construction industry before he became a lawyer, and he founded Kelly Legal Group in Austin in 2009. You work directly with an experienced attorney who has read pay applications, change orders, and lien waivers from the business side.
The firm handles construction matters in Travis, Williamson, Hays, and Burnet counties. You keep one lawyer from contract review through trial.
Get Your Project Deadlines Reviewed Before the Next One Passes
Call Kelly Legal Group at (512) 505-0053 for a consultation, or send us your project details online. Bring your contract, the latest pay application or defect notice, and any letters you’ve received.
We’ll tell you which deadline is closest and which options still fit your timeline. You can also read more about our construction law practice in Austin.
Common Questions About Construction Litigation in Texas
How long does a construction lawsuit take in Texas?
Cases that settle at mediation can wrap up within a few months of filing. Cases that go to trial commonly run longer than a year, and multi-party defect cases take the longest.
Do I have to notify my builder before I sue over a defect?
Yes, for most residential defect claims. The RCLA requires written notice at least 60 days before you sue or start arbitration (Texas Property Code §27.004). Skipping it can delay your case or limit what you recover.
Can I sue a contractor for a defect found 10 years later?
Usually not. Texas bars most defect suits against contractors filed more than 10 years after substantial completion (Texas Civil Practice and Remedies Code §16.009). A qualifying new-home warranty can shorten that to six years.
Can a subcontractor go after the property owner directly?
Sometimes, through the lien. A sub has no contract with the owner, but a properly perfected mechanic’s lien attaches to the property. The owner’s exposure is generally limited to funds it retained or was told to withhold.
Is arbitration better than going to court for a construction dispute?
Faster in most cases, with far fewer appeal rights. Arbitration fits disputes where speed and privacy count most, while court fits cases that need a lien foreclosure or a full appeal.
