Overview
KB Home operates extensively across Texas, with active communities in the Dallas-Fort Worth, Houston, Austin, and San Antonio metropolitan areas. The company's Central segment includes its Texas operations, and the state represents one of KB Home's largest markets by volume. KB Home's Mirasol Homes development in San Antonio was the subject of a $20 million settlement over substandard construction claims.
Texas is one of the few states with no implied warranty of habitability for new residential construction beyond the builder's express warranty. The Texas Residential Construction Liability Act (RCLA) governs construction defect claims and requires a pre-suit notice and opportunity to repair process. Texas courts have generally upheld mandatory arbitration clauses in residential construction contracts.
How Texas Law Affects Your Contract
The following analysis examines how KB Home's documented contract patterns interact with Texas consumer protection law.
Texas RCLA Pre-Suit Requirements
The Texas Residential Construction Liability Act (Tex. Prop. Code §§ 27.001–27.007) requires buyers to provide 60 days' written notice to the builder before filing a construction defect lawsuit and allow the builder an opportunity to inspect and offer repairs. KB Home buyers in Texas must comply with the RCLA process. Failure to follow these procedures can limit the buyer's ability to recover damages. The RCLA also caps certain damages, which interacts with KB Home's own limitation of liability provisions (DAM-001).
Limited Implied Warranty Protections
Texas does not provide broad statutory implied warranty protections for new home construction. KB Home's habitability waiver provisions (HAB-001) face fewer enforceability challenges in Texas than in states with stronger implied warranty statutes. Buyers rely primarily on the builder's express warranty, making the terms of KB Home's warranty — including the one-year workmanship limitation (WAR-001) and the arbitration-warranty tie (WAR-002) — particularly significant.
Arbitration Clause Enforceability
Texas courts have generally enforced mandatory arbitration clauses in residential construction contracts under the Texas General Arbitration Act (Tex. Civ. Prac. & Rem. Code § 171) and the Federal Arbitration Act. KB Home's binding arbitration provisions (ARB-001) and class action waiver (CLA-001) are more likely to be upheld in Texas than in states with stronger consumer protection frameworks limiting arbitration.
Texas Deceptive Trade Practices Act
The Texas Deceptive Trade Practices-Consumer Protection Act (Tex. Bus. & Com. Code §§ 17.41–17.63) provides remedies for false, misleading, or deceptive acts in consumer transactions. However, the DTPA contains exemptions and procedural requirements, including a 60-day pre-suit demand letter. Texas buyers who believe KB Home made misleading representations about construction quality or contract terms may have DTPA claims, though the statute's interaction with the RCLA can limit available remedies.
Deposit and Cancellation Under Texas Law
Texas does not impose statutory restrictions on earnest money forfeiture provisions in new construction contracts. KB Home's deposit forfeiture provisions (DEP-001), including the short opt-out window, are generally enforceable under Texas contract law. Buyers should understand that once the opt-out period expires, recovery of the earnest money deposit may be difficult absent a breach by the builder.
Texas Legal History
Selected cases and investigations involving KB Home in Texas.
San Antonio / Mirasol Homes Settlement
KB Home and its Mirasol Homes development agreed to pay homeowners and the San Antonio Housing Authority $20 million to settle claims of substandard construction practices in the San Antonio area.
KB Home / Countrywide Appraisal Claims (Texas)
Class action lawsuits were filed alleging that KB Home and Countrywide Financial conspired to inflate home appraisals in Texas. Plaintiffs alleged that when independent appraisals came in below the contract price, appraisers resubmitted revised appraisals matching the builder's price.
Relevant Texas Laws
Provides buyers with additional remedies for misleading representations made during the home sales process, including the potential for treble damages in cases of knowing or intentional conduct.
Requires homeowners to provide written notice and a 60-day inspection period before filing a construction defect lawsuit against a builder.
Governs express warranty obligations for residential construction. Texas does not impose a statutory implied warranty of habitability on new home builders.
Texas Key Facts
- 1Texas does not have a statutory implied warranty of habitability for new construction.
- 2Mandatory arbitration clauses are generally enforceable under both the Federal Arbitration Act and the Texas General Arbitration Act.
- 3Texas has no statutory cooling-off period for new construction purchase agreements.
- 4The Texas Residential Construction Commission was abolished in 2009.
- 5The RCLA requires 60-day written notice to the builder before filing a construction defect lawsuit.
- 6The DTPA allows consumers to seek damages for false, misleading, or deceptive acts in the sale of goods and services, including new homes.
What Texas Buyers Should Know
- Follow the RCLA notice process before filing suit. Texas law requires 60 days' written notice to the builder before filing a construction defect lawsuit. Failure to comply with the RCLA process can limit your available damages. Consult an attorney familiar with the RCLA before initiating any claim.
- Recognize that Texas has limited implied warranty protections. Unlike many states, Texas does not provide broad implied warranty protections for new construction beyond the builder's express warranty. KB Home's warranty terms — including the one-year workmanship window and the arbitration-warranty trade-off — largely define your coverage.
- Evaluate the arbitration-warranty choice carefully. KB Home may offer a choice between non-binding arbitration with a 10-year warranty or binding arbitration with a 12-year warranty. Texas courts generally uphold binding arbitration clauses, so selecting binding arbitration may permanently waive your right to a jury trial.
- Compare KBHS Home Loans with independent Texas lenders. KB Home and KBHS Home Loans share common ownership. Texas has a competitive mortgage market. Compare rates and closing costs with at least two independent lenders before committing to the builder's affiliated lender (LEN-001).
- Document everything from the Mirasol Homes precedent. KB Home's $20 million settlement over substandard construction in San Antonio underscores the importance of independent inspections. Hire a licensed inspector at pre-drywall and pre-closing stages and document all findings in writing.