Overview
Meritage Homes operates extensively in Texas, with active communities across the Dallas-Fort Worth metroplex, Houston, San Antonio, and Austin markets. Texas is one of Meritage's largest markets by volume. The company builds primarily single-family detached homes targeting first-time and move-up buyers.
Texas law governs many of Meritage's core contract provisions through the Residential Construction Liability Act (RCLA) and the Deceptive Trade Practices Act (DTPA). The absence of a statutory implied warranty of habitability in Texas means the builder's express warranty and contract terms carry particular weight for Texas buyers.
How Texas Law Affects Your Contract
The following analysis examines how Meritage Homes's documented contract patterns interact with Texas consumer protection law.
Arbitration Enforceability After Meritage v. Pouye
In Meritage Homes of Texas v. Pouye (2023), a Texas appellate court denied Meritage's motion to compel arbitration against subsequent purchasers, finding the arbitration clause (ARB-001) could not bind buyers who were not parties to the original agreement. This decision may limit arbitration enforcement for resale buyers of Meritage homes in Texas, though first-time purchasers who sign the agreement remain subject to the clause.
Habitability Waivers Under Texas Law
Texas does not recognize a statutory implied warranty of habitability for new construction. Meritage's habitability waiver clause (HAB-001) may carry more weight in Texas than in states that recognize this warranty. Texas buyers rely primarily on the builder's express limited warranty, common law protections, and the DTPA for recourse.
RCLA Notice Requirements
Before filing a construction defect lawsuit in Texas, homeowners must provide written notice under the Residential Construction Liability Act (Tex. Prop. Code §§ 27.001-27.007) and allow a 60-day inspection and repair period. This statutory requirement applies regardless of what the Meritage purchase agreement provides. Failure to comply can limit the damages a buyer may recover.
Stucco Defect Claims Under RCLA
Meritage has faced over 1,300 stucco defect claims in Texas and Florida, with approximately 500 settled as of the company's most recent disclosures. Texas stucco claims were filed under the RCLA. Buyers of Meritage homes with stucco or synthetic exterior cladding should document the condition at closing and monitor for cracking, separation, or moisture intrusion.
Deposit Forfeiture and Liquidated Damages
Meritage's deposit forfeiture provisions (DEP-001) are subject to Texas contract law. Texas courts generally enforce liquidated damages clauses if they represent a reasonable estimate of anticipated damages. Deposits reported as high as $10,000 have been retained when buyers failed to close, including cases involving financing issues with MTH Mortgage.
Texas Legal History
Selected cases and investigations involving Meritage Homes in Texas.
Meritage Homes of Texas v. Pouye & Toure
Meritage attempted to compel arbitration against homeowners who purchased a previously owned Meritage home. The appellate court upheld the trial court's denial, finding the arbitration clause in the original purchase agreement could not bind subsequent purchasers who were not parties to that contract.
Stucco Defect Claims (Texas)
Homeowners filed claims alleging design and construction defects in exterior stucco systems, specifically inadequately installed stucco that fails to resist cracking or drain moisture. Claims were filed under the Texas Residential Construction Liability Act. Meritage has reported over 1,300 such claims across Texas and Florida combined.
Meritage Homes of Texas v. AIG Specialty Insurance Co.
Meritage sued its umbrella insurer AIG seeking coverage for approximately $11 million paid in stucco defect settlements. The court found the widespread defects stemmed from the same defective installation practices and could be treated as a single occurrence.
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
- Understand that Texas lacks a statutory habitability warranty. Texas does not guarantee by statute that a newly built home will be habitable. Your protections depend primarily on the builder's express warranty, common law, and the Deceptive Trade Practices Act.
- Know the RCLA notice requirement before considering legal action. Texas law requires 60 days' written notice to the builder before filing a construction defect lawsuit. An attorney familiar with the RCLA can help you comply with this mandatory pre-suit requirement.
- Document stucco and exterior cladding condition at closing. Given the volume of stucco defect claims filed against Meritage in Texas, buyers should photograph and document the condition of all exterior cladding systems at closing and monitor for cracking, separation, or moisture intrusion during the warranty period.
- Compare MTH Mortgage with independent lenders. Meritage offers incentives conditioned on using MTH Mortgage (LEN-001). Compare rates, fees, and loan terms with at least two independent lenders. Verify that any quoted monthly payment includes property taxes, homeowner's insurance, and HOA fees.
- Hire an independent inspector despite builder resistance. Meritage has been reported to warn buyers that independent inspections could void their warranty (INS-001). Texas law generally permits buyers to hire independent inspectors. Document any resistance from the builder in writing.