Texas home improvement contract requirements

The short version

Licensing in Texas

The state licenses trades, not general builders. Plumbers (Occupations Code chapter 1301), air conditioning and refrigeration contractors (chapter 1302) and electricians (chapter 1305) need state licenses for their part of a remodel, and cities set their own permit and registration rules. Because there's no statewide remodeler license, there's no license number the state requires on your contract, but your trades' license numbers and your city registration still belong in it.

The Chapter 27 notice

The Residential Construction Liability Act covers contractors who build, repair, alter or add to a residence: a one- or two-family home, a townhouse up to three stories, a duplex to fourplex, or a condo unit. Every written contract it covers must carry this notice in 10-point bold, or something substantially similar:

Leave it out and a homeowner who later sues over a defect can recover a $500 civil penalty on top of any other remedy (§ 27.007(b)). It's the cheapest line in your contract to get right.

Disclosure, subcontractor list and payments

• The disclosure statement. Before the owner signs a residential construction contract, the original contractor must deliver a statement that opens "KNOW YOUR RIGHTS AND RESPONSIBILITIES UNDER THE LAW" and covers getting it in writing, monitoring payments, subcontractor claims and the owner's 10 percent reservation. Section 53.255 gives the full text.
• The subcontractor and supplier list. Before construction starts, give the owner each one's name, address and phone number, with the bold notice that the list may not be final, and update it within 15 days of any change. The owner can waive this only by signing the statutory waiver wording.
• Disbursement statements. Each time you ask for payment, include a statement naming each direct subcontractor you intend to pay from that draw.
• Bills-paid affidavit. At final payment, sign an affidavit that everyone has been paid, or list who hasn't. A false disbursement statement or affidavit is a misdemeanor with a fine up to $4,000, up to a year in jail, or both.
• No deed demands. You can't require the owner to convey the property to you as a condition of the work (§ 53.260).

Homestead jobs

Texas protects homesteads from most liens. To have one for your work, § 53.254 requires a written contract signed before materials are furnished or labor is performed, signed by both spouses if the owner is married, and filed with the county clerk. Under § 41.007 that contract must carry, in 10-point bold: "IMPORTANT NOTICE: You and your contractor are responsible for meeting the terms and conditions of this contract. If you sign this contract and you fail to meet the terms and conditions of this contract, you may lose your legal ownership rights in your home. KNOW YOUR RIGHTS AND DUTIES UNDER THE LAW." Missing it is a deceptive trade practice, and an arbitration clause in such a contract must also be in 10-point bold or it can't be enforced against the owner.

The three-day right to cancel

Chapter 601 of the Business & Commerce Code applies when you personally solicit a sale of goods or services over $25 somewhere other than your place of business, usually the customer's kitchen, and they sign there. The customer can cancel until midnight of the third business day after signing. Their copy must be in the language of your pitch, show the date and your name and address, and carry this near their signature in 10-point bold:

Attach the completed Notice of Cancellation in duplicate (§ 601.053), with the deadline filled in. The FTC's forms also satisfy the chapter (§ 601.054). If the customer cancels, you're not entitled to pay for services already performed (§ 601.101), and you must refund within 10 business days. Breaking the subchapter on prohibited conduct voids the sale, and any violation is a deceptive trade practice with actual damages and attorney's fees.

Insurance jobs: the deductible notice

Roofers and restoration contractors know this one. A contract of $1,000 or more that you reasonably expect to be paid wholly or partly from a property insurance claim must contain, in at least 12-point bold, the notice in § 27.02(b) that Texas law requires the insured to pay the deductible and that it's a violation for a seller to help them avoid it. Advertising or actually paying, waiving or rebating the deductible without the insurer's consent is a Class B misdemeanor.

Signing it electronically

Texas adopted the Uniform Electronic Transactions Act, so an electronically signed remodeling contract is as valid as a paper one (see e-signature law in Texas). Two timing rules matter more than the medium: the § 53.255 disclosure has to reach the owner before they sign, and a homestead contract has to be signed before any work or materials. For notices the law requires you to give a consumer in writing, ESIGN asks for the consumer's consent to electronic records first (15 U.S.C. § 7001(c)).

Setting it up in SignMaster

1. 1

   Build a Texas template

   Start from your contract with the Chapter 27 notice and the homestead warning typed in, and save it as a template. Keep a version with the deductible notice for insurance work and one with the cancellation notice for in-home sales.

2. 2

   Lead with the disclosure

   Put the § 53.255 disclosure statement first in the envelope, with an acknowledgment signature, so the owner reads it before reaching the contract. Add the subcontractor list, or the waiver if they choose to sign one.

3. 3

   Add both spouses

   For a homestead, list both spouses as signers. One can sign on your iPad with Sign in person while the other signs from an email link at work.

4. 4

   Keep the record

   When everyone has signed, each party gets the PDF by email, and the audit trail shows the disclosure was signed before the contract.