Builders Do Have Protection from Some Construction Defects
If you’re a builder who is hired by a lender after foreclosure to complete a home and are worried about prior construction defects, fear not, Texas law protects you. Section 59.011 (c) of the Texas Finance Code provides that a builder hired by a lender to complete the construction of a foreclosed home is not liable for any construction defects of which the builder had no knowledge that existed prior to the acquisition of the home by the lender.
However, the builder is subject to the Texas Residential Construction Act found in Chapter 27 of the Texas Property Code for the work it performed for the lender after acquisition of the home by the lender.
This makes perfect sense and in laymen terms: a builder is not liable for the work done by another but is liable for his own work.