By Madla S.B. No. 1557
77R7654 JMM-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the licensing of certain residential contractors;
1-3 providing penalties.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 ARTICLE 1. GENERAL PROVISIONS
1-6 SECTION 1.001. PURPOSE. It is the intent of the legislature
1-7 to improve the general welfare and safety of the citizens of this
1-8 state by regulating persons engaged in the vocation of residential
1-9 contracting and protecting the public against incompetent and
1-10 inexperienced contractors and the unlawful and fraudulent acts of
1-11 residential contractors.
1-12 SECTION 1.002. DEFINITIONS. In this Act:
1-13 (1) "Board" means the State Regulatory Board for
1-14 Residential Building Contractors.
1-15 (2) "Person" includes an individual, firm,
1-16 partnership, corporation, association, or other organization,
1-17 combination, or legal entity.
1-18 (3) "Residential contractor" means a person who, for
1-19 compensation, advertises or offers to undertake, offers a bid to
1-20 undertake, or otherwise engages in, the construction, remodeling,
1-21 repair, or improvement of a single-family dwelling or a duplex,
1-22 triplex, or fourplex residential building. The term includes a
1-23 construction manager who performs management and services on a
1-24 construction project for a fee.
2-1 SECTION 1.003. EXEMPTION. This Act does not apply to a
2-2 person who builds or improves a structure on the person's own
2-3 property for the person's own occupancy or use and who does not
2-4 offer the structure for sale or rent before the first anniversary
2-5 of the date of the completion of the building or improvement of the
2-6 structure.
2-7 ARTICLE 2. STATE REGULATORY BOARD
2-8 FOR RESIDENTIAL BUILDING CONTRACTORS
2-9 SECTION 2.001. BOARD. (a) The State Regulatory Board for
2-10 Residential Building Contractors is established. The board is
2-11 composed of nine members appointed by the governor. Board members
2-12 serve staggered six-year terms with the terms of three members
2-13 expiring on February 1 of each odd-numbered year.
2-14 (b) The members of the board are appointed as follows:
2-15 (1) four members must be residential contractors
2-16 licensed under this Act;
2-17 (2) one member must be a licensed engineer who
2-18 practices structural engineering;
2-19 (3) one member must be a registered architect; and
2-20 (4) three members must be representatives of the
2-21 public.
2-22 (c) A person is not eligible for appointment as a public
2-23 member of the board if the person or the person's spouse:
2-24 (1) is registered, certified, or licensed by an
2-25 occupational regulatory agency in the field of construction;
2-26 (2) is employed by or participates in the management
2-27 of a business entity or other organization regulated by the board
3-1 or receiving funds from the board;
3-2 (3) owns or controls, directly or indirectly, more
3-3 than a 10 percent interest in a business entity or other
3-4 organization regulated by the board or receiving funds from the
3-5 board; or
3-6 (4) uses or receives a substantial amount of tangible
3-7 goods, services, or funds from the board, other than compensation
3-8 or reimbursement authorized by law for board membership,
3-9 attendance, or expenses.
3-10 (d) An officer, employee, or paid consultant of a Texas
3-11 trade association in the field of construction may not be a member
3-12 of the board and may not be an employee of the board who is exempt
3-13 from the state's position classification plan or is compensated at
3-14 or above the amount prescribed by the General Appropriations Act
3-15 for step 1, salary group A17, of the position classification salary
3-16 schedule.
3-17 (e) A person who is the spouse of an officer, manager, or
3-18 paid consultant of a Texas trade association in the field of
3-19 construction may not be a member of the board and may not be an
3-20 employee of the board who is exempt from the state's position
3-21 classification plan or is compensated at or above the amount
3-22 prescribed by the General Appropriations Act for step 1, salary
3-23 group A17, of the position classification salary schedule.
3-24 (f) For the purposes of this section, a Texas trade
3-25 association is a nonprofit, cooperative, and voluntarily joined
3-26 association of business or professional competitors in this state
3-27 designed to assist its members and its industry or profession in
4-1 dealing with mutual business or professional problems and in
4-2 promoting their common interest.
4-3 (g) A vacancy on the board shall be filled by appointment by
4-4 the governor of a person with the appropriate qualifications to
4-5 serve for the remainder of the term.
4-6 (h) Appointments to the board shall be made without regard
4-7 to the race, color, disability, sex, religion, age, or national
4-8 origin of the appointee.
4-9 (i) A member of the board may not serve more than one term.
4-10 (j) The State Regulatory Board for Residential Building
4-11 Contractors is subject to Chapter 325, Government Code (Texas
4-12 Sunset Act). Unless continued in existence as provided by that
4-13 chapter, the board is abolished and this Act expires September 1,
4-14 2013.
4-15 SECTION 2.002. GROUNDS FOR REMOVAL. (a) It is a ground for
4-16 removal from the board that a member:
4-17 (1) does not have at the time of appointment the
4-18 qualifications required by Section 2.001 of this Act;
4-19 (2) does not maintain during service on the board the
4-20 qualifications required by Section 2.001 of this Act;
4-21 (3) violates a prohibition established by Section
4-22 2.001 or 2.005 of this Act;
4-23 (4) cannot because of illness or disability discharge
4-24 the member's duties for a substantial part of the term for which
4-25 the member is appointed; or
4-26 (5) is absent from more than half of the regularly
4-27 scheduled board meetings that the member is eligible to attend
5-1 during a calendar year unless the absence is excused by majority
5-2 vote of the board.
5-3 (b) The validity of an action of the board is not affected
5-4 by the fact that it is taken when a ground for removal of a board
5-5 member exists.
5-6 (c) If the executive director has knowledge that a potential
5-7 ground for removal exists, the executive director shall notify the
5-8 presiding officer of the potential ground. The presiding officer
5-9 shall then notify the governor and the attorney general that a
5-10 potential ground for removal exists. If the potential ground for
5-11 removal involves the presiding officer, the executive director
5-12 shall notify the next highest officer of the board, who shall
5-13 notify the governor and the attorney general that a potential
5-14 ground for removal exists.
5-15 SECTION 2.003. OFFICERS; MEETINGS. (a) The board shall
5-16 elect annually from the membership of the board a presiding
5-17 officer, assistant presiding officer, and secretary-treasurer.
5-18 (b) The board shall meet at least annually and at other
5-19 times at the call of the presiding officer.
5-20 SECTION 2.004. BOARD POWERS AND DUTIES. (a) The board
5-21 shall adopt rules consistent with this Act for the administration
5-22 of this Act and for the operation of the board.
5-23 (b) The board shall adopt application, examination,
5-24 licensing, and renewal fees in amounts that are reasonable and
5-25 necessary to provide sufficient revenue to cover the costs of
5-26 administering this Act. The fees set by the board may be adjusted
5-27 so that the total fees collected are sufficient to meet the
6-1 expenses of administering this Act.
6-2 (c) The board may appoint an executive director and other
6-3 personnel as necessary for the administration of this Act.
6-4 SECTION 2.005. CONFLICT OF INTEREST. A person may not serve
6-5 as a member of the board or act as the general counsel to the board
6-6 if the person is required to register as a lobbyist under Chapter
6-7 305, Government Code, because of the person's activities for
6-8 compensation on behalf of a profession related to the operation of
6-9 the board.
6-10 SECTION 2.006. PERSONNEL POLICIES. (a) The executive
6-11 director or the executive director's designee shall develop an
6-12 intra-agency career ladder program that addresses opportunities for
6-13 mobility and advancement for employees within the board. The
6-14 program shall require intra-agency posting of all positions
6-15 concurrently with any public posting.
6-16 (b) The executive director or the executive director's
6-17 designee shall develop a system of annual performance evaluations
6-18 that are based on documented employee performance. All merit pay
6-19 for board employees must be based on the system established under
6-20 this subsection.
6-21 (c) The board shall develop and implement policies that
6-22 clearly separate the policymaking responsibilities of the board and
6-23 the management responsibilities of the executive director and the
6-24 staff of the board.
6-25 SECTION 2.007. PUBLIC INTEREST INFORMATION. (a) The board
6-26 shall prepare information of public interest describing the
6-27 functions of the board and the procedures by which complaints are
7-1 filed with and resolved by the board. The board shall make the
7-2 information available to the public and appropriate state agencies.
7-3 (b) The board by rule shall establish methods by which
7-4 consumers and service recipients are notified of the name, mailing
7-5 address, and telephone number of the board for the purpose of
7-6 directing complaints to the board. The board may provide for that
7-7 notification:
7-8 (1) on each registration form, application, or written
7-9 contract for services of a person regulated under this Act;
7-10 (2) on a sign prominently displayed in the place of
7-11 business of each person regulated under this Act; and
7-12 (3) in a bill for service provided by a person
7-13 regulated under this Act.
7-14 (c) The board shall develop materials and programs to
7-15 educate the public concerning the licensing requirements imposed
7-16 under this Act, the need of the public to conduct business only
7-17 with a licensed residential building contractor, and the methods
7-18 for reporting unlicensed contracting activity.
7-19 SECTION 2.008. COMPLAINTS. (a) The board shall keep
7-20 information about each complaint filed with the board. The
7-21 information must include:
7-22 (1) the date the complaint is received;
7-23 (2) the name of the complainant;
7-24 (3) the subject matter of the complaint;
7-25 (4) a record of all persons contacted in relation to
7-26 the complaint;
7-27 (5) a summary of the results of the review or
8-1 investigation of the complaint; and
8-2 (6) for complaints for which the board did not take
8-3 action, an explanation of the reason the complaint was closed
8-4 without action.
8-5 (b) The board shall keep a file about each written complaint
8-6 filed with the board that the board has authority to resolve. The
8-7 board shall provide to the person filing the complaint and the
8-8 persons or entities complained about the board's policies and
8-9 procedures pertaining to complaint investigation and resolution.
8-10 The board, at least quarterly and until final disposition of the
8-11 complaint, shall notify the person filing the complaint and the
8-12 persons or entities complained about of the status of the complaint
8-13 unless the notice would jeopardize an undercover investigation.
8-14 SECTION 2.009. EQUAL EMPLOYMENT OPPORTUNITY. (a) The
8-15 executive director or the executive director's designee shall
8-16 prepare and maintain a written policy statement to assure
8-17 implementation of a program of equal employment opportunity under
8-18 which all personnel transactions are made without regard to race,
8-19 color, disability, sex, religion, age, or national origin. The
8-20 policy statement must include:
8-21 (1) personnel policies, including policies relating to
8-22 recruitment, evaluation, selection, appointment, training, and
8-23 promotion of personnel that are in compliance with the requirements
8-24 of Chapter 21, Labor Code;
8-25 (2) a comprehensive analysis of the board workforce
8-26 that meets federal and state guidelines;
8-27 (3) procedures by which a determination can be made
9-1 about the extent of underuse in the board workforce of all persons
9-2 for whom federal or state guidelines encourage a more equitable
9-3 balance; and
9-4 (4) reasonable methods to appropriately address those
9-5 areas of underuse.
9-6 (b) A policy statement prepared under Subsection (a) of this
9-7 section must cover an annual period, be updated annually and
9-8 reviewed by the Commission on Human Rights for compliance with
9-9 Subsection (a)(1) of this section, and be filed with the governor.
9-10 (c) The governor's office shall deliver a biennial report to
9-11 the legislature based on the information received under Subsection
9-12 (b) of this section. The report may be made separately or as a
9-13 part of other biennial reports made to the legislature.
9-14 SECTION 2.010. STANDARDS OF CONDUCT. The executive director
9-15 or the executive director's designee shall provide to members of
9-16 the board and to board employees, as often as necessary,
9-17 information regarding their qualification for office or employment
9-18 under this Act and their responsibilities under applicable laws
9-19 relating to standards of conduct for state officers or employees.
9-20 SECTION 2.011. PUBLIC ACCESS. (a) The board shall develop
9-21 and implement policies that provide the public with a reasonable
9-22 opportunity to appear before the board and to speak on any issue
9-23 under the jurisdiction of the board.
9-24 (b) The executive director shall prepare and maintain a
9-25 written plan that describes how a person who does not speak English
9-26 can be provided reasonable access to the board's programs and
9-27 services.
10-1 SECTION 2.012. BOARD MEMBER TRAINING. (a) Before a member
10-2 of the board may assume the member's duties and before the member
10-3 may be confirmed by the senate, the member must complete at least
10-4 one course of the training program established under this section.
10-5 (b) A training program established under this section shall
10-6 provide information to the member regarding:
10-7 (1) the enabling legislation that created the board to
10-8 which the member is appointed to serve;
10-9 (2) the programs operated by the board;
10-10 (3) the role and functions of the board;
10-11 (4) the rules of the board, with an emphasis on the
10-12 rules that relate to disciplinary and investigatory authority;
10-13 (5) the current budget for the board;
10-14 (6) the results of the most recent formal audit of the
10-15 board;
10-16 (7) the requirements of the:
10-17 (A) open meetings law, Chapter 551, Government
10-18 Code;
10-19 (B) open records law, Chapter 552, Government
10-20 Code; and
10-21 (C) administrative procedures law, Chapter 2001,
10-22 Government Code;
10-23 (8) the requirements of the conflict of interest laws
10-24 and other laws relating to public officials; and
10-25 (9) any applicable ethics policies adopted by the
10-26 board or the Texas Ethics Commission.
10-27 ARTICLE 3. LICENSE REQUIREMENTS
11-1 SECTION 3.001. LICENSE REQUIRED. (a) A person may not act
11-2 as a residential contractor in this state unless the person holds a
11-3 license issued under this Act. A partnership, corporation, or
11-4 other entity conducting business as a residential contractor must,
11-5 if the owner is not a license holder, employ an individual who
11-6 holds a license under this Act.
11-7 (b) An application for a permit in a jurisdiction where a
11-8 permit is required for the construction of a residence must include
11-9 the license number of the residential contractor.
11-10 (c) A political subdivision of the state may not require a
11-11 license for a residential contractor who is subject to the
11-12 requirements of this Act. This subsection does not apply to a
11-13 general business registration required by a political subdivision
11-14 for a person to conduct business in that political subdivision.
11-15 SECTION 3.002. LICENSE QUALIFICATIONS. (a) A person may
11-16 apply for a license under this Act by filing an application on a
11-17 form prescribed by the board. The application must be accompanied
11-18 by the application fee and examination fee.
11-19 (b) In determining the qualifications of an applicant, the
11-20 board shall consider the applicant's experience, ability,
11-21 character, financial condition, ability and willingness to protect
11-22 the public health and safety, and other pertinent information
11-23 required by the board. The board shall adopt an examination to
11-24 evaluate the qualifications considered under this subsection.
11-25 (c) The board shall issue a license to an applicant who
11-26 passes the examination under Subsection (b) of this section, pays
11-27 the license fee, and submits proof of financial ability as provided
12-1 by board rule.
12-2 (d) An applicant for a license whose application is rejected
12-3 by the board may reapply under this section on payment of the fees
12-4 required for an initial application. An applicant who fails the
12-5 examination under Subsection (b) of this section on three occasions
12-6 may not reapply before the first anniversary of the date of the
12-7 third failure.
12-8 (e) A license issued under this section expires on the
12-9 second anniversary of its date of issuance.
12-10 (f) The board shall maintain a record of each applicant for
12-11 a license under this section and the results of the applicant's
12-12 examination. A certified copy of the record under this subsection
12-13 may be furnished to an applicant on request on payment of a fee
12-14 adopted by the board that reasonably reflects the costs of
12-15 furnishing the record.
12-16 SECTION 3.003. LICENSE RENEWAL. (a) A person who is
12-17 otherwise eligible to renew a license may renew an unexpired
12-18 license by paying the required renewal fee to the board before the
12-19 expiration date of the license and submission of a renewal
12-20 application that includes a current audited financial statement
12-21 prepared on a form prescribed by the board, a bank reference, a
12-22 current credit report, and proof that the continuing education
12-23 requirements of the board have been satisfied. A person whose
12-24 license has expired may not engage in activities that require a
12-25 license until the license has been renewed under the provisions of
12-26 this section.
12-27 (b) If the person's license has been expired for 90 days or
13-1 less, the person may renew the license by paying to the board 1-1/2
13-2 times the required renewal fee.
13-3 (c) If the person's license has been expired for longer than
13-4 90 days but less than one year, the person may renew the license by
13-5 paying to the board two times the required renewal fee.
13-6 (d) If the person's license has been expired for one year or
13-7 longer, the person may not renew the license except as provided by
13-8 Subsection (e) of this section. The person may obtain a new
13-9 license by submitting to reexamination and complying with the
13-10 requirements and procedures for obtaining an original license.
13-11 (e) If the person was licensed in this state, moved to
13-12 another state, and is currently licensed and has been engaged in
13-13 residential contracting in the other state for the two years
13-14 preceding application, the person may renew an expired license
13-15 without reexamination. The person must pay to the board a fee that
13-16 is equal to two times the required renewal fee for the license.
13-17 (f) Not later than the 31st day preceding the expiration of
13-18 a person's license, the board shall send written notice of the
13-19 impending license expiration to the person at the person's last
13-20 known address according to the records of the board.
13-21 (g) The board by rule may adopt a system under which
13-22 licenses expire on various dates during the year. For the period
13-23 in which the license expiration date is changed, license fees shall
13-24 be prorated on a monthly basis so that each license holder pays
13-25 only that portion of the license fee that is allocable to the
13-26 number of months during which the license is valid. On renewal of
13-27 the license on the new expiration date, the total license renewal
14-1 fee is payable.
14-2 SECTION 3.004. EXAMINATION RESULTS. (a) Not later than the
14-3 30th day after the date on which a licensing examination is
14-4 administered under this Act, the board shall notify each examinee
14-5 of the results of the examination. However, if an examination is
14-6 graded or reviewed by a national testing service, the board shall
14-7 notify examinees of the results of the examination not later than
14-8 the 14th day after the date on which the board receives the results
14-9 from the testing service. If the notice of examination results
14-10 graded or reviewed by a national testing service will not be
14-11 received by the examiner before the 90th day after the examination
14-12 date, the board shall notify the examinee of the reason for the
14-13 delay before that date. The board may require a testing service to
14-14 notify examinees of the results of an examination.
14-15 (b) If requested in writing by a person who fails a
14-16 licensing examination administered under this Act, the board shall
14-17 furnish the person with an analysis of the person's performance on
14-18 the examination.
14-19 SECTION 3.005. DISCIPLINARY PROCEEDINGS. (a) The board
14-20 shall revoke, suspend, or refuse to renew a license, place on
14-21 probation a person whose license has been suspended, or reprimand a
14-22 license holder for a violation of this Act or a rule adopted under
14-23 this Act. If a license suspension is probated, the board may
14-24 require the license holder to:
14-25 (1) report regularly to the board on matters that are
14-26 the basis of the probation;
14-27 (2) limit practice to the areas prescribed by the
15-1 board; or
15-2 (3) continue or review professional education until
15-3 the license holder attains a degree of skill satisfactory to the
15-4 board in those areas that are the basis of the probation.
15-5 (b) If the board proposes to suspend, revoke, or refuse to
15-6 renew a person's license, the person is entitled to a hearing
15-7 conducted by the State Office of Administrative Hearings.
15-8 Proceedings for a disciplinary action are governed by the
15-9 administrative procedures law, Chapter 2001, Government Code.
15-10 Rules of practice adopted by the board under Section 2001.004,
15-11 Government Code, applicable to the proceedings for a disciplinary
15-12 action, may not conflict with rules adopted by the State Office of
15-13 Administrative Hearings.
15-14 (c) In addition to a disciplinary proceeding initiated for a
15-15 violation of this Act or a rule adopted under this Act, the board
15-16 may revoke, suspend, or refuse to renew a license, place on
15-17 probation a person whose license has been suspended, or reprimand a
15-18 license holder who:
15-19 (1) abandons the construction of a residence under a
15-20 contract without a legal excuse;
15-21 (2) wilfully or deliberately disregards or violates an
15-22 applicable building code of this state or a political subdivision
15-23 of this state;
15-24 (3) commits fraud or engages in deceit, gross
15-25 negligence, incompetency, or misconduct in the practice of
15-26 contracting; or
15-27 (4) diverts funds received for the completion of a
16-1 specific building project.
16-2 (d) In the case of a conflict between the board and a
16-3 license holder concerning the violation of this Act or a rule
16-4 adopted under this Act, the license holder may continue to work on
16-5 a project under construction if the license holder posts a bond in
16-6 an amount equal to 125 percent of the total amount, as determined
16-7 by the board, needed to satisfy the alleged violation.
16-8 SECTION 3.006. RESTRICTIONS ON RULES AFFECTING ADVERTISING;
16-9 ADVERTISING REQUIREMENTS. (a) The board may not adopt rules
16-10 restricting competitive bidding or advertising by a license holder
16-11 except to prohibit false, misleading, or deceptive practices.
16-12 (b) In its rules to prohibit false, misleading, or deceptive
16-13 practices, the board may not include a rule that:
16-14 (1) restricts the use of any medium for advertising;
16-15 (2) restricts the use of a license holder's personal
16-16 appearance or voice in an advertisement;
16-17 (3) relates to the size or duration of an
16-18 advertisement by the license holder; or
16-19 (4) restricts the license holder's advertisement under
16-20 a trade name.
16-21 (c) The license number of a residential contractor must
16-22 appear in any advertising by that contractor. Advertising in any
16-23 manner by an unlicensed residential contractor is prohibited,
16-24 including alphabetical or classified directory listings.
16-25 SECTION 3.007. CONTINUING EDUCATION. (a) The board shall
16-26 recognize, prepare, or administer a continuing education program
16-27 for its license holders. Participation in the continuing education
17-1 program by license holders is mandatory.
17-2 (b) The board shall require a license holder to provide
17-3 proof that the license holder has completed 15 hours of continuing
17-4 education during the two-year period preceding the date of the
17-5 application for renewal before the board may renew the license.
17-6 SECTION 3.008. LIMITATION ON RIGHT TO SUE. A residential
17-7 contractor who does not hold a license under this Act may not bring
17-8 an action to enforce the provisions of a contract for residential
17-9 building or residential specialty contracting that the contractor
17-10 entered into without holding a license required by this Act.
17-11 ARTICLE 4. INJUNCTION; PENALTIES
17-12 SECTION 4.001. INJUNCTION; CIVIL PENALTY. At the request of
17-13 the board, the attorney general shall bring an action in the name
17-14 of the state for an injunction or to collect a civil penalty for a
17-15 violation of this Act.
17-16 SECTION 4.002. CRIMINAL PENALTY. (a) A person commits an
17-17 offense if the person undertakes or attempts to undertake the
17-18 construction, remodeling, repair, or improvement of a building in
17-19 violation of this Act or knowingly presents to the board false
17-20 information to obtain a license under this Act.
17-21 (b) An offense under this section is a Class A misdemeanor.
17-22 ARTICLE 5. TRANSITION AND EFFECTIVE DATE
17-23 SECTION 5.001. TRANSITION. (a) In making the initial
17-24 appointments to the State Regulatory Board for Residential Building
17-25 Contractors, the governor shall appoint:
17-26 (1) two persons eligible to be licensed under this Act
17-27 as residential contractors and one public member to serve terms
18-1 expiring February 1, 2003;
18-2 (2) one person eligible to be licensed under this Act
18-3 as a residential contractor, one licensed engineer member, and one
18-4 public member to serve terms expiring February 1, 2005; and
18-5 (3) one person eligible to be licensed under this Act
18-6 as a residential contractor, one registered architect member, and
18-7 one public member to serve terms expiring February 1, 2007.
18-8 (b) The board shall issue a temporary license to a
18-9 residential contractor that the board determines to be a reputable
18-10 contractor on submission of proof that the contractor has completed
18-11 five residential construction projects in the two-year period
18-12 preceding the date of application for a temporary license and
18-13 submission of three notarized client references and one reference
18-14 from a financial institution that includes a current credit report
18-15 for the applicant. A temporary license is valid for one year from
18-16 the date of issuance. The holder of a temporary license may apply
18-17 for a license under this Act in the same manner that a person
18-18 applies for a renewal license. This subsection expires September
18-19 1, 2003.
18-20 (c) The board shall adopt rules under this Act not later
18-21 than December 31, 2001.
18-22 SECTION 5.002. EFFECTIVE DATE. (a) Except as provided by
18-23 Subsection (b) of this section, this Act takes effect September 1,
18-24 2001.
18-25 (b) Sections 3.001(a) and 4.002 of this Act take effect
18-26 March 1, 2002.