LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
March 1, 2001
TO: Honorable David Sibley, Chair, Senate Committee on
Business & Commerce
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB754 by Van de Putte (Relating to consumer protection
for and remedies available to a homebuyer whose home does
not comply with certain warranties; providing an
administrative penalty.), As Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB754, As Introduced: positive impact of $0 through the biennium *
* ending August 31, 2003. *
* *
* The bill would make no appropriation but could provide the legal *
* basis for an appropriation of funds to implement the provisions of *
* the bill. *
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General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $0 *
* 2003 0 *
* 2004 0 *
* 2005 0 *
* 2006 0 *
****************************************************
All Funds, Five-Year Impact:
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*Fiscal Probable Probable Revenue Change in Number of *
* Year Savings/(Cost) from Gain/(Loss) from State Employees from *
* General Revenue Fund General Revenue Fund FY 2001 *
* 0001 0001 *
* 2002 $(128,621) $128,621 3.0 *
* 2003 (231,574) 231,574 7.0 *
* 2004 (231,574) 231,574 7.0 *
* 2005 (231,574) 231,574 7.0 *
* 2006 (231,574) 231,574 7.0 *
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Technology Impact
No significant technology impact is anticipated.
Fiscal Analysis
The bill would amend Chapter 27 of the Property Code to enact the Texas
Homebuyer Protection Act. The bill would establish administrative
procedures before the Texas Real Estate Commission (TREC) which must be
exhausted before a homebuyer may file suit against a contractor for
construction defects or breach of warranties. TREC's executive director
may set a hearing on a complaint that is not privately resolved by the
homebuyer and contractor and order repairs, replacement or repurchase of
the home. TREC, in consultation with the Texas Real Estate Inspector
Committee, would be authorized to adopt rules to administer and enforce
the bill and to establish incidental costs and a maximum amount of
incidental costs for which the buyer must be reimbursed by the
contractor. TREC would be required to publish an annual report relating
to homes ordered replaced or repurchased and would be authorized to
charge a reasonable fee to recover the costs of the report. TREC also
would be authorized to impose administrative penalties not to exceed
$1000 for violation of the bill or a TREC rule or order. Orders are
appealable under the Administrative Procedures Act and may be initiated
in or removed to the Third Court of Appeals on the motion of either
party.
The bill would become effective September 1, 2001, and applies only to
the sale of a new home for which the closing date is on or after that
date.
Methodology
Passage of the bill would require TREC to accept and review complaints
from homebuyers. Assuming 100,000 new homes sold each year (source: 1999
Texas Single-Family Building Permits, Texas Real Estate Research
Center), TREC could receive an estimated 2,000 complaints each year. The
agency estimates the need for seven additional employees to implement the
bill, three in fiscal year 2002 and an additional four in fiscal years
2003 onward.
It is assumed that the agency would adjust fees to generate the
additional revenue needed to implement the bill.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 329 Texas Real Estate Commission, 332 Texas
Department of Housing and Community Affairs
LBB Staff: JK, JO, RT, KM