2003S0435-1 TYPE ONLY
By: Van de Putte S.B. No. 773
A BILL TO BE ENTITLED
AN ACT
relating to the registration of homebuilders.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The Occupations Code, is amended by adding
Chapter 1203 to read as follows:
CHAPTER 1203. HOMEBUILDERS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1203.001. SHORT TITLE. This chapter may be cited as
the Homebuilder Registration Act.
Sec. 1203.002. DEFINITIONS. In this chapter:
(1) "Commission" means the Texas Homebuilder
Commission.
(2) "Construction defect" has the meaning assigned to
that term under Section 27.001, Property Code.
(3) "Home" means:
(A) the real property and improvements and
appurtenances for a single-family house, townhome, patio home,
zero-lot line home, duplex, triplex, or quadraplex; or
(B) a unit in a multiunit residential structure
in which title to the individual units is transferred to the owners.
(4) "Homebuilder" means a person who constructs,
contracts to construct, or offers to construct a new home or a new
improvement to real property:
(A) for another for a profit or compensation or
in the expectation of receiving profit or compensation; or
(B) that the homebuilder intends to sell,
transfer, or convey to another for profit or compensation or in the
expectation of receiving a profit or compensation.
(5) "Homeowner" means a person who owns, contracts to
own a home, or a subrogee or assignee of a person who owns or
contracts to own a home.
(6) "Trade association" means a cooperative and
voluntarily joined association of business or professional
competitors designed to assist its members and their industry or
profession as a whole, in dealing with mutual business or
professional problems, issues, and circumstances and in promoting
the common interest of its members and their industry and
profession as a whole.
Sec. 1203.003. APPLICABILITY OF CHAPTER. This chapter does
not apply to:
(1) a person who renovates or repairs a home;
(2) a governmental entity or public official engaged
in official duties; or
(3) a person acting under a court order.
Sec. 1203.004. SUNSET PROVISION. The commission is subject
to Chapter 325, Government Code (Texas Sunset Act). Unless
continued in existence as provided by that chapter, the commission
is abolished and this chapter expires September 1, 2009.
[Sections 1203.005-1203.020 reserved for expansion]
SUBCHAPTER B. COMMISSION
Sec. 1203.021. TEXAS HOMEBUILDER COMMISSION; MEMBERSHIP.
(a) The Texas Homebuilder Commission consists of nine members
appointed by the governor with the advice and consent of the senate
as follows:
(1) two members must be homebuilders with active
registrations under this Chapter;
(2) two members must be representatives of the general
public;
(3) one member must be a licensed professional
engineer;
(4) one member must a licensed architect;
(5) one member must be a licensed professional
inspector under Chapter 1102;
(6) one member must be a licensed real estate broker
under Chapter 1101; and
(7) one member must be certified real estate appraiser
under Chapter 1103.
(b) Appointments to the commission shall be made without
regard to the race, color, disability, sex, religion, age, or
national origin of the appointees.
Sec. 1203.022. TERMS. (a) Commission members serve
staggered six-year terms with three members terms expiring January
31 of each odd-numbered year. The terms of the two representatives
of the general public must expire in different years. The terms of
the two homebuilders must expire in different years.
(b) A member of the commission may not serve more than two
complete terms.
Sec. 1203.023. PRESIDING OFFICER. The governor shall
designate a member of the commission as the presiding officer of the
commission to serve in that capacity at the pleasure of the
governor. At a regular meeting in February of each year, the
Commission shall elect from its own membership a vice-chairperson
and secretary. A quorum of the commission consists of five members.
Sec. 1203.024. MEMBERSHIP AND EMPLOYEE RESTRICTIONS.
(a) A person may not be a member of the commission and may not be a
commission employee employed in a "bona fide executive,
administrative, or professional capacity," as that phrase is used
for purposes of establishing an exemption to the overtime
provisions of the federal Fair Labor Standards Act of 1938 (29
U.S.C. Section 201 et seq.) and its subsequent amendments, if:
(1) the person is an employee or paid consultant of a
Texas trade association in the field of residential construction;
or
(2) the person spouse is a manager or paid consultant
of a Texas trade association in the field of residential
construction.
(b) A person may not be a member of the commission or act as
the general counsel to the commission if the person is required to
register as a lobbyist under Chapter 305, Government Code, because
of the person activities for compensation on behalf of a profession
related to the operation of the commission.
Sec. 1203.025. GROUNDS FOR REMOVAL. (a) It is a ground for
removal from the commission that a member:
(1) does not have at the time of taking office the
qualifications required by Section 1203.021;
(2) does not maintain during service on the commission
the qualifications required by Section 1203.021;
(3) is ineligible for membership under Section
1203.021;
(4) cannot because of illness or disability discharge
the member duties for a substantial part of the member term; or
(5) is absent from more than half of the regularly
scheduled commission meetings that the member is eligible to attend
during a calendar year without an excuse approved by a majority vote
of the commission.
(b) The validity of an action of the commission is not
affected by the fact that it is taken when a ground for removal of a
commission member exists.
(c) If the executive director has knowledge that a potential
ground for removal exists, the executive director shall notify the
presiding officer of the potential ground. The presiding officer
shall then notify the governor and the attorney general that a
potential ground for removal exists. If the potential ground for
removal involves the presiding officer, the executive director
shall notify the next highest ranking officer of the commission,
who shall notify the governor and the attorney general that a
potential ground for removal exists.
Sec. 1203.026. TRAINING. (a) A person who is appointed to
and qualifies for office as a member of the commission may not vote,
deliberate, or be counted as a member in attendance at a meeting of
the commission until the person completes a training program that
complies with this section.
(b) The training program must provide the person with
information regarding:
(1) the legislation that created the commission;
(2) the programs operated by the commission;
(3) the role and functions of the commission;
(4) the rules of the commission, with an emphasis on
the rules that relate to disciplinary and investigatory authority;
(5) the current budget for the commission;
(6) the results of the most recent formal audit of the
commission;
(7) the requirements of:
(A) the open meetings law, Chapter 551,
Government Code;
(B) the open records law, Chapter 552, Government
Code;
(C) the administrative procedure law, Chapter
2001, Government Code;
(D) the general arbitration law, Chapter 171,
Civil Practice and Remedies Code; and
(E) other laws relating to public officials,
including conflict-of-interest laws; and
(8) any applicable ethics policies adopted by the
commission or the Texas Ethics Commission.
(c) A person appointed to the commission is entitled to
reimbursement, as provided by the General Appropriations Act, for
the travel expenses incurred in attending the training program
regardless of whether the attendance at the program occurs before
or after the person qualifies for office.
Sec. 1203.027. MEETINGS. The commission shall meet at
least quarterly and at other times at the call of the presiding
officer.
[Sections 1203.028-1203.060 reserved for expansion]
SUBCHAPTER C. EXECUTIVE DIRECTOR AND OTHER AGENCY PERSONNEL
Sec. 1203.061. EXECUTIVE DIRECTOR. The commission shall
employ an executive director as the executive head of the agency.
Sec. 1203.062. OTHER PERSONNEL. The commission may employ
other personnel as necessary for the administration of this
chapter.
Sec. 1203.063. DIVISION OF RESPONSIBILITIES. The
commission shall develop and implement policies that clearly
separate the policymaking responsibilities of the commission and
the management responsibilities of the executive director and the
staff of the commission.
Sec. 1203.064. QUALIFICATIONS AND STANDARDS OF CONDUCT
INFORMATION. The executive director or the executive director
designee shall provide to members of the commission and to
commission employees, as often as necessary, information regarding
the requirements for office or employment under this chapter,
including information regarding a person responsibilities under
applicable laws relating to standards of conduct for state officers
or employees.
Sec. 1203.065. CAREER LADDER PROGRAM; PERFORMANCE
EVALUATION. (a) The executive director or the executive director
designee shall develop an intra-agency career ladder program that
addresses opportunities for mobility and advancement for employees
within the commission. The program must require intra-agency
posting of all nonentry level positions concurrently with any
public posting.
(b) The executive director or the executive director
designee shall develop a system of annual performance evaluations
based on measurable job tasks. All merit pay for commission
employees must be based on the system established under this
subsection.
Sec. 1203.066. EQUAL EMPLOYMENT OPPORTUNITY POLICY; ANNUAL
REPORT. (a) The executive director or the executive director
designee shall prepare and maintain a written policy statement that
implements a program of equal employment opportunity to ensure that
all personnel decisions are made without regard to race, color,
disability, sex, religion, age, or national origin.
(b) The policy statement must include:
(1) personnel policies, including policies relating
to recruitment, evaluation, selection, training, and promotion of
personnel, that show the intent of the commission to avoid the
unlawful employment practices described by Chapter 21, Labor Code;
and
(2) an analysis of the extent to which the composition
of the commission personnel is in accordance with state and federal
law and a description of reasonable methods to achieve compliance
with state and federal law.
(c) The policy statement must:
(1) be updated annually;
(2) be reviewed by the state Commission on Human
Rights for compliance with Subsection (b)(1); and
(3) be filed with the governor office.
(d) The governor office shall deliver a biennial report to
the legislature based on the information received under Subsection
(c)(3). The report may be made separately or as a part of other
biennial reports made to the legislature.
Sec. 1203.067. INFORMATION AND TRAINING ON STATE EMPLOYEE
INCENTIVE PROGRAM. The executive director or the executive
director designee shall provide to commission employees
information and training on the benefits and methods of
participation in the state employee incentive program.
[Sections 1203.068-1203.080 reserved for expansion]
SUBCHAPTER D. POWERS AND DUTIES
Sec. 1203.081. GENERAL POWERS AND DUTIES. The commission
shall:
(1) administer this chapter;
(2) maintain a registry of registrants;
(3) adopt and enforce rules and establish buildings
standards as required by this chapter to fulfill the purposes of
this chapter;
(4) authorize specific employees to conduct hearings
and issue final decisions in contested cases under Sections
1203.127 and 1203.182 and in dispute resolution hearings under
Section 1203.246; and
(5) adopt procedural rules to make final decisions
rendered by specific employees, as hearings officers, under
Sections 1203.127 and 1203.182 are appealable to the commission.
Sec. 1203.082. FEES. The commission shall adopt fees as
required by this title in amounts that are reasonable and necessary
to provide sufficient revenue to cover the costs of administering
this chapter. The commission shall charge and collect the
following fees:
(1) for filing an original application for a
homebuilder registration, not more $500;
(2) for annual renewal of homebuilder registration,
not more than $500;
(3) for filing a request for a change of place of
business or change of name, not more than $100;
(4) for filing a request to replace a lost or destroyed
registration certificate, not more than $100;
(5) for preparing a registration history, not more
than $50;
(6) for filing a request to resolve a dispute under
Subchapter L, not more than $100; and
(7) for filing a request for moral character
determination under Section 1203.123, not more than $100.
Sec. 1203.083. ACCESSIBILITY. (a) The commission shall
comply with federal and state laws related to program and facility
accessibility.
(b) The executive director shall prepare and maintain a
written plan that describes how a person who does not speak English
can obtain reasonable access to the commission programs and
services.
Sec. 1203.084. ANNUAL REPORT. (a) The commission shall
file annually with the governor and the presiding officer of each
house of the legislature a complete and detailed written report
accounting for all funds received and disbursed by the commission
during the preceding fiscal year.
(b) The report must be in the form and reported in the time
provided by the General Appropriations Act.
Sec. 1203.085. RULES RESTRICTING ADVERTISING OR
COMPETITIVE BIDDING. (a) The commission may not adopt a rule
restricting advertising or competitive bidding by a homebuilder
except to prohibit a false, misleading, or deceptive practice by
the homebuilder.
(b) The commission may not include in rules to prohibit
false, misleading, or deceptive practices by a homebuilder a rule
that:
(1) restricts the use of any advertising medium;
(2) restricts the homebuilder personal appearance or
use of the homebuilder voice in an advertisement;
(3) relates to the size or duration of an
advertisement used by the homebuilder; or
(4) restricts the homebuilder advertisement under a
trade name.
Sec. 1203.086. SUBPOENA AUTHORITY. (a) The commission may
request and, if necessary, compel by subpoena:
(1) the attendance of witnesses for examination under
oath; and
(2) the production for inspection and copying of
records, documents, and other evidence relevant to an investigation
or other proceeding authorized under this chapter.
(b) A subpoena may be issued throughout the state and may be
served by any person designated by the commission.
(c) If a person fails to comply with a subpoena issued under
this section, the commission, acting through the attorney general,
may file suit to enforce the subpoena in a district court in Travis
County or in the county in which a hearing conducted by the
commission may be held.
(d) The court shall order compliance with the subpoena if
the court finds that good cause exists to issue the subpoena.
[Sections 1203.087-1203.100 reserved for expansion]
SUBCHAPTER E. PUBLIC INTEREST INFORMATION AND
COMPLAINT PROCEDURES
Sec. 1203.101. PUBLIC INTEREST INFORMATION. (a) The
commission shall prepare information of public interest describing
the functions of the commission and the procedures by which
complaints or requests to resolve disputes are filed with and
resolved by the commission.
(b) The commission shall make the information available to
the public and appropriate state agencies.
Sec. 1203.102. COMPLAINTS AND REQUESTS FOR DISPUTE
RESOLUTION. (a) The commission by rule shall establish methods by
which consumers and service recipients are notified of the name,
mailing address, and telephone number of the commission for the
purpose of directing a complaint or submitting a dispute for
resolution to the commission. The commission may provide for that
notice:
(1) on each application for a certificate of
registration or written contract for services of a registrant under
this chapter;
(2) on a sign prominently displayed in the place of
business of each person registered under this chapter;
(3) in a bill for services provided by a registrant
under this chapter; or
(4) in conjunction with any notice registrants may be
required to provide to consumers or service recipients under this
chapter or the rules of the commission.
(b) The commission shall provide to a person who files with
the commission a complaint relating to a registrant or a request for
dispute resolution under Subchapter L and to the registrant against
whom the complaint or request is filed:
(1) an explanation of the remedies that are available
to the person under this chapter; and
(2) information about appropriate state or local
agencies or officials with whom the person may file a complaint.
Sec. 1203.103. COMPLAINT INFORMATION AND INFORMATION IN
REQUESTS FOR DISPUTE RESOLUTION. (a) The commission shall
maintain an information file about each complaint and request for
dispute resolution filed with the commission that the commission
has authority to resolve.
(b) If a written complaint or a request for dispute
resolution is filed with the commission that the commission has
authority to resolve, the commission, at least quarterly and until
the matter is resolved, shall notify the parties to the complaint or
dispute of the status of the complaint or dispute.
Sec. 1203.104. COMPLAINT INVESTIGATION AND DISPOSITION.
(a) The commission shall investigate the actions and pertinent
records of a registrant if:
(1) a consumer or service recipient submits a signed,
written complaint; and
(2) the complaint and any evidence presented with the
complaint provide reasonable cause for an investigation.
(b) The commission shall promptly provide a written notice
to a person registered under this chapter who is the subject of an
investigation.
(c) An investigation or other action against a person
licensed under this chapter may not be initiated on the basis of an
anonymous complaint.
(d) The commission may authorize a commission employee to
file a signed, written complaint against a registrant under this
chapter and to conduct an investigation if:
(1) the registrant is convicted of a criminal offense
that may constitute grounds for the suspension or revocation of the
person's registration; or
(2) the registrant fails to honor a check issued to the
commission.
Sec. 1203.105. COMPLAINT INVESTIGATION. The commission
shall investigate a signed complaint received by the commission
that relates to an act of a person required to hold a certificate of
registration under this chapter.
Sec. 1203.106. PUBLIC PARTICIPATION. (a) The commission
shall develop and implement policies that provide the public with a
reasonable opportunity to appear before the commission and to speak
on any issue under the commission's jurisdiction.
(b) The commission shall prepare and maintain a written plan
that describes how a person who does not speak English or who has a
physical, mental, or developmental disability may be provided
reasonable access to the commission's programs.
[Sections 1203.107-1203.120 reserved for expansion]
SUBCHAPTER F. REGISTRATION REQUIREMENTS
Sec. 1203.121. REGISTRATION REQUIRED. (a) Unless a person
holds a certificate of registration issued under this chapter, the
person may not act as a homebuilder.
(b) An applicant for a homebuilder registration may not act
as a homebuilder until the person receives the certificate of
registration evidencing that authority.
Sec. 1203.122. APPLICATION FOR REGISTRATION. (a) Each
applicant for a homebuilder registration must submit an application
on a form prescribed by the commission.
(b) Each applicant for a homebuilder registration must
disclose in the application whether the applicant has:
(1) entered a plea of guilty or nolo contendere to a
felony; or
(2) been convicted of a felony and the time for appeal
has elapsed or the judgment or conviction has been affirmed on
appeal.
(c) The disclosure under Subsection (b) must be provided
even if an order has granted community supervision suspending the
imposition of the sentence.
(d) The commission may, upon receipt of an application,
conduct a criminal background check of the applicant or any person
responsible for the application. The commission may obtain
criminal history record information maintained by the Department of
Public Safety, the Federal Bureau of Investigation, any court, or
any other local, state, or national governmental agency. Unless
the information is a public record at the time the commission
obtains the information under this subsection, the information is
confidential and the commission may not release or disclose the
information to any person except under order from a court or with
the permission of applicant.
Sec. 1203.123. MORAL CHARACTER DETERMINATION. (a) If
before applying for a registration under this chapter a person
requests that the commission determine whether the person's moral
character complies with the commission's moral character
requirements for registration under this chapter and pays the fee
prescribed by Section 1203.082, the commission shall make its
determination of the person's moral character.
(b) Not later than the 30th day after the date the
commission makes its determination, the commission shall notify the
person of the determination.
(c) A person may appeal the commission determination under
this section by following the procedure under Section 1203.127 for
the denial of an application for registration. An appeal hearing
concerning a moral character determination is governed by Section
1203.127.
(d) If a person applies for a registration after receiving
notice of a determination, the commission may conduct a
supplemental moral character determination of the person. The
supplemental determination may cover only the period after the date
the person requests a moral character determination under this
section.
Sec. 1203.124. GENERAL ELIGIBILITY REQUIREMENTS. To be
eligible to receive a registration under this chapter, a person
must:
(1) at the time of application:
(A) be at least 18 years of age; and
(B) be a citizen of the United States or a
lawfully admitted alien; and
(2) satisfy the commission as to the applicant's
honesty, trustworthiness, and integrity.
Sec. 1203.125. ADDITIONAL GENERAL ELIGIBILITY REQUIREMENTS
FOR BUSINESS ENTITIES. (a) To be eligible to register under this
chapter:
(1) a corporation must designate one of its officers
as its agent for purposes of this chapter;
(2) a limited liability company must designate one of
its managers as its agent for purposes of this chapter; and
(3) a partnership, limited partnership, or limited
liability partnership must designate one of its managing partners
as its agent for purposes of this chapter.
(b) A corporation, limited liability company, partnership,
limited partnership, or limited liability partnership is not
eligible to be registered under this chapter and may not act as a
homebuilder unless the entity's designated agent, according to the
commission's records, is individually registered as a homebuilder.
(c) Except as provided by Subsection (d), a corporation,
limited liability company, partnership, limited partnership, or
limited liability partnership is not eligible to be registered
under this chapter and may not act as a homebuilder if any of its
officers, managers, or partners was or is the subject of an order
from the commission revoking:
(1) the individual officer , manager , or partner
registration under this chapter; or
(2) the registration of a business entity for whom the
officer, manager, or partner was an officer, manager, or partner
during the time the acts causing the revocation were committed.
(d) The commission may waive the application of Subsection
(c) if it is satisfied as to the officer , manager , or partner
honesty, integrity, and trustworthiness.
Sec. 1203.126. ISSUANCE OF A CERTIFICATE OF REGISTRATION.
(a) The commission shall issue a certificate of registration to an
applicant who meets the requirements for a registration under this
chapter.
(b) A certificate of registration remains in effect for the
period prescribed by the commission if the certificate holder
complies with this chapter and pays the appropriate renewal fees.
Sec. 1203.127. DENIAL OF REGISTRATION. (a) The commission
shall immediately give written notice to the applicant of the
commission's denial of a registration.
(b) Before the applicant may appeal a denial of an
application, a denial of an application to renew a certificate of
registration, or a moral character determination, the applicant
must file, not later than the 10th day after the date the applicant
receives the notice, an appeal requesting a time and place for a
hearing before the commission. If the applicant fails to request a
hearing as provided by this subsection, the commission's decision
becomes final and is not subject to judicial review.
(c) The commission shall:
(1) set a time and place for the hearing not later than
the 30th day after the date the commission receives the appeal; and
(2) give notice of the hearing to the applicant before
the 10th day preceding the date of the hearing.
(d) The hearing may be continued from time to time with the
consent of the applicant.
(e) The hearing shall be before a hearings officer appointed
by the commission. After the hearing, the hearings officer shall
enter an appropriate order, which shall be a final decision.
(f) The commission shall adopt procedural rules under which
all decisions rendered by a hearings officer are appealable to the
commission.
(g) A hearing under this section is governed by Chapter
2001, Government Code.
[Sections 1203.128-1203.140 reserved for expansion]
SUBCHAPTER G. RENEWAL OF REGISTRATION CERTIFICATES
Sec. 1203.141. EXPIRATION OF CERTIFICATE OF REGISTRATION.
(a) The commission may issue or renew a certificate of
registration for a period not to exceed 24 months.
(b) The commission by rule may adopt a system under which
certificates of registration expire on various dates during the
year. The commission shall adjust the date for payment of the
renewal fees accordingly.
(c) For a year in which the certificate of registration
expiration date is changed, renewal fees payable shall be prorated
on a monthly basis so that each certificate holder pays only that
portion of the fee that is allocable to the number of months during
which the certificate of registration is valid. On renewal of the
certificate of registration on the new expiration date, the total
renewal fee is payable.
Sec. 1203.142. INFORMATION REQUIRED FOR RENEWAL. (a) Each
applicant for the renewal of a certificate of registration must
disclose in the renewal application whether the applicant has:
(1) entered a plea of guilty or nolo contendere to a
felony; or
(2) been convicted of a felony and the time for appeal
has elapsed or the judgment or conviction has been affirmed on
appeal.
(b) The disclosure under Subsection (a) must be provided
even if an order has granted community supervision suspending the
imposition of the sentence.
Sec. 1203.143. ADDITIONAL RENEWAL REQUIREMENTS FOR
BUSINESS ENTITIES. (a) To renew a certificate of registration
under this chapter:
(1) a corporation must designate one of its officers
as its agent for purposes of this chapter;
(2) a limited liability company must designate one of
its managers as its agent for purposes of this chapter; and
(3) a partnership, limited partnership, or limited
liability partnership must designate one of its managing partners
as its agent for purposes of this chapter.
(b) A corporation, limited liability company, partnership,
limited partnership, or limited liability partnership may not act
as a homebuilder unless the entity's designated agent, according to
the commission's records, is individually registered as a
homebuilder under this chapter.
(c) Except as provided by Subsection (d), a corporation,
limited liability company, partnership, limited partnership, or
limited liability partnership may not act as a homebuilder if any of
the officers, managers, or partners was or is the subject of an
order from the commission revoking:
(1) the individual officer , manager , or partner
registration under this chapter; or
(2) the registration of a business entity for which
the officer, manager, or partner was an officer, manager, or
partner during the time the acts causing the revocation were
committed.
(d) The commission may waive the application of Subsection
(c) if it is satisfied as to the officer , manager , or partner
honesty, integrity, and trustworthiness.
Sec. 1203.144. DENIAL OF RENEWAL. (a) If the commission
denies the renewal of an applicant for renewal, the commission
shall immediately give written notice to the applicant of the
denial.
(b) The applicant may appeal the denial by following the
procedures under Section 1203.127.
(c) An appeal hearing under this section is governed by Sec.
1203.127.
[Sections 1203.145-1203.160 reserved for expansion]
SUBCHAPTER H. PRACTICES BY CERTIFICATE HOLDERS
Sec. 1203.161. FIXED OFFICE REQUIRED; CHANGE OF ADDRESS;
OFFICE LOCATIONS. (a) A homebuilder shall maintain a fixed office
in this state. The address of the principal place of business for
the homebuilder shall be designated on the certificate of
registration.
(b) Not later than the 10th day after the date a homebuilder
moves from the address designated on the certificate of
registration, the homebuilder shall submit an application,
accompanied by the appropriate fee, for a certificate of
registration that designates the new location of the homebuilder
principal place of business. The commission shall issue a
certificate of registration that designates the new location if the
new location complies with the requirements of this section.
(c) A homebuilder who maintains more than one place of
business in this state shall notify the commission in writing of
each additional office location maintained by the homebuilder not
later than the 10th day after the homebuilder opens the additional
location.
Sec. 1203.162. REQUIRED NOTICES AND PROVISIONS IN A
HOMEBUILDER CONTRACT. (a) When homebuilder enters into a contract
to sell to a homeowner real estate on which the homebuilder
constructed a new home, the homebuilder shall include in the
written contract:
(1) a written notice that the homeowner should:
(A) have the abstract covering the real estate
that is the subject of the contract examined by an attorney chosen
by the homeowner; or
(B) be provided with or obtain a title insurance
policy;
(2) the written notice required by Section 27.007,
Property Code; and
(3) a provision that entitles the homeowner, at the
homeowner election, to submit a dispute related to a construction
defect to the commission for resolution under Subchapter L before
the dispute is submitted to litigation or arbitration as the
contract may require.
(b) When a homebuilder enters into a contract or agreement
with a homeowner to construct a new home or new improvements to an
existing home on the homeowner real estate, the homebuilder shall
include in the written contract the notice described under
Subsection (a)(2) and the provision described under Subsection
(a)(3).
[Sections 1203.163-1203.180 reserved for expansion]
SUBCHAPTER I. PROHIBITED PRACTICES AND DISCIPLINARY PROCEEDINGS
Sec. 1203.181. GROUNDS FOR SUSPENSION OR REVOCATION OF
CERTIFICATE OF REGISTRATION. (a) The commission may suspend or
revoke a certificate of registration issued under this chapter if
the certificate holder:
(1) enters a plea of guilty or nolo contendere to or is
convicted of a felony, and the time for appeal has elapsed or the
judgment or conviction has been affirmed on appeal, without regard
to an order granting community supervision that suspends the
imposition of the sentence;
(2) procures or attempts to procure a certificate of
registration under this chapter for the certificate holder or
another by fraud, misrepresentation, or deceit or by making a
material misstatement of fact in an application for a certificate
of registration;
(3) engages in an intentional misrepresentation or
fraud when selling, buying, trading, or leasing real property;
(4) fails to honor, within a reasonable time, a check
issued to the commission after the commission has sent by certified
mail a request for payment to the certificate holder's last known
business address according to commission records;
(5) fails to provide, within a reasonable time,
information requested by the commission that relates to a formal or
informal complaint to the commission that would indicate a
violation of this chapter;
(6) fails to surrender to the owner, without just
cause, a document or instrument to a dispute that is requested by
the owner and that is in the certificate holder's possession;
(7) fails to pay or otherwise comply with a final award
issued against the homebuilder under Subchapter L; or
(8) disregards or violates this chapter.
(b) The commission may suspend or revoke a certificate of
registration issued under this chapter if the certificate holder,
while acting as a homebuilder:
(1) makes a material misrepresentation to a homeowner
concerning a significant defect, including a latent structural
defect, known to the homebuilder that would be a significant factor
to a reasonable and prudent homeowner in making a decision to
purchase the home or accept construction by the homebuilder as
substantially complete;
(2) fails to disclose to a homeowner a defect
described by Subdivision (1) that is known to the homebuilder;
(3) makes a false promise that is likely to influence a
person to enter into an agreement when the homebuilder is unable or
does not intend to keep the promise;
(4) pursues a continued and flagrant course of
misrepresentation or makes false promises through advertising, or
otherwise;
(5) fails within a reasonable time to properly account
for or remit money that is received by the homebuilder and that
belongs to another person;
(6) commingles money that belongs to another person
with the homebuilder own money;
(7) solicits, sells, or offers for sale a home by means
of a lottery;
(8) solicits, sells, or offers for sale a home by means
of a deceptive practice;
(9) guarantees or authorizes or permits a person to
guarantee that future profits will result from a resale of a home;
(10) negotiates or attempts to negotiate the sale,
exchange, or lease of real property with an owner, landlord, buyer,
or tenant with knowledge that that person is a exclusively
represented by an attorney or broker in connection with the
transaction;
(11) publishes or causes to be published any
advertisement that is false or misleads or is likely to deceive the
public;
(12) withholds from or inserts into a statement of
account or invoice a statement that the homebuilder knows makes the
statement of account or invoice inaccurate in a material way;
(13) publishes or circulates an unjustified or
unwarranted threat of a legal proceeding or other action;
(14) aids, abets, or conspires with another person to
circumvent this chapter;
(15) fails or refuses to provide, on request, a copy of
a document relating to a transaction to a person who signed the
document;
(16) fails to include in a contract for the sale of a
home to a homeowner or a contract for construction of a new home or
new improvements the notices required under Section 1203.162;
(17) fails to deposit, within a reasonable time, money
the certificate holder receives as earnest money:
(A) in trust with a title company authorized to
do business in this state; or
(B) in a custodial, trust, or escrow account
maintained for that purpose in a banking institution authorized to
do business in this state;
(18) conditions the sale of a home on the homeowner
using a title company that the homebuilder selects if the homeowner
pays for the title policy;
(19) conditions the sale of a home on the buyer using a
lender that the homebuilder selects;
(20) discriminates against a homeowner or prospective
homeowner on the basis of race, color, religion, sex, national
origin, or ancestry, including directing a homeowner or prospective
homeowner interested in equivalent properties to a different area
based on the race, color, religion, sex, national origin, or
ancestry of the homeowner or prospective homeowner; or
(21) disregards or violates this chapter.
Sec. 1203.182. ADDITIONAL DISCIPLINARY AUTHORITY OF
COMMISSION. (a) If a certificate holder violates this chapter or
a commission rule, the commission may, in addition to any other
authority under this chapter:
(1) suspend or revoke a certificate of registration;
(2) place on probation a person whose certificate of
registration has been suspended;
(3) reprimand a certificate holder; or
(4) assess an administrative penalty that complies
with Subchapter J against a certificate holder, alone or in
addition to a suspension, probation, or reprimand.
(b) The commission may probate a suspension, revocation, or
cancellation of a certificate of registration under reasonable
terms determined by the commission.
Sec. 1203.183. HEARING. (a) If the commission proposes to
take any disciplinary action described in Section 1203.182 against
a certificate holder, the certificate holder is entitled to a
hearing before the a hearings officer appointed by the commission.
(b) The commission shall adopt procedural rules by which all
decisions to take disciplinary action against certificate holder
are appealable to the commission.
(c) The commission shall prescribe the time and place of the
hearing.
(d) A hearing under this section is governed by the
contested case procedures under Chapter 2001, Government Code.
Sec. 1203.184. APPEAL. (a) A person aggrieved by a
ruling, order, or decision of the commission is entitled to appeal
to a district court in the county in which the administrative
hearing was held.
(b) An appeal is governed by the procedures under Chapter
2001, Government Code.
[Sections 1203.185-1203.200 reserved for expansion]
SUBCHAPTER J. ADMINISTRATIVE PENALTY
Sec. 1203.201. IMPOSITION OF ADMINISTRATIVE PENALTY. In
contested cases involving disciplinary action, the commission, as
part of the order, may impose an administrative penalty on a
certificate holder who violates this chapter or a rule adopted or
order issued by the commission under this chapter.
Sec. 1203.202. AMOUNT OF PENALTY. (a) The amount of an
administrative penalty may not exceed $5,000 for each violation.
(b) In determining the amount of the penalty, the hearings
officer or commission shall consider:
(1) the seriousness of the violation, including the
nature, circumstances, extent, and gravity of the prohibited acts;
(2) the history of previous violations;
(3) the amount necessary to deter a future violation;
(4) efforts to correct the violation; and
(5) any other matter that justice may require.
Sec. 1203.203. PAYMENT OF ADMINISTRATIVE PENALTY. Not
later than the time specified in the commission's order, which may
not be sooner than 30 days after the order becomes final, the person
shall pay the administrative penalty.
Sec. 1203.204. COLLECTION OF PENALTY. If the person does
not pay the administrative penalty and the enforcement of the
penalty is not stayed, the commission may:
(1) refer the matter to the attorney general for
collection of the penalty; or
(2) enforce any part of the order that specifies
disciplinary action to be taken against the certificate holder if
the certificate holder fails to pay the administrative penalty
within the time required.
[Sections 1203.205-1203.220 reserved for expansion]
SUBCHAPTER K. OTHER PENALTIES AND ENFORCEMENT PROVISIONS
Sec. 1203.221. INJUNCTIVE ACTION BROUGHT BY COMMISSION.
(a) In addition to any other action authorized by law, the
commission may bring an action in its name to enjoin a violation of
this chapter or a commission rule.
(b) To obtain an injunction under this section, the
commission is not required to allege or prove that:
(1) an adequate remedy at law does not exist; or
(2) substantial or irreparable damage would result
from the continued violation.
Sec. 1203.222. ADDITIONAL INJUNCTIVE AUTHORITY. (a) In
addition to any other action authorized by law, the commission,
acting through the attorney general, may bring an action to abate a
violation or enjoin a violation or potential violation of this
chapter or a commission rule if the commission determines that a
person has violated or is about to violate this chapter.
(b) The action shall be brought in the name of the state in
the district court in the county in which:
(1) the violation occurred or is about to occur; or
(2) the defendant resides.
(c) An injunctive action may be brought to abate or
temporarily or permanently enjoin an act or to enforce this
chapter.
(d) The commission is not required to give a bond in an
action under Subsection (a), and court costs may not be recovered
from the commission.
(e) If the commission determines that a person has violated
or is about to violate this chapter, the attorney general or the
county attorney or district attorney in the county in which the
violation has occurred or is about to occur or in the county of the
defendant's residence may bring an action in the name of the state
in the district court of the county to abate or temporarily or
permanently enjoin the violation or to enforce this chapter. The
plaintiff in an action under this subsection is not required to give
a bond, and court costs may not be recovered from the plaintiff.
Sec. 1203.223. CIVIL PENALTY FOR CERTAIN VIOLATIONS BY A
CERTIFICATE HOLDER. (a) In addition to injunctive relief under
Sections 1203.221 and 1203.222, a person who receives a profit or
other consideration as a result of acting as a homebuilder without
holding a certificate of registration under this chapter is liable
to the state for a civil penalty of not less than the amount of money
received or more than three times the amount of money received.
(b) The commission may recover the civil penalty, court
costs, and reasonable attorney's fees on behalf of the state.
(c) The commission is not required to give a bond in an
action under this section, and court costs may not be recovered from
the commission.
Sec. 1203.224. PRIVATE CAUSE OF ACTION FOR CERTAIN
VIOLATIONS BY CERTIFICATE HOLDER. (a) A person who receives a
profit or other consideration as a result of acting as a homebuilder
without holding a certificate of registration under this chapter is
liable to an aggrieved person for a penalty of not less than the
amount of money received or more than three times the amount of
money received.
(b) The aggrieved person may file suit to recover a penalty
under this section.
Sec. 1203.225. APPEAL BOND EXEMPTION. The commission is
not required to give an appeal bond in an action to enforce this
chapter.
Sec. 1203.226. GENERAL CRIMINAL PENALTY. (a) A person
commits an offense if the person willfully violates or fails to
comply with this chapter or a commission order.
(b) An offense under this section is a Class A misdemeanor.
Sec. 1203.227. CRIMINAL PENALTY FOR CERTAIN VIOLATIONS BY
CERTIFICATE HOLDER. (a) A person commits an offense if the person
engages in an activity for which a certificate of registration is
required under this chapter without holding a certificate.
(b) Except as provided by Subsection (c), (d), or (e), an
offense under this section is a misdemeanor punishable by:
(1) a fine of not less than $100 or more than $500;
(2) confinement in the county jail for not more than
one year; or
(3) both the fine and confinement.
(c) An offense under this section by a person other than an
individual is punishable by a fine of not less than $1,000 or more
than $2,000.
(d) A second or subsequent offense under this section by an
individual is punishable by:
(1) a fine of not less than $500 or more than $1,000;
(2) confinement for not more than two years; or
(3) both the fine and confinement.
(e) A second or subsequent offense under this section by a
person other than an individual is punishable by a fine of not less
than $2,000 or more than $5,000.
[Sections 1203.228-1203.240 reserved for expansion]
SUBCHAPTER L. VOLUNTARY INSPECTION AND DISPUTE
RESOLUTION PROCESS
Sec. 1203.241. APPLICABILITY OF SUBCHAPTER. (a) This
subchapter applies only to disputes between homebuilders and
homeowners to which Chapter 27, Property Code, applies if the
homeowner files a written request with the commission to resolve
the dispute under this subchapter.
(b) Notwithstanding any provision in a contract or
agreement between a homebuilder and a homeowner to the contrary, a
homeowner may submit a dispute, to which this subchapter applies,
to the commission for resolution under this subchapter.
(c) This subchapter applies only to the part of a dispute
and only to causes of action that seek reimbursement of actual
damages caused by a construction defect.
(d) This subchapter does not apply to construction defects
that are not brought within two years after the homeowner knew or
should have reasonably known of the construction defect and that
are not brought within 10 years after the home or improvement was
constructed.
Sec. 1203.242. EFFECT OF COMMISSION FINAL RESOLUTION AND
DETERMINATIONS. The commission resolution of the dispute and
determination of the existence of construction defect under this
subchapter is binding and dispositive and is, for all purposes, an
enforceable arbitration award under Chapter 171, Civil Practice and
Remedies Code.
Sec. 1203.243. PREREQUISITE TO FILING REQUEST. Before
filing a request under this subchapter, the homeowner must:
(1) not later than 30 days before filing the request
have notified the homebuilder in writing of the alleged
construction defect; and
(2) offered the homebuilder and the homebuilder
experts reasonable opportunity and access to inspect the alleged
construction defect.
Sec. 1203.244. INFORMATION REQUIRED TO BE SUBMITTED WITH
WRITTEN REQUEST. A homeowner who submits a request to the
commission for dispute resolution under this subchapter must pay
the commission the fee authorized under Section 1203.082(6) and in
the request must:
(1) specify in reasonable detail each alleged
construction defect that is a subject of the request;
(2) state the amount of any known out-of-pocket
expenses and fees for experts, inspectors, consultants, and
attorneys incurred, as of the date of filing, by the homeowner in
connection with each alleged construction defect;
(3) include any evidence that depicts the nature and
cause of each alleged construction defect and the nature and extent
of repairs that the homeowner believes is reasonably necessary to
remedy the construction defect, including inspection reports,
photographs, videotapes, and other relevant information;
(4) disclose the name, address, and phone number of
any person who has, on behalf of the requestor, inspected the home
in connection with the construction defect alleged in the request;
(5) include a copy of the written notice required
under Section 1203.243 and the homebuilder response, if any; and
(6) state the amount that the homeowner seeks to
recover from the homebuilder as of the date of filing.
Sec. 1203.245. NOTICE TO REQUESTOR AND TO HOMEBUILDER.
(a) Not later than the 15th day after the commission receives the
request under Section 1203.244, the commission shall provide the
person who filed the request with a copy of the commission
procedures relating to the investigation and resolution of the
dispute.
(b) Not later than the 15th day after the commission
receives a request under Section 1203.244, the commission shall
send to the homebuilder:
(1) a copy of the request;
(2) a copy of all the information submitted with the
request; and
(3) a copy of the commission procedures relating to
the investigation and resolution of the dispute.
Sec. 1203.246. STATE INSPECTORS. (a) The commission shall
employ or contract with state inspectors to inspect the alleged
construction defect in the request.
(b) The commission shall employ or contract with only
trained and qualified inspectors and, by rule, shall set criteria
that state inspectors must satisfy to be employed by the commission
and to remain employed by the commission as a state inspector.
(c) After receiving the request, the commission shall send a
state inspector to inspect the home and interview the homebuilder
and homeowner.
(d) The state inspector shall complete a written report and
written recommendations concerning any necessary repairs to the
alleged construction defect. The state inspector shall, upon
completion, provide a copy the report to the homeowner and
homebuilder.
Sec. 1203.247. DISPUTE RESOLUTION HEARING. (a) If after
the 30th day after the state inspector has sent a copy of the report
to the homeowner and homebuilder as required by Section 1203.246(d)
the parties to the dispute have not otherwise resolved the dispute,
the commission shall set an arbitration hearing and give notice of
the hearing to the parties to the dispute.
(b) A hearings officer designated by the commission shall
conduct the hearing. The state inspector that inspected the
alleged construction defect shall, at the request of either the
homeowner or homebuilder, be present to testify at the hearing. The
state inspector report shall be admissible as evidence regardless
of whether the state inspector is called to testify at the hearing.
The hearings officer shall make findings of fact and conclusions
and issue an award.
(c) A proceeding under this section is an arbitration
hearing governed by Chapter 171, Civil Practice and Remedies Code
and by the rules the commission adopts under Section 1203.249.
(d) The commission shall prescribe the time and place of the
hearing.
Sec. 1203.248. THE AWARD. (a) The hearings officer may
award only:
(1) reimbursement of actual damages caused by the
construction defect;
(2) reimbursement of reasonable out-of-pocket
expenses;
(3) interest on the out-of-pocket expenses awarded at
the rate of 10 percent per annum from the date the homeowner
incurred the expense; and
(4) reasonable attorney fees.
(b) Actual damages under Subdivision (1) of Subsection (a)
are to be measured by one of the following methods:
(1) the cost to repair the construction defect;
(2) the decrease in the market value of the home caused
by the construction defect; or
(3) both methods under Subdivisions (1) and (2) if a
decrease in market value is evident after the construction defect
is repaired.
(c) Out-of-pocket expenses under Subdivision (2) of
Subsection (a) include, but are not limited to:
(1) fees paid to experts, inspectors, and consultants
reasonably necessary to evaluate the construction defect;
(2) reasonable attorney's fees paid by the homeowner;
and
(3) other reasonable expenses or repairs necessary to
mitigate damage caused by the construction defect.
Sec. 1203.249. RULES OF ARBITRATION. The commission shall
adopt rules of procedure that are:
(1) necessary for the implementation of the intent and
purposes of this subchapter; and
(2) consistent with Chapter 171, Civil Practice and
Remedies Code.
Sec. 1203.250. EFFECT OF AWARD ON OTHER CAUSES OF ACTION.
An award under this subchapter is dispositive of all claims for the
types of damages the commission is authorized to award under this
chapter and is binding on the homeowner and homebuilder as an
arbitration award. Neither the award nor this subchapter dispose
of claim or cause for damage that is not awardable under this
subchapter.
[Sections 1203.251-1203.260 reserved for expansion]
SUBCHAPTER M. BUILDING STANDARDS
Sec. 1203.261. BUILDING STANDARDS. (a) For the purposes
of evaluating evidence and resolving disputes under Subchapter L,
the commission by rule shall adopt building standards for
residential construction that comply with this section.
(b) The building standards must substantially comply with
the standards contained in the version of the International
Residential code for One- and Two-Family Dwelling published by the
International Code Council that is applicable under Subsection (c).
(c) The International Residential Code for One- and
Two-Family Dwellings that applies to residential construction for
the purposes of the building standards under this section is:
(1) for residential construction located in a
municipality, the version of the International Residential Code
applicable to residential construction in the municipality under
Section 214.212, Local Government Code; and
(2) for residential construction located in an
unincorporated area, the version of the International Residential
Code applicable to residential construction in the municipality
that is the county seat of the county in which the construction is
located.
SECTION 2. (a) This Act takes effect September 1, 2003.
(b) A person is not required to be registered under this
Act, before March 1, 2004.
SECTION 3. For the purposes of implementing new Chapter
1203, the governor may appoint two persons who are regularly
engaged in the homebuilding industry in Texas to fill the two
positions on the Texas Homebuilder Commission under new Section
1203.021(1) and the appointees may continue to serve after March 1,
2004, provided that the appointees are registered under this Act
not later than May 1, 2004. New Section 1203.025(1)-(3) shall not
apply to the two commissioners who are required to be registered
under this Act until May 1, 2004.
SECTION 4. The governor may assign to the persons the
governor appoints as commissioners under this Act the length of the
appointees initial terms, which will expire at staggered times as
required by new Section 1203.022.