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79R3972 KCR-D
By: Paxton H.B. No. 1237
A BILL TO BE ENTITLED
AN ACT
relating to binding arbitration clauses in certain residential
construction contracts; providing an administrative penalty.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Sections 418.001 and 418.002, Property Code, are
amended to read as follows:
Sec. 418.001. GROUNDS FOR DISCIPLINARY ACTION. A person is
subject to disciplinary action under this chapter for:
(1) fraud or deceit in obtaining a registration or
certification under this subtitle;
(2) misappropriation of trust funds in the practice of
residential construction;
(3) naming false consideration in a contract to sell a
new home or in a construction contract;
(4) discriminating on the basis of race, color,
religion, sex, national origin, or ancestry;
(5) publishing a false or misleading advertisement;
(6) failure 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 person's last known
business address, according to commission records;
(7) failure to pay an administrative penalty assessed
by the commission under Chapter 419;
(8) nonpayment of a final nonappealable judgment
arising from a construction defect or other transaction between the
person and a homeowner;
(9) failure to register a home as required by Section
426.003;
(10) failure to remit the fee for registration of a
home under Section 426.003; [or]
(11) failure to reimburse a homeowner the amount
ordered by the commission as provided in Section 428.004(d); or
(12) failure to include the notice required under
Section 436.005 in a contract with a homeowner.
Sec. 418.002. DISCIPLINARY POWERS OF COMMISSION. (a)
Except as provided by Subsection (b), on [On] a determination that a
ground for disciplinary action under Section 418.001 exists, the
commission may:
(1) revoke or suspend a registration or certification;
(2) probate the suspension of a registration or
certification; or
(3) formally or informally reprimand a registered or
certified person.
(b) On a determination that a ground for disciplinary action
under Section 418.001(12) exists, the commission may impose an
administrative penalty against the builder under Chapter 419.
SECTION 2. Chapter 436, Property Code, is amended by adding
Section 436.005 to read as follows:
Sec. 436.005. DISCLOSURE OF BINDING ARBITRATION REQUIRED.
(a) This section applies only to a written contract between a
builder and a homeowner that:
(1) is subject to this title;
(2) contains a provision that obligates the builder
and the homeowner to arbitrate a dispute under the contract; and
(3) binds the builder and the homeowner to the results
of that arbitration.
(b) A contract described under Subsection (a) must contain a
notice that reads substantially similar to the following notice and
that appears in the contract in 12-point boldfaced, uppercase
typewritten letters:
"THE PARTIES TO THIS CONTRACT AGREE TO SUBMIT ANY DISPUTE
ARISING UNDER THIS CONTRACT TO BINDING ARBITRATION. ARBITRATION IS
A FORUM IN WHICH EACH PARTY AND COUNSEL FOR EACH PARTY PRESENT THE
POSITION OF THE PARTY TO AN IMPARTIAL THIRD PARTY WHO RENDERS A
SPECIFIC DECISION OR AWARD. UNDER THE TERMS OF THIS CONTRACT, A
DECISION OR AWARD RENDERED IN ARBITRATION IS BINDING AS TO AND
ENFORCEABLE AGAINST EACH PARTY TO THE CONTRACT IN THE SAME MANNER AS
ANY OTHER CONTRACT OBLIGATION."
SECTION 3. The change in law made by this Act applies only
to a contract that is entered into on or after the effective date of
this Act. A contract that is entered into before the effective date
of this Act is governed by the law in effect at the time the contract
was entered into, and that law is continued in effect for that
purpose.
SECTION 4. This Act takes effect September 1, 2005.