|
|
A BILL TO BE ENTITLED
|
|
AN ACT
|
|
relating to the registration and regulation of homebuilders and |
|
residential construction and improvements; providing penalties. |
|
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
|
SECTION 1. Subchapter Z, Chapter 214, Local Government |
|
Code, is amended by adding Section 214.906 to read as follows: |
|
Sec. 214.906. CERTIFICATE OF REGISTRATION NUMBER REQUIRED |
|
FOR RESIDENTIAL CONSTRUCTION PERMIT. A municipality may not issue a |
|
permit that authorizes the construction of a new single-family |
|
house or duplex or the improvement of an existing single-family |
|
house or duplex by a builder who is required to hold a certificate |
|
of registration issued by the Texas Residential Construction |
|
Commission unless the builder provides the builder's certificate of |
|
registration number to the municipality. |
|
SECTION 2. Section 41.007(a), Property Code, is amended to |
|
read as follows: |
|
(a) A contract described by Section 41.001(b)(3) must |
|
contain: |
|
(1) the contractor's certificate of registration |
|
number from the Texas Residential Construction Commission if the |
|
contractor is required to register as a builder with the |
|
commission; |
|
(2) the address and telephone number at which the |
|
owner of the homestead may file a complaint with the Texas |
|
Residential Construction Commission about the conduct of the |
|
contractor if the contractor is required to register as a builder |
|
with the commission; and |
|
(3) the following warning conspicuously printed, |
|
stamped, or typed in a size equal to at least 10-point bold type or |
|
computer equivalent, next to the owner's signature line on the |
|
contract: |
|
"IMPORTANT NOTICE: You and your contractor are responsible |
|
for meeting the terms and conditions of this contract. If you sign |
|
this contract and you fail to meet the terms and conditions of this |
|
contract, you may lose your legal ownership rights in your home. |
|
KNOW YOUR RIGHTS AND DUTIES UNDER THE LAW." |
|
SECTION 3. Subchapter K, Chapter 53, Property Code, is |
|
amended by adding Section 53.2555 to read as follows: |
|
Sec. 53.2555. CERTIFICATE OF REGISTRATION NUMBER. (a) A |
|
contractor who is required to register as a builder with the Texas |
|
Residential Construction Commission shall include, in a clear and |
|
conspicuous manner, the contractor's certificate of registration |
|
number on each residential construction contract. |
|
(b) The failure of a contractor to comply with Subsection |
|
(a) makes void any mechanic's or materialman's lien by the |
|
contractor or a subcontractor. |
|
SECTION 4. Section 162.003, Property Code, is amended to |
|
read as follows: |
|
Sec. 162.003. BENEFICIARIES OF TRUST FUNDS. (a) An |
|
artisan, laborer, mechanic, contractor, subcontractor, or |
|
materialman who labors or who furnishes labor or material for the |
|
construction or repair of an improvement on specific real property |
|
in this state is a beneficiary of any trust funds paid or received |
|
in connection with the improvement. |
|
(b) A property owner is a beneficiary of trust funds paid in |
|
connection with a residential construction contract to the extent |
|
that the amount of money paid by the property owner exceeds the |
|
value of work performed by persons described by Subsection (a) for |
|
the property owner under the contract. |
|
SECTION 5. Section 162.006(a), Property Code, is amended to |
|
read as follows: |
|
(a) A contractor who enters into a written contract with a |
|
property owner to construct improvements to a residential homestead |
|
for an amount exceeding $2,500 [$5,000] shall deposit the trust |
|
funds in a construction account in a financial institution. |
|
SECTION 6. Section 401.002(7), Property Code, is amended to |
|
read as follows: |
|
(7) "Homeowner" means a person who owns a home or who |
|
contracts for the construction of a new home or an improvement to an |
|
existing home. The term includes a subrogee or assignee of that [a] |
|
person [who owns a home]. |
|
SECTION 7. Section 401.003, Property Code, is amended to |
|
read as follows: |
|
Sec. 401.003. DEFINITION OF BUILDER. (a) In this title, |
|
"builder" means any business entity or individual who, for a fixed |
|
price, commission, fee, wage, or other compensation, constructs or |
|
supervises or manages the construction of: |
|
(1) a new home; or |
|
(2) [a material improvement to a home, other than an
|
|
improvement solely to replace or repair a roof of an existing home;
|
|
or
|
|
[(3)] an improvement to [the interior of] an existing |
|
home when the cost of the work exceeds $2,500 [$20,000]. |
|
(b) The term includes: |
|
(1) an owner, officer, director, shareholder, |
|
partner, affiliate, subsidiary, or employee of the builder; |
|
(2) a risk retention group governed by Article 21.54, |
|
Insurance Code, that insures all or any part of a builder's |
|
liability for the cost to repair a residential construction defect; |
|
[and] |
|
(3) a third-party warranty company and its |
|
administrator; |
|
(4) a person who negotiates on behalf of a builder a |
|
contract for the construction of a new home or an improvement to an |
|
existing home; and |
|
(5) a person who solicits or attempts to procure on |
|
behalf of a builder a contract for the construction of a new home or |
|
an improvement to an existing home. |
|
(c) The term does not include any business entity or |
|
individual who: |
|
(1) has been issued a license by this state or an |
|
agency or political subdivision of this state to practice a trade or |
|
profession related to or affiliated with residential construction |
|
if the work being done by the entity or individual to the home is |
|
solely for the purpose for which the license was issued; |
|
(2) is an employee of a builder who holds a certificate |
|
of registration issued under Chapter 416; |
|
(3) is an employee of the federal government, the |
|
state, or a political subdivision of the state and performs |
|
construction work within the scope of the person's employment; |
|
(4) is a student enrolled in a vocational school |
|
program in which the student works under the direct supervision of a |
|
builder who holds a certificate of registration under Chapter 416 |
|
or another person who is licensed by the state or a political |
|
subdivision of the state; |
|
(5) is a public utility performing construction, |
|
maintenance, or development work incidental to the utility's own |
|
business; or |
|
(6) furnishes materials, supplies, or equipment for a |
|
residential construction project and does not construct or |
|
supervise or manage the construction of a new home or an improvement |
|
to an existing home. |
|
SECTION 8. Section 408.002, Property Code, is amended to |
|
read as follows: |
|
Sec. 408.002. FEES. (a) Except as provided by Subsection |
|
(b), the [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 title. |
|
(b) The commission may not charge a homeowner a fee for: |
|
(1) filing a complaint with the commission; |
|
(2) receiving a state-sponsored inspection or |
|
participating in a dispute resolution process under Subtitle D; |
|
(3) participating in arbitration under Subtitle E; or |
|
(4) receiving information from the commission under |
|
Chapter 409. |
|
SECTION 9. Section 409.003, Property Code, is amended by |
|
adding Subsection (d) to read as follows: |
|
(d) The commission shall make available to the public |
|
information about each complaint that resulted in disciplinary |
|
action by the commission. |
|
SECTION 10. Chapter 409, Property Code, is amended by |
|
adding Section 409.004 to read as follows: |
|
Sec. 409.004. DIRECTORY OF BUILDERS. The commission shall |
|
make available to the public a list of each builder who holds a |
|
certificate of registration issued under Chapter 416. |
|
SECTION 11. Section 416.002(a), Property Code, is amended |
|
to read as follows: |
|
(a) An applicant for an original or renewal certificate of |
|
registration must submit: |
|
(1) an application on a form prescribed by the |
|
commission; |
|
(2) evidence of financial responsibility as required |
|
by commission rule under Section 416.003; |
|
(3) an outline of the organization of the applicant's |
|
contracting business or the applicant's duties if the applicant is |
|
a solo practitioner; |
|
(4) information about any outstanding judgment |
|
against the applicant resulting from home improvement contracting |
|
or construction work; |
|
(5) information about any pending litigation that the |
|
applicant is involved in resulting from home improvement |
|
contracting or construction work; |
|
(6) information about any past-due franchise tax owed |
|
by the applicant to the comptroller; and |
|
(7) all fees required by the commission at the time of |
|
application. |
|
SECTION 12. Chapter 416, Property Code, is amended by |
|
adding Section 416.003 to read as follows: |
|
Sec. 416.003. FINANCIAL RESPONSIBILITY. The commission |
|
shall adopt rules requiring each certificate holder to obtain |
|
bonding and insurance coverage. In adopting the rules, the |
|
commission shall require the certificate holder to obtain: |
|
(1) insurance for personal injury in an amount not |
|
less than $100,000 per occurrence and $300,000 aggregate; |
|
(2) insurance for property damage caused by the |
|
builder in an amount not less than $50,000; and |
|
(3) a general obligation bond for the benefit of any |
|
person damaged by the breach of a home improvement contract in an |
|
amount not less than $50,000. |
|
SECTION 13. Section 416.004, Property Code, is amended to |
|
read as follows: |
|
Sec. 416.004. FEES. (a) The commission shall charge and |
|
collect: |
|
(1) a filing fee for an application for an original |
|
certificate of registration of at least [that does not exceed] |
|
$500; and |
|
(2) a fee for renewal of a certificate of registration |
|
of at least [that does not exceed] $300. |
|
(b) The commission shall establish a fee schedule that takes |
|
into consideration the unit volume or dollar volume of potential |
|
applicants. The commission may increase the fees charged under |
|
Subsection (a) to raise money to provide improved service to the |
|
public in connection with investigations of complaints of |
|
construction defects filed by homeowners under this title. |
|
(c) The fees in Subsection (a) apply to each builder, |
|
including each corporation, limited liability company, |
|
partnership, limited partnership, limited liability partnership, |
|
and subsidiary. |
|
SECTION 14. Chapter 416, Property Code, is amended by |
|
adding Section 416.012 to read as follows: |
|
Sec. 416.012. REGISTRATION REQUIRED TO ENFORCE CONTRACT. A |
|
builder may not sue to collect fees or damages under a contract with |
|
a homeowner unless the builder, at the time the builder entered into |
|
the contract and performed work under the contract for the |
|
homeowner, held a certificate of registration issued under this |
|
chapter. |
|
SECTION 15. Section 418.001, Property Code, is 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, including a violation of Section |
|
162.031; |
|
(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); |
|
(12) failure to obtain a permit required by a |
|
political subdivision before constructing a new home or an |
|
improvement to an existing home; |
|
(13) performing inadequate or incomplete work or |
|
performing work in a poor and unworkmanlike manner; |
|
(14) engaging in fraud or bad faith in a transaction |
|
with a homeowner; |
|
(15) violating this title or a rule adopted under this |
|
title; |
|
(16) abandoning or wilfully failing to perform, |
|
without justification, any home improvement contract or |
|
residential construction project engaged in or undertaken by the |
|
person, or deviating from or disregarding plans or specifications |
|
in any material respect without the consent of the homeowner; |
|
(17) making a substantial misrepresentation in the |
|
procurement of a contract, or making any false promise of a |
|
character likely to influence, persuade, or induce another person |
|
regarding a contract; |
|
(18) engaging in fraud in the execution of, or in the |
|
alteration of, any contract, mortgage, promissory note, or other |
|
document incident to a construction transaction; |
|
(19) using or attempting to use a certificate of |
|
registration that has expired or that has been revoked; |
|
(20) falsely representing that the person holds a |
|
certificate of registration issued under Chapter 416; |
|
(21) entering into a home improvement contract with |
|
the intent to damage the property of a consumer; |
|
(22) working on the property of a consumer without the |
|
consumer's prior authorization; |
|
(23) misrepresenting that the contractor or another |
|
person is an employee or agent of the federal government, the state, |
|
or a political subdivision of the state; |
|
(24) misrepresenting that the supplier or another |
|
person is an employee or agent of a public or private utility; |
|
(25) advertising in any manner that a person holds a |
|
certificate of registration issued under Chapter 416 unless the |
|
advertisement includes an accurate reference to the person's |
|
current certificate of registration number in a manner prescribed |
|
by the commission; |
|
(26) creating or confirming a consumer's impression |
|
that is false and that the builder does not believe to be true; |
|
(27) making a promise to perform work that the person |
|
does not intend to perform or that the person knows will not be |
|
performed; |
|
(28) entering into a contract with a homeowner in |
|
which the total sales price exceeds the value of the work performed |
|
under the contract by more than 25 percent; |
|
(29) acting as a builder using a name other than the |
|
name listed on the person's certificate of registration; |
|
(30) aiding, abetting, or conspiring with a person who |
|
does not hold a certificate of registration to evade the provisions |
|
of this title or rules adopted under this title; |
|
(31) allowing the person's certificate of registration |
|
to be used by another person; |
|
(32) acting as an agent, partner, or associate of a |
|
person who does not hold a certificate of registration with the |
|
intent to evade the provisions of this title or rules adopted under |
|
this title; |
|
(33) demanding or receiving payment for a residential |
|
construction project before the contract is signed; |
|
(34) failing to pay all required taxes; |
|
(35) violating Section 53.2555; |
|
(36) violating Section 53.256; or |
|
(37) violating Chapter 17, Business & Commerce Code, |
|
Title 4 or 5, Labor Code, or federal or state tax law in the course |
|
of acting as a builder. |
|
SECTION 16. Chapter 418, Property Code, is amended by |
|
adding Section 418.005 to read as follows: |
|
Sec. 418.005. DISCIPLINARY ACTION FOR CONDUCT OF OTHERS. A |
|
builder is subject to disciplinary action under this chapter for a |
|
violation of this title by an employee, agent, or partner of the |
|
builder, unless the commission determines that: |
|
(1) the person who committed the violation was an |
|
employee acting outside the scope of the person's employment; or |
|
(2) the builder tried and was unable to prevent the |
|
violation. |
|
SECTION 17. The heading to Chapter 419, Property Code, is |
|
amended to read as follows: |
|
CHAPTER 419. PENALTIES AND ENFORCEMENT PROVISIONS [ADMINISTRATIVE
|
|
PENALTY] |
|
SECTION 18. Chapter 419, Property Code, is amended by |
|
adding Section 419.005 to read as follows: |
|
Sec. 419.005. CRIMINAL PENALTY. (a) A person commits an |
|
offense if the person violates Section 416.001. |
|
(b) An offense under this section is a Class B misdemeanor. |
|
SECTION 19. Chapter 419, Property Code, is amended by |
|
adding Section 419.006 to read as follows: |
|
Sec. 419.006. INJUNCTIVE RELIEF. (a) If a builder commits |
|
a violation of this title or a commission rule and the violation |
|
poses a serious threat of substantial or irreparable harm to |
|
another person, the attorney general shall initiate a suit for: |
|
(1) an injunction against the conduct; |
|
(2) an order for the satisfactory completion of the |
|
residential construction project, as appropriate; or |
|
(3) restitution. |
|
(b) In seeking injunctive relief under this section, the |
|
attorney general is not required to allege or prove that an adequate |
|
remedy at law does not exist. |
|
(c) A suit under this section shall be brought in a district |
|
court in: |
|
(1) Travis County; or |
|
(2) the county in which the alleged violation |
|
occurred. |
|
SECTION 20. Chapter 419, Property Code, is amended by |
|
adding Section 419.007 to read as follows: |
|
Sec. 419.007. PRIVATE CAUSE OF ACTION. (a) In addition to |
|
any other available remedies, a homeowner may bring a cause of |
|
action against a builder who violates this title or a rule adopted |
|
under this title to recover: |
|
(1) $1,000 for each violation; |
|
(2) actual damages; |
|
(3) consequential damages; |
|
(4) punitive damages; |
|
(5) court costs; and |
|
(6) reasonable attorney's fees. |
|
(b) A builder is liable under this section for a violation |
|
of this title committed by an employee, agent, or partner of the |
|
builder, unless the court determines that: |
|
(1) the person who committed the violation was an |
|
employee acting outside the scope of the person's employment; or |
|
(2) the builder tried and was unable to prevent the |
|
violation. |
|
SECTION 21. Subtitle C, Title 16, Property Code, is amended |
|
by adding Chapter 420 to read as follows: |
|
CHAPTER 420. BUILDER RECOVERY FUND |
|
Sec. 420.001. DEFINITION. In this chapter, "fund" means the |
|
builder recovery fund. |
|
Sec. 420.002. RECOVERY FUND. The commission shall maintain |
|
a builder recovery fund to reimburse aggrieved persons who suffer |
|
actual damages from a builder's act in violation of this title or a |
|
rule adopted under this title. An aggrieved person may recover from |
|
the fund based on the act of any person who is a builder at the time |
|
the act occurs, regardless of whether the person holds a |
|
certificate of registration issued under Chapter 416 at the time |
|
the act occurs. |
|
Sec. 420.003. PAYMENTS INTO FUND. (a) In addition to any |
|
other fees required by this chapter, a person who applies for a |
|
certificate of registration under Chapter 416 shall pay a fee in an |
|
amount determined by commission rule and not less than $50. The |
|
commission shall deposit the fee to the credit of the fund before |
|
issuing the certificate of registration. |
|
(b) If the balance in the fund at any time is less than |
|
$250,000, each builder shall pay at the next license renewal, in |
|
addition to the renewal fee, a fee that is equal to the lesser of $50 |
|
or a pro rata share of the amount necessary to obtain a balance in |
|
the fund of $350,000. The commission shall deposit the additional |
|
fee to the credit of the fund. |
|
(c) To ensure the availability of a sufficient amount of |
|
money to pay anticipated claims on the fund, the commission by rule |
|
may provide for the collection of assessments at different times |
|
and under conditions other than those specified by this chapter. |
|
Sec. 420.004. MANAGEMENT OF FUND. (a) The commission shall |
|
hold money credited to the fund in trust to carry out the purpose of |
|
the fund. |
|
(b) Money credited to the fund may be invested in the same |
|
manner as money of the Employees Retirement System of Texas, except |
|
that an investment may not be made that would impair the liquidity |
|
necessary to make payments from the fund as required by this |
|
chapter. |
|
(c) Interest from the investments shall be deposited to the |
|
credit of the fund. |
|
Sec. 420.005. DEADLINE FOR ACTION; NOTICE TO COMMISSION. |
|
(a) An action for a judgment that may result in an order for payment |
|
from the fund may not be brought after the second anniversary of the |
|
date the cause of action accrues. |
|
(b) When an aggrieved person brings an action for a judgment |
|
that may result in an order for payment from the fund, the builder |
|
against whom the action is brought shall notify the commission in |
|
writing of the action. |
|
Sec. 420.006. CLAIM FOR PAYMENT FROM FUND. (a) An aggrieved |
|
person who obtains a court judgment against a builder for a |
|
violation of this title may, after final judgment is entered, |
|
execution returned nulla bona, and a judgment lien perfected, file |
|
a verified claim in the court that entered the judgment. |
|
(b) After the 20th day after the date the aggrieved person |
|
gives written notice to the commission and judgment debtor, the |
|
person may apply to the court that entered the judgment for an order |
|
for payment from the fund of the amount unpaid on the judgment. The |
|
court shall proceed promptly on the application. |
|
Sec. 420.007. ISSUES AT HEARING. At the hearing on the |
|
application for payment from the fund, the aggrieved person must |
|
show: |
|
(1) that the judgment is based on facts allowing |
|
recovery under this chapter; |
|
(2) that the person is not: |
|
(A) the spouse of the judgment debtor or the |
|
personal representative of the spouse; or |
|
(B) a builder; |
|
(3) that, according to the best information available, |
|
the judgment debtor does not have sufficient attachable assets in |
|
this or another state to satisfy the judgment; |
|
(4) the amount that may be realized from the sale of |
|
assets liable to be sold or applied to satisfy the judgment; and |
|
(5) the balance remaining due on the judgment after |
|
application of the amount under Subdivision (4). |
|
Sec. 420.008. COMMISSION RESPONSE. (a) On receipt of |
|
notice under Section 420.006, the commission may notify the |
|
attorney general of the commission's desire to enter an appearance, |
|
file a response, appear at the hearing, defend the action, or take |
|
any other action the commission considers appropriate. |
|
(b) The commission and the attorney general may act under |
|
Subsection (a) only to: |
|
(1) protect the fund from spurious or unjust claims; |
|
or |
|
(2) ensure compliance with the requirements for |
|
recovery under this chapter. |
|
(c) The commission may relitigate in the hearing any |
|
material and relevant issue that was determined in the action that |
|
resulted in the judgment in favor of the aggrieved person. |
|
Sec. 420.009. COURT ORDER FOR PAYMENT. The court shall |
|
order the commission to pay from the fund the amount the court finds |
|
payable on the claim under this chapter if at the hearing the court |
|
is satisfied: |
|
(1) of the truth of each matter the aggrieved person is |
|
required by Section 420.007 to show; and |
|
(2) that the aggrieved person has satisfied each |
|
requirement of Sections 420.006 and 420.007. |
|
Sec. 420.010. PAYMENT LIMITS; ATTORNEY'S FEES. (a) |
|
Payments from the fund for claims, including attorney's fees, |
|
interest, and court costs, arising out of a single transaction may |
|
not exceed a total equal to the greater of $50,000 or five percent |
|
of the recovery fund balance, regardless of the number of |
|
claimants. |
|
(b) Payments from the fund for claims based on judgments |
|
against a single builder may not exceed a total of $100,000 in any |
|
year until the builder has reimbursed the fund for all amounts paid. |
|
(c) If the court finds that the total amount of claims |
|
against a builder exceeds the limitations contained in this |
|
section, the court shall proportionally reduce the amount payable |
|
on each claim. |
|
(d) A person receiving payment from the fund is entitled to |
|
reasonable attorney's fees in the amount determined by the court, |
|
subject to the limitation prescribed by this section. |
|
Sec. 420.011. APPLICATION OF JUDGMENT RECOVERY. An |
|
aggrieved person who receives a recovery on a judgment against a |
|
single defendant before receiving a payment from the fund must |
|
apply the recovery first to actual damages. |
|
Sec. 420.012. SUBROGATION. (a) The commission is |
|
subrogated to all rights of a judgment creditor to the extent of an |
|
amount paid from the fund, and the judgment creditor shall assign to |
|
the commission all right, title, and interest in the judgment up to |
|
that amount. |
|
(b) The commission has priority for repayment from any |
|
subsequent recovery on the judgment. |
|
(c) The commission has priority for recovery from the |
|
judgment debtor's general obligation bond for the amount owed by |
|
the judgment debtor to the fund. |
|
(d) The commission shall deposit any amount recovered on the |
|
judgment to the credit of the fund. |
|
Sec. 420.013. EFFECT ON DISCIPLINARY PROCEEDINGS. (a) This |
|
chapter does not limit the commission's authority to take |
|
disciplinary action against a builder for a violation of this |
|
chapter or a commission rule. |
|
(b) A builder's repayment of all amounts owed to the fund |
|
does not affect another disciplinary proceeding brought under this |
|
title. |
|
Sec. 420.014. WAIVER OF RIGHTS. An aggrieved person who |
|
does not comply with this chapter waives the person's rights under |
|
this chapter. |
|
Sec. 420.015. NOTICE TO CONSUMERS AND SERVICE RECIPIENTS. |
|
(a) Each builder shall provide notice of the availability of |
|
payment from the fund for aggrieved persons: |
|
(1) on a written contract for the builder's services; |
|
(2) on a brochure that the builder distributes; |
|
(3) on a sign prominently displayed in the builder's |
|
place of business; |
|
(4) in a bill or receipt for the builder's services; |
|
and |
|
(5) in a prominent display on the Internet website of a |
|
person regulated under this chapter. |
|
(b) The notice must include: |
|
(1) the commission's name, mailing address, and |
|
telephone number; and |
|
(2) any other information required by commission rule. |
|
SECTION 22. Subtitle C, Title 16, Property Code, is amended |
|
by adding Chapter 421 to read as follows: |
|
CHAPTER 421. BUILDING CONTRACT PROVISIONS |
|
Sec. 421.001. REQUIRED WRITTEN DISCLOSURE. Before |
|
beginning work on a project to construct a new home or an |
|
improvement to an existing home when the cost of the work exceeds |
|
$2,500, a builder must provide a notice to the homeowner in at least |
|
14-point bold type that gives the telephone number of the |
|
commission and states: |
|
STATE LAW REQUIRES THAT A PERSON HOLD A CERTIFICATE OF |
|
REGISTRATION FROM THE TEXAS RESIDENTIAL CONSTRUCTION COMMISSION IF |
|
THE PERSON CONTRACTS TO CONSTRUCT A NEW HOME OR IF THE PERSON |
|
CONTRACTS TO CONSTRUCT AN IMPROVEMENT TO AN EXISTING HOME AND THE |
|
TOTAL COST OF THE IMPROVEMENT IS $2,500 OR MORE (INCLUDING LABOR AND |
|
MATERIALS). |
|
BUILDERS ARE REGULATED BY LAWS DESIGNED TO PROTECT THE |
|
PUBLIC. YOU MAY CONTACT THE COMMISSION AT [insert commission's |
|
telephone number] TO FIND OUT WHETHER THE BUILDER HAS A VALID |
|
CERTIFICATE OF REGISTRATION. THE COMMISSION HAS COMPLETE |
|
INFORMATION ON THE HISTORY OF BUILDERS, INCLUDING ANY SUSPENSION, |
|
REVOCATION, COMPLAINT, AND RESOLUTION OF COMPLAINT. |
|
IF YOU HAVE A COMPLAINT AGAINST A BUILDER, YOU MAY CONTACT THE |
|
TOLL-FREE TELEPHONE NUMBER TO OBTAIN A COMPLAINT FORM AND FURTHER |
|
INFORMATION. |
|
IF THE BUILDER FAILED TO COMPLETE THE WORK OR PERFORMED POOR |
|
QUALITY WORK, YOU MAY FILE A CLAIM WITH THE RECOVERY FUND BY |
|
CONTACTING THE TOLL-FREE TELEPHONE NUMBER. YOU MUST FILE ALL CLAIMS |
|
AGAINST THE FUND WITHIN TWO YEARS OF THE DATE THE BUILDER ABANDONED |
|
THE PROJECT OR PERFORMED THE POOR QUALITY WORK. |
|
Sec. 421.002. REQUIRED CONTRACT PROVISIONS. A contract for |
|
the construction of a new home or an improvement to an existing home |
|
when the cost of the work exceeds $2,500 is not enforceable against |
|
a homeowner unless the contract: |
|
(1) is in writing and legible; |
|
(2) is signed by the homeowner and by the builder; |
|
(3) contains the entire agreement between the |
|
homeowner and the builder; |
|
(4) contains the date of the transaction; |
|
(5) is entered into with a builder who holds a |
|
certificate of registration issued under Chapter 416; |
|
(6) contains the builder's name, physical address, and |
|
certificate of registration number; |
|
(7) contains the approximate starting date and |
|
completion date for the work under the contract; |
|
(8) contains the notice required by Section 421.001; |
|
(9) includes a description of the work to be performed |
|
and the materials to be used and a set of specifications that cannot |
|
be changed without the written approval of the homeowner; |
|
(10) includes the total sales price due under the |
|
contract or the procedure by which the final price will be |
|
determined; |
|
(11) includes the amount of any down payment, which |
|
may not exceed one-third of the total contract price; |
|
(12) includes a schedule of any progress payments |
|
required, including the amount of each payment and the state of |
|
completion of the work when the payment is due; |
|
(13) includes a statement that on satisfactory payment |
|
being made for any portion of the work performed, the builder will, |
|
before any further payment is made, provide to the homeowner a full |
|
and unconditional release from any claim or mechanic's lien for |
|
that portion of the work; |
|
(14) includes a notice in at least 14-point bold type |
|
that the homeowner should not sign the contract if there are any |
|
blanks and that the homeowner is entitled to a copy of the contract |
|
at the time the homeowner signs it; |
|
(15) includes a notice of a consumer's right to cancel |
|
the transaction, if a right to cancel applies to the transaction; |
|
(16) includes a description of any collateral taken to |
|
secure the contract; |
|
(17) advises the homeowner that it is the |
|
responsibility of the builder to obtain all necessary permits to |
|
perform the work; |
|
(18) complies with all applicable state or federal |
|
credit laws if the contract includes financing for the work to be |
|
performed; and |
|
(19) includes a statement that any trustee in |
|
bankruptcy, receiver, or successor in interest of the contract is |
|
subject to all claims and defenses that the homeowner could assert |
|
against the builder. |
|
Sec. 421.003. PROHIBITED CONTRACT PROVISIONS. Each of the |
|
following provisions is void and unenforceable if included in a |
|
contract for the construction of a new home or the improvement of an |
|
existing home when the cost of the work exceeds $2,500: |
|
(1) a hold harmless clause; |
|
(2) a waiver of the requirements of a health, safety, |
|
or building code or ordinance; |
|
(3) a confession of judgment clause; |
|
(4) a waiver of any right to a jury trial in any action |
|
brought by or against the homeowner; |
|
(5) a clause in which the homeowner relieves the |
|
builder from liability for any legal or equitable remedy that the |
|
homeowner may have against the builder under the contract or other |
|
instrument; |
|
(6) a mandatory arbitration clause; |
|
(7) a provision relieving the builder from liability |
|
for acts committed by the builder or the builder's agent in the |
|
collection of any payment or in the repossession of any goods; |
|
(8) a provision in which the homeowner agrees not to |
|
assert any claim or defense arising out of the contract; |
|
(9) a provision stating that the builder may be |
|
awarded attorney's fees and costs; and |
|
(10) a waiver of any provision of this title. |
|
SECTION 23. Section 426.004, Property Code, is amended to |
|
read as follows: |
|
Sec. 426.004. FEES. (a) A builder [party] who submits a |
|
request under this subtitle shall pay any amount required by the |
|
commission to cover the expense of the third-party inspector. |
|
(b) [The commission shall adopt rules permitting a waiver or
|
|
reduction of the inspection expenses for homeowners demonstrating a
|
|
financial inability to pay the expenses.
|
|
[(c)] If the transfer of the title of the home from the |
|
builder to the initial homeowner occurred before January 1, 2004, |
|
or if the contract for improvements or additions between the |
|
builder and homeowner was entered into before January 1, 2004, a |
|
builder [the person] who submits a request involving the home shall |
|
pay, in addition to the inspection expenses required by this |
|
section, the registration fee required by Section 426.003. |
|
SECTION 24. Section 428.004(d), Property Code, is amended |
|
to read as follows: |
|
(d) Except as provided by this subsection, the third-party |
|
inspector's recommendation may not include payment of any monetary |
|
consideration. If the inspector finds for a homeowner [the party] |
|
who submitted the request, the commission may order the builder |
|
[other party] to reimburse all or part of the fees and inspection |
|
expenses paid by the requestor under Section 426.004. |
|
SECTION 25. The changes in law made by this Act to Section |
|
416.002, Property Code, apply only to an application for a |
|
certificate of registration filed with the Texas Residential |
|
Construction Commission on or after the effective date of this Act. |
|
An application filed before that date is governed by the law in |
|
effect when the application is filed, and the former law is |
|
continued in effect for that purpose. |
|
SECTION 26. Section 416.012, Property Code, as added by |
|
this Act, applies only to work performed by a builder on or after |
|
the effective date of this Act. Work performed by a builder before |
|
that date is governed by the law in effect when the work is |
|
performed, and the former law is continued in effect for that |
|
purpose. |
|
SECTION 27. The changes in law made by this Act by the |
|
amendment of Section 418.001, Property Code, and the enactment of |
|
Chapter 420 and Sections 418.005, 419.006, and 419.007, Property |
|
Code, apply only to conduct that occurs on or after the effective |
|
date of this Act. Conduct that occurs before that date is governed |
|
by the law in effect when the conduct occurs, and the former law is |
|
continued in effect for that purpose. |
|
SECTION 28. Section 214.906, Local Government Code, as |
|
added by this Act, applies only to an application for a construction |
|
permit filed with a municipality on or after the effective date of |
|
this Act. An application filed before that date is governed by the |
|
law in effect when the application is filed, and the former law is |
|
continued in effect for that purpose. |
|
SECTION 29. The changes in law made by this Act by the |
|
enactment of Section 53.2555, Property Code, and the amendment of |
|
Sections 41.007(a) and 162.006(a), Property Code, apply only to a |
|
contract entered into on or after the effective date of this Act. A |
|
contract entered into before the effective date of this Act is |
|
governed by the law in effect when the contract is entered into, and |
|
the former law is continued in effect for that purpose. |
|
SECTION 30. (a) Except as provided by Subsection (b) of this |
|
section, this Act takes effect September 1, 2007. |
|
(b) The changes in law made by this Act to Section 401.003, |
|
Property Code, take effect January 1, 2008. |