|
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A BILL TO BE ENTITLED
|
|
AN ACT
|
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relating to the continuation and functions of the Texas Residential |
|
Construction Commission; providing penalties. |
|
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Chapter 27, Property Code, is amended by adding |
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Section 27.0021 to read as follows: |
|
Sec. 27.0021. TIME FOR CERTAIN OFFERS AND ELECTIONS BY |
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BUILDER. In a dispute subject to Subtitle D, Title 16, if a party to |
|
the dispute is authorized to file an action described by Section |
|
426.005(a) before a recommendation is issued by a third-party |
|
inspector, before a ruling on an appeal of a third-party |
|
inspector's report, or before the expiration of the mediation |
|
period under Section 428A.004, a builder may make a written offer of |
|
settlement to the claimant under Sections 27.004(b) and (c) or an |
|
election to purchase the residence under Section 27.0042 not later |
|
than the 15th day after the earliest date on which the action may be |
|
filed under Section 426.005(g) or 428A.004(b). |
|
SECTION 2. Section 27.003(a), Property Code, is amended to |
|
read as follows: |
|
(a) In an action to recover damages or other relief arising |
|
from a construction defect: |
|
(1) a contractor is not liable for any percentage of |
|
damages caused by: |
|
(A) negligence of a person other than the |
|
contractor or an agent, employee, or subcontractor of the |
|
contractor; |
|
(B) failure of a person other than the contractor |
|
or an agent, employee, or subcontractor of the contractor to: |
|
(i) take reasonable action to mitigate the |
|
damages; or |
|
(ii) take reasonable action to maintain the |
|
residence; |
|
(C) normal wear, tear, or deterioration; |
|
(D) normal shrinkage due to drying or settlement |
|
of construction components within the tolerance of building |
|
standards; or |
|
(E) the contractor's reliance on written |
|
information relating to the residence, appurtenance, or real |
|
property on which the residence and appurtenance are affixed that |
|
was obtained from official government records, if the written |
|
information was false or inaccurate and the contractor did not know |
|
and could not reasonably have known of the falsity or inaccuracy of |
|
the information; and |
|
(2) if an assignee of the claimant or a person |
|
subrogated to the rights of a claimant fails to provide the |
|
contractor with the written notice and opportunity to inspect and |
|
offer to repair required by Section 27.004 or fails to request an |
|
[state-sponsored] inspection [and dispute resolution] under |
|
Chapter 428, if applicable, before performing repairs, the |
|
contractor is not liable for the cost of any repairs or any |
|
percentage of damages caused by repairs made to a construction |
|
defect at the request of an assignee of the claimant or a person |
|
subrogated to the rights of a claimant by a person other than the |
|
contractor or an agent, employee, or subcontractor of the |
|
contractor. |
|
SECTION 3. Sections 27.004(b), (c), (d), and (l), Property |
|
Code, are amended to read as follows: |
|
(b) Not later than the 15th day after the date of a final, |
|
unappealable determination of a dispute under Subtitle D, Title 16, |
|
if applicable, or not later than the 45th day after the date the |
|
contractor receives the notice under this section, if Subtitle D, |
|
Title 16, does not apply, the contractor may make a written offer of |
|
settlement to the claimant. The offer must be sent to the claimant |
|
at the claimant's last known address or to the claimant's attorney |
|
by certified mail, return receipt requested. The offer may include |
|
either an agreement by the contractor to repair or to have repaired |
|
by an independent contractor partially or totally at the |
|
contractor's expense or at a reduced rate to the claimant any |
|
construction defect described in the notice and shall describe in |
|
reasonable detail the kind of repairs which will be made. The |
|
repairs shall be made not later than the 45th day after the date the |
|
contractor receives written notice of acceptance of the settlement |
|
offer, unless completion is delayed by the claimant or by other |
|
events beyond the control of the contractor. [If a contractor makes
|
|
a written offer of settlement that the claimant considers to be
|
|
unreasonable:
|
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[(1)
on or before the 25th day after the date the
|
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claimant receives the offer, the claimant shall advise the
|
|
contractor in writing and in reasonable detail of the reasons why
|
|
the claimant considers the offer unreasonable; and
|
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[(2)
not later than the 10th day after the date the
|
|
contractor receives notice under Subdivision (1), the contractor
|
|
may make a supplemental written offer of settlement to the claimant
|
|
by sending the offer to the claimant or the claimant's attorney.] |
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(c) If compliance with Subtitle D, Title 16, or the giving |
|
of the notice under Subsections (a) and (b) within the period |
|
prescribed by those subsections is impracticable because of the |
|
necessity of initiating an action at an earlier date to prevent |
|
expiration of the statute of limitations or if the complaint is |
|
asserted as a counterclaim, compliance with Subtitle D, Title 16, |
|
or the notice is not required. However, the action or counterclaim |
|
shall specify in reasonable detail each construction defect that is |
|
the subject of the complaint. If Subtitle D, Title 16, applies to |
|
the complaint, simultaneously with the filing of an action by a |
|
claimant, the claimant must submit a request under Section 428.001. |
|
If Subtitle D, Title 16, does not apply, the inspection provided for |
|
by Subsection (a) may be made not later than the 75th day after the |
|
date of service of the suit, request for arbitration, or |
|
counterclaim on the contractor, and the offer provided for by |
|
Subsection (b) may be made not later than the 15th day after the |
|
date the [state-sponsored] inspection [and dispute resolution] |
|
process under Chapter 428 is completed, if Subtitle D, Title 16, |
|
applies, or not later than the 60th day after the date of service, |
|
if Subtitle D, Title 16, does not apply. If, while an action |
|
subject to this chapter is pending, the statute of limitations for |
|
the cause of action would have expired and it is determined that the |
|
provisions of Subsection (a) were not properly followed, the action |
|
shall be abated to allow compliance with Subsections (a) and (b). |
|
(d) The court or arbitration tribunal shall abate an action |
|
governed by this chapter if Subsection (c) does not apply and the |
|
court or tribunal, after a hearing, finds that the contractor is |
|
entitled to abatement because the claimant failed to comply with |
|
the requirements of Subtitle D, Title 16, if applicable or [,] |
|
failed to provide the notice or failed to give the contractor a |
|
reasonable opportunity to inspect the property as required by |
|
Subsection (a)[, or failed to follow the procedures specified by
|
|
Subsection (b)]. An action is automatically abated without the |
|
order of the court or tribunal beginning on the 11th day after the |
|
date a motion to abate is filed if the motion: |
|
(1) is verified and alleges that the person against |
|
whom the action is pending did not receive the written notice |
|
required by Subsection (a), the person against whom the action is |
|
pending was not given a reasonable opportunity to inspect the |
|
property as required by Subsection (a), or the claimant failed to |
|
follow the procedures specified by [Subsection (b) or] Subtitle D, |
|
Title 16; and |
|
(2) is not controverted by an affidavit filed by the |
|
claimant before the 11th day after the date on which the motion to |
|
abate is filed. |
|
(l) If Subtitle D, Title 16, applies to the claim and the |
|
contractor's offer of repair is accepted by the claimant, the |
|
contractor, on completion of the repairs and in accordance with |
|
Section 428.0041 [at the contractor's expense], shall engage the |
|
third-party inspector who provided the recommendation regarding |
|
the construction defect involved in the claim to inspect the |
|
repairs and determine whether the residence, as repaired, complies |
|
with the applicable limited statutory warranty and building and |
|
performance standards adopted by the commission. [The contractor
|
|
is entitled to a reasonable period not to exceed 15 days to address
|
|
minor cosmetic items that are necessary to fully complete the
|
|
repairs.] The determination of the third-party inspector of |
|
whether the repairs comply with the applicable limited statutory |
|
warranty and building and performance standards adopted by the |
|
commission establishes a rebuttable presumption on that issue. A |
|
party seeking to dispute, vacate, or overcome that presumption must |
|
establish by clear and convincing evidence that the determination |
|
is inconsistent with the applicable limited statutory warranty and |
|
building and performance standards. |
|
SECTION 4. Section 41.007(a), Property Code, is amended to |
|
read as follows: |
|
(a) A contract for improvements to an existing residence |
|
described by Section 41.001(b)(3) must contain: |
|
(1) the contractor's license [certificate of
|
|
registration] number from the Texas Residential Construction |
|
Commission if the contractor is required to be licensed [register] |
|
as a builder by [with] the commission; |
|
(2) the address and telephone number at which the |
|
owner may file a complaint with the Texas Residential Construction |
|
Commission about the conduct of the contractor if the contractor is |
|
required to be licensed [register] as a builder by [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: |
|
"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 5. Chapter 401, Property Code, is amended by adding |
|
Section 401.0011 to read as follows: |
|
Sec. 401.0011. PURPOSE; TEXAS RESIDENTIAL CONSTRUCTION |
|
COMMISSION. (a) The Texas Residential Construction Commission |
|
oversees persons required to be licensed by the commission to |
|
ensure that those persons are responsible and accountable to the |
|
homeowners with whom they contract. |
|
(b) The commission's mission includes: |
|
(1) educating builders and homeowners about all |
|
aspects of the residential construction industry affecting the |
|
building or remodeling of homes; and |
|
(2) facilitating resolution of disputes between |
|
builders and homeowners regarding construction defects through the |
|
state inspection program and through a voluntary mediation program. |
|
SECTION 6. Section 401.002, Property Code, is amended by |
|
amending Subdivisions (3) and (4) and adding Subdivision (11-a) to |
|
read as follows: |
|
(3) "Approved architect" means an architect licensed |
|
by this state and approved by the commission to provide services to |
|
the commission in connection with the state [state-sponsored] |
|
inspection program [and dispute resolution process]. |
|
(4) "Approved structural engineer" means a licensed |
|
professional engineer approved by the commission to provide |
|
services to the commission in connection with the state |
|
[state-sponsored] inspection program [and dispute resolution
|
|
process]. |
|
(11-a) "State inspection program" means the program |
|
administered by the commission under Subtitle D under which homes |
|
are inspected to determine whether alleged construction defects |
|
exist and inspectors issue determinations and recommendations |
|
regarding the alleged defects. |
|
SECTION 7. Section 401.003, Property Code, is amended by |
|
amending Subsections (c) and (d) and adding Subsection (e) to read |
|
as follows: |
|
(c) The term does not include a [any] person who: |
|
(1) has been issued a license by this state or an |
|
agency 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; [or] |
|
(2) sells a new home and: |
|
(A) does not construct or supervise or manage the |
|
construction of the home; and |
|
(B) holds a license issued under Chapter 1101, |
|
Occupations Code, or is exempt from that chapter under Section |
|
1101.005, Occupations Code; |
|
(3) guarantees or co-makes a construction loan and is |
|
not otherwise a builder under Subsection (a); or |
|
(4) constructs or makes improvements to not more than |
|
one home in a 12-month period. |
|
(d) The term does not include a nonprofit business entity |
|
that is exempt from taxation under Section 501(c)(3), Internal |
|
Revenue Code, if: |
|
(1) the construction or supervision or management of |
|
the construction of the home, material improvement, or improvement |
|
sold by the nonprofit business entity is performed by a builder |
|
licensed [registered] under this title; |
|
(2) the builder contractually agrees to comply with |
|
the provisions of this title; |
|
(3) the builder is contractually liable to the |
|
homeowner for the warranties and building and performance standards |
|
of this title; and |
|
(4) the nonprofit business entity does not participate |
|
directly in the construction of the home, material improvement, or |
|
improvement. |
|
(e) The term does not include a federally insured financial |
|
institution or a subsidiary or affiliate of the institution. |
|
SECTION 8. Section 401.005, Property Code, is amended by |
|
amending Subsection (c) and adding Subsection (d) to read as |
|
follows: |
|
(c) Except as provided by Subsection (d), a person [An
|
|
individual] who builds a home, [or] a material improvement to a |
|
home, or an improvement to the interior of an existing home when the |
|
cost of the work exceeds $10,000 and sells the home immediately |
|
following completion of the building or remodeling and does not |
|
live in the home for at least one year following completion of the |
|
building or remodeling, is responsible as a builder under the |
|
warranty obligation created by this title for work completed by the |
|
person [individual]. Responsibility under this subsection |
|
requires a person [does not automatically require an individual] to |
|
obtain a license [register] under Section 416.001. |
|
(d) Notwithstanding Subsection (c), this title does not |
|
apply to an individual who: |
|
(1) improves the individual's homestead by improving |
|
the interior of an existing home that is the individual's primary |
|
residence when the cost of the work exceeds $10,000; and |
|
(2) sells the home and does not live in the home for at |
|
least one year following the completion of the improvement. |
|
SECTION 9. Section 401.006, Property Code, is amended to |
|
read as follows: |
|
Sec. 401.006. SUNSET PROVISION. (a) The Texas Residential |
|
Construction 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 title expires |
|
September 1, 2015 [2009]. |
|
(b) The Sunset Advisory Commission shall conduct a |
|
special-purpose review of the Texas Residential Construction |
|
Commission as part of the Sunset Advisory Commission's review of |
|
agencies for the 83rd Legislature. The Sunset Advisory |
|
Commission's report to the 83rd Legislature regarding the review |
|
must include an assessment of the Texas Residential Construction |
|
Commission's compliance with the mandates and requirements |
|
contained in legislation passed by the 81st and 82nd Legislatures |
|
and the agency's management practices and enforcement efforts to |
|
implement those changes to the statutes governing the agency |
|
enacted by those legislatures. This subsection expires September 1, |
|
2013. |
|
SECTION 10. Sections 401.007(a), (b), and (c), Property |
|
Code, are amended to read as follows: |
|
(a) The [If the] commission [has reasonable cause to believe
|
|
that a person is violating a statute to which this chapter applies,
|
|
the commission, in addition to any other authorized action,] may |
|
issue an emergency order, including an emergency order to cease and |
|
desist, to any person regardless of whether the person is a builder |
|
licensed under this title [from the violation or an order to take
|
|
affirmative action, or both], to enforce a statute to which this |
|
chapter applies if the commission determines that an emergency |
|
exists requiring immediate action to protect the public health and |
|
safety or if the commission has reasonable cause to believe that a |
|
person is violating a statute to which this chapter applies. The |
|
commission may issue the emergency order without notice and hearing |
|
or with any notice and hearing the commission considers practicable |
|
under the circumstances [compliance]. A person may appeal the |
|
order directly to district court in accordance with Chapter 2001, |
|
Government Code. |
|
(b) The [Before issuing an order under this section, the] |
|
commission shall set the time and place and give notice for a |
|
hearing to affirm, modify, or set aside an emergency order that was |
|
issued without a hearing [of a hearing before a hearings officer]. |
|
The hearing is governed by Chapter 2001, Government Code. Based on |
|
the findings of fact, conclusions of law, and recommendations of |
|
the hearings officer, the commission by order may find whether a |
|
violation has occurred. |
|
(c) The commission, after providing notice and an |
|
opportunity to appear for a hearing, may impose against a person who |
|
violates an emergency [a cease and desist] order an administrative |
|
penalty in an amount not to exceed $1,000 for each day of violation. |
|
In addition to any other remedy provided by law, the attorney |
|
general or the commission may institute in district court a suit for |
|
injunctive relief and to collect an administrative penalty. A bond |
|
is not required of the commission with respect to injunctive relief |
|
granted under this section. In the action, the court may enter as |
|
proper an order awarding a preliminary or final injunction. |
|
SECTION 11. Chapter 401, Property Code, is amended by |
|
adding Sections 401.008 and 401.009 to read as follows: |
|
Sec. 401.008. REFERENCES TO REGISTRATION. Unless the |
|
context clearly indicates otherwise, a reference in this title to a |
|
registered builder means a licensed builder. A reference in this |
|
title to a certificate of registration held by a builder under this |
|
title means a license. |
|
Sec. 401.009. VENUE FOR ARBITRATION. (a) An arbitration of |
|
a dispute involving a construction defect shall be conducted in the |
|
county in which the home alleged to contain the defect is located. |
|
(b) The requirements of this section may not be waived by |
|
contract. |
|
SECTION 12. Sections 406.001(a) and (c), Property Code, are |
|
amended to read as follows: |
|
(a) The Texas Residential Construction Commission consists |
|
of 11 [nine] members appointed by the governor with the advice and |
|
consent of the senate as follows: |
|
(1) four members must be builders who each hold a |
|
license [certificate of registration] under Chapter 416; |
|
(2) four [three] members must be representatives of |
|
the general public; |
|
(3) one member must be a licensed professional |
|
engineer who practices in the area of residential construction; |
|
[and] |
|
(4) one member must be [either] a licensed architect |
|
who practices in the area of residential construction; and |
|
(5) one member must be [or] a building inspector who |
|
meets the requirements set forth in Chapter 427 and practices in the |
|
area of residential construction. |
|
(c) A person may not be a public member of the commission if |
|
the person or the person's spouse: |
|
(1) is a builder licensed by [registered with] the |
|
commission, or is otherwise registered, certified, or licensed by a |
|
regulatory agency in the field of residential construction; |
|
(2) is employed by or participates in the management |
|
of a business entity or other organization regulated by or |
|
receiving money from the commission; |
|
(3) owns or controls, directly or indirectly, more |
|
than a 10 percent interest in a business entity or other |
|
organization regulated by or receiving money from the commission; |
|
or |
|
(4) uses or receives a substantial amount of tangible |
|
goods, services, or money from the commission other than |
|
compensation or reimbursement authorized by law for commission |
|
membership, attendance, or expenses. |
|
SECTION 13. Section 406.002(a), Property Code, is amended |
|
to read as follows: |
|
(a) Commission members serve staggered six-year terms, with |
|
three or four members' terms expiring February 1 of each |
|
odd-numbered year. The terms of three of the builder |
|
representatives must expire in different odd-numbered years. The |
|
terms [term] of three [one] of the representatives of the general |
|
public must expire in different [each] odd-numbered years [year]. |
|
SECTION 14. Section 408.001, Property Code, is amended to |
|
read as follows: |
|
Sec. 408.001. RULES. The commission shall adopt rules as |
|
necessary for the implementation of this title, including rules: |
|
(1) governing the state [state-sponsored] inspection |
|
program [and dispute resolution process], including building and |
|
performance standards, administrative regulations, and the conduct |
|
of hearings under Subtitle D; |
|
(2) establishing limited statutory warranty and |
|
building and performance standards for residential construction; |
|
(3) approving third-party warranty companies; and |
|
(4) approving third-party inspectors. |
|
SECTION 15. Sections 408.002(c) and (d), Property Code, are |
|
amended to read as follows: |
|
(c) The commission may charge a reasonable fee for: |
|
(1) [a homeowner to submit a request for
|
|
state-sponsored inspection under Subtitle D;
|
|
[(2)] providing public information requested under |
|
Chapter 552, Government Code, excluding information requested from |
|
the commission under Section 409.001; or |
|
(2) [(3)] producing, mailing, and distributing |
|
special printed materials and publications generated in bulk by the |
|
commission for use and distribution by builders. |
|
(d) The commission may not charge [waive or reduce the fee
|
|
for an inspection under Subtitle D for] a homeowner a [who
|
|
demonstrates an inability to pay the] fee in connection with a |
|
complaint, request, or other proceeding under Chapter 409 or |
|
Subtitle D. |
|
SECTION 16. Chapter 408, Property Code, is amended by |
|
adding Sections 408.006 and 408.007 to read as follows: |
|
Sec. 408.006. USE OF TECHNOLOGY. The commission shall |
|
implement a policy requiring the commission to use appropriate |
|
technological solutions to improve the commission's ability to |
|
perform its functions. The policy must ensure that the public is |
|
able to interact with the commission on the Internet. |
|
Sec. 408.007. NEGOTIATED RULEMAKING AND ALTERNATIVE |
|
DISPUTE RESOLUTION PROCEDURES. (a) The commission shall develop |
|
and implement a policy to encourage the use of: |
|
(1) negotiated rulemaking procedures under Chapter |
|
2008, Government Code, for the adoption of commission rules; and |
|
(2) appropriate alternative dispute resolution |
|
procedures under Chapter 2009, Government Code, to assist in the |
|
resolution of internal and external disputes under the commission's |
|
jurisdiction. |
|
(b) The commission's procedures relating to alternative |
|
dispute resolution must conform, to the extent possible, to any |
|
model guidelines issued by the State Office of Administrative |
|
Hearings for the use of alternative dispute resolution by state |
|
agencies. |
|
(c) The commission shall designate a trained person to: |
|
(1) coordinate the implementation of the policy |
|
adopted under Subsection (a); |
|
(2) serve as a resource for any training needed to |
|
implement the procedures for negotiated rulemaking or alternative |
|
dispute resolution; and |
|
(3) collect data concerning the effectiveness of those |
|
procedures, as implemented by the commission. |
|
SECTION 17. Section 409.001(a), Property Code, is amended |
|
to read as follows: |
|
(a) The commission shall prepare information of public |
|
interest describing the functions of the commission, the provisions |
|
of the limited statutory warranty and building and performance |
|
standards, the state [state-sponsored] inspection program [and
|
|
dispute resolution process], and the procedures by which complaints |
|
or requests are filed with and resolved by the commission. |
|
SECTION 18. Section 409.0011(b), Property Code, is amended |
|
to read as follows: |
|
(b) The commission shall create and make accessible to the |
|
public an electronic list and a hard-copy list of builders who: |
|
(1) are licensed by [registered with] the commission; |
|
and |
|
(2) provide in this state building services, including |
|
accessible floor plans, to persons with mobility-related special |
|
needs. |
|
SECTION 19. Section 409.004, Property Code, is amended to |
|
read as follows: |
|
Sec. 409.004. DIRECTORY OF BUILDERS AND CERTAIN INFORMATION |
|
REGARDING BUILDERS. (a) The commission shall make available to the |
|
public a list of each builder who holds a license [certificate of
|
|
registration] issued under Chapter 416. |
|
(b) The commission shall post information on the |
|
commission's Internet website regarding the number of complaints |
|
the commission receives during a calendar year regarding a builder |
|
that are justified, expressed as a percentage of the total number of |
|
homes registered by the builder during the calendar year. A |
|
complaint is justified if the complaint is closed and the |
|
commission has taken disciplinary action against the builder. The |
|
commission shall update annually the information required by this |
|
subsection. |
|
SECTION 20. The heading to Subtitle C, Title 16, Property |
|
Code, is amended to read as follows: |
|
SUBTITLE C. BUILDER LICENSING [REGISTRATION] |
|
SECTION 21. The heading to Chapter 416, Property Code, is |
|
amended to read as follows: |
|
CHAPTER 416. LICENSE [CERTIFICATE OF REGISTRATION] |
|
SECTION 22. Section 416.001, Property Code, is amended to |
|
read as follows: |
|
Sec. 416.001. LICENSE [REGISTRATION] REQUIRED; RULES; |
|
OFFENSE. (a) Notwithstanding any other law, a [A] person may not |
|
engage in business as a builder in this state or act as a builder |
|
unless the person holds a license [certificate of registration] |
|
under this chapter. |
|
(b) The commission shall adopt all rules necessary to |
|
implement the licensing program under this chapter, including rules |
|
relating to: |
|
(1) license eligibility, subject to the requirements |
|
of this chapter; |
|
(2) renewal requirements, examination requirements, |
|
and continuing education requirements for license holders; |
|
(3) security and insurance requirements; |
|
(4) disciplinary actions; and |
|
(5) any other issues as determined necessary by the |
|
commission. |
|
(c) A person commits an offense if the person violates |
|
Subsection (a). An offense under this section is a Class B |
|
misdemeanor. |
|
SECTION 23. The heading to Section 416.002, Property Code, |
|
is amended to read as follows: |
|
Sec. 416.002. LICENSE APPLICATION [FOR CERTIFICATE]. |
|
SECTION 24. Sections 416.002(a) and (e), Property Code, are |
|
amended to read as follows: |
|
(a) An applicant for an original or renewal license |
|
[certificate of registration] must submit an application on a form |
|
prescribed by the commission. |
|
(e) Based on a commission investigation of an alleged |
|
violation of Sections 418.001(13)-(19) [418.001(a)(14)-(20)], the |
|
commission may require an applicant for renewal of a license |
|
[certificate of registration] to disclose to the commission every |
|
person with an ownership interest in the applicant's business as a |
|
builder. This subsection does not apply to a publicly traded |
|
company. |
|
SECTION 25. Section 416.004(a), Property Code, is amended |
|
to read as follows: |
|
(a) The commission shall charge and collect: |
|
(1) a filing fee for an application for an original |
|
license [certificate of registration] that does not exceed $500; |
|
(2) a fee for renewal of a license [certificate of
|
|
registration] that does not exceed $300; and |
|
(3) a late fee that does not exceed the amount of the |
|
fee due if payment of a license [registration] application or |
|
renewal fee due under this title is late. |
|
SECTION 26. Section 416.005, Property Code, is amended to |
|
read as follows: |
|
Sec. 416.005. GENERAL ELIGIBILITY REQUIREMENTS. (a) A |
|
person may not receive an original license [a certificate of
|
|
registration] under this chapter unless: |
|
(1) the person, at the time of the application: |
|
(A) is at least 18 years of age; and |
|
(B) is a citizen of the United States or a |
|
lawfully admitted alien; [and] |
|
(2) the commission is satisfied with the person's |
|
honesty, trustworthiness, and integrity based on information |
|
supplied or discovered in connection with the person's application; |
|
and |
|
(3) the person complies with Subsection (b). |
|
(b) To receive an original license, the person must complete |
|
an eight-hour course, one hour of which must address ethics and two |
|
hours of which must address: |
|
(1) limited statutory warranties; |
|
(2) building and performance standards; |
|
(3) requirements of the International Residential |
|
Code as adopted under Section 430.001; and |
|
(4) other statutes and rules that apply to builders |
|
under this title. |
|
SECTION 27. Chapter 416, Property Code, is amended by |
|
adding Section 416.0051 to read as follows: |
|
Sec. 416.0051. BOND REQUIREMENT. (a) In addition to the |
|
requirements for the issuance of an original license under Section |
|
416.005, before an original license may be issued, the person to |
|
whom the license is to be issued must file with the commission a |
|
surety bond approved by the commission that is: |
|
(1) in the amount of $25,000; |
|
(2) payable to the commission; and |
|
(3) for the benefit of a party who suffers damages |
|
arising from the license holder's violation of this title. |
|
(b) The security required by this section must be maintained |
|
by the license holder in the required amount as a condition of |
|
licensure. |
|
SECTION 28. Section 416.006, Property Code, is amended to |
|
read as follows: |
|
Sec. 416.006. ADDITIONAL ELIGIBILITY REQUIREMENTS FOR |
|
BUSINESS ENTITIES. (a) To be eligible for an original or renewal |
|
license [certificate of registration] under this chapter: |
|
(1) a corporation, other than a nonprofit corporation, |
|
must designate one of its officers as its agent for the purposes of |
|
this chapter; |
|
(2) a limited liability company must designate one of |
|
its managers as its agent for the 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 the purposes of this chapter; and |
|
(4) a nonprofit corporation must designate one of its |
|
officers or executive-level administrators as its agent for the |
|
purposes of this chapter. |
|
(b) A corporation, limited liability company, partnership, |
|
limited partnership, or limited liability partnership is not |
|
eligible to hold a license [be registered] under this chapter and |
|
may not act as a builder unless the entity's designated agent is |
|
individually licensed [registered] as a builder. |
|
SECTION 29. Chapter 416, Property Code, is amended by |
|
adding Section 416.0061 to read as follows: |
|
Sec. 416.0061. EXAMINATION. (a) Except as otherwise |
|
provided by this section and effective May 1, 2010, each applicant |
|
for an original individual license under this chapter must take a |
|
licensing examination prescribed by the commission. An applicant |
|
is entitled to take the examination prescribed by the commission |
|
if: |
|
(1) the commission determines that the applicant meets |
|
the qualifications required by this chapter; and |
|
(2) the applicant pays the fees required by the |
|
commission. |
|
(b) Each examination administered under this section must |
|
be prepared by the commission or by a multistate contractor |
|
licensing association approved by the commission. The commission |
|
shall ensure that the examination is administered in various |
|
locations throughout the state. |
|
(c) The examination must be designed to determine the |
|
fitness of the applicant to engage in business as a builder in this |
|
state. |
|
(d) A person who, immediately before January 1, 2010, held a |
|
certificate of registration issued by the commission or who |
|
immediately before May 1, 2010, held a license issued by the |
|
commission is eligible for a license without satisfying the |
|
examination requirement of this section if the commission |
|
determines that the person's certificate or license was active and |
|
in good standing. If the person's certificate was not active or was |
|
not in good standing as of December 31, 2009, or the person's |
|
license was not active or was not in good standing as of August 31, |
|
2011, the person is required to satisfy the examination |
|
requirement. This subsection expires December 31, 2014. |
|
SECTION 30. Section 416.007, Property Code, is amended to |
|
read as follows: |
|
Sec. 416.007. LICENSE ISSUANCE [OF CERTIFICATE]. (a) Not |
|
later than the 15th day after the date the commission receives an |
|
application from an applicant who meets the requirements of this |
|
chapter, the commission shall issue an original or provisional |
|
license, as appropriate, [a certificate of registration] to the |
|
applicant. A builder who holds a provisional license may operate as |
|
a builder under this chapter. |
|
(b) Except as provided by Section 416.0071, the license [The
|
|
certificate of registration] remains in effect for the period |
|
prescribed by the commission if the license [certificate] holder |
|
complies with this chapter and pays the appropriate renewal fees. |
|
(c) The commission shall issue one license [certificate of
|
|
registration] for each business entity licensed [registered] under |
|
this chapter. |
|
SECTION 31. Chapter 416, Property Code, is amended by |
|
adding Section 416.0071 to read as follows: |
|
Sec. 416.0071. PROVISIONAL LICENSE. (a) The commission |
|
may grant a provisional license to an applicant for a license in |
|
this state who: |
|
(1) has been licensed or registered in good standing |
|
to engage in business as a builder for at least two years in another |
|
jurisdiction that has licensing or registration requirements |
|
substantially equivalent to the requirements of this title; |
|
(2) is currently licensed or registered in that |
|
jurisdiction; and |
|
(3) has passed a national or other examination |
|
recognized by the commission. |
|
(b) The commission shall issue a provisional license to a |
|
person who satisfies the requirements of Section 416.005(a) but who |
|
has not completed the course required by Section 416.005(b). |
|
(c) A provisional license under Subsection (a) is valid for |
|
six months from the date of issuance. |
|
(d) A provisional license under Subsection (b) is valid for |
|
30 days from the date of issuance. The commission shall issue an |
|
original license to the holder of a provisional license under |
|
Subsection (b) if the person completes the required course on or |
|
before the 30th day after the date the provisional license was |
|
issued. |
|
SECTION 32. The heading to Section 416.008, Property Code, |
|
is amended to read as follows: |
|
Sec. 416.008. DENIAL OF LICENSE [REGISTRATION]. |
|
SECTION 33. Section 416.008(a), Property Code, is amended |
|
to read as follows: |
|
(a) If the commission denies an application for an original |
|
license [certificate of registration] or a renewal application, the |
|
commission shall give written notice to the applicant not later |
|
than the 15th day after the date the commission receives the |
|
application. |
|
SECTION 34. Section 416.009, Property Code, is amended to |
|
read as follows: |
|
Sec. 416.009. LICENSE EXPIRATION [OF CERTIFICATE]. (a) |
|
The commission may issue or renew a license, other than a |
|
provisional license, [certificate of registration] for a period |
|
that does not exceed 24 months. |
|
(b) The commission by rule may adopt a system under which |
|
licenses [certificates of registration] expire on several dates |
|
during the year. The commission shall adjust the date for payment |
|
of renewal fees accordingly. |
|
(c) In a year in which the expiration date for a license |
|
[certificate of registration] is changed, the renewal fee payable |
|
shall be prorated on a monthly basis so that the license |
|
[certificate] holder pays only that portion of the fee that is |
|
allocable to the number of months during which the license |
|
[certificate of registration] is valid. On renewal of the license |
|
[certificate of registration] on the new expiration date, the total |
|
renewal fee is payable. |
|
SECTION 35. Sections 416.010(a), (b), (c), and (d), |
|
Property Code, are amended to read as follows: |
|
(a) A builder shall maintain a fixed office location in this |
|
state. The address of the builder's principal place of business |
|
must be designated on the license [certificate of registration]. |
|
(b) Not later than the 30th day after the date a builder |
|
moves from the address designated on the license [certificate of
|
|
registration], the builder shall submit an application, |
|
accompanied by the appropriate fee, for a license [certificate of
|
|
registration] that designates the new location of the builder's |
|
principal place of business. The commission shall issue a license |
|
[certificate of registration] that designates the new location if |
|
the new location complies with the requirements of this section. |
|
(c) If a builder operates under any name other than the name |
|
that is set forth on the builder's license [certificate of
|
|
registration], the builder shall, within 45 days of operating under |
|
this other name, disclose this other name to the commission. |
|
(d) This section does not require a builder to obtain a |
|
license [certificate of registration] for each sales office. |
|
SECTION 36. Section 416.011(a), Property Code, is amended |
|
to read as follows: |
|
(a) The commission shall establish rules and procedures for |
|
a program through which a builder can be designated as a "Texas Star |
|
Builder." A builder's participation in the program is voluntary |
|
and is not a requirement for the issuance of a license [certificate
|
|
of registration] required under this chapter. |
|
SECTION 37. Sections 416.012(a), (c), (d), and (e), |
|
Property Code, are amended to read as follows: |
|
(a) The commission shall recognize or administer continuing |
|
education programs for builders licensed [registered] by the |
|
commission. A licensed [registered] builder must participate in |
|
the programs to the extent required by this section to maintain the |
|
builder's license [registration]. |
|
(c) A builder who is licensed with the commission |
|
[registered before September 1, 2007, and all other builders who
|
|
register for the first time on or after September 1, 2007, and
|
|
satisfy the requirements of Subsection (b),] must complete 16 |
|
[five] hours of continuing education every two [five] years, one |
|
hour of which must address ethics and may not be completed by |
|
self-directed study. |
|
(d) The commission shall permit a licensed [registered] |
|
builder to receive continuing education credit for educational, |
|
technical, ethical, or professional management activities related |
|
to the practice of residential construction, including: |
|
(1) successfully completing or auditing a course |
|
sponsored by an institution of higher education; |
|
(2) successfully completing a course certified by a |
|
professional or trade organization; |
|
(3) attending a seminar, tutorial, short course, |
|
correspondence course, videotaped course, or televised course on |
|
the practice of residential construction; |
|
(4) participating in an in-house course sponsored by a |
|
corporation or other business entity; |
|
(5) teaching a course described by Subdivisions |
|
(1)-(4); |
|
(6) publishing an article, paper, or book on the |
|
practice of residential construction; |
|
(7) making or attending a presentation at a meeting of |
|
a residential or builder association or organization or writing a |
|
paper presented at the meeting; |
|
(8) participating in the activities of a residential |
|
or builder association, including serving on a committee of the |
|
organization; and |
|
(9) engaging in self-directed study on the practice of |
|
residential construction. |
|
(e) A licensed [registered] builder may not receive more |
|
than two continuing education credit hours during each two-year |
|
[five-year] period for engaging in self-directed study. |
|
SECTION 38. Section 417.003(a), Property Code, is amended |
|
to read as follows: |
|
(a) The commission shall charge and collect: |
|
(1) a filing fee for an application for certification |
|
under this chapter that does not exceed $100; |
|
(2) a fee for renewal of a certification under this |
|
chapter that does not exceed $50; and |
|
(3) a late fee that does not exceed the amount of the |
|
fee due if payment of a certification [registration] or application |
|
fee due under this title is late. |
|
SECTION 39. Section 418.001, Property Code, is amended to |
|
read as follows: |
|
Sec. 418.001. GROUNDS FOR DISCIPLINARY ACTION. A person, |
|
including a builder or a person who is designated as a builder's |
|
agent under Section 416.006, or a person who owns or controls a |
|
majority ownership interest in the builder is subject to |
|
disciplinary action under this chapter for: |
|
(1) fraud or deceit in obtaining a license, |
|
registration, or certification under this subtitle; |
|
(2) misappropriation or misapplication of trust funds |
|
in the practice of residential construction, including a violation |
|
of Chapter 32, Penal Code, or Chapter 162, if found by a final |
|
nonappealable court judgment; |
|
(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, or any other instrument of payment, |
|
including a credit or debit card or electronic funds transfer, |
|
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 or a fee due under Chapter 426; |
|
(8) failure to pay a final nonappealable court |
|
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; |
|
(11) [failure to reimburse a homeowner the amount
|
|
ordered by the commission as provided by Section 428.004(d);
|
|
[(12)] engaging in statutory or common-law fraud or |
|
misappropriation of funds, as determined by the commission after a |
|
hearing under Section 418.003; |
|
(12) [(13)] a [repeated] failure to participate in the |
|
state [state-sponsored] inspection program [and dispute resolution
|
|
process] if required by this title; |
|
(13) [(14)] failure to obtain a license [register as a
|
|
builder] as required under Chapter 416; |
|
(14) [(15)] using or attempting to use a license |
|
[certificate of registration] that has expired or that has been |
|
revoked; |
|
(15) [(16)] falsely representing that the person |
|
holds a license [certificate of registration] issued under Chapter |
|
416; |
|
(16) [(17)] acting as a builder using a name other |
|
than the name or names disclosed to the commission; |
|
(17) [(18)] aiding, abetting, or conspiring with a |
|
person who does not hold a license [certificate of registration] to |
|
evade the provisions of this title or rules adopted under this |
|
title, if found by a final nonappealable court judgment; |
|
(18) [(19)] allowing the person's license |
|
[certificate of registration] to be used by another person; |
|
(19) [(20)] acting as an agent, partner, or associate |
|
of a person who does not hold a license [certificate of
|
|
registration] with the intent to evade the provisions of this title |
|
or rules adopted under this title; |
|
(20) [(21)] a failure to reasonably perform on an |
|
accepted offer to repair or a [repeated] failure to make an offer to |
|
repair based on: |
|
(A) the recommendation of a third-party |
|
inspector under Section 428.004; or |
|
(B) the final holding of an appeal under Chapter |
|
429; |
|
(21) [(22)] a [repeated] failure to respond to a |
|
commission request for information; |
|
(22) [(23)] a failure to obtain a building permit |
|
required by a political subdivision before constructing a new home |
|
or an improvement to an existing home; |
|
(23) [(24)] abandoning, without justification, any |
|
home improvement contract or new home construction project engaged |
|
in or undertaken by the person, if found to have done so by a final, |
|
nonappealable court judgment; |
|
(24) [(25)] a [repeated] failure to comply with the |
|
requirements of Subtitle F; [or] |
|
(25) [(26)] a failure to comply with the reporting |
|
requirements of Section 428.006; |
|
(26) a failure to substantially complete all the |
|
obligations under an express contract for construction without |
|
reasonable grounds for the failure, if found to have done so by a |
|
final, nonappealable court judgment; |
|
(27) a failure to comply with a commission rule |
|
related to the duties and obligations of a third-party inspector |
|
under Chapter 427; |
|
(28) a failure to use a contract form adopted or |
|
approved by the commission under Section 420.004; or |
|
(29) otherwise violating this title or a commission |
|
rule adopted under this title. |
|
SECTION 40. Sections 418.002(a) and (c), Property Code, are |
|
amended to read as follows: |
|
(a) On a determination that a ground for disciplinary action |
|
under Section 418.001 exists, the commission may: |
|
(1) revoke or suspend a license [registration] or |
|
certification [in the event of repeated prior violations that have
|
|
resulted in disciplinary action]; |
|
(2) probate the suspension of a license [registration] |
|
or certification; |
|
(3) formally or informally reprimand a licensed |
|
[registered] or certified person; [or] |
|
(4) impose an administrative penalty under Chapter |
|
419; or |
|
(5) prohibit a person or entity from acting as a |
|
builder under this title, from acting as a contractor, as defined by |
|
Section 27.001, or from owning or operating a company that supplies |
|
goods or services to a builder or contractor for a period of time |
|
and under conditions determined by the commission. |
|
(c) For purposes of Section 418.001(11) [418.001(12)], the |
|
commission may not conduct a hearing or revoke or suspend a license |
|
[registration] or certification unless the determination of |
|
statutory or common-law fraud or misappropriation of funds has been |
|
made in a final nonappealable judgment by a court. |
|
SECTION 41. Section 418.004(c), Property Code, is amended |
|
to read as follows: |
|
(c) An appeal to a district court of a final decision of the |
|
commission under this section regarding a revocation or suspension |
|
of a license [registration] or certification is determined by |
|
substantial evidence. |
|
SECTION 42. Section 419.002(c), Property Code, is amended |
|
to read as follows: |
|
(c) A violation of Section 418.001(2) or (11) [(12)] is |
|
punishable by a penalty not to exceed $100,000. |
|
SECTION 43. Section 419.004, Property Code, is amended to |
|
read as follows: |
|
Sec. 419.004. ENFORCEMENT OF PENALTY. If a person does not |
|
pay an administrative penalty imposed under this chapter and |
|
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 licensed [registered] |
|
or certified person if the licensed [registered] or certified |
|
person fails to pay the administrative penalty within the time |
|
prescribed. |
|
SECTION 44. The heading to Chapter 420, Property Code, is |
|
amended to read as follows: |
|
CHAPTER 420. REGULATION OF BUILDING CONTRACTS AND TRANSFERS OF |
|
TITLE FROM BUILDER [CONTRACT PROVISIONS] |
|
SECTION 45. Section 420.001, Property Code, is amended to |
|
read as follows: |
|
Sec. 420.001. REQUIRED WRITTEN DISCLOSURE. In a contract |
|
for the construction of a new home or an improvement to an existing |
|
home required to be registered under Section 426.003, the contract |
|
must contain a notice to the consumer in at least 10-point bold type |
|
or the computer equivalent that gives the telephone number of the |
|
commission and states: |
|
STATE LAW REQUIRES THAT A PERSON HOLD A LICENSE [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 A MATERIAL IMPROVEMENT TO AN EXISTING |
|
HOME OR CERTAIN IMPROVEMENTS TO THE INTERIOR OF AN EXISTING HOME AND |
|
THE TOTAL COST OF THE IMPROVEMENT IS $10,000 OR MORE (INCLUDING |
|
LABOR AND MATERIALS). |
|
YOU MAY CONTACT THE COMMISSION AT [insert commission's |
|
telephone number] TO FIND OUT WHETHER THE BUILDER HAS A VALID |
|
LICENSE [CERTIFICATE OF REGISTRATION]. THE COMMISSION HAS |
|
INFORMATION AVAILABLE ON THE HISTORY OF BUILDERS, INCLUDING |
|
SUSPENSIONS, REVOCATIONS, COMPLAINTS, AND RESOLUTION OF |
|
COMPLAINTS. |
|
THIS CONTRACT IS SUBJECT TO CHAPTER 426, PROPERTY CODE. THE |
|
PROVISIONS OF THAT CHAPTER GOVERN THE PROCESS THAT MUST BE FOLLOWED |
|
IN THE EVENT A DISPUTE ARISES OUT OF AN ALLEGED CONSTRUCTION DEFECT. |
|
IF YOU HAVE A COMPLAINT CONCERNING A CONSTRUCTION DEFECT YOU MAY |
|
CONTACT THE COMMISSION AT THE TOLL-FREE TELEPHONE NUMBER TO LEARN |
|
HOW TO PROCEED UNDER THE STATE [STATE-SPONSORED] INSPECTION PROGRAM |
|
[AND DISPUTE RESOLUTION PROCESS]. |
|
SECTION 46. Section 420.002, Property Code, is amended to |
|
read as follows: |
|
Sec. 420.002. REQUIRED CONTRACT PROVISIONS. In a contract |
|
for the construction of a new home or an improvement to an existing |
|
home required to be registered under Section 426.003, the contract |
|
is not enforceable against a homeowner unless the contract: |
|
(1) contains the builder's name and license |
|
[certificate of registration] number; and |
|
(2) contains the notice required by Section 420.001. |
|
SECTION 47. Section 420.003, Property Code, is amended to |
|
read as follows: |
|
Sec. 420.003. BINDING ARBITRATION CONTRACT PROVISION. (a) |
|
In a contract for the construction of a new home or the improvement |
|
of an existing home required to be registered under Section 426.003 |
|
and that contains a provision requiring the parties to submit a |
|
dispute arising under the contract to binding arbitration, or in |
|
any agreement related to the contract that requires the parties to |
|
submit a dispute to arbitration, the provision requiring the |
|
submission of a dispute to arbitration must be prominently |
|
displayed in the document and conspicuously printed or typed in a |
|
size equal to at least 12-point [10-point] bold type or the computer |
|
equivalent. |
|
(b) A written arbitration agreement to arbitrate a |
|
controversy that exists at the time of the agreement that is entered |
|
into in connection with a contract described by Subsection (a) must |
|
include a statement, initialed by each party to the agreement, |
|
stating that the party has chosen to arbitrate a controversy that |
|
exists at the time of the agreement. A written arbitration |
|
agreement to arbitrate a controversy that arises between the |
|
parties after the date of the agreement that is a provision of a |
|
contract described by Subsection (a), or an agreement entered into |
|
in connection with the contract, must include a statement, |
|
initialed by each party to the agreement, stating that the party has |
|
chosen to arbitrate a controversy that arises between the parties |
|
after the date of the agreement. A written arbitration agreement |
|
must also contain a second statement, immediately following the |
|
other statement required by this subsection, that is conspicuously |
|
printed or typed in at least 12-point bold-faced type or the |
|
computer equivalent and initialed by the homeowner that states that |
|
the homeowner knowingly and voluntarily waives the homeowner's |
|
right to a trial by jury of all disputes by signing the agreement. |
|
(c) A contract provision or agreement described by this |
|
section [Subsection (a)] is not enforceable against the homeowner |
|
unless the requirements of this section [Subsection (a)] are met. |
|
SECTION 48 .Chapter 420, Property Code, is amended by |
|
adding Section 420.004 to read as follows: |
|
Sec. 420.004. STANDARD CONTRACT FORMS. (a) The commission |
|
shall adopt rules in the public's best interest that require |
|
builders to use contract forms prepared with the assistance of the |
|
Texas Real Estate Broker-Lawyer Committee and adopted by the |
|
commission for the sale or construction of a new home. |
|
(b) The commission may not prohibit a builder from using a |
|
contract form for the sale or construction of a new home that is: |
|
(1) prepared by the purchaser; or |
|
(2) prepared by an attorney and required by the |
|
purchaser. |
|
(c) A contract form adopted by the commission must comply |
|
with this chapter, except that the commission may not adopt a |
|
contract form that includes a provision that requires the parties |
|
to submit a dispute arising under the contract to binding |
|
arbitration. |
|
(d) A builder may use the builder's own contract form if the |
|
builder has submitted the form to the commission and the commission |
|
has approved the builder's use of the form. The commission shall |
|
approve or disapprove a contract form submitted under this |
|
subsection on or before the 30th day after the date the form is |
|
submitted. |
|
(e) In considering whether to approve a builder's contract |
|
form under Subsection (d), the commission shall approve the form |
|
only if the commission determines that the contract form is in the |
|
public's best interest and consistent with the criteria used by the |
|
commission to adopt standard forms under Subsection (a). |
|
SECTION 49. Chapter 420, Property Code, is amended by |
|
adding Section 420.005 to read as follows: |
|
Sec. 420.005. FULL DISCLOSURE OF RESALE BY BUILDER. (a) |
|
Before a contract may be executed or money exchanged between a |
|
builder and a buyer for purchase of a home that, because of one or |
|
more construction defects, the builder repurchased from a previous |
|
buyer from the builder, the builder must provide to the buyer a |
|
document that fully discloses the nature of and the builder's |
|
remediation of each of those construction defects. |
|
(b) In addition to a disclosure of the nature of each |
|
construction defect and the remediation work performed, the |
|
disclosure under Subsection (a) must include information relating |
|
to: |
|
(1) any products installed in the home relating to the |
|
remediation; |
|
(2) care and component warranties of those products; |
|
(3) building standards used in performing the |
|
remediation; and |
|
(4) any risks and hazards of the home. |
|
SECTION 50. Chapter 420, Property Code, is amended by |
|
adding Section 420.006 to read as follows: |
|
Sec. 420.006. CONSTRUCTION DOCUMENTS. A builder who |
|
constructs a new home must provide a copy of the plat and the |
|
blueprints used in the construction of the home: |
|
(1) at the time the construction is completed, to the |
|
person who contracted with the builder for the construction of the |
|
home; or |
|
(2) at the time title to the home is transferred by the |
|
builder, to the person who purchases the home from the builder. |
|
SECTION 51. Subtitle C, Title 16, Property Code, is amended |
|
by adding Chapter 421 to read as follows: |
|
CHAPTER 421. HOMEOWNER RECOVERY FUND |
|
Sec. 421.001. DEFINITIONS. In this chapter: |
|
(1) "Fund" means the homeowner recovery fund. |
|
(2) "Fund account" means the account established for |
|
the deposit of money held by the fund. |
|
Sec. 421.002. LEGISLATIVE INTENT. The legislature intends |
|
that the fund serve as a resource of last resort for homeowners who |
|
are unable to collect damages from a builder arising from the |
|
builder's violation of this title or to get a confirmed |
|
construction defect repaired by a builder. |
|
Sec. 421.003. FUND ESTABLISHED. The homeowner recovery |
|
fund is established. |
|
Sec. 421.004. ACCOUNT. (a) The fund account is established |
|
with the Texas Treasury Safekeeping Trust Company in accordance |
|
with procedures adopted by the comptroller. The comptroller shall |
|
account for the deposited money separately from all other money. |
|
(b) The comptroller shall annually transfer to the credit of |
|
the fund account 10 percent of each administrative penalty |
|
collected under Chapter 419. |
|
(c) Notwithstanding Sections 404.071 and 404.106, |
|
Government Code, the pro rata portion of interest earned by the |
|
trust company from money in the fund shall be allocated to the fund. |
|
(d) The commission shall notify the comptroller of the |
|
existence of money to be credited to the fund account under this |
|
section. The commissioner must enter an order to transfer amounts |
|
from the fund account. |
|
(e) The comptroller shall transfer to the credit of the fund |
|
account any money collected by the commission during state fiscal |
|
year 2010 that exceeds the commission's direct and indirect |
|
operating costs. This subsection expires September 1, 2011. |
|
Sec. 421.005. CLAIM FOR PAYMENT FROM ACCOUNT. (a) A |
|
homeowner who participates in the state inspection process in |
|
connection with a request filed under Section 428.001 or engages in |
|
mediation under Section 428A.004 and sustains damages arising from |
|
a builder's violation of this title is entitled to payment from the |
|
fund if the homeowner: |
|
(1) obtains a court judgment against a builder for |
|
damages arising from the violation for which execution is returned |
|
without a satisfaction of the total amount of the judgment and |
|
perfects a judgment lien for the unsatisfied amount; |
|
(2) in a bankruptcy proceeding involving the builder, |
|
proves a claim against the builder for damages arising from the |
|
builder's violation of this title that is disallowed or rendered |
|
uncollectible by an order or other final ruling of the bankruptcy |
|
court; or |
|
(3) proves in accordance with rules adopted by the |
|
commission that: |
|
(A) the homeowner sustained damages arising from |
|
the builder's violation of this title, including court costs and |
|
reasonable attorney's fees, of not more than $10,000; |
|
(B) the builder has not offered to repair or has |
|
failed to repair the construction defect or otherwise resolve the |
|
dispute arising from the construction defect; and |
|
(C) the damages are uncollectible from the |
|
builder without pursuing a civil action against the builder. |
|
(b) After receiving a request for payment from the fund |
|
under Subsection (a)(3), the commission shall hold a hearing to |
|
determine whether the person who makes the request is entitled to |
|
payment and, if so, the amount of the payment to which the person is |
|
entitled. |
|
(c) A person entitled to payment under this section may |
|
collect only the lesser of: |
|
(1) the amount of actual damages awarded or proven |
|
that the person was unable to collect from the builder; or |
|
(2) $175,000. |
|
SECTION 52. The heading to Subtitle D, Title 16, Property |
|
Code, is amended to read as follows: |
|
SUBTITLE D. STATE [STATE-SPONSORED] INSPECTION PROGRAM [AND
|
|
DISPUTE RESOLUTION PROCESS]; STATUTORY WARRANTY AND BUILDING AND |
|
PERFORMANCE STANDARDS |
|
SECTION 53. Section 426.003, Property Code, is amended by |
|
amending Subsections (a) and (b) and adding Subsections (e) and (f) |
|
to read as follows: |
|
(a) A builder shall register a new home with the commission |
|
on or before the 15th day of the month following the month in which |
|
the transfer of title from the builder to the homeowner occurs. |
|
[The registration must include the information required by the
|
|
commission by rule and be accompanied by the fee required by
|
|
Subsection (c).] |
|
(b) A builder who enters a transaction governed by this |
|
title, other than the transfer of title of a new home from the |
|
builder to the seller, shall register the home involved in the |
|
transaction with the commission[. The registration must:
|
|
[(1)
include the information required by the
|
|
commission by rule;
|
|
[(2)
be accompanied by the fee required by Subsection
|
|
(c); and
|
|
[(3) be delivered to the commission] not later than |
|
the 15th day after the earlier of: |
|
(1) [(A)] the date of the substantial completion of |
|
the home or other residential construction project; |
|
(2) [(B)] the date the new home is occupied; or |
|
(3) [(C)] the date of issuance of a certificate of |
|
occupancy or a certificate of completion. |
|
(e) A builder who registers a home or a residential |
|
construction project under Subsection (a) or (b) shall: |
|
(1) include the information required by the commission |
|
by rule; |
|
(2) state whether the registration concerns a new |
|
home, a material improvement to an existing home, or an improvement |
|
to the interior of an existing home when the cost of the work |
|
exceeds $10,000; and |
|
(3) pay the fee required by Subsection (c). |
|
(f) Notwithstanding Subsections (a) and (b), a builder is |
|
not required to comply with this subtitle after completing |
|
construction of a partially completed home owned by a mortgagee or a |
|
beneficiary under a deed of trust who acquired the partially |
|
completed home: |
|
(1) at a sale conducted under a power of sale under a |
|
deed of trust or a court-ordered foreclosure; or |
|
(2) by a deed in lieu of foreclosure. |
|
SECTION 54. The heading to Section 426.004, Property Code, |
|
is amended to read as follows: |
|
Sec. 426.004. EXPENSES [FEES]. |
|
SECTION 55. Section 426.004(a), Property Code, is amended |
|
to read as follows: |
|
(a) A builder [party] who is involved in a dispute for which |
|
a request is submitted [submits a request] under this subtitle |
|
shall pay any amount required by the commission to offset [cover] |
|
the expense of the third-party inspector. |
|
SECTION 56. Section 426.005, Property Code, is amended by |
|
amending Subsections (b) and (f) and adding Subsections (g), (h), |
|
(i), and (j) to read as follows: |
|
(b) Except as provided by Subsections (g) and (h), an [An] |
|
action described by Subsection (a) must be filed: |
|
(1) on or before the expiration of any applicable |
|
statute of limitations or by the 45th day after the date the |
|
third-party inspector issues the inspector's recommendation, |
|
whichever is later; or |
|
(2) if the recommendation is appealed, on or before |
|
the expiration of any applicable statute of limitations or by the |
|
45th day after the date the commission issues its ruling on the |
|
appeal, whichever is later. |
|
(f) A homeowner is not required to comply with this subtitle |
|
if: |
|
(1) at the time a homeowner and a builder enter into a |
|
contract covered by this title the builder was not licensed |
|
[registered]; or |
|
(2) the license [certificate of registration] of the |
|
builder has been revoked. |
|
(g) Except as provided by Subsection (h), an action |
|
described by Subsection (a) may be initiated by the homeowner or |
|
builder: |
|
(1) for a dispute involving workmanship and materials, |
|
on or after the 76th day after the date the request for a state |
|
inspection is submitted, except as provided by Subdivision (3); |
|
(2) for a dispute involving a structural matter, on or |
|
after the 91st day after the date the request for a state inspection |
|
is submitted, except as provided by Subdivision (3); or |
|
(3) if the third-party inspector's recommendation is |
|
appealed and a ruling on the appeal is not issued in the time |
|
prescribed by Section 429.001, on or after the day after the date |
|
the panel is required to issue the ruling under that section. |
|
(h) If a homeowner or builder causes a delay of more than |
|
five days in the completion of the inspection process under the |
|
state inspection program or any appeal under the program, the time |
|
required under Subsection (g) to initiate an action against the |
|
homeowner or builder who causes the delay is extended by the number |
|
of days of the delay. |
|
(i) An action filed under Subsection (g) must be filed on or |
|
before the later of: |
|
(1) the expiration of the applicable statute of |
|
limitations; or |
|
(2) the 45th day after the first date on which |
|
Subsection (g) authorizes the filing of the action. |
|
(j) Once a final, unappealable recommendation or a ruling on |
|
an appeal of a recommendation is issued under this subtitle, a |
|
homeowner or builder may file an action described by Subsection |
|
(a). A homeowner is not required to delay the filing of an action to |
|
allow the builder an opportunity to make an offer of settlement or |
|
repair under Sections 27.004(b) and (c) or an election to purchase |
|
the residence under Section 27.0042. The filing of an action by the |
|
homeowner does not affect a builder's right to make an offer of |
|
settlement or repair in the time provided by Section 27.004(b) or an |
|
election to purchase the residence in the time provided by Section |
|
27.0042. |
|
SECTION 57. Section 426.006, Property Code, is amended to |
|
read as follows: |
|
Sec. 426.006. TIME FOR REQUESTING INSPECTION [AND DISPUTE
|
|
RESOLUTION]. (a) For an alleged defect discovered during an |
|
applicable warranty period, an [the state-sponsored] inspection |
|
through the state inspection program [and dispute resolution
|
|
process] must be requested on or before the second anniversary of |
|
the date of discovery of the conditions claimed to be evidence of |
|
the construction defect but not later than the 90th day after the |
|
date the applicable warranty period expires. |
|
(b) If the alleged defect would violate the statutory |
|
warranty of habitability and was not discoverable by a reasonable, |
|
prudent inspection or examination of the home or improvement within |
|
the applicable warranty period, the [state-sponsored] inspection |
|
[and dispute resolution process] must be requested: |
|
(1) on or before the second anniversary of the date of |
|
discovery of the conditions claimed to be evidence of the |
|
construction defect; and |
|
(2) not later than the 10th anniversary of the date of |
|
the initial transfer of title from the builder to the initial owner |
|
of the home or improvement that is the subject of the dispute or, if |
|
there is not a closing, the date on which the contract for |
|
construction of the improvement is entered into. |
|
SECTION 58. Section 426.007, Property Code, is amended to |
|
read as follows: |
|
Sec. 426.007. ADMISSIBILITY OF CERTAIN EVIDENCE. A person |
|
who submits a request for [state-sponsored] inspection under |
|
Section 428.001 [and dispute resolution] or responds to a request |
|
made under that section [Chapter 428] must disclose in the request |
|
or response the name of any expert who, before the request is |
|
submitted, inspected the home on behalf of the requestor or |
|
respondent in connection with the construction defect alleged in |
|
the request or response. If an expert's name is known to the |
|
requestor or respondent at the time of the request or response and |
|
is not disclosed as required by this section, the requestor or |
|
respondent may not designate the person as an expert or use |
|
materials prepared by that person in: |
|
(1) the [state-sponsored] inspection [and dispute
|
|
resolution] process arising out of the request; or |
|
(2) any action arising out of the construction defect |
|
that is the subject of the request or response. |
|
SECTION 59. Sections 427.001(c), (c-1), and (d), Property |
|
Code, are amended to read as follows: |
|
(c) A third-party inspector who inspects an issue involving |
|
a structural matter [or involving workmanship, materials, and a
|
|
structural matter] must: |
|
(1) be an approved structural engineer or approved |
|
architect; and |
|
(2) have a minimum of five years' experience in |
|
residential construction. |
|
(c-1) For an inspection request with an issue [A third-party
|
|
inspector who inspects an issue] involving a structural matter and |
|
an unrelated issue involving workmanship and materials matters, the |
|
commission must assign a third-party inspector who meets [must
|
|
meet] the requirements of Subsections (b) and (c) or assign two |
|
third-party inspectors, one who meets the requirements of |
|
Subsection (b) and one who meets the requirements of Subsection |
|
(c), to work in conjunction with one another to inspect the alleged |
|
defects. |
|
(d) Each third-party inspector must receive, in accordance |
|
with commission rules: |
|
(1) initial training regarding the state |
|
[state-sponsored] inspection program [and dispute resolution
|
|
process] and this subtitle; and |
|
(2) annual continuing education in the inspector's |
|
area of practice. |
|
SECTION 60. Section 427.002(a), Property Code, is amended |
|
to read as follows: |
|
(a) The commission shall employ state inspectors to: |
|
(1) review on an appeals panel the recommendations of |
|
third-party inspectors; |
|
(2) provide consultation to third-party inspectors; |
|
and |
|
(3) administer the state [state-sponsored] inspection |
|
program [and dispute resolution process]. |
|
SECTION 61. The heading to Chapter 428, Property Code, is |
|
amended to read as follows: |
|
CHAPTER 428. STATE [STATE-SPONSORED] INSPECTION PROGRAM [AND
|
|
DISPUTE RESOLUTION PROCESS] |
|
SECTION 62. Sections 428.001(a) and (b), Property Code, are |
|
amended to read as follows: |
|
(a) If a dispute between a homeowner and a builder arises |
|
out of an alleged construction defect, the homeowner or the builder |
|
may submit to the commission a written request for |
|
[state-sponsored] inspection under this subtitle [and dispute
|
|
resolution]. If the builder files a request under this section, the |
|
homeowner may submit a request for mediation as provided by Section |
|
428A.004. |
|
(b) 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 engineering or consulting fees incurred 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 necessary to remedy the construction defect, including, |
|
if available, expert reports, photographs, and videotapes, if that |
|
evidence would be discoverable under Rule 192, Texas Rules of Civil |
|
Procedure; |
|
(4) be accompanied by the fees required under Section |
|
426.004, if applicable; and |
|
(5) state the name of any person who has, on behalf of |
|
the requestor, inspected the home in connection with an alleged |
|
construction defect. |
|
SECTION 63. Chapter 428, Property Code, is amended by |
|
adding Section 428.0011 to read as follows: |
|
Sec. 428.0011. PROCESSING AND PRIORITIZING OF REQUESTS. |
|
(a) The commission shall adopt rules for processing requests under |
|
this chapter that include guidelines for prioritizing the handling |
|
of the requests and allocating agency staff and other resources in |
|
the most efficient manner to address the requests. |
|
(b) In adopting rules under this section, the commission |
|
shall consider: |
|
(1) appropriate ways to expedite inspections under the |
|
state inspection program under emergency circumstances, including |
|
cases involving issues of habitability; |
|
(2) appropriate handling of complex case material and |
|
whether different handling is appropriate for requests involving a |
|
structural defect and requests involving workmanship and |
|
materials; and |
|
(3) the most efficient ways to use agency staff. |
|
SECTION 64. Section 428.002(a), Property Code, is amended |
|
to read as follows: |
|
(a) At [In addition to the right of inspection provided by
|
|
Section 428.001(c), at] any time before the conclusion of the |
|
[state-sponsored] inspection [and dispute resolution] process |
|
under this subtitle and on the builder's written request, the |
|
builder shall be given reasonable opportunity to inspect the home |
|
that is the subject of the request or have the home inspected to |
|
determine the nature and cause of the construction defect and the |
|
nature and extent of repairs necessary to remedy the construction |
|
defect. |
|
SECTION 65. Section 428.003, Property Code, is amended to |
|
read as follows: |
|
Sec. 428.003. INSPECTION BY THIRD-PARTY INSPECTOR; |
|
ADMINISTRATIVE PENALTY. (a) On or before the 10th [30th] day after |
|
the date the commission receives a request, the commission shall |
|
appoint the next available third-party inspector from the |
|
applicable lists of third-party inspectors maintained by the |
|
commission under Subsection (d) [(c)]. If, in accordance with |
|
guidelines adopted under Section 428.0011, the executive director |
|
determines the circumstances involved in a request constitute an |
|
emergency, the executive director may assign a state inspector or |
|
other commission employee that the executive director determines is |
|
qualified to conduct the inspection and issue a recommendation in |
|
accordance with the requirements for inspections and |
|
recommendations by a third-party inspector. |
|
(b) The commission shall establish rules and regulations |
|
that require [allow the homeowner and the builder to each have the
|
|
right to strike the appointment of] a third-party inspector to |
|
decline an appointment and disclose to the commission that a |
|
conflict of interest exists if the third-party inspector: |
|
(1) is employed by or participates in the management |
|
of a business entity or other organization owned by or receiving |
|
money from the interested homeowner or builder; |
|
(2) owns or controls, directly or indirectly, more |
|
than a 10 percent interest in a business entity or other |
|
organization owned by or receiving money from the interested |
|
homeowner or builder; or |
|
(3) uses or receives a substantial amount of goods, |
|
services, or money from the interested homeowner or builder [one
|
|
time for each request submitted]. |
|
(c) The commission may impose an administrative penalty on |
|
or remove from the list of available third-party inspectors a |
|
third-party inspector who knowingly fails to decline an appointment |
|
and disclose a conflict of interest in accordance with Subsection |
|
(b). |
|
(d) The commission shall adopt rules that allow for the |
|
commission to maintain a list of available third-party inspectors |
|
for the various regions of the state, as required to satisfy the |
|
provisions of this title. |
|
SECTION 66. Section 428.004, Property Code, is amended by |
|
amending Subsections (b) and (c) and adding Subsections (g), (h), |
|
and (i) to read as follows: |
|
(b) If the dispute involves a structural matter in the home, |
|
the commission shall appoint a [an approved engineer to be the] |
|
third-party inspector qualified under Section 427.001 to inspect |
|
for structural defects. The third-party inspector shall inspect |
|
the home not later than the 30th day after the date the request is |
|
submitted and issue a recommendation not later than the 45th [60th] |
|
day after the date the third-party inspector receives the |
|
assignment from the commission, unless additional time is requested |
|
by the third-party inspector or a party to the dispute. The |
|
commission shall adopt rules governing the extension of time under |
|
this subsection. |
|
(c) The third-party inspector's recommendation must[:
|
|
[(1)
address only the construction defect, based on
|
|
the applicable warranty and building and performance standards; and
|
|
[(2)] designate a method or manner of repair, if any. |
|
At the option of the third-party inspector, the recommendation may |
|
identify any construction defects discovered by the third-party |
|
inspector that are not included in the request for inspection that |
|
involve a violation of any applicable building and performance |
|
standard that if left unrepaired may threaten the health or safety |
|
of the occupants of the home or that involve a violation of a |
|
building code applicable to the construction. A third-party |
|
inspector has no duty to inspect the home for construction defects |
|
that are not included in the request for inspection. |
|
(g) A final report made available to the public on the |
|
commission's Internet website may not include the name of the |
|
homeowner and must indicate whether the builder offered to make |
|
repairs as recommended by the final report or otherwise resolved |
|
the dispute with the homeowner. |
|
(h) A final report made available to the public on the |
|
commission's Internet website may not include the name or street |
|
address of the homeowner and must indicate: |
|
(1) whether the builder has resolved the dispute with |
|
the homeowner by: |
|
(A) making repairs substantially equivalent to |
|
those required by the findings of the final report confirming the |
|
defect, as confirmed by the homeowner and a third-party inspector |
|
who has inspected the repairs; or |
|
(B) has otherwise resolved the dispute with the |
|
homeowner; or |
|
(2) whether the builder has not resolved the dispute |
|
with the homeowner. If the builder has not resolved the dispute |
|
with the homeowner, the report shall indicate whether the builder |
|
offered to make repairs as recommended by the final report. |
|
(i) All final reports and all information contained therein |
|
are public records. |
|
SECTION 67. Chapter 428, Property Code, is amended by |
|
adding Sections 428.0041 and 428.006 to read as follows: |
|
Sec. 428.0041. INSPECTION OF CONSTRUCTION DEFECT OR REPAIR; |
|
TIME FOR COMPLETION OF CERTAIN REPAIRS. (a) A builder who, for the |
|
purposes of Section 27.004(l) or otherwise, completes repairs of a |
|
construction defect shall, at the builder's expense, engage an |
|
inspector to inspect the repairs and determine whether the home, as |
|
repaired, complies with the applicable limited statutory warranty |
|
and building and performance standards adopted by the commission. |
|
The builder shall engage the third-party inspector who issued a |
|
recommendation regarding the construction defect to perform the |
|
inspection unless otherwise provided by commission rules adopted |
|
under this section. |
|
(b) An inspection of repairs under Subsection (a), other |
|
than minor cosmetic repairs described by Subsection (c), must be |
|
completed not later than: |
|
(1) the 30th day after the date the repairs are |
|
completed for a dispute involving workmanship and materials; and |
|
(2) the 45th day after the date the repairs are |
|
completed for a dispute that involves a structural matter. |
|
(c) The builder is entitled to a reasonable period not to |
|
exceed 15 days to address minor cosmetic items that are necessary to |
|
fully complete the repairs. |
|
(d) The commission may for good cause require that: |
|
(1) an alleged construction defect that has been |
|
inspected by a third-party inspector be inspected again by another |
|
third-party inspector or a state inspector or other commission |
|
employee; or |
|
(2) a builder's repair of a construction defect be |
|
inspected by a third-party inspector or a state inspector or other |
|
commission employee, regardless of whether the repair is inspected |
|
for the purposes of Subsection (a) by the third-party inspector who |
|
issued a recommendation regarding the construction defect or by a |
|
state inspector. |
|
(e) The commission may charge the builder a fee for an |
|
inspection conducted under Subsection (d). |
|
(f) A homeowner may refuse an inspection under this section. |
|
Sec. 428.006. BUILDER REPORTING REQUIRED. (a) A builder |
|
involved in the inspection process or mediation under this subtitle |
|
shall file with the commission, on a form prescribed by the |
|
commission, information relating to any activity related to the |
|
dispute, including a settlement, repair effort, mediation, |
|
arbitration, or litigation, that occurs after: |
|
(1) a third-party inspector's report issued under this |
|
chapter becomes final and nonappealable; or |
|
(2) mediation is requested under Section 428A.004. |
|
(b) A builder shall file a form not later than the 21st day |
|
after the report becomes final and nonappealable or the builder |
|
receives a request for mediation under Section 428A.004. |
|
(c) In addition to any other information the commission |
|
determines is appropriate to request, the form prescribed under |
|
this section must request the following information: |
|
(1) the name of the builder; |
|
(2) the name and address of the homeowner and the |
|
property involved in the inspection process or mediation; |
|
(3) any inspection or other request number assigned by |
|
the commission; |
|
(4) whether any repairs or other types of compensation |
|
were offered by the builder to the homeowner for any construction |
|
defects affirmed by a final, nonappealable report; |
|
(5) if repairs were offered by the builder: |
|
(A) whether any alleged defects affirmed by a |
|
final, nonappealable report were excluded from the offer of repair; |
|
and |
|
(B) whether the homeowner accepted any or all of |
|
the repairs offered; |
|
(6) if repairs were offered and accepted: |
|
(A) whether the repairs were made; and |
|
(B) whether the repairs resulted in the |
|
satisfaction of all issues between the parties as a result of the |
|
residential construction project; |
|
(7) if repairs were made, whether the builder engaged |
|
the services of the third-party inspector who performed the |
|
inspection under this subtitle to inspect the repairs; |
|
(8) if repairs were not offered or an offer for repair |
|
was not accepted, whether either of the parties pursued any further |
|
legal proceedings related to the dispute between the parties; |
|
(9) if either party has pursued further legal |
|
proceedings, whether the parties are in mediation or involved in |
|
arbitration or a civil lawsuit; and |
|
(10) if the parties are involved in an arbitration |
|
proceeding, whether the arbitration is required as a provision of a |
|
contract between the parties. |
|
(d) If the parties have not resolved their dispute at the |
|
time the builder files the initial form under Subsection (b), the |
|
builder must update the status of the information requested or |
|
provided on the form not later than the 21st day after the |
|
occurrence of one of the following events: |
|
(1) repairs offered by the builder are accepted and |
|
performed and, once performed, reinspected in accordance with |
|
Sections 27.004(l) and 428.0041 and accepted by the homeowner as |
|
resolving all issues in the dispute; |
|
(2) any legal proceedings described by Subsection |
|
(c)(9) are final; |
|
(3) the builder repurchases the home under Section |
|
27.0042; or |
|
(4) any other resolution of the dispute between the |
|
parties is finalized. |
|
(e) A builder's failure to comply with this section or to |
|
complete the required form honestly is grounds for denial of the |
|
builder's license renewal application under Chapter 416. |
|
SECTION 68. Subtitle D, Title 16, Property Code, is amended |
|
by adding Chapter 428A to read as follows: |
|
CHAPTER 428A. OFFICE OF OMBUDSMAN; VOLUNTARY MEDIATION |
|
Sec. 428A.001. OFFICE OF OMBUDSMAN. The office of the |
|
ombudsman is established at the commission to assist the |
|
commission, builders, and homeowners following the completion of |
|
the state inspection process and to engage in other activities as |
|
provided by this chapter. |
|
Sec. 428A.002. QUALIFICATIONS. The commission shall hire a |
|
licensed attorney to act as ombudsman. |
|
Sec. 428A.003. POWERS AND DUTIES. (a) The ombudsman shall: |
|
(1) provide information and, subject to Subsection |
|
(b), advice to homeowners and builders engaged in defect repairs |
|
after the completion of the state inspection process to assist them |
|
in understanding the post-inspection process; |
|
(2) assist homeowners and builders in locating |
|
mediation services, if requested, for the purposes of Section |
|
428A.004; and |
|
(3) submit comments to the commission on rules and |
|
other policy changes being considered by the commission. |
|
(b) The ombudsman may not provide legal advice to homeowners |
|
and builders. |
|
(c) The ombudsman shall report directly to the commission. |
|
Sec. 428A.004. VOLUNTARY MEDIATION. (a) The commission by |
|
rule shall establish procedures for a builder and homeowner to |
|
engage in a third-party mediation, as described by Section 154.023, |
|
Civil Practice and Remedies Code, performed by a third-party |
|
mediator not employed by the commission, of a dispute involving a |
|
construction defect as an alternative to the inspection process |
|
under this subtitle, if the homeowner, before the expiration of the |
|
time to submit a request for inspection under Section 426.006, and |
|
before a third-party inspection has been performed, submits a |
|
statement to the commission and the builder, in the form prescribed |
|
by the commission, that the homeowner is requesting mediation as an |
|
alternative to the state inspection process. If a homeowner |
|
requests mediation under this section, a builder is required to |
|
participate in mediation in good faith, as determined by the |
|
mediator. The mediation must be completed on or before the |
|
expiration of the mediation period prescribed by Subsection (c) |
|
and, unless otherwise agreed by the parties, be conducted in the |
|
county in which the home is located. |
|
(b) Notwithstanding any other law, if the homeowner |
|
requests mediation under this section, an action described by |
|
Section 426.005(a): |
|
(1) may not be filed before the expiration of the |
|
mediation period unless an agreement is executed as a result of the |
|
mediation that is breached before the end of the mediation period; |
|
and |
|
(2) must be filed on or before the later of: |
|
(A) the expiration of any applicable statute of |
|
limitations; or |
|
(B) the 45th day after the earlier of: |
|
(i) the expiration of the mediation period; |
|
or |
|
(ii) the execution of an agreement as a |
|
result of the mediation. |
|
(c) For the purposes of this section, the mediation period |
|
expires on the 90th day after the date the homeowner submits a |
|
statement of intent to engage in mediation under this section. A |
|
homeowner or builder may, in accordance with Subsection (b), file |
|
an action described by Section 426.005(a) if no agreement is |
|
reached before the expiration of the mediation period. |
|
(d) A builder's failure to comply with an agreement executed |
|
by the parties as a result of a mediation under this section is |
|
grounds for disciplinary action under Chapter 418, including the |
|
imposition of an administrative penalty under Chapter 419. |
|
(e) The parties to a mediation under this section shall |
|
split the fees of the third-party mediator equally. |
|
(f) For purposes of Chapter 27, good faith participation in |
|
mediation under this section, as determined by the mediator, for |
|
the mediation period established by this section constitutes a |
|
final, nonappealable determination under this subtitle and |
|
completion of the state inspection process, and a written agreement |
|
to mediate submitted by the parties under this section constitutes |
|
a request under Section 428.001. For the purposes of Section |
|
27.004(l), if the builder makes a repair pursuant to an offer under |
|
Section 27.004(b), the builder may engage any third-party inspector |
|
to inspect the repair and determine whether the residence, as |
|
repaired, complies with the applicable limited statutory warranty |
|
and building and performance standards. |
|
SECTION 69. Sections 430.001(b), (d), and (e), Property |
|
Code, are amended to read as follows: |
|
(b) The warranty periods shall be: |
|
(1) two years [one year] for workmanship and |
|
materials; |
|
(2) two years for plumbing, electrical, heating, and |
|
air-conditioning delivery systems; and |
|
(3) 10 years for major structural components of the |
|
home. |
|
(d) The International Residential Code for One- and |
|
Two-Family Dwellings that applies to nonelectrical aspects of |
|
residential construction for the purposes of the limited statutory |
|
warranties and building and performance standards adopted under |
|
this section is: |
|
(1) for residential construction located in a |
|
municipality or the extraterritorial jurisdiction of a |
|
municipality, the version of the International Residential Code |
|
applicable to nonelectrical aspects of residential construction in |
|
the municipality under Section 214.212, Local Government Code; and |
|
(2) for residential construction located in an |
|
unincorporated area not in the extraterritorial jurisdiction of a |
|
municipality, the version of the International Residential Code |
|
adopted by the commission by rule [applicable to nonelectrical
|
|
aspects of residential construction in the municipality that is the
|
|
county seat of the county in which the construction is located; and
|
|
[(3)
for residential construction located in an
|
|
unincorporated area in a county that does not contain an
|
|
incorporated area, the version of the International Residential
|
|
Code that existed on May 1, 2001]. |
|
(e) The National Electrical Code for One- and Two-Family |
|
Dwellings that applies to electrical aspects of residential |
|
construction for the purposes of this section is: |
|
(1) for residential construction located in a |
|
municipality or the extraterritorial jurisdiction of a |
|
municipality, the version of the National Electrical Code |
|
applicable to electrical aspects of residential construction in the |
|
municipality under Section 214.214, Local Government Code; and |
|
(2) for residential construction located in an |
|
unincorporated area not in the extraterritorial jurisdiction of a |
|
municipality, the version of the National Electrical Code adopted |
|
by the commission by rule [applicable to electrical aspects of
|
|
residential construction in the municipality that is the county
|
|
seat of the county in which the construction is located; and
|
|
[(3)
for residential construction located in an
|
|
unincorporated area in a county that does not contain an
|
|
incorporated area, the version of the National Electrical Code that
|
|
existed on May 1, 2001]. |
|
SECTION 70. Section 430.001, Property Code, is amended by |
|
adding Subsection (b-1) to read as follows: |
|
(b-1) A builder shall assign to the homeowner, without |
|
recourse, the manufacturer's warranty for all manufactured |
|
products that are covered by a manufacturer's warranty. Any rights |
|
that inure to the homeowner provided under a manufacturer's |
|
warranty are the obligation of the manufacturer. The builder does |
|
not assume any of the obligations of the manufacturer resulting |
|
from a manufacturer's warranty, but shall coordinate with the |
|
manufacturer, suppliers, or agents to achieve compliance with the |
|
performance standard. If the manufacturer does not comply with the |
|
manufacturer's warranty within a reasonable period of time, the |
|
builder shall make the affected condition comply with the |
|
performance standard and shall be subrogated to the homeowner's |
|
claims against the manufacturer. |
|
SECTION 71. Sections 430.005(b) and (c), Property Code, are |
|
amended to read as follows: |
|
(b) This section does not exempt a builder in an area |
|
described by Subsection (a) from the builder licensing and home |
|
registration requirements imposed by this title, including the |
|
requirements of Sections 416.001 and 426.003. |
|
(c) An allegation of a postconstruction defect in a |
|
construction project in an area described by Subsection (a) is |
|
subject to the state [state-sponsored] inspection program [and
|
|
dispute resolution process] described by this subtitle. |
|
SECTION 72. Chapter 430, Property Code, is amended by |
|
adding Sections 430.012 and 430.013 to read as follows: |
|
Sec. 430.012. HOMEOWNER INFORMATION PAMPHLET. (a) The |
|
commission shall produce a homeowner information pamphlet to |
|
provide homeowners with basic information about the commission and |
|
the state inspection program. |
|
(b) The pamphlet must include information describing: |
|
(1) the commission's jurisdiction; |
|
(2) the state inspection program; |
|
(3) statutory warranties; |
|
(4) building and performance standards; and |
|
(5) how the items listed in Subdivisions (1) through |
|
(4) apply to a new or newly remodeled home. |
|
(c) The commission shall make the pamphlet available |
|
through the commission's Internet website and in a hard-copy |
|
format. |
|
(d) An escrow officer, as defined by Section 2501.003, |
|
Insurance Code, or an attorney performing closing services in which |
|
title insurance is not obtained, at a closing in which title to a |
|
new home is transferred shall provide the pamphlet produced by the |
|
commission under Subsection (a) to the person purchasing the new |
|
home. |
|
(e) The commission shall provide the pamphlet to a homeowner |
|
after registration of the home under Section 426.003(b). |
|
Sec. 430.013. WARRANTIES AND PERFORMANCE STANDARDS |
|
ADVISORY COMMITTEE. (a) The commission shall appoint a Warranties |
|
and Performance Standards Advisory Committee. |
|
(b) The committee may: |
|
(1) regularly review and evaluate the residential |
|
construction performance standards adopted by the commission; |
|
(2) review and evaluate proposed changes to the |
|
performance standards made either by the public or internally by |
|
the commission; and |
|
(3) make recommendations to the commission. |
|
(c) The commission by rule shall establish: |
|
(1) the number of committee members; |
|
(2) qualifications for appointment to the committee; |
|
(3) the terms of service of committee members; and |
|
(4) the duties and operating procedures of the |
|
committee. |
|
(d) A member of the committee serves at the will of the |
|
commission. |
|
(e) A member is not entitled to compensation for service on |
|
the committee but is entitled to reimbursement for reasonable |
|
travel expenses the member incurs in performing committee duties. |
|
SECTION 73. Section 446.004, Property Code, is amended to |
|
read as follows: |
|
Sec. 446.004. FEE INSPECTOR. A fee inspector must be either |
|
a licensed engineer, a registered architect, a professional |
|
inspector licensed by the Texas Real Estate Commission, a plumbing |
|
inspector employed by a municipality and licensed by the Texas |
|
State Board of Plumbing Examiners, a building inspector employed by |
|
a political subdivision, or a third-party inspector qualified under |
|
Section 427.001(b). A builder may use the same or a different fee |
|
inspector for inspections required under this chapter. |
|
SECTION 74. Section 59.011(a), Finance Code, is amended to |
|
read as follows: |
|
(a) For purposes of Chapter 27, Property Code, and Title 16, |
|
Property Code, a federally insured financial institution, or a |
|
subsidiary or affiliate of the institution, regulated under this |
|
code is not a builder. |
|
SECTION 75. The following provisions of the Property Code |
|
are repealed: |
|
(1) Section 5.016, as added by Chapter 843, Acts of the |
|
80th Legislature, Regular Session, 2007; |
|
(2) Section 401.002(12); |
|
(3) Section 416.012(b); |
|
(4) Section 418.002(d); |
|
(5) Sections 426.004(b) and (c); |
|
(6) Section 428.001(c); and |
|
(7) Sections 428.004(d) and (e). |
|
SECTION 76. The Sunset Advisory Commission's report to the |
|
84th Legislature shall evaluate: |
|
(1) the Texas Residential Construction Commission's |
|
overall performance; and |
|
(2) the ability of the Texas Residential Construction |
|
Commission to implement the changes in law made by this Act and |
|
management actions recommended by the 81st Legislature. |
|
SECTION 77. Promptly after this Act takes effect, the |
|
governor shall appoint the two additional members to the Texas |
|
Residential Construction Commission as required by Section |
|
406.001, Property Code, as amended by this Act. In appointing those |
|
members, the governor shall appoint one person to a term expiring |
|
February 1, 2011, and one to a term expiring February 1, 2013. |
|
SECTION 78. The Texas Residential Construction Commission |
|
shall adopt rules as required by Chapter 416, Property Code, as |
|
amended by this Act, not later than December 1, 2009. A person is |
|
not required to hold a license under Section 401.005(c) or Chapter |
|
416, Property Code, as amended by this Act, until January 1, 2010. |
|
SECTION 79. Not later than December 1, 2009, the Texas |
|
Residential Construction Commission shall adopt rules and |
|
prescribe forms under Sections 428.0011 and 428.006, Property Code, |
|
as added by this Act. |
|
SECTION 80. Not later than December 1, 2009, the Texas |
|
Residential Construction Commission shall hire an ombudsman as |
|
provided by Chapter 428A, Property Code, as added by this Act. |
|
SECTION 81. Not later than December 1, 2009, the Texas |
|
Residential Construction Commission shall adopt statutory |
|
warranties and building and performance standards under Section |
|
430.001, Property Code, as amended by this Act. Except as provided |
|
by this section, the warranties and building and performance |
|
standards adopted by the commission under this section apply only |
|
to residential construction commenced on or after January 1, 2010. |
|
Residential construction commenced before January 1, 2010, or |
|
commenced on or after January 1, 2010, under a contract entered into |
|
before that date, is governed by the statutory warranties and |
|
building and performance standards applicable to the construction |
|
immediately before the adoption of the statutory warranties and |
|
building and performance standards under this section. |
|
SECTION 82. (a) The terms of the current members of the |
|
Warranties and Performance Standards Advisory Committee expire on |
|
the date on which the new Warranties and Performance Standards |
|
Advisory Committee is appointed under Section 430.013, Property |
|
Code, as added by this Act. |
|
(b) The changes in law made by Section 430.013, Property |
|
Code, as added by this Act, to the compensation of the members of |
|
the Warranties and Performance Standards Advisory Committee apply |
|
only to members appointed on or after the effective date of this |
|
Act. |
|
SECTION 83. (a) Section 401.005, Property Code, as amended |
|
by this Act, applies only to a home, material improvement to a home, |
|
or improvement to the interior of a home, the building or remodeling |
|
of which commences on or after the effective date of this Act. A |
|
home, material improvement to a home, or improvement to the |
|
interior of a home described by Section 401.005, Property Code, as |
|
amended by this Act, the building or remodeling of which is |
|
commenced before the effective date of this Act is subject to the |
|
warranty obligation applicable to the home, material improvement to |
|
the home, or improvement to the interior of the home immediately |
|
before the effective date of this Act. |
|
(b) Section 401.007, Property Code, as amended by this Act, |
|
applies only to an order regarding an emergency or a violation of a |
|
statute to which Chapter 401, Property Code, applies that occurs on |
|
or after the effective date of this Act. An order regarding an |
|
emergency or a violation of a statute that occurred before the |
|
effective date of this Act is governed by the law in effect at the |
|
time the emergency or violation occurred, and that law is continued |
|
in effect for that purpose. |
|
(c) Section 416.001, Property Code, as amended by this Act, |
|
applies only to an offense committed on or after the effective date |
|
of this Act. An offense committed before the effective date of this |
|
Act is governed by the law in effect at the time the offense was |
|
committed, and the former law is continued in effect for that |
|
purpose. For the purposes of this section, an offense was committed |
|
before the effective date of this Act if any element of the offense |
|
occurred before that date. |
|
(d) Section 416.005, Property Code, as amended by this Act, |
|
applies only to a person licensed by the Texas Residential |
|
Construction Commission as a builder for the first time on or after |
|
January 1, 2010. A person registered with the commission as a |
|
builder before January 1, 2010, is governed by the law in effect at |
|
the time the person registered, and that law is continued in effect |
|
for that purpose. |
|
(e) Section 416.006(a), Property Code, as amended by this |
|
Act, applies only to a license issued for the first time on or after |
|
January 1, 2010. A certificate of registration issued before |
|
January 1, 2010, is governed by the law in effect immediately before |
|
the effective date of this Act, and that law is continued in effect |
|
for that purpose. |
|
(f) Sections 416.012(c) and (e), Property Code, as amended |
|
by this Act, and the repeal by this Act of Section 416.012(b), |
|
Property Code, apply only to a renewal of a license by a builder on |
|
or after September 1, 2011. The renewal of a license by a builder |
|
before September 1, 2011, is governed by the law in effect |
|
immediately before the effective date of this Act, and that law is |
|
continued in effect for that purpose. |
|
(g) Sections 418.001 and 418.002, Property Code, as amended |
|
by this Act, apply only to a ground for disciplinary action that |
|
occurs on or after the effective date of this Act. A ground for |
|
disciplinary action that occurs before the effective date of this |
|
Act is governed by the law in effect at the time the ground for |
|
disciplinary action occurred, and that law is continued in effect |
|
for that purpose. |
|
(h) Section 420.006, Property Code, as added by this Act, |
|
applies only to a contract entered into or a transfer of title made |
|
on or after the effective date of this Act. A contract entered into |
|
or a transfer of title made before the effective date of this Act is |
|
governed by the law in effect immediately before the effective date |
|
of this Act, and that law is continued in effect for that purpose. |
|
(i) Section 426.003, Property Code, as amended by this Act, |
|
applies only to a registration of a home that occurs on or after the |
|
effective date of this Act. A registration of a home that occurs |
|
before the effective date of this Act is governed by the law in |
|
effect immediately before the effective date of this Act, and that |
|
law is continued in effect for that purpose. |
|
(j) Sections 408.002, 426.004, 426.005, 428.002, 428.003, |
|
and 428.004, Property Code, as amended by this Act, apply only to a |
|
request for a state inspection filed on or after the effective date |
|
of this Act. A request filed before the effective date of this Act |
|
is governed by the law in effect immediately before the effective |
|
date of this Act, and that law is continued in effect for that |
|
purpose. |
|
(k) Section 27.004(l), Property Code, as amended by this |
|
Act, and Section 428.0041(a), Property Code, as added by this Act, |
|
apply only to inspection of a repair completed by a builder on or |
|
after the effective date of this Act. Inspection of a repair |
|
completed by a builder before the effective date of this Act is |
|
governed by the law in effect immediately before the effective date |
|
of this Act, and that law is continued in effect for that purpose. |
|
SECTION 84 .The Texas Residential Construction Commission |
|
shall adopt contract forms as required by Section 420.004, Property |
|
Code, as added by this Act, not later than January 1, 2010. A |
|
builder is not required to use a form adopted under Section 420.004, |
|
Property Code, as added by this Act, before the 91st day after the |
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date on which the forms are adopted under that section. |
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SECTION 85. Section 420.005, Property Code, as added by |
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this Act, applies only to a contract executed by a builder and a |
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buyer as described by Section 420.005, Property Code, as added by |
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this Act, on or after the effective date of this Act. A contract |
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executed before the effective date of this Act is covered by the law |
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in effect when the contract was executed, and the former law is |
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continued in effect for that purpose. |
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SECTION 86. This Act takes effect September 1, 2009. |