81R11591 NC-D

By: McClendon H.B. No. 2699

A BILL TO BE ENTITLED

AN ACT

relating to the licensing and regulation of certain builders.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. The heading to Subtitle C, Title 16, Property Code, is amended to read as follows:

SUBTITLE C. BUILDER LICENSING [REGISTRATION]

SECTION 2. The heading to Chapter 416, Property Code, is amended to read as follows:

CHAPTER 416. LICENSE [CERTIFICATE OF REGISTRATION]

SECTION 3. Section 416.001, Property Code, is amended to read as follows:

Sec. 416.001. LICENSE [REGISTRATION] REQUIRED; RULES. (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;

(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 determined necessary by the commission.

SECTION 4. The heading to Section 416.002, Property Code, is amended to read as follows:

Sec. 416.002. LICENSE APPLICATION [FOR CERTIFICATE].

SECTION 5. 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(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 6. 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 7. Chapter 416, Property Code, is amended by adding Section 416.0041 to read as follows:

Sec. 416.0041. SECURITY REQUIREMENTS. (a) As a guarantee that a builder will meet the builder's obligations under this subtitle, each licensed builder shall maintain with the commission a bond or other security accepted by the commission.

(b) A bond posted as security must:

(1) be issued by an insurer authorized to engage in the business of insurance in this state;

(2) be continuous;

(3) be cancelable by the surety only after at least 90 days' notice to the commission; and

(4) recognize that the obligation continues for the terms of the contracts written by the builder while the bond is in force.

(c) Any security provided under this section in a form other than a bond must be convertible to cash by the commission for the benefit of persons who contract with the builder in this state, without resort to the courts, if the commission determines that the builder is in default of the builder's financial obligations to those contract holders. Any amount remaining after all contract holders' claims are paid must be returned to the builder not later than the 120th day after the date the last outstanding contract expires.

SECTION 8. Section 416.005, Property Code, is amended to read as follows:

Sec. 416.005. GENERAL ELIGIBILITY REQUIREMENTS. A person may not receive a license [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.

SECTION 9. 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 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.

(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 10. 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 September 1, 2011, each applicant for an 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 September 1, 2009, held a certificate of registration 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 was active and in good standing. If the person's certificate was not active or was not in good standing as of August 31, 2009, the person is required to satisfy the examination requirement. This subsection expires December 31, 2014.

SECTION 11. 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 a license [certificate of registration] to the applicant.

(b) The license [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 12. 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) A provisional license under this section is valid for six months from the date of issuance.

SECTION 13. The heading to Section 416.008, Property Code, is amended to read as follows:

Sec. 416.008. DENIAL OF LICENSE [REGISTRATION].

SECTION 14. 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 15. 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 [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 16. 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 17. 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 18. Sections 416.012(a), (b), (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].

(b) A licensed builder [who registers for the first time on or after September 1, 2007,] must complete, during the first year the builder is licensed [registered] with the commission, five hours of continuing education, one hour of which must address ethics.

(c) A licensed builder who has satisfied [is 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 thereafter complete five hours of continuing education every five years, one hour of which must address ethics.

(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 five-year period for engaging in self-directed study.

SECTION 19. Chapter 401, Property Code, is amended by adding Section 401.008 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.

SECTION 20. 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.

SECTION 21. A person is not required to hold a license under Chapter 416, Property Code, as amended by this Act, until January 1, 2010.

SECTION 22. Except as otherwise provided by this Act, this Act takes effect September 1, 2009.