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Construction Commission sunset passes with little debate Print E-mail
by William Lutz    Wed, May 13, 2009, 10:27 AM

With surprisingly little acrimony, the House May 6-7 passed the Sunset Bill (HB 2295) for the Texas Residential Construction Commission.

Many Democratic amendments – including some that add costs to the industry – went onto the bill, which now goes to the Senate for further consideration.

The Texas Residential Construction Commission was a new agency created in 2003 to provide a forum for the inspection and resolution of construction defect disputes in homes prior to litigation. It is controversial for two reasons.

First, the bill that set up the commission made it more difficult for homeowners to go to court and cut their damages. Second, the bill was supported by John Krugh, a member of the commission and general counsel of the homebuilding firm owned by Republican megadonor Bob Perry. Most of the press stories of the agency focus on Perry.

Two factors led to the lack of acrimony: the House Business and Industry Committee insisted on many concessions to consumers. House sponsor Ruth Jones McClendon (D-San Antonio) accepted almost all amendments that expanded consumers’ rights.

Consumer protections

House Business and Industry Chairman Joe Deshotel (D-Beaumont) was adamant that a bill would emerge only if it was a better deal for homeowners.

Here are some of the key concessions inserted into the bill:

* Builders would be licensed, as opposed to merely registered — a provision that includes bonding.

* Builders would have to take an exam

* A recovery fund is created for homeowners unable to collect on judgments

* Traditional mediation is offered as an alternative to the commission-administered State Inspection and Resolution Process (SIRP). The homeowner can opt for either process.

* Warranties for workmanship and materials are increased from one to two years, and warranties for heating, air conditioning, plumbing, and electrical are increased from two to four years.

Additions on the floor

After adding in committee several additional concessions to homeowners, the House added several more on the floor, including the following:

* Homeowners no longer have to pay a fee to get their premises inspected for defects under the State Inspection and Resolution program. This amendment went on easily despite an attempt to table it.

* There is no cap on the amount of the recovery fund, and any aggrieved homeowner can recover up to $175,000 – the average value of a Texas home.

* The commission would either write or approve the contracts between builder and homeowner, according to an amendment from Rep. David Leibowitz (D-San Antonio), but the approved forms could not require consumers to waive their right to go to court and instead settle differences through binding arbitration.

* Blueprints must be disclosed. Additionally, if a homebuilder buys a home back due to defects, the builder must disclose that fact to a future buyer.

What next

One reason many Democratic amendments survived is that, for a while, the bill appeared unlikely to pass the House. Getting any bill out of the House can be perceived as a victory for builders – even if they had to make concessions to get it.

In fact, the builders themselves praised the House’s action. "The Texas Association of Builders," said Executive Director Scott Norman, "congratulates Rep. Ruth McClendon for her hard work to pass a Texas Residential Construction Commission Sunset Bill that contains numerous provisions that address the shortcomings identified by consumer advocates and home builders alike.

"Among the improvements for consumers that TAB supports are shortening the process for resolving construction defects, increasing the TRCC’s authority to discipline builders, creating a recovery fund to assist homeowners when necessary, and significant builder education requirements. 

"As HB 2295 continues through the legislative process, the Texas Association of Builders looks forward to working with the Texas Legislature to make the TRCC even more beneficial for both homeowners and the home building industry." 

Of the final product, Leibowitz said, "I think it’s a lot better than current law. It’s still got a long way to go."

Leibowitz issued a pointed warning, however. "If we get it back from the Senate and our pro-consumer pro-homeowner amendments have been taken off, then there’s going to be a lot of people on the warpath over here, and it’s just going to get wiped out."

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