Texas home builders have seen a slew of legislation proposed during the Legislature's 81st session that will ultimately determine how consumer builder-homeowner arbitration will look in the future.
More than 20 bills have been proposed, all dealing with the Texas Residential Construction Commission (TRCC) and its part in the industry, mainly due to some homeowners, politicians, and government staff calling the TRCC a failure in regards to oversight and the arbitration processes of the home building industry.
The TRCC and accompanying Texas Residential Construction Commission Act was established in 2003 by the state Legislature with the intention of overseeing registration of companies in the industry, requiring uniform building and performance standards through inspection services, and acting as a neutral source giving homeowners and builders/remodelers a chance to resolve post-construction defect issues before proceeding with legal action. The commission was also charged with administering the state-sponsored Inspection and Dispute Resolution Process to help resolve defect disputes outside the formal legal system.
Originally given a six-year status instead of the typical 12-year term, the TRCC came under review at the Legislature's last session in 2007 when its authority was revamped to give the commission more authority over building companies such as issuing cease-and-desist orders and the ability to penalize builders or remodelers that fail to abide by the law.
During the second half of 2008, the state's Sunset Advisory Commission staff released a report calling for the abolishment of the TRCC and the repeal of the accompanying act stating: "Repealing the regulation of builders would be better than the regulations currently in place. To achieve meaningful regulation of builders would require a complete overhaul of current regulations and the commission itself that cannot be justified at this time."
The TRCC shot back with a defense of not being allotted enough time to fully implement the expanded authority given to it on Sept. 1, 2007, before the Sunset Advisory team finished its report almost a year later in August 2008.
That aside, the Sunset Advisory commissioners disagreed, negating the final recommendation of the staff's report and putting forward their support for giving the TRCC more time and power--a position some politicians have gotten behind through proposed legislation.
"Rightfully so, concerns are being expressed, but the [TRCC] needs more power," said Scott Norman, executive director of the Texas Association of Builders. He added that many in the industry are behind some of the proposed legislation bringing more authority to the commission, such as making it a misdemeanor crime if a builder does not register with the TRCC, forming an ombudsman office to assist homeowners with inspection and litigation processes, as well as broadening the number of commission seats from nine to 11, with only four seats representing those in the building industry.
H.B. 2295 and S.B. 1015 bring forth these types of standards, with hopes a bridge can be formed on both sides of the issue.
"No Texan deserves to be forced to deal with an ineffective and, many times, hostile process to simply have their home properly repaired to the condition it should have been in when they purchased it," said state Sen. Glenn Hegar, author of S.B. 1015, which calls for the continuation of the TRCC albeit under close scrutiny from the Legislature.
"[The TRCC] isn't working the way it is intended," said Amy Ellsworth, press secretary for Rep. Dan Gattis, who has proposed two bills to strengthen the TRCC--H.B. 3348 and H.B. 3349--and another, H.B. 2695--to abolish the commission if its authority isn't broadened. Rep. Todd Smith has also proposed H.B. 1635, which calls for abolishing the TRCC and phasing out arbitrary claims.
Gattis proposed some of the same legislation during the 80th session, with all the "teeth" of the amendments stripped out, Ellsworth said.
Norman and other builders stand behind the beliefs that the commission is a powerful incentive for working out disputes and that consumers are still fully protected and able to move forward with their civil rights of litigation.
"A consumer who disagrees with the outcome of an inspection still has all the legal rights he or she would have otherwise," said A. Duane Waddill, executive director of the TRCC before the Sunset Advisory Commission. "In the absence of the inspection process, a consumer's only recourse would be to negotiate with a builder directly--a tactic the commission knows has limited success as many consumers try this method before pursuing commission assistance--or to pursue their issue through a more complicated and costly legal process."
He went on to state that since its broadened authority, the TRCC has resolved more than 550 complaints and disputes, and more than 1,300 homeowners have been provided commission reports that certify construction defects in their home, claiming their value to homeowners in regards to being able to "negotiating resolution, mediation, arbitration, or civil litigation."
All proposed bills regarding the TRCC are pending in legislative committee sessions.