The Texas Residential Construction Commission (TRCC) has begun what will be a 14-month-long winding down of its operations, which will cease on Aug. 31, 2010, according to a statement posted on its Web site last Friday.

The TRCC’s fate was essentially sealed when the Texas Senate unanimously approved a so-called “safety net” bill last week and did not include the Commission among the state agencies subject to sunset reviews that would be allowed to continue operating for another two years even if their reauthorizations weren’t passed.

Six years ago, Texas established the Commission at the behest of state builders who were looking for a way to resolve construction defect disputes with homeowners without the need for costly litigation. However, TRCC was never able to escape the perception that its evaluations and resolutions of defect disputes were too builder-friendly. In addition, the TRCC’s charter never really included mechanisms that could force builders to fix detects, or penalize them if they didn’t.

For those very reasons, the staff of the state’s Sunset Advisory Commission last year recommended abolishing TRCC. While the full commission decided against that move, it was clear that TRCC’s days were numbered. The question, though, is what’s next?

According to its Web site, TRCC will stop accepting new inspection requests, as well as renewal registration applications, on Aug. 31, 2009. Ombudsmen within the agency will continue to process homeowner complaints and post-inspection actions through Aug. 31, 2010. TRCC currently has about 200 cases pending, according to its Web site.

The San Antonio Express-News reports that on Sept. 1, construction defect disputes will fall under the Residential Construction Liability Act, which before TRCC existed limited damages that homeowners could seek and gave builders the right to repair poor construction. Ned Munoz, vice president of regulatory reform for the Texas Association of Builders, points positively to a bill passed in the recent legislative session that he says allows counties to enforce building codes and conduct home inspections in unincorporated areas.

However, in an interview with the Dallas Business Journal, Phil Crone, the director of government relations for the Home Builders Association of Greater Dallas, said he feared that the disappearance of TRCC would return the state to “the Wild West,” where dispute resolution wasn’t regulated. “We’re really taking a step back into the past,” he’s quoted as saying.

John Caulfield is a senior editor for BUILDER magazine.

Learn more about markets featured in this article: Austin, TX, Dallas, TX.