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What are Builders Up To - TRCC Reform Bill Clears Committee
Monday, 27 April 2009

New homebuyers stand to gain some protection, builders to be licensed
The much-maligned Texas Residential Construction Commission (TRCC) was given new life after the Sunset Commission unanimously rejected its own staff's recommendation that it be allowed to die. But the TRCC, scorned by one state official as the "builder protection agency," will be a changed outfit if a reform bill that passed a House committee last week becomes law. "Establishing at least a minimum standard for what it means to be a builder in this state; requiring them to hold a bond in case they've done something wrong - they have to be accountable for that; that's good," noted Winslow. "It's a real improvement."


TRCC reform bill clears committee
New homebuyers stand to gain some protection, builders to be licensed


James Shannon
Staff Writer

The much-maligned Texas Residential Construction Commission (TRCC) was given new life after the Sunset Commission unanimously rejected its own staff's recommendation that it be allowed to die. But the TRCC, scorned by one state official as the "builder protection agency," will be a changed outfit if a reform bill that passed a House committee last week becomes law.

HB 2295 was introduced by Rep. Ruth Harper-Brown (D-San Antonio), who reportedly endured a bitter struggle with a shady homebuilder who later ended up in prison. When her bill was sent to the Business and Industry Committee, chairman Joe Deshotel (D-Beaumont) teamed up with three Republicans to offer a substitute version of Harper-Brown's proposed legislation.

Deshotel explained his reasoning in an interview with The Examiner.

"We could've killed the agency but if we had done that, the only recourse that people would have would be to go directly to court," he said. "A lot of people can't afford that, and the damages are not enough that a lawyer is going to take the case. It would only be cases of big damages where people could get relief, so we tried to make it to where it was more consumer-oriented and not so one-sided."

One major problem with the 2003 legislation creating TRCC was that it only required builders to register with the state as opposed to being licensed and prevented homeowners from filing lawsuits in most cases. Those defects have been addressed in the committee substitute for HB 2295.

"Builders will now have to be licensed and post a bond," said Deshotel. "The homeowner can choose to go through dispute resolution and if things are not worked out and agreed to, they can go to court and file a lawsuit."

The committee action came in the wake of widespread consumer complaints about TRCC that may have reduced the ferocity of the opposition by the industry and given Deshotel an opening to help craft a better bill.

"I said it wasn't going to come out of my committee unless it was the way I wanted it; otherwise I was just going to let it die," he said.

Alex Winslow, executive director of the consumer advocacy group Texas Watch, has been one of the leading critics of TRCC. He said the bill represents real progress.

"It's certainly better than it was before," Winslow said. "The substitute is a significant improvement. Is there more to do? Sure. Is there a long way to go 'til it's an agency that is worth its salt? Definitely, but this is a bill that is much, much improved."

Winslow listed the changes to TRCC proposed in the bill.

"Establishing at least a minimum standard for what it means to be a builder in this state; requiring them to hold a bond in case they've done something wrong - they have to be accountable for that; that's good," noted Winslow. "It's a real improvement."

Understanding the mechanics of the proposed changes to TRCC required a little analysis provided by a legislative source who did not want to be identified by name discussing specific legislation.

"This bill is really the alternative to the Commission staff recommendation that the agency should be allowed to expire," said the source. "The licensing of builders is a really big deal - one of the main areas cited in the staff recommendation as a real problem. Of course, (the bill) has a nice grandfather period for those who are currently registered."

Another feature of the new bill will require TRCC to create specific rules to achieve the legislation's intent.

"The bill does not spell out detailed elements of what the upfront eligibility needs to be," said the source. "It requires the commission to develop that - general license eligibility, renewal requirements, examination requirements and continuing examination requirements."

Under the existing TRCC law, the homeowner was required to submit any disputes to binding arbitration. That is no longer required providing the homeowner does not initial a clause in the contract that requires it.

"Clearly the big deal there is that the builder cannot force the homeowner into arbitration," said the source. "Under current law, the homeowner would have to go through the entire process before they can file a lawsuit, but the new law preserves the homeowner's right to take the builder to court and reduces the waiting periods for various phases to be completed."

The bill also expands TRCC from nine to 11 members, all appointed by the governor and confirmed by the Senate. Gov. Rick Perry has not been known for appointing consumer-friendly commissioners in the past, often resulting in decisions favoring builders by a margin of 7-2 or even 8-1.

Winslow acknowledged the nature of the commission is largely dependent on the commissioners.

"The Legislature can change the structure of the commission and give the commission more authority and all that, but ultimately it's incumbent upon the board and the executive director to exercise whatever authority they're given," he said. "Up to now, the agency hadn't had the ability to do anything, really. The bill that we're looking at right now at least gives them some authority. Whether they choose to exercise that authority, that's a different story altogether."

Deshotel said he feels the measure has a fighting chance in the Senate, where he expects a version of the House bill to be sponsored by Rep. Glenn Heger (R-Katy).

"I don't think there is going to be a concerted effort by the homebuilders to kill the bill," he said. "I understand there are some homebuilders that are balking real bad about it, but the Texas Homebuilders Association really didn't have much choice because I wasn't going to let it out of committee the way they wanted it."

Winslow echoed that sentiment but noted there is work remaining.

"We're still early in this process," he said. "We only have 40 days left in the legislative session, but this bill has got a long way to go before it's done."

http://examiner.1upprelaunch.com/main.asp?Search=1&ArticleID=77&SectionID=1&SubSectionID=1&S=1

 
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