The Senate passed the Texas Residential Construction Commission Act late Tuesday and returned it to the House.

Consumer advocate groups initially condemned the proposed commission, first drafted by the Texas Association of Builders and authored in the House of Representatives by Rep. Allan Ritter, D-Nederland.

Jason McElvaney, Ritter's legislative director, said Wednesday that Ritter intends to accept the Senate amendments. "I think it's a done deal," McElvaney said.

At its inception, the bill had an industry-controlled membership that would set policy on all construction defect claims, regulate the dispute resolution process, choose third-party warranty companies and define building performance standards.

But Reps. Burt Solomons, R-Carrollton, and Robert Puente, D-San Antonio, managed to change builder representation from a majority to a four-member minority.

They also loosened the appeals process to give state judges greater discretion in reviewing evidence after the mandatory state arbitration.

Jerry Valdez, spokesman for the builders association, said that although the amendments were viewed as pro-consumer, the association hadn't chosen on Wednesday to formally oppose any.

"For the most part, the TAB is supportive," Valdez said. "We're just working toward a solution that is a fair balance between the industry and the homeowners."

Consumers Union regional director Reggie James warned that the new measure will still increase the cost of a defects dispute.

"The consumer still has to pay for whoever requests the third-party inspection," he said. That cost can be recovered, however, if the commission finds in favor of the homeowner.

Sen. Robert Duncan, R-Lubbock, restored the most coveted tool homeowners have, the judicially created implied warranty of habitability.

More than any other issue, the homebuilders specifically targeted the implied warranty, a standard established by the Texas Supreme Court that has withstood legal challenges for 35 years.

The builders association publicly asserted it was introducing the legislation to head off groups like HomeOwners for Better Building, who are "creating legislative agendas based on emotional quick fixes rather than science and fact."

A more immediate concern, however, was a dramatic withdrawal from the construction industry of insurance providers. Where more than 40 companies provided comprehensive general liability insurance to contractors eight years ago, only a handful underwrite the coverage today.

Premiums skyrocketed several hundred percent on primary policies and a thousand percent on umbrella coverage, said Mike Hobson of Zurich North America Construction.

Mold damage gets most of the attention, but in Texas, the insurance carriers are excluding damage caused by shifting foundations. Texas has the nation's second-highest number of foundation-based claims, Hobson said.

The state board of engineers receives far more complaints about residential foundation design engineers than on any of the other 30-plus engineering disciplines it regulates.

David Grissom, president-elect of the Houston-based Foundation Performance Association, said foundation problems in new houses have been on the increase for several years.

Grissom said a major contributor to slab problems is developers' improper site preparation.

Facing a wave of litigation, builders sought to specifically exclude the implied warranty and replace it with the limited warranties that have taken so much criticism from construction defects attorneys.

Other amendments to the bill require registration of builders that involve criminal background checks and creation of task forces on mold and arbitration.

A mold task force would advise the commission, as it creates building standards, on construction materials and building practices that mitigate mold.

An arbitration task force would set certification standards, arbitration procedures and reporting requirements.

The commission and grievance process was to be funded through a combination of builder and home registration fees, a grievance application fee and third-party inspector fees.

Sen. Leticia Van de Putte, D-San Antonio, eliminated the need for homeowners to pay an application fee, a staff member said.

The Legislative Budget Board estimates the commission will handle 37,500 complaints annually at a cost of $1.8 million