C.S.H.B. 2295 (as voted out of committee on 4/17)

 SIP/Mediation

• Max time a homeowner can be stuck in the SIP: 76 days (workmanship & materials disputes) or 91 days (structural disputes)
• If builder requests a SIP, HO can request mediation instead
• HO can request either SIP or mediation. 
• Third party inspectors must disclose any conflicts of interest – subject to disciplinary grounds if he fails to do so (inspector must not control/own more than 10% of a licensee or work for a licensee)
• Final report of a SIP will be removed from the website and not subject to open records request if builder has made repairs and HO has confirmed the repairs
• Builder is still entitled to make an offer to repair/settle per RCLA, but must do so within 15 days of the date on which the HO can bring a legal action
• Only a HO can request mediation, and if HO does so, both the builder & the HO must participate in good faith
• After 90 days, the mediation is deemed completed, even if no resolution has been reached (if an agreement is reached between the parties sooner, the mediation is deemed complete when the agreement is reached)
• If the builder fails to make a repair he agreed to in the mediation, he’s subject to discipline
• Builder & HO must split the mediator’s fee

Licensure

• People who make interior repairs greater than $10,000 to a house that is sold within a year (and who can’t claim the house as a homestead exemption) must register as builders (requires flippers to register)
• New builders will be required to post a $25,000 surety bond with TRCC (builders renewing their licenses are grandfathered)
• Starting on September 1, 2011, every new builder must take an exam
• Provisional licenses will be issued to new builders for 30 days so they have time to take the required 8 hour course) and for new builders who are currently licensed in good standing in another state for 6 months
• Licenses are good for 2 years
• Continuing education requirements: 16 hours every 2 years, including 1 hour of ethics that cannot be done with self-study.  Up to 2 hours every 2 years may be done via self-study

Misc

• TRCC given a mission that includes overseeing people required to be licensed to ensure they’re responsible & accountable to homebuyers
• Next TRCC sunset: 2015
• 4 public members (instead of 3)

Arbitration

• Any agreement related to the contract that has an arbitration clause must be disclosed (this would include warranties)
• Any arbitration clause must be initialed by the buyer
• Contract can’t have a non-negotiable arbitration clause (no take-it-or-leave-it contracts)

Disciplinary Actions/Grounds

• TRCC can issue a cease and desist order without a hearing
• Confirmed complaints against a builder (defined as a complaint that results in disciplinary action) will be listed on the website as a percentage of the total number of homes the builder has registered during the calendar year
• Failure to register as a builder is a Class B misdemeanor (punishable by a fine of up to $2000 and/or 180 days in jail)
• All of the “repeated” requirements are removed from the grounds for disciplinary action
  • After a single act listed as a ground for discipline, TRCC can revoke or suspend a builder’s license
  • Single instance of refusing to participate in the SIP
  • Single failure to offer to repair
  • Single failure to supply requested info to the TRCC
• New ground for disciplinary action: failure to substantially complete the contract for no good reason (must have final, nonappealable court judgment)
• New available punishment: TRCC can prohibit “an individual” from acting as a builder or from owning or operating a company that supplies goods or services to a builder for any period of time the TRCC decides (this probably couldn’t be used against companies and is meant for sole proprietors)

Homeowner recovery fund

• Funded with all excess from TRCC in FY2010, then with 10% of all administrative penalties
• Homeowner can get money from the fund if:
  • He gets a final court judgment & can’t get money out of the builder
  • The builder files for bankruptcy & the HO can prove damages (no requirement of court action)
  • Homeowner has damages (including attorney fees) of less than $10,000, builder hasn’t offered to repair, AND homeowner would have to take further legal action against builder to get damages
• Each homeowner can get the lesser of actual damages or $75,000

Statutory Warranties

·        2 years for workmanship & materials (currently it’s only 1 year)

·        4 years for plumbing, electrical, heating, and a/c (currently it’s only 2 years)

·        Structural components warranty remains unchanged at 10 years