11-Jan-06 2:00 PM CST

New Protections and Hurdles for Homeowners

For individuals considering remodeling their home or buying a newly constructed home, new requirements under Texas law provide consumers valuable information and some protection, but also create a maze of hurdles for homeowners with construction problems.

Under the Texas Residential Construction Commission Act (TRCC Act), as of November 1, 2005, new homes must be registered with the Texas Residential Construction Commission (TRCC) by the 15^th day of the month after title is transferred. For remodeling jobs, the contractor must register the project no later than 15 days after the project agreement or construction begins, whichever is earlier. Homeowners and prospective homebuyers can go to the Texas Residential Construction Commissions’ web site at www.trcc.state.tx.us to research a worker’s history before contracting on a remodeling job or new home purchase.

Since June 1, 2005, home builders and re-modelers have been required to provide limited warranties including one year for workmanship and materials, two years for plumbing, electrical, heating and air conditioning systems and ten years for structural components and habitability. New building and performance requirements provide homeowners with minimum standards to expect from contractors.

Smaller builders who do not provide their own warranties often work with third parties to warranty their work and materials. These third party warranty providers now must register with the TRCC. To register, they must either have been in business for five years or meet insurance requirements.

While the TRRC Act created new standards and registration requirements to protect homeowners, the Act also requires them to jump through new hoops when they encounter problems.

A strong lobby of homebuilders and contractors helped formulate and implement new procedural rules that homeowners must follow before seeking relief in court. The TRCC Act requires a homeowner to give written notice 30 days before filing a claim with the Commission. At each step of the dispute, the homeowner must give the builder or re-modeler an opportunity to inspect the defects. Only after the contractor fails to respond to the homeowner’s satisfaction, can the homeowner file an action with the Commission. The homeowner must then go through a state sponsored inspection and dispute resolution process.

This process, called the State-sponsored Inspection and Dispute Resolution Process, or SIRP, requires the homeowner to pay a $250.00 inspection fee for an independent inspection of the defect. If homeowners disagree with the inspector’s findings, they may appeal within the Commission to a panel of inspectors. If the contractor makes an offer to settle the dispute at any time in the process, specific statutory rules provide consequences and some penalties for rejecting the contractor’s offer.

Only after a homeowner pursues all remedies through the TRCC, may he or she pursue their rights through litigation. An independent inspector’s findings create a legal presumption in favor of the inspector and are admissible in arbitration proceedings or court.

On its face, the ability to cure defects as required by the TRCC Act seems to be a good way to resolve construction problems. But those who find defects want a fast resolution. In practice under the TRRC Act, however, homeowners must successfully navigate a complex, time-consuming complaint process.

Some home construction problems are not covered under the TRCC Act and can be resolved outside the Commission’s rigid rules. Independent inspectors review defects to see if they fail to meet only minimum standards and compliance guidelines under the TRCC Act. Defective custom features may not be covered under the Act. The TRCC also does not resolve contract issues and recommends consulting an attorney for disputes that arise because a contractor fails to meet the terms of a contract.

While the TRCC Act provides good resources and some protection for consumers, once consumers encounter problems, the Act’s rigid procedural requirements mean homeowners must move carefully to protect their rights.