TRCC Bites Back to Sunset Slam -- Beleagured Construction Commission Issues Response and "News Release" to Abolition Recommendation

In a somewhat telling attempt to salvage an agency's very existence and preserve the jobs of professional bureaucrats, the TRCC published a "News Release" in Response to the Texas Sunset Advisory Committee's recommendation that TRCC be dismantled. The News Release contains only a portion of TRCC "management's response" to the Sunset Report issued in late August, but purports to "offer solutions" to "issues identified but not addressed" in that report. Recall, if you will, that the Sunsetters determined that TRCC was essentially dysfunctional and needs to be abolished. (See earlier blog posts). My favorite portion of the management response is a quote by the regulatory agency's Chairman, Paulo Flores:

“The Texas Residential Construction Commission adamantly disagrees with the Sunset Commission staff recommendation to eliminate builder oversight in Texas. Just because the Commission does not fit that staff’s standard and somewhat restricted view of what a regulatory agency should look like does not mean that the regulatory structure is fundamentally flawed.”

Chairman Flores' statement seems to dance around the fact that, ever since its creation by the Legislature in 1977, the statutory purpose of the Sunset Advisory Commission is to "identify and eliminate waste, duplication, and inefficiency in government agencies." In order to perform that function, the Sunsetters "question the need for each agency, look for potential duplication of other public services or programs, and consider new and innovative changes to improve each agency's operations and activities." In what I consider to be an insightful conclusion, Sunset Review of the TRCC has made the "sun shine" on that agency's flawed existence.

As an attorney who regularly represents Texas homeowners who suffer from construction defects or have been cheated, defrauded and sometimes plain robbed by unscrupulous builders, my experience has been that the Texas Residential Construction Commission is biased in favor of builders and against owners. In my opinion, this bias has been played out by the TRCC through blatant adoption of cumbersome Rules, expensive processes, and ineffectual communications. Though I deal with legal issues relating to residential construction on a daily basis, I have experience virtually nothing positive about the TRCC scheme.

Like TRCC Chairman Flores, I believe that Texas' 28,000 builders need regulatory oversight. I also believe that Texas homeowners need strict consumer protections against unethical builders. However, I disagree that the TRCC is the best agency to provide that oversight -- especially given its cozy relationship with builders, and the absence of any enforcement teeth.

In the end, the next Legislature will decide how best to handle TRCC. Though the agency has some friends in the Lege, it is worth noting that, in most cases, agencies under Sunset review are automatically abolished unless legislation is enacted to continue them.

Read the Sunset Advisory Commission's Staff Report on the TRCC here. The entire TRCC Response is available here.

NEW LAW -- EFFECTICE 9/1/08 -- MANDATORY INSPECTIONS & STANDARDS FOR HOMES OUTSIDE CITY LIMITS

As of September 1, 2008, the Texas Residential Construction Commission Act (Subtitle F; Chapter 446) requires that residential construction completed by builders and remodelers in unincorporated areas or in areas not subject to municipal inspections (commonly called "in the county") must have a minimum of three inspections conducted by a fee inspector. The builder/remodeler is responsible for hiring a fee inspector. The three required minimum inspections are a foundation inspection, a framing, mechanical and delivery systems inspection and a final inspection.

What if a builder starts work before September 1, 2008? Are some of the inspections required?The new county inspection requirements apply to new construction or remodeling projects that begin on or after September 1, 2008. If construction starts on a home before September 1, 2008, the builder/remodeler is exempt from completing the inspections.

Who can be a fee inspector?
A fee inspector can be an actively licensed professional engineer, a licensed architect, a professional inspector licensed by the Texas Real Estate Commission or a Texas Residential Construction Commission certified third-party inspector.

What is the process for a fee inspector to document the three required inspections? What form is needed?Fee inspectors must fill out the required Contracted Inspections information in order to submit an inspection on the commission’s online County Inspection Certification System. The Contracted Inspections information is the only information that an inspector needs to submit for an inspection. To submit a report, an inspector first must secure a builder-assigned project number; an inspector can submit reports only for projects that pass inspection. Once the information has been submitted, an emailed receipt confirmation will be sent to the builder/remodeler informing them that an inspection has been completed. Fee inspectors should not submit documentation supporting the inspection findings to the commission.

What are the code requirements for these required inspections?
The statewide residential building codes are the 2000 International Residential Code (IRC) and the 1999 National Electrical Code (NEC). These, however, may be amended in local jurisdictions if they have updated the code provisions. The code that applies to an unincorporated area is the same code adopted by the county seat. If the county seat has not adopted an updated version of the code, then the 2000 IRC applies.

Will the Texas Residential Construction Commission audit inspectors?
While the commission does not audit fee inspectors, builders and remodelers must keep inspection records. The commission randomly conducts audits on builders and remodelers once a year to verify inspection documentation ensuring that inspections were performed according to applicable codes and commission rules. However, if audit results show that a fee inspector repeatedly did not comply with the commission rules or apply the applicable code to construction projects inspected, the TRCC may withdraw the fee inspector’s registration.

What are the penalties if a builder does not obtain these inspections?
The commission can take disciplinary action against a builder or remodeler who fails to comply with the inspection requirements. It is the builder and remodeler’s responsibility to secure the three required inspections for qualified residential construction projects in unincorporated areas or areas not subject to municipal inspections.

FAQ - Home Registration with the TRCC

When did the home registration requirement begin?
Since January 1, 2004, the law has required all home builders and remodelers in Texas to register each qualifying home construction project with the commission.

What projects does the builder have to register?
The registered builder/remodeler must complete a Home Registration for: new homes; residential remodeling projects involving interior renovations exceeding $10,000; and, residential material improvements (a modification to the home that either increases or decreases the home's total square footage of living space and that also alters a perimeter wall, foundation or roof; e.g. room additions). For new homes built on the builder's lot, you must register and pay the fee no later than the 15th day of the following month in which the title transferred from builder to homeowner. If no title is transferred (e.g. home built on homeowner's lot or remodeling project), you must file the registration and pay the fee paid no later than the 15th day after: substantial completion of the project or upon the issuance of a certificate of occupancy or completion. You can register homes online.

What is the home registration fee?
The fee to register a home online is $25. If you use the paper registration form, it costs $40 per project. If your company registered more than 25 homes with the commission in the preceding calendar year, you must use the online registration system or file a waiver request in order to submit paper registration forms. You can pay the fee with cash, check, money order or credit card.

How long is the home registration process?
It can take up to 15 days, although online registration occurs overnight. The commission processes applications in the order received and there are no expedited methods of registration.

Are any residential construction projects exempt from home registration?
A home built by an individual (either alone or with the help of the individual's employees or independent contractors) and used as the primary residence for at least one year after completion or substantial completion of construction is exempt from registration. Home improvement projects that do not change the square footage of the home's living space or an interior renovation that does not exceed $10,000 during a 12-month period are also exempt. Please note that the $10,000 threshold only applies to interior renovations, not material improvement projects.

Why do builders have to register their projects?
The law requires that builders register all qualified projects. Registration helps to identify newly constructed homes and remodel projects that are subject to the inspection process and that fall under limited statutory warranty and building and performance standards. The limited statutory warranty and building and performance standards apply to construction started after June 1, 2005.

How will the TRCC enforce the home registration process?The commission has the authority to levy severe penalties against builders or remodelers who fail to register a home. Sanctions can range from disciplinary actions, such as a reprimand, a suspension or revocation of a builder or remodeler registration to administrative penalties, which can reach as high as $10,000 per violation.

Can a person building his/her own home register the home without registering as a builder?Individuals who build their own home and plan to live there for at least one year do not have to register as a builder and do not have to register their home. That home also is exempt from the state-sponsored inspection and dispute resolution process. If the owner sells the home within ten years of completion, you must disclose in the contract that the home or project is not subject to the minimum statutory warranties and performance standards.

Does the commission ever refund registration fees?
The commission only refunds registration fees that involve commission errors/typos. According to policy, the commission generally does not issue refunds due to builder/remodeler registration errors. Refunds may take up to six weeks to process.

What types of home construction projects require registration?
Builders/remodelers must register all single family homes, duplexes, certain townhomes and qualifying residential remodeling projects.

What is the definition of a townhome?
A townhome is a single-family dwelling unit constructed in a group of three or more attached dwelling units in which each unit extends from foundation to roof and with open space on at least two sides not more than three stories in height with a separate means of ingress and egress.

Time to Abolsih the TRCC?

This editorial was taken directly from the San Antonio Express News, and appeared on August 25, 2008:


On paper, the Texas Residential Construction Commission sounded like a good idea. The Legislature created it during the 2003 session to resolve disputes between homeowners and homebuilders and keep those disputes from entering arbitration and an already-clogged court system.

The commission might have been a model for homebuilder dispute resolution. But from the very start, it was plagued by political missteps that doomed it to failure.

Critics contended that the resolution process was already stacked against homeowners before the commission went to work. So it was incumbent on lawmakers and Gov. Rick Perry — who appoints the nine commissioners — to create a new entity that leveled the playing field.

That wasn't likely to occur in Austin, where the campaign contributions and lobbyists of builders and developers are a potent force.

What happened, in fact, is that they tilted the field even further in the homebuilders' direction. By statute, six of the nine commission seats are designated for representatives of the homebuilding community. And the prescribed procedures placed additional costs and burdens of proof on homeowners.

The Texas Residential Construction Commission came up this year for its first review by the Sunset Advisory Commission. The sunset review process is supposed to eliminate waste and inefficiency in state agencies.

The sunset panel found a construction commission that was “fundamentally flawed.” “It's really doing more harm to homeowners than good,” the panel's executive director told the Express-News Austin Bureau.

The Sunset Advisory Commission recommends abolishing the Texas Residential Construction Commission. That's a recommendation that will be challenged mightily in the halls of the state Capitol.

But lawmakers — especially those inclined to rail against government waste — should heed the sunset review recommendation. More than being abolished, this once-promising, now-failed commission needs to be demolished.