Part 7.
TEXAS RESIDENTIAL CONSTRUCTION COMMISSION
Chapter 303.
REGISTRATION
Subchapter C. REGISTRATION OF THIRD-PARTY INSPECTORS
10 TAC §§303.200, 303.205, 303.210, 303.215, 303.220, 303.225, 303.230, 303.235
The Texas Residential Construction Commission (the "commission")
adopts on an emergency basis new rules at Title 10, Part 7, Chapter 303, Subchapter
C, §§303.200, 303.205, 303.210, 303.215, 303.220, 303.225, 303.230
and 303.235 regarding the registration and qualification of third-party inspectors
who take part in the state-sponsored inspection and dispute resolution process
described in Title 16, Property Code.
The rules are adopted on an emergency basis to comply with new legislation,
House Bill 730 (Act effective Sept. 1, 2003, 78th Leg., R.S., ch. 458, §1.01).
The new rules are adopted under new Chapter 427, Property Code (Act effective
Sept. 1, 2003, 78th Leg., R.S., ch. 458, §1.01), which provides in part
that third-party inspectors that take part in the state-sponsored inspection
and dispute resolution process must be registered with the state and must
meet certain statutory qualifications to serve. The adoption of the emergency
rule permits the commission to comply with the timetable prescribed by House
Bill 730 and set out in Title 16, Property Code.
The statutory provisions affected by the emergency adoption are
those set forth in the Title 16, Property Code and House Bill 730, 78th Legislature.
No other statutes, articles, or codes are affected by the adoption.
§303.200.Inspector Registration.
(a)
Beginning on February 17, 2004, the commission shall register
two types of third-party inspectors to participate in the state-sponsored
inspection and dispute resolution process.
(b)
The commission shall register:
(1)
persons who qualify under the Act to serve as inspectors
on issues involving workmanship and materials; and
(2)
persons who qualify under the Act to serve as inspectors
on issues involving a structural matter.
(c)
In addition to reviewing other qualifications for persons
seeking to serve as a third-party inspector under this subchapter, the commission
shall conduct a criminal background check on each person who seeks to register
under this subchapter.
(d)
The commission shall promptly notify persons who meet all
of the qualifications required to serve as an inspector under this subchapter
and shall provide registered inspectors with evidence of registration, which
shall remain effective for at least one year from the effective date as determined
by the commission, unless otherwise revoked.
§303.205.Application.
(a)
A person seeking to register with the commission as a third-party
inspector in order to participate in the state-sponsored inspection and dispute
resolution process must submit a completed application on a commission-prescribed
form accompanied by the appropriate fee.
(b)
A person may register with the commission to serve as both
a workmanship and materials inspector and a structural inspector. The person
seeking to serve as both a workmanship and materials inspector and a structural
inspector must qualify under the Act to serve as both.
(c)
A person who seeks to register as a third-party inspector
for issues related to workmanship and materials shall:
(1)
provide evidence that the person has acquired a minimum
of five (5) years of experience working in the field of residential construction;
(2)
provide evidence that the person holds a current ICC certification
as a residential combination inspector;
(3)
attest that the person has not received more than ten (10)
percent of the person’s gross income, as reported on the last federal
income tax return filed by that person, from providing expert witness services,
including retention for the purpose of providing testimony, evidence, or consultation
in connection with a pending or threatened legal action, less any fees for
expert witness services, including providing testimony or evidence in a threatened
legal action, received by that person when in conjunction with service in
the capacity of a certified third party inspector; and
(4)
provide other information requested by the commission that
the commission has determined is necessary to assess the applicant’s
qualifications and fitness to serve as a third-party inspector under this
subchapter.
(d)
A person who seeks to register as a third-party inspector
for issues involving a structural matter shall:
(1)
provide evidence that the person is a state-licensed professional
engineer or a state-licensed architect;
(2)
provide evidence that the person has acquired a minimum
of ten (10) years of experience working in the field of residential construction;
(3)
attest that the person has not received more than ten (10)
percent of the person’s gross income, as reported on the last federal
income tax return filed by that person, from providing expert witness services,
including retention for the purpose of providing testimony, evidence, or consultation
in connection with a pending or threatened legal action, less any fees for
expert witness services, including providing testimony or evidence in a threatened
legal action, received by that person when in conjunction with service in
the capacity of a certified third party inspector; and
(4)
provide other information requested by the commission that
the commission has determined is necessary to assess the applicant’s
qualifications and fitness to serve as a third-party inspector under this
subchapter.
§303.210.Determination of Qualifications and Fitness.
(a)
In reviewing an application to determine if an applicant
is fit to carry out the duties of serving as an inspector under this subchapter,
the commission shall consider among other things, whether the applicant
has a criminal history and if so:
(1)
the nature and seriousness of any crimes for which the
applicant has a prior conviction;
(2)
the extent to which service as a registered inspector might
offer an opportunity to engage in further criminal activity of a same or similar
nature as that for which the applicant has a prior conviction;
(3)
the extent and nature of the applicant’s past criminal
activity;
(4)
the age of the applicant when any criminal activity discovered
occurred;
(5)
the remoteness in time between the submission of the application
and the date of the applicant’s last criminal conviction;
(6)
the applicant’s overall work history in relation
to the dates of any criminal convictions;
(7)
evidence of the applicant’s successful rehabilitation
efforts while incarcerated or after release, including but not limited to,
restitution to the victim, completion of probationary requirements and completion
of community service; and
(8)
other evidence of the applicant’s fitness to serve
as a third-party inspector, as requested by the commission.
(b)
An applicant must respond to a commission request for evidence
of fitness to serve as a third-party inspector in order to complete the application
process.
§303.215.Training.
(a)
The commission shall develop an initial training program
for third-party inspectors who conduct inspections under the Act.
(b)
Persons registered as third-party inspectors must complete
the commission-developed training prior to participation in the state-sponsored
inspection and dispute resolution process.
§303.220.Material Change in Information.
Each person who is registered as a third-party inspector under this
subchapter shall report to the commission in writing any material change in
the information provided to the commission pursuant to this subchapter within
thirty (30) days of the change.
§303.225.Renewal.
(a)
A registered third-party inspector shall annually renew
the inspector’s registration not later than thirty (30) days prior to
the expiration of its effective period as determined by the commission.
(b)
A registered third-party inspector shall re-file for renewal
on a commission-prescribed application accompanied by the appropriate fee
as adopted by the commission.
§303.230.Denial of Registration.
(a)
The commission shall deny an application for registration
if the commission determines that the applicant is not qualified or fit to
carry out the duties of serving as a third-party inspector under this subchapter.
(b)
The commission shall deny any application for registration
under this subchapter if the applicant has a criminal conviction and if the
crime for which the person was convicted would negatively affect the person’s
fitness to carry out the duties of serving as a third-party inspector under
this subchapter.
(c)
If the commission denies an application for a registration,
the commission shall provide written notice detailing its reason(s) for denial
to the applicant not later than the 15th day after the date the commission
receives the completed application and fee.
§303.235.Appeal of Denial.
An applicant who is denied an application under this subchapter may
appeal that decision to the Executive Director within ten business days of
receipt of the notice that the application was denied.
This agency hereby certifies that the emergency adoption
has been reviewed by legal counsel and found to be within the agency's legal
authority to adopt.
Filed with the Office of
the Secretary of State on January 9, 2004.
TRD-200400168
Susan Durso
General Counsel
Texas Residential Construction Commission
Effective Date: January 9, 2004
Expiration Date: May 7, 2004
For further information, please call: (512) 463-9524
10 TAC §§313.1 - 313.23
The Texas Residential Construction Commission (the "commission")
adopts on an emergency basis new rules at Title 10, Part 7, Chapter 313, §§313.1
- 313.23, regarding the state-sponsored inspection and dispute resolution
process as provided for in Title 16, Property Code and in Property Code Chapter
27, as amended by House Bill 730 (Act effective Sept. 1, 2003, 78th Leg.,
R.S., ch. 458, §1.01).
The rules are adopted on an emergency basis to comply with new legislation,
House Bill 730 (Act effective Sept. 1, 2003, 78th Leg., R.S., ch. 458, §1.01).
The new rules are adopted under new §408.001, Property Code, Title 16,
Subtitle D., Chapter 426, Property Code and Chapter 27 Property Code as amended
by House Bill 730 (Act effective Sept. 1, 2003, 78th Leg., R.S., ch. 458, §1.01),
which provide authority to the commission to adopt rules necessary to implement
Title 16, Property Code, and that establish the state-sponsored inspection
and dispute resolution process for resolving disputes between builders and
homeowners. The adoption of the emergency rules permits the commission to
comply with the timetable prescribed by House Bill 730 and set out in Title
16, Property Code.
The statutory provisions affected by the emergency adoption are
those set forth in the Title 16, Property Code, Chapter 27 Property Code and
House Bill 730, 78th Legislature.
No other statutes, articles, or codes are affected by the adoption.
§313.1.Purpose.
The process described in this chapter applies to a dispute arising
from a transaction governed by the Act in which there is a claim resulting
from alleged construction defect(s), which accrued after September 1, 2003,
other than a claim solely for personal injury, survival, wrongful death or
damage to goods. The filing of a request under this chapter is a prerequisite
to the homeowner initiating an action for damages or other relief in response
to alleged construction defect(s).
§313.2.Time for Filing a Request.
A person must file a request to initiate the SIRP:
(1)
on or before the second anniversary of the date of the
discovery of the conditions claimed to be evidence of a construction defect(s),
but not later than the thirtieth day after the date that any applicable warranty
period expires; and
(2)
on or before the tenth anniversary of the date of the initial
transfer of title from the builder to the initial owner of the affected home,
or the improvement that is the subject of the dispute or the date on which
the contract for construction of the improvement was entered, if there is
not a closing.
§313.3.Notice to Builder.
(a)
Prior to initiating the SIRP, a homeowner must give a builder
a minimum of thirty (30) days written notice of any alleged construction defect(s).
(b)
If a homeowner submits a request for inspection to the
commission prior to providing the builder with the notice and inspection opportunity
provided in this section, the commission shall return the request to the homeowner
as incomplete.
§313.4.Builder’s Right to Inspect.
(a)
After notice has been provided in accordance with §313.3,
if requested by the builder, the homeowner must provide the builder or its
designated consultants a reasonable opportunity to inspect the affected home.
(b)
In addition to the right to inspect under subsection (a)
of this section, at any time after the request to initiate the SIRP has been
filed with the commission and prior to the conclusion of the SIRP, and upon
written request from the builder, a builder shall be given a reasonable opportunity
to inspect the affected home, or to have the home inspected, to determine
the nature and cause of the alleged construction defect(s) and the nature
and extent of repairs necessary to remedy the alleged construction defect(s).
(1)
The builder may take reasonable steps during the inspection
to document the alleged construction defect(s) and the condition of the home.
(2)
If the homeowner delays the inspection for more than five
(5) days after receipt of the builder’s request to inspect under this
subsection, any period for subsequent action to be taken by the builder or
a registered third-party inspector shall be extended one day for each day
the inspection is delayed after the fifth day.
§313.5.Initiating the SIRP.
(a)
No earlier than the thirtieth day after a homeowner has
given a builder written notice of alleged construction defect(s), either the
homeowner or the builder may initiate the SIRP by filing with the commission
a request for a third party inspection.
(b)
If the affected home is not registered with the commission
pursuant to Part 7, Chapter 303, Subchapter B, of this Title, at the time
the request is made, the requesting party must simultaneously register the
home with the commission on a commission-prescribed form, accompanied by the
appropriate fee, with filing the request.
§313.6.Required Information.
(a)
The request shall be submitted on a commission-prescribed
form and must include:
(1)
a description of the transaction giving rise to the dispute;
(2)
evidence that the homeowner provided the builder with written
notice of the alleged construction defect(s) or that the builder received
notice of the alleged construction defect(s) at least thirty days prior to
filing the request;
(3)
a general description of the builder’s response to
notice of the alleged construction defect(s), and if any portion of the builder’s
response was provided in writing, a copy of that response;
(4)
a description in reasonable detail of the alleged construction
defect(s);
(5)
a listing of the names and addresses of all professionals
or other persons that have inspected the alleged construction defect(s) on
behalf of the party requesting the inspection and that have prepared any written
materials regarding their inspection, if any;
(6)
an itemization of the amounts of any known out-of-pocket
expenses and engineering or consulting fees incurred by the homeowner in connection
with the alleged construction defect(s); and
(7)
any evidence that depicts the nature and cause of the alleged
construction defect(s), the nature and extent of repairs necessary to remedy
the alleged construction defect(s), including, if available, expert reports,
photographs and video tapes, if that evidence would be discoverable under
Texas Rules of Civil Procedure 192.
(b)
With regard to information provided under subsection (a)(4)
of this section, the party making the request must submit the name of any
person who inspected the home in connection with the alleged construction
defect(s) that is the subject of the request on behalf of the requestor prior
to the request being made. Failure to disclose the name of a person who has
performed such an inspection, if known to the requestor at the time of the
request, could prohibit the requesting party from later designating the person
who performed the inspection as an expert or from using any materials prepared
by such person performing the inspection in the SIRP or any action arising
out of any alleged construction defect(s) that is the subject of the request.
§313.7.Notice of the Request.
The party who initiates the SIRP by filing a request shall send notice
of the request, including a copy of the request and all information submitted
to the commission with the request, to all other interested parties by certified
mail, return receipt requested.
§313.8.Inspection fees.
(a)
The request to initiate the SIRP shall be accompanied by
the appropriate filing and inspection fees established by the commission.
(b)
The commission will establish fees that are commensurate
with the scope of the requested inspection and the type of construction defect(s)
alleged.
(c)
A homeowner who is able to show financial need may request
a reduction or waiver of the home inspection fees. To make such a request,
the homeowner must file with the request for an inspection a sworn affidavit
of inability to pay costs on a commission-prescribed form. The Executive Director
will review the request and approve it or deny it. The Executive Director’s
decision on such a request is a final agency decision not subject to further
administrative appeal.
§313.9.Initial Request Review.
(a)
Upon receipt of a request for inspection the commission
shall review the request to determine:
(1)
that the dispute arises from a transaction governed by
the Act;
(2)
that the request is complete, including required attachments
and the payment of the appropriate fees;
(3)
that the affected home is registered with the commission;
(4)
that the alleged construction defect(s) accrued on or after
September 1, 2003;
(5)
that the request is timely under §313.2; and
(6)
that the request involves a dispute between a homeowner
and a builder regarding an alleged construction defect(s), and is not:
(A)
a claim solely for personal injury, survival, wrongful
death or damage to goods, which do not include damage to a home; or
(B)
a claim for an alleged violation of Section 27.01, Business &
Commerce Code, regarding Fraud in Real Estate and Stock Transactions; or
(C)
a claim based solely on a builder’s wrongful abandonment
of an improvement project before completion; or
(D)
a claim for an alleged violation of Property Code, Chapter
162, regarding Construction Payments, Loan Receipts, and Misapplication of
Trust Funds.
(b)
If the commission determines that the request is not complete,
that the claim is or that the claim is not subject to the SIRP, the commission
shall so advise the homeowner and builder in writing, specifying in detail
the reason(s) why the request is not complete.
§313.10.Appointment of Third-Party Inspector.
(a)
After a determination that the request is based on a claim
within the jurisdiction of the commission’s SIRP and within fifteen
(15) days of receipt of the complete request and fee, the commission shall
appoint a third-party inspector to conduct an inspection.
(b)
The commission shall appoint the next available third-party
inspector from the list of registered third-party inspectors maintained by
the commission, who performs inspections in the affected home’s geographic
region and who has been qualified by the commission to perform the type of
inspection required for the construction defect(s) alleged.
§313.11.Objection to the Third-Party Inspector Appointed.
(a)
The commission shall notify the homeowner and builder in
writing of the appointment of the third-party inspector. Within three (3)
business days of receipt of notice of the commission’s appointment,
each party shall have the opportunity to object to the third-party inspector
appointed, with or without stating a cause, and shall notify the commission
in writing of the objection. Written notice under this section can be transmitted
by mail, facsimile or electronic transmission.
(b)
Each party shall have only one opportunity for each request
submitted to the commission to object to the third-party inspector appointed.
(c)
Failure to timely notify the commission that a party objects
to the third-party inspector appointed will serve as waiver of that party’s
right to object unless the party is able to show that it has acquired material
information that provides the basis for the objection that could not reasonably
have been discovered prior to the expiration of the objection period.
(d)
Following receipt of a party’s objection, the commission
shall appoint the next available third-party inspector from the list of registered
third-party inspectors maintained by the commission, who performs inspections
in the home’s geographic region and who has been qualified by the commission
to perform the type of inspection required for the construction defect(s)
alleged, and shall notify the interested parties of the appointment.
§313.12.Home Inspection.
(a)
If the commission has not received a written objection
to the third-party inspector appointed pursuant to §313.11, the commission
shall forward to the appointed third-party inspector a copy of the request
for inspection and all supporting documentation submitted with the request.
(b)
As soon as practicable after appointment, the appointed
third-party inspector shall contact the homeowner and arrange a mutually convenient
time to visit the home. The third-party inspector shall notify the builder
and the homeowner of the date and time of the inspection. The homeowner and
builder, including any of their consultants or representatives, may be present
at the inspection.
(c)
During the home inspection the third-party inspector shall
not:
(1)
take testimony; or
(2)
create, or permit the creation of a written, audio or video
recording of the inspection by any party or party’s representative.
(d)
The third-party inspector shall gather all information
and other data that the third-party inspector, in his sole professional judgment,
deems relevant to the inspection and shall gather it by any reasonable means
including taking photographs and interviewing the homeowner, the builder,
and any consultants present. An interview under this subsection may take place
outside the presence of others not aligned with the party subject to the interview.
(e)
The third-party inspector may suspend the inspection if
a party interferes with the inspection in such a manner as to prohibit the
third-party inspector from performing his duties in an impartial and professional
manner.
(f)
The third-party inspector shall not engage the services
of any consultant.
(g)
The builder shall submit to the third-party inspector for
his consideration any written documentation generated as a result of having
received a notice of a request for home inspection.
§313.13.The Third-Party Inspector’s Report.
(a)
If the alleged construction defect(s) described in the
request involve workmanship and materials but not including a structural matter,
the third-party inspector shall issue a report not later than the 15th day
after the date the third-party inspector is appointed by the commission. The
report shall set forth the third-party inspector’s findings based on
applicable warranty and building and performance standards and shall include
the third-party inspector’s recommendation for repairs, if any.
(b)
If the alleged construction defect(s) described in the
request involve a structural matter, the third-party inspector shall inspect
the home not later than the 30th day after the date the complete request is
submitted, and shall issue a report with recommendations not later than the
60th day after the date the third-party inspector is appointed by the commission,
unless the third-party inspector or a party to the dispute requests additional
time, which is approved by the commission. The report shall set forth the
third-party inspector’s findings based on applicable warranty and building
and performance standards; and shall include the third-party inspector’s
recommendation for repairs, if any.
(c)
Third-party inspectors shall consider a range of repair
or remediation options to address the alleged construction defect(s).
(d)
A party to the dispute or the third-party inspector may
request additional time to complete the inspection, including requesting additional
time to conduct further testing. Upon a showing that there is good cause for
an extension the commission shall grant additional time to complete the inspection.
(e)
A third-party inspector may not include in its report a
recommendation for payment of monetary damages, a price for the repairs recommended,
or a determination of the value of any loss allegedly suffered by the homeowner.
§313.14.Delivery of Third-Party Inspector’s Report.
The third-party inspector shall deliver its report to the commission
on a commission-prescribed form and the commission shall promptly transmit
the report to the homeowner and the builder.
§313.15.Reimbursement of Fees and Costs.
If the third-party inspector’s findings support all or a portion
of the allegations of the requesting party, the commission may order the other
party to reimburse all or part of the fees or costs of inspection paid by
the requestor.
§313.16.Time to Appeal of the Third-Party Inspector’s Report.
A homeowner or builder may appeal the third-party inspector's report
and recommendation on or before the 15th day after receipt of the report by
the objecting party. If either party is able to show good cause why the deadline
to file a notice of appeal of the third-party inspector’s report should
be extended, the commission may extend the deadline by no more than an additional
fifteen days.
§313.17.Appeal Process.
(a)
If a homeowner or builder appeals the conclusions or recommendations
in a third-party inspector's report, the Executive Director shall refer the
appeal to a three-person panel made up of state inspectors. If the request
involves a structural matter, one of the state inspectors on the panel shall
be a licensed professional engineer.
(b)
The appellate panel shall conduct a review of the written
materials submitted with the request, any information or data gathered by
the third-party inspector and the third-party inspector’s report and
recommendations. The appellate panel will issue written findings of fact and
shall approve, reject, or modify the recommendation of the third-party inspector
or remand the matter to the third-party inspector for further action as directed
by the appellate panel.
(c)
The appellate panel shall issue its ruling not later than
the 30th day after the date the notice of appeal is filed with the commission.
(d)
A ruling by an appellate panel under this section is a
final agency decision not subject to further administrative appeal.
§313.18.Offer to Repair.
(a)
Not later than the 15th day after the third-party inspector’s
report has been transmitted to the parties by the commission, or if the third-party
inspector’s report and recommendation has been appealed, not later than
the date of a final decision by the appellate panel, a builder may make a
written offer of settlement to the homeowner to repair the alleged construction
defect(s).
(b)
The offer must be sent by certified mail, return receipt
requested, to the homeowner at the homeowner’s last known address or
the homeowner’s attorney, if the homeowner is represented by counsel.
(c)
The offer may include either an agreement by the builder
to repair or to have repaired by an independent contractor, partially or totally
at the builder’s expense, or at a reduced rate to the homeowner, any
construction defect(s) included in the SIRP request.
(d)
The offer shall include in reasonable detail the repairs
to be made and shall provide that the repairs will be made within forty-five
(45) days after the date the builder receives written notice of the homeowner’s
acceptance of the offer, except as delayed by the homeowner or the occurrence
of events beyond the builder’s control.
§313.19.Response to Offer to Repair.
If the homeowner considers the builder’s offer to repair under §313.18
to be unreasonable, the homeowner shall notify the builder in writing on or
before the 25th day after the date the homeowner receives the offer why the
homeowner considers the offer to be unreasonable. The homeowner shall describe
in reasonable detail the homeowner’s reasons for concluding that the
offer is unreasonable.
§313.20.Supplemental Written Offer to Repair.
Not later than the tenth day after the date the builder receives written
notice from the homeowner under §313.19 the builder may make a supplemental
written offer of settlement. The builder shall send the supplemental written
offer by certified mail return receipt requested to the homeowner, or if the
homeowner is represented by counsel, to the homeowner’s attorney.
§313.21.Offer Rejected.
An offer of repair made under this chapter that is not accepted before
the 25th day after the date of receipt, the offer is considered rejected.
§313.22.Procedures Following Acceptance of Offer of Repair.
(a)
If a homeowner accepts a builder’s offer to repair
under this chapter, the builder, upon completion of the repairs, shall engage
the third-party inspector who provided the report and recommendation under §313.13
to inspect the repairs and to determine whether the home, as repaired, complies
with the applicable statutory warranty and building and performance standards
adopted by the commission.
(b)
Following the third-party inspector’s post-repair
inspection, the builder shall have a reasonable period, not to exceed fifteen
(15) days, to address any minor cosmetic deficiencies necessary to fully complete
the repairs.
§313.23.Third-Party Inspectors as Witnesses.
(a)
If a third-party inspectors registered by the commission
is subpoenaed by a party to a dispute between a homeowner and builder to provide
testimony by deposition, in court or in any alternative form of dispute resolution
proceeding, or to provide other expert witness services, the party who issues
the subpoena must pay to the third-party inspector a reasonable fee and related
expense for the services requested.
(b)
The commission shall establish reasonable fees for witness
services performed by a registered third-party inspector as a result of an
inspection undertaken pursuant to the SIRP.
This agency hereby certifies that the emergency adoption
has been reviewed by legal counsel and found to be within the agency's legal
authority to adopt.
Filed with the Office of
the Secretary of State on January 9, 2004.
TRD-200400169
Susan Durso
General Counsel
Texas Residential Construction Commission
Effective Date: January 9, 2004
Expiration Date: May 7, 2004
For further information, please call: (512) 463-9524
Subchapter B. CERTIFICATION OF ARBITRATORS
Chapter 313.
STATE-SPONSORED INSPECTION AND DISPUTE RESOLUTION PROCESS (SIRP)
Chapter 318.
RESIDENTIAL CONSTRUCTION ARBITRATION