10 TAC §307.7
The Texas Residential Construction Commission adopts
amendments to §307.7, relating to failure to comply with inspection
requirements. The rule amendments apply to residential construction
in areas not subject to municipal inspections. The rule amendments
are adopted with changes to the text as proposed and published in
the April 10, 2009, issue of the Texas Register (34
TexReg 2348), as discussed herein.
Effective on September 1, 2008, builders and remodelers who undertake
certain residential construction projects in areas not subject to
municipal inspections are required to have those projects inspected
at several stages of construction. The adopted amendments result in
homes that are in greater compliance with the accepted residential
building standards and with fewer construction defects.
The amendments revise the commission's rule to clarify the consequences
that may result when a builder/remodeler fails to conduct the required
phase inspections and the penalties associated with that failure.
The adopted amendments provide incentives for builders/remodelers
to have post-construction forensic evaluations performed when phase
inspections have not been timely performed in accordance with the
law. The adopted amendments recognize that a builder or remodeler's
unintentional failure to have the required inspections performed should
not subject the builder to the same penalties that an intentional
failure to abide by the law would require.
The commission received only one set of comments regarding the
proposed rule amendments. Ned Munoz submitted three comments on behalf
of the Texas Association of Builders (TAB). The first of TAB's comments
addresses subsections (b)(3), (c)(3), and (e) of §307.7. TAB
expresses concern that the rule language directs the commission to
take disciplinary action and requires the commission to presume certain
intentions. TAB suggests that the term "will" be replaced with the
term "may" in order to allow the commission to weigh the severity
of a builder's actions and to make case-by-case determinations as
to whether a builder acted intentionally.
In response to TAB's comment, the commission declines to modify
its rule as requested. The phase inspections required for residential
construction in an unincorporated area and in other areas not subject
to municipal jurisdiction are mandated by Property Code, Subtitle
F. However, the commission's disciplinary powers and authority to
assess appropriate administrative penalties promulgated under Property
Code Title 16, give the commission discretion to assess a builder's
actions and to respond accordingly. The commission has determined
that a strong policy of enforcement is necessary to achieve compliance
with the new requirements of Subtitle F. Moreover, the commission
finds that Subtitle F embodies a policy of the State to provide homebuyers
and homeowners with assurances that construction meets applicable
building standards. Therefore, the commission believes that its rule
must support both deterrence and consumer assurance. Accordingly,
if evidence supports a finding that a builder or remodeler's failure
to have phase inspections performed was not intentional, the commission
has determined that the commission's response must be an action that
serves to encourage strict compliance with the requirements of Subtitle
F or at least provide consumer assurances of quality construction.
So the commission has determined that certain actions will
be taken in the event that a builder
or remodeler fails to have the legally required phased inspections
performed in a timely manner. The commission will
notify the homeowner. The commission will
provide the builder or remodeler with a copy of the law and
regulations requiring phase inspections and the
commission will impose a minimum penalty.
As a part of the scheme to enforce Subtitle D, the commission has
incorporated varied levels of minimum penalties to reflect the degree
to which the evidence supports a finding of intention If evidence
demonstrates that a builder or remodeler has failed to comply with
Subtitle F intentionally, the minimum penalty increases.
TAB's second comment addresses subsection (g). The commission proposed
subsection (g) to provide that "[i]f a builder/remodeler neglects
to have a phase inspection performed . . . but has a post-construction
forensic evaluation performed and submits the results of the evaluations
to the commission and to the homeowner for the subject property before
receiving a notice of the failure to comply from the commission, the
commission will presume that the failure to comply was not intentional."
TAB suggests modifying the text by adding the following language to
the end of subsection (g) ", provided that a builder's failure to
do so before receiving notice of the failure from the commission will
not be deemed as evidence that the failure to comply was intentional."
TAB suggests the added language is needed to ensure that a builder
who fails to have a post-construction forensic evaluation performed
before receiving a notice of failure from the commission will not
necessarily be deemed to have done so intentionally.
In response to TAB's comment, the commission notes that the law
requires phase inspections of residential construction in areas not
subject to municipal inspections. If a builder/remodeler did not have
the phase inspection conducted or failed to have completed all of
the phase inspections, the builder/remodeler would be out of compliance
with the law. The proposed rule reflects the commission's intention,
which is to encourage any builder/remodeler that is out of compliance
to conduct post-construction forensic tests and to submit those tests
to the commission and to the homeowner without prompting by the commission.
As proposed, the rule promotes voluntary compliance and self-reporting
and encourages the builder/remodeler to resolve the compliance failure
as early as possible without need of commission intervention. If a
builder/remodeler realizes that it is out of compliance, but voluntarily
chooses to have the post-construction forensic testing completed,
it is a reasonable assumption that the builder/remodeler was not attempting
to circumvent the law. In other words, the builder/remodeler's actions
were likely unintentional.
On the other hand, a builder/remodeler's failure to act to resolve
the phase inspection omission unless and until the commission issues
a notice of that failure would not encourage voluntary compliance
or self reporting. The totality of the evidence regarding that builder/remodeler,
including the builder/remodeler's practice, allows the commission
to make the determination whether the builder/remodeler's failure
to comply was intentional. The commission may discern that the builder/remodeler's
omission and failure to act is an intentional disregard of the law
and rule requirements. For example, if a builder/remodeler were to
rely upon post-construction forensic testing more than one time, it
is within the commission's discretion to consider such evidence an
indication that the builder/remodeler was intentionally failing to
conduct the required phase construction inspections. If a builder/remodeler
fails to conduct the required phase construction inspections and does
not voluntarily conduct post-construction forensic testing, but instead
chooses to wait to determine whether the commission or the homeowner
discover the omission of one or more of the phase inspections that
is required by the law, then the commission might consider such evidence
an indication that the builder/remodeler intentionally failed to conduct
the required phase construction inspections.
TAB's suggested language modification contradicts the commission's
intention and does not comport with the overall action/consequence
and action/reward plan created by the commission's rule. The commission
finds that TAB's suggested language modification could be limiting
to the commission's enforcement actions and might discourage voluntary
compliance. Therefore, the commission declines to modify the rule
in response to TAB's second comment.
TAB's third comment addresses §307.7(h)(1) and (3). TAB suggests
that in two instances where the phrase "the forensic tests" appears,
the commission should change the text to "any forensic tests." TAB
states its reasons for this suggested modification are threefold:
for consistency with the references to measurements that are taken,
for consistency with the references in §307.7(h)(2) to forensic
tests and measurements, and to take into account that some tests may
or may not be performed in accordance with a particular forensic evaluation.
The commission agrees with TAB that the references to the forensic
tests should be consistent and the references to the measurements
should be consistent. However, the proposed rule amendment requires
an opinion letter, accompanied by a report on the inspection, including
forensic tests performed and measurements taken. Use of the phrase
"any forensic tests" may create ambiguity for some readers who might
assume that forensic tests are optional. They are not. The licensed
professional engineer or the fee inspector qualified under Chapter
307 is required to conduct forensic testing to support the conclusion
of the opinion letter regarding the construction.
For example, a licensed professional engineer must determine that
the foundation will serve its intended purpose. The report created
by the engineer must describe the forensic tests that were conducted
and the measurements taken. Even if the engineer conducts some forensic
testing that is inconclusive or upon which the engineer does not base
the opinion, the report must describe the forensic testing and report
measurements. The report should describe the destructive forensic
testing and resulting measurements, core drilling sample locations
and resulting measurements, X-rays and resulting measurements, elevation
shoot locations and resulting measurements, etc. Knowing which forensic
tests were performed and the measurements taken support the engineer's
opinion and provides valuable information to the builder and to the
homeowner. Should the foundation fail or a problem arise, the description
of the forensic tests and the measurement data may be helpful to the
builder and homeowner. The phrase "any forensic tests" might suggest
that forensic testing is not required; however, there is no option
for the engineer to write an opinion letter without having conducted
forensic testing.
Similarly, the builder and homeowner should be made aware of which
forensic tests a fee inspector performed to demonstrate that the framing
and mechanical systems were installed by the builder in compliance
with applicable Code. The builder and homeowner should be made aware
of which forensic tests a fee inspector performed to demonstrate that
installation, operation, and performance of each aspect of the substantially
completed project meets all applicable Code. When post-construction
forensic testing is conducted in lieu of the required phase inspections,
the fee inspector's report should describe the forensic tests performed
and the measurements taken which support the fee inspector's opinion
letter.
For example, the builder and homeowner should know whether the
fee inspector removed the electric plug plates to confirm that the
correct size wiring was used; opened the panel box to determine whether
the correct size wiring was used; conducted an air or water test on
the drain, waste, and ventilation systems; removed the grills of the
air conditioner vents to confirm that the correct size duct work was
installed; went into the attic to evaluate the condition of the duct
work; conducted a dielectric test to determine whether the wire insulation
has nicks; sent a camera through the sewer lines to observe bellies
or humps; used a peppermint test in the sewer system to check the
viability of the system; or performed any destructive testing in various
locations throughout the home. This is not an exhaustive list. Rather,
these examples demonstrate that there are many forensic tests that
may be performed to support the fee inspector's opinion letter. In
some instances, more than one test may be used to examine the home
for similar potential construction defects.
The phrase "any forensic tests" suggested by TAB to replace the
phrase "the forensic test" may create ambiguity for some readers who
might assume that the forensic tests are optional or that the fee
inspector does not have to check the entire home. However, there is
no option for the fee inspector to write an opinion letter without
having conducted adequate forensic testing in support of the fee inspector's
opinion.
Therefore, in response to TAB's comment and in an effort to reduce
or eliminate potential ambiguity regarding the rule requirements,
the phrases "the forensic tests" and "any forensic tests" will be
replaced by "all forensic tests" and the phrase "any measurements
taken" will be replaced by "all measurements taken."
The rule amendments are adopted under Property Code §408.001,
which provides general authority for the commission to adopt rules
necessary for the implementation of Title 16 of the Property Code.
The rule amendments implement Property Code §408.001 and House
Bill 1038.
No other statutes, articles, or codes are affected by the rule
adoption.
§307.7.Failure to Comply with Inspection Requirements.
(a) A builder or remodeler who fails to comply with
the inspection requirements of this chapter will be subject to disciplinary
action pursuant to the provisions of Chapter 305 of this title.
(b) The first time that the commission becomes aware
that a builder/remodeler has neglected to have a phase inspection
performed as required by this chapter, if the builder/remodeler brings
the matter to the attention of the commission or is forthcoming with
the commission about the oversight in response to a commission inquiry,
and the builder/remodeler demonstrates that its failure to have the
proper inspections performed was not the result of an intentional
disregard for the law requiring inspections of new residential construction
in areas in which a municipal inspection is not conducted, the commission will:
(1) notify the homeowner by letter that the builder/remodeler
failed to comply with the County Inspection Program and the letter
will identify the phases of construction that the new home or construction
project should have been inspected;
(2) provide the builder/remodeler with a copy of the
law and a link to the commission website for information about the
inspection program and requirements; and
(3) undertake disciplinary action pursuant to subsection
(a) of this section, in which the commission will offer the builder/remodeler
an opportunity to enter an agreed order for disciplinary action including
a reprimand and a minimum penalty of $1,500 for each phase of the
inspection not timely performed or in lieu of accepting a reprimand
and monetary penalty, the builder/remodeler can choose the option
to have post-construction forensic evaluations performed for all required
phases of construction that were not timely performed, as further
described in subsection (h) of this section.
(c) The first time that the commission becomes aware
that a builder/remodeler has neglected to have a phase inspection
performed as required by this chapter, if the builder/remodeler has
not been forthcoming with the commission about the oversight, but
demonstrates that its failure to have the proper inspections performed
was not the result of an intentional disregard for the law requiring
inspections as described in this chapter, the commission will:
(1) notify the homeowner by letter that the builder/remodeler
failed to comply with the County Inspection Program and the letter
will identify the phases of construction that the new home or construction
project should have been inspected;
(2) provide the builder/remodeler with a copy of the
law and a link to the commission website for information about the
inspection program and requirements; and
(3) undertake disciplinary action pursuant to subsection
(a) of this section, in which the commission will offer the builder/remodeler
an opportunity to enter an agreed order for disciplinary action including
a reprimand and a minimum penalty of $3,000 for each phase inspection
not timely performed or in lieu of accepting the monetary penalty,
the builder/remodeler can choose the option to have post-construction
forensic evaluations performed for all required phases of construction
that were not timely performed, as further described in subsection
(h) of this section.
(d) The first time that the commission becomes aware
that a builder/remodeler has neglected to have a phase inspection
performed as required by this chapter, if the builder/remodeler is
not forthcoming with the commission about the oversight and cannot
demonstrate that its failure to have the proper inspections performed
was not the result of an intentional disregard for the law requiring
inspections as described in this chapter, the commission will:
(1) notify the homeowner by letter that the builder/remodeler
failed to comply with the County Inspection Program and the letter
will identify the phases of construction that the new home or construction
project should have been inspected;
(2) provide the builder/remodeler with a copy of the
law and a link to the commission website for information about the
inspection program and requirements; and
(3) undertake disciplinary action pursuant to subsection
(a) of this section, in which the commission will offer the builder/remodeler
an opportunity:
(A) to enter an agreed order for disciplinary action
including a reprimand and a penalty of $5,000 for each phase of inspection
not timely performed; or
(B) to accept a reprimand and a total penalty of not
greater than $10,000 and have post-construction forensic evaluations
performed for all required phases of construction that were not timely
performed, as further described in subsection (h) of this section.
(e) For all instances after the first time that the
commission becomes aware that a particular builder/remodeler has failed
to have a phase inspection performed as required by this chapter,
the commission will presume that the failure is the result of an intentional
disregard for the law requiring phase inspections and will pursue
appropriate disciplinary action for the violation under Chapter 305
of this title.
(f) After notification by the commission that it has
become aware that builder or remodeler failed to timely have a phase
inspection performed as required by this chapter under subsections
(b), (c), (d), and (e) of this section, the builder or remodeler will
be provided an opportunity to present information to the commission
that the builder/remodeler's failure to have a phase inspection performed
as required by this chapter is not the result of an intentional disregard
for the law and that information will be considered in determining
the appropriate disciplinary action for the violation of this chapter.
(g) If a builder/remodeler neglects to have a phase
inspection performed as required by this chapter but has a post-construction
forensic evaluation performed and submits the results of the evaluations
to the commission and to the homeowner for the subject property before
receiving a notice of the failure to comply from the commission, the
commission will presume that the failure to comply was not intentional.
(h) A builder/remodeler that has post-construction
forensic evaluation performed under subsection (g) of this section
or as a part of the penalty for failure to comply with this chapter
must submit the following documentation for each applicable phase
of construction not timely performed:
(1) For a foundation inspection, the builder/remodeler
must submit an opinion letter signed and sealed by a licensed professional
engineer that the engineer has performed an inspection of the foundation
in accordance with generally accepted standards of engineering practice
and has determined that the foundation will serve its intended purpose
to the best of the engineer's knowledge. The letter must include a
report on the inspection, including all forensic tests performed and
all measurements taken, regardless of whether relied upon to make
the determination.
(2) For an inspection of the framing and mechanical
systems prior to the installation of insulation, wall board, or other
wall covering facing the home's interior, the builder/remodeler must
submit an opinion letter from a fee inspector qualified under this
chapter to perform phase inspections affirming that the fee inspector
has determined that the framing and mechanical systems are installed
in compliance with the applicable Code. The letter must include a
report on the inspection performed including all forensic tests performed
and all measurements taken, regardless of whether relied upon to make
the determination.
(3) For a final inspection upon substantial completion
of the project, the builder/remodeler must submit an opinion letter
from a fee inspector qualified under this chapter to perform phase
inspections affirming that the fee inspector has determined that installation,
operation, and performance of each aspect of the substantially completed
project meets all applicable Code. Final inspection upon substantial
completion of the project includes but is not limited to plumbing,
electric, and mechanical delivery systems; yard grading; attic insulation;
ventilation; egress; International Residential Code (IRC); and National
Electric Code (NEC) requirements. The letter must include a report
of all forensic tests performed and all measurements taken, regardless
of whether relied upon to make the determination that all Code requirements
are met.
(i) If a builder/remodeler has a post-construction
forensic evaluation performed as part of the penalty for failure to
comply with this chapter under subsection (h) of this section, the
commission will provide that information to the homeowner.
This agency hereby certifies that the adoption has
been reviewed by legal counsel and found to be a valid exercise of
the agency's legal authority.
Filed with the Office of the Secretary of State on June 11, 2009.
TRD-200902335
Susan K. Durso
General Counsel
Texas Residential Construction Commission
Effective date: July 1, 2009
Proposal publication date: April 10, 2009
For further information, please call: (512) 463-3926