Wednesday, November 11, 2009

Sunset of the Texas RCCA

The Texas Residential Construction Commission Act (TRCCA) has joined the Alamo as a memorable episode in Texas history. Like defenders of the Alamo, defenders of TRCCA went down swinging. But the result was about the same: A commendable effort that came up a little short.

As I pointed out in this space last May, TRCCA was basically a good idea: Provide every new home and every home improvement project over $10,000 with a detailed statutory warranty against defects – what's covered, what's not covered and for how long. Get an independent third-party opinion if the property owner and the contractor can't agree on a defect claim. Then identify what a contractor has to do about any true defect.

The essential element in this scheme was the TRCCA performance standards – 47 pages developed by knowledgeable professionals with the help of the Construction Science Department at Texas A&M. These standards took most subjective opinion out of the equation, leaving less room for dispute. I like that. And courts do too – freeing up dockets for more important work.

The rap on TRCCA was that the claim process took too long (5 months) and didn't resolve enough disputes (only 12%). Worse, TRCCA didn't give anyone authority to enforce decisions that go against Texas builders (or Texas home owners).

Like defenders at the Alamo, the Commission is gone. They aren't accepting new complaints, aren't making inspections and aren't registering builders and remodelers.

But even with TRCCA gone, Texas still has plenty of construction defect law on the books. The Texas Residential Construction Liability Act of 1989 gives builders the right to inspect and repair after a claim of defect. There's a heavy incentive for builders to make a reasonable offer of settlement. If the dispute ends up in court, Texas may throw in attorney fees and the cost of temporary re-settlement if the owner has to relocate during repairs.

I believe the legacy of TRCCA will be their performance standards. These standards won't be the law in Texas after August 31, 2010. But they're still the best authority on residential construction defects. Texas is the only state that's made a conscientious effort to develop residential performance standards. Expect to see these standards recycled the next time legislators in Austin re-visit ways to protect Texas home owners.

With TRCCA gone, Texas builders and remodelers need to make a few changes in their contracts. Title 16 notices and disclosures are obsolete. These include registration (§ 420.001), registration number (§ 420.002), arbitration (§ 420.003) and dispute resolution (§ 426). But the right to repair notice in Texas Property Code § 27.007 must now appear in residential contracts because the exemption in Texas Property Code § 27.007(c) no longer applies. And, of course, the statutory TRCCA warranty is now optional.

If you need a little help sorting all this out, TexasConstructionContract.com offers a program that drafts post-TRCCA contracts. If you've already installed Texas Construction Contract Writer, the update is free. Click Help on the program Menu bar. Then click Check for Updates.