San Antonio Express-News
August 12, 2003

New Govt. Commission will Limit Homeowner’s Rights

copyright 2003, Paul Premack

I am not a litigation attorney so I will not venture to give you specific advice on how to sue your contractor. But I chose your letter so that the community could be made aware of a new law that the legislature passed and Governor Perry signed, which takes effect on September 1^st, 2003: the Texas Residential Construction Liability Act.

The Act completely changes the way a builder can be held accountable for construction defects. First, it creates a new government entity: the Texas Residential Construction Commission. The Governor appoints the nine members, and is required to select four registered builders, one licensed professional engineer, one architect or building inspector, and three at-large members. One consumer law expert has likened this to putting the foxes in charge of the henhouse, since at least six of the nine members will be in the building trade.

Second, the Act requires that the homeowner notify the builder, in writing, of each defect, and must give the builder 30 days to respond. If the builder fails to respond, or responds inadequately, the homeowner must submit the dispute to the Commission at the expense of the homeowner, along with evidence of the defects. Thus, the homeowner should hire an inspector – since overlooking a hidden defect means that defect is not part of the claim.

The Commission will then assign a private inspector to look at the home. There is concern that the inspectors will be biased toward the builders. After all, each homeowner has only one case to bring – but the builders may be involved in multiple claims, and an inspector who desires repeat business will not want to come down too hard on the builder. If the homeowner disagrees with the recommendation of the inspector, an appeal can be brought before the Commission. However, there is no right to make a presentation at the appeal; they simply review the documentation. Again, be aware the Commission, composed mostly of those in the building trade, may be biased toward the builder.

Only after appeal to the Commission’s is complete can a homeowner turn to the courts with a lawsuit. Before September 1^st, a homeowner could sue to recover damages including cost of repairs, out of pocket expenses like inspector’s fees, attorney’s fees plus mental anguish and punitive damages. After September 1^st, the homeowner is limited to recovering for "breach of warranty" (which eliminates mental anguish and punitive damages). The Act also strips the homeowner of the right to sue the builder under the Texas Deceptive Trade Practices Act (our primary consumer protection law since the 1970’s).

Here is the biggest pointer I can give you: if you have a dispute with your builder, get to your attorney NOW. If a lawsuit is necessary and appropriate, file it before the Act limits your recovery rights on September 1^st, 2003.

To read more on the Residential Construction Commission in my column of August 26, 2003 -- click here.