With the most recent session of the Texas Legislature having come and gone without an extension of the Texas Residential Construction Commission Act (TRCCA), the TRCCA and the regulatory commission spawned by it, the Texas Residential Construction Commission (Commission), will expire soon. More specifically, the TRCCA, by its own terms, mandates the abolishment of both the TRCCA and the Commission on Sept. 1, 2009.

While it is not unusual for a State commission to "sunset" -- meaning that the commission winds down over a one-year period -- the co-expiration of the act that established three statutory warranties, abolished implied warranties, and created performance standards for homes is unprecedented. This expiration will create many tricky questions for builders constructing homes in Texas over the next several years. Most notably, the TRCCA expiration creates questions as to what warranty standards will be applied to homes commenced before September 1 but closed after September 1, and what role the State-Sponsored Inspection and Dispute Resolution Process (SIRP) will have going forward.

The Commission attempted to address some concerns in a recent press release. In short, the Commission has decided that:

  • All homes completed before Aug. 31, 2009 must be registered with the Commission;
  • New builder registrations and renewals of builder registrations will be accepted until Aug. 31, 2009;
  • SIRP requests will be accepted up until Aug. 31, 2009;
  • The Commission will process and review SIRP's until the end of its sunset period, Aug. 31, 2010.

In addition to these questions, Texas home builders must re-write their contracts as of Sept. 1, 2009 to reflect statutory requirements applicable at that time. Conscientious builders will also want to consider warranty periods and standards differing between the TRCCA and the laws that will control warranty issues after Sept. 1, 2009. The changeover will force these same builders to be diligent during the changeover so that sales contracts appropriately limit warranties provided to homeowners. Any missteps during this transition will expose builders to unwanted, and certainly unnecessary, additional liability.