Third-Pary Warranties Following the Loss of the TRCC

Without question, one of the more surprising acts of the 81ST Legislative Session has been the discontinuation the Texas Residential Construction Commission (TRCC).  As many of you have heard, the TRCC will not accept any new registrations, complaints or requests for inspection after August 31, 2009.  Thereafter, unless the Texas Legislature provides for a shortened wind-down period, the TRCC will cease to exist on August 31, 2010.

Given the dissolution of the TRCC, the obvious question is what happens next?  How do builders protect themselves given that the TRCC’s Limited Statutory Warranty and Performance Standards are no longer applicable?  Can a builder establish a uniform standard for construction against which its work will be evaluated?  The answer to this last question is yes and it lies in the terms of a third-party warranty.

Even though the TRCC and the Limited Statutory Warranty and Performance Standards have been abolished, this does not mean that Texas builders are relieved of their responsibility to provide a structural warranty for up to ten years.  One of the ways in which a builder can protect itself against the exorbitant cost of repairing a major structural defect is to purchase a third-party warranty.

A third-party warranty typically establishes the construction codes by which the home is to be built and it identifies the performance standards against which your work will be evaluated in a lawsuit or arbitration.  Further, while terms and conditions apply, the third-party warranty may also pay the cost of performing covered structural repairs.

Without a third-party warranty and a well written contract,

(a) the quality of your work will be evaluated according to the vague usual and customary standards, which are next to impossible to satisfy and

(b) the cost of required structural repairs will be the sole responsibility of the builder. (Of course, terms and conditions apply.  Please see the third-party warranty for further details).

Now more than ever it is important for Texas builders to protect themselves against major structural defect claims.  In my opinion, one way to protect yourself against such claims is to purchase a third-party warranty.

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