Texas Construction Law and Remodeling

DID YOU KNOW...

It has been announced that as of September 1, 2008, residential construction not otherwise under the jurisdiction of a municipal inspection process will need to be inspected by a third party inspector that is registered and recognized by the TRCC. For remodeling projects, the work involved will determine the inspections required. Please visit the Texas Residential Construction Commission's website for further details. You may click the TRCC link below.

In addition, for those interested in non-residential remodeling, September 1, 2008 will bring a change in the sales tax rate for some projects. No longer will the project be taxed based on the location of the job, but it will now be taxed on the location of the remodeler's office. This means the contractor will be using tax rates based on the county in which he does business, no matter where (in Texas) the work is being performed.

Effective September 1, 2007, projects involving interior remodeling will now be registered with the State of Texas if the labor and material cost for those interior renovations are $10,000 or more. This is half of the original amount set by our congress in 2003. In addition, the changes enacted by the recent legislature call for a disclosure statement to be added to all agreements for said interior improvements of $10,000 or more, informing home owners of their rights under Title 16 of the Texas Property Code, and the inclusion of the Texas Residential Construction Commission (TRCC) registration number of the builder/remodeler. Further, the registration of homes will now be done at the end of the project instead of with the signing of the contract. For contracts less than $10,000, only the TRCC registration number of the builder/remodeler is required.

Also beginning September 1, 2007, builders and remodelers registered with the State of Texas will need to participate in, and successfully complete, a continuing education program to qualify for the renewal of their registration with the state. The details for this program have yet to be announced. Additional information will be made available as possible.

As of July 1, 2006, the permit fees for projects permitted in the City of Houston have risen dramatically. In most cases, the base fees have increased from $12.00 to $35.00, with the valuation portion of the permit cost increasing somewhat, as well. The new fees will bring Houston more in line with the fees of other major Texas cities, and should allow for an increase in related city services that are long overdue. For more information, ask your contractor.

On September 1, 2003, a commission was formed to oversee the construction industry in Texas. Homebuilders (and remodelers who perform interior remodeling projects valued over $20,000) are now required to register with the state, and a new inspection system is being developed. Now, contractors must register any home in which he/she has performed $20,000 in interior improvements within a twelve month period with the TRCC. The commission will oversee an arbitration system to deal with problem resolution.

Over the past couple of years, Texas laws were changed so that you must now be provided with a state specified list of disclosures, including a list of subcontractors and suppliers who may have the right to lien your property.

Any job over $5,000.00 is to result in the establishment of a construction trust account*, and the homeowner is entitled to a complete accounting of the funds at the end of the job. If the project is financed using a home equity loan, the contract may not be signed in the home, and there is an extended waiting period before the construction project can begin.

Further changes have passed the in recent legislative sessions, which affect every remodeling contract written in Texas. These changes pertain to the disclosure statement, lien deadlines, and a clarification of the term "completion" with regard to retainage. Basically, a "punch-list" is no longer a reason to withhold the final payment. Those items on such a list are to be considered covered by the contractor's warranty. If you would additional information about these changes, just let us know.

Repairs to existing residences are now covered under the "Residential Construction Liability Act," which means that when you have repairs made so that you can sell your home, your contractor must honor any complaints regarding those repairs from the buyer of your home. By the same token, whoever buys your home, must give your contractor the opportunity to correct any problem discovered with his/her work. Definitions and remedies, as they apply to repairs, have been established under the recent changes. Since September 1, 2000, an additional disclosure statement is supposed to have been incorporated into every contract, which addresses this issue.

From a federal standpoint, do not forget that you are required to sign a lead paint disclosure statement if you are disturbing the paint on a home that was built before 1978!