Third-party warranty companies that provide services for Texas homeowners on behalf of builders/remodelers must now register with the Texas Residential Construction Commission. The commission announced it adopted rules that cover the warranty company guidelines during the its April 13, 2005, meeting and those rules were effective May 3.
The companies, as a minimum, must adopt the commission’s required warranties and building and performance standards. Third-party warranty companies must meet at least one of the following requirements in order to register with the commission:
• An entity that has operated warranty programs in Texas for at least five (5) years;
• A company whose performance is insured by an insurance company authorized to engage in the business of insurance in the State of Texas; or
• An insurer as defined under §4001.003 of the Texas Insurance Code that insures the warranty obligations of a builder under the Act as implemented under Chapter 304 of the commission’s rules.
Effective June 1, all residential builders and remodelers must provide limited warranties and meet adopted building and performance standards for each home construction project. The warranty periods are:
• One year for workmanship and materials;
• Two years for plumbing, electrical, heating and air-conditioning delivery systems;
• Ten years for major structural components of the home; and
• Ten years for the warranty of habitability.
These warranties and standards will play an important role when disputes between a homeowner and a builder/remodeler arise, and either party submits a State-Sponsored Inspection and Dispute Resolution Process (SIRP) Request Form to the commission. The neutral third-party inspector assigned to review each alleged defect listed on the SIRP Request will use the commission’s warranties and performance standards to determine whether the alleged construction defects are in compliance or not.
Commission Executive Director Stephen D. Thomas said builders/remodelers have the option of providing these warranties directly to the homeowners or contracting through third-party warranty company. If the builder or remodeler chooses to contract a third-party warranty company to provide coverage, the builder or remodeler must ensure that the third-party warranty company is registered with the commission. Likewise, it is the responsibility of third-party warranty companies providing coverage and/or repairs for builders/remodelers to make sure they have registered with the commission.
“With the baseline standardization of the warranties provided through third-party warranty companies, homebuyers can now be assured that a new home will perform to specific standards,” Thomas said. “These warranty companies will work with home builders to ensure all Texans will have a reliable, well-built home.”
Detailed information on the adopted Limited Warranties and Building and Performance Standards, as well as third-party warranty company rules, registration forms and instructions are available on the commission’s Web site at www.trcc.state.tx.us, or for more information, call the toll-free consumer hotline at (877) 651-TRCC.
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