Thursday, April 4, 2013
Open letter to Texas TPREIA and InterNACHI members
As you likely know a bill has been filed in both the Senate and House, which is exclusively inspector legislation. Both were filed on March 7th of this year. At this writing the bill has passed out of the Senate subcommittee while the House bill is still in committee. The House Sponsor’s Chief of Staff indicated that the bill was brought to them by TREC.
You can read the bills;
**Senate Bill 1296 **http://www.capitol.state.tx.us/BillLookup/History.aspx?LegSess=83R&Bill=SB1296](http://www.capitol.state.tx.us/BillLookup/History.aspx?LegSess=83R&Bill=SB1296)
**House Bill 2911 **http://www.capitol.state.tx.us/BillLookup/Text.aspx?LegSess=83R&Bill=HB2911](http://www.capitol.state.tx.us/BillLookup/Text.aspx?LegSess=83R&Bill=HB2911)
The bills are essentially the same. TPREIA was contacted in late February regarding these. Through research, survey and deliberation TPREIA determined that we could not support the bill with the below items in the bill. These both negatively impact the inspection industry and the Texas consumer.
Sec 1102.1141 **
Increases Professional Liability Insurance requirements and establishes them as a minimum.
· Allows for increases without legislative action
· TPREIA believes Professional Liability Insurance should be a business decision and not forced onto an inspector while encouraging the use of it to its membership
While on the surface, there is no significant impact from the rewording of the requirement for Professional Liability Insurance, in reality the changes further entrench the mandate. Its wording also opens the intent to interpretation by courts which may increase limits of liability to the Inspector. The number of claims has risen since the law was enacted in 2007 and the cost to the inspector has risen. These costs have been passed on to the consumer. It has also driven inspectors from the market. The changes proposed will only continue that trend.
**Sec 1102.1142 **
Amendment providing for Bond to meet Insurance requirement if E&O is not available in market or to an inspector
· Unknown availability of bonds for inspectors
· Unknown cost of bonds for inspectors
· Bonds do not provide coverage for litigation costs and a judgment
· Inspector pays not only for the bond but for defense and damages in the case of a suit
· Will likely decrease the ranks of inspectors, a negative to the Texas consumer
The use of a Bond as an alternative to Professional Liability Insurance is an attempt to maintain a license should coverage become unavailable, either to an individual or to the market. It offers no financial protection to the Inspector. It provides no protection against loss to a claimant or the costs associated to the legal defense. A single claim could bankrupt an inspector and does not serve the public; Inspectors will leave the market.
SECTIONS 15, 16, 17
Leave the Inspectors Recovery Fund intact
· The recovery fund is not an ongoing cost to the inspector and provides an additional layer of consumer protection
· Maintaining the recovery fund will provide an opportunity to strengthen it, similar to the Recovery Trust Fund used by TREC Agents, and allow for an eventual tradeoff against the Professional Liability Insurance
This Fund was initially designed as protection for the Consumer while trying to protect against Inspectors becoming a source of recovery for any damages perceived by a party to a real estate transaction. The actions in the market since the mandate for Professional Liability Insurance was created, has shown how true the original concern was. Claims have risen, often due to a “shot-gun” lawsuit approach; sue everyone involved in the transaction. Let the attorneys, courts, juries, and the insurance underwriters sort it out. It will still cost the inspector regardless of his performance. Make this Fund stronger and let it serve its original purpose.
CALL TO ACTION
If you agree that these are detrimental to either the Inspection Industry or the Texas Consumer, we encourage you to write a brief note to the below committee members and send it to their email address. Your note should be as brief as possible and professional to be effective.
We suggest using the above three points, add an opening and closing. Include your contact information. Send this out every three days by email.
We also recommend that you send a copy to your own Representative and Senator. You can secure their contact information at; http://www.capitol.state.tx.us/Home.aspx
House of Representative Committee Members**
Email addresses for Representatives are very easy: FirstName.LastName@house.state.tx.us
District – 713-665-8322
District – 806-374-8787
District – 210-532-2758
District – 972-552-5715
District – 832-556-2002
District – 713-633-3390
**Senate Business and Commerce Committee Members**
Email addresses for Senators are also easy: FirstName.LastName@senate.state.tx.us
Leticia Van de Putte
Chief of Staff - 512-463-0109
District - 940-689-0191 / Fax 940-689-0194
Eddie Lucio Jr.
District - 956-548-0227 / 956-548-0440 fax
District - 713-864-8701
District - 903-596-9122 / 903-596-9189