Texas Legislative Alert mandatory E&O!!!

[FONT=‘Times New Roman’]Legislative Alert**: **

Inspectors of Texas:

Please understand, I could easily spend 3-hours on this email explaining what all has transpired over the past 48-hours. I will not burden you.

Unfortunately we were unsuccessful in our earlier attempt(s) today of getting this amendment of “mandatory” E & O insurance to SB914 ](http://www.legis.state.tx.us/tlodocs/80R/amendments/html/SB00914H21.HTM)removed as we thought we would as of late last night.

Below is my version of the TAREI position statement just sent to the following Legislators. Long story short, various individuals have not been telling the truth to our Lobbyist and relaying this information back to Sen. Shapleigh & Sen.Brimer’s offices.

As of 10:30 PM last night, we were told TAR was not in favor of this amendment and that they were going to help our cause. Today, as of 9:30 AM, we were told TAR was taking a “neutral” position. At 2:30 PM, we were told TAR was “in favor” of this amendment. As of 5:17 PM, this does not appear to be the case…or so we are now told from Mr. Mark Lehman w/TAR.

Per my conversation as of 5:15 PM with Sen. Shapleigh’s Chief of Staff, Eduardo Hagert, he stated both TAR & Sunset stated: “This amendment would benefit the Consumers in Texas”.

I encourage you to take immediate action to the following individuals. This exact letter (except Word protected) was just sent to the individuals below.

Please do not simply “forward” this position statement. Form/chain letters do us NO GOOD. I have sent this “unlocked/unprotected” Word document so you may cut/paste for the key points including any other positive comments you may add. Your comments should be positive regarding pros/cons on this amendment for the Inspection Industry.

As stated in the provided letter, if the “intent” for the amendment is Consumer Protection, why not add the Brokers/Agents to have mandatory E & O. You may also wish to consider adding language regarding E & O for Builders. Here’s another thing to ponder when contacting your Legislators…

With the proposed mandatory E & O insurance, every Inspector in Texas for fear of being sued for the most minute item (remember…you now have “pockets”) will now absolutely “nit/pic” & destroy every property Inspection they perform. I wonder how the RE community will respond when their deals fall thru…repeatedly.

Individuals that must be contacted to call/email are as follows. I would also encourage you to contact your Rep. & Senators from your respective areas as well.

Sen. Eliot Shapleigh


(O) 512 463 0129

Chief of Staff: Mr. Eduardo Hagert

Sen. Kim Brimer


(O) 512 463 0110

Chief of Staff: Ms. Jill Crocker

Rep. Vicki Truit

Vicki. Truitt@house.state.tx.us

(O) 512 463 0690

Rep. Byron Cook


(O) 512 463 0730

Rep. Lois Kolkhorst


(O) 512 463 0600

Rep. Ruth McClendon


(O) 512 463 0708

Rep. Dan Flynn

Dan.Flynn @house.state.tx.us

(O) 512 463 0880

Ladies & Gentlemen, we are faced with yet another example of how the Inspectors in Texas get slammed at the “11th hour” during a Legislative Session. We must act now. At this point, we have absolutely nothing to lose & possi bly everything to gain.

I implore you to let your voices be heard. We still have a shot of getting this amendment pulled from the Senate, but…time is quickly running out. You must take action this weekend so the Legislators get this first thing Monday morning.

Thank you.


**Daniel F. South **
TAREI President 2007-2008

**May 18, 2007 **

Re**: Amendment to SB914 **

**Hon. Senator Shapleigh, **

**Texas Association of Real Estate Inspectors TAREI](http://www.tarei.com/) is considered to be the vanguard of the Inspection Industry in Texas since 1977. As current President, I urge you to pull the amendment to SB914, requiring E & O “liability insurance” for all TREC Inspectors. **

**Considering th e “11th hour” tactics utilized for this amendment, I have no choice but to release a Legislative Alert to all 4,400+ Texas Inspectors on this issue. Unfortunately, time is not on our side. I have compiled the following facts for your consideration in removal of said amendment: **

**1. As you are aware, Sunset completed their audit of TREC. On page 56 of the Sunset repo rt, FY05 resulted in 5,020 Complaints against Real Estate Brokers/Agents. Complaints on Inspectors were 235. The Inspector is the only non-biased, true third-party for Consumer protection in a real estate transaction. **

**2. If you look at the TREC provided data per their website for the past 10 years on Inspector complaints, the total numbers for violations and monies out of the Recovery Fund are: 53-Disciplinary Actions totaling $ 88,500. **

**3. With mandatory E & O, costs for Consumers on Inspections will automatically increase a minimum of 30-40% overnight. **

**4. Considering the option of mandatory E & O, the current system in place withi n TREC for more than 25 years for Complaint Resolution for Consumers, also known as the Recovery Fund will seize to exist. By Legislative mandate, this Fund is required to be kept at a minimum of $ 450,000 annually. I would suspect TREC’s Budget will have to find these monies thru another revenue stream as well. **

**5. This past year, TREC had an “Emergency Hearing” for reciprocity for Inspectors in other states (Louisiana) to practice in Texas. With inco rporating “mandatory” E & O insurance, this will surely eliminate the reciprocity agreement for other Inspectors attempting to establish their businesses in Texas. **

**6. For the mandatory E & O insurance, please consider the following: **

**Ø Many Inspectors cannot qualify for E & O for either the cost(s) or, if he/she has been involved with any form of previous Litigation. (This is almost guaranteed for exemption) **

**Ø There are approximately 6 Carriers in Texas who offer E &a mp; O for Inspectors. Out of the approx. 4,400 + Inspectors who will now be “required” to carry, who will write this policy and…at what cost? **

**Ø 2006 Sunset’s recommendations, nor TREC, nor TAR has recommended “mandatory” E & O for Inspectors. That said, if we look at the Sunset provided numbers from above with over 5,000 Complaints from Agents/Brokers, if this amendment was truly concerned about Consumer Protection, you would also include “mandatory” E & O for the Real Estate community (Agents/Brokers) as well. **

**Ø For certain, this requirement will cause numerous Inspectors to close their businesses. That said, for the individuals who simply cannot afford the 4,000- 7,000/year in costs for E & O, is the state of Texas prepared to generate a “Risk Management” E & O Insurance pool considering we are a “right t o work” state? **

**Another point of contention of said amendment is that we have confirmed as of this afternoon, neither TAR nor Sunset is in favor of this amendment. As requested on behalf of the Inspectors in Texas, why this amendment? **

**As eluded to, if in fact this amendment is to “take aim” at Consumer Protection, where is the public outcry? Where are the Consumers who have been harmed? **

**There are none as indicated by the Sunset Review process. The Recovery Fund appears to be working well today, as it has been for the past 25+ years. **

**I strongly urge you to remove the amendment from SB914. **

**Thank you. **

**Sincerely, **

**Daniel F. South **
TAREI President 2007-2008


There’s not too many Texas HI’s that follow this board is there? There’s a pretty good discussion over at Inspection News regarding this. I recommend paying special attention to Phil Stojanik’s posts. It would appear that Texas HI’s have been taken off guard by this 11th hour amendment and there may be little time to raise a defense against it. I will take TAREI’s advice and contact the recommended legislators via e-mail and since I’m here in Austin I may even attempt to take written responses to them Monday. BTW, I carry E&O but I do not support the idea that it be mandated, it should be an individual business decision.

Since I live in Austin I will possibly attempt to hand deliver my written opposition response to the amendment to the two senators on Monday or Tuesday. If any of you would like for me to include your written response along with mine then e-mail a .pdf or Word file to me at borntxn@gmail.com asap! Please keep it to one page if at all possible and formatted as a formal letter, not a copy of an e-mail you may send separately. Also, please consider this as in addition to, not in lieu of, any other means you plan to use to get your opinion to the legislators.

I have already sent mine to all parties concerned, THANKS for the offer.
Tried to GREEN you but the system won’t allow???

Barry, I have mine thru the NACHI endorsed Towers-Perrin plan. My broker is Southern Risk Specialists, 8144 Walnut Hill Lane, Suite 1600, Dallas, TX 75231. I pay a total of $1,991/yr for $500,000 coverage with $2,500 deductible. That does not include general liability as I have that elsewhere.

E&O has been an optional product that inspectors choose to protect their business. Inspectors do not buy E&O to protect the consumer.

Inspectors who have promoted E&O for consumer protection are merely trying to bring others up to their cost of doing business. They are false “saviors”.

Mandatory E&O that is argued to protect the consumer will promote litigation.

Using TREC Enforcment and the current SoP I GUARANTEE I can wrangle $1,000 on any inspection you do. If its an older home I can up it to $10,000.

This bill makes inspectors fish in a barrell. There is LOTS of money to be make by experts and lawyers. LOTS

Yep- you might as well change your company logo to a nice big red bull’s eye.

Right now, since it is a business decision, you would be less likely for the General Public to take after you for nit-picky-$hit but once it become mandatory, and the public finds out that you have deep pockets, Look out (every inspector will be paying to get the walls of some guys new house painted (because you failed to report a scuff,lifted seam, or surface damaged sheet rock) not-required by the SOP- but who is going to care they can say the SOP frees you from pointing out OBVIOUS damage- and can then argue that the damage was not obvious to them and you Omitted to report it.

But, on the other hand-
I would like to see the look on the Realtor’s face when you hand them a 150 page report detailing every small defect and possible area of hidden defects, and a list of every possible latent defect then wish him luck selling.

If they really wanted to protect the consumer, they should make Home Inspections mandatory for every real estate transaction.

If I read the Texas legislature web site correctly, it seems the amendment has passed, the bill has passed both the Senate and the House and unless an unlikely miracle happens with Gov. Perry vetoing it, we are going to be stuck with this crap. Is that correct?

Ron…that’s correct. Go read the last 10 or so posts at http://nachi.org/forum/showthread.php?t=17147

For those who seem to have difficulty in grasping why it is inadvisable to relenquish control over our profession to the state, I give you the latest casualties - New York and Texas.

Here are two states where home inspectors actually felt comfortable with the idea of legislation and felt that it enhanced them. Then, as they bent over to pick up the soap…aaarrrgggghhhhhhh!!!

Once you have given it up…you don’t get it back. You just live from legislative session to legislative session, like living on the first floor of a two story outhouse, waiting to see what comes through the hole.

Licensing solves nothing.

You gotta make a bumper sticker. I’d buy one. :cool:

OK let me try to quantify this for you left-brainers.

Take the number of real estate agents and brokers in your state and divide that by the number of inspectors in the same jurisdiction. The result is a index of how just screwed you will be trying to control your own regulations.

In Texas that number is 42.

Nationally, it is about 40.

Do another calculation. Divide the percentage realtors accrue from an average real estate transaction by the percentage inspection typically gets.

That number runs around 50.

The arithmetic should be compelling. Inspectors have no numbers and no money. Our trade groups are pitifully small and fight constantly – We are politically invisible, if not downright laughable.

You trust your livelihood to a legislature that has no reason whatsoever to care.

Russell in Texas