TREC has replied with a response indicating they feel I misrepresent the testimoney. I agreed to post anything they say. Here is their response and my reply to the response follows.
I will amend the YouTubes ASAP to indicate TAREI and ASHI do not oppose $100,000 per claim liability and to accept that Mr. Phillips could represent TREC until I have time to research the agendas, votes and minutes.
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**From: **Douglas E. Oldmixon, Administrator
**Date: **April 22, 2013
**RE: **HB 2911 & SB 1296
This memo is being offered as a resource to correct misinterpretations contained in the annotated video commentary prepared by John Cahill regarding testimony on HB 2911 before the House Committee on Licensing and Administration.
$100,000 of E&O coverage for each inspection performed
Mr. Cahill contends that those speaking in support of the bill endorse insuring each inspection performed by an inspector for $100,000. This is a fundamental misreading of the proposed text. The law currently requires an inspector to carry insurance that provides a minimum of $100,000 of coverage per claim not per inspection. The proposed bill language does not alter that requirement in any way and simply provides clarification. It does this in three ways:
· It specifies the types of companies authorized to write the coverage. This guarantees that the coverage is written by an entity subject to some regulatory oversight.
· It clarifies the type of liability coverage that must be provided by the policy. The lack of clarity regarding the type of liability coverage resulted in the agency previously seeking clarification from the Office of the Attorney General of Texas. This language merely codifies the outcome of that opinion.
· It confirms a minimum annual aggregate of $100,000 per policy. This text provides a statutory minimum cap on the amount the overall E&O policy must cover. The existing statute is silent on aggregate limits, leaving it open to insurance company setting various limits. The inspector is free to choose a larger aggregate limit, as many do.
**Authority of the Chair of the Texas Real Estate Inspector Committee **
Mr. Cahill states that Brad Phillips does not have the authority to speak on behalf of the Texas Real Estate Inspector Committee (the Inspector Committee). This is not true. As current Chair of the Inspector Committee, Mr. Phillips does have the authority to speak on its behalf. Mr. Cahill also contends that Mr. Phillips changed who he was representing when prompted by Representative Geren. This is not true. Mr. Phillips had actually registered both representing himself AND as a resource witness representing the Inspector Committee. Representative Geren was simply seeking clarification for the record from Mr. Phillips regarding that fact. Previously, Mr. Phillips had spoken on his own behalf.
Endorsement by the Administrator of the Texas Real Estate Commission (TREC)
Mr. Cahill comments that the TREC Administrator gives a speech endorsing the bill. This is not true. As a state agency, TREC is prohibited from lobbying for or against a bill before the legislature. Mr. Oldmixon clearly states that he was there as a resource registered “on” the bill and was available to answer any questions the Committee had with regard to the prior testimony presented. He only provides further explanations about the various aspects of some provisions in the bill when asked to do so by members of the Committee.
Contractual Limitation of Liability
Contrary to Mr. Cahill’s contention that the bill would impact inspectors’ ability to limit their liability by contract, the bill simply does not address this issue. In this regard, inspectors are free to follow whatever practice they do currently.
Consideration of bill provisions by Committee & Commission
Both the Committee and the Commission, in prior open meeting sessions over the past year, have either recommended or approved the contents of the bill. The only variance to this is the addition of the option for a bond, which was later introduced and included to address a concern expressed by TPREIA.
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My response to the response
Thanks for the memo. My comments:
1st comment
Inspection versus possible claim versus actual claim. Very interesting. I learned something new. In the home inspectors world every inspection is a possible claim but law only cares about actual claims. I invite you to live in our world of risk. I would now interpret ASHI and TAREI do not oppose 100,000 liability per claim.
2nd comment
I do not recall this bill being discussed and voted on by the inspector committee. When I was on committee General Counsel made us attend open meeting classes and sign acknowledgement agreements. GC enforced the open meetings agenda with vigor. Not on the agenda? No discussion. On the agenda and discussed? No vote allowed unless “possible action” stated on agenda. No vote taken? Discussion could not be forwarded as a recommendation. Maybe I missed the discussion and vote. I’ll check the minutes one day. It’s of little concern now, day is done.
In 2007 the inspector committee attempted to discuss the E&O legislation. Long story short the inspector committee was told by TREC that pending legislation was beyond the scope of their service and volunteer Chairman Davis was severely reprimanded by TREC. When the inspector committee was statutorily required (early 2007) they were not allowed to discuss pending legislation. When the statute requiring the committee was eliminated (late 2007) it seems they can now discuss pending legislation. Seems confusing but such is life.
3rd comment
You stated clearly you were a resource witness. I will take it that TREC has no position on the bill therefore would not be offended if the industry tried to make last minute changes through the Governor.
You mention inspectors are free to practice whatever it is they do now. Texas courts have upheld liability negotiation. It is what inspectors do now. This bill would be much more acceptable if the words “the inspector and client may negotiate liability in a written contract” were added. It is completely honest representation of accepted commerce practices.
Thanks for your help and concern regarding home inspection. The Governor summed it up when he signed the E&O bill in 2007 by saying “this is onerous”. It has proved to be a challenge for everyone. I remain convinced that TAREI and ASHI testimony can be used against any member of their group in the event of a claim. Just an opinion.
I know you are not permitted to lobby this bill so I petition others by suggesting one simple line be added to the bill “the inspector and client may negotiate liability in a written contract”? Thank you for the response.
