Another Boneheaded new law from our Texas Legislature

I wrote a while back about a new law imposing a mandatory two day grace period for landlords in Texas, which will cause tenants to pay more in late fees that they currently do – exactly the opposite of what the author of the bill intended. Now we have a new law that is equally as stupid and will serve no purpose other than to make real estate transactions more complicated and confusing.

At present, a Seller in Texas has no obligation whatsoever to make any repairs or improvements to a property being sold. It doesn’t matter if it’s out of code, falling down, roof leaks, etc. All property is sold as-is except for those repairs agreed to in writing between a buyer and seller.

House Bill 2118, which goes into effect Sept 1, 2007, creates several new points of which Sellers and their agents need to be aware. I’m going to discuss the main effects these will have on the home buying selling and process.

The new law says that Sellers may be required to install smoke detectors for the hearing impaired. If the new purchaser or a member of their family is hearing impaired and asks the seller to do so as part of the contract the seller will be required to install new smoke detectors. The buyer must request this in writing within the first 10 days of the contract and have a letter from a physician. The expense is negotiable between the buyer and seller.

Lest I appear to be hostile toward the hearing impaired, let me just say that I’d make the same arguments I’m going to make if a new law required hand rails at tubs and showers for elderly buyers, or required sellers to install wheel chair ramps for the mobility impaired. The point is, if a buyer has a special need or requirement of their new home, they are free and welcome to make those changes after they own the home and at their own expense.

So let’s break this one down.

You are a seller and you receive an offer on your home. Within 10 days of the effective date, you receive a written notice from the buyer requesting that you install smoke detectors equipped for the hearing impaired.

The request must include a letter from a licensed physician stating that the smoke detector is needed for the buyer or a member of the buyer’s family. The law does not dictate who will pay for the installation, but authorizes the seller and buyer to agree which party will bear the cost of the smoke detectors and which brand will be installed. If you fail to install the smoke detectors as required, the buyer may terminate the contract. Got it?

How should you handle this as a seller?
First of all, I doubt many of these requests will be made. But if I were a Seller and such request was made, my response would be cordial and friendly, but I’d say “sure, if you want to pay 100% of the cost. Also, if you fail to close, the smoke detectors stay”.

I’d have the buyer contract directly with the vendor who will be installing the system, and I would not allow any work to commence until I received a written statement from the vendor stating that the work had been paid in full in advance. I’d also want to write up something for the vendor to sign waiving vendor’s right to file any mechanics lien in case the buyer’s check bounced, or the credit card payment was subsequently challenged, or the quality of the work was in dispute, etc.

Do you see how complicated this could get, having a situation where you are required to have government mandated work performed on your home prior to closing? It’s just a very, very stupid law. There’s no other was to put it. But it gets even dumber.

How can it get dumber?
Let’s now look at how the above can and probably will be avoided entirely. The new Seller Disclosure requirements imposed on Sellers require you to check “yes”, “no” or “unknown” as to whether or not your home has smoke detectors for the hearing impaired. That’s on page 1 of the revised disclosure form, and simple enough. The problematic language is on page 4, where you are asked:

Does the property have working smoke detectors installed in accordance with the smoke detector requirements of Chapter 766 of the Health and Safety Code?* [ ] unknown [ ] no [ ] yes.
If no or unknown, explain. (Attach additional sheets if necessary):

A Seller should NEVER say yes here, because “yes” cannot be ascertained or known with certainty. Trust me on this. If you don’t believe me, start trying to find out for yourself and let me know how you do.

Chapter 766 of the Health Code says:

… each one-family or two-family dwelling constructed in this state to have working smoke detectors installed in the dwelling in accordance with the smoke detector requirements of the building code in effect in the political subdivision in which the dwelling is located, including performance, location, and power source requirements.

Call the City of Austin, the Travis County, then a local fire house, and ask each which is the “building code in effect in the political subdivision in which the dwelling is located, including performance, location, and power source requirements” for your particular home.

There are so many overlapping building code requirements with fuzzy interpretations that you simply cannot ever arrive at a place of certainty that would allow you to say “yes”. We tried in the past, in our local Austin Property Managers Association meetings, to have speakers from the city and from the fire department come and inform us on what the smoke detector requirements were in rental properties. After the meeting, we were more confused than before.

The real answer is “it depends”. And it depends on a lot of things, such as the year built and what the code was at the time your home was built, whether or not you’ve had substantial remodeling done, which government authority controls your area, etc.

So, a prudent seller is NEVER going to check ‘yes’ on the new Seller’s disclosure. You will ALWAYS check “No” or “Unknown”. The explanation you offer will simply be “I am not familiar enough with code requirements to check yes.”

Now that you’ve checked “no” or “unknown”, a new twist comes into play.
At the bottom of page 5 of the revised TAR Seller Disclosure form, above where the Buyer signs and acknowledges receipt of the form, it states the following:

The undersigned Buyer acknowledges receipt of the foregoing notice and acknowledges the property complies with the smoke detector requirements of Chapter 766, Health and Safety Code, or, if the property does not comply with the smoke detector requirements of Chapter 766, the buyer waives the buyer’s rights to have smoke detectors installed in compliance with Chapter 766.

So, if you’ve simply checked “no” on your Seller Disclosure, the buyer, by acknowledging receipt of the Seller Disclosure, waives the right to ask you to install smoke detectors, and the entire matter becomes a mute point. It is unclear to me whether or not the right is waived if “unknown” is checked.

The author of this bill should be ashamed. It’s a crappy and confusing law. If we had news reporters and investigative journalists worth their salt, they would report on and shame these lawmakers into doing a better job by exposing the poor work product (laws) they produce.

Now let’s look at something else the law imposes.
“All permits issued for home improvements will include the installation of smoke detectors that meet the current building code”.

That sounds well and good on the face of it, if you think it’s the business of government to be our nannies, but what if old Widow Johnson’s gas water heater goes out and needs to be replaced? And it’s out of code. Now a plumbing permit may be required, depending on the municipality or county in which she lives, to elevate the water heater 18 inches, or relocate it, or change the venting to bring it into compliance with current code.

The plumbing permit to do that work must now be accompanied by an additional permit to upgrade the smoke detectors to current code. Without the smoke detector work being done, the plumbing permit won’t be issued. And a government official (code inspector) will be coming into Ms. Johnson’s home to check the work, at which time if he notices other code violations, she could be flagged for additional violations.

Maybe Ms. Johnson can barely afford the new water heater but now she’s told that the government says she has to have her entire home wired for new electric powered smoke detectors. Her battery powered detectors are not good enough, according to the government, so she will either have to either live with cold water or fork out the money to upgrade the home’s smoke detector system and risk having other mandated repairs placed upon her. If it’s an older home built in the 1950’s, this could be a major electrical job to run wiring to all of the required smoke detector locations. What is she going to do?

A better written law would have included exceptions to the smoke detector requirement in a case such as the one outlined above, where a home owner has a health or safety repair repairing a permit, but they cannot afford to upgrade the smoke detector system.

I think many of out legislators have good intentions, but most seem fairly dumb at thinking through all of the implications of the laws they write. Or they write laws that are not needed.

This law is so bad I went to the State of Texas legislative website and reviewed the history of this law .

Of interest was the fact that the witnesses testifying in favor of the law were fire equipment industry people. They are the ones who stand to benefit from all of the new installations of expensive fire detection equipment that results from the law. And that now explains it to me, how a completely useless set of new rules can come into existence. Just follow the money.

Posted by Steve
9 years ago
Steve

Steve is a Real Estate Blogger, Husband and Dad, UT Austin Grad, Runner, Real Estate Broker and owner of Crossland Team and Crossland Real Estate in Austin TX.

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Mare - 9 years ago

If the state denied Widow Jones her hot water heater, wouldn’t they be putting her health at risk? I’d say she has a good case for a lawsuit.

I don’t mean to be knit-picky – I understand and agree with the heart of your opinion. But I don’t think that HB 2118 has anything on Austin City Council Resolution 20070215-023. It was passed back in February, and mysteriously, we haven’t heard anything more about it. Let’s recap some portions of that resolution:

1)implementing building codes requiring all new single-family homes
to be zero net energy capable by 2015 (Somebody PLEEAASE pass the perpetual motion machine!)

2)implementing building codes to increase energy efficiency in all
other new private and public sector buildings by at least 75 percent
by 2015

3)implementing policies identifying opportunities for energy
efficiency retrofits and upgrades, and requiring all cost-effective
retrofits and upgrades for all properties at the point of sale
(This one gets me. This, to me, is a BLATANT violation of private property rights.)

4)developing enhanced technical assistance and marketing incentives
and standards for the Green Building Program, developing policies
requiring achievement of upper-tier ratings in cases where green
building is mandated as a product of City programs or negotiations,
and developing an optional “Carbon Neutral” certification to
accompany green building ratings
(What is an ‘optional’ Carbon Neutral certification? If they’re going for pie-in-the-sky wishful thinking, why not go for the gold?)

5)develop a menu of greenhouse gas reduction strategies for local
implementation that citizens and organizations can fund through the
purchase of “carbon offset” credits, thereby reducing their own
carbon footprint
(FUND?? People will be too busy-and broke-trying to ‘retrofit’ their homes. And buying carbon credits.)

I know you’ve addressed this issue before, but I think it merits mention here. Some folks say this resolution is empty because it’s vague – but it sure sounds good – and I’m wondering when the city council will pounce.

Sounds like I’m anti-environmentalism, which isn’t true. I’m just not for being unrealistic about it – and AT THE PROPERTY OWNER’S EXPENSE. Oh, but I forgot – Mayor Wynn was so gracious to suggest that the improvements could be wrapped in the buyer’s mortgage.

So, why don’t we just wrap the cost of the smoke-detector upgrade into the mortgage?

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Steve - 9 years ago

Thanks Mare,

I’ll have to look further into that. I had heard something about requiring upgraded sewer lines in the older parts of town upon sale someday, which may be part of what you’re talking about.

Yes, it seems like we’re moving toward a day when selling a home will mean having to comply with government imposed “upgrades”, which is unconstitutional. It will probably be placed under the umbrella of “for the better good of all”. Believe me, there are plenty of Buyers and Sellers who can’t afford even the simple repairs that are revealed upon inspection, so I’m not sure who we think will be coming up with the cash to comply with mandated retrofits and upgrades.

Thanks for your comments.

Steve

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Frances Venable - 9 years ago

Steve – I enjoyed reading this blog, particularly about how crazy the laws have become & the trappings we as Realtors have to be aware of & the new smoke detector issue is already getting alot of buzz around our office. However, it’s your 2nd paragraph that I agree with most & should sum it all up:

“At present, a Seller in Texas has no obligation whatsoever to make any repairs or improvements to a property being sold. It doesn’t matter if it’s out of code, falling down, roof leaks, etc. All property is sold as-is except for those repairs agreed to in writing between a buyer and seller.”

So often I find that many buyers feel that the seller is obligated to be making any/all repairs (pursuant to the inspection report). I feel it’s the agent’s responsibility to point out to their buyers what it says on Pg. 3 of the contract, #7 PROPERTY CONDITION, under D, Acceptance of Property Condition. It clearly states that the buyer accepts the property in its present condition. By the way, those blanks are there to write in something that was glaring when they viewed the home (i.e. hole in the bedroom wall, broken down car in the backyard) NOT the words, “Per inspection report”. Where are these agents getting this crap from? From other (bad) agents?

Personally, and I find many agents agree, this section on the contract needs to be in bold, in 14 point & hi-lited in yellow. It’s ridiculous to me when buyers are buying existing homes, not a brand new home (& even they have issues) and expect the home to be perfect, further, if it’s not, they feel the seller needs to bring it up to their standards. WRONG. Buyer’s Agents, Brokers, please do your job, read the contract and make sure your buyers do too; advise your buyers accordingly.

Texas is a Buyer Beware state and the responsibility lies with the buyers to understand they are purchasing a home AS IS, if they want time to get inspections, they need to PAY the seller for that time, it’s called an Option Period (and what’s with the pidly $25, $50 Option fees? for friggin 10 day Option Periods?). Agents remind your buyers the seller doesn’t have to fix anything, they are buying it AS IS (remember they signed the contract, pg. 7, Acceptance of property condition?). If they are going to want to address issues with the seller, agents need to explain to the buyers, it should be something BIG & SERIOUS and/or DANGEROUS (i.e. HVAC issues, Electrical issues, Foundation issues). By better preparing the buyer or the seller about what to expect through the differenct phases of the transaction, most will find that everyone involved will cooperate & the transaction will go smoothly. When everyone is kept informed, they feel involved and know what their choices are that will allow them to make reasonable decisions, resulting in a smoother transaction. In the big picture, thus resulting in future referrals from those satisfied clients.

The seller’s disclosure just went to 5 pages, I’m sure it won’t be long until the contract goes beyond 8 pages (we are already seeing ugly signs of Mineral Rights – due to the drilling leases/contracts for the Barnett Shale). It’s becoming more & more difficult to get through a transaction smoothly and I find most of the time it is because an agent failed to inform their party accordingly.

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Sherry - 9 years ago

Steve- I’m a rehabber in south Texas up late tonight filling out a Seller’s Disclosure, etc. I didn’t know what the smoke detector question meant, so had to look it up. Thanks for clearing it up. The Austin attitide- that is why Austin is where I spend my days off!
Thank you=)

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Steve - 9 years ago

Hi Sherry,

Glad you found the information useful.

Steve

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Chuck Weigand, REALTOR, Broker - 9 years ago

Did you try to look up the Texas Health and Safety Code Chapter 766? There is not a chapter 766 on the state web site for the code. What is up with this new rule and there isn’t even a rule.

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Steve - 9 years ago

Exactly. How can the average seller have read something which is so difficult to find. Politicians hinder our lives more than they help us in cases like this.

Steve

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Tom Robinson - 8 years ago

Actually you can find Chapter 766 on the Texas Health and Safety Code web site. (Perhaps it was posted after Mr. Weigand went looking for it.) Of course, finding it won’t make it any easier to interpret or comply with. Here’s the link:

http://tlo2.tlc.state.tx.us/statutes/hs.toc.htm

I ran across this blog because I’m buying a house and noted that the seller’s disclosure is marked “unsure” with regard to whether the smoke detectors meet the code. I’m glad there was someone out there who could clear up why seller might not know. Now if only someone could clear up the law itself.

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James Harris - 8 years ago

Thanks for the explanation Steve. It is afternoon now and I have been looking for clarification on this all day. This is the only place I’ve even seen it referenced. I just got hit with the second part of the bill that you mentioned early this morning. I failed a plumbing inspection due to lack of smoke alarms.

The large contractors I used for the job didn’t even know about this. I had to have my AC unit relocated and they had to pull a City of Austin mechanical and plumbing permit to do the job. The plumbing failed when the inspector noted I didn’t have the installed hard-wired smoke alarms. What a pain in the a**! Now I have to spend this weekend wiring smoke alarms in my freekin’ attic in July!

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Steve - 8 years ago

Thanks James. Glad you found the info you were looking for.
Steve

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