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.