Become a Licensed Residential Service Company
Residential Service Companies (RSCs) more commonly referred to as “home warranty companies”, sell home owners and buyers a service contract for a certain period of time to maintain, repair, or replace all or any part of a structural component, an appliance, or an electrical, plumbing, heating, cooling, or air-conditioning system of a residential property. RSCs have a unique set of laws and RSC rules that govern them. Statutory amendments effective January 1, 2018, are available here: HB2279
What’s Needed for your Application
To become a licensed RSC in Texas the company must first apply and be approved. Before you apply you will need the following items:
- a copy of the organizational documents such as articles of incorporation, articles of organization, articles of association, partnership agreement or management agreement, or trust agreement, including all amendments;
- a copy of any bylaws, rules, or other similar documents that regulates the conduct of your company's internal affairs;
- the name, address, and official position of each person who will be responsible for the conduct of your company's affairs, including:
- each member of the board of directors, board of trustees, executive committee, or other governing body or committee of your company;
- your company's principal officer, if your company is a corporation; and
- each partner or member of your company, if your company is a partnership or association;
- a financial statement that:
- is prepared by an independent certified public accountant within six months preceding the date the application is submitted; and
- shows your company's assets, liabilities, and sources of financial support;
- Financial information has to demonstrate to the Commission that the company will be financially responsible and be able to meet the company obligations to contract holders
- a description of your company's proposed method of marketing a residential service contract;
- a statement regarding your company's sources of working capital and any other funding sources;
- if your company is not domiciled or qualified to do business in Texas, you will need to complete a Consent to Service of Process appointing the Executive Director of the Texas Real Estate Commission as your true and lawful attorney for receipt of legal service process in any legal action brought against your company in Texas;
- a Residential Service Company Bond or other security accepted by the Commission in the amount of $25,000;
- a copy of the residential service contract(s) your company plans to offer, a summary of the proposed coverage, and any available promotional materials; and
- a copy of the schedule of charges associated with each contract your company plans to offer, a justification for the rates to be charged, all discounts you plan to offer, and a breakdown of projected costs (expenses) for the rates, including a profit projection.
Keep in mind other items may be required as staff reviews your application.
File your Application
After you have all of the items listed above you will also need to:
- complete the required Application for Residential Service Company License
- complete the required Application to Approve Residential Service Contract
- complete the required Application to Approve/File Schedule of Charges
- you must submit a separate application for each contract and for each schedule of charges
Before you submit your applications, be sure you have included all the required documents and information. The Commission may reject any application that is incomplete.
After your application and any required fees are submitted and accepted by the Commission we will approve or disapprove the application materials in writing as soon as reasonably possible.