Whose government is it?
Most of us assume certain things about how government institutions work. When the government regulates a business, it's to protect consumers. When you have a dispute that can't be settled through other means, the courts are there as an avenue to seek resolution. One of the interesting stories of the last few years is how some of this has been quietly dismantled. That's true here in Texas when it comes to buying a new home. There was an interesting, but unfortunately context-free story in the Chronicle recently about the difficulty of getting information about home builders. This is something you want if you're about to sink your life savings into your dream home. But good luck finding it:
A reader blog about politics and current events with John Whiteside
October 17, 2006
Whose government is it?
Most of us assume certain things about how government institutions work. When the government regulates a business, it's to protect consumers. When you have a dispute that can't be settled through other means, the courts are there as an avenue to seek resolution.
One of the interesting stories of the last few years is how some of this has been quietly dismantled. That's true here in Texas when it comes to buying a new home.
There was an interesting, but unfortunately context-free story in the Chronicle recently about the difficulty of getting information about home builders. This is something you want if you're about to sink your life savings into your dream home. But good luck finding it:
Used to be, diligent consumers would check out complaints against builders at the attorney general's office, look for major lawsuits at the courthouse, and investigate credentials.
But now that's getting harder to do because the Texas Attorney General's Office stopped processing all consumer complaints three years ago, and there are fewer homeowner lawsuits at the courthouse because of binding arbitration clauses in contracts.
And, a new state-mandated credential -- a registration with the Texas Residential Construction Commission -- doesn't carry as much weight as some consumers may think, consumer advocates say.
Unlike lawsuits, the results of arbitration are hard to find: they are generally sealed when they're filed with the court.
Well, does the commission itself provide information?
Consumers can also visit the commission's Web site to see if a builder is registered and has any complaints lodged against it with the agency.
But consumer groups warn that it doesn't take much to be registered, and only those builders and remodelers who work on projects worth more than $20,000 must register.
"You basically just need a checkbook," said Carol Ritter, with the Better Business Bureau of Houston. There are no tests or continuing education requirements.
There are more stringent requirements -- such as level of education, training, financial stability and insurance -- or those applying for a "Star Builder" designation. But of the 25,982 registered builders in the state, only 25 have the designation.
On the commission's Web site, consumers can see how many times a customer has requested to resolve a dispute with the builder through the agency's formal process.
But only closed cases that the commission is no longer investigating are included in the count. And consumers have to call to find out who the commission agreed with in each dispute. The commission also posts enforcement actions, but most have been about late registrations or other minor infractions because the agency doesn't have the power to force repairs.
What if the results of the arbitration are that a homebuilder has to fix a problem with a new home? The Dallas Morning news reports that often, builders just don't do it:
Buyers of brand-new homes with cracked foundations, leaking roofs and other problems are still living with defects after turning to a state-run program designed to resolve their disputes with builders.
Good news: In about nine of 10 investigations, Texas officials have told builders to make repairs.
Bad news: Two years into the program, most builders haven't made the fixes.
The Dallas Morning News contacted more than 60 homeowners in North Texas who took their problems to the Texas Residential Construction Commission. Of the 23 who responded, only four said the builder made some or all of the repairs recommended.
The informal survey seems to echo the sentiment of a statewide review of 102 homeowners. Of those, 88 said the builder didn't make the repairs suggested by the commission, according to a state comptroller's office report released this year. Some of those included cases still being reviewed, commission officials said.
Obviously, this leaves home buyers frustrated. Here's a way you can still get to court, though: one San Antonio homeowner wrote about his experience on a consumer advocacy web site and wound up being sued for libel by the builder.
How did we wind up with a major industry exempted from the usual process for resolving disputes between buyers and sellers? Texas Monthly wrote about the birth of the Texas Residential Construction Commission in an article last summer:
In the good old days, if you scrimped and saved and bought your dream home in Texas, you could sleep easy at night knowing that the roof over your head was protected by a common-sense legal doctrine. Known as an implied warranty of habitability, in layman's terms it meant that--whether or not anything was put in writing--the courts would hold the builder to a guarantee that your home was fit to live in and constructed with care. If your foundation sagged or your windows leaked or your roof caved in, you could demand that the builder fix the defect and take him to court if he didn't.
That option is no longer available. In 2003, after spreading around $9 million in campaign contributions, the powerful home builders' lobby got the Legislature to agree with its contention that implied warranties were too darn vague and that the lawsuits they produced were too damaging to the industry. Instead, it asked lawmakers to create a new state agency to protect builders from legal retribution. It was one of the most blatant power plays in recent years, made possible by an anti-lawsuit fervor that swept through the new Republican-controlled Legislature and by the influence of two politically active builders: the biggest individual contributor, Bob Perry (no relation to Governor Rick Perry but lots of political ties), and the co-founder of Texans for Lawsuit Reform, Dick Weekley. Thus was born the Texas Residential Construction Commission (TRCC), which in its short life has served as the classic case study of what can happen when a public agency is captured by the industry it is supposed to regulate.
If you're thinking of building a home, it would be wise for you to learn all you can about TRCC and what will happen if you have a problem.
The TRCC stands as a great example of what happens when a special interest has more access to state government than ordinary citizens. Meanwhile, the Chronicle reports today that local homebuilder Bob Perry, the state's top Republican donor, has donated $8 million to help Republicans keep control of Congress.
Mr. Perry, like any citizen, has the right to use his money to support politicians who share his views. But other citizens whose checkbooks have a bit less power ought to pay attention to where money is coming from in campaigns. Fortunately, while our checks aren't all equally valuable, our votes are.
Posted by John Whiteside at October 17, 2006 08:47 AM