Builders, house flippers face more accountability
New changes to a state law have made home builders slightly more accountable if they build a defective home, and also have broadened the definition of who qualifies as a builder... House flippers and other individuals who rehabilitate homes don't have to register as "builders," but need to be aware that they must guarantee their fixer-upper work. "There's going to be a benefit to you if you're more proactive," Javore told builders and remodelers. Builders who make repair offers before the inspection process won't have their names put on the TRCC's Web site, for instance. The agency also will have to strike the addresses of homes from all public records, making it impossible know exactly where a defective home is located. Consumer groups say little of substance changed with the updates to the law because it focuses on getting builders to register with the agency. The TRCC still lacks the authority to force a builder to repair a defective home, said Janet Ahmad of Home Owners for Better Building.

Builders, house flippers face more accountability
8/09/2007
Jennifer Hiller
Express-News Business Writer 
Many remodelers and house flippers will fall under the purview of a state agency that regulates the building industry starting next month.

New changes to a state law have made home builders slightly more accountable if they build a defective home, and also have broadened the definition of who qualifies as a builder

Starting Sept. 1, remodelers who do more than $10,000 of work to a home will have to register with the Texas Residential Construction Commission. And if they get into a quarrel with a homeowner over the quality of work, the fight will have to go through the agency's dispute-resolution process.

That remodeling work will have the same warranty that a builder gives on a new home — 10 years for structural elements, two years for systems such as water and air conditioning and one year for workmanship and materials, San Antonio attorney Gary Javore told members of the Greater San Antonio Builders Association last week.

Pretty much anyone — other than decorators and interior designers — who makes more than $10,000 in "material improvements" to a home and doesn't occupy it for a full year, also will have to give the same warranty on the improvements that a builder would, said Javore, of the firm Johnson, Christopher, Javore & Cochran.

That means a lot more people than probably realize it will qualify as "builders" under the law, he said.

It includes, for example, people who build their own home and sell it quickly, or who quickly rehab an existing property and put it back on the market.

"If the owner sold within a year, the homeowner has to warrant the home," said Patrick Fortner, spokesman with the TRCC.

The agency is urging remodelers who typically do work in the $10,000 or higher range to register with the commission before the Sept. 1 deadline.

Previously, only projects worth more than $20,000 would have fallen under the TRCC's authority, and only the higher-dollar remodelers had to pay the state's registration fees.

House flippers and other individuals who rehabilitate homes don't have to register as "builders," but need to be aware that they must guarantee their fixer-upper work.

Joe Barfield of the Joe Barfield Group at Keller Williams said that's welcome news for people who buy remodeled homes. He's had clients who have discovered problems post-sale with fixed-up homes, but he is never sure of how the prior owner will respond.

"You never know if they're going to say, 'Oh, I'll look at it,' or if they're going to say, 'Why are you calling me? I don't own the house anymore.'"

Already, warranties on existing homes are available at a low cost — around $300. It's increasingly common for house sellers to purchase one for the new buyer, partly as an act of good faith, but also as a hedge against legal trouble should anything malfunction shortly after the house sale.

"Home warranties aren't required, but they are certainly recommended," Barfield said.

The new law doesn't require such a warranty to be purchased, as the warranty now is implied once a remodeler puts the house on the market.

The TRCC also now can issue cease-and-desist orders to try to stop people from building homes or doing remodeling work if they repeatedly have refused to register or have let their registrations lapse.

It also can take disciplinary action against builders who refuse to participate in the dispute-resolution process with homeowners, or who fail to make a repair offer when a defect is found with their work.

Fines can be as high as $10,000 a day under the law.

"They've given TRCC some serious teeth," Javore said. "For smaller builders, these are serious sanctions."

Other new aspects of the home builder regulation law focus on trying to get builders to settle disputes quickly with homeowners.

"There's going to be a benefit to you if you're more proactive," Javore told builders and remodelers. Builders who make repair offers before the inspection process won't have their names put on the TRCC's Web site, for instance.

The agency also will have to strike the addresses of homes from all public records, making it impossible know exactly where a defective home is located.

Consumer groups say little of substance changed with the updates to the law because it focuses on getting builders to register with the agency. The TRCC still lacks the authority to force a builder to repair a defective home, said Janet Ahmad of Home Owners for Better Building.

"It's going to discourage people from filing a complaint," she said.

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