Door slams shut on bills to protect homeowners
May 20, 2005
By Dave Lieber
Star-Telegram Staff Writer

Movie star Sandra Bullock sued the builder of her defective Austin home. According to testimony at the trial last year, the roof, windows and doors in her $6.5 million, 10,000-square-foot mansion leaked. The wallboard was rotted, and toxic mold rendered the house uninhabitable. Bullock won a jury verdict of $7 million.

Afterward, an ecstatic Janet Ahmad, a San Antonio consumer-rights activist, issued a statement: "We are encouraged that Sandra Bullock's trial will help send a message to legislators in the upcoming 2005 legislative session for the need to regulate the home-building industry."

Now, with 11 days to go before the Legislature adjourns, a disappointed Ahmad says, "The message has been lost on our state leaders."

Two bills were introduced in the Legislature this year that could have given homeowners more voice in dealing with bad builders. Both died in committee.

Home builders say no new law is needed. This session of the Legislature will end May 30. Anyone who buys a new house after that will be covered by a state-mandated limited warranty created by a new state agency, the Texas Residential Construction Commission. Home buyers also have to follow the commission's rules for resolving disputes with builders.

But consumer groups say that the building industry dominates the nine-member commission. Because of that, they say, its new dispute-resolution process helps builders more than buyers.

And consumer groups apparently have found a new ally: state Sen. Robert Duncan, R-Lubbock, who introduced the bill two years ago that created the commission.

Duncan says he now wonders whether the commission is operated "by the builder, for the builder."

"It appeared to be to the public a regulatory body," he told fellow lawmakers at a hearing Monday in Austin. But in fact, he said, "The people that are being regulated by the act are the consumers, to a certain degree, as opposed to the builders."

He questioned whether the board was independent enough to make sure that its decisions "are in the best interest of all Texans and not just in the best interest of home builders and the Texas Association of Builders."

Members of the new commission responded by saying they didn't see themselves in lock step with the industry.

By way of evidence, one commissioner told Duncan that "one of our members actually abstained" in a vote when he didn't agree with the other commissioners.

Consumer groups, such as HomeOwners for Better Building, say these are among the flaws they see in the commission's procedures:

• Starting June 1, all new homes will be covered for one year for workmanship and materials, two years for plumbing, electrical, heating and air conditioning, and 10 years for major structural defects. But defects may not be apparent that soon, and if a problem isn't discovered by those deadlines, a builder may be off the hook.

• The resolution process may discourage homeowners. If construction on Bullock's house had begun after June 1 instead of in 1997, she would have been required to pay several hundred dollars in fees to file her complaint (which would be returned if she ultimately prevailed) and then waited for a state-appointed inspector to visit her property and file a report.

If she was not satisfied with the resolution, she could sue, but only if her home-buying contract did not require, as most now do, that she submit her complaint to binding arbitration.

• The state's third-party inspectors are only allowed to focus on specific items forming the basis of a homeowner's complaint. They are not allowed to point out other construction defects they might see during a home visit.

• Even if a state inspector rules against a builder, the commission has no enforcement power.

Duncan filed a bill in March that would have altered, slightly, a few of the new procedures. His bill died, and he is unhappy.

State Sen. Troy Fraser, R-Horseshoe Bay, chairman of the Senate Business and Commerce Committee, where the bill died, did not return a call seeking comment.

On the House side, a bill introduced by Rep. Jessica Farrar, D-Houston, would have eliminated the homeowner's fee to file a complaint, required three of the nine commissioners to be consumer-oriented, increased builder registration fees to $500 from $125, given the commission power to discipline bad builders and increased the warranty period for workmanship and materials from one year to two.

Farrar's bill got a hearing in the House State Affairs Committee. But the hearing took place after midnight.

One homeowner told lawmakers, "I would love to regulate myself. ... When you have the building industry regulating itself, I don't feel that qualifies as regulation."

Farrar's bill died in committee because, members said, they wanted to wait for Duncan's bill to arrive from the Senate. It never did.

Sandra Puente, Farrar's spokeswoman, told me: "The way this club is around here, we can't expect bills like that to see the light of day."

Consumer groups say the financial clout of the Texas home-building industry stacks the deck. The industry contributed almost $9 million to state executive and legislative candidates between 2001 and 2004, campaign records show. More than 75 percent of that money came from Houston builder Bob Perry, owner of Perry Homes. John Krugh, Perry Homes' legal counsel, helped write the new law and serves on the commission.

Debra Ellis, who helped write the commission's new rules, told an audience of builders, inspectors and others at a public forum in Fort Worth last week that she didn't expect changes this year.

"They're just getting this up and going," she said. "Then they'll work out the tics and the problems."

After the meeting, Fort Worth home builder Steve Harris of University Homes said it was too early to tell whether the new law will work as hoped.

He added: "There are bad builders that are probably running from their customers every step of the way. ... The good guys are going to go with this."