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PLUS: It's Your Choice, Homebuilder Contracts - Hold Harmless  

As Goes Texas So Goes the Nation 
How Texas Home Building Industry shaped the Texas Residential Construction
Commission (TRCC) and regulates new homebuyers

Home Lemon Law
Sunday, 25 September 2005

Realty Times
Net-Based Consumers Fight Defective Homes
by Broderick Perkins
Published: May 9, 2001

Grass roots consumer action aimed at new home defects is yielding unprecedented results -- including a landmark bill that could force builders to buy back or replace defective homes.

What could be the nation's first lemon law for new homes -- as well as recent major media investigations of new home defects -- can all be linked to a ground swell of unresolved complaints from home owners who are joining forces on the Internet.

Earlier this year, spurred by heavy lobbying from San Antonio-based HOBB.org (Homeowners For Better Building), Texas state Senator Leticia R. Van de Putte (D-Austin) introduced SB 754, also known as "The Texas Homebuyer Protection Act".

Three Strikes

If the bill passes, the hard-hitting law would give a builder three opportunities to remedy a defect that creates a serious safety hazard or substantially impairs the use or market value of the home.

If the builder fails to remedy the problem, the buyer can choose to:

  • Receive a comparable replacement home in the same neighborhood, or

  • Return the home to the builder and receive a refund for the full purchase price and any closing and moving costs.

Reimbursed Buying Costs

In either case, the builder must also reimburse the home buyer for:

  • Reasonable incidental costs resulting from the loss of the use of the home because of the defect.

  • Lost wages resulting from time spent at defect-related appointments with the contractor or the contractor's representative.

Mandatory Disclosures

  • New home builders who replace a home or refund its purchase price, must disclose that information to the home's next buyer.

  • The law also establishes a public record of refunds and replacements by marking deeds with statements indicating the home was repurchased or replaced.

Builders oppose the law, claiming remedies are already in place to address new home defects, but for years numerous consumers have attempted to use those remedies without success. New home consumer's frustration is largely responsible for spawning the lemon law legislation.

New Trend?

At least one other state, Massachusetts, is considering a similar law.

Officials from the New England state recently went public suggesting the need for lemon law legislation after the Boston Globe's four-part series "Luxury by Design, Quality by Chance" reported on a litany of new home defects in an investigation joined by local WBZ-TV reporters.

In recent months NBC's Dateline and MSNBC.com and the Houston Press, among other media, have detailed the dilemma again and again -- home owners buy what's likely their most expensive purchase only to become embroiled in home defect complaints that become so difficult to resolve they ban together -- often on the Internet -- to demand solutions.

In the last two decades, the problem has spawned HOBB.org, as well as Liberty City, MO-based Homeowners Against Deficient Dwellings (HAAD.org) Hollister, CA-based Advocates for Quality Home Construction (AQHC), H.O.M.E. (Homeowners Organization for Mediation and Education), formerly known as Sick of Bad Builders (SOBB), and a host of other Web site homes for consumers disgruntled about new home defects.

They all say their struggle reflects years of resistance, inaction and down right refusals by builders to honor warranties and repair defects.

Meanwhile, builders have begun to announce quality control efforts and more and more permit buyers to inspect new home construction in progress.

"I think what we are seeing is a different attitude on the way to do business on the parts of the national builders who are beholden to stockholders and the local builders who have more interest in being upright, honest members of their communities -- and of protecting their reputations," said Myron E. Ferguson, author of "Build It Right: What To Look For In Your New Home" (Home User Press, $18.95).

For more articles by Broderick Perkins, please press here.

Published: May 9, 2001

Related Articles:

  • Realty Consumers Empowered By Online "Peoples" Court
  • Gripes of Wrath: The Art of the Beef
  • Home-Related Issues Dominate Consumer Complaints
  • Broderick PerkinsBroderick Perkins, is executive editor of San Jose, CA-based DeadlineNews.Com, an editorial content and editorial consulting firm. Perkins has been a consumer and real estate journalist for 25 years.

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