Insurance Journal
Texas Comptroller Says Construction Commission Favors Builders

January 25, 2006

The Texas Residential Construction Commission is acting as a "builder protection agency'' and has no power to force homebuilders to repair construction defects in new houses, according to state Comptroller Carole Keeton Strayhorn.

The agency, formed by legislators in 2003, also is shifting most of the money it collects back to the state budget rather than spending it carrying out its mission, she said.

"For these reasons, if it were up to me personally, I would blast this Texas Residential Construction Commission off the bureaucratic books,'' Strayhorn said.

Duane Waddill, executive director of the Texas Residential Construction Commission, said he will prepare a formal response to Strayhorn's review. But his initial reaction is that he finds audits valuable.

"We'll be able to use this to make improvements in our system and look forward,'' said Waddill, who took over the agency this past year. "When I came in one of the things we looked at is: How do we do this better?''

The legislation that created the commission was backed by homebuilders. Industry representatives praised it for establishing standards and warranties for home construction and for creating a process to resolve disputes between builders and buyers out of court.

Consumer advocates criticized the law, saying it made homebuyers pay fees to file a complaint and limited their legal recourse.

The new agency doesn't provide sufficient balance between homebuilders and homeowners, and even shifts the cost to the homeowner when a builder fails to pay a required fee to register a home, Strayhorn said.

"Caveat emptor - let the buyer beware - is the motto of the unscrupulous. It should not be the hallmark of state policy,'' she said.

The comptroller's office researched the commission's activities after receiving a request last August from Rep. Todd Smith, R-Euless.

A Texas Association of Builders official said some of Strayhorn's statements to the press were more "bombastic'' than recommendations contained in her report. For instance, the 50-page report doesn't suggest eliminating the commission but makes recommendations to the Legislature on how to improve it, said Jay Dyer, director of regulatory affairs for the builders association.

Consumers are better served because the commission was created and because new objective home-building standards were put in place last June, Dyer said.

A comptroller's survey found that 86 percent of homeowners questioned said their builders failed to repair home construction defects, even after going through the state inspection and resolution process.

Waddill of the TRCC said the 102 responses amount to one-third of the 297 homeowners who have been through the resolution process. He said the comptroller's office is going to provide him with the individual responses so he can review them.

Alongside Strayhorn at a news conference was Dr. Eldo Jones, a retired surgeon who said he has had a rough time in his dealings with the Texas Residential Construction Commission over his recently purchased $330,000 home in Temple.

Jones said he now is engaged in a lawsuit against a builder and realtor and is trying to recover $25,000 to $30,000 in expenses he has paid to repair toilets, the air conditioning system and faulty attic stairs.

In criticizing the commission, Strayhorn stayed away from talking about her run for governor as an independent against Republican Gov. Rick Perry. But an aide to Democratic gubernatorial candidate Chris Bell suggested that Strayhorn's criticism of the construction commission had a political bent.

Strayhorn, who ran for comptroller as a Republican, accepted some $160,000 in campaign contributions from prominent Houston builder Bob Perry from 2000 to 2003, but didn't get any after that, the Bell campaign said. Bob Perry also has been one of Rick Perry's biggest contributors.

"Of course the Texas Residential Construction Commission is a case study in corruption. The Comptroller doesn't have to misuse her state office to prove that,'' Bell spokesman Jason Stanford said in a prepared statement.

Strayhorn's spokesman denied any political motivation.

The consumer group Texas Watch issued a favorable response to Strayhorn's findings and said they should serve as a wake-up call to the Legislature.

"The TRCC was created by the builders and for the builders,'' said Texas Watch executive director Alex Winslow.