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A Review of the Brief of Amicus Curiae
Submitted by the NAHB for the Supreme Court
of Centex v. Buecher
by
John R. Cobarruvias
HomeOwners for Better Building
Note: If you find ANY incorrect or misleading statements,
please contact HOBB so we may correct them.
Introduction::
The National Association of Home Builders paid for an
Amicus to be filed in the Texas Supreme Court of
Centex Homes v. Buecher. I believe in layman's terms, an Amicus is
a legal document by a third party voicing their support for one of the
parties. In this case, a national organization has decided to butt into
an issue involving the State of Texas. They have paid for an Amicus voicing
their support of Centex Homes.
Their argument seems to center around the fact that some
(not all) home builders provide a comprehensive, expressed, ten-year warranty
that offer "significant tangible benefits to home buyers". And these expressed
warranties make the implied warranty of habitability not necessary.
But if you take the time to review the Centex provided warranty you
will find it full of exclusions and excuses. A homeowner is decieved into
thinking a ten year warranty covers the entire house much like a bumper
to bumper 5 year/60,000 mile warranty supplied with KIA cars. This is NOT
the case. (see a review of the RWC)
It is a shame that a National organization must petition
a State Supreme Court for relief for one of it's members. It is also a
shame that we do not have the expertise or money to counter the claims
in the Amicus with our own evaluation of the Texas Building Industry.
The next best thing is to post our comments here. The
complete Amicus in pdf format is available.
Here are some key points taken from the Amicus and a short discussion on
each. The words in italics are from the amicus.
Between the time a home buyer signs a contract and
the time the sale is closed, the buyer is free to inspect the home, retain
one or more outside professional inspectors, and consult realtors, attorneys
or other professionals.
Many builders do not allow pre-inspections of
the home. And those who choose to hire a professional inspector (and licensed
in the state of Texas) learn the builder has no obligation to respond or
comply with the inspection results. Homeowners are then held hostage by
a threat of default on the contract agreement.
To fully understand a builders contract and warranty,
requires the use of an attorney or other professional. It is amazing that
an industry who prides itself on "quality" would even suggest hiring of
inspectors, attorneys, or other professionals. Homeowners are investing
large portions of their salary into a home. They have put their entire
trust into the hands of the builder, and yet the building industry is suggesting
to hire outside professionals.
These warranties [2-10 Home Owner Warranties]
are
not illusory; they offer significant tangible benefits to home buyers.
These warranties are misleading. Only Major Structural
Damage is covered for 10 years. And as in the Centex Warranty provided
(RWC) the defect must "materially affect the physical
safety of the occupants of the home". Most every other part of the
home, windows, paint, roof, bricks, plumbing, etc are covered in the first
year only, and some in the second year. The "Ten Year Warranty" is a great
selling item, but in reality it is extremely limited and full of exclusions
and excuses.
Between 1987 and 1998, Home Buyers Warranty Corporation,
one of the largest providers of ten-year insured warranty programs in Texas
paid an average more than $40,000 per accepted structural claim to home
owners in Texas.
Centex Homes does not use the Home Buyers Warranty.
They use the Residential Warranty Corporation Warranty as most builders
do in Texas. For this particular case, the statistics of the HBW is misleading
and worthless, but since it was brought up, just how many claims were made
to the RWC and HBW? How many claims were turned down? These are questions
that should be answered.
For example, a buyer may sue for breach of contract
when a builder fails to comply with applicable building codes.
From the RWC provided by Centex Homes: Section
II Exclusions The following are NOT covered under
this Limited Warranty: 7. Violation of applicable Building Codes or
ordinances unless such violation results in a defect which is otherwise
covered under this limited warranty. Under such circumstances, the obligation
of the Warrantor under this Limited Warranty shall only be to repair the
defective warranted portion of the home, but not to restore or bring the
Home to conform to code.
In addition, the RCLA allows a person who prevails
in a construction defect lawsuit to recover damagesÖ..
How can a homeowner sue when the builders have
mandatory, binding, arbitration clauses in their contracts? And if they
are not following the clause, why have it?
Typically, these sophisticated customers and the
builders they choose agree to disclaim the vague implied warranties of
habitability and construction in a good and workmanlike manner in exchange
for specific express warranties with clear, certain and agreed upon standards
for performance, producing an agreement similar to the one in this case.
From the RWC Warranty: The
builder makes no housing merchant implied warranty or any other warranties,
express or implied, in connection with the attached sales contract or the
warranted home, and all such warranties are excluded, except as expressly
provided in this Limited Warranty.
The homeowner as with the arbitration clause is sold a
home on these conditions. These conditions are usually not known till the
homeowner is at closing. The homeowner agrees without knowing the intent
or consequences.
Likewise, builders who build for a broader market
generally offer their own express warranties, or 10-year warrantiesÖ.
Generally is misleading. Either builders in Texas
offer a warranty or not. Many builders in Texas do not offer a warranty
of any kind. If the implied warranty is removed, the homeowners will have
no warranty at all.
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