Home building commission continues to draw fire
The Andrews case underscores the debate over the Texas Residential Construction Commission, which has been criticized by consumers and an outside review as a toothless bureaucracy created to protect builders. Once the commission process has been exhausted, usually within a few months, a builder who loses cannot be compelled by the commission to make the repairs. The outside review by the state comptroller found that the overwhelming majority did not...In a survey of affected homeowners, the report said 86 percent of the respondents said the builders did not fix the defects confirmed in the state inspections. It also concluded that the law provides no way to hold builders accountable for shoddy building practices and described the agency's building standards as "overly lenient."

Home building commission continues to draw fire
Critics say new agency remains toothless

By Laylan Copelin
AMERICAN-STATESMAN STAFF
Monday, July 31, 2006

Terri and William Andrews spent more than a year and thousands of dollars fighting the builder of their Pflugerville house over cracks in the foundation and brick veneer.

Despite a state-hired inspector's warning that a wall could collapse, their fight against Plantation Homes of Houston was settled only on the way to the courthouse — not by the state agency charged since 2003 with regulating residential construction.

The Andrews case underscores the debate over the Texas Residential Construction Commission, which has been criticized by consumers and an outside review as a toothless bureaucracy created to protect builders.

The commission's defenders argue that the agency needs more time, but not necessarily more enforcement tools, to do its job.

The Legislature is already warming up to tackle the issue next year, but one of the chief proponents of change predicts little will be done without the consent of the state's builders.

The Andrewses, who have since moved to another house, and a lawyer for Plantation Homes don't agree on whether the state agency helped or hindered a settlement.

"The (state) commission is just another roadblock," Terri Andrews said. "TRCC is supposed to make it so that a person doesn't have to have a lawyer. That's not true. We got the results, they ruled in our favor, but they couldn't make the builder do anything."

Ray Holan, the builder's lawyer, said the commission helped lead both parties to a settlement.

"The state's findings sets a line in the sand for both parties," Holan said. "It's been our stance to offer to make the repairs the state recommends."

Neither side would comment on the settlement because of a confidentiality agreement.

But it took four months after the builder exhausted its agency appeals before the case was settled.

Often, the battle continues beyond the agency because the parties can't agree on the state's proposed solutions, there's a fight over legal fees or there are other issues outside the state inspection.

"It was a very expensive endeavor," Terri Andrews concluded about her experience, though she wouldn't say how expensive.

Findings ignorable

In 2003, the Legislature created the commission in a wave of tort legislation aimed at curbing consumer lawsuits against businesses.

The process also was touted as giving homeowners a less costly option than litigation.

For a mandatory $250 fee, a homeowner can request that the agency appoint an independent inspector to consider a claim against a builder or major remodeler after the work is completed. (The state doesn't get involved in cases where builders walk off the job and will only weigh in on remodeling jobs worth $20,000 or more.)

Either side can appeal the inspector's findings to a three-member panel.

If the homeowner wins, the $250 fee is refunded.

Once the commission process has been exhausted, usually within a few months, a builder who loses cannot be compelled by the commission to make the repairs.

The outside review by the state comptroller found that the overwhelming majority did not.

"There are builders who are just ignoring the the state's findings," complained Mark McQuality, a Dallas lawyer who has represented homeowners for 25 years. "There's no meaningful sanction."

Jay Dyer with the Texas Association of Builders disagrees.

He said the law serves as a deterrent because most builders work hard to keep their customers from filing complaints.

"How much crime does a policeman deter?" Dyer asked. "It's hard to measure what doesn't happen" because a complaint system now exists.

In Texas about 160,000 single-family building permits are issued annually. The commission received about 1,200 complaints in the past year.

Almost 200 of them were resolved without going through the commission process. Roughly 800 didn't meet the requirements of the agency's screening process.

Another 270 cases were approved for investigation. Almost 93 percent of the time, the inspection confirmed at least one defect alleged by the homeowner, according to the comptroller's study.

By any measure, Dyer argued, "You are talking about a very small number."

Dyer said a state inspector's report also can be damaging evidence if the case goes to trial.

McQuality said the new commission adds delays and increases costs instead of providing the quick resolution homeowners want. The cost of litigation, he said, is pricing most middle-class families out of the courthouse.

Once the state inspection system has been exhausted, homeowners can continue to pursue their claims in court, but the 2003 legislation changed the landscape for litigation.

Prior to 2003, the legal standard was that a builder provided an implied warranty of good and workmanlike performance.

The law that created the commission now provides for one-year warranties for workmanship and material, two years for air-conditioning and other mechanical systems and 10 years on structures such as the foundation.

McQuality objects to the arbitrary time limits: "Some times it takes a while for problems to manifest themselves."

Dyer said most homeowners are better off under the new law.

"Four years ago, a builder could look at you and give you no written warranty," Dyer said. "A lot of consumer groups don't look at where would we be if this bill never passed."

The new system, however, has hardly taken lawyers out of the process.

An unscientific sampling of cases before the state commission shows lawyers involved in more than half.

McQuality said no homeowner with serious money at stake should tackle the system without a lawyer because, in effect, both sides are creating a record to use if they continue to court.

"The other side has more information and expertise in construction," McQuality said. "They have their lawyers and experts they always work with."

Most repairs unmade

In January, Comptroller Carole Keeton Strayhorn, who is running for governor, concluded her outside review of the commission, saying, "I would blast this TRCC builder-protection agency off the bureaucratic books."

In a survey of affected homeowners, the report said 86 percent of the respondents said the builders did not fix the defects confirmed in the state inspections. It also concluded that the law provides no way to hold builders accountable for shoddy building practices and described the agency's building standards as "overly lenient."

Rep. David Swinford, R-Dumas, questioned whether it's Strayhorn's job to investigate the efficiency of a state agency.

Attorney General Gregg Abbott agreed that Strayhorn overstepped her legal authority.

But Rep. Todd Smith, R-Euless, who requested the study, praised the thoroughness of the report.

Smith expects to offer legislation next year expanding the enforcement powers of the commission and putting consumers on the nine-member commission, now dominated by people from construction and related industries.

"The spirit of the original legislation is clearly good if the Legislature can create an efficient state agency that helps builders and homeowners resolve disputes," he said. "But why we are spending millions on a state agency that doesn't appear to be accomplishing its goal?" The agency's budget is $3.4 million per year.

Smith warns it's an uphill battle unless the Texas Association of Builders agrees to a change: "The reality is, the builders will have enough political influence to pass or kill anything."

It's a common complaint among consumer groups who say builders had too much say in the creation of the agency.

For one, Houston home builder Bob Perry, the largest individual donor to Texas campaigns in recent years, has given more than $500,000 to Gov. Rick Perry (no relation) since his days as state agriculture commissioner. The governor appointed a key executive of Perry Homes Inc. to the commission.

So far, the builders appear satisfied with the status quo.

Dyer with the state builders group argues that the agency needs more time to work out the kinks, saying it only really became fully operational in 2005.

"They spent the first year or so doing administrative ramp-up. All that's been in place for 13 months. We feel like the commission is (now) operating on auto pilot and doing what it should be doing," Dyer said.

Duane Waddill was promoted from within the agency to job of executive director last September. He has increased the number of the case managers from one to five. The managers follow the complaints from beginning to end. Inspectors are private contractors.

Waddill's also promising to test the limits of the law to see whether the agency can, in fact, force builders to fix their problems. The commission is now requiring builders to report how they fix a defect if an inspector rules against them.

Waddill said he is looking for a test case to see whether he can levy fines if a builder fails to perform. He said he's also discussing whether the attorney general can seek injunctions against builders who fail to address the problems.

So far, he is not asking the Legislature for more enforcement powers: "Let me use the tools in the toolbox and see how it works."

Some critics think the commission should issue licenses to builders, a process that would allow the state to deny a bad builder the right to work in Texas.

"Your barber has to be licensed," McQuality says, "but not builders,"

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