Dallas Morning News: Special Report

Home buyers wary of agency
Some consumer groups, others say TRCC doesn't aid consumers enough
Since its creation in September 2003, unhappy homeowners and consumer groups have criticized the agency for doing little to help buyers, because it can't force builders to make repairs. And they say the agency's passage this month of new building standards allows for shoddy construction, not a guarantee of quality work... Consumer groups say the agency is biased toward the building industry because commissioners and most agency leaders have backgrounds in construction or real estate. They say builders have won their influence in the Legislature from both parties by blanketing them with political donations.

Dallas Morning News
Home buyers wary of agency
Some consumer groups, others say TRCC doesn't aid consumers enough
Monday, January 24, 2005
By PAULA LAVIGNE / The Dallas Morning News

One leak in a roof he could understand, but Jeff Gonzalez knew there was a bigger problem when he saw four water spots in his new home in Flower Mound.

After first approaching the builder, he filed a complaint in November with the Texas Residential Construction Commission, a new state agency assigned to handle disputes between homebuilders and buyers.

Two months later, Mr. Gonzalez is back to square one, even though the agency's inspection report blames the builder for botching the roof.

"The feeling I got is, even if the ... [commission] tells them you have to do this, they have no authority," he said. "It's like they have no teeth."


Since its creation in September 2003, unhappy homeowners and consumer groups have criticized the agency for doing little to help buyers, because it can't force builders to make repairs. And they say the agency's passage this month of new building standards allows for shoddy construction, not a guarantee of quality work.

What's more, they say, the building industry pushed to create the commission, and almost all of its leadership is made up of builders, construction attorneys and other real estate professionals.

Commission members are asking the public to give them time. They say that over the next year, buyers will see how monitored builder registration rules, publicity and inspector decisions will make home building more favorable to everyone.

Builders defend the commission and say they expect it to reduce the number of disputes that end up in arbitration or court.

Scott Norman, vice president of governmental affairs and general counsel for the Texas Association of Homebuilders, said most home buyers are happy with their purchases.

"One half of 1 percent of all homes ever result in an unresolved construction defect," he said. "For something built on site, out of wood, by hand, with dozens of different trades, those are pretty good numbers."

Buyer beware
Only California and Florida had more single-family home permits issued last year than Texas, where almost 140,000 homes were under construction. Within the state, the Dallas-Fort Worth area ranks first for the number of new homes, outpacing Houston, Austin and San Antonio.

Also Online Right to sue Builders is easily lost

Builders must register with the TRCC in order to build in Texas, and most cities require a registration number before they will issue a building permit, said Paul Cauduro, director of government relations for the Homebuilders Association of Greater Dallas. The TRCC can yank a builder's registration and request that the attorney general force the builder to stop building if the builder fails to pass a criminal background check or if the number and type of complaints indicate a problem.

The TRCC has received about 400 complaints since its inception 18 months ago; however, it claimed jurisdiction in only one-fourth of those cases.

It handles only post-construction defects in homes built or remodeled after September 2003, or homes built earlier with warranties. If a builder goes bankrupt halfway through construction or a remodeler is taking twice as long as promised to renovate a kitchen, the TRCC will log the complaint but cannot act on it.

The TRCC agreed to process about 100 complaints in its first 18 months. Of those, 21 were resolved before it sent an inspector. Among the 77 that remained, 43 are pending. Inspectors have issued 34 reports, siding with homebuyers in all but two cases.

The process can take several months, and either side can appeal the report. An appellate panel rules whether the report's findings stand. After that, the TRCC's job is over. It doesn't know whether builders willingly complete repairs or if the dispute drags into arbitration, court, or the homeowners' pocketbooks.

Vincent Dayries is shopping his case around to various attorneys. The red brick on his Frisco home started leaching white chalky residue soon after his family moved in. An inspector's report indicated that the brick didn't cure properly, and the builder should either paint or replace it.

The builder, Grand Homes, responded by sending Mr. Dayries a three-sentence letter saying it rejected the TRCC's finding and would "take no further action regarding this alleged brick defect."

Grand Homes would not allow The News to interview any of its employees, nor would it respond to Mr. Dayries' case.

The Dallas-based builder issued a statement from corporate attorney Chad Johannesen saying, "Grand Homes is hopeful and optimistic that the new Texas Residential Construction Commission will be a positive step towards consumer protection in the home building industry."

New rules challenged
This month, the TRCC debated new building standards, which already have drawn criticism for being too lenient.

Mr. Cauduro said the builders themselves even suggested areas in which the standards needed to be stricter.

One of the TRCC commissioners, Mickey Redwine of Ben Wheeler, abstained from voting on the standards, because he said they "didn't go far enough to protect the consumer."

Consumer-protection groups, including Texas Watch and the southwest office of Consumers Union, agreed.

Mark Eberwine, a home inspector from San Antonio who has been following the TRCC, said the agency accepted some of his suggestions on the warranty standards but still tolerates bad building.

"It's not a warranty. It's a preemptive strike on complaining homeowners," he said. "I got sick reading it, and I'm in a position to know what I'm doing."

Mark McQuality, a Dallas consumer law attorney in practice for almost 30 years, said the standards do not help consumers, and the complaint process is just another hurdle for homeowners to overcome to get their claims resolved.

Although supporters of the standards argue that they will make builders perform to a higher level, Mr. McQuality said they simply narrow the scope of work under which consumers can allege problems.

Bias allegation
Consumer groups say the agency is biased toward the building industry because commissioners and most agency leaders have backgrounds in construction or real estate. They say builders have won their influence in the Legislature from both parties by blanketing them with political donations.

The consumer groups often point to Commissioner John Krugh as an example. Mr. Krugh is the corporate counsel for Perry Homes, the home building company owned by deep-pocketed Republican donor Bob Perry. Mr. Perry has given more than $8 million to Republican candidates and causes in the last few years.
Mr. Krugh was involved in drafting the legislation that created the TRCC in 2003, but he said Mr. Perry was not behind his involvement.
He also pointed out that the commissioners don't review consumer complaints. The agency's professional staff, third-party inspectors and the appellate panel make those determinations.

The commission also visited eight cities across the state to get input from consumers on the new performance standards, he said. The standards approved this month probably will be reviewed yearly for the first few years because they are so new, he said.

"I'd encourage people to let this system work," he said. "It's the first time the state has had performance standards. I won't agree that it's perfect, but it's a great starting point."

Publicity will also help the agency, he said, noting that the number of complaints received so far were "a little light."

"Could there be more? Yes. Will there be more? Yes," he said.

Other commissioners, and the agency's executive director, Stephen D. Thomas, said they're reviewing ways to improve the system, including finding a way to keep track of what happens to complaints once they leave the purview of the TRCC.

"Quality of construction is going to improve," said Mr. Thomas. "We're going to implement programs to work with builders to become better builders, and we're going to work with consumers to understand how they should maintain their investment.

"I really do feel we're going to have some tremendous success, and issues are going to be minimized."
State Rep. Allan Ritter, the Democratic legislator whose family has been in the building materials business for 60 years and who authored the bill creating the TRCC, said he wasn't sure whether the legislature needed to give the commission more enforcement authority.

He said he supports a tracking process and would like to see all cities make state registration mandatory on building permits.

As to the continued skepticism of consumer groups, Mr. Ritter said perhaps that is a sign the legislation is a protection for both sides.

"I've always been told a good piece of legislation, that both sides don't totally like it. Both sides don't totally like this legislation," he said. "We don't want the consumers ever to be totally happy."

E-mail This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

WHAT THEY'RE SAYING
THE HOME BUYERS
Sam and Rowena Lyle said they went to the TRCC after their builder refused to fix a web of cracks in their newly built Irving home. The inspector's report blames the builder and suggests what needs to be done to fix the problem.

The Lyles said they don't expect to hear from the builder, but they say they'll be able to use the report to get estimates for repairs and to support their case in court.

San Antonio homeowner Stephanie Brown had no success in getting her builder to fix a plumbing problem until she contacted the TRCC. Once the builder received the inspection report, she received a letter from him agreeing to make the repairs – and his crews have already started.

The TRCC helped her avoid a $2,500 attorney fee for arbitration, and she's already recommended the commission to other homeowners.

Houston homeowner Paul Cesak said the inspector told him what he already knew from other contractors.
"I've got water pouring out the back of my house when I take a shower," Mr. Cesak said. "You could take a 10-year-old kid out there and say, 'Hey, do you think it's supposed to be doing that?' "

THE BUILDERS
Pulte Homes Dallas division president Richard Dix says it's too early to assess the impact of the TRCC, but it could benefit builders and homeowners.

"Given Pulte's warranty is already among the best in the business, along with our demonstrated commitment to the consumer, the new guidelines will likely not have a material impact on the way we run the business," Mr. Dix wrote.

KB Homes Dallas division president Jeff Dworkin said the company encourages direct contact with homeowners. However, "having an agency in place with the intention of protecting home buyers ... could become an effective safeguard."

Paul Cauduro, director of government relations for the Homebuilders Association of Greater Dallas, said most builders have embraced the TRCC. It's a way for builders and home buyers to avoid expensive and time-consuming arbitration or litigation costs, he said. Builder advocates also say it should help weed out fly-by-night, shoddy builders.

HOME BUYER HELP HEADED FOR A VOTE
In Frisco – one of the fastest-growing communities in Texas' hottest home building region – a grass-roots group called Take Back Your Rights is taking its own steps to secure more buyer protections. The group has gathered enough signatures to put two measures before voters. One would require builders to post a $2 million surety bond for multiple homes, or a $250,000 bond for individual homes, before the city would issue a building permit.

Another measure would require new builder disclosures related to warranties, building standards and risks, and it would make the city engineer weigh in on homeowner complaints – an element of the proposal that has city officials worried about their own legal liability.

In Austin on Monday, the group joined two other home buyer groups upset with the Texas Residential Construction Commission's oversight and issued a report detailing contributions home builders made to various state candidates and causes.

Homeowners for Better Building, Homeowners Against Deficient Dwellings, and Take Back Your Rights joined with Campaigns for People, a campaign-finance watchdog group, to compile donation figures over the last four years to state executive and legislative candidates, parties and political action committees. "Big Money and Shoddy Construction: Texas Home Buyers Left Out in the Cold" states that the building industry donated nearly $9 million. Bob Perry, of Perry Homes in Houston, was the largest donor with contributions totaling about $6.9 million since January 2001.

To see the full report, go to www.cleanuptexaspolitics.com
WHERE TO FIND HELP
Here are some places you can go to research builders and, in some cases, remodelers.
The Texas Residential Construction Commission: www.trcc.state.tx.us
Scroll down to select "TRCC Public Record Search" to access builder registration and complaint files.
The Texas Association of Builders: www.texasbuilders.org
The J.D. Power Consumer Center: www.jdpower.com/cc
Select "Homes" and then "Home Builders" to see ratings.
The Better Business Bureau: www.bbb.org
The site allows consumers to check up on businesses and file complaints.
Texas Association of Real Estate Inspectors: www.tarei.com
Find home inspectors by city.

Vincent Dayries is shopping his case around to various attorneys. The red brick on his Frisco home started leaching white chalky residue soon after his family moved in. An inspector's report indicated that the brick didn't cure properly, and the builder should either paint or replace it.
The builder, Grand Homes, responded by sending Mr. Dayries a three-sentence letter saying it rejected the TRCC's finding and would "take no further action regarding this alleged brick defect."
Grand Homes would not allow The News to interview any of its employees, nor would it respond to Mr. Dayries' case.
The Dallas-based builder issued a statement from corporate attorney Chad Johannesen saying, "Grand Homes is hopeful and optimistic that the new Texas Residential Construction Commission will be a positive step towards consumer protection in the home building industry."
New rules challenged
This month, the TRCC debated new building standards, which already have drawn criticism for being too lenient.
Mr. Cauduro said the builders themselves even suggested areas in which the standards needed to be stricter.
One of the TRCC commissioners, Mickey Redwine of Ben Wheeler, abstained from voting on the standards, because he said they "didn't go far enough to protect the consumer."
Consumer-protection groups, including Texas Watch and the southwest office of Consumers Union, agreed.
Mark Eberwine, a home inspector from San Antonio who has been following the TRCC, said the agency accepted some of his suggestions on the warranty standards but still tolerates bad building.
"It's not a warranty. It's a preemptive strike on complaining homeowners," he said. "I got sick reading it, and I'm in a position to know what I'm doing."
Mark McQuality, a Dallas consumer law attorney in practice for almost 30 years, said the standards do not help consumers, and the complaint process is just another hurdle for homeowners to overcome to get their claims resolved.
Although supporters of the standards argue that they will make builders perform to a higher level, Mr. McQuality said they simply narrow the scope of work under which consumers can allege problems.

Bias allegation
Consumer groups say the agency is biased toward the building industry because commissioners and most agency leaders have backgrounds in construction or real estate. They say builders have won their influence in the Legislature from both parties by blanketing them with political donations.
The consumer groups often point to Commissioner John Krugh as an example. Mr. Krugh is the corporate counsel for Perry Homes, the home building company owned by deep-pocketed Republican donor Bob Perry. Mr. Perry has given more than $8 million to Republican candidates and causes in the last few years.
Mr. Krugh was involved in drafting the legislation that created the TRCC in 2003, but he said Mr. Perry was not behind his involvement.
He also pointed out that the commissioners don't review consumer complaints. The agency's professional staff, third-party inspectors and the appellate panel make those determinations.
The commission also visited eight cities across the state to get input from consumers on the new performance standards, he said. The standards approved this month probably will be reviewed yearly for the first few years because they are so new, he said.
"I'd encourage people to let this system work," he said. "It's the first time the state has had performance standards. I won't agree that it's perfect, but it's a great starting point."
Publicity will also help the agency, he said, noting that the number of complaints received so far were "a little light."
"Could there be more? Yes. Will there be more? Yes," he said.
Other commissioners, and the agency's executive director, Stephen D. Thomas, said they're reviewing ways to improve the system, including finding a way to keep track of what happens to complaints once they leave the purview of the TRCC.
"Quality of construction is going to improve," said Mr. Thomas. "We're going to implement programs to work with builders to become better builders, and we're going to work with consumers to understand how they should maintain their investment.
"I really do feel we're going to have some tremendous success, and issues are going to be minimized."
State Rep. Allan Ritter, the Democratic legislator whose family has been in the building materials business for 60 years and who authored the bill creating the TRCC, said he wasn't sure whether the legislature needed to give the commission more enforcement authority.
He said he supports a tracking process and would like to see all cities make state registration mandatory on building permits.
As to the continued skepticism of consumer groups, Mr. Ritter said perhaps that is a sign the legislation is a protection for both sides.
"I've always been told a good piece of legislation, that both sides don't totally like it. Both sides don't totally like this legislation," he said. "We don't want the consumers ever to be totally happy."
E-mail This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
WHAT THEY'RE SAYING
THE HOME BUYERS
Sam and Rowena Lyle said they went to the TRCC after their builder refused to fix a web of cracks in their newly built Irving home. The inspector's report blames the builder and suggests what needs to be done to fix the problem.
The Lyles said they don't expect to hear from the builder, but they say they'll be able to use the report to get estimates for repairs and to support their case in court.
San Antonio homeowner Stephanie Brown had no success in getting her builder to fix a plumbing problem until she contacted the TRCC. Once the builder received the inspection report, she received a letter from him agreeing to make the repairs – and his crews have already started.
The TRCC helped her avoid a $2,500 attorney fee for arbitration, and she's already recommended the commission to other homeowners.
Houston homeowner Paul Cesak said the inspector told him what he already knew from other contractors.
"I've got water pouring out the back of my house when I take a shower," Mr. Cesak said. "You could take a 10-year-old kid out there and say, 'Hey, do you think it's supposed to be doing that?' "
THE BUILDERS
Pulte Homes Dallas division president Richard Dix says it's too early to assess the impact of the TRCC, but it could benefit builders and homeowners.
"Given Pulte's warranty is already among the best in the business, along with our demonstrated commitment to the consumer, the new guidelines will likely not have a material impact on the way we run the business," Mr. Dix wrote.
KB Homes Dallas division president Jeff Dworkin said the company encourages direct contact with homeowners. However, "having an agency in place with the intention of protecting home buyers ... could become an effective safeguard."
Paul Cauduro, director of government relations for the Homebuilders Association of Greater Dallas, said most builders have embraced the TRCC. It's a way for builders and home buyers to avoid expensive and time-consuming arbitration or litigation costs, he said. Builder advocates also say it should help weed out fly-by-night, shoddy builders.
HOME BUYER HELP HEADED FOR A VOTE
In Frisco – one of the fastest-growing communities in Texas' hottest home building region – a grass-roots group called Take Back Your Rights is taking its own steps to secure more buyer protections. The group has gathered enough signatures to put two measures before voters. One would require builders to post a $2 million surety bond for multiple homes, or a $250,000 bond for individual homes, before the city would issue a building permit.
Another measure would require new builder disclosures related to warranties, building standards and risks, and it would make the city engineer weigh in on homeowner complaints – an element of the proposal that has city officials worried about their own legal liability.
In Austin on Monday, the group joined two other home buyer groups upset with the Texas Residential Construction Commission's oversight and issued a report detailing contributions home builders made to various state candidates and causes.
Homeowners for Better Building, Homeowners Against Deficient Dwellings, and Take Back Your Rights joined with Campaigns for People, a campaign-finance watchdog group, to compile donation figures over the last four years to state executive and legislative candidates, parties and political action committees. "Big Money and Shoddy Construction: Texas Home Buyers Left Out in the Cold" states that the building industry donated nearly $9 million. Bob Perry, of Perry Homes in Houston, was the largest donor with contributions totaling about $6.9 million since January 2001.
To see the full report, go to www.cleanuptexaspolitics.com
WHERE TO FIND HELP
Here are some places you can go to research builders and, in some cases, remodelers.
The Texas Residential Construction Commission: www.trcc.state.tx.us
Scroll down to select "TRCC Public Record Search" to access builder registration and complaint files.
The Texas Association of Builders: www.texasbuilders.org
The J.D. Power Consumer Center: www.jdpower.com/cc
Select "Homes" and then "Home Builders" to see ratings.
The Better Business Bureau: www.bbb.org
The site allows consumers to check up on businesses and file complaints.
Texas Association of Real Estate Inspectors: www.tarei.com
Find home inspectors by city.