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IS YOUR STATE NEXT?
As Goes Texas So Goes the Nation 
TEXAS REGULATES HOMEBUYERS!
NEW HOMEBUYER LEGISLATION MAY BE COMING TO YOUR STATE SOON
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How Texas Home Building Industry shaped the Texas Residential Construction
Commission (TRCC) and regulates new homebuyers

HOBB Board Member Jo Hayman - “Cheetum Custom Homes”
Monday, 04 April 2005
Home-building law has more than a few cracks
...Jo Hayman...  She formed her company, Cheetum Custom Homes, to prove a point.  She won't build a single house. Instead, the physical therapist wants to show how easy it is to get into the home-building business in Texas.  All anyone has to do to build a home is pay a $125 fee and register with a new state agency, the Texas Residential Construction Commission, or TRCC. "It's absurd," says the Plano woman, now the Dallas-Fort Worth representative for HomeOwners for Better Building. "Almost anybody in this state can be a builder today, and there's no way to stop you unless you are a convicted felon."   ... And under regulations set by TRCC's nine commissioners, most of whom have ties to the home-building industry, items that aren't covered after the first year include roofs, siding, windows, bricks, tile, carpet, flooring, doors, trim, drywall, plaster and stucco.

Home-building law has more than a few cracks


THE WATCHDOG - Ft Worth Star-Telegram
Mar. 20, 2005
 If you plan to buy a new home after June 1, new rules will determine if builders must correct their mistakes.

By the law of averages, there are good home builders and bad home builders. And then there's Jo Hayman.

She is neither good nor bad, although she is a registered Texas home builder. She formed her company, Cheetum Custom Homes, to prove a point.

She won't build a single house. Instead, the physical therapist wants to show how easy it is to get into the home-building business in Texas.

All anyone has to do to build a home is pay a $125 fee and register with a new state agency, the Texas Residential Construction Commission, or TRCC.

"It's absurd," says the Plano woman, now the Dallas-Fort Worth representative for HomeOwners for Better Building. "Almost anybody in this state can be a builder today, and there's no way to stop you unless you are a convicted felon."

Hayman got interested when her Dallas home builder left her with a lemon and skipped town. She lost $150,000 on the deal, she says, and decided to get acquainted with the laws protecting Texas home buyers. What Hayman found unnerved her, as it has some consumer groups.

After June 1, every new home sold will be subject to a new state-mandated limited warranty, along with new requirements for settling builder-buyer battles. This could have a particular impact on the Dallas-Fort Worth housing market, because we have the largest number of homes under construction in Texas.

Previously, builders operated under an implied warranty that required them to build homes and make repairs in a good and workmanlike manner consistent with accepted community standards, consumer lawyers say.

Under the new limited warranty, starting June 1 all new homes will be covered for one year for workmanship and materials, two years for plumbing, electrical, heating and air conditioning, and 10 years for major structural defects. If a problem isn't discovered by those deadlines, the builder may be off the hook.


Jo Hayman of Plano started Cheetum Custom
Homes to show how easy it is to get into the
home-building business in Texas. All anyone
has to do to build a home is pay a $125
fee and register with the Texas Residential
Construction Commission.

That's where consumer groups cry foul.

Often, latent defects in a home don't show up until after the first or second year, the groups say.

And under regulations set by TRCC's nine commissioners, most of whom have ties to the home-building industry, items that aren't covered after the first year include roofs, siding, windows, bricks, tile, carpet, flooring, doors, trim, drywall, plaster and stucco.

One rule allows cracks in drywall up to 1/32 of an inch and cracks in siding up to 1/8 of an inch. There is no limit on the number of cracks allowed.

"There can be lots of smaller cracks less than an eighth of an inch that will still impact the value of that home," real estate lawyer Mark McQuality of Dallas says. "Something's happening in that structure that's not right."

Before the law was enacted, buyers could sue builders under the Texas Deceptive Trade Practices Act. Now consumer advocates say it's going to be much harder because of new requirements for resolving disputes. That's their other beef with the law.

Any home buyer who discovers problems now must first give the builder 30 days' notice. Then, if repairs aren't made, the homeowner must file a request with the TRCC in Austin for a state-appointed inspector to examine the problems. The cost ranges from $350 to $650.

After a homeowner pays the fee, the TRCC will decide if the complaint is eligible. It has 15 days to name an inspector. The inspector has 12 to 45 days to do an inspection and file a report about whether the builder should pay for repairs.

The homeowner or builder can appeal within 15 days. The TRCC has 30 days to rule. The recommendation becomes final 45 days after that.

If the homeowner is not satisfied, arbitration or court is next, depending on what the buyer's purchase contract allows.

Builders say the process will help protect home buyers by setting a statewide standard for home construction and will save legal costs by reducing lawsuits.

The state inspection process has already begun, with about 60 cases so far. In most, the inspector has found in favor of the homeowner after a period that averages 58 days, TRCC officials say.

"The Fort Worth builders are in full support of the TRCC and the processes that they are attempting to undertake," said Meredith Martin, government affairs manager for the Greater Fort Worth Builders Association. "There are going to be some hiccups, but we want to work with the consumer to find the answers that make the consumers happy and the state happy."

Jim Haddock, president of the Greater Fort Worth Builders Association, did not return calls to discuss the changes. Neither did officials with the Texas Association of Builders in Austin.

McQuality said the inspection process is so cumbersome and the paperwork so confusing that "many homeowners, even intelligent people, will have difficulty. It's like filling out insurance claim forms. It becomes so burdensome to fill out that, many times, people will say, 'I'll just fix it myself or just live with it.' "

Another barrier: Even if the state inspector rules against a builder, the TRCC, under the new law, has no enforcement power.

Consumer groups say it's no surprise that home builders like the new system because the TRCC is dominated by those who work in the industry. That's also an issue with some elected officials.

On March 10, state Sen. Robert Duncan, R-Lubbock, filed a bill to change the TRCC's makeup to create, he said, a better balance between builders and buyers. The bill would lower inspection fees to $150, force builders to disclose prior civil lawsuits and bankruptcies, require continuing education for builders, including one hour a year on ethics training, and enable the TRCC to discipline builders.

Jo Hayman of Cheetum Custom Homes says the bill doesn't begin to correct the many problems created by the new law.

"It's like putting out a forest fire with a squirt gun," she says.

IN THE KNOW

In the money

The Texas home-building industry contributed almost $9 million to state executive and legislative candidates between 2001 and 2004. That number is based on studies by several groups, including Campaigns for People, which advocates campaign finance reform in Texas, and HomeOwners for Better Building.

More than 75 percent of that money came from Houston builder Bob Perry, owner of Perry Homes. John Krugh, Perry Homes' legal counsel, serves on the new state agency, the Texas Residential Construction Commission. He also helped write the state law creating the commission.

Before you buy a new home

Consumer groups say you can protect your rights by taking these steps:

• Research your builder thoroughly before signing any agreements.

• Consider hiring a real estate lawyer to negotiate your contract. There is no better time to negotiate than before you buy.

• To protect your right to sue, strike any requirement that disputes will go to binding arbitration.

• Ask for the names of subcontractors building your home. Investigate their work before you buy.

• Hire a professional inspector to examine your home during construction. Point out flaws that can be fixed before you move in.

• Discuss your warranty thoroughly with the builder. Put everything in writing.

• Leave a paper trail. Send all correspondence to the builder by certified mail, return receipt requested.

Dave Lieber's Watchdog column appears Sundays and Fridays. (817) 685-3830 This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
 
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