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ABC Special Report
Investigation: New Home Heartbreak
Trump - NAHB Homebuilders Shoddy Construction and Forced Arbitration
Editorial- Avoiding Builder Contracts
Sunday, 10 April 2005

Warning!  Avoiding Builder Contracts that Harm New Home Buyers
How to minimize the risks
A message from Janet Ahmad

The most frequently asked question is; “Can you tell me who is a good builder?”  Unfortunately, we can't tell you who is a good builder.  Because of today’s market, new home builders require that the buyer agree to binding arbitration, or they will not sell them a home.  Go to the next builder and they will have the same condition.

By far, the worse problem when buying a new home is that new home buyers, most of the time unknowingly sign away their constitutional rights.  In many instances, you as a buyer will give up your right to ever sue the builder if something goes wrong.  In some cases you may give up your right to tell anyone, even friends, neighbors, the Better Business Bureau, or the media. Buy a New Home - Don't Sue & Shut Up.  The result is that builders don’t care if you get a bad house because you can’t do anything about it.

Helpful history and growing trend: Texas sets a precedent for the nation

Most states (44) licenses builders, however Georgia, Ohio, South Carolina, Kentucky and Texas have no licensing requirement. Perhaps no other state has received more recognition for building defective homes than Texas.

In Texas, where the home building industry has never been regulated and anyone can be a builder with absolutely no knowledge or proof of even a current bank account, the self-assured industry has total sovereignty.   Over the past 10 years, Texas homebuilders and the National Associastion of Home Builders (NAHB) have pioneered a trend that is growing nationwide toward deregulation and tort reform, which has left homebuyers vulnerable to predatory business practices and driven down industry building standards, reducing the quality of new home construction further.  


The state only recently adopted the first ever state building code called International Residential Code (IRC) however; the Office of Attorney General issued an opinion that local municipalities can adopt amendments that reduce building codes to a lesser standard. In rural areas where home building is booming builders do not have to follow any minimum code what so ever. 

Even in major metropolitan cities like San Antonio, Texas where building codes do apply records indicate that 75% of all new homes built did not get all of their inspections.  See: San Antonio Building Inspection Records in Shambles

In 2003, the powerful home construction industry spent millions to establish the Texas Residential Commission (TRCC), a state agency that regulates home buyers. Now Texas homeowners with defective homes must pay $350, $450 or $650 to file a complaint with the new TRCC, which is run by a nine-member commission dominated by the building industry.  The process takes five months and is so complex that homeowners need an attorney and must provide all of their evidence against the builder when they initiate their complaint, including photos, engineering reports, etc.  That is all before going to Binding Arbitration where the homebuyer inevitably loses and the builder wins. See Read Report: Big Money… and ATTENTION: IS YOUR STATE NEXT?  NEW HOMEBUYER LEGISLATIVE REGULATION MAY BE COMING TO YOUR STATE SOON!

The result is that homes are so poorly constructed that they actually have higher maintenance costs than a 50-year-old home.  Then there is the health hazard of materials that predispose the house to the growth of mold that creates even greater risks. 

One simple way to avoid trouble
If I were thinking of buying a home, I would look at buying a pre-owned home.  If the homeowner knew of problems and didn't disclose them, you can sue them, the realtor, and the builder.   You, as the second owner, can sue the builder because you do not have a contract with the builder. Unlike the first buyer, you are not bound to binding arbitration, and in some states a law of implied warranty of good workmanship and habitability may apply to the home itself. 

Study our web site and you will be able to understand the sad facts of buying a home and the importance of being cautious.  A new house may not be the best home for your family.  Good Luck and keep me informed as to your progress of finding the home of your dreams

Janet Ahmad, national president of HomeOwners for Better Building -  This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

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