Warning! Avoiding Builder Contracts that Harm New Home Buyers
How to minimize the risk
By 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 todays 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. You may even be giving 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 dont care if you get a bad house because you cant do anything about it.
Helpful history and growing trend: Texas sets a precedent for the nation
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 has pioneered a trend that is growing nationwide of deregulation and tort reform, which have left homebuyers vulnerable to predatory business practices and driven down industry building standards, reducing the quality new home construction further.
Even in cities where they have building codes like San Antonio, records indicate that 75% of all new homes built did not get all of their inspections. In 2003, the powerful home construction industry spent millions to establish the Texas Residential Commission (TRCC), a state agency that regulates home buyers. See: Read Report: Big Money
In Texas, an owner of a defective home must now pay $350, $450 or $650 to file a complaint against their builder 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, including photos, engineering reports, etc. That is all before going to Binding Arbitration where the homebuyer inevitably loses and the builder wins.
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 is not always the best house. 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 -