When Life Gives You Lemons...
Activists push for a law to keep homebuyers from getting squeezed
Published: Thursday, January 25, 2001
The Web sites spring up, all over the state, like mushrooms after a hard rain.
Clear Lake's John Cobarruvias maintains one (users2.ev1.net/~johncoby/ryland/) dedicated to the rotting siding on his still new Ryland home. Janet Ahmad runs the clearinghouse HOBB site (Homeowners for Better Building, www.hobb.org) out of San Antonio, each page headed "Centex Homes, Buyer Beware." Dallas attorney Kathy Fragnoli founded the SOBB site (Sick of Bad Builders), which has morphed into HOME (Homeowners' Organization for Mediation and Education, home.flash.net/~carlton2/home.htm) for eponymous reasons.
Together with dozens of smaller sites around the state and the nation, these addresses take browsers on an encyclopedic tour of homeowner despair over residential construction ills: cracked slabs, substandard siding materials and the class-action lawsuits that accompany them, building code violations, worthless warranties, unresponsive service departments and jackboot deed covenants.
For years these sites and the homegrown activists behind them have pushed education and awareness -- pretty much the only tools available to homebuyers looking to avoid becoming characters in the horror stories that proliferate around the largely unregulated business of new home construction.
Now, these activists are going a step further in Texas, lobbying to become the first state to offer homebuyers a measure of protection against unscrupulous and incompetent builders. At long last, they want a home lemon law.
Leading the fight is San Antonio's Ahmad, president of HOBB. Ahmad founded the group in the 1970s and became active in an unsuccessful effort to require city licensing of home builders. She also worked with a Federal Trade Commission investigation of the building industry that found that 75 percent of new homes had major defects.
After being unable to get meaningful legislation passed, Ahmad drifted away from the fight until 1998. That was when she found that her new Centex home was full of building code violations and there was very little she could do about it.
"I'm supposed to be educated on this, but I bought a home and the builder did a snow job on me," she says. Ahmad tells of having city building inspectors confirm the code violations, but the inspectors' director advised her that her only recourse was a suit against the builder.
"I said, 'Excuse me?' This is a building code violation we're talking about. I can't enforce building codes," she says. "He was totally unconcerned."
The problems that jump-started HOBB back in the '70s, Ahmad found, had only gotten worse in the intervening years. She says that Texas, under the banner of tort reform and specious attacks on "lawsuit abuse" funded in part by the home-building industry, has been steadily eroding consumer protection laws in favor of the lobby-heavy industry. Suing builders was not only an unattractively expensive option, she says, but the fine print in almost any new home contract makes it nearly impossible.
The Centex Homes warranty contains the same boilerplate language to be found in most builders' contracts: Unresolved disputes have to be taken to an arbitrator, whose decision "shall be final and binding upon all parties." Or, in plain language, you can't sue your builder.
If arbitration should fail to give relief, Ahmad and others have found, many homeowners are contractually bound to shut up about it. The declaration of covenants signed by Damon Lyles, a division president of Centex Real Estate Corp., states: "â¦no owner or resident of any lot shall engage in picketing, protest marches, sit-in demonstrations, protest speeches, or other forms of public protest, including without limitation, displaying signs or placards within public viewâ¦." The wording says that when homeowners receive their lot deeds, they "shall be deemed to have accepted the foregoing prohibitions as reasonable limitations on his or her constitutional right of free speech."
The problem, Ahmad is quick to point out, does not lie with any one home builder. She says that full inspections are not performed on 75 to 90 percent of the new homes in San Antonio, and that builders universally include warranty language that excludes coverage of "habitability."
Her solution is legislation requiring licensing of home builders, enforcement of building codes, and a home lemon law similar to the automotive lemon law. That 1983 statute generally gives owners of defective new cars the right to get another vehicle or get their money back if the defects are not fixed in a reasonable amount of time.
She's gained a commitment from state Senator Leticia Van De Putte of San Antonio to introduce a bill for the home lemon law in the new legislative session.
"The single most important purchase that anybody makes in a lifetime is your home," Van De Putte says, "and yet we don't have the type of protections for consumers that I think are necessary." The legislator says activist groups in areas such as Houston, San Antonio and Dallas-Fort Worth reflect widespread problems. "They have difficulties and they have no redress."
While the specifics of a bill have yet to be worked out, Ahmad and her allies can expect a major battle from builders in the new legislative session.
Toy Wood, vice president and director of governmental affairs for the Greater Houston Builders Association, says the Residential Construction Liability Act of 1989 provides an adequate process for "resolving issues" between buyers and builders. Wood notes that there were 23,000 housing starts in the Houston area last year and doubts that anywhere close to a majority of homebuyers are dissatisfied with their purchases.
Building homes is not an exact science, Wood says. "I think that as a society we've come to expect perfection, and think that if we don't have perfection, somebody's got to pay, and pay big," she says. "And I think that's kind of a sad commentary on where we are."
Wood says any lemon law for new homes would have to be "very narrowly tailored" to avoid disrupting the industry. "Whether you like it or not, when you start raising a builder's risk to litigation, he has to increase the cost of his home," she says. "He has to build in, now, all his litigation expenses."
Activists such as Ahmad remain hopeful that they can finally get a law passed, even in the consumer-unfriendly atmosphere spawned by the past decade's move toward corporate unaccountability.
Ahmad says she and Cobarruvias collected complaints from a few hundred homebuyers and submitted them to the state attorney general's office. "Do you know what advice we got? Get private attorneys," she says.
"Everything seems to be going to let free enterprise take care of it. Let's not have the courts do anything," she says, calling a lemon law a reasonable reform. "We're not trying to make a killing on this. We're not gold diggers," Ahmad says. "We just want what we bought. What we paid for."