Builders leave Better Business Bureau
Some builders are dropping their membership in the Better Business Bureau of Metropolitan Houston because they don't want to use the alternative dispute resolution process, a process they agreed to as terms of their membership. Instead, they'd rather disputes go through the American Arbitration Association or the Texas Residential Construction Commission...
(Toy Wood, CEO of the Greater Houston Builders Association) "And although our reasons for creating the TRCC and the various associated processes were very worthy, we were creating another bureaucracy," she wrote. "While we maintain control of the commission, we must be just as vigilant with the TRCC as we are with any other agency or commission."
Builders leave Better Business Bureau
Homeowners losing one option to resolve issues
November 22, 2005
Copyright 2005 Houston Chronicle
Homeowners used to be able to easily turn to the local Better Business Bureau for help in resolving a complaint against a builder.
They still can, but for some it's getting harder.
Some builders are dropping their membership in the Better Business Bureau of Metropolitan Houston because they don't want to use the alternative dispute resolution process, a process they agreed to as terms of their membership.
Instead, they'd rather disputes go through the American Arbitration Association or the Texas Residential Construction Commission.
So far, four major builders â Centex Homes, Pulte Homes of Texas Houston Division, Tremont Homes and David Weekley Homes â have left the bureau in the past year.
And Bay Area Builders' membership is pending revocation for not participating in the agency's arbitration process.
A spokesman for David Weekley said the builder didn't renew its membership this year because it would rather potential customers research the builder by talking to other customers and the company directly, instead of using the bureau.
But bureau officials said they believe Weekley's nonrenewal stemmed from an arbitration ruling against the builder.
Complaints on fairnessIn letters to the agency, a few other builders or their attorneys took issue with the process's fairness. Some said their contracts with homeowners call for arbitration through the arbitration association or that they have to handle consumer complaints through the two-year-old commission, a state agency builders lobbied heavily to create.
The bureau was trying to force builders through their mediation process when they had another legal requirement they had to to go through, said Toy Wood, CEO of the Greater Houston Builders Association.
"I'm hopeful we can work these things out and the BBB can modify their policy to accommodate the law, but at this point I'm not sure what's going to happen," she said.
The Chronicle is a member of the building association and the Better Business Bureau.
The building industry isn't new to dealing with consumer complaints. The onslaught of consumer issues prompted the industry to lobby for the creation of the Texas Residential Construction Commission.
In the August issue of Home Builder magazine, Wood noted the commission was created to help resolve disputes between the industry and consumers and provide accountability and fairness for both, but it could lead to overregulation of the industry.
"And although our reasons for creating the TRCC and the various associated processes were very worthy, we were creating another bureaucracy," she wrote. "While we maintain control of the commission, we must be just as vigilant with the TRCC as we are with any other agency or commission."
The commission also overrides the Better Business Bureau process, builders say.
Committed to mediationBut the bureau argues that its membership contracts commit members to participate in the agency's alternative dispute resolution program, which first includes mediation and then binding arbitration.
Only those who name an alternative, such as the arbitration association, on their membership agreement and get it approved by the BBB can avoid the bureau's process.
"So far, to my knowledge, we've only done that with one home builder, and that was in 2000," said Carol Ritter, vice president of operations at the Better Business Bureau of Houston.
Most builders have been cooperative with the process, she said.
"In the past, they came on down and arbitrated the case. But lately, that's not the case. But in the past 12 months, it's like they're saying they don't need us," Ritter said. "Every now and then we'd get a builder who didn't want to, we'd explain their obligation and how it's better than going to court, and they'd agree and do it. Now we can't even get to the member to talk to them."
The bureau won't take a case to arbitration if the consumer and builder have already started another process through the American Arbitration Association or Texas Residential Construction Commission, Ritter said. But she noted that going through the arbitration association can be costly and burdensome for consumers.
The bureau's process is free for consumers with disputes against members, but would cost consumers $150 to $250 for mediation or arbitration against a nonmember.
"We feel the BBB offers a cost-effective way for consumers to resolve their complaints without having to jump through hoops and deplete their resources," Ritter said.
A spokesman for the American Arbitration Association, Larry Parker, wouldn't discuss the specifics of arbitration costs, but noted potential filing fees are usually laid out in contracts between homeowners and builders.
He added that both parties must consent to the appointment of an arbitrator, but it usually ends up being whomever the builder chooses. That's because the arbitrator is usually someone with knowledge of the industry, and builders are more likely to come across the individual in the course of business than the consumer.
"We do get some media criticism for it. But we have strict codes of ethics for neutrality and impartiality," Parker said.
Confused consumersIn the meantime, some consumers aren't sure where to turn.
Homeowner Dan Jurgena hoped Centex Homes would show up for a mediation so he could argue the builder should replace rotting trim in his home.
But the builder never showed and instead, canceled its membership in the BBB.
Mike Belmont, division president of Centex Homes, said the company canceled its membership last month because the local bureau's process could confuse homeowners and circumvent Texas laws governing dispute resolution between homebuilders and homeowners. The company is willing to work with Jurega, Belmont said, but not through the BBB.
"We have our process and it is something we have offered to all homeowners," Belmont said, adding that "with the BBB, there's just two choices: you either use their process or they revoke membership. We chose to just cancel our membership."
Jurgena says he chose the BBB because it was free and impartial. He worried going through the American Arbitration Association would take too long and potentially be unfair.
He can't go through the Texas Residential Construction Commission because he knew of defects in 1999. The state agency only handles disputes on home defects discovered on or after Sept. 1, 2003, the effective date of its creation.
"I don't know what else I can do," Jurenga said. "I don't have the money to screw around with these guys in court or arbitration, and I certainly don't have the time to waste."
Centex offered to pay Jurenga's arbitration fees, but he's not sure he wants to accept.
"If they're so willing to resolve the problem, why won't they go through the BBB?" he asked.