The vast majority of complaints to a state agency created to give Texan home owners redress for new home defects may as well be fed into a paper shredder, according to findings in a study by the Lone Star State's comptroller.

The Texas Residential Construction Commission (TRCC) is little more than a paper tiger with no authority to force home builders to comply with orders to fix new home defects -- 86 percent of home owners who've used the commission's resolution process said builders failed to fix the problem -- according to an October, 2005 Review of the Texas Residential Construction Commission.

The study was conducted by Carole Keeton Strayhorn, Texas' Comptroller -- a gubernatorial hopeful -- at the behest of Texas House Of Representatives' Todd Smith (R-Bedford), chairman of Budget and Oversight on the House's Elections Committee and a member of the House's Appropriations Committee.

Without disputing the audit's findings, the commission said new home buyers can expect much better results as the two-year old commission gears up to enforce the law with new efforts developed just one month after Strayhorn's audit.

Builders say the study doesn't tell the whole story. They say the mere existence of the law in the previously unregulated home building marketplace deters errant builders much as a cop on the beat deters criminal activity.

Meanwhile, grassroots anti-defect advocates cheered the survey.

"It is remarkable that we have gotten something like this. It has been wonderful for us," said Janet Ahmad of San Antonio and president of Home Owners for Better Building (HOBB).

The group helped spearhead an effort for a new home lemon law before the Texas' Legislature opted instead to create the TRCC in 2003. The vote came after an ongoing hue and cry over new home defects led to numerous lawsuits in a market regulated largely only by a hodge podge of building codes.

Generally, TRCC required that by March 2004, home builders must hold a state certificate of registration to operate in Texas. Contractors who perform remodeling work amounting to $20,000 or more and those who perform work that changes the square footage of a home must also register.

The commission says more than 24,000 residential construction entities have registered with the state, compared to original estimates that some 4,000 would register.

The new law doesn't mandate a uniform building code, but a set of building and performance standards which detail how a home must perform after it is built.

For consumers, the law also comes with a State-Sponsored Inspection and Dispute Resolution Process (SIRP). SIRP allows a home owner to appeal to the commission to appoint a third-party independent inspector to check the home after a consumer finds new home or new construction defects that go unresolved for 30 days. Consumers pay a $250 fee that is reimbursed if the inspector's report supports the home owner's allegations.

Strayhorn said the commission spent $3.7 million on its operations in 2005, but after collecting $6.6 million from builders and home owners and transferring $2.9 million to the general fund, the commission has had little impact.

"My research found no evidence that the Texas Residential Construction Commission has had a favorable impact on the homeowner," Strayhorn said.

Strayhorn found that of 257 filed SIRPs, some 86 percent had third-party verified construction defects the builder didn't fix. The findings were based on responses from 102 of the 257 consumers who filed.

Also, 45 percent of respondents said they were unsatisfied or very unsatisfied with the SIRP process and 32 percent thought the fees charged for filing a SIRP were inappropriate.

Half of the consumers said the TRCC handled their SIRP "slowly" or "very slowly", 33 percent said the fees were "inappropriate" or "very inappropriate", 45 percent said third-party inspectors performance was only "fair" or "poor", and 17 percent of those with confirmed complaints waited four weeks or have yet to receive their refund.

"The agency should improve its customer service to homeowners. Only 69 percent of survey respondents were satisfied with how they were treated and only 59 percent thought the staff was knowledgeable about their claims. When home owners were asked to provide comments and concerns, moreover, most responded quite negatively," said Strayhorn.

Patrick Fortner, TRCC spokesman and head of its dispute and resolution process, says the commission has been understaffed and was in the throes of gearing up when the audit requested data -- four days after a new executive directory, Duane Waddill took his post.

"In a very short period of time we've had to create rules and procedures dealing with the day-to-day operation of a state agency," Fortner said.

However, before the audit was complete, the agency had already increased the number of people working in dispute resolution and enforcement operations and it had honed enforcement activity.

By November, the commissioners passed a new rule and issued a new form builders must use to document what they are doing to solve a dispute within 45 days after the dispute has been validated by a third-party inspector. A final report from the builder must also be submitted when the job is complete. A new complaint form for consumers is also available.

"We've just launched this. The forms went up on website last week and went out to builders last week. We think it is unlikely builders want to create a lasting document that says this agency found the home defective and their response was to do nothing," said Fortner.

"Most importantly, Mr. Waddill will look at separate cases and evaluate the builders. If it becomes apparent the builder is recalcitrant in regard to a customer, we can use our results as a basis to fine and or to revoke registrations. We believe we do have the authority," he added.

TRCC has cited 65 builders, forcing them to pay fines and fees, but nothing totalling more than about $1,000.

"We welcome the report and view the audit as an opportunity to see how we are doing since this process wasn't even fully formed while the comptroller was gathering data and doing the review. Forty-five days down the road, we'll get a pretty good idea what direction we need to go in," Fortner said.

The Texas Association of Builders supported the creation of TRCC, which removed the nebulous implied warranty that previously came with new homes in the Lone State. The association says, despite what the audit found, the commission has made inroads in terms of reducing the number of defects and getting defects repaired.

"How much crime does a policeman deter? You got to believe he prevents some. Builders have an incentive to get it done right. This is the first time in the state of Texas' history that there is a statewide building and performance standard. Today as a builder, I know what I have to deliver," said Jay Dyer, association spokesman.

Errant builders, said Dyer, should pay the price.

"The single-best marketing tool builders have is satisfied customers. If there is a builder who is not complying with the law, it should suffer legal consequences," Dyer added.

Anti-defect advocates say the audit is a solid start, but just a start and that the home building industry in Texas still needs a lot of work.

"I thought Strayhorn did an outstanding, comprehensive, in-depth study of a complicated situation, in a short period of time, but I don't think they'll (TRCC) do anything. They'll say all the right things when they talk to you, but then they do nothing. Maybe some little tweaks that won't harm the builders," said Nancy Seats, president of Homeowners Against Deficient Dwellings (HADD).

Published: January 26, 2006

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