Have you ever wondered who the individuals are that are charged with regulating and overseeing homebuilders in the State of Texas? After all, the State has surely placed highly qualified, unbiased, and consumer-concious individuals at the helm of the agency created for the purpose of "promoting quality construction for Texans by registering industry members and residential construction projects; providing information and educating homeowners and the residential construction industry; acting as a resource for complainants; and offering a neutral, technical review of alleged post-construction defects," Right? You might just be surprised.
By law, the Texas Residential Construction Commission is comprised of nine members appointed by the Governor: four registered builders, three members of the general public, one engineer who practices in the area of residential construction and one either architect or inspector who practices in the area of residential construction. The Commission members serve six-year staggered terms.
Here is a list of the current members:
COMMISSIONER Paulo Flores (Chair) - Dallas, Texas
COMMISSIONER Glenda Mariott (Vice Chair) - College Station, Texas
COMMISSIONER Lewis Brown (Secretary) - Trinity, Texas
COMMISSIONER Art Cuevas - Lubbock, Texas
COMMISSIONER Kenneth Davis, P.E. - Weatherford, Texas
COMMISSIONER Gerardo "Jerry" Garcia - Corpus Christi, Texas
COMMISSIONER John Krugh - Houston, Texas
COMMISSIONER Steven Leipsner - Lakeway, Texas
COMMISSIONER Mickey Redwine - Ben Wheeler, Texas
here are some of their "unofficial" affiliations, which might cause the average Texas consumer a little discontent:
J. Paulo Flores: Chairman. Mr. Flores is a distinguished lawyer with impressive credentials. But...who have his clients have been for the past 20 years? This would be interesting to know.
Glenda Marriott, Vice Chair. She is the Vice-President of Marriott Homes, Inc. This corporation is a Builder, registered with TRCC under builder number 1003. As of the date of this posting, they have registered 172 homes with the TRCC.
Lewis Brown, Commissioner. Mr. Brown is an inspector and the proprietor of Brown's Inspection Service, LLC. he was once a prominent member of the Greater Houston Builders Association. Note who GHBA is, and who its members are.
Art Cuevas, Commissioner. he is a Builder and the president of Art Cuevas Construction -- TRCC registered builder 1001, with 51 homes registered as of today.
Jerry Garcia, Commissioner. He is President of Hacienda Construction, Inc. This coporation has TRCC registration number 2444, with 10 homes registered. As past president of the Corpus Christi Builders Association, a Life Director for the Texas Association of Builders and a Director for the National Association of Homebuilders, Mr. Garcia is hardly a consumer advocate.
John Krugh, Commissioner. Senior Vice President and Corporate Counsel for Perry Homes. Perry Homes is among the largest builders in the nation. Perry is registered under TRCC number 1040, and has 12559 homes registered with TRCC.
Steven Leipsner, Commissioner. Former Executive Vice President of the Marriott Corporation.
Mickey Redwine, Commissioner. President of Dynamic Cable Construction Company, L.P.
Trey Wilson is a construction, real estate, evictions and water lawyer in San Antonio Texas. He routinely represents homeowners in claims for defective construction and residential project abandonment. he may be reached at www.sa-law.com or 210/223-4100
Attorney Trey Wilson - RL Wilson Law
Showing posts with label TRCC. Show all posts
Showing posts with label TRCC. Show all posts
17 September 2008
TRCC Bites Back to Sunset Slam -- Beleagured Construction Commission Issues Response and "News Release" to Abolition Recommendation
In a somewhat telling attempt to salvage an agency's very existence and preserve the jobs of professional bureaucrats, the TRCC published a "News Release" in Response to the Texas Sunset Advisory Committee's recommendation that TRCC be dismantled. The News Release contains only a portion of TRCC "management's response" to the Sunset Report issued in late August, but purports to "offer solutions" to "issues identified but not addressed" in that report. Recall, if you will, that the Sunsetters determined that TRCC was essentially dysfunctional and needs to be abolished. (See earlier blog posts). My favorite portion of the management response is a quote by the regulatory agency's Chairman, Paulo Flores:
Chairman Flores' statement seems to dance around the fact that, ever since its creation by the Legislature in 1977, the statutory purpose of the Sunset Advisory Commission is to "identify and eliminate waste, duplication, and inefficiency in government agencies." In order to perform that function, the Sunsetters "question the need for each agency, look for potential duplication of other public services or programs, and consider new and innovative changes to improve each agency's operations and activities." In what I consider to be an insightful conclusion, Sunset Review of the TRCC has made the "sun shine" on that agency's flawed existence.
As an attorney who regularly represents Texas homeowners who suffer from construction defects or have been cheated, defrauded and sometimes plain robbed by unscrupulous builders, my experience has been that the Texas Residential Construction Commission is biased in favor of builders and against owners. In my opinion, this bias has been played out by the TRCC through blatant adoption of cumbersome Rules, expensive processes, and ineffectual communications. Though I deal with legal issues relating to residential construction on a daily basis, I have experience virtually nothing positive about the TRCC scheme.
Like TRCC Chairman Flores, I believe that Texas' 28,000 builders need regulatory oversight. I also believe that Texas homeowners need strict consumer protections against unethical builders. However, I disagree that the TRCC is the best agency to provide that oversight -- especially given its cozy relationship with builders, and the absence of any enforcement teeth.
In the end, the next Legislature will decide how best to handle TRCC. Though the agency has some friends in the Lege, it is worth noting that, in most cases, agencies under Sunset review are automatically abolished unless legislation is enacted to continue them.
Read the Sunset Advisory Commission's Staff Report on the TRCC here. The entire TRCC Response is available here.
“The Texas Residential Construction Commission adamantly disagrees with the Sunset Commission staff recommendation to eliminate builder oversight in Texas. Just because the Commission does not fit that staff’s standard and somewhat restricted view of what a regulatory agency should look like does not mean that the regulatory structure is fundamentally flawed.”
Chairman Flores' statement seems to dance around the fact that, ever since its creation by the Legislature in 1977, the statutory purpose of the Sunset Advisory Commission is to "identify and eliminate waste, duplication, and inefficiency in government agencies." In order to perform that function, the Sunsetters "question the need for each agency, look for potential duplication of other public services or programs, and consider new and innovative changes to improve each agency's operations and activities." In what I consider to be an insightful conclusion, Sunset Review of the TRCC has made the "sun shine" on that agency's flawed existence.
As an attorney who regularly represents Texas homeowners who suffer from construction defects or have been cheated, defrauded and sometimes plain robbed by unscrupulous builders, my experience has been that the Texas Residential Construction Commission is biased in favor of builders and against owners. In my opinion, this bias has been played out by the TRCC through blatant adoption of cumbersome Rules, expensive processes, and ineffectual communications. Though I deal with legal issues relating to residential construction on a daily basis, I have experience virtually nothing positive about the TRCC scheme.
Like TRCC Chairman Flores, I believe that Texas' 28,000 builders need regulatory oversight. I also believe that Texas homeowners need strict consumer protections against unethical builders. However, I disagree that the TRCC is the best agency to provide that oversight -- especially given its cozy relationship with builders, and the absence of any enforcement teeth.
In the end, the next Legislature will decide how best to handle TRCC. Though the agency has some friends in the Lege, it is worth noting that, in most cases, agencies under Sunset review are automatically abolished unless legislation is enacted to continue them.
Read the Sunset Advisory Commission's Staff Report on the TRCC here. The entire TRCC Response is available here.
31 August 2008
Mandatory County Code Inspections -- Being Outside the City Limits No Longer Enables Faulty Construction
Big changes are in effect for all homebuilders and remodelers who build in the unincorporated areas of the state. As of September 1, 2008, all homes constructed in unincorporated areas, or areas not subject to municipal inspections, must undergo a minimum of three inspections to ensure building code compliance.
Legislation was passed in 2001, making the International Residential Code (“IRC”) the municipal residential building code in the state. Then, in 2003, the Texas Legislature mandated that all homes in the state, including those in the unincorporated areas, be built to IRC standards. Finally, last session saw the passage of legislation requiring that all homes in the unincorporated areas, as well as areas without
municipal inspections, must be inspected for code compliance beginning September of
this year.
A minimum of three inspections will be performed by a third party inspector, or Fee
Inspector, and must occur at the following stages of construction:
1. foundation, prior to the placement of concrete;
2. framing and mechanical systems prior to being covered with sheetrock or other
interior wall covering; and
3. final inspection when the home is completed.
The builder/remodeler is responsible for contracting with the Fee Inspector, which
includes the following pool: (1) a licensed engineer; (2) a registered architect; (3) a professional inspector licensed by the Texas Real Estate Commission—a TREC
inspector; or (4) a third-party inspector approved by the Texas Residential Construction Commission (“TRCC”)—a TRCC code inspector.
It is important to note that the builder/remodeler may use the same or different Fee Inspector for the three required inspections, and that the builder/remodeler, has the ability to hire the Fee Inspector of his choice and is not forced to use any one category of Fee Inspectors.
The TRCC will create a unique numbering system using a builder’s registration number
for all construction subject to the new inspections. This number will be used to track the inspections. The fee inspectors will electronically report the completion of an inspection using the unique number and receive a verification document showing the inspections have been satisfactorily completed. The purpose of this document is to show that the home has passed these required inspections so as not to hold up closings.
Within 30 days thereafter of the registration of the home, the homeowner and builder will receive an official "Certificate of Completion."
For a remodel, the inspections will only be required if necessary based on the scope of work. The applicable building code will be the building code in effect for the area, as currently mandated by the TRCC Act. The applicable building code for residential construction located in an unincorporated area not in a city’s ETJ is the IRC as adopted and amended by the county seat of the county in which the construction is located. If the county seat has not adopted and/or amended the IRC, the applicable building code is the IRC as it existed on May 1, 2001. The applicable building codes as described above do not constitute a change in the rules or the statute.
Inspection records and documents will not be turned over to the TRCC by the inspector or builder. However, the TRCC will conduct random audits of the inspection records, and builders must maintain those records for a minimum of five years.
After publishing the proposed rules on the subject and making some amendments to them
based on formal Texas Association of Builders (“TAB”) comments, the TRCC has
adopted the final Fee Inspector rules. To see a copy of the formal rules, please visit the Commission’s website at: http://www.trcc.state.tx.us/Inspectors/CountyInspections.asp
Legislation was passed in 2001, making the International Residential Code (“IRC”) the municipal residential building code in the state. Then, in 2003, the Texas Legislature mandated that all homes in the state, including those in the unincorporated areas, be built to IRC standards. Finally, last session saw the passage of legislation requiring that all homes in the unincorporated areas, as well as areas without
municipal inspections, must be inspected for code compliance beginning September of
this year.
A minimum of three inspections will be performed by a third party inspector, or Fee
Inspector, and must occur at the following stages of construction:
1. foundation, prior to the placement of concrete;
2. framing and mechanical systems prior to being covered with sheetrock or other
interior wall covering; and
3. final inspection when the home is completed.
The builder/remodeler is responsible for contracting with the Fee Inspector, which
includes the following pool: (1) a licensed engineer; (2) a registered architect; (3) a professional inspector licensed by the Texas Real Estate Commission—a TREC
inspector; or (4) a third-party inspector approved by the Texas Residential Construction Commission (“TRCC”)—a TRCC code inspector.
It is important to note that the builder/remodeler may use the same or different Fee Inspector for the three required inspections, and that the builder/remodeler, has the ability to hire the Fee Inspector of his choice and is not forced to use any one category of Fee Inspectors.
The TRCC will create a unique numbering system using a builder’s registration number
for all construction subject to the new inspections. This number will be used to track the inspections. The fee inspectors will electronically report the completion of an inspection using the unique number and receive a verification document showing the inspections have been satisfactorily completed. The purpose of this document is to show that the home has passed these required inspections so as not to hold up closings.
Within 30 days thereafter of the registration of the home, the homeowner and builder will receive an official "Certificate of Completion."
For a remodel, the inspections will only be required if necessary based on the scope of work. The applicable building code will be the building code in effect for the area, as currently mandated by the TRCC Act. The applicable building code for residential construction located in an unincorporated area not in a city’s ETJ is the IRC as adopted and amended by the county seat of the county in which the construction is located. If the county seat has not adopted and/or amended the IRC, the applicable building code is the IRC as it existed on May 1, 2001. The applicable building codes as described above do not constitute a change in the rules or the statute.
Inspection records and documents will not be turned over to the TRCC by the inspector or builder. However, the TRCC will conduct random audits of the inspection records, and builders must maintain those records for a minimum of five years.
After publishing the proposed rules on the subject and making some amendments to them
based on formal Texas Association of Builders (“TAB”) comments, the TRCC has
adopted the final Fee Inspector rules. To see a copy of the formal rules, please visit the Commission’s website at: http://www.trcc.state.tx.us/Inspectors/CountyInspections.asp
Homeowners losing fights with builders
Article by Jennifer Hiller of the San Antonio Express News:
Hoses twist and snake through Jonathan Steiner's home. The makeshift plumbing lines run beneath furniture, across the living room and into the garage, where they block that door from closing completely. Air conditioning leaks out while bugs crawl in. The hoses were supposed to be a temporary fix when the plumbing system failed and sprung leaks all over the house.
That was more than two years ago.
After plumbers told Steiner the entire system needed replacing, the physical therapist couldn't get his builder to make repairs in his four-year-old brick home, located in the Woodridge neighborhood near USAA. So Steiner turned to the state agency the Legislature created to resolve disputes between homeowners and homebuilders. It didn't help.
The Texas Residential Construction Commission agreed the builder is responsible for the plumbing fiasco, but the agency can't force the company to fix it. That disconnect is one reason the Sunset Advisory Commission staff this month recommended abolishing the agency.
The TRCC is up for reauthorization by the Legislature next year. And the staff of the Sunset Commission, the legislative body charged with identifying and eliminating waste in government agencies, is the latest critic of the TRCC.
Homeowners have to go through the process before going to court, but don't trust the agency, the staff report said. “No other regulatory agency has a program with such a potentially devastating effect on consumers' ability to seek their own remedies,” it said.
Documents obtained under the Texas Public Information Act and interviews with more than four dozen San Antonio-area homeowners or their attorneys show a wide gulf exists between having the TRCC rule in a homeowner's favor and in actually getting a builder to repair shoddy construction. Of the homeowners interviewed over the past 18months, 27 people had builders who ignored needed repairs even after independent inspectors found construction defects in the home. Just 14 people had their homes repaired or had settled with the builder.
A handful of homeowners were involved in lawsuits and were legally prevented from disclosing settlement terms or said they still were working through the dispute resolution process. Three other TRCC decisions were unclear based on incomplete paperwork provided by the agency. And three homeowners had a TRCC ruling that didn't find construction defects in their homes, although in one of those cases the builder made the repairs anyway.
Statewide, only 12 percent of cases where the state has sent in inspectors to review alleged defects have resulted in a “satisfactory offer or repair or compensation over the life of the program,” according to last week's Sunset Commission report. “The remaining 88 percent of reported cases are pursued by one party or the other using the legal system — the very outcome the process was enacted to prevent,” the report said.“That's not a good batting average,” said Kendall County resident Joseph Bartoloni, who complained to the agency in 2006 when his builder would not repair problems or complete work on his custom home. He had to make the repairs himself. “I don't know how much the building community respects the TRCC. My builder blew it off.”
The process
The Legislature created the TRCC in 2003 as a way for homeowners and builders to resolve disputes without going through the expense of a lawsuit. The TRCC registers homebuilders and remodelers, and provides homebuyers an online search tool for researching homebuilders.
Homeowners who have a disputes with their builders can't sue until they have tried the agency's dispute-resolution process, which involves putting any alleged defects in writing and having an independent inspector look at the house. If the builder or homeowner disagrees with the inspector, either can appeal to a TRCC panel.
But since its inception, TRCC has had no shortage of critics — and it's not just homeowners or consumer groups complaining about the agency. In 2006, an audit from the Texas comptroller's office branded the agency a “paper tiger” and said the agency shields builders from responsibility. Then there was last week's Sunset Commission recommendation. “It didn't stack up,” said Joey Longley, the Sunset Commission's executive director, of the TRCC. “We really didn't see that you could fix it.”
The unlucky few
Thousands of people purchase new homes in Texas each year, and it's a happy transaction for nearly all of them. The TRCC estimates just one-half of 1 percent of new homebuyers end up in the agency's dispute-resolution process. Of the 600,000 new homes the agency has registered in the past few years, just 1,441 have gone through the TRCC process. The agency has 310 pending cases.
But for the handful of people who do have homes with construction defects that a builder does not address, the process can be like a race without a finish line. Even attorneys have found themselves entangled. County Court-at-Law Judge Karen Crouch spent more than five years battling with a contractor who walked off an extensive remodel of her Castle Hill's home. Crouch said the TRCC process causes delays that can give bad builders time to shield financial assets and prevents people from accessing the jury system. “The process to me is inherently unfair to consumers,” Crouch said. “I would love to see them abolished. I think that would be the most wonderful thing ever.” She was one of the first to go through the TRCC process, and she and her husband spent tens of thousands of dollars on home repairs and legal fees.
Earlier this year, they settled with the contractor for an amount that fell short of the expense of repairs and attorney's fees. “My husband still says we should have kept going. I said, ‘We need to take what we can get while we can get it,'” Crouch said.
Chad and Amanda Tenborg also settled with their builder for a fraction of what it would cost to make repairs to their house, figuring the builder had deeper pockets for a legal fight than they did. Chad Tenborg said the builder ignored the state inspector's repair recommendations. “It's a slap in the face,” he said. “All they're in favor of is the homebuilder.”
Giving it ‘teeth'
Legislators in 2007 reformed the TRCC in hopes of fighting that perception. The TRCC now can issue cease-and-desist orders to try to stop people from building homes or doing remodeling work if they repeatedly have refused to register with the agency or have let their registrations lapse. It also can take disciplinary action against builders who refuse to participate in the dispute-resolution process with homeowners, or who fail to make a repair offer when a defect is found with their work. Fines can be as much as $10,000 a day under the law.
Remodeling work worth more than $10,000 now also has to go through the agency's dispute-resolution process. The building industry says the 2007 changes haven't been given a chance yet and could benefit homeowners.
Some of the new rules encourage builders to make repair offers quickly, and by doing so, avoid having their firm's name given the black mark of having built a “defective” home.
“It makes no sense to vaporize numerous homebuyer safeguards,” said Ned Muñoz, director of regulatory affairs with the Texas Association of Builders. “I think pulling the cord on the most readily available and cost-effective path to resolution is anything but constructive.”
To be or not to be
Abolishing the TRCC would return Texas to the days of unregulated homebuilding, Muñoz said. TRCC Executive Director Duane Waddill also said the agency's new powers just were starting to bear fruit. “We're starting to see really big changes,” he said. “Every day I get e-mails from people who say they have been through the process and their problems are getting resolved.”
Consumer groups say little of substance changed with the updates because the TRCC still lacks the authority to force a builder to repair a defective home. They also say the agency focuses too much on registering builders and collecting fees.
“If you're going to force this kind of process on homeowners, there ought to be some sort of guarantee they can get their homes fixed,” said Alex Winslow, executive director of Texas Watch, a consumer advocacy group. “Homeowners are the ones being regulated. They're the ones being told what they can and cannot do.”
Michael Moore, president of the Greater San Antonio Builders Association, said abolishing the TRCC would benefit only attorneys. “Before tort reform happened, trial attorneys were just eating our industry alive,” Moore said. “We wanted to do dispute resolution before it gets to court. Anybody who has had the misfortune of being in court knows it's a very expensive process and is pretty much only good for the attorney.”
Gary Javore, an attorney who often represents homebuilders, said the dispute-resolution process isn't perfect, but that it would be premature to abolish the agency. “I'd like to see the Legislature set another Sunset (Commission review) in another three years, and let's see how the TRCC functions now that it's got these additional powers,” Javore said. “It's created an incentive for builders to be more proactive.”
Rep. Allan Ritter, D-Nederland, authored the bill that created the TRCC and said consumers without the money to hire attorneys would be left with no way to resolve disputes without the agency. “The Legislature would be making a mistake by doing away with TRCC completely,” Ritter said. “Then you're back to nothing. That means my constituents that don't have the money or the power to hire attorneys or engineers have no place to go.”
Taking a toll
But some homeowners say the process is too slow. Joseph Newton, an Air Force dentist, has a TRCC ruling in his favor and now is suing his builder over foundation problems. “It has done nothing to quickly resolve the dispute, which is what the agency is supposed to do,” Newton said. “Absolutely nothing has been resolved. I built my house over three years ago and I can't believe it will be four years when we go to trial.”
But Newton is glad to have the state's inspection report to take to court. “We have an independent person who will tell us the builder is at fault,” Newton said. “That's something good that came from all of this.”
Most homeowners say they felt validated to have a state inspector rule on their side, and some have been able to parlay that into a resolution. Melissa Eldridge thought that going through the TRCC process helped her reach a settlement with her builder. Eldridge's agreement prevented her from talking about the specifics of the settlement, but she and her family no longer live in the home, and they are building a new one with a different builder. “I'm driving the builder crazy,” she said. “But they know what we've been through.”
Some homeowners give up after the dispute resolution process. They either can't afford an attorney to continue the fight or decide it's not worth the continued energy and expense.
A state inspector sided with Miguel Mendez when he had problems with water leaks on a balcony of his new home. Then his builder went out of business. Mendez figured a lawsuit would waste more time and money. Mendez did the work himself. Then the flooring subcontractor turned up, threatening to file a lien against his house because the builder had never paid him. “That had me more stressed out,” said Mendez, who paid the man $5,000. “It was a sore subject in my life. It was a difficult time, but we've been able to move on.”
For other homeowners the fight becomes a battle of wills. Leslie Firestone will go to arbitration in November after more than three years of trying to get the builder to address problems with her house. “You get to a point in this whole process where you're in it so deep you really can't back out. You're sunk,” Firestone said. “You can't back out, or they win.”
What's next?
Steiner, whose home has the extensive plumbing problems, will head for an arbitration hearing with his homebuilder later this year. Like many homebuyers, he signed a binding arbitration clause that prevents him from seeking a jury trial. He has already spent tens of thousands of dollars for attorney's fees and plumbers. The kitchen has only hot water. The downstairs toilet cannot be flushed. And he said that his builder in a recent mediation session offered just $5,000.
“The arrogance of the builders and the failure of the TRCC and the Legislature to protect homeowners is unbelievable,” Steiner said. “This process has gotten me nowhere. I just want my life back.”
The TRCC will be fighting for its survival this fall. The full Sunset Commission will consider the recent staff report at hearings Sept. 23-24 in Austin. It will give its recommendation to the Legislature in mid-December.
Rep. Todd Smith, R-Euless, said the recent Sunset Commission report is powerful, but so is the building industry. “You just can't deny that the agency was created originally with the significant backing of the building industry itself,” Smith said. “The political reality is you will not be able to move legislation that does not at least have the building community at the table. That is just the stark reality of politics in Austin. If they don't want to abolish the agency, I doubt very seriously the agency will be abolished.”
But public relations may demand change, Smith said, and those changes could reform the agency to better help consumers, especially those who have smaller claims against their builders and can't hire attorneys. “I think the commission's stated purpose is laudable, and that's to provide consumers an alternative to expensive and time-consuming litigation with builders. There's nobody that's against that purpose,” Smith said. “The question is, are they accomplishing that objective?”
That's something the 2009 Legislature will have to answer.
San Antonio attorney Trey Wilson regularly represents owners in defective construction and residential construction claims against builders. Trey Wilson is intimately famliar with the TRCC SIRP (state sponsored inspection process), and the presentment of TRCC claims against unscrupulous builders. Trey Wilson has served as the homeowners' lawyer in various lawsuits filed against builders who have abandoned residential construction projects, and failed to pay subcontractors and/or suppliers, who, in turn, file liens.
Hoses twist and snake through Jonathan Steiner's home. The makeshift plumbing lines run beneath furniture, across the living room and into the garage, where they block that door from closing completely. Air conditioning leaks out while bugs crawl in. The hoses were supposed to be a temporary fix when the plumbing system failed and sprung leaks all over the house.
That was more than two years ago.
After plumbers told Steiner the entire system needed replacing, the physical therapist couldn't get his builder to make repairs in his four-year-old brick home, located in the Woodridge neighborhood near USAA. So Steiner turned to the state agency the Legislature created to resolve disputes between homeowners and homebuilders. It didn't help.
The Texas Residential Construction Commission agreed the builder is responsible for the plumbing fiasco, but the agency can't force the company to fix it. That disconnect is one reason the Sunset Advisory Commission staff this month recommended abolishing the agency.
The TRCC is up for reauthorization by the Legislature next year. And the staff of the Sunset Commission, the legislative body charged with identifying and eliminating waste in government agencies, is the latest critic of the TRCC.
Homeowners have to go through the process before going to court, but don't trust the agency, the staff report said. “No other regulatory agency has a program with such a potentially devastating effect on consumers' ability to seek their own remedies,” it said.
Documents obtained under the Texas Public Information Act and interviews with more than four dozen San Antonio-area homeowners or their attorneys show a wide gulf exists between having the TRCC rule in a homeowner's favor and in actually getting a builder to repair shoddy construction. Of the homeowners interviewed over the past 18months, 27 people had builders who ignored needed repairs even after independent inspectors found construction defects in the home. Just 14 people had their homes repaired or had settled with the builder.
A handful of homeowners were involved in lawsuits and were legally prevented from disclosing settlement terms or said they still were working through the dispute resolution process. Three other TRCC decisions were unclear based on incomplete paperwork provided by the agency. And three homeowners had a TRCC ruling that didn't find construction defects in their homes, although in one of those cases the builder made the repairs anyway.
Statewide, only 12 percent of cases where the state has sent in inspectors to review alleged defects have resulted in a “satisfactory offer or repair or compensation over the life of the program,” according to last week's Sunset Commission report. “The remaining 88 percent of reported cases are pursued by one party or the other using the legal system — the very outcome the process was enacted to prevent,” the report said.“That's not a good batting average,” said Kendall County resident Joseph Bartoloni, who complained to the agency in 2006 when his builder would not repair problems or complete work on his custom home. He had to make the repairs himself. “I don't know how much the building community respects the TRCC. My builder blew it off.”
The process
The Legislature created the TRCC in 2003 as a way for homeowners and builders to resolve disputes without going through the expense of a lawsuit. The TRCC registers homebuilders and remodelers, and provides homebuyers an online search tool for researching homebuilders.
Homeowners who have a disputes with their builders can't sue until they have tried the agency's dispute-resolution process, which involves putting any alleged defects in writing and having an independent inspector look at the house. If the builder or homeowner disagrees with the inspector, either can appeal to a TRCC panel.
But since its inception, TRCC has had no shortage of critics — and it's not just homeowners or consumer groups complaining about the agency. In 2006, an audit from the Texas comptroller's office branded the agency a “paper tiger” and said the agency shields builders from responsibility. Then there was last week's Sunset Commission recommendation. “It didn't stack up,” said Joey Longley, the Sunset Commission's executive director, of the TRCC. “We really didn't see that you could fix it.”
The unlucky few
Thousands of people purchase new homes in Texas each year, and it's a happy transaction for nearly all of them. The TRCC estimates just one-half of 1 percent of new homebuyers end up in the agency's dispute-resolution process. Of the 600,000 new homes the agency has registered in the past few years, just 1,441 have gone through the TRCC process. The agency has 310 pending cases.
But for the handful of people who do have homes with construction defects that a builder does not address, the process can be like a race without a finish line. Even attorneys have found themselves entangled. County Court-at-Law Judge Karen Crouch spent more than five years battling with a contractor who walked off an extensive remodel of her Castle Hill's home. Crouch said the TRCC process causes delays that can give bad builders time to shield financial assets and prevents people from accessing the jury system. “The process to me is inherently unfair to consumers,” Crouch said. “I would love to see them abolished. I think that would be the most wonderful thing ever.” She was one of the first to go through the TRCC process, and she and her husband spent tens of thousands of dollars on home repairs and legal fees.
Earlier this year, they settled with the contractor for an amount that fell short of the expense of repairs and attorney's fees. “My husband still says we should have kept going. I said, ‘We need to take what we can get while we can get it,'” Crouch said.
Chad and Amanda Tenborg also settled with their builder for a fraction of what it would cost to make repairs to their house, figuring the builder had deeper pockets for a legal fight than they did. Chad Tenborg said the builder ignored the state inspector's repair recommendations. “It's a slap in the face,” he said. “All they're in favor of is the homebuilder.”
Giving it ‘teeth'
Legislators in 2007 reformed the TRCC in hopes of fighting that perception. The TRCC now can issue cease-and-desist orders to try to stop people from building homes or doing remodeling work if they repeatedly have refused to register with the agency or have let their registrations lapse. It also can take disciplinary action against builders who refuse to participate in the dispute-resolution process with homeowners, or who fail to make a repair offer when a defect is found with their work. Fines can be as much as $10,000 a day under the law.
Remodeling work worth more than $10,000 now also has to go through the agency's dispute-resolution process. The building industry says the 2007 changes haven't been given a chance yet and could benefit homeowners.
Some of the new rules encourage builders to make repair offers quickly, and by doing so, avoid having their firm's name given the black mark of having built a “defective” home.
“It makes no sense to vaporize numerous homebuyer safeguards,” said Ned Muñoz, director of regulatory affairs with the Texas Association of Builders. “I think pulling the cord on the most readily available and cost-effective path to resolution is anything but constructive.”
To be or not to be
Abolishing the TRCC would return Texas to the days of unregulated homebuilding, Muñoz said. TRCC Executive Director Duane Waddill also said the agency's new powers just were starting to bear fruit. “We're starting to see really big changes,” he said. “Every day I get e-mails from people who say they have been through the process and their problems are getting resolved.”
Consumer groups say little of substance changed with the updates because the TRCC still lacks the authority to force a builder to repair a defective home. They also say the agency focuses too much on registering builders and collecting fees.
“If you're going to force this kind of process on homeowners, there ought to be some sort of guarantee they can get their homes fixed,” said Alex Winslow, executive director of Texas Watch, a consumer advocacy group. “Homeowners are the ones being regulated. They're the ones being told what they can and cannot do.”
Michael Moore, president of the Greater San Antonio Builders Association, said abolishing the TRCC would benefit only attorneys. “Before tort reform happened, trial attorneys were just eating our industry alive,” Moore said. “We wanted to do dispute resolution before it gets to court. Anybody who has had the misfortune of being in court knows it's a very expensive process and is pretty much only good for the attorney.”
Gary Javore, an attorney who often represents homebuilders, said the dispute-resolution process isn't perfect, but that it would be premature to abolish the agency. “I'd like to see the Legislature set another Sunset (Commission review) in another three years, and let's see how the TRCC functions now that it's got these additional powers,” Javore said. “It's created an incentive for builders to be more proactive.”
Rep. Allan Ritter, D-Nederland, authored the bill that created the TRCC and said consumers without the money to hire attorneys would be left with no way to resolve disputes without the agency. “The Legislature would be making a mistake by doing away with TRCC completely,” Ritter said. “Then you're back to nothing. That means my constituents that don't have the money or the power to hire attorneys or engineers have no place to go.”
Taking a toll
But some homeowners say the process is too slow. Joseph Newton, an Air Force dentist, has a TRCC ruling in his favor and now is suing his builder over foundation problems. “It has done nothing to quickly resolve the dispute, which is what the agency is supposed to do,” Newton said. “Absolutely nothing has been resolved. I built my house over three years ago and I can't believe it will be four years when we go to trial.”
But Newton is glad to have the state's inspection report to take to court. “We have an independent person who will tell us the builder is at fault,” Newton said. “That's something good that came from all of this.”
Most homeowners say they felt validated to have a state inspector rule on their side, and some have been able to parlay that into a resolution. Melissa Eldridge thought that going through the TRCC process helped her reach a settlement with her builder. Eldridge's agreement prevented her from talking about the specifics of the settlement, but she and her family no longer live in the home, and they are building a new one with a different builder. “I'm driving the builder crazy,” she said. “But they know what we've been through.”
Some homeowners give up after the dispute resolution process. They either can't afford an attorney to continue the fight or decide it's not worth the continued energy and expense.
A state inspector sided with Miguel Mendez when he had problems with water leaks on a balcony of his new home. Then his builder went out of business. Mendez figured a lawsuit would waste more time and money. Mendez did the work himself. Then the flooring subcontractor turned up, threatening to file a lien against his house because the builder had never paid him. “That had me more stressed out,” said Mendez, who paid the man $5,000. “It was a sore subject in my life. It was a difficult time, but we've been able to move on.”
For other homeowners the fight becomes a battle of wills. Leslie Firestone will go to arbitration in November after more than three years of trying to get the builder to address problems with her house. “You get to a point in this whole process where you're in it so deep you really can't back out. You're sunk,” Firestone said. “You can't back out, or they win.”
What's next?
Steiner, whose home has the extensive plumbing problems, will head for an arbitration hearing with his homebuilder later this year. Like many homebuyers, he signed a binding arbitration clause that prevents him from seeking a jury trial. He has already spent tens of thousands of dollars for attorney's fees and plumbers. The kitchen has only hot water. The downstairs toilet cannot be flushed. And he said that his builder in a recent mediation session offered just $5,000.
“The arrogance of the builders and the failure of the TRCC and the Legislature to protect homeowners is unbelievable,” Steiner said. “This process has gotten me nowhere. I just want my life back.”
The TRCC will be fighting for its survival this fall. The full Sunset Commission will consider the recent staff report at hearings Sept. 23-24 in Austin. It will give its recommendation to the Legislature in mid-December.
Rep. Todd Smith, R-Euless, said the recent Sunset Commission report is powerful, but so is the building industry. “You just can't deny that the agency was created originally with the significant backing of the building industry itself,” Smith said. “The political reality is you will not be able to move legislation that does not at least have the building community at the table. That is just the stark reality of politics in Austin. If they don't want to abolish the agency, I doubt very seriously the agency will be abolished.”
But public relations may demand change, Smith said, and those changes could reform the agency to better help consumers, especially those who have smaller claims against their builders and can't hire attorneys. “I think the commission's stated purpose is laudable, and that's to provide consumers an alternative to expensive and time-consuming litigation with builders. There's nobody that's against that purpose,” Smith said. “The question is, are they accomplishing that objective?”
That's something the 2009 Legislature will have to answer.
San Antonio attorney Trey Wilson regularly represents owners in defective construction and residential construction claims against builders. Trey Wilson is intimately famliar with the TRCC SIRP (state sponsored inspection process), and the presentment of TRCC claims against unscrupulous builders. Trey Wilson has served as the homeowners' lawyer in various lawsuits filed against builders who have abandoned residential construction projects, and failed to pay subcontractors and/or suppliers, who, in turn, file liens.
27 August 2008
Excerpts from the August 2008 Staff Report of the Texas Sunset Commission on the Continued Viability of the Texas Residential Construction Commission
NOTE: In 1977, the Texas Legislature created the Sunset Advisory Commission to identify and eliminate waste, duplication, and inefficiency in government agencies. The 12-member Commission is a legislative body that reviews the policies and programs of more than 150 government agencies every 12 years. The Commission questions the need for each agency, looks for potential duplication of other public services or programs, and considers new and innovative changes to improve each agency’s operations and activities. The Commission seeks public input through hearings on every agency under Sunset review and recommends actions on each agency to the full Legislature. In most cases, agencies under Sunset review are automatically abolished unless legislation is enacted to continue them.
The following are DIRECT EXCERPTS from the Sunset Commission's Staff Report on the TRCC:
Summary
Current regulation of the residential construction industry is fundamentally flawed and does more harm than good.
Ultimately, the Legislature will need to decide the approach for overseeing this industry. This report presents an opportunity to have a more comprehensive discussion of dispute resolution and legal processes available to homeowners and the regulation of the residential construction industry as a whole.
"The Texas Residential Construction Commission was never meant to be a true regulatory agency with a clear mission of protecting the public. It has elements of a regulatory agency in its registration of homebuilders, but this program is not designed to ensure that only qualified persons can enter the field – the way true regulatory agencies work – and so does not work to prevent problems from occurring. The Commission also has tools for taking enforcement action, but the ease of satisfying the registration requirements and significant gaps in who must be registered make it easy for even problem builders to stay in business. The Commission also administers the State Inspection Process, designed to resolve disputes between homeowners and builders before either party may pursue legal action. Th is lengthy and sometimes difficult process has been a source of frustration for homeowners trying to address defects with their homes. Despite changes last Session ostensibly to strengthen the process by making builders subject to new penalties if they refuse to off er repair of a confirmed defect, the Commission still has no real power to require builders to make needed repairs. Because homeowners must submit to this process before they may seek remedies in court, those who fail to satisfy its requirements either out of confusion or frustration lose their access to court. No other regulatory agency has a program with such a potentially devastating effect on consumers’ ability to seek their own remedies.
The cumulative impact of these programs is a greater lack of trust than is seen
with other regulatory agencies. People do not trust the regulatory processes to protect them from unqualified builders who should not be in business. Homeowners do not trust the State Inspection Process to help fix defects in their houses. When confronted with the daunting issues involved in controlling such a large, important, and complex field as residential construction, Sunset staff did not trust that the commitment exists to establish the true regulation needed for the protection of the public.
In its review of the Texas Residential Construction Commission, Sunset staff concluded that anything short of a true regulatory program does more harm than good, and should be abolished. Despite recent improvements in the State Inspection Process regarding satisfactory offers of repair, the process is still ineffective and likewise needs to be abolished. The Commission cannot require needed repairs, and the Process potentially threatens the Commission’s ability to objectively enforce regulations. Although agency staff work diligently to implement regulations and help consumers navigate the various processes for redressing complaints, good intentions are not a substitute for having adequate statutory tools.
Issue and Recommendation
Issue 1
The Texas Residential Construction Commission Fails to Provide Meaningful Oversight and Public Protection Because of Fundamental Structural Flaws in the Current Regulatory Approach.
Key Recommendation
Key Findings The Legislature created the Texas Residential Construction Commission to be a different type of regulatory agency – providing both industry oversight and an inspection service.
Registration does not provide an effective mechanism for adequately protecting the public and regulating the residential construction industry.
The State Inspection Process requires a heavy investment of resources and is ineffective in requiring meaningful results.
Other agency functions do not add value, distract from the Commission’s main duties, and confuse many homeowners.
The overall regulatory scheme for residential construction has broad impacts beyond the agency’s purview, leading to considerable consumer distrust.
While most other states regulate builders, the majority do so with more rigorous licensing programs.
Fundamental flaws with current industry regulations and the expansion of regulation needed to fix them make it difficult to justify either continuing down the current path or overhauling the State’s approach.
Conclusion
From its inception, the Texas Residential Construction Commission has received criticism of its ability to eff ectively oversee builders and protect Texans from poor quality construction. Although the Legislature recently listened to these concerns and made significant changes to the Commission and its enforcement abilities, these eff orts only mask fundamental flaws in the State’s current approach to industry regulation. To fix these structural flaws would require an expansion of industry regulation that Sunset staff concluded cannot be accomplished in the near future. Without true regulation designed to ensure public protection, Texans are better served without the Texas Residential Construction Commission.
San Antonio Attorney Trey Wilson has significant experience in residential construction claims, and the Texas Residential Construction Commission SIRP and complaint processes. He regularly represents owners in claims against registered builders. Trey Wilson may be contacted at www.sa-law.com or 210/223-4100.
The following are DIRECT EXCERPTS from the Sunset Commission's Staff Report on the TRCC:
Summary
Current regulation of the residential construction industry is fundamentally flawed and does more harm than good.
Ultimately, the Legislature will need to decide the approach for overseeing this industry. This report presents an opportunity to have a more comprehensive discussion of dispute resolution and legal processes available to homeowners and the regulation of the residential construction industry as a whole.
"The Texas Residential Construction Commission was never meant to be a true regulatory agency with a clear mission of protecting the public. It has elements of a regulatory agency in its registration of homebuilders, but this program is not designed to ensure that only qualified persons can enter the field – the way true regulatory agencies work – and so does not work to prevent problems from occurring. The Commission also has tools for taking enforcement action, but the ease of satisfying the registration requirements and significant gaps in who must be registered make it easy for even problem builders to stay in business. The Commission also administers the State Inspection Process, designed to resolve disputes between homeowners and builders before either party may pursue legal action. Th is lengthy and sometimes difficult process has been a source of frustration for homeowners trying to address defects with their homes. Despite changes last Session ostensibly to strengthen the process by making builders subject to new penalties if they refuse to off er repair of a confirmed defect, the Commission still has no real power to require builders to make needed repairs. Because homeowners must submit to this process before they may seek remedies in court, those who fail to satisfy its requirements either out of confusion or frustration lose their access to court. No other regulatory agency has a program with such a potentially devastating effect on consumers’ ability to seek their own remedies.
The cumulative impact of these programs is a greater lack of trust than is seen
with other regulatory agencies. People do not trust the regulatory processes to protect them from unqualified builders who should not be in business. Homeowners do not trust the State Inspection Process to help fix defects in their houses. When confronted with the daunting issues involved in controlling such a large, important, and complex field as residential construction, Sunset staff did not trust that the commitment exists to establish the true regulation needed for the protection of the public.
In its review of the Texas Residential Construction Commission, Sunset staff concluded that anything short of a true regulatory program does more harm than good, and should be abolished. Despite recent improvements in the State Inspection Process regarding satisfactory offers of repair, the process is still ineffective and likewise needs to be abolished. The Commission cannot require needed repairs, and the Process potentially threatens the Commission’s ability to objectively enforce regulations. Although agency staff work diligently to implement regulations and help consumers navigate the various processes for redressing complaints, good intentions are not a substitute for having adequate statutory tools.
Issue and Recommendation
Issue 1
The Texas Residential Construction Commission Fails to Provide Meaningful Oversight and Public Protection Because of Fundamental Structural Flaws in the Current Regulatory Approach.
Key Recommendation
Abolish the Texas Residential Construction Commission and repeal the Texas Residential Construction Commission Act.
Key Findings The Legislature created the Texas Residential Construction Commission to be a different type of regulatory agency – providing both industry oversight and an inspection service.
Registration does not provide an effective mechanism for adequately protecting the public and regulating the residential construction industry.
The State Inspection Process requires a heavy investment of resources and is ineffective in requiring meaningful results.
Other agency functions do not add value, distract from the Commission’s main duties, and confuse many homeowners.
The overall regulatory scheme for residential construction has broad impacts beyond the agency’s purview, leading to considerable consumer distrust.
While most other states regulate builders, the majority do so with more rigorous licensing programs.
Fundamental flaws with current industry regulations and the expansion of regulation needed to fix them make it difficult to justify either continuing down the current path or overhauling the State’s approach.
Conclusion
From its inception, the Texas Residential Construction Commission has received criticism of its ability to eff ectively oversee builders and protect Texans from poor quality construction. Although the Legislature recently listened to these concerns and made significant changes to the Commission and its enforcement abilities, these eff orts only mask fundamental flaws in the State’s current approach to industry regulation. To fix these structural flaws would require an expansion of industry regulation that Sunset staff concluded cannot be accomplished in the near future. Without true regulation designed to ensure public protection, Texans are better served without the Texas Residential Construction Commission.
San Antonio Attorney Trey Wilson has significant experience in residential construction claims, and the Texas Residential Construction Commission SIRP and complaint processes. He regularly represents owners in claims against registered builders. Trey Wilson may be contacted at www.sa-law.com or 210/223-4100.
25 August 2008
Time to Abolsih the TRCC?
This editorial was taken directly from the San Antonio Express News, and appeared on August 25, 2008:
On paper, the Texas Residential Construction Commission sounded like a good idea. The Legislature created it during the 2003 session to resolve disputes between homeowners and homebuilders and keep those disputes from entering arbitration and an already-clogged court system.
The commission might have been a model for homebuilder dispute resolution. But from the very start, it was plagued by political missteps that doomed it to failure.
Critics contended that the resolution process was already stacked against homeowners before the commission went to work. So it was incumbent on lawmakers and Gov. Rick Perry — who appoints the nine commissioners — to create a new entity that leveled the playing field.
That wasn't likely to occur in Austin, where the campaign contributions and lobbyists of builders and developers are a potent force.
What happened, in fact, is that they tilted the field even further in the homebuilders' direction. By statute, six of the nine commission seats are designated for representatives of the homebuilding community. And the prescribed procedures placed additional costs and burdens of proof on homeowners.
The Texas Residential Construction Commission came up this year for its first review by the Sunset Advisory Commission. The sunset review process is supposed to eliminate waste and inefficiency in state agencies.
The sunset panel found a construction commission that was “fundamentally flawed.” “It's really doing more harm to homeowners than good,” the panel's executive director told the Express-News Austin Bureau.
The Sunset Advisory Commission recommends abolishing the Texas Residential Construction Commission. That's a recommendation that will be challenged mightily in the halls of the state Capitol.
But lawmakers — especially those inclined to rail against government waste — should heed the sunset review recommendation. More than being abolished, this once-promising, now-failed commission needs to be demolished.
On paper, the Texas Residential Construction Commission sounded like a good idea. The Legislature created it during the 2003 session to resolve disputes between homeowners and homebuilders and keep those disputes from entering arbitration and an already-clogged court system.
The commission might have been a model for homebuilder dispute resolution. But from the very start, it was plagued by political missteps that doomed it to failure.
Critics contended that the resolution process was already stacked against homeowners before the commission went to work. So it was incumbent on lawmakers and Gov. Rick Perry — who appoints the nine commissioners — to create a new entity that leveled the playing field.
That wasn't likely to occur in Austin, where the campaign contributions and lobbyists of builders and developers are a potent force.
What happened, in fact, is that they tilted the field even further in the homebuilders' direction. By statute, six of the nine commission seats are designated for representatives of the homebuilding community. And the prescribed procedures placed additional costs and burdens of proof on homeowners.
The Texas Residential Construction Commission came up this year for its first review by the Sunset Advisory Commission. The sunset review process is supposed to eliminate waste and inefficiency in state agencies.
The sunset panel found a construction commission that was “fundamentally flawed.” “It's really doing more harm to homeowners than good,” the panel's executive director told the Express-News Austin Bureau.
The Sunset Advisory Commission recommends abolishing the Texas Residential Construction Commission. That's a recommendation that will be challenged mightily in the halls of the state Capitol.
But lawmakers — especially those inclined to rail against government waste — should heed the sunset review recommendation. More than being abolished, this once-promising, now-failed commission needs to be demolished.
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Trey Wilson --Named By Scene in SA Magazine As One of San Antonio's Best Real Estate Litigation Attorneys -- September 2008 -- As voted on by peers