Chief Justice of Texas Supreme Court transmits "Call to Arms" to Legislature

On March 6, 2013, Chief Justice Wallace Jefferson addressed the Texas Legislature in the annual "State of the Judiciary" presentation.  Although traditionally considered a "health and funding" check on our state's courts, Justice Wallace characterized his speech this year as a "Call to Arms."

In his heartfelt address, which can definitely be considered as a departure from tradition, Justice Jefferson focused on a few universally important questions:

Is our system of justice is working for the people it has promised to serve? 

Do we have liberty and justice for all? 

Or have we come to accept liberty and justice only for some? 

With brutal honesty, Jefferson admitted that in many areas, the Texas judiciary falls far short of the standards set by a justice and equality-loving populace:

For those who can afford legal services, we have a top-notch judicial system. Highly qualified lawyers help courts dispense justice fairly and efficiently. But that kind of representation is expensive. A larger swath of litigation exists in which the contestants lack wealth, insurance is absent, and public funding is not available. Some of our most essential rights – those involving families, homes, and livelihoods – are the least protected. Veterans languish for months before their disability, pension, and educational benefits arrive. As a result of the recent financial crisis, lower- and middle-income homeowners and tenants face foreclosure and eviction. Ever-increasing numbers of consumers and small businesses have filed for bankruptcy. And few can afford a lawyer to guide them through these crises. 

The full transcript of the speech can be found HERE. It is most definitely worth a read.

Laws Setting-forth important rights you have as a homebuyer

When buying a home, you should consider several important considerations. Among them are finding competent representatives knowledgable in real estate and law to assist you. You should also be aware that the following provisions of law establish and protect your important rights as a homebuyer:

Consumer Credit Protection Act (1960) - Guarantees confidentiality of credit reports and allows consumers to correct inaccurate information in their reports.
Equal Credit Opportunity Act of 1975 (ECOA) - Prohibits the discrimination in any credit action based on race, sex, marital status, color, religion, age, handicap, or national origin.
Equal Housing Opportunity - Prohibits housing discrimination based on race, sex, marital status, color, religion, age, handicap, family status or national origin.
Fair Housing Act - Prohibits the discrimination based on race, sex, marital status, handicap, or national origin in any real estate transaction.
Federal Consumer Credit Protection Act (commonly known as the Truth in Lending Act) (1969) - Requires that lenders disclose the actual terms and conditions of a loan before an applicant commits to the loan.
Home Mortgage Disclosure Act (1975) - Provides information to help determine whether public institutions are assisting the housing needs of their communities and neighborhoods.
Real Estate Settlement Procedures Act of 1974 (RESPA) - Encouraging homeownership through consumer protection, this act regulates certain lending actions related to closing/settlement. Some of its provisions are:
RESPA requires lenders to provide buyers a good faith estimate of the cost of the loan, including disclosure of the Annual Percentage Rate (APR). RESPA requires lenders to provide buyers with general information about settlement costs. Lenders must provide buyers a copy of the Mortgage Servicing Disclosure Statement, regarding loan servicing and transfer. Within three days after receiving the loan application, lenders must provide the buyer with an estimate of closing costs and monthly payments. RESPA provides the borrower the opportunity to see the HUD-1 Settlement Statement one day before the actual settlement. Prohibits kickbacks between Real Estate professionals for referrals and prohibits fee-splitting and receiving unearned fees for services not rendered.
Regulation B of the Consumer Credit Protection Act - Requires lenders to inform potential borrowers of any adverse actions taken on their loan applications.
Regulation Z - Includes regulations related to consumer credit disclosures identified in the Consumer Credit Protection Act.
Veterans Housing Benefits Act (1978) - Increases the housing benefits for eligible veterans including increased loan amounts.

Trey Wilson is an experienced real estate lawyer in San Antonio. In addition, he is a licensed real estate agent, and is intimately familiar with the laws affecting buyers and sellers of real property in Texas. Trey Wilson was voted as one of San Antonio's best real estate litigation lawyers in San Antonio in August 2008.

FAQ - Home Registration with the TRCC

When did the home registration requirement begin?
Since January 1, 2004, the law has required all home builders and remodelers in Texas to register each qualifying home construction project with the commission.

What projects does the builder have to register?
The registered builder/remodeler must complete a Home Registration for: new homes; residential remodeling projects involving interior renovations exceeding $10,000; and, residential material improvements (a modification to the home that either increases or decreases the home's total square footage of living space and that also alters a perimeter wall, foundation or roof; e.g. room additions). For new homes built on the builder's lot, you must register and pay the fee no later than the 15th day of the following month in which the title transferred from builder to homeowner. If no title is transferred (e.g. home built on homeowner's lot or remodeling project), you must file the registration and pay the fee paid no later than the 15th day after: substantial completion of the project or upon the issuance of a certificate of occupancy or completion. You can register homes online.

What is the home registration fee?
The fee to register a home online is $25. If you use the paper registration form, it costs $40 per project. If your company registered more than 25 homes with the commission in the preceding calendar year, you must use the online registration system or file a waiver request in order to submit paper registration forms. You can pay the fee with cash, check, money order or credit card.

How long is the home registration process?
It can take up to 15 days, although online registration occurs overnight. The commission processes applications in the order received and there are no expedited methods of registration.

Are any residential construction projects exempt from home registration?
A home built by an individual (either alone or with the help of the individual's employees or independent contractors) and used as the primary residence for at least one year after completion or substantial completion of construction is exempt from registration. Home improvement projects that do not change the square footage of the home's living space or an interior renovation that does not exceed $10,000 during a 12-month period are also exempt. Please note that the $10,000 threshold only applies to interior renovations, not material improvement projects.

Why do builders have to register their projects?
The law requires that builders register all qualified projects. Registration helps to identify newly constructed homes and remodel projects that are subject to the inspection process and that fall under limited statutory warranty and building and performance standards. The limited statutory warranty and building and performance standards apply to construction started after June 1, 2005.

How will the TRCC enforce the home registration process?The commission has the authority to levy severe penalties against builders or remodelers who fail to register a home. Sanctions can range from disciplinary actions, such as a reprimand, a suspension or revocation of a builder or remodeler registration to administrative penalties, which can reach as high as $10,000 per violation.

Can a person building his/her own home register the home without registering as a builder?Individuals who build their own home and plan to live there for at least one year do not have to register as a builder and do not have to register their home. That home also is exempt from the state-sponsored inspection and dispute resolution process. If the owner sells the home within ten years of completion, you must disclose in the contract that the home or project is not subject to the minimum statutory warranties and performance standards.

Does the commission ever refund registration fees?
The commission only refunds registration fees that involve commission errors/typos. According to policy, the commission generally does not issue refunds due to builder/remodeler registration errors. Refunds may take up to six weeks to process.

What types of home construction projects require registration?
Builders/remodelers must register all single family homes, duplexes, certain townhomes and qualifying residential remodeling projects.

What is the definition of a townhome?
A townhome is a single-family dwelling unit constructed in a group of three or more attached dwelling units in which each unit extends from foundation to roof and with open space on at least two sides not more than three stories in height with a separate means of ingress and egress.

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.