State-sought home fixes rarely made

Construction board lacks authority to have builders correct defects

04:50 PM CDT on Thursday, October 12, 2006

By PAULA LAVIGNE / The Dallas Morning News

Buyers of brand-new homes with cracked foundations, leaking roofs and other problems are still living with defects after turning to a state-run program designed to resolve their disputes with builders.

Good news: In about nine of 10 investigations, Texas officials have told builders to make repairs.

Bad news: Two years into the program, most builders haven't made the fixes.

The Dallas Morning News contacted more than 60 homeowners in North Texas who took their problems to the Texas Residential Construction Commission. Of the 23 who responded, only four said the builder made some or all of the repairs recommended.

The informal survey seems to echo the sentiment of a statewide review of 102 homeowners. Of those, 88 said the builder didn't make the repairs suggested by the commission, according to a state comptroller's office report released this year. Some of those included cases still being reviewed, commission officials said.

The Legislature formed the construction commission in 2003 to handle complaints about new homes. The commission investigates and recommends repairs, but it lacks the power to force builders to comply. As a result, homeowners and consumer activists have criticized the agency for its inaction.


Agency set to put complaints online
Visit the Wilson home, where cracks run through concrete, drawers don't open, and a ball rolls down the crooked mantle
Chat transcript: TRCC executive director Duane Waddill on reporting problems and getting information on builders
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Contact the commission at (877) 651-TRCC(8722) or by e-mail at info@trcc.state.tx.us
Agency officials said their rulings would help homeowners prevail in whatever legal action or other options the owners pursued. But owners say the rulings have not provided a boost.

Even builders acknowledge that progress has been slow, with only 35 percent of those involved in complaint investigations saying they've resolved their disputes with homeowners, according to agency reports.

"I'd like the number to be higher," said TRCC executive director Duane Waddill, who said he's personally investigating cases in which the builder is not cooperating.

Homeowners often find that if they don't get relief through the agency, their options are limited.

Some may opt for a private, fee-based arbitration hearing. An arbitrator's decision is legally binding, not subject to appeal and not made public, unlike a court judgment. Almost all large builders have mandatory arbitration clauses in their contracts. But arbitration can be a risk for homeowners, as some end up owing the builders.

Disgruntled owners can also file lawsuits if their contracts allow, but legal fees can mount.
Only fraction complain

Builder associations support the agency's oversight and say most homeowners are satisfied customers.
The 525 investigations initiated in two years with the TRCC represent about one-tenth of 1 percent of about 373,000 homes built and registered in Texas during that time.
Investigations can include multiple problems. Inspectors reviewed 7,730 alleged defects. They confirmed about 60 percent and suggested the builder make repairs, according to a TRCC report released last month.

Most cases with defects found were in homes built by custom or smaller-scale builders. The region's top 20 large-volume builders, such as D.R. Horton, accounted for fewer than 10 percent of cases with recommended repairs, according to a Morning News analysis of two years of TRCC records.

"We're focusing on a very, very small number of situations where ... communication and other things have broken down," said Scott Norman, vice president of governmental affairs and general counsel for the Texas Association of Builders.

"A lot of the time [defects] might be a minor paint blemish or ruffled carpet. Those are all getting repaired," Mr. Norman said.

Robert Martinez of Tyler said his builder blew him off for two years before he complained to the TRCC.
Water had seeped in from a leaky window and damaged his hardwood floors.

The TRCC inspector ordered the builder to fix the window, replace the floors and make other repairs stemming from a plumbing leak, Mr. Martinez said.

The builder started work within a month, Mr. Martinez said.

"I'm pretty satisfied," Mr. Martinez said. "I guess I was one of the few fortunate ones."
'Builder said no'

Sachse homeowner Jean Cogdell is still waiting.

TRCC officials ruled in February that her home's foundation shifted because the builder failed to properly prepare the soil. They recommended the builder consult an engineer on foundation repairs, improve the drainage and fix interior cracks.

"The builder said no," Ms. Cogdell said.

Now she, her husband and their attorney are assessing whether they should go to arbitration – required by their contract – or just pay for repairs themselves.

"Most [homeowners] are barred from filing lawsuits and are subjected to a biased and costly binding arbitration process," said Janet Ahmad, president of HomeOwners for Better Building, a national consumer advocacy group based in San Antonio. "Without enforcement authority, builders have no incentive to build homes correctly or even make

But Mr. Waddill said he's trying to do as much as he can within the TRCC's powers.

He described a recent encounter with a McKinney builder.

"I asked, 'What is your good faith effort? What are you doing to operate with integrity and honesty in the state of Texas? What actions are you taking to deal with this?' " he said, adding that the builder later offered the owners money for repairs.

Some builders say that they've offered to make repairs but that some demands are unreasonable.
Bradley Taylor, division president of Lennar Homes in Dallas, said his company agreed to make the TRCC-recommended repairs for an Allen homeowner more than two years ago, but the owner wanted more.

Mr. Taylor said, "If they called me today and said, 'Next Wednesday at 5 o'clock,' I'd make that [the repairs] happen. ... I feel like we've gone above and beyond."

Other options
Homeowners whose problems are not resolved by the agency are faced with myriad options that are often complicated and costly.

Irving homeowner Sam Lyle said it would cost up to $38,000 to repair his foundation. An attorney told him she thought he'd have a good case against the builder. But he can't afford her $500 fee.

"I don't intend to give up," he said. "Who knows, maybe $500 will just fall out of the sky."
Some smaller, custom homebuilders simply disappear or threaten bankruptcy if homeowners don't agree to a settlement.

Ms. Cogdell, whose Sachse home needs foundation repair, said builder Doug Buchar told her that he might file for bankruptcy if she continued the case.

Mr. Buchar could not be reached at several phone numbers.

The Cogdells' contract requires arbitration. Agreeing to that process means that both sides consent to bringing disputes before a private arbitrator, whose decision is binding. It also means that owners give up their right to have a judge or jury decide the case.

Guy Combs, a homeowner in Alpine in West Texas, said arbitration backfired for him. He lined up about 20 expert witnesses and provided several inspection reports to support his claims that builder negligence led to damaged stucco, a leaking roof and mold.

The arbitrator ruled against him, in part because, she said, he contributed to the damages. She ordered him to pay the builder $68,000 for legal fees, which he negotiated to $50,000.

Favoring arbitration
Builders favor arbitration over the courtroom because arbitrators come from a pool of people – attorneys, inspectors, appraisers – who have construction expertise. Critics of arbitration say those ties create a bias. They also suspect arbitrators prefer to side with builders because they want repeat business.

Jeff Adams, a home inspector in San Antonio who worked as an arbitrator, said he received a couple of cases a month until he decided a case in favor of a homeowner.
"I never got another assignment after that," he said.   

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