House Bill 1038, a bill to address the flaws of the Texas Residential Construction Commission (TRCC pronounced trick), has passed the House and Senate and awaits the signature of the Governor. Unfortunately the bill provides nothing more than a shiny coat of paint to cover up the severely flawed foundation of the Commission. New homebuyers with costly new home construction defects will find little if any improvements to this Commission.
Representative Alan Ritter (D-Nederland) and Senator Troy Fraser (R-Horseshoe Bay,) the same pair who filed the original bill that created the TRCC disaster in 2003, filed HB1038 supported by the homebuilding industry. In the House hearing, over 30 homeowners testified till 4 in the morning on 12 different bills concerning the TRCC, yet only Ritter’s bill was voted out of the committee. Senator Fraser gave only 24 hours notice for the hearing in his committee to successfully limit participation from consumers. In the end, few significant changes for consumer protection were allowed into HB1038.
In Jan of 2006, the Texas Comptroller released a very detailed report including 16 specific recommendations to improve the Commission. HB1038 ignored all but four of the recommendations.
The composition of the Commissioners will continue to have a bias towards the homebuilders. The bill does includes a suggestion to the Governor to select consumer-oriented representatives to the three public positions, although this is only a suggestion and it is non-binding. The warranty standards were not changed, leaving a new home with only 1 year of protection. Foundations will continue to require “maintenance” with correct and ample watering techniques that the Commission cannot define or document. And homeowners will continue to pay a hefty fee to apply for the mandatory and extremely complicated State Sponsored Inspection and Resolution Process.
The homebuilders will claim the bill gives the Commission enforcement powers, the ability to issue cease and desist orders, and can levy fines up to $100,000, but they fail to say the bill also sets a very high threshold for enforcement. Action by the Commission requires a non-appealable decision in court against the builder, a very lengthy and unlikely process.
One of the major issues consumer organizations have addressed in the past has been the abuse of mandatory binding arbitration in new home contracts. Instead of protecting new homebuyers from this abuse, HB1038 only requires the homebuilders to clearly disclose that the contract contains the arbitration clause. There is no option available to the homebuyer to opt out of this arbitration clause.
Consumer organizations across the state asked for simple modifications to the bill such as extending the warranty standards, making the inspection process voluntary and free, and balancing the Commission with consumer representation yet they were ignored. Four years ago Representative Ritter and Senator Fraser ignored the consumer organizations. This year was no different.
On a fiscal note, the modifications in the bill will require 43 new paid positions in the TRCC at a cost of $7.5 million. This includes more attorneys, inspectors, and case investigators. Over the last four years millions of dollars collected in registration fees were returned to the general revenue fund. Now these funds will be used to further the TRCC bureaucracy with 43 new employees. The homebuilder’s representative during the House hearings claimed only .0018% of the new homes built in Texas over the last 4 years have required the use of the TRCC. If this is true, it is very hard to understand why the Commission requires 43 new employees at a cost of $7.5 million for these few cases.
HB1038 is nothing but a coat of paint to cover up a severely flawed foundation of the TRCC and until this foundation is corrected, new homebuyers with construction defects will be left with little if any consumer protection for the largest investment of their lifetime, their new home.
John R. Cobarruvias
Houston
President, Homeowners Against Deficient Dwellings, Texas
John R. Cobarruvias
Houston
