Chrysty Hoppe, The Dallas Morning News (choppe@dallasnews.com)
8/19/2008

[highlights added] A powerful state agency recommended Tuesday that the Legislature abolish the 5-year-old Texas Residential Construction Commission, which was supposed to protect consumers but has been criticized since its inception as a boon for homebuilders.

The staff recommendation to the Texas Sunset Commission, which periodically reviews all state agencies, outlined its unusual findings in blunt language, saying there is insufficient resolve for true licensing and regulation of the powerful homebuilding industry in Texas and so the Legislature meeting in January should raze the TRCC.

The recommendation from the staff is generally drafted into a bill that is taken before the Legislature.

"Isn't it a wonderful day? I'm singing," said Janet Ahmad, executive director of the Texas chapter of HomeOwners for Better Building, a consumer protection group.

She said the TRCC does more to hamstring homeowners than help them, subjecting them to a costly and protracted process that rarely resolves serious defects. The whole agency is best dissolved because, "It caused more than a long delay. I call it torture," Ms. Ahmad said.

But the Texas Association of Builders, representing homebuilders, said it was disappointed with the "short-sighted recommendation that would harm consumers by returning Texas to the uncertainty of unregulated homebuilders."

A. Duane Waddill, TRCC executive director, said his agency ardently disagrees with the Sunset Commission staff and attributed the recommendation to "a basic misunderstanding of what we were created to do."

He said his agency's mission is to help resolve disputes between homeowners and builders through a cost-effective and accessible process, and not necessarily to regulate an industry.

Recognizing the need for some regulation, lawmakers last year added teeth to the process by giving the agency more power over homebuilders, including levying fines of up to $10,000 for failing to resolve problems.

Mr. Waddill pointed out that 28,000 builders are registered with the state and that 500 problem builders have lost their right to operate in Texas.

"We're going to do everything we can to come to the table with solutions to address everything they've addressed in the report," Mr. Waddill said, adding that he intends to persuade the Legislature to spare his agency.

The TRCC was created in 2003 with legislation touted as a way to weed out shoddy outfits and provide a way to resolve disputes without resorting to lawsuits.

But the Sunset review found basic problems:

• The lengthy process for determining legitimate complaints has caused distrust and frustration for homeowners. The average wait is eight months but has been as long as 20 months. If homeowners repair the defect in the interim, it invalidates their claim. And if they do not complete the process, they forfeit their right to sue. "No other regulatory agency has a program with such a potentially devastating effect on the consumers' ability to seek their own remedies," the report stated.
• Homebuilders must register with the state, but many - perhaps most - haven't. The registration process doesn't evaluate the "basic capability" of the builder. If they lose the right to build in Texas through fraud, repeated failure to fix problems or pay fines, they can simply list someone else in their shop as the registered agent. The state does not have the resources or ability to monitor.
• A survey showed 69 percent of homeowners who filed a complaint were dissatisfied. In 88 percent of the cases, the homeowner after going through the TRCC process still had to go to arbitration or a lawsuit to resolve the defect.

"Protecting practitioners is not the rationale for involving the power of the state," the report stated. "The need for regulations centers on protecting the public."

The original legislation was backed by Houston homebuilder Bob Perry, who is also the largest political donor in the state. His spokesman, Anthony Holm, said it was a rare case where the industry came to the Legislature and asked to be regulated.

"The goal of the TRCC is to ensure that the few bad apples among builders were weeded out. I believe the Legislature has the power to achieve that end and hope that they will," Mr. Holm said.

Source: http://www.dallasnews.com/sharedcontent/dws/dn/latestnews/stories/082008dntexsunset.41880d4.html

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