The much-maligned Texas Residential Construction Commission (TRCC), which was established six years ago at the behest of the state’s builders to provide a neutral assessment of homeowners' post-construction defect complaints, is in serious danger of being allowed to expire. What would take its place, though, to settle disputes between homeowners and builders, is anyone’s guess.
On Saturday, the Texas Senate voted to close the agency on Feb. 1, 2010. That decision follows a vote last December by the state’s Sunset Advisory Commission not to abolish TRCC, despite a forceful recommendation by its own staff to shut down the agency. Sen. Glenn Hegar, who sponsored a recently passed “safety-net” bill—which gives state agencies subject to “sunset” reviews a two-year extension if their continuation isn’t approved by both chambers of the Texas Legislature—stated that his “inclination” was to exclude TRCC from that bill and to allow the agency to “systematically wind down.”
Lawmakers in the Texas House have until June 1, when the current legislative session ends, to revive TRCC. A House bill—HR 2295, which provides greater consumer protections and strengthens the agency’s regulatory authority over builder licensing and defect mediation—does not appear to have enough support in the Senate to reverse its decision. Critics of the House bill have complained that its licensing provision exempts the 29,400 builders already registered with TRCC and doesn’t give the agency the teeth to force builders to repair defects that TRCC has affirmed.
The Texas Builders Association seemed to be waving the white flag when its executive director, Scott Norman, stated on Friday that his group’s attempts to rescue TRCC were running into legislative deadlines “that may not be overcome.”
Norman predicted that the abolishment of the Commission would lead to the disappearance of “mandatory warranties, building and performance standards that new homes must meet, a quicker and less costly alternative to resolve construction defects, and a database of builders with information regarding their work history. With the regulatory structure over builders eliminated, no mechanism will prohibit bad actors from entering or staying in the home building industry.
“If the TRCC is eliminated,” added Norman, “the real losers are the consumers who will find themselves with nowhere to turn.” Some consumers did not agree: “They have nowhere to turn now,” one retorted after reading Norman’s comments in the Houston Chronicle.
Ever since it came into being in 2003, the TRCC has been castigated by critics and homeowners as being too builder friendly. (To this day it continues to be framed as the brainchild of Perry Homes’ politically connected owner Bob Perry, whose general counsel reportedly crafted the bill that created the agency.) TRCC hasn’t helped itself over the years by its less-than-transparent record keeping and low defect-resolution rate.
A tripling of its budget last year allowed TRCC to hire more inspectors and resolve significantly more cases over the past several months. Its executive director, Duane Waddill, told BUILDER last December that he thought too many people misunderstood the TRCC’s mission, which is focused on identifying whether consumer complaints are valid and providing them with an avenue to settle disputes without resorting to litigation.
But the inspection process, while averaging fewer than 100 days during the second quarter of 2009 (versus 206 days for the same quarter a year ago), is considered by critics and some lawmakers to be too complex and cumbersome for homeowners. And a still-high number of TRCC’s findings that favor homeowners get reversed or modified on appeal.
If TRCC goes away, what would take its place? Some consumer advocates, such as Janet Ahmad of the San Antonio–based consumer advocacy group Homeowners for Better Building, have been beating the drum for a state-run enforcement bureau. Others remain convinced that the courts are homeowners’ best recourse, which would be the last thing most builders would want.
Until some kind of substitute body comes into play, Hegar, the state senator, stated his belief that federal construction codes and “common law” would ensure safe building practices and warranty enforcement.
John Caulfield is a senior editor with BUILDER magazine.
Learn more about markets featured in this article: Houston, TX.