Next year’s session of the Texas Legislature could determine the fate of a controversial state agency it created five years ago to resolve disputes between homeowners and builders. In August, a report from the Sunset Advisory Commission, which evaluates different agencies’ performance, recommended the abolition of the Texas Residen-tial Construction Commission (TRCC), which the Legislature established in 2003 at the behest of home builders to provide owners with an alternative to litigation for getting construction defects fixed. Since TRCC’s inception, consumer advocates and homeowners have complained about its record keeping, its transparency, and its effectiveness. The Sunset Commission report notes that through the second quarter of fiscal 2008, TRCC had resolved only 12 percent of all the cases brought before it; the rest ended in either binding arbitration or mediation that critics insist favors builders. TRCC doesn’t require registered builders to be licensed, so it is “not designed to ensure [that] only qualified people enter the field,” the report says. And when TRCC’s 87 inspectors verify defects, the commission “has no real powers to require builders to make repairs.”
“I was in a state of shock at the Sunset report’s strong language,” says Janet Ahmad of the San Antonio–based consumer advocacy group Homeowners for Better Building and a vocal critic of TRCC.
In early September, TRCC rebutted the Sunset report, which TRCC officials insist didn’t factor in improvements the commission made after the Legislature raised its budget in fiscal 2008 (which ran September 2007 through August 2008) to $10.6 million from $3.2 million, allowing the commission to increase staff to 80 from 32 last spring. Patrick Fortner, a TRCC spokesman, says that from the second quarter of fiscal 2006 through second quarter fiscal 2008, TRCC had inspected 740 homes for defects and resolved 89 cases, or 12 percent; but as a result of fuller staffing, its performance in the last two quarters of fiscal 2008 improved markedly, to the point where TRCC had cumulatively resolved 337 of 1,071 cases, or 31.5 percent. On Sept. 1, TRCC also launched a county inspection program, which requires registered builders to conduct three inspections during construction, versus zero previously. TRCC also made other recommendations it is urging the Legislature to consider such as granting the Commission’s executive director emergency authority to dispatch a state inspector, hiring an attorney to represent homeowners in defect disputes, allowing the Commission to conduct voluntary mediation, and creating a recovery fund for consumers.
TRCC officials concede the commission’s arduous defect verification process—which takes anywhere from four to 20 months to complete—scares off owners, who must go through the process before pursuing legal action. “It’s been a frustration,” says Duane Waddill, TRCC’s executive director. Fortner notes that appeals have often been the sticking point. But Ahmad is less charitable in her assessment of the process, which she calls “the punishment phase of homeownership.”
The Sunset Commission will meet in December to vote on whether to accept or reject the report’s recommendations. A bill will then be presented to the Legislature next year calling for either TRCC’s renewal or demise. What would replace it is anyone’s guess. Ahmad favors a housing lemon law that funnels complaints through a state-run enforcement bureau that would give builders three chances to fix confirmed defects or require them to buy back the house. Waddill, on the other hand, thinks TRCC simply needs clarification about its purpose. “Our mission is to give a neutral, technical, professional assessment of a defect complaint,” he says. He rejects suggestions that more regulation or contractor licensing (which 28 states require) is needed to repair TRCC’s defects.
Learn more about markets featured in this article: San Antonio, TX.