Sun setting on homebuilding commission

(TX--Update) As means to regulate residential construction, TRCC “fundamentally flawed and does more harm than good.”

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Sun setting on homebuilding commission

Elimination of TRCC in 2010 could pose problems, some say

by Kate Harrington

One of the homebuilding industry’s largest regulating bodies, the Texas Residential Construction Commission, has been allowed to sunset by the 81st Legislature, which some say could lead to more litigation in the court system and less oversight of builders.

The TRCC’s official mission is to promote quality construction by registering industry members and projects, providing information and education to homeowners and acting as a resource for complaints.

In the first six months of the TRCC’s fiscal year, which begins in September, it fielded 358 requests for inspections from homeowners and received 1,137 complaints about builders from homeowners, said Duane Waddill, executive director of the TRCC. During that period, it fined 123 builders a total of $143,545.

Although it registers homebuilders, the TRCC was never meant to act as a true regulatory agency, a role it has nonetheless awkwardly fallen into, according to a report from the Sunset Commission published earlier this year. The TRCC oversees a state inspection process designed to resolve disputes between homeowners and builders before either party pursues legal action. But as a means to regulate residential construction, the process is “fundamentally flawed and does more harm than good,” the Sunset Commission concluded.

“Despite changes last session ostensibly to strengthen the process by making builders subject to new penalties if they refuse to offer repair of a confirmed defect, the commission still has no real power to require builders to make needed repairs,” the Sunset Commission’s report said. “Because homeowners must submit to this process before they may seek remedies in court, those who fail to satisfy its requirements either out of confusion or frustration lose their access to court.”

Still, some homebuilders said the construction commission did its job by keeping an eye on scurrilous builders across the state who were otherwise able to burn bridges from town to town without getting caught.

James Streetman, president of Austin-based Streetman Homes Ltd. LLP, said the industry is so large that it took a body like the TRCC to keep a comprehensive eye on contractors.

“The allegation that it was stacked in favor of builders isn’t true. I think they often ruled for the buyer,” Streetman said. “We thought the intent of the commission was very good — to eliminate people who shouldn’t be in the business and serve as an intermediary. … Unfortunately, it became political.”

The TRCC will cease to exist September 2010. Streetman said without the TRCC acting as a mediator, more disputes between buyers and homebuilders will enter the court system, although warranty providers could step into a mediation role once the commission is gone.

Scott Norman, executive director of the Texas Association of Builders, said consumers, more than homebuilders, will feel the impact of the TRCC’s absence because of the commission’s role in resolving disputes. Local and state homebuilder associations will have to take on much of that role, he predicted.

Mandatory warranties and performance standards required by law will also be left unenforced, Norman said.

“It really changes the game from a risk standpoint,” said George Schneller, risk consultant with IMA of Texas Inc., who is a former plaintiff’s lawyer. “While the TRCC was in existence, there were advantages realized by the homebuilders. Before a lawsuit alleging a construction defect, a home buyer was required to submit a claim to the TRCC and let that administrative agency investigate.”

Waddill said the TRCC gets many open records requests, and lists information on its Web site about builders, a resource that will go away with the commission.

“I encourage people to do a lot of homework before they spend a lot of money with a builder,” he said.

kharrington@bizjournals.com | (512) 494-2523 Katherine Cromer Brock of the Dallas Business Journal contributed to this report.

Reader Comments
(2) Comments

Janet Ahmad June 27, 2009 12:35PM EST
Goodnight and Good Riddance TRCC”TRCC was never meant to act as a true regulatory agency;” it was financed and crafted as a state agency by the building industry to serve its needs and to regulate new homebuyers. TRCC was the punishment phase of homeownership.While 92% of the homeowners who went through TRCC confirmed construction defects 88% got nothing corrected. Many homebuilders even relied on TRCC for its warranty customer service by ignoring warranty requests or filed claims against their customers with their agency. Two state agencies reviewed TRCC and issued scathing reports. Even the trustworthy reputable builders publicly rejected TRCC. Unfortunately the growing exposure of the industry’s highly profitable but toxic deeds threatens the image of every aspect of the building industry. The fall out of TRCC is far from over for the industry. TRCC will for ever remain as the prototype for the need to regulate the industry. While this article attempts to sugarcoat the unpleasant smell of TRCC the agency will always be remember as the agency created “by the builders for the builders.”

marc kirsch June 27, 2009 7:22AM EST
Now that the builders have spoken why not ask those who had the unforunate experience of having a new home laden with defects how efficent TRCC was to their case?TRCC seemed to have a problem of believing the builder without investigating or doing its homework in my opinion. How many times were inspector's decison's overturned to support the builder after originally siding with the homeowner? What this state needs is an agency made up of consumer advocates and well respected engineers and home inpsectors + laws protecting the consumer.