A whole lot of talk yields little action

Homeowners wish mediation agency could force repairs

MINDY Brooks just wants her house fixed.

Shoddy construction left her Fort Worth home with a laundry list of problems, from loose floors in her kitchen to loose bricks in her entryway.

Dissatisfied with the builder's attempts to fix the defects, she went to the Texas Residential Construction Commission, a year-old state agency formed to resolve disputes between homeowners and builders.

The commission's inspector found more than a dozen defects. But the commission had no power to enforce its findings, leaving Brooks feeling helpless. She and her builder continue to butt heads over the terms of a contract that would start repairs on her home.

Brooks' case underscores the concerns of consumer advocates that the commission's lengthy process — required before consumers can pursue legal action — can leave many homeowners with the same options they would have had without it: expensive litigation or lengthy negotiations.

"The only positive thing TRCC provides for the home builder is a nonbiased third-party inspector," said Brooks, one of the first homeowners to go through the agency's dispute resolution process.

"That's really and truly the scope of their power."

Since its inception, the agency has received 104 requests for help through the formal dispute resolution process; 42 of those requests are open, and 24 were closed after the agency found for the homeowner. The rest are ineligible or are being processed, the agency said.

The agency does have some powers. Although it can't force a company to make the repairs it recommends, it can apply other pressures, such as revoking the builder's registration, assessing a fee capped at $5,000 per violation and asking the state attorney general to file an injunction against builders that violate commission rules.

But the disciplinary actions would be used only to enforce final orders or rulings, such as those that come from a court or arbitration proceeding, not the agency's recommendations, said Stephen Thomas, executive director of the agency.

No action taken

Homeowners, however, can submit the findings as evidence in court to pressure the builder. And some builders are quick to resolve matters. Others can't agree on fixes after the appeals process.

"It would be nice to be able to have a little more authority to help carry through some resolution on some of these things," he said." I think there certainly is concern that if there is a particularly egregious case and we go through the process, a builder could just continue to drag out the process and not resolve it."

The Texas Builders Association, which lobbied for the creation of the commission, said it's too early to say lawmakers need to alter the agency or its powers. Although the agency is a year old, it wasn't able to start processing requests for the resolution process until late last July.

"I think most would say, 'Let's give this agency and brand new process an opportunity to work,' " said Scott Norman, general counsel for the association.

Quick changes sought

"This agency is in its infancy, and it has a lot of growing pains to go through," she said. "But I would like to see lawmakers change the rules and give TRCC the power to make the builder follow through. It's a voluntary basis as to whether or not the builder fixes the construction defects. That is something that has to change."

Brooks' builder, Houston-based McGuyer Homebuilders, appealed the commission's findings but was still found at fault on several of the defects.

McGuyer, which builds under the brand names Pioneer Homes and Plantation Homes, has offered to make the repairs but wants Brooks to sign a contract that prevents any future owner of her house from making claims against the builder.

"I want to fix this, but I'm not going to sign away somebody else's rights," she said. "Plus, what homeowner would want to buy this home now?"

Ray Holan, general counsel for McGuyer Homebuilders, said the company simply wants to end any future claims once the repairs are made.

"We're just trying to get it in the document that once the work is done and an inspector looks at our work and says it's done the way it should be, then that's when all this is final," he said.

Consumer advocates worry that the commission's limited power is self-defeating, forcing some homeowners with uncooperative builders to turn to the court system — something the resolution process was supposed to help stop.

Further complicating matters, even if they want to go to court, many can't because clauses in their construction contracts force them into arbitration if a dispute arises.

The overwhelming majority of home builders have arbitration clauses built into their contracts, said John Cobarruvias, president of the Houston chapter of Homeowners Against Deficient Dwellings.

Although builders promote arbitration as a faster and cheaper alternative to the court system, the homeowner has no right to decline the mandatory process and hence no alternative, he said.

Concerns over arbitration have not escaped the attention of lawmakers.

To assess arbitration's effectiveness, the Legislature, in creating the commission in 2003, ordered the agency to submit recommendations to lawmakers later this month and told the agency to collect data on arbitration awards from builders or homeowners who volunteered the information.

Data in only one case

Cobarruvias can understand keeping the arbitration process private if consumers could choose whether they wanted to go through it.

"Now we're advocating the entire process should be regulated because it's mandatory," he said. "It's a private justice system the state is supporting. It should be regulated to the hilt."

purva.patel@chron.com