House Bill Gets Passed by the Texas 80th Legislature - Defies All Logic
By: Jordan Fogal & Amy Rosier
A vote of 138 to 1 for HB1038's passage looked like the legislature was pretty much unanimous, a overwhelming success. - Wrong! It was the legislator's only available option to attempt to make things a little better for homeowners.
This Texas Construction agency is not going to protect the homeowners no matter what kind of spin they put on it. This is all semantics.
The Texas House gave the commission more authority to discipline builders who don't register with the TRCC. Builders were already supposed to register; but the new bill makes 'failure to register' a Class A misdemeanor, with up to one year in jail, and a $4,000 fine.
Is the punishment actually going to be imposed on anyone accept the small builders? These registrations insure more revenue for the state, compliments of the big builders. In return, the big builders are protected from responsibility for shoddy workmanship and substandard construction. This is a hardship for the small builder. Could this be big business' way to dispose of the small builder?
The sponsor of House Bill 1038, Rep. Allan Ritter, D-Nederland, did actually admit that the Texas Residential Construction Commission 'has had problems'; but was quick to add "The builders wanted an agency to help resolve disputes between the builder and consumer...to prevent lawsuits." How could anyone say that and keep a straight face? Everyone in Texas knows the TRCC was at the request of the builders. Of course, the builders wanted it. We all know they wanted it; they bought it; and they run it. There would be no need for lawsuits if the builders built quality housing. We also know they do not want a jury, in open court, to see pictures of the defective and substandard construction. They do not want the public to know about what horrible fraud and misrepresentations they are making. Arbitration clauses and the TRCC allow them to get away with shoddy building, just fine. Builders want everything behind closed doors. Secrets; after the word "secrets", comes "lies."
That is why they created the TRCC and Mandatory arbitration. They can hide it all with the Legislature, the State Affairs Committee, and the people who are supposed to protect us, covering for them.
The House rejected an amendment to require builders to buy back houses with defects that create a safety hazard, substantially impairing the use of the home; or a defect, which cannot be fixed, decreases the home market value by more than 5%.
Of course, the idea was rejected that builders who built houses with SERIOUS defects should have to buy them back. The homebuilders, commission, and the state affairs committee think the homeowners should be stuck with them. Even, if they are so poorly constructed the homeowner cannot live in them. The big builder should not have to take the blame; after all, he just took the homeowners' money.
This is big business; a man's word is no longer his bond. He is a faceless entity who never has to look the people he has destroyed.
He never has to watch families go into bankruptcy or foreclosure because they cannot afford to repair the house he built. He doesn't have to watch the families move their things and their children because of him. He can just brag about his bottom line and give to charities to ease his conscience and make himself look like a big man.
Those 83 representatives should be forced to live in our houses. If Sam Houston was still alive, I think he would have beaten them all with his cane. Yes, a lot of things were masked and the spin on it would not fool a small child.
Rep. David Swinford, R-Dumas, chairman of the House State Affairs Committee, claimed a lemon law would add to the cost of everybody's house.
Rep. Senfronia Thompson, D-Houston, shot back: "I'm not trying to protect unscrupulous builders." It was, however, obvious that other members there were trying to do just that; and she made it quite apparent that she knew who was.
I think Representative Swinford, R Dumas should have taken the opportunity during the State Affairs hearing to ask if any of us expected that we would being living with toxic mold. He should have asked after the health of our children. He should have asked if we paid a FAIR price for our houses with cracked slabs, faulty foundations, leaking roofs, commodes that didn't flush and windows that were installed upside down. He should have showed some concern for the browbeaten attendees. To the contrary, the only time he genuinely appeared interested, he jerked his head up and growled at Fred Lewis of Clean Up Texas Politics. Mr. Lewis had referred to the fact that in Ms. Strayhorn's investigation of the TRCC; it was proven that 86% of the TRCC claims were handled incorrectly. Rep. Swinford glared and spit out the words, "She had no legal right to investigate the TRCC."
I thought the better response would have been. "86% of the claims handled wrong; we'll have to look into that, and fix it." I felt his anger was a little misplaced.
Eighty six percent of consumer complaints weren't handled correctly by the TRCC. In addition, they have a 91% increase in complaints in two years, so does every state agency that will accept one. We do agree there are complaints.
As one of the overflow crowd that waited until the wee hours of the morning to testify before the State Affairs Committee, I am disgusted with the politics-as-usual in Austin.
One day we all have to answer for our mistakes and after listening to the horror stories at the State Affairs committee. I would hate to have to answer for what these builders have done. I would hate to be associated with the committee that helped cover for them.
Ritter said the legislation would give the commission more tools to take action against bad builders without burdening the industry.
Excuse us, we the subjects would not want to further burden the building industry. Give the commission more tools? Why do they need more tools? Tools is a good choice of words. Maybe if the builders used them correctly, they would not be doing such shoddy work. These builders need an agency to force them to use tools correctly. The TRCC is not that agency. The TRCC is not going to do a thing other than say, "Play nice." or give them, a "That's a no-no." For example: The TRCC had a builder who was thrown out of the Better Business Bureau, built 37 of 44 houses with major defects, some uninhabitable, committed fraud, did not pay court-filed judgments, and had a felon as their director and agent. The TRCC really slapped their hands... They did not let them register yet another alias that week; and gave them the option of just withdrawing their request, so the TRCC wouldn't have to deny it. Now what good are tools or teeth going to do this kitty cat? I am sure this builder is just terrified after his punishment and will build quality houses. Or, will he take advantage of another entire subdivision of homeowners?
The bill now allows the commission to discipline builders who fail to repair a defect. The agency can issue cease-and-desist orders to close a business and can levy fines up to $100,000.
Rep. Craig Eiland, D-Galveston, objected, saying the commission couldn't enforce those penalties until the builder exhausts his legal appeals.
How wonderful of Rep. Eiland D to try to bring some sanity into the process. Now that HB1038 has passed, I wonder just where are the homeowners supposed to live while the builder gets to go to court? The homeowner is not allowed the privilege of going to court. The homeowner is forced into mandatory arbitration. This is another great example of the haves and have-nots. By the time the builder has exhausted his appeals, the homebuyer will be the home-less.
This statement is also so ludicrous, because he says it so cavalier. Rep Ritter, do you hear what you said? You said it, as if we the Texans still had the right to go to court. You said people would not choose... We have no freedom of choice. We have no seventh amendment rights. We cannot buy a new house in Texas unless we give up our constitutional right to a trial-by-jury.
Ritter knows that binding arbitration clauses are in all new home contracts that strips the homeowner of his right to ever go to court. Yet, he can stand up in front of a whole room of other well-educated legislators and the rest of the world (through video) and unashamedly admit that the homebuilder retains the right to litigate their case in the courts. Astonishing!
Before HB1038, the commission had no way to force a builder to make repairs. They could pull their registration; but they only did that to tiny builders with a couple of houses, not to the big builders with hundreds or thousands of houses and lots of money. Suggestion: just pull their registration - then they cannot build until they clean up their mess. They have no incentive to build a better house. They do, however, have a lot of incentives to build the cheapest house they can and dump it on the public. No skin off their nose that this house won't last the term of the mortgage.
I do not believe the commission will discipline the big builders to any extent that would make them professional builders. They are not the least bit intimidated by the TRCC. They go into the TRCC, do not tell the truth, use different houses and the TRCC makes out like they do not know it. The TRCC does not even let the person who filed the complaint be there, and they accept whatever the builders' lawyers tell them.
How long does a homeowner have to live in a defective home before the TRCC will levy a fine of any substantial amount against a builder? Some of these houses have over 150,000 worth of damage.
Many of the complaints that TRCC received were against the same builders. TRCC severely punished one, who was especially egregious, by not allowing them to register yet another alias that week. That showed that bad builder.
And what did the TRCC do to them? Nothing. A builder commits fraud and lies to a state agency and there are no repercussions? But now, that we have tools to control them; this bill, HB1038, is going to make them behave? I bet they are just terrified.
The House also rejected an amendment to increase the number of public-interest members on the TRCC's panel.
Surprise! Surprise! The TRCC has worked just as it was intended to since it inception in 2003; why change it. The TRCC is not for the public interest; it was created for the greedy and wealthy homebuilders to absolve themselves of any aggravations from the little people they had fleeced.
With a 92-to-47 vote, the House refused to make TRCC's arbitration process optional for the homeowner, after Ritter said it would gut the purpose of the commission.
We all know the purpose of the commission. That is why it is mandatory. No homeowner would voluntarily subject himself or herself to the red taped, builder-owned agency with the delays they have to put up with and pay for.
The legislative branch created these problems by allowing the TRCC to be "purchased" by the building industry. The State of Texas allowed the arbitration to be spawned right here. All of us know it. If you haven't gotten the whole scoop yet, please read, Blocking the Court House Door by Stephanie Mencimer. It will tell you, not only that it started here in the great state of Texas, but it also will tell you exactly who did it.
HB1038 now requires every builder to take five hours of continuing education every five years.
Will the builder take the course, or will one of the supervisors, or will one of the workers? Bob Perry, David Weekly, and my builders (Thibodeau, Al Banna and Jorge Casimior) are finally going to be forced to go to school to learn the proper way to construct a home?
If a builder cannot build 90% of the houses in a subdivision correctly, how is he supposed to all-of-a-sudden know how to repair them? How many times does he get to tear the homeowners' house up? Where is the homeowner supposed to live while all this is going on? The homebuilders say the homeowners have to move their own furniture out. They are responsible for moving it out, moving it back in, and cleaning up the mess. The homeowner also has to re do the yards the builders tear up when they are pretending to fix defects. They do not fix they patch until warranties are no longer in effect. It is all a well-orchestrated act. How long does a homeowner have to deal with incompetence?
Started at the 3:22 timestamp on the archived broadcast
http://www.house.state.tx.us/media/chamber/80.htm. Click on 04/24/07, 1:15 pm - 9:06 pm. RealPlayer or RealOne Player (or equivalent) software is required to access video/audio broadcasts. For the free copy of this software, download the "player only" or "basic" version from www.real.com.
Rep. Craig Eiland
At timestamp 3:28, he questions the correlation of Section 15, Sec. 418.001, subsection (a)(12) of HB1038 AND subsection (b) on page 10.
[SECTION 15. Sections 418.001 and 418.002, Property Code, are amended to read as follows:
Sec. 418.001. GROUNDS FOR DISCIPLINARY ACTION. (a) A person, including a builder, a person who is designated as a builder's agent under Section 416.006, or a person who owns or controls a majority ownership interest in the builder, is subject to disciplinary action under this chapter for:]
[(12) engaging in statutory or common law fraud or misappropriation of funds, as determined by the commission after a hearing under Section 418.003;].
(b) For the
purposes of Subsection (a)(12), the commission may not revoke a registration
or impose an administrative penalty
unless the determination of statutory or common law fraud or
misappropriation of funds has been made in a final nonappealable judgment
by a court.
Rep. Eiland stated at the 3:30 timestamp: "So, for all the stuff you said about how tough they're going to be for misappropriating funds or committing fraud on our constituents, the commission can't do anything, disciplinary-wise, until there has been a case filed in court; and that case becomes final and nonappealable."
(b) The commission may not revoke a registration or certification unless the conduct that was the basis for the revocation was committed during the 12 months preceding the date of the revocation and involves four or more homes registered by the builder or at least two percent of the homes registered by the builder under Section 426.003, whichever is greater. This subsection applies only to acts involving transactions between a builder and a homeowner.
Amendment 12 (timestamp 3:56) sounded so good when summed up by McClendon. She said this amendment adds a disciplinary violation if a builder fails to obtain a requisite permit, and it adds a disciplinary violation for a builder who abandons or willfully fails to perform, under the improvement or construction project contract if found by a final, nonappealable judgment of a court, to have done so without justification.
I liked: Amendment 13 (timestamp 3:57). Again, it sounded so promising when summed up by Rep. Gattis. He said, simply that this amendment lets the Attorney General to go after bad actors as well, so they can get their attorney fees and costs back. My thought was, "Oh good the Attorney General can now help homebuyers." Wrong! When you look at the actual amendment this new rule only applies WHEN the Attorney General sues for injunctive relief, which is an order, issued by a court, usually telling a party to refrain from doing something.
[(e) The attorney general and the commission may recover reasonable expenses incurred in obtaining injunctive relief under this section, including court costs, reasonable attorney's fees, investigative costs, witness fees, and deposition costs.]
So even if the Attorney General does get involved, the only thing he or she can do, is stop a builder from continuing business as usual. Under this amendment, the Attorney General can't do anything to help the original homebuyer, who filed the complaint. I've heard that the Texas Attorney General can't or won't do anything against homebuilders. Correct me if I'm wrong, but it still looks that way to me. Do you think the fact that Abbott has received $1.1 million from Mr. and Mrs. Bob Perry since 2001 might have something to do with it, huh?
I liked: Amendment 16 (timestamp 4:01) by Rep. Gattis. It requires that, during the first year a builder is registered with the commission, the builder must complete five hours of continuing education, one hour of which must address ethics. The same requirement is to repeat once every five years.
Rep. Larry Phillips of Sherman was concerned that adding education requirements will increase the cost of building homes. Note that Mr. Phillips voted 'yea' to table (shoot down) all three of the worthwhile amendments.
Rep. Gattis responded with; What this amendment does, is it requires that if somebody's going to be a builder in the state of Texas, that they need to be up-to-speed and up-to-date on codes and regulations, and make sure that they understand what best building practices are. We require continuing education of attorneys, of doctors, for many things. We require licensing and those types of things for somebody who is going to be an investment advisor. So, basically, if I'm going to turn over $1000 to somebody to be invested, that person is going to have to be licensed, and go through education requirements. "But in the situation when we're going to have some of our people in our districts turn over their life savings, and make the biggest investment that they will ever to make in their life; and we're going to say - that person, all they need is a pickup truck and a magnetic sign, I think is wrong. We need to make sure that we have professional builders that are building houses, making things to code, and making sure that they are taking care of the major investment of our constituents, in our communities."
Rep. Craig Eiland's amendment 19 was tabled (voted down).
Timestamp 4:09 An amendment to make the TRCC's arbitration process optional for the homeowner. Rep Eiland argued that this bill says to builders that if they commit fraud against a homeowner, if they steal money from a homeowner, AND the commission agrees to those charges, the builder still has the option to go to court and dispute those charges. The Attorney General and the TRCC can go to court. Everyone in this bill can go to court except the homeowners.
Representative Ritter moved to table Amendment No. 19.
A record vote was requested.
The motion to table prevailed by (Record 628): 92 Yeas, 47 Nays, and 2 Present, not voting.
Yeas - Alonzo; Aycock; Berman; Bohac; Bonnen; Branch; Brown, B.;
Brown, F.; Callegari; Chisum; Christian; Cook, B.; Cook, R.; Corte; Crabb;
Creighton; Crownover; Darby; Davis, J.; Delisi; Driver; Eissler; Elkins; England;
Escobar; Farabee; Flynn; Frost; Gattis; Geren; Goolsby; Haggerty; Hamilton;
Hancock; Hardcastle; Harless; Harper-Brown; Heflin; Hilderbran; Hill;
Hochberg; Homer; Hopson; Isett; Jackson; Jones; Keffer; King, P.; King, S.;
Kolkhorst; Krusee; Kuempel; Latham; Laubenberg; Lucio; Macias; Madden;
Martinez; McReynolds; Merritt; Miller; Morrison; Mowery; Murphy; O'Day;
Oliveira; Orr; Otto; Parker; Patrick; Paxton; Phillips; Pickett; Pitts; Puente;
Quintanilla; Riddle; Ritter; Rose; Smith, T.; Smith, W.; Strama; Straus; Swinford;
Taylor; Truitt; Turner; Van Arsdale; West; Woolley; Zedler; Zerwas.
Nays - Allen; Anchia; Anderson; Bailey; Bolton; Burnam; Castro; Chavez;
Coleman; Davis, Y.; Deshotel; Dukes; Dunnam; Dutton; Eiland; Flores; Garcia;
Gonzales; Gonzalez Toureilles; Guillen; Hartnett; Hernandez; Herrero; Howard,
D.; Hughes; King, T.; Leibowitz; Mallory Caraway; Martinez Fischer; McCall;
McClendon; Naishtat; Noriega; Olivo; Ortiz; Pen˜a; Pierson; Raymond;
Rodriguez; Smithee; Solomons; Talton; Thompson; Vaught; Veasey; Villarreal; Vo.
Present, not voting-Mr. Speaker(C); Howard, C.
Absent, Excused-Farrar; Menendez; Moreno.
Absent-Cohen; Farias; Gallego; Giddings; Hodge; Miles.
STATEMENTS OF VOTE
When Record No. 628 was taken, I was in the house but away from my
desk. I would have voted yes. Giddings
I was shown voting yes on Record No. 628. I intended to vote no. T. Smith
Rep. Lon Burnam amendment 26 was tabled (voted down).
Timestamp 4:31 An amendment to increase the number of public-interest commissioners in the TRCC from three(3) to four(4).
Representative Ritter moved to table Amendment No. 26.
A record vote was requested.
The motion to table prevailed by (Record 629): 109 Yeas, 31 Nays, and 2 Present, not voting.
Yeas - Anchia; Anderson; Aycock; Berman; Bohac; Bolton; Bonnen;
Branch; Brown, B.; Brown, F.; Callegari; Chisum; Christian; Cohen; Cook, B.;
Cook, R.; Corte; Crabb; Creighton; Crownover; Darby; Davis, J.; Delisi;
Deshotel; Driver; Dunnam; Eissler; Elkins; England; Escobar; Farabee; Flores;
Flynn; Frost; Garcia; Gattis; Geren; Giddings; Goolsby; Guillen; Haggerty;
Hamilton; Hancock; Hardcastle; Harless; Harper-Brown; Hartnett; Heflin;
Hilderbran; Hill; Homer; Hopson; Howard, C.; Howard, D.; Hughes; Isett;
Jackson; Jones; Keffer; King, S.; King, T.; Kolkhorst; Krusee; Kuempel; Latham;
Laubenberg; Lucio; Macias; Madden; McCall; McReynolds; Merritt; Miller;
Morrison; Mowery; Murphy; O'Day; Oliveira; Orr; Otto; Parker; Patrick; Paxton;
Pen˜a; Phillips; Pickett; Pitts; Puente; Quintanilla; Raymond; Riddle; Ritter; Rose;
Smith, T.; Smith, W.; Smithee; Solomons; Strama; Straus; Swinford; Talton;
Taylor; Truitt; Turner; Van Arsdale; West; Woolley; Zedler; Zerwas.
Nays - Allen; Alonzo; Bailey; Burnam; Castro; Chavez; Coleman; Dukes;
Dutton; Eiland; Farias; Gallego; Gonzales; Gonzalez Toureilles; Hernandez;
Herrero; Hochberg; Hodge; Leibowitz; Mallory Caraway; Martinez; Martinez
Fischer; Miles; Naishtat; Noriega; Ortiz; Rodriguez; Thompson; Vaught; Veasey;
Present, not voting-Mr. Speaker; King, P.(C).
Absent, Excused-Farrar; Menendez; Moreno.
Absent-Davis, Y.; McClendon; Olivo; Pierson; Vo.
Rep. Senfronia Thompson's amendment 27 was tabled (tossed out).
Timestamp 4:34 (Lemon Act Amendment) An amendment stating that if the contractor is unable to repair a defect within 120 days, and the defect creates a safety hazard, that substantially impairs the use of the home or it decreases the home market value by more than 5%, the contractor shall either replace the home with a comparable home within the same neighborhood, or accept the return of the home from the homebuyer, and refund the homebuyer the full purchase price, the closing costs, and reasonable moving costs.
Texas State Representative Swinford argued that a lemon law it would raise the price of all new homes.
Rep. Thompson "Members, if you want to protect unscrupulous homebuilders, you need to vote with Mr. Ritter. But if you want to be for the people, who are paying their hard earned money to make the greatest investment that they are ever going to make in their life, and that's a home, then you need to vote no on the motion to table."
Representative Ritter moved to table Amendment No. 27.
A record vote was requested.
The motion to table prevailed by (Record 631): 83 Yeas, 60 Nays, and 1 Present, not voting.
Yeas - Anchia; Aycock; Berman; Bohac; Bonnen; Branch; Brown, B.;
Brown, F.; Callegari; Chisum; Christian; Cohen; Cook, B.; Cook, R.; Corte;
Crabb; Creighton; Crownover; Darby; Davis, J.; Delisi; Driver; Eissler; Elkins;
Farabee; Flynn; Frost; Garcia; Gattis; Goolsby; Haggerty; Hancock; Hardcastle;
Harless; Harper-Brown; Heflin; Hilderbran; Hopson; Hughes; Isett; Jones;
Keffer; King, P.; King, S.; King, T.; Kolkhorst; Krusee; Kuempel; Latham;
Laubenberg; Lucio; Macias; Madden; McReynolds; Merritt; Miller; Morrison;
Mowery; Murphy; O'Day; Orr; Otto; Parker; Patrick; Paxton; Phillips; Pitts;
Quintanilla; Riddle; Ritter; Rose; Smith, W.; Smithee; Strama; Straus; Swinford;
Talton; Taylor; Van Arsdale; West; Woolley; Zedler; Zerwas.
Nays- Allen; Alonzo; Anderson; Bailey; Bolton; Burnam; Castro; Chavez;
Coleman; Davis, Y.; Deshotel; Dukes; Dunnam; Dutton; Eiland; England;
Escobar; Farias; Flores; Gallego; Geren; Giddings; Gonzales; Gonzalez
Toureilles; Guillen; Hamilton; Hartnett; Hernandez; Herrero; Hill; Hochberg;
Hodge; Homer; Howard, D.; Leibowitz; Mallory Caraway; Martinez; Martinez
Fischer; McCall; Miles; Naishtat; Noriega; Oliveira; Olivo; Ortiz; Pen˜a; Pickett;
Pierson; Puente; Raymond; Rodriguez; Smith, T.; Solomons; Thompson; Truitt;
Turner; Vaught; Veasey; Villarreal; Vo.
Present, not voting-Mr. Speaker(C).
Absent, Excused-Farrar; Menendez; Moreno.
Absent-Howard, C.; Jackson; McClendon.
STATEMENT OF VOTE
I was shown voting yes on Record No. 631. I intended to vote no. Cohen
I was shown voting no on Record No. 631. I intended to vote yes. England
 The House Research Organization - Texas House of Representatives.
Texans for Public Justice, LobbyWatch:
Political Contributions in the 2006 Election Cycle = Rep. Ritter received $17,000
from Bob Perry; Rep. Swinford received $12,000 from Bob Perry and $20,000 from TLR's PAC;
 HousingZone.com - 2007 PROFESSIONAL BUILDER GIANT 400 Results
 Alex Winslow, executive director of Texas Watch
 Houston Chronicle - July 1, 2006
 Representative Garnet Coleman (D-Houston)