By Jordan Fogal and Amy Rosier

The Many Levels of Texas Bureaucracy by Jordan Fogal

We purchased our Tremont / Stature home April of 2002. The first night in the house my husband took a bath in the garden tub on the third floor. When he got out, 100 gallons of water came through the dining room ceiling and flooded the living room and dining room on the second floor. While the plumbing was being connected, and the ceiling replaced, the yard began to flood. Ankle deep water stood and the grass rotted. The kitchen window started leaking; the stucco outside cracked and rust colored water ran out. Then we were hit with a $500 dollar assessment from the newly elected homeowners association because Tremont / Stature had stolen our homeowner's dues. This is what we got with a $360,000 dollar home!


Living in an ADR State

If you live in Texas, an ADR State, you no longer have seventh amendment rights. You are told to go to the TRCC for RCLA and SIRP because we no longer have the DTPA and you will end up in AAA. Now, do you have any idea what I am talking about? Neither do most Texans.

ADR - Alternative Dispute Resolution... it means you don't get a trial by jury and you cannot sue the builder.

TRCC - Texas Residential Construction Commission... a state bureaucracy that regulates home-buyers.

RCLA - Residential Construction Liability Act... a state law that regulates homebuyers. Also known as Requires Considerable Legal Assistance.

SIRP - State Inspection Resolution Process... a mandatory state procedure that requires homeowners to pay a fee of $350, $450, or $650 for the SIRP complaint process.

DTPA - Deceptive Trade Practices Act... and act that once protected homebuyers from deceptive business practices, which was nullified by the passage of TRCCA.

AAA - American Arbitration Association... conducts business like a demented collection agency at the request of a builder in Texas. If you go into their process have a minimum of $50,000 on hand and be prepared to pay $100,000. You have to pay dearly even to file, and in my case the filing fee is $6,000. Then you must pay an arbitrator $2000 plus, per day, plus an hourly fee for pre and post study. AAA does not provide a maximum limit on costs, so they ask for a credit card authorization. The entire burden of proof is on you - the homebuyers. You pay for all expert testimony, depositions, a stenographer, and even the rent on the room to conduct the arbitration. Of course your attorney's fees are on top of that. People come out of arbitration broke, bankrupt, and under secrecy agreements. Beware; it's not a fair playing field.


How TRCC Came into Being (See

The great, once sovereign, state of Texas has been bought by homebuilders for almost $9 million in campaign contributions to state officials, state candidates, political parties, and political action committees (PACs). Over $1 million of it went to the governor, lieutenant governor, and the House speaker. In 2003, after the flurry of dollars settled and after intense lobbying, the Legislature passed House Bill 730 with little media or public attention. HB730 (or the TRCCA), established a state commission to register homebuilders (TRCC), sets up a mandatory dispute resolution process, and imposes a state-mandated limited warranty for home construction. In reality, the law strips crucial consumers' rights, allows too many ways for the builders to circumvent their responsibility, and ensures that home-owning constituents have little leverage to get shoddy construction fixed. The state-mandated warranty eradicates the "implied warranty of good and workman-like construction" afforded by common law; and is enforced by a very complex mandatory-dispute-resolution-process.


"TRCCA, in short, abolishes the common law discovery rule (which allowed homeowners to discover defects even after the warranty period). Today hidden defects undetected within the warranty period are not the builder's responsibility. If the homebuilder, for instance, installs the plumbing, electrical wiring or air-conditioning poorly (of which the homeowner has no knowledge) and these essential components fail after two years, the homeowner is left with a long mortgage, poor construction, and no recourse. Similarly, if the foundation crumbles completely after ten years, no matter how poorly the homebuilders' work and no matter how worthless the house, the homeowner has no recourse."


Texas Monthly: "It was one of the most blatant power plays in recent years." The TRCCA is special-interest legislation that is designed to shield the powerful homebuilder industry from legal retribution, and places sizeable hurdles before homeowners seeking to live in homes with the level of quality that they paid for.


TRCC's First Report Card

Carole Keeton Strayhorn, Texas State Comptroller, issued a blistering report on TRCC in 2006. In that com-prehensive report, she stated, "In fiscal 2005, the agency spent $3.7 million on its operations. That same year, the agency collected $6.6 million from builders and homeowners. As a result, the agency transferred $2.9 million to the general fund, effectively helping balance the general state budget on the backs of home-owners. In the next two years, the agency is estimated to raise about $9.7 million a year from its fees and spend only $4.2 million a year, meaning that the agency will be putting more money in the general budget than it does into doing its job."


Ms. Strayhorn said, "This agency imposes costly and bureaucratic roadblocks for homeowners left out in the cold by shabby construction and a commission dominated by builders, where even the public members are beholden to the industry they are supposed to be regulating." "But it isn't the role of government to throw up bureaucratic barriers to protect unethical or inept builders from their customers." Both the report and the news release can be found at


After that, the new deputy director, Duane Waddell, had to admit (on television) to her findings that 86% of the claims filed with the TRCC were mishandled.

The 80th Legislature's Attempt to "Improve" TRCC

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 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. We all know the builders 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 misrepresenta-tions they are making. Arbitration clauses and the TRCC allow them to get away with shoddy building, just fine. Builders want everything behind closed doors. 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. (See

TRCC's Latest Report Card

TRCC: REPORT SHOWS CONTROVERSIAL STATE AGENCY FAILS AGAIN - State Auditor Cites Residential Construction Commission for Sloppy Record-keeping

The State Auditor reports that the controversial Texas Residential Construction Commission (TRCC) reported unreliable results on four out of seven key measures mandated by the legislature. The auditor conducted the report to certify that the agency is meeting the performance measures laid out by the legislature. According to the auditor's report, the TRCC failed to properly maintain its records and failed to follow written policies, and miscalculated expenditures. Because of these deficiencies, the auditor was unable to certify that the agency was meeting its goals.



More Sites to See, from Jordan Fogal

Binding Arbitration and Right-to-Cure, Is Your State Next? That is a very real threat!