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Resolving a New Home Construction Defect with a Texas Homebuilder

Homeowners Against Deficient Dwellings


A Homeowners Guide

Prepared by

Homeowners Against Deficient Dwellings July 2006

Members of Homeowners Against Deficient Dwellings contributed to this report. http://www.hadd.com


Homeowners Against Deficient Dwellings Texas

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A Homeowners Guide

Table of Contents:

ABOUT THIS GUIDE ..............................................................................................................................4

SUMMARY...............................................................................................................................................4

TAKE MATTERS INTO YOUR OWN HANDS! ...................................................................................5

A WORD ABOUT KB HOME.................................................................................................................5

LACK OF CONSUMER PROTECTION FOR NEW HOMEBUYERS................................................6

NOTE ON STATUTE OF LIMITATIONS .............................................................................................7

TAKING ACTION ...................................................................................................................................7

DOCUMENT EVERYTHING .................................................................................................................7

WORKING WITH THE BUILDER ........................................................................................................8

FILE A COMPLAINT WITH HADD......................................................................................................8

CONTACTING YOUR ELECTED OFFICIALS ...................................................................................9

THE TEXAS RESIDENTIAL CONSTRUCTION COMMISSION.....................................................10

THE BETTER BUSINESS BUREAU ....................................................................................................11

THE TEXAS ATTORNEY GENERAL’S OFFICE..............................................................................12

FILE A COMPLAINT WITH THE FEDERAL TRADE COMMISSION ..........................................13

CLAIM ON YOUR WARRANTY COMPANY ....................................................................................13

CONSUMER ADVOCATES TALK SHOWS.......................................................................................14

SMALL CLAIMS COURT.....................................................................................................................14

THE RESIDENTIAL CONSTRUCTION LIABILITY ACT (RCLA).................................................15

OTHER AVENUES FOR RESOLUTION.............................................................................................15

PROTESTING THE BUILDER.............................................................................................................16

CONTACTING THE MEDIA................................................................................................................17



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THE INTERNET ....................................................................................................................................18

LEGAL ACTION....................................................................................................................................19

RECOMMENDATIONS AND CONCLUSIONS..................................................................................19

ABOUT HOMEOWNERS AGAINST DEFICIENT DWELLINGS ....................................................20

RESOURCES..........................................................................................................................................21



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About this Guide Our elected officials in Texas have made it very clear: Don’t get old, don’t get poor, don’t get sick, and don’t get screwed by a homebuilder, because there is little, if any, compassion for you.

This report is targeted for the State of Texas and was created to document available resources when attempting to resolve a new home construction defect with a homebuilder. Although this guide is specific to Texas, most of the information is applicable to many, if not all, States. This guide is written from a consumer’s perspective based upon real life experiences and not from a legal standpoint. It should be used as a guide and not necessarily as a step-by-step process. The information in this guide should not be substituted for sound legal advice and any similarity to a legal opinion is by chance only and is not intended. Summary Trying to resolve a new home construction dispute with an uncooperative builder is like pulling teeth without painkillers, and through an orifice other than your mouth.

A Kangaroo Court of “Arbitraitors”.

The purchase of the American Dream, a new home, should be a once in a lifetime wonderful event celebrated with champagne and house warming parties. This is the case, for the vast majority of homebuyers but for the unfortunate few with a construction defect the experience of buying the American Dream can transform into a horrible Texas nightmare. There is little if any consumer protection for new homebuyers in Texas even with the newly created Texas Residential Construction Commission, which has been incorrectly advertised as “consumer friendly”. Except for a serious medical illness, there is nothing more emotional, time consuming, frustrating, and expensive than a new home construction defect. Even without legal action, a complaint can span months or years. It can ruin a family financially and mentally, and it can, and has, destroyed families. The stress of a construction defect can lead many to out of character actions such as protesting, or activism. Many homeowners will give up, foreclose, or pay the expense of repairing their home.



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The resolution process is generally long and frustrating. Hopefully this guide will ease the frustration and help homeowners resolve their complaints without the need of legal action. Take Matters Into Your Own Hands!

Texas is by far the worst state for consumer protection, especially for the homebuilding industry. Because of this, homeowners must take an aggressive approach to resolving the defect. Take matters into your own hands and take every action available, within the law, to get your home repaired. This is the biggest investment of your life, but it can turn into the biggest liability if you cannot resolve the defect. As the homebuilder resists, more forceful action may be needed. Prepare to use your Constitutional Rights to protest, or develop a website, or picket your builder’s home. Initiate and take action to protect your family and your financial situation. A Word About KB Home

In 1979 the FTC entered into a consent decree with Kaufman and Broad, now KB Home. This decree established restrictions on KB Home for any further home defects. In 2006 the FTC investigated KB Home and entered into an settlement for violations of the consent decree. According to a press release by the FTC: The modified consent decree, which replaces the consent decree entered in 1991, resolves the Commission’s allegations that KB Home violated the prior order. It enjoins KB Home from violating the 1979 consent order and requires KB Home to: 1) modify the dispute resolution provisions of existing warranties to comply with the 1979 order; 2) comply with the warranties as so modified; 3) extend for one year the two-year warranty coverage for major home components for homeowners whose homes were delivered during 2002 through 2004; and 4) reimburse homeowners for fees they had to pay to arbitrate warranty disputes in alleged violation of Part III.B of the order. In addition, the decree will require KB Home to pay a civil penalty of $2 million to settle the Commission’s charges that it violated the order. Finally, the modified decree contains terms requiring KB Home to distribute the order to certain company personnel, as well as to keep relevant records and provide them to the Commission to ensure its compliance with the order’s terms. The Commission vote approving the stipulation and modified consent decree and authorizing transmission to the DOJ for filing was 5-0. DOJ submitted the modified consent decree in the U.S. District Court for the Southern District of California on August 3, 2005. The entire press release announcing is available from t h e F T C ’ s Web s i t e a t http://www.ftc.gov/opa/2005/08/kbhome.htm. If KB Home does not respond to your complaints in a timely fashion, KB Home owners should immediately file with the FTC. Under the FTC order KB Home must resole all defects in a timely manner and cannot require binding arbitration. This has been a very effective method to get KB Home to respond to your complaint.



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Contact HADD for specific FTC contact information. Lack of Consumer Protection for New Homebuyers “They are the third largest builder in the nation. What do you think they are going to do? Screw us?” 1

Many homebuyers incorrectly assume their 30 year investment has adequate protection from construction defects. After all, this is by far the “biggest investment of their life”, “The American Dream”. Unfortunately, this error in judgment is realized only after a construction defect occurs and the builder decides to stand behind their attorneys instead of standing behind their workmanship. The homeowner learns, over a number of months or years, that no state, county, or city organization is available to provide assistance to resolve the dispute. Few homeowners will ever have this problem, but for those who do, they are quickly convinced.

Limited Warranties: Because of the severe limitations of new home warranties, homeowners have little, if any, recourse in resolving a new home defect. In “New Home Warranties. Deception or Protection”, the limitations of the various warranties used throughout the United States have been addressed. (See http://www.hadd.com/documents/warranty.pdf for a copy of the report.) The warranty adopted by the Texas Residential

Construction Commission are based upon these extremely limited warranties. The Texas Residential Construction Commission: Texas created this commission in 2003. It will oversee the building industry and provide a complaint resolution process for homeowners. Unfortunately the appointed commissioners are all from the building industry with no one representing the interests of the consumers. HADD doubts seriously if this commission will provide any benefit to the consumers. This Commission is nothing more than a country club for the building industry. This will be discussed in detail later. Attorney General’s Office: Our Texas Attorney General’s Office has shown no interest in pursuing complaints against builders. Complaints filed with the OAG’s office are not even sent to the homebuilder. They are simply filed with no response to the homeowner. The Better Business Bureau: The Better Business Bureau complaint process is available to consumers. There is no way to judge this process, although it seems to be much more fair. This will be discussed later. 1 John R. Cobarruvias. http://users2.ev1.net/~johncoby/ryland/



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Homebuilder Associations: Various homebuilder associations at one time provided some amount of policing of their membership. Now the associations are more of a lobbying and industry organization for builders and contractors. Complaints about builders who have violated the code of ethics are ignored and, in the end, HBAs provide no assistance to resolve the defect for the homeowner. Laws in Texas. The laws governing the homebuilding industry are very complicated and require legal assistance. These laws were created by the industry for the industry. These are not consumer friendly laws. The Residential Construction Liability Act (RCLA) was the first “Right to Repair” law in the United States in 1989. This was followed by the creation of the Texas Residential Construction Commission by House Bill 730. The Commission was created because of the failure of RCLA. Both are extremely complicated procedures and should be treated as such. Legal advice is always recommended. Legal Action: Because of tort reform in Texas, legal action has become very difficult, time consuming, and unrewarding therefore it is difficult to find affordable legal representation. Few homeowners also do not realize their rights to a civil trial have been replaced with a mandatory binding arbitration clause that is grossly unfair, and extremely costly. Most homebuilders have these hidden clauses within their contract. Note on Statute of Limitations

Because the laws are so complicated in Texas and because this is a legal issue, the homeowner should get legal advice to insure they are not in jeopardy of losing any rights because of the statue of limitations. The ideas of in this document should be used with full knowledge of the limitations. Taking Action When beginning to take action against an uncooperative builder remember that there is no one single silver bullet, instead you will have to take action on many different fronts. Use the BBB, the Attorney General’s office, your elected officials, and then be creative with other avenues. Remember there is no single simple way to address this problem. Document Everything The best defense you have is to document everything and keep a two by four by your side.

Begin by creating a folder with all important documents from your home purchase and anything that would document the defect. Try to keep it in a chronological order. Include:

1. Photographs and video if you can.



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2. Copies of letters you send to all organizations. 3. Any reports from inspectors or engineers 4. Responses from the builder or other organization 5. A log of all activity including phone calls, letters, responses, etc 6. Reports from the BBB, Attorney Generals office, etc 7. Anything else that may be of importance

Working with the Builder If you believe treating the builder with respect will result in the builder taking responsibility for their actions and repairing your home, then you have already lost the battle.

One of the first mistakes a homeowner can make is trusting the builder to “do the right thing”. The defect and its resolution should always be considered a business transaction and nothing else. It should not be considered a friendly mistake, but instead it should be considered a breach of contract, a bad business deal, and it should be addressed as such. Trusting the

builder should come only after the defect is corrected to your satisfaction. Given the above, the homeowner should respectfully present the builder with the facts of the defect and any pictures or supporting evidence. Work with the builder in allowing them to inspect and repair. As always, keep a log of all actions. At first, calls to the builder should be sufficient, followed by letters, faxes, and emails. If you are having problems with the builder returning calls or letters, stand outside of the sales office with a sign that says “PLEASE FIX MY NEW HOME”. This will surely get their attention once sales begin to drop off. Remember that your salesman is paid for sales, not for happy customers. If their sales were to stop, because of an unhappy customer, then maybe they would be inclined to help you. Make your salesman work for you even after the sale of the home. Once the builder stops being cooperative, or refuses to respond in a timely fashion, then move on to 3rd party assistance. File a Complaint with HADD



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First, file a complaint with HADD at www.hadd.com for our records. This information will not be distributed or shared unless you specifically request it. This would help us in the long run to further changes in the law to provide more protection for consumers. Contacting Your Elected Officials [Governor] Perry’s top overall sources of money were the Sterling Group ($528,000), Bob Perry Homes ($455,000) and Dallas financiers Charles & Sam Wyly ($353,500). He also received $4.7 million from the members and PACs of groups seeking to limit the liabilities of businesses that harm consumers, workers or communities (Texans for Lawsuit Reform and the Texas Civil Justice League).2

Next, contact your elected officials and make sure they are aware of your problem. Many of the top State positions as well as many Representatives and Senators are heavily funded by the homebuilding and the insurance industry. Finding compassion or understanding at the top level of Texas government is about as hard as finding weapons of mass destruction in Iraq. It just doesn’t exist. Find your elected officials by visiting the Texas House of Representatives site www.house.state.tx.us. There is a search capability available. This will disclose your elected officials on the state and national level. Create one letter explaining your situation and send it to your State Representative and Senator. Call later to discuss this. Make sure you state the name of the builder and ask for assistance. Contact his or her office and ask for someone who can handle a new homebuilder defect. Make sure they are aware of your problem and demand that the laws be changed to help consumers not the builders. The staff will probably refer you to the Texas Residential Construction Commission, but they should be made aware of the problem nevertheless and they should be kept informed of your situation. Get their email address and periodically make them aware of your progress. If after following the rules of the commission or any other regulatory organization and the results are not satisfactory, again contact your elected officials and request help. If the State operated organization is not doing the job they are suppose to be doing, the State Reps and Senators do have the authority to inquire on your behalf. Again, you must be persistent. If you are having problems with the Veterans Administration, HUD or FHA, contact your Congressman for assistances. They can inquire on your behalf on a federal agency. Contact your city representatives. Make an appointment to talk at the next city council meeting. Demand that any further building permits be denied until your house is repaired.

2 Studies Probe $66 Million That TX Gubernatorial Candidates Raised. Texans for Public Justice Oct 2 2002



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Protest at the steps of the Texas State Capital

The Texas Residential Construction Commission “Gov. Rick Perry has appointed John R. Krugh of Houston as one of seven individuals to the Texas Residential Construction Commission. Krugh is senior vice president and corporate counsel for Perry Homes. He is a member of the Texas Association of Builders and co-chair of the association's Building Standards Task Force. Krugh also is active in the Greater Houston Builders Association.”3

Visit the TRCC at www.trcc.state.tx.us and file a complaint against your builder. There is a difference between filing a complaint and filing for the dispute resolution process which costs at least $250 and will take a few months. First file a complaint and see if that will get the builder to be cooperative. During the 2003 session the Texas homebuilding industry passed a bill to create the Texas Residential Construction Commission. This commission will register all builders, create performance standards for new homes, and provide a problem resolution system for construction defects. As good as this may sound, it is nothing more than a country club for the industry and will provide more protection for the builders and less protection for consumers.

3 Houston Business Journal. Sept 8, 2003



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The entire bill and commission is heavily stacked in favor of the builder. The resolution process is mandatory for all complaints before a suit could be filed. The cost of this process could be as high as $750 for a structural defect and $250 for a workmanship defect. There are many problems with this commission, but the most important is the fact that legal counsel, although not required, is highly recommended. This is a not a simple 3rd party mediation service. Instead it is a complicated set of steps and procedures riddled with pitfalls that must be avoided or your case could be denied. The cost is undetermined, but expected to be in the thousands of dollars for structural related defects. There is a process to file a complaint against a builder for non-compliance to the TRCC rules. Contact the TRCC and inquire about this process. Homebuilders are required to be “fit” to build homes, financially and morally. If the builder has filed bankruptcy in the past, or if the builder has had trouble with his subcontractors, or any other problems, they should be reported to the TRCC. Builders are also required to be registered with the state. If a builder is not, there are severe fines. Report any non-registered builder to the TRCC. The TRCC’s process should be the very last option for any homeowner due to the complexity, cost, and legal complications. An attorney well versed in the commission is highly recommended. If you want to file a complaint against a homebuilder for matters other than problems with workmanship and material and structural defects, you may file a written complaint with the Texas Residential Construction Commission at P.O. Box 13144, Austin, Texas 78711. You may obtain further information at the Commission’s web site, http://www.trcc.state.tx.us/. This may actually be a simple low cost alternative. Filing a complaint against the builder should be an alternative. The Better Business Bureau “This company participates in BBB CARE, and the Membership Identification Program. This means the company has agreed to use special procedures including mediation and arbitration if necessary to resolve complaints.”4

The BBB can provide some useful information about the builder. Check their website at www.bbb.org . Search for the builder in the “reports” section of the site. There is also a link to file a complaint on the web or it will provide a mailing address and printable form. If you do not have Internet access, contact the BBB in your local area and ask for an application. When filing with the BBB make sure you include the following information:

1. All requested information about yourself and the builder 2. What you would expect a reasonable solution would be 3. Any extraordinary information

4 BBB Houston concerning Pulte Homes as of Sept 2003



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It has been our experience that a complete detailed account of the defect is not necessary and most probably will never be read though ally. Save this type of detail for later. Keep your complaint concise, to the point, and most of all, FACTUAL. The complaint in its entirety will most probably be sent to the address and contact person you provide without anyone ever reading it. The BBB will forward this information and update their database. You should get a response from the builder within a week or so. If not, contact the BBB again and keep contacting until the builder responds. If the builder is a BBB member, you may have more leverage if the builder refuses to deal in good faith. Report all failed attempts to the BBB and if necessary ask the BBB to cancel the builder’s membership if they refuse to respond. Check the status of the builder to see if the builder is a CARE member. If the builder is a CARE member, they have agreed to use special problem resolution procedures such as mediation and arbitration. These services should be either free or very low cost for the consumer. WARNING: ACCORDING TO THE BBB SITE, ARBITRATION IS BINDING THEREFORE REMOVING YOUR RIGHT TO FURTHER ACTION. THIS SHOULD BE CONSIDERED VERY CAREFULLY BEFORE REQUESTING THIS. IN THE PAST ARBITRATION WAS NOT BINDING ON THE CONSUMER. We have heard of some good success stories out of the BBB’s CARE program. One builder in Houston was forced to arbitrate with the BBB as per the CARE program. The homeowner was satisfied with the results. The builder then left the BBB. If your builder is a BBB member, then you should use this to your advantage. The Texas Attorney General’s Office A doctor saw a patient for hemorrhoids and prescribed suppositories. A few weeks later he saw his patient and asked him “How did the medicine worked for you?” The patient replied “Well doc, the good those pills did me, I might as well have stuck them up my ass!”

There is little good to say about the Texas Attorney General’s Office Consumer Protection Division. Much like the joke, the time you spend complaining to the OAG office could be better used doing something else. And once you obtain legal representation, as with the BBB, this process will not be available to pursue. The Ags office once had an informal dispute resolution process, which was nothing more than a post office transaction of exchanging the complaint and response. Now there is no exchange of information. The Ags office does nothing with the complaint except to file it.



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The homeowner should consider filing with the Ags office, but realize it will never be provided to the builder. Consider contacting the OAG Open Records division and request a list of all complaints about a particular builder or builders. This is usually accomplished by sending a simple email to the OAG office via their website. If there are many complaints, they will charge you an excessive fee to reproduce, but if you ask for a listing including the name, address, and phone number of the homeowner, it will be provided at no cost. Contact the homeowners and ask how they resolved their problem. If there are multiple owners in your area with the same problems, have each one file a complaint. Consolidating complaints does not seem to work very well, but if there is a pattern of complaints from multiple homeowners, then a meeting with the OAG should be arranged in Austin or in their field offices. If there is reluctance on the part of the OAG, contact your State Senator or Representative to arrange this. If there is a case of fraud, where you believe the builder is deliberately misleading the public, contact the OAG office and talk with an investigator about it. You must be persistent in order to get any action. Again, try to meet with the OAG staff. If the OAG office does not respond to the allegations, contact your state elected officials and ask for help. Their office should contact the OAG office and request a reason for the inactivity. File a Complaint with the Federal Trade Commission “Did I tell you the joke about the doctor and the suppositories?”

For immediate help, the FTC is one of the worst avenues to take, but as with all the above, homeowners should at least file a complaint, especially KB Home owners. In 1979 the FTC entered into a consent decree with Kaufman and Broad, now KB Home. This decree established restrictions on KB Home for any further home defects. Unfortunately the FTC has failed to adequately monitor and enforce the decree and KB Home is not being held accountable. KB Home owners should immediately file with the FTC when they have defects and KB Home is delaying repairs. Under the FTC order KB Home must resole all defects in a timely manner and cannot require binding arbitration. This has been a very effective method to get KB Home to respond to your complaint. Claim on Your Warranty Company “These warranties are not illusory; they offer significant tangible benefits to home buyers.” 5

5 Brief of Amicus Curae, Submitted by the NAHB for the Texas Supreme Court, Centex vs. Buecher No.00-0479



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New home warranties are extremely limited in coverage, but homeowners should attempt to file with the warranty program anyway. FHA and VA homebuyers should pay special attention to the addendums within the warranties. The FHA has special rules concerning structural defects that may help the consumer. Please see www.hadd.com/warranty.pdf for a complete review of new home warranties. Also realize that the Texas Residential Construction Commission has set standards for new home construction and warranty standards. The home must meet these standards, although limited. Homeowners should visit the TRCC website and review the standards. http://www.trcc.state.tx.us Consumer Advocates Talk Shows

There are a number of radio talk shows that could provide some help. One in particular is the Tom Martino show, a national call in show. If your complaint is valid they will assist in helping to resolve the complaint. Visit http://www.troubleshooter.com for more information. Check your local radio stations for other consumer advocates in your area. When you contact them make sure you have a short concise description of the problem. Usually within the first 15-30 seconds you should be able to adequately describe your situation. A chronological list is not necessary at this point, just the overall problem description. It is important to grab their attention within the first few moments of the conversation. Be prepared with your logbook. Have contact information for your builder or who ever you have been working with. They will be asking you for this information in order to call them. Small Claims Court “$5000 limit”

Small claims court is available for claims under $5000, but the homeowner should be careful because of the arbitration clause, the Residential Construction Liability Act (RCLA) and the Texas Residential Construction Commission which may supercede this avenue. The American Arbitration Association in response to continued criticism has allowed the use of small claims court in lieu of arbitration, but other arbitration firms may not have this policy. Check your contract the policies of the arbitration company before filing. Even though the small claims process is suppose to be easy and low cost, the procedure defined in RCLA may be required to be followed prior to filing. RCLA is complicated



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and generally it is suggested to obtain legal assistance, but if a homeowner intends only to file in small claims, the process should be attempted. As with arbitration, the Texas Residential Construction Commission should allow the use of small claims court without the additional expense of the TRCC dispute process which would negate the low cost simple small claims process. This has not been determined as of this writing. The Residential Construction Liability Act (RCLA) RCLA also stands for “Requires Competent Legal Assistance”6

RCLA was passed in 1989 and was the first of the “right to repair” laws in the country. It requires the homeowner to give the builder a chance to repair the defect before proceeding to court. It is another mandatory requirement before proceeding to legal action. As with the commission, this bill is extremely complicated and should only be used with legal assistance. This bill is not consumer friendly and has been modified a number of times to limit the amount that can be recovered, as well as penalize homeowners if the rules are not followed correctly. It is not quite clear how RCLA interfaces with the commission’s problem resolution process. Because of this, it is highly recommended to find an attorney well versed in the commission and RCLA. RCLA just like the Texas Residential Construction Commission was created by the builders for the builders and should not be considered consumer friendly.

Other Avenues for Resolution “When all else fails, pick up a 2 by 4 and visit your salesman”

Homeowners should use their imagination when trying to find someone who could be held responsible for the defects in the home. There are some state agencies, which oversee professions such as plumbing, air conditioning, and electricians. These agencies usually

have a complaint process against professionals responsible for a defect. Also consider taking legal action against the subcontractors or the various professionals who have little if any protection by the state..Contacting the city and reviewing city records could find these individuals. Some agencies available include: Plumbing Board. Texas State Board of Plumbing Examiners. www.tsbpe.state.tx.us. Licensing Board. Texas Department of Licensing and Regulation. www.license.state.tx.us This board oversee a number of different professions such as air conditioning installations and maintenance and electricians. 6 Washington Builder Law Nothing New in Texas. Realty Times. 7/18/2002



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EPA Star Energy. http://www.energystar.gov/ for energy star builders. Contact this agency for air conditioning, heating and energy related matters. Engineering Board. http://www.tbpe.state.tx.us/ The Texas Board of Professional Engineers. Oversees the engineers such as the archeticts, and foundation designers. City Council and Inspection Department. In the past this has not been very useful, but cities are beginning to feel the pressure from homeowners due to the lack of policing by the State. FHA. http://www.fha.gov. The Federal Housing Administration. The FHA has not been much help, but if pressured they could provide some useful information. HUD http://www.hud.gov. The Housing and Urban Development Administration. HUD has not been much help, but if pressured they could provide some useful information. VA. http://www.va.gov. The Veterans Administration. The VA has not been much help, but if pressured they could provide some useful information. Protesting the Builder “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances.” 7

According to the United States Constitution Americans have the right to free speech. Consider using this right by placing a sign on your front law stating your situation with the builder. Sample slogans include:

Ask me before you buy a <your builders name here>

Visit my house before you buy a <your builders name here>

Again make sure you state

only the facts. Refrain from making slanderous remarks or hard to prove allegations such as “My builder is a crook” If your house is at the beginning of the subdivision, then make 7 1st Amendment of the United State Constitution



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sure everyone who is looking at homes in the area can read your sign If they ask to view your home, be prepared to show them the defects and a quick synopsis on how you have dealt with the builder. Many homeowners associations are initially populated with board members representing the builders. The association may ask you to take your sign down due to association bylaws. Verify the association has a ban on signs and if so, place the sign inside of the front window of your home. Picket the builder’s sales office. Call the local police and ask if there are any special rules or permits required. Assemble your family members and make signs stating your defect. Have a handout for prospective buyers detailing what you have been through. Keep it short and to the point. Make sure you are on public property and are not blocking the entrance of the sales office. Find out when the next open house, special sale, or parade of homes will take place and picket at the entrance. Also consider placing a sign on your back window of your car. It is a great moving advertisement. Protesting and picketing is legal, but that will not stop a builder from harassing you. Many times the police will be called. Talk with the police and make sure they know you are conducting a peaceful protest. Ask if there are any rules that must be followed. Also, the builders may attempt to file a frivolous suit against you for slander or loss of business. Whether this is frivolous or not, it will take your time; money and it could be a very stressful process. The media would also be very interested in the visuals so make sure you contact them a day before the protest. Contacting the Media



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A roaming protest in north Texas. A great visual for the media. Sometimes contacting the media can encourage the builder to take responsibility for their defects. Contact the local TV station and ask to talk with someone about a possible story. The key is to sell the story on the first 15-30 seconds. Usually the attendant on the phone will write the information down, then pass it on to the news desk. If the story is interesting they may pass it on to specific reporters. Also, if you know that a particular reporter has done consumer advocate stories, contact them directly. When you are given the opportunity to discuss the situation, make it short, with enough visual details to make it interesting. For example: “My new $150,000 home is less than a year old, and I have a crack the width of a pencil in my kitchen tile. The builder has claimed it is due to lack of maintenance and has refused to help. I also have an 8 foot sign in my yard protesting the building” This begins to sound good. Your home is expensive, less than a year old, and they have a visual to film. Hopefully this will help sell the story. Be prepared to talk in detail to a follow-up caller. Don’t limit it to just one TV station. Call all of them. Once you get a commitment from a station to film, and then tell the others. The others may not want to cover it again. Also look to see if any stations have an in depth segment, such as Fox in Focus in Houston Texas. This is usually a 10-minute segment and is very detailed. Contact local newspapers including daily and weekly papers. Again, sell the story within the first few seconds of calling. If you are staging an event such as a protest, contact the media a day before. Make sure they are aware of any signs, visuals, or anything they should be aware of.+ The Internet

The Internet has become a breeding ground for homeowners with construction defect complaints. Consumer groups also have been able to use the Internet to organize opposition to the home building industry. Consider building a simple web page documenting your experiences and defects. Purchasing a web page and domain name such as www.kbhomesucks.com costs under $100 a year and is a great way to document your experience. Remember to keep it factual. And also remember that although we do have freedom of speech, it doesn’t seem to stop the builders from filing frivolous lawsuits in order to intimidate you to take the site down.



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Legal Action

Taking legal action should the absolute last step in the process. Unfortunately because of tort reform, legal action is rarely fair to the consumer. Triple damages as dictated by the Texas Deceptive Trade Practices Act is rare, if not impossible, with new home defects. And with the continued abuse of mandatory arbitration it will be difficult to find legal representation willing to take the risk. Usually the complaint will be put in front of a kangaroo court of arbitrators after many months or years of trying to work the problem with the builder. And arbitration rarely, if ever, compensates the homeowner

for any inconvenience, suffering, etc. Many times the award is just enough to cover the cost of repairs, which was what most homeowners wanted in the first place. Make sure when looking for an attorney that they have experience with RCLA and know of the limitations and regulations of the Texas Residential Construction Commission. This is not a time to find “my cousin Vinnie”. The attorney must be a specialist in new home construction defects. Also make sure you have preserved the statue of limitations. Consult an attorney to verify. One thing is for sure in Texas, making a builder pay for wasting your time, money, and putting you and your family through months or years of anguish, is a thing of the past. The laws in Texas against builders were written for the builders, by the builders and passed by builder friendly legislators. If you have had to resort to taking legal action, do so knowing what you should expect. Recommendations and Conclusions

Homeowners should realize that their 30-year investment has as much consumer protection as buying stock in Enron. Know this before you begin your problem resolution process. Use all avenues of problem resolution, including:

Working with the builder in good faith Filing a complaint with the TRCC Contacting ALL of your elected officials Visit with your State rep and Senator Contacting the media Protesting Building a webpage Protesting at the builders office



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Filing a complaint with the AGs office Filing with the BBB Using the resources provided by the BBB Filing a SIRP request through the TRCC Being creative and filing complaints with other organizations Interfacing with other homeowners Calling into radio talk shows Use small claims court File with the FTC

Contact your neighbors to see if they have experienced the same problems. Be aware of the statute of limitations. And most of all, keep persistent, and keep your sanity.

About Homeowners Against Deficient Dwellings The volunteers of Homeowners Against Deficient Dwellings are the best money can’t buy.

Homeowners Against Deficient Dwellings, (HADD) a non-profit organization, came into existence in response to an overwhelming need of support and resolution from families who felt isolated while coping with their devastating home damages and loss. Because the lone attempts to get their homes fixed proved unsuccessful, these families started to find each other and united into a cohesive group with a common cause. It was while testifying before legislative committees in the Kansas State Capital that HADD emerged as a grass roots organization. HADD is not an arbitration group, nor does it provide legal counsel. HADD offers support and suggestions to assist consumers in making educated, informed decisions when buying a home or resolving the complicated issues involving deficient homes. Homeowners Against Deficient Dwellings Nancy Seats, President 827 Bristol Way Website: http://www.hadd.com Email: [email protected] John R. Cobarruvias President HADD Texas 14646 Cardinal Creek Ct Houston, TX 77062 281-486-5203 [email protected]



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Resources

The Texas Residential Construction Commission. http://www.trcc.state.tx.us/. The Consumer Pitfalls of Binding Arbitration. A Report by the Texas Watch Foundation. The report raises questions about the quality of justice delivered through binding arbitration between parties of different bargaining levels and documents the uneven playing field binding arbitration offers consumers and citizens seeking justice. (PDF) New Home Warranties. Deception or Protection? By Homeowners Against Deficient Dwellings. Homeowners Against Deficient Dwellings (HADD), a national non-profit consumer advocacy organization released a new report identifying extreme limitations and loopholes in new home warranties. The report, "New Home Warranties. Deception or Protection?" analyzes the warranties used by the majority of builders in Texas and highlights the limitations, exclusions, and unreasonable maintenance requirements common to each warranty. www.hadd.com/warranty.pdf The Abuse of Mandatory Arbitration in New Home Contracts. By Homeowners Against Deficient Dwellings. HADD release a report on the abuse of arbitration in new home contracts. The report at www.hadd.com/arbitration.pdf is based upon hearings in the Texas House during the summer of 2002 and based upon homeowner’s experiences.

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