January 06, 2005
Tell it to the arbitration council

In 2003, the Lege created the Texas Residential Construction Commission to resolve disputes between homeowners and builders without having to use the civil courts. Today's Chron takes a look at the effectiveness of the TRCC, and learns that the answer is not so good if you're a homeowner, since the TRCC has no actual power to enforce its findings.

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.

Thus far, the commission has not taken disciplinary actions against any builder for construction complaints. It has, however, pursued three actions on administrative issues.

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."


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.

I can't say I'm surprised by any of this. The Lege is apparently going to look into things and see if maybe there's some room for improvement. I'm not expecting much.

There's another angle here, which didn't get mentioned in this story. Part of the problem I have with the concept of the TRCC is that its membership is appointed by the Governor, who has already taken the opportunity to pay back one of his patrons with a seat on the Commission. How confident does that make you the homeowner feel about your odds of getting a fair shake?

Posted by Charles Kuffner on January 06, 2005 to Legal matters | TrackBack