The Republican-led government in Texas has historically advocated for limited regulation and government intervention in various industries, including the housing sector. While this approach is often framed as promoting economic freedom and individual responsibility, it has also created an environment where unregulated home builders and remodeling contractors can exploit gaps in oversight to the detriment of the public.
Lax Regulatory Framework: Texas has relatively lenient regulations compared to other states when it comes to home construction and remodeling. This lack of stringent oversight allows unscrupulous builders and contractors to operate with minimal accountability, leading to a higher risk of poor-quality workmanship, safety hazards, and fraudulent practices.
Limited Consumer Protections: The emphasis on limited government intervention means that consumer protections in the housing industry are often woefully inadequate. Homebuyers and homeowners have fewer avenues for recourse when disputes arise or when they encounter issues with builders or contractors. This lack of protection can leave consumers vulnerable to exploitation and financial harm.
Political Influence: The homebuilding industry holds significant sway in Texas politics, often wielding influence through campaign contributions and lobbying efforts. This political influence can shape legislation and regulatory policies in favor of industry interests, further eroding protections for consumers and enabling unregulated practices to persist.
Zoning and Development Policies: Republican-led governments in Texas have generally favored pro-development policies, which prioritize economic growth and property rights over environmental conservation and community interests. While promoting development can stimulate the housing market, it can also lead to unchecked expansion and urban sprawl, exacerbating issues related to unregulated construction and inadequate infrastructure.
Deregulation Agenda: The overarching deregulation agenda pursued by Republican officials in Texas has contributed to a hands-off approach to industry oversight. While proponents argue that deregulation fosters innovation and economic competitiveness, critics contend that it can result in a race to the bottom, where companies prioritize profit over public welfare and environmental sustainability.
Overall, the Republican government in Texas has played a significant role in creating an environment where unregulated home builders and remodeling contractors can thrive. Addressing these issues requires a reevaluation of regulatory policies, stronger consumer protections, and a commitment to balancing economic interests with the health, safety, and well-being of the public. Think on these things in the upcoming elections.
We’ve all heard and instinctively understand that purchasing a home is one of the most significant investments people make in their lifetime. That is why ensuring that the transaction is legally sound and protects the buyer’s interests is crucial. Here are several reasons why hiring an attorney before purchasing a new home from an unregulated Texas home builder is of utmost importance:
Legal Expertise: Attorneys specialize in understanding complex legal documents and contracts. They can review the purchase agreement, warranty documents, and other legal paperwork associated with buying a home to ensure the terms are fair and favorable to the buyer.
Contract Review: Home purchase contracts can be lengthy and contain legal jargon that may be difficult for the average person to understand. An attorney can review the contract thoroughly, explain its terms to the buyer, and negotiate any necessary changes to protect their interests.
Protection Against Fraud: Unfortunately, there have been numerous cases of fraud and misconduct involving unregulated home builders. An attorney can identify any red flags indicating potential fraud or unethical behavior.
Compliance with Laws and Regulations: Texas and each municipality have specific laws and regulations governing the home-buying process, including disclosure requirements, construction standards, and warranty obligations. An attorney can ensure that the builder complies with all applicable laws and regulations, protecting the buyer from legal issues down the line.
Negotiation: Attorneys are skilled negotiators who can advocate for the buyer’s interests during the home-buying process. Whether it’s negotiating the purchase price, financing terms, or upgrades to the home, an attorney can help the buyer achieve the best possible outcome.
Dispute Resolution: If disputes arise during the home buying process or after the purchase is complete, having an attorney on your side can be invaluable. They can represent you in negotiations, mediation, or litigation to resolve the dispute quickly and effectively.
Overall, hiring an attorney before purchasing a new home from an unregulated Texas home builder provides the buyer an added layer of protection and peace of mind. It ensures that the buyer’s interests are fully represented and they make a sound investment in their future home.
Fans of Mike Holmes, dba the Canadian Showboat, might be surprised to find that it is all blow and no go with the popular builder/inspector. https://www.cbc.ca/news/investigates/mike-holmes-lawsuit-demolition-1.7091774
If you haven’t already, you might want to check out the recent WFAA article discussing the declining quality of home construction in the DFW area. You can find it here:
https://www.wfaa.com/article/news/local/dfw-home-inspector-concerned-about-fast-new-construction/287-47695769-4e06-4c11-9a8b-3c39e4dcbd42
While the inspector’s concerns in the article are a step in the right direction, they may not be providing you with the full picture. His optimism in estimating that only 90% of new houses in the area have structural defects is questionable at best. In my 27 years of inspecting houses, I consistently find structural issues in every single one, and they seem to be worsening.
The recommendation to have inspections during the construction process, as suggested by the inspector in the article, is indeed sound advice. However, the problem lies in the fact that, like the inspector mentioned, almost 100% of the home inspectors licensed by the Texas Real Estate Commission lack the qualifications needed to inspect buildings under construction.
All houses built in Texas must adhere to standards such as the International Residential (IRC) and Energy Conservation (IECC) Codes, as well as the National Electrical Code (NEC). However, the standards of practice (SOP) for TREC-licensed inspectors explicitly exclude knowledge of building, energy, or electrical codes.
Builders are required to conform to prescriptive codes, which provide detailed requirements for the design and construction of buildings, specifying certain materials, methods, and dimensions.
In contrast, the SOP for TREC inspectors follows a performance code, which sets overall goals and objectives for buildings in terms of safety, functionality, and sustainability. Rather than specifying materials or methods, performance codes prioritize achieving desired outcomes over time.
It’s important to note that a house under construction, obligated to be built according to a prescriptive code, cannot be effectively inspected using a performance code. Since it’s new, no time has passed, and its performance over time cannot be measured. Due to the intricate nature of house construction projects and the multitude of factors involved, performance codes lack the detailed instructions necessary for proper construction. This opens the door to interpretations by contractors and inspectors that often serve as excuses for not adhering to proper procedures.
Think about it like this. Car and Driver, Motor Trend, Edmonds, et al., don’t publish reliability reports on automobiles that have just rolled off the assembly line, right?
Builders required to adhere to prescriptive codes are unlikely to address reported defects from an inspector operating under a performance code. Hiring an under-qualified and under-performing inspector will lead to wasted money and a house that does not perform as intended over time.
No inspector lacking a Residential Combination Inspector certification from the International Code Council is qualified to inspect new house. Check your inspector’s credentials (or lack thereof) here:
https://www.iccsafe.org/search-for-certified-professionals/
TITLE INFLATION
The practice of using more elaborate or prestigious titles to describe a job or position than its conventional or common name is often referred to as “euphemism” or “title inflation.” Calling a janitor a “sanitation engineer” would be an example of using a euphemistic or inflated title to make the job sound more sophisticated or important. This can be done for various reasons, such as to enhance the perceived status of the position or to make it more appealing. However, it’s important to note that the appropriateness and effectiveness of such terminology can vary, and some may view it as an attempt to mask the true nature of the job.
The home inspection industry is rife with these euphemistic titles. Inspectors with zero construction experience and little time in the profession will attempt to lure customers in using such puffery. For those of you in the market for an inspector I’ve made an attempt here to decode a few of these for you lest you fall under their sway.
Thermographer is the term adopted to glorify users of infrared cameras. I suggest “heat whisperer” or perhaps “infrared ninja”. Any inspector in the business for more than 15 minutes owns an infrared camera. They have limited uses. They are not magical devices used to see inside of walls. An infrared camera is just another tool in the box.
Sewer Scope Inspector is the grandiloquent term for someone who inserts a rather long endoscopic device into the sewer pipes of a building. I like the term “rotoscatographer”. Any plumber is qualified to perform this function. Home inspectors are not. Allowed by nonsensical Texas law? Yes. Qualified? Not a chance.
UAV Pilot (drone pilot) is the term used by people who play with drones when they should be working, exceptions being commercial drone operators like utility contractors, commercial roofers, law enforcement agencies, etc. I prefer “Sky Commander” or “Crashologist”. If the drone cost less than $10K it is a mere toy. Toys are not tools.
I could add a few of my own to the vernacular, but fear that they might actually become commonplace.
“Darkness Disruption Technician” – One who uses a flashlight.
“Elevation Engineer” – One who climbs a ladder.
“Fastener Manipulation Expert” – One who employs a screwdriver.
“Gravity Consultant” – One who uses a level.
“Hydraulic Scrutinizer” – One who uses a water pressure gauge.
“Doctor of Distance Divination” – One who utilizes a tape measure.
And finally, “Home Inspector” – This is a misnomer that has been promoted by the real estate industry brokers and salespeople. One cannot inspect a home. One can only inspect the house that has been made a home by its inhabitants.
And now off we go into 2024!
Labor shortages, lumber shortages, supply chain issues, mortgage rates, etc. are not the real cause of the current housing issue.
Read this: https://www.futurity.org/buying-a-house-real-estate-2973222-2/
I recently sent this letter to the editor of the ASHI Reporter, the magazine of the American Society of Home Inspectors. Since I doubt seriously that they will publish it, I thought I’d post it here as well.
“Inspecting New Construction
While pondering over the idea of penning a technical article on new construction inspections for the upcoming December issue of the ASHI Reporter, I felt I should say this first.
If your business is not located in Texas – be happy. Properly inspecting new residential construction here is a serious challenge. Builders are not regulated, i.e. need not be licensed, bonded, insured, educated – nada. It may be similar in other states, but is certainly not as blatant as it is where I work.
Municipal inspectors are, I suspect, like they are nearly everywhere; overworked, under-paid, and questionably-proficient in building code enforcement. Even those who are in the know, well-meaning, and have a solid ethical base are often not allowed to be too strict, if they value their jobs. Builders are notorious for putting pressure on building officials, either via payola or by threat of moving their building sites to another jurisdiction where less enforcement will be encountered.
With both home prices and mortgage interest rates soaring it has become crystal clear to the home buying public that independent interim inspections are a must. In Texas, any inspector licensed by the Texas Real Estate Commission is allowed to inspect new homes under construction. This is certainly questionable, since they specifically exclude any building code knowledge from their SOP. This is also the case with the major inspection associations – including ASHI.
Where does this leave the home buyers? In peril. As professional inspectors it is our duty to inform clients of material and safety defects found during an inspection. If we are not ourselves intimately familiar with the minimum construction standards, i.e. the building, electrical, and energy efficiency codes, how will that work? It will not.
I think it is high time that ASHI makes the long overdue move toward requiring ICC certification for its members and assisting them in obtaining it. You cannot simply pretend to be the best, you must make proactive moves to ensure that you are indeed the best. One can spout all of the ethics one likes, but without action, it is just so much hot air.
Certification is the only way that one can prove knowledge of a process such as building. Without it, one is unaware of the very bones of construction regulations, not to mention the nuances that come by actually building homes – another prerequisite lacking for association memberships or state licensing.
The term “ASHI Certified Inspector” would take on a much broader and authoritative meaning if backed by more than the current minimalist SOP.
Flipping through the pages of the ASHI Reporter over the past few years gives me a clear view of the professional liability insurance industry’s influence that appears to be predominant. Insurance carriers do what is best for their bottom line by spouting fear-inducing mantras such as “do not exceed your SOP” or “do not quote codes”. In other words, be minimalists. Do the very least imaginable in order to protect your insurance company’s assets.
I apologize if the title of this article lured you in with the idea of discussing technical aspects of new construction inspections. I assume that, for the overwhelming majority of you who lack boots-on-the-ground construction experience and code certification, that might be a bridge too far.”
THE EVER-SHRINKING HOMEBUILDER WARRANTIES
I have written numerous times about the near-worthless warranties offered by Texas homebuilders. On September 1, 2023, I will now have less to write about. The barking-mad buffoons in the Texas Legislature were successfully lobbied by the Texas Builders Association and their insurers into lowering the 10-year maximum structural warranty to 6 years. There must have been some big money changing hands to get a whopping 40% reduction in consumer protection. Ya’ think?
It has been a slow-moving coup. We went from having an implied warranty of good workmanship (remember that?) and habitability back in 2000 to express warranties of 1-2-10 years, and now to 1-2-6 years. Given the philosophies embraced by the ruling party in Austin, I give it another 5 years before we are down to a 1-2-3 express warranty. Another 10 years, and they’ll be like the warranties on the appliance the builders install – 365 days.
Ticking bombs.
The bright side, if there is one, is that the express warranties never actually warranted much anyway. So, homebuyers have not lost a whole lot—just 40% of disingenuous, empty promises.
I am reminding those of you who are about to sign on the dotted line with an unlicensed, unregulated Texas builder to have them build your new house that you have literally no protection from the unconscionable building practices that prevail here.
Get a copy of the warranty before you buy. Read the exclusions. These warranties consist mostly of exclusions. Important exclusions. For example, they do not cover building code violations. Since the building codes are the MINIMAL standards, one might presume that the warranties would insist on ensuring compliance with them. That is not the case.
If you do not have your house independently inspected during the construction process for code compliance, who will ensure that compliance? Your builder certainly will not. The municipal inspectors will not. The Texas Legislature will definitely not. The Texas Attorney General cannot – he’s been put on indefinite leave due to “alleged” corruption. You’ll be screwed. Self-screwed, not to put too fine a point on it.
With the relatively recent advent of media bombardment regarding A.I. meddling in human affairs, I feel I should remind everyone that I do not employ artificial intelligence in writing my blog articles or inspection reports. There is simply no question as to who is more qualified; me with 48 years in construction defect identification or AI with literally no boots-on-the-ground experience.
As with most businesses, A.I. lovers are attempting to insinuate themselves into everything. Inspection report-writing software companies are hawking their wares with ludicrous statements like:
“One of the key drivers for the adoption of AI-based home inspection software is the shortage of skilled labor in the industry. According to the National Association of Home Inspectors, the demand for home inspections is projected to grow by 10% over the next decade, while the supply of qualified inspectors is expected to decrease by 15%. This means that the industry will face a shortage of 25,000 inspectors by 2029.
AI-based home inspection software like XYZ is providing a solution to this problem by providing a consistent level of quality across all inspections, regardless of the inspector. This technology is capable of analyzing large amounts of data quickly and providing a detailed report and recommendations for repairs or upgrades in a fraction of the time it would take a human inspector.”
A.I. lovers dream on.
The Texas Association of Builders (TAB) Warranty
The State of Texas does not regulate homebuilders. They are self-regulated.
If you search Google for who governs Texas home builders you get the following result: “The Texas Association of Home Builders (TAB) is a voluntary trade organization representing all segments of the residential building industry.”
“Founded in 1946, the Texas Association of Builders is an affiliate of the National Association of Home Builders and has 26 local associations and nearly 10,000 builder, remodeler, developer and associate members across the state. Representing over 758,000 jobs and more than $71.5 billion annually in the Texas economy, the state and local associations play a crucial role in providing housing for Texans.
The Texas Association of Builders is dedicated to creating a positive business environment for the housing industry by addressing the housing issues of the people of Texas.” – From the TAB website
Note that nothing is said regarding consumer protection. It is all about a “positive business environment for the housing industry”. Read: industry control.
“The Texas Association of Builders (TAB) has a standing Contracts Committee to ensure that its contracts are comprehensive, up-to-date, and the best product available in Texas. As such, the TAB contracts provide homeowners and builders an invaluable benefit in the form of enhanced legal protections, reduced liability, clear legal compliance with various Texas laws and a solid written warranty with some of the strongest performance standards in the nation. Many other form contracts, including the National Association of Home Builders’ contracts, fail to meet numerous statutory requirements in the Texas Property Code, as well as fail to properly waive all implied warranties as outlined by the Supreme Court of Texas, thereby exposing homeowners and builders to serious legal liabilities and significant expenses, including the voiding of non-compliant contracts.” – From the TAB website
Though cryptically stated, this explains they are mainly concerned with enhanced legal protections and reduced liability for home builders. Avoiding legal liabilities through lobbying for builder-friendly laws as opposed to actually constructing houses properly. It is important to note that they are praising their own efforts to preclude builders from the need to adhere to the any implied warranties.
EXPRESS VS. IMPLIED WARRANTIES
In Texas home building, an express warranty and an implied warranty are two different types of warranties that provide different levels of protection to the homeowner.
An express warranty is a warranty that is explicitly stated in writing, such as in a contract, sales brochure, or other documentation. The terms of an express warranty are negotiated between the home builder and the homeowner and can vary widely. For example, an express warranty might specify that the home’s foundation will not crack for a certain number of years or that the roof will not leak.
In contrast, an implied warranty is a warranty that is not explicitly stated but is automatically assumed to exist by law. In Texas, there are two types of implied warranties that apply to new home construction: the implied warranty of habitability and the implied warranty of good workmanship. The implied warranty of habitability means that a new home must be fit for its intended use as a dwelling and must be free from any defects that could affect its use for that purpose. The implied warranty of good workmanship means that the home must be constructed in a workmanlike manner, using materials that are of a quality consistent with industry standards.
The key difference between an express warranty and an implied warranty is that an express warranty is negotiated and agreed upon by the parties, while an implied warranty is automatically implied by law. Additionally, an express warranty may offer more specific protections than an implied warranty, while an implied warranty applies regardless of whether or not it is explicitly stated in the contract.
IMPLIED WARRANTIES
- IMPLIED WARRANTY OF GOOD WORKMANSHIP
The implied warranty of good workmanship is a common law principle that is implied in every construction contract, regardless of whether it is explicitly stated in the contract or not. It is a promise that the work performed by the contractor or subcontractor will be done in a skillful, careful, and diligent manner consistent with the standards of the trade.
The warranty applies to both the construction of new property and the repair or modification of existing property. It requires the work to be done in a manner that meets the standards of the industry and is consistent with the expectations of a reasonable person. If the work performed by the contractor or subcontractor does not meet these standards, the owner may have a cause of action against them for breach of the implied warranty of good workmanship.
It is important to note that the warranty does not guarantee a perfect result, but rather a result that is consistent with the standards of the industry. If the work is performed in a good and workmanlike manner, but defects or problems arise later, the owner may still have recourse through other legal avenues, such as a breach of contract claim or a claim for negligence.
Overall, the implied warranty of good workmanship is an important protection for owners and ensures that construction work is performed to a reasonable standard of quality.
A profit-driven industry that is self-policing would surely do all in its power to avoid adherence to avoid dealing with something as consumer-friendly as an implied warranty of good workmanship.
- IMPLIED WARRANTY OF HABITABILITY
The implied warranty of habitability is a legal doctrine that is implied in most residential construction contracts. It requires the contractor to construct a residential dwelling that is safe, sanitary, and fit for human habitation at the time of sale, and that is free from defects that could render the dwelling uninhabitable. The warranty is implied by law, which means that it applies even if it is not specifically stated in the contract.
In most states, including Texas, the implied warranty of habitability cannot be waived because it is viewed as being in the public interest to protect homeowners from uninhabitable conditions. However, the implied warranty of good workmanship can be superseded by an express warranty if the parties’ agreement specifically describes the manner, performance, or quality of the services to be provided.
This means that if the parties explicitly agree to a higher or lower standard of workmanship than what is normally expected in the industry, the express warranty will supersede the implied warranty of good workmanship. However, the express warranty must be clear and unambiguous and must be sufficiently specific to the work being performed.
Overall, both the implied warranty of habitability and the implied warranty of good workmanship are important protections for homeowners. While the implied warranty of habitability is generally viewed as being non-waivable, the implied warranty of good workmanship can be superseded by an express warranty under certain circumstances.
EXPRESS WARRANTIES
The darling of the TAB is their express warranty, which they tout as the best warranty in the nation. It was originally authored by the now defunct Texas Residential Construction Commission (TRCC).
The Texas Residential Construction Commission (TRCC) was a state agency established in 2003 to regulate the home building industry and resolve disputes between homeowners and builders. However, it was disbanded in 2009 due to controversy surrounding its effectiveness and transparency.
One of the main criticisms of the TRCC was that it was too closely aligned with the home building industry and did not adequately protect homeowners’ rights. Critics argued that the TRCC’s dispute resolution process favored builders over homeowners and that its regulations were weak and ineffective.
In addition, there were concerns about the TRCC’s transparency and accountability. Some critics claimed that the agency was too secretive and that its decision-making process was not open to public scrutiny. In response to these concerns, the Texas Legislature voted to abolish the TRCC in 2009.
The commission that the builders themselves lobbied for was deep-sixed due to what the Sunset Commission regarded as widespread builder corruption.
BUILDING CODES
The State of Texas has adopted minimum model building standards for home construction in the form of those authored by the International Code Council (International Residential Code, International Energy Efficiency Code, et al.) and the National Fire Protection Association (National Electrical Code).
The purpose of these codes, per the ICC:
“IRC R101.3 Intent. The purpose of this code is to establish minimum requirements to safeguard the public safety, health and general welfare through affordability, structural strength, means of egress facilities, stability, sanitation, light and ventilation, energy conservation and safety to life and property from fire and other hazards attributed to the built environment, and to provide safety to fire fighters and emergency responders during emergency operations.”
The only mention of building codes – the absolute minimum of consumer protection in new home construction – is in the exclusions of the warranty adopted by the Texas Association of Builders.
“Section VIII Exclusions – 5. Failure of Your Builder/Seller to complete construction or construction which is noncompliant with plans and specifications;
violations of local or national building codes, ordinances or standards;”
So, if your builder does not build in accordance with the minimum building standards, and the municipal inspector (if any) does not do his job to enforce these standards, you will find yourself in an extremely challenging situation that may not be practically escapable.
” Government Affairs
The Texas Association of Builders’ professional government relations staff work year-round to advocate for legislative reforms that benefit our industry. TAB’s experienced lobbyists monitor bills, legislative and regulatory agency hearings that affect the building industry and work to amend or defeat measures that would adversely impact the industry.
TAB’s government affairs program is nationally recognized for its innovation and legislative successes. The effective efforts of TAB’s government relations team has resulted in the defeat of bills that would potentially harm our industry, and add significant costs to the home building industry and, in turn, to the home buying public.
The home building industry is among the most regulated industries in the country. In Texas, several regulatory agencies govern the practice of construction including: Texas Department of Licensing and Regulation (TDLR), Texas Department of Insurance (TDI), State Energy Conservation Office (SECO), Texas Commission for Environmental Quality (TCEQ) and Texas State Board of Plumbing Examiners.
TAB staff continuously monitors regulatory changes and new rule postings. When changes are proposed, TAB staff and members participate in the process by providing comments and testimony in an effort to keep the home building industry free from excessive regulation and fees.” – From the TAB website
The TAB evidently considers any regulation of its members to be excessive.
In short, the TAB is on a course to supplant all industry standards with their paper-thin express warranty.
RECOMMENDATIONS
Before you sign on the dotted line with any Texas homebuilder, hire an attorney to review the contract, warranty, and other documents involved and explain your rights.
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