Houston Democrats: Consumer Protection Archives

January 29, 2006

The Texas Residential Construction Commission (TRCC). The house that Bob Perry built.

A TRiCC on the Public by John R. Cobarruvias Homeowners Against Deficient Dwellings

In 2003 the Texas Legislature created the Texas Residential Construction Commission (TRCC, pronounced "trick") by passing House Bill 730. This bill, written by the Texas Association of Builders (TAB), was promoted to our elected officials as providing protection for new homebuyers from costly construction defects. Unfortunately the recent audit of the TRCC by the Comptroller of Texas concluded the TRCC "functions as a builder protection agency". It is clear from this audit, the TRCC is nothing more than a TRiCC on the homebuyers of Texas and our elected officials.

The TRCC was created due to an outpouring of complaints by angry homebuyers with construction defects, yet not one single consumer advocate was consulted when Mr. John Krugh, senior vice president and corporate counsel for Bob Perry Homes, drafted the bill. Mr. Krugh was later appointed, by Governor Perry, as one of members of the Commission.

The bill was filed by State Representative Alan Ritter(D Beaumont), a lumber salesman and a member of the Texas Association of Builders. He was later honored by the TAB for his role in passing the bill, creating the Commission.

The Commission was granted authority to create a "State Sponsored Dispute Resolution Process" (SIRP) a mandatory process to assist homeowners mediate their complaints with a builder. It authorized the Commission to create "Warranty and Performance Standards" to define standards for new home construction. And it created the Arbitration Task Force to research the continued abuse of mandatory binding arbitration used by homebuilders.

As the audit disclosed, the resolution process is a costly, lengthy, and complicated process requiring the assistance of an attorney to navigate, exactly the opposite of what it was advertised. The warranty standards originally created by the builders and fashioned after the "worthless" 10-year warranties provided by homebuilders, provides less protection for the biggest investment of a lifetime than a cheap foreign made new car. Once again the builders falsely claimed these standards would benefit the homebuyer.

The arbitration task force was to research the continued abuse of arbitration to resolve defects in new homes. All of the initial task force members had ties with the homebuilding industry or the American Arbitration Association. Membership also included the President of the TAB. Needless to say, the results of this task force has been slanted and the homebuilder industry continues to claim arbitration is good for the consumer.

The homebuilding industry's response to the Comptroller's audit is predictable: "Trust us. It will get better." But trusting the homebuilding industry to fix the TRCC is like trusting a fox to fix hen house security. They have tricked the consumers and fooled our elected officials long enough. Our elected officials, regardless of party, should stop protecting this industry and start demanding protection for new homebuyers. If they can't be trusted to provide simple protection for the biggest investment of a lifetime, then they can't be trusted with our health care, insurance, our teachers, and our children's education. And in November the voters in Texas should demand massive reforms of this agency from all candidates.

The audit by the Comptroller has validated our long lasting concerns since House Bill 730 was filed. The TRCC, built on a cracked foundation, was created by the builders, for the builders, with no input from consumer organizations. Until the foundation is fixed, the TRCC will remain nothing more than a huge "TRiCC" on the consumers of Texas and on our elected officials.

John R. Cobarruvias
Homeowners Against Deficient Dwellings
www.hadd.com

John R. Cobarruvias has been an advocate for new homeowner rights and is President of Homeowners Against Deficient Dwellings, Texas. He testified against House Bill 730 and has since provided research on the Commission and the rules and procedures.

--
John R. Cobarruvias
Homeowners Against Deficient Dwellings
john.cobarruvias@hadd.com 14646 Cardinal Creek Ct
Houston, TX 77062
281-486-5203 H
281-536-2457 C

http://www.hadd.com

Posted by John Cobarruvias at 07:15 AM | Permalink | Comments (0) | TrackBack

January 27, 2006

Builders Commission responds to Carole Keeton Rylander Strayhorn Cougar Mellencamp Crosby Stills Nash and Young

The Texas Residential Construction Commission responded to the critisism by the Texas Comptroller. Here is a shortened version of the response:

Comptroller Carole Keeton Rylander Strayhorn
Comptrollers Office
Austin, Tx

Comptroller Strayhorn,

We have read your report on our Commission and rest assured, we aint' goin to do squat, so stick it!

Sincerely,
~~Bob Perry Homes~~
The TRCC Commission

Posted by John Cobarruvias at 02:35 PM | Permalink | Comments (1) | TrackBack

January 23, 2006

Comptroller Rylander nails Texas Homebuilders Commission

Today Texas Comptroller Carole Keeton Rylander issued a very stern review of the Texas Residential Construction Commission (TRCC pronounced "trick") which was to help homeowners with construction defects. "After reviewing the TRCC and its enabling statue, it is clear that the agency functions as a builder protection agency." states the report.

"This report validates the concerns we have had ever since this Commission was proposed in 2003. The TRCC has been nothing more than a trick on the homebuyers of Texas and our elected officials." said John Cobarruvias President of the Texas chapter of Homeowners Against Deficient Dwellings.

The report criticizes the Commission for being stacked with builder friendly Commissioners, including the Vice President of Bob Perry Homes, Governor Rick Perry's biggest donor. The mandatory inspection process was found to be expensive and nothing more than a bureaucratic roadblock. And the Commission lacks any enforcement over the builders who refuse to make repairs.

Comptroller Rylander concludes "...if it was up to me personally, I would blast this TRCC builder-protection agency off the bureaucratic books"

"I reluctantly agree. This Commission was built on a flawed foundation which cannot be repaired. It must be torn down and we must start over" said John Cobarruvias.

The complete report can be found at: http://www.cpa.state.tx.us/trcc/.
--
John R. Cobarruvias
Homeowners Against Deficient Dwellings
john.cobarruvias@hadd.com

Posted by John Cobarruvias at 07:30 PM | Permalink | Comments (0) | TrackBack

January 08, 2006

Carolyn Keeton Rylander Strayhorn hammers the builders.

The comptroller will be releasing an audit of the Texas Residential Construction Commission (TRCC, pronounced “trick”) this week. This Commission has been heavily criticized for its overbearing bias towards the homebuilding industry. Instead of providing protection for new homebuyers, the commission has provided ample protection for the builders.

Rylander's audit has already been under fire even before the report has been released. Representative Swinford has asked the Attorney General to determine whether Rylander has the authority to audit the Commission. That request can be found here.

Needless to say, Rylander could be playing politics since the commission is Governor Perry’s personal playground. He appointed John Krugh, the VP of Bob Perry Homes, to the TRCC -- the commission that should regulate Perry Homes. This was right after Perry gave Perry $100,000. (Confused yet?) Krugh wrote the bill which created the commission and also wrote the warranty standards.

This commission is sick. It is a complete joke. The Texas Association of Builders claimed this commission was to provide consumer protection. Instead they played a huge TRiCC on the public and our elected officials.

Watch for the fireworks coming soon.

Posted by John Cobarruvias at 08:09 PM | Permalink | Comments (0) | TrackBack

November 04, 2005

Oct Newsletter on the Texas Homebuilding industry.

Get the scoop on homebuilders and the lack of consumer protection for new homebuyers. Download our quarterly newsletter at:

http://www.hadd.com/documents/texasnewsoct2005.pdf

In “Your Home Matters”

President’s Message
Perry Homes. They lost Again!
KB Homes Gets the Ka-Boom!
End Mandatory Arbitration
Centex Homes out of BBB!
Heidi Wanken: Home buyers, beware
The Many Levels of Texas Bureaucracy
Texans Homeowners United

Posted by John Cobarruvias at 08:51 PM | Permalink | Comments (0) | TrackBack

July 08, 2005

Texas Homebuilding Newsletter. Your Home Matters. July 2005

Homeowners Against Deficient Dwellings, Texas, quarterly newsletter can be found http://www.hadd.com/documents/texasnewsjuly2005.pdf

We hope you will be interested in the issues surrounding the new home building industry and the lack of consumer protection for homebuyers.

This issue includes:
Mother Jones In Houston, Texas. A national article about a homebuilder in Houston
Killed on the Hill. Consumer bills killed during the legislation session.
Arbitration Fact Sheet. A fact sheet about the abuse of arbitration.
A Homeowner Nails Bob Perry. An article about Bob Perry Homes and arbitration.
John Krugh Confirmation. Details on Bob Perry's Vice President's confirmation to the Commission.
A Public Relations Disaster. A meeting conducted by the TRCC was a disaster in Houston.
Contractors From Hell…Not at the BBB! An Article by the Better Business Bureau
www.trccwatch.com. A new watchdog website about the TRCC.
Texas New Home Warranties. An Op-Ed on the new home warranties adopted by the TRCC.
Frisco Texas. A report on the results of the elections.
--
John R. Cobarruvias
Homeowners Against Deficient Dwellings
john.cobarruvias@hadd.com
281-486-5203
http://www.hadd.com

Posted by John Cobarruvias at 09:45 PM | Permalink | Comments (1) | TrackBack

June 03, 2005

Texas New Home Warranties. A Trick On The Public.

Two years after the creation of the Texas Residential Construction Commission (TRCC), a Commission to regulate homebuilders in Texas, the Commission has released warranty standards for all new home construction in Texas. This standard, which comes into effect June 1, 2005, was created on a flawed foundation of promises of consumer protection and heavy influence by the homebuilding industry. For new homebuyers, there are only two words of encouragement available: Good Luck.

Full OP-ED can be found at:
http://www.democrats.us/editorial/cobarruvias060305.shtml

Posted by John Cobarruvias at 09:25 PM | Permalink | Comments (0) | TrackBack

May 27, 2005

A public relations disaster for the Builders Commission

The Texas Residential Construction Commission (TRCC), appropriately pronounced "tricky" held a public seminar in Houston on Thursday evening to discuss the new home warranty standards that take effect June 1, 2005.

In short, it was a Public Relations disaster for the TRCC.

The lone Commissioner in attendance, Mr. Porter left the meeting before the question and answer session began. He never returned. Some believed it was because Channel 13 set up a camera at the back of the room and was looking for comments.

A professor from Texas A&M Department of Building Construction (the same group that built a 80ft tall 100 ton stack of logs without a foundation that fell and killed 12 students) along with a representative of the TRCC gave a very "rosy" presentation of the TRCC that, to the untrained eye, described the TRCC as a consumer protection dream.

Unfortunately once the tough questions were asked by consumers the professor became short and at times rude enough for a number of people to confront her about it after the meeting. Many questions were left unanswered and many of those who attempted to ask questions were cutoff and quit in frustration.

All of this would have all been recorded by CH 13, but the A&M professor told them they could not film inside of the public hearing even though it was being held with tax dollars by a public Commission.
After the event was completed, the TRCC representative and the Texas A&M Professor refused to be interviewed on camera. And the lone Commission never returned, leaving only the homeowners who took their time to attend the meeting to talk with the media.

All in all, it was an embarrassing disaster for the Commission and their representatives. It was a very poor showing and was insulting to many of the homeowners.
--
John R. Cobarruvias

Posted by John Cobarruvias at 05:34 PM | Permalink | Comments (0) | TrackBack

May 04, 2005

The leadership of Texas adopts extremely limited new home warranties.

Austin Texas. The newly created Texas Residential Construction Commission (TRCC pronounced "trick") approved extremely limited new home warranty standards for home construction in Texas. The warranty which must be provided by all new homebuilders becomes effective June 1. These standards have been in work for almost a year, yet fall short of providing adequate protection for new homebuyers.

According to a review, by Homeowners Against Deficient Dwellings, the standards allow for cracks in the walls, in the foundation, and in the exterior of the home which consumer groups and the general public deems unreasonable. Homeowners must also correctly maintain the water content around their foundation or risk voiding the warranty. These are only a few of the many serious flaws in the standards that will be imposed on new homebuyers.

"The leadership of Texas has stooped to the lowest set of warranty standards for new home construction. It is a shame they hold such little regard for the largest investment of a Texan's lifetime." says John Cobarruvias President HADD Texas.

The warranty standards can be found at the TRCC's website http://www.trcc.state.tx.us. The TRCC is conducting informational seminars on the standards across the state. The schedule can be found at http://www.trcc.state.tx.us/links/Sandy%20Warranty%20Schedule.pdf

HADD's review of the warranty can be found at http://www.hadd.com/documents/warrantyreview.pdf

For further information Contact
John Cobarruvias
Homeowners Against Deficient Dwellings
john.cobarruvias@hadd.com
281-496-5203 H
281-483-9357 W
281-222-2754 C

Posted by John Cobarruvias at 10:41 PM | Permalink | Comments (0) | TrackBack

April 21, 2005

Invitation to a HADD meeting on new homebuilding

OPEN TO THE PUBLIC!

The Homeowners Against Deficient Dwellings meeting on April 25 will be held at:

The Post Oak Room
3050 Post Oak Blvd
Houston, TX 77056-6527

Parking is at no charge. Beverages will be provided. Map is at:
http://www.lakesonpostoak.com/Location.aspx

April 25, Monday beginning at 7:00PM.

Guest speaker will be Duane Waddill, Deputy Executive Director of the Texas Residential Construction Commission, the new Commission designed to oversee the homebuilding industry. He will be speaking on the TRCC with Q&A.

Please invite others who would be interested in homebuilding issues, including inspectors, engineers, homebuilders, and those in the legal profession.

We will also provide an update on all legislation in Austin affecting homeowners. Your support and interest would be greatly appreciated.

--
John R. Cobarruvias
Homeowners Against Deficient Dwellings
john.cobarruvias@hadd.com
14646 Cardinal Creek Ct
Houston, TX 77062
281-486-5203

http://www.hadd.com

Posted by John Cobarruvias at 08:00 PM | Permalink | Comments (0) | TrackBack

April 12, 2005

Oppose SB 848 and HB 1704

In a surprise addition to the calendar, the Texas Senate will vote on SB 848 today and the House wil vote on its companion bill, HB 1704 tomorrow. Both bills allow developers to lock in development regulations by submitting incomplete and defective plans. Call your state representatives and senators today to oppose these bills!

Matt Glazer, Legislative Organizer - GEAA explains:

"GRANDFATHERING" CONSIDERED BY FULL LEGISLATURE
Tuesday Morning the Texas Senate will vote on SB 848, a bill that will
destroy local control of development by expanding the "Grandfathering"
laws. Wednesday the House of Representatives will vote on its version of
the same bill, HB 1704.

These bills allow developers to submit defective and incomplete plans---as
in a sketch on a cocktail napkin---and lock in development regulations for
years and decades until the project is built. In this way developers
circumvent water quality and regional planning regulations that cities and
counties have worked hard to enact. These bills serve no public purpose
but allow developers to build at higher densities for higher profits than
ever before. SB 848/HB 1704 are developer dream bills that destroy local
control of development and water quality.

Your help is crucial to STOPPING these bills. Here's what you can do: 1)
Call your State Senator Tuesday Morning before 11 a.m. That is the only
way they will know you OPPOSE 848 before they go to the Senate floor. 2)
Call your State Representative next and tell them you OPPOSE HB 1704.
3) Come to the GEAA press conference on these bills at the Capitol,
E1.002 at Noon on Tuesday.

To find out who your Senator and Representative are, use this free web link:

http://www.capitol.state.tx.us/fyi/fyi.htm

MORE INFORMATION

SB 848/HB 1704 allow developers to lock in the regulations that will
apply to their project by mailing in an application, even though the
application may be incomplete or defective.

These bills allow the postmark date to serve as the application date at
which point all development regulations, including water quality
regulations, will be locked in for years or decades until the project is
built. These bills also provide for regulations to be locked in when a
developer merely acquires a promise that utilities will be provided to the
site-a decision that doesn't have anything to do with project density or
design.

Changing the grandfathering laws will force cities to develop new methods
for dealing with these applications, as well as implementing a complicated
regulatory structure applying laws in effect at several different times,
not to mention defending all those decisions in court. Cities will be
forced to waste valuable taxpayer dollars figuring out how to implement
these new laws---while they don't serve any public purpose and only
increase developer profits.

Please circulate this among your friends and groups,

Posted by Lyn Wall at 10:26 AM | Permalink | Comments (0) | TrackBack

March 31, 2005

The "Front Groups" protecting your family

You would think that our elected officials in Austin would be firmly protecting their constituents, but many are listening and being lobbied by special interest groups claiming to represent the interest of you and your family.

Texans should be asking, "Who are these special interest groups? why are they speaking for me and my family? And how much is this going to cost me?"

During the last Legislation session in Austin, a number of special interest groups, some would call "front groups" were busy advocating for limits on access to the justice system as if this was good for the consumer. When actually they were advocating for business interests and business interests only.

For instance, a group called Texans for Lawsuit Reform (TLR) advocated for limits on our civil justice system and Proposition 12, which limited medical malpractice awards to $250,000. They have advocated for the use of mandatory arbitration stripping our Constitutional rights to a judge and jury. Their advocating has resulted in little if any reductions in consumer goods or protections for consumers, but has provided overwhelming protection from lawsuits for business interests.

The Texas Coalition for Affordable Insurance an organization composed of insurance companies such as USAA, State Farm, and Allstate, has also advocated for the consumer on insurance matters. Formed during the 2003 legislation session, their advocacy on behalf of your family has resulted in higher rates and less coverage. Again, only the business interests have been rewarded by their advocacy.

This session another organization call CLOUT or Citizens Lowering Of Unfair Taxes is advocating for the lowering of property taxes, much like the Texas Coalition for Affordable Insurance advocated for lower insurance rates.

CLOUT 's executive director, Edd Hendee, uses a far right radio talk show to promote CLOUT and their agenda. According to the Houston Press, Mr. Hendee has donated $20,000 to the anti-rail Political Action Committee chaired by Congressman John Culberson. And not surprisingly, Mr. Hendee has at least a personal relationship with anti-rail, anti-tax, Congressman Tom DeLay, even sharing bible study sessions with him. Congressman DeLay and Culberson have long been advocates of taxing schemes such as the flat tax. The flat tax sounds like a rationale and simple idea, yet in the end would unfairly tax lower and middle class families.

All of this, in itself, should not be cause for alarm or concern, until an organization such as CLOUT uses a radio station to promote reduction in property taxes and attends hearings in Austin on behalf of your family. What is not being told is how much the property tax cuts will cost the average family. Sure, everyone would welcome lower taxes, but not if the reductions in property taxes will be offset by a raise in sales tax, taxes on other goods, or reductions in fire and police service. In the end, the overall tax burden may be just the same, if not greater, with less service.

After all of the help by these special interest groups, our insurance rates have skyrocketed, our rights to the civil court system have been eroded, and tax rates have risen. Maybe it is time for them to stop helping us.

Posted by John Cobarruvias at 04:31 AM | Permalink | Comments (0) | TrackBack

March 23, 2005

An American Dream turns to a Texas Nightmare

"It should be clear, trusting the homebuilding industry to advocate for your family is like trusting a terrorist to advocate for homeland security."

http://www.hadd.com/documents/lies.jpg

Audio of this commentary beginning at 15:29 is available at: http://www.kpftx.org/archives/kpftsignal/mp3/050322_173002news.MP3

If you, or a family member, become the victim of a shoddy homebuilder, you will quickly learn the biggest investment in your life has the least amount of consumer protection. Thousands of new homes are built each year and according to a Texas Senate report, 12% of all new home construction will have a defect requiring third party intervention.

The process to resolve a defect could be one of the most time consuming and frustrating experiences of your life. And your American Dream turned Texas Nightmare could leave you financially, physically, and mentally bankrupt.

Many victims are shocked to learn the consumer friendly Texas Deceptive Trade Practice Act no longer applies to homebuilders. Instead it has been replaced with a long complicated process created by the homebuilding industry 15 years ago

This process, the Residential Construction Liability Act, or RCLA was the first “right to repair” law passed in the nation. It requires a long process of inspections and offers of repair. It limits the amount that can be awarded in a lawsuit. RCLA R-C-L-A also stands for Requires Competent Legal Assistance requiring a specialized attorney versed in construction law. The process can also last longer than it took to build the home with absolutely no guarantee of resolution.

Due to the complete failure of RCLA, our elected officials in 2003 created the Texas Residential Construction Commission or the TRCC pronounced appropriately TRICK.. House bill 730 was drafted by the homebuilding industry with absolutely no input from consumer organizations. It was filed by State Representative Alan Ritter of Beaumont. who is a member of the Texas Association of Builders and owns a lumber company, which sells lumber, to builders.

Needless to say, the Commission was flawed from the beginning and is well stacked against the consumer. It created a long, complicated, and costly dispute resolution process that must be followed before RCLA and before a suit can be filed. The processing fee is at least $350 and could take up to 3 months to complete with again, no guarantee of resolution or enforcement by the Commission. The Commission also created warranty standards so limited that a new $10,000 car has more protection than a new $100,000 home.

After following the long and costly procedures of RCLA and the TRCC, a homeowner will find they cannot sue the builder in front of a judge and jury, but instead are bound to a kangaroo court of arbitrators. Arbitration has been fond to be extremely costly, grossly unfair and the subject of 4 different investigations. This combination of Arbitration, RCLA and the TRCC also makes it extremely difficult if not impossible to find an attorney willing to tackle construction defect claims.

In response, Houston State Representative Jessica Farrar has filed HB3404 which will correct the major flaws of the TRCC. But the homebuilding industry will fight any changes to their Commission claiming it provides unprecedented consumer protection for homeowners.

The building industry has advocated for the consumer for over 15 years and consumers have little if anything to show for it. It should be clear, trusting the homebuilding industry to advocate for your family is like trusting a terrorist to advocate for homeland security.

Posted by John Cobarruvias at 07:17 AM | Permalink | Comments (0) | TrackBack

March 15, 2005

Texas #1 in home Insurance rates. Again.

Last week Forbes Magazine released a study with Texas ranked #1 with the highest insurance rates in the nation, 25% more than 2nd place Lousiana. During the last State elections, Texans were promised insurance rate relief, and yet over the last three years our rates double, tripled and our policy coverage was reduced.

So what happened, and what are our elected officials doing about it?

In 2001 the Texas Department of Insurance or TDI, held toxic mold hearings across th e state. After hundreds of homeowners pleaded for help, the commissioner relieved the insurance industry from mold damage, yet not one single penny of rate reduction was provided to consumers.

In 2002 insurance became a campaign issue with promises of lower rates yet the TDI continued to cave to the insurance lobby by allowing the use of HO-A policies. These policies removed foundation, water, and sewer damage. And yet again, not one single penny of rate reduction was provided to consumers.

In 2003 the Texas Legislature lead by Houston’s Senator Mike Jackson, passed massive insurance reforms. Under the leadership of Houston’s Representative Joe Nixon they also passed wide sweeping tort reform and limited medical malpractice awards to only $250,000.

The TDI again caving to the insurance industry, allowed the use of credit scoring, which insurers use to increase rates based upon a policyholders credit history. And again after all of these reforms, not one single penny of rate reduction was provided to consumers.

To add insult to injury, Forbes Magazine also reported that State Farm posted a $5.3 billion dollar profit for 2004. And the Washington Post has reported after analysis of the last 15 years of medical lawsuits, the medical malpractice crisis created in 2003 was nothing more than a myth.

So after three years of fighting on behalf of the consumers, we got two black eyes. Higher rates and less coverage. In short, we got ripped off, swindled, cheated, conned, deceived. Call it what you want, but in the end, the consumer, got it in the end.

And what are our elected officials doing about this? Unfortunately, not much.

Senator Mike Jackson, who filed the insurance welfare bill on behalf of the insurance industry, has filed Senate bill 14 that would penalize insurance companies if they raise their rates excessively. This bill is about three years too late and does nothing to reduce the current excessive rates.

House Bill 23 with wide support from consumer groups will finally ban the use of credit scoring. Credit scoring was overwhelmingly banned in the house in 2003, but was removed in Senate conference committee. It is hoped this bill will pass against any veto threat.

So three years of insurance reform gave Texans higher rates, less coverage, no mold, foundation, water or sewer damage, and absolutely no benefit from tort reform or medical malpractice reform based upon a malpractice myth.

Representative Larry Taylor of League City, an insurance agent, as well as a member of the House Insurance Committee recently said at a town hall meeting, “At least we are going in the right direction”.

If higher rates and less coverage is going in the right direction, I would hate to see what going in the wrong direction would be like.

Posted by John Cobarruvias at 11:08 PM | Permalink | Comments (3) | TrackBack

March 09, 2005

Arbitration in Consumer Contracts is a SCAM!

Over the last decade the use of arbitration as an alternative to our court systems has been growing, especially in consumer contracts. If you have purchased a new home or car, you probably have unknowingly waived your rights to a civil trial by jury for any dispute.

A civil trial is guaranteed by the 7th amendment of the Constitution. Unfortunately due to loopholes in federal law, mandatory, binding arbitration has been forced upon consumers to resolve product defects. Most every new homebuilder in Texas has an arbitration clause as a prerequisite to purchasing a new home to resolve all construction defects, therefore waving their Constitutional rights. In short, to purchase the American Dream, consumers must give up their rights as an American.

Contrary to popular belief arbitration is extremely costly and grossly unfair to the consumer. In fact there has been enough abuse in arbitration that the Texas House and Senate has conducted three investigations into the practice. And the newly created Texas Residential Construction Commission, which oversees the homebuilding industry, has also conducted a very thorough study. At all the hearings, the consumers hammered the home building industry with horror stories attributed to arbitration.

Over the years a number of unfair arbitration awards have been disclosed in the investigations. Even when the arbitration is in the favor of the consumer, the results can be very disappointing. A perfect example of this abuse is an arbitration award against homebuilder Bob Perry that can be found in the Senate hearing public records.

The filing fee was over $6000. In contrast, the fee to file in court is only $125. The cost for the arbitrator was $1000 a day. In court, the Judge and Jury are paid with our tax dollars. The filing fee did not include the cost of an attorney or expert witnesses, which you must have in either arbitration or court. The arbitrator in this case ruled in favor of the homebuyer for a total of $750,000. Unfortunately this award was entered over two years ago, and as of today has not been paid by the builder. (see http://www.hadd.com/documents/perry.pdf)

This is just one of many examples detailing the abuse of arbitration. Because of these investigations, our elected officials have filed bills to curb the abuse. These bills will require all arbitrations to be made public record. Currently the arbitration proceedings are held in secret, away from scrutiny by our elected officials and the public. The bills will also require arbitrators in Texas to be registered with the state and will require full disclosure of the arbitration agreement in new home contracts.

Although these bills attempt to resolve the abuse of arbitration, they fail to acknowledge that all Americans, by the Constitution, have the right to a civil trial by our time honored court system. Arbitration should always be an available alternative to the court system, but consumers should never have to be forced to give up their constitution rights.

Homebuilders and their tort reform groups have long defended the used of mandatory arbitration clauses claiming arbitration is good for the consumer, but the evidence says otherwise. The abuse of arbitration will stop only when it is truly an option, not a mandate, to our current court system. Until then consumers should carefully read their contracts and rethink their purchases if there is a mandatory, binding arbitration clause.

For more information on the abuse of arbitration read the report at http://www.hadd.com/documents/arbitration.pdf

Posted by John Cobarruvias at 05:41 PM | Permalink | Comments (6) | TrackBack

Houston Democrats - Consumer Protection