[Texas Lefty Capital Austin...] Records, lawsuits reveal foundation problems plague massive Austin development

[Leroy N. Soetoro]

https://www.kxan.com/investigations/too-much-money-at-stake-who-in-texas-
is-looking-out-for-home-owners/

Investigative Summary:
KXAN Investigates introduced you to families inside one massive Austin
subdivision fighting for costly repairs to their home foundations. While
buying a home is most people’s largest investment, the industry
responsible for building thousands of new homes every year is largely
unregulated in Texas. We take a look at the shuttered Texas Residential
Construction Commission — a short-lived Texas agency that tried to resolve
disputes between builders and homeowners over alleged construction
defects.

EXPLORE PART 1: Records, lawsuits reveal foundation problems plague
massive Austin development

AUSTIN (KXAN) – Three months ago, Janeka Harris was nursing her newborn
baby upstairs as construction crews began drilling the driveway of her
southeast Austin home.

It was the last part of a months-long repair of her home foundation.
Harris said a couple of years after purchasing and building her new home
in 2013, she noticed cracks coming from her window seals.

“After they started getting bigger, I called a friend to come out and do
some measurements,” Harris said.

Harris’s home is one of nearly 50 in the Lennar at Bradshaw Crossing
neighborhood that has undergone foundation repair since 2010, city permits
show. Her repair was covered under her warranty with the developer,
Lennar, records show.

But not every homeowner in the subdivision has had their repairs covered
by the national builder, according to court records.

In 2019, two Bradshaw Crossing homeowners sued Lennar claiming the
developer “failed to honor their warranties.”

Lennar declined an interview, but in an emailed statement to KXAN
Investigates, Lennar said it “has built thousands of homes in Austin, and
stand[s] behind all of them, including those in Bradshaw Crossing.”

The builder also said it will repair any home that does not meet the
commitment made to buyers.

For many homeowners, it’s hard to drill down on the underlying problem
causing their home foundations to fail.

The City of Austin told us it doesn’t require developers to submit the
results of soil evaluations that would shed light on the environmental
conditions home foundations are built on — and how the soil was treated —
and outside of local permitting offices there is not much regulation for
home builders in Texas.

At one time in Texas, there was an agency tasked with helping homeowners,
like Harris and her neighbors, deal with alleged construction defects.

‘Too much money at stake’
Back in 2003, for the first time, lawmakers created the Texas Residential
Construction Commission. But the agency was short-lived. After seven years
in operation, the legislature shuttered it in 2009 during the Sunset
Review process — a system where state workers and legislators evaluate an
agency and make recommendations to the legislature for changes, including
abolishment.

The then-Sunset Commission director told lawmakers during a hearing in
2009 his staff’s review of the agency found “a fundamentally flawed
system” for regulating builders.

The TRCC was not a hit with homeowners. The then-director of the agency,
Paulo Flores — a construction law attorney — told lawmakers in 2009 he saw
the commission not as a regulatory agency, but as a state agency to help
resolve disputes between builders and homebuyers.

Some lawmakers and consumers accused the TRCC of favoring builders and
delaying homebuyers from filing lawsuits over what they believed were
construction defects.

The TRCC had a process where homeowners could request a third-party
inspection of their home through the agency — and a ruling on the alleged
issues with their home. The TRCC said it oversaw 580 inspections in 2007
and found 25,000 post-construction defects in Texas homes. But critics
claimed the TRCC had little power to force builders to then make repairs.

“I mean you have a process with no results. You have a homeowner that goes
through a two-year process and gets nothing from your agency because you
have no authority. You have nothing to do to force a builder to make a
repair to a home,” said Sen. Juan Hinojosa, D-McAllen, during the Sunset
Advisory Commission meeting on Sept. 23, 2008.

But, during hearings in 2008 and 2009, even the harshest critics of the
agency expressed interest in keeping it — with fixes including shortening
the timeframe for inspections and posting consumer complaints on the
agency’s website.

A bill proposed by then-Sen. Glenn Hegar, R-Katy — Hegar is now the Texas
Comptroller — and the late Rep. Ruth Jones McLendon, D-San Antonio, gave
lawmakers a choice: overhaul the agency or abolish it altogether.

“If this agency is abolished, both consumers and builders will lose,” said
former TRCC member Mickey Redwine. “Renegade and unscrupulous builders
will once again be able to operate in Texas, practically unchecked and
unregulated.”

More than a decade after the commission’s end, Texas home inspector Lewis
Brown, who once sat on the commission, says the homebuilding industry is
still in need of regulation.

“There is no oversight,” Brown said. “We need a commission. We need
oversight. We need unbiased oversight in our profession.”

The commission noted in 2007, 33 states regulated residential homebuilders
in different ways. Many have state licensing agencies or set up recovery
funds for homebuyers. Some states, like Nevada, developed inspection
programs and help resolve disputes between builders and homeowners.

‘Things are better’
Individual cities across Texas approve building codes, including those
from the International Building Code, that dictate the minimum
requirements homebuilders must meet when they are building homes in any
given area. The requirements can vary across the state. The Texas
Legislature has passed legislation impacting the residential homebuilding
industry, like laws restricting the period of time a contractor can be
sued for defective construction or pandemic protections for construction
projects. But there is still not a single agency tasked with solely
regulating home builders in the state.

Scott Norman, the executive director of the Texas Association of Builders,
said he would not speculate on whether the TRCC would be better to have
now. But he said one thing available to homeowners that was not during the
days of the TRCC is access to research on builders and remodelers.

“I think one of the things that exist now — that was not as prevalent, you
know, going on 17, 18 years ago — is the rise of the internet and social
media, the ability for consumers to learn more information beforehand,”
Norman said. “We do not hear near the stories. We have 10,000 members
around the state, get calls and hear things from all over our 26 local
home builders associations, and the volume of complaints and those sorts
of things are nothing, nothing to compare to where they were before or
during the TRCC time.”

Investigative Photographer Richie Bowes, Investigative Intern Addie
Costello, News Director Chad Cross, Director of Investigations &
Innovation Josh Hinkle, Graphic Artist Rachel Gale, Digital Reporter &
Assignment Editor Chelsea Moreno, Digital Director Kate Winkle and Graphic
Artist Jeffrey Wright contributed to this report.



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