Homeowners rebuilding from Hurricane Ike have basically no consumer protection in Texas

Houston Mayor Bill White threw in the towel this week, ending his modest effort to provide rudimentary consumer protections to Houston homeowners who must hire contractors to repair their homes damaged by Hurricane Ike.

White proposed an ordnance that would have required all contractors doing work in Houston to register with the city.  The proposal would have also required contractors to obtain at least $1 million in property damage and liability insurance coverage.  This would have been the thinnest of consumer protections.  But even it proved too much for those who have insisted that contractors should be able to operate free of any meaningful regulation and consumer protection laws.

The Houston Chronicle characterized White’s withdrawal of the ordnance as “a rare defeat for White, who pushed for the measure in the wake of Hurricane Ike as a protection for consumers against poor or fraudulent roofing companies.”

“White appeared visibly frustrated last week as most council members spoke against the measure, saying repeatedly the city needed to do something to give homeowners recourse in case they were defrauded,” the Chronicle reported.

The Houston action comes in the wake of recommendations of the Texas Sunset Advisory Commission to abolish the Texas Residential Construction Commission (TRCC).  The Sunset staff report on the TRCC concludes, “current regulation of the residential construction industry is fundamentally flawed and does more harm than good.”

I agree with the Sunset staff recommendation.

The TRCC was pushed into being in 2003 by some in the Texas home building industry who wanted to hinder efforts by homeowners from taking builders to court over shoddy building practices.  Essentially all the TRCC does, once a contractor causes a problem, is mandate the homeowner submit to a long and drawn out state review, inspection and mediation process. The agency is designed to discourage homeowners from taking contractors to court to enforce their contract.

The upshot of all this is Texas homeowners are on their own with no meaningful state or local protections to help them deal with contractors who don’t do what they promise.  The absence of consumer protection is a special problem for the poor and the elderly.  The poor and the elderly often lack skills and resources to attract competing contractors to bid on their homes in the wake of a disaster, evaluate contractor’s credentials and references and, when necessary, fight with contractors to get the repairs done right.

Texas needs a state law defining licensing and insurance requirements for all contractors.  Texas also needs a true regulatory agency with a clear mission of protecting the public; an agency designed to ensure that only qualified persons can be licensed.  Instead of being a hurdle for consumers to overcome after they have been victimized by a crooked contractor, a new state agency needs to prevent unscrupulous contractors from doing business in Texas.

The building and construction lobby has blocked meaningful homeowner protections at the state level and has left homeowners worse than nothing in the form of the Texas Residential Construction Commission.  Now that same lobby has demonstrated its power over the Houston City Council by blocking even Mayor White’s weak proposed consumer protections.

Shame on them and shame on us for letting them get away with this.  It is past time for the Texas Legislature to do right and protect Texas homeowners.