New Homebuyer Beware
by
John R. Cobarruvias

Since 1968, Texas consumers have had the Implied Warranty of Good Workmanship and Habitability to protect the biggest investment of their lives, their American Dream, their new home.  Unfortunately, the big business sympathizers of the Texas Supreme Court are poised to relieve Texas homebuilders of this implied warranty. The Texas State Insurance Commissioner, Jose Montemayor, has recently hammered another nail in the coffin of consumer protection by relieving the insurance industry from covering mold damage. The Texas Supreme Court holds the last coffin nail, and with this, Texas could become the first Home Buyer Beware State.

It is difficult to imagine a homebuilder arguing against a warranty of habitability, but in Centex Homes vs. Buesche No, 04-99-00337-CV, Centex defense was simple: Why have an ambiguous implied warranty when Texas homebuilders provide an expressed 10-year warranty chock full of protection? As the National Association of Home Builders argued "These warranties are not illusory; they offer significant tangible benefits to home buyers".

The opposing argument is simpler: "Read the warranties."  If the Supreme Court Justices would simply read the various 10-year warranties provided by Texas builders, they would find them more deceptive than protective, and would rule in favor of the homebuyers. But dont' bet your house on this happening. With the pro-business history of the Texas Supreme Court, Texas has an excellent chance of becoming a Home Buyer Beware State.

The deceptive nature of home warranties is beyond debate.  Simply read the warranties and see for yourself.  Unfortunately, deceptive warranties are only the tip of the iceberg

With the help of so-called "grass roots" organizations such as Texans for Lawsuit Reform, headed by Richard Weekley, brother of builder David Weekley, Texas homebuilders have surrounded themselves with layers of legal protection to  cushion their responsibility for building defective new homes. Builders also have the added convenience of no licensing or regulatory requirements, unlike other professionals such as hairdressers, plumbers, and nurses.  Consumers have protection for a bad hair day, but little if any for their newly constructed home.

Inspections of new homes to prevent defects are left to the home buyer to be paid out of pocket. Moreover, there are no city, county, or state organizations who willingly and aggressively help resolve new home defects. The State Attorney General's Consumer Protection Office, who advocates not resorting to legal action, simply suggests, "This is a civil matter. Go get an attorney." And in
1989, the state gutted the powerful Deceptive Trade Practices Act by limiting the
liability of builders with the Residential Construction Liability Act, informally
known as the "Builder Protection Act," an act that does more to limit liability
than provide needed protection for homeowners.

Finally, when a homeowners heeds the advice of the Attorney Generals and hires an attorney to attempt to hold the builder accountable, they quickly learn their 7th amendment constitutional right to a civil trial has been replaced by a mandatory binding arbitration clause.  Instead of a jury of their peers, they get a kangaroo court of arbitrators.  And binding arbitration is expensive,
time-consuming, and anything but fair.

The deception of new home warranties and the lack of consumer protection for new homeowners instills nothing but false hope.  You "hope" your home does not have a serious defect, because if it does you will soon learn the meaning of the Lone Star in our state flag.  You will find yourself fighting this battle alone.

Recently, Insurance Commissioner Montemayor, in statewide hearings on toxic mold (the mother of all construction defects), has heard many complaints from
homeowners and consumer groups.  Toxic mold, not covered in the 10-year warranties, leaves the homeowner and their families financially, mentally, and physically devastated.  And it leaves the home uninhabitable.  The homeowners
look for relief from the insurance companies (and rightfully so), but the Commissioner has decided to protect the industry just as the builders have been protected. For these and other homeowners with construction defects, the implied warranty of habitability and good workmanship has become a last resort.

The Texas Supreme Court Justices should review what little protection and rights new homeowners have in this state and rule in favor of the homeowners.  The implied warranty of good workmanship and habitability provided to homebuyers since 1968 must remain intact.