TRCC News, May/June 2009
BUILDERS TAKE NOTICE
by Executive Director A. Duane Waddill
The Texas Residential Construction Commission appreciates and recognizes that the vast majority of builders follow the law and commission rules. Of the 29,409 active builders registered with the commission, only 123 have violations listed. Fewer than one-half of one percent of all homes registered with the commission have confirmed defects. Clearly, the vast majority of those in the industry are doing the right thing.
For those few who don't, let the story of former homebuilder Pete Stucky's lifetime ban serve as a cautionary tale to the homebuilding and remodeling industry. The Texas Residential Construction Commission takes its responsibilities seriously, and will exercise its authority to protect consumers and the industry from bad actors. The commission recently banned Stucky, the agent for Affiliates LLC, from working in the homebuilding industry for the rest of his life.
The ban extends beyond homebuilding; Stucky cannot act as a subcontractor or supplier, nor can he have any ownership interest in, be employed by or associated with, or take an action on behalf of any other builder, subcontractor or real estate entity outside the regulation of the Texas Real Estate Commission.
Mr. Stucky had many alleged violations. A commission investigation found he pocketed money that was supposed to go to subcontractors, leaving a series of liens on properties that had been fully paid for by unsuspecting homeowners. The commission found that Mr. Stucky did not correct warranted defects, conducted business as an unregistered builder and signed an "all bills paid affidavit" for properties that were not free of liens. This forced homeowners to pay more than the represented price of the homes.
On February 11, 2009, the commission permanently revoked the registration of Affiliates LLC, First Home and Pete Stucky. Mr. Stucky's problems did not end with the commission's lifetime sanction. One week after reaching an agreed order with the commission, a Williamson County grand jury hit Mr. Stucky and Affiliates LLC with 37 felony indictments. Mr. Stucky was indicted on 21 counts of securing execution of a document by deception, 14 counts of misapplication of trust funds and one count of theft of service.
Although Mr. Stucky is the first builder to receive a lifetime ban in Texas, the commission has taken strong actions against builders in the past. The commission banned Michael Kelly, agent of Primera Homes, Ltd., from working in the Texas residential construction industry for 20 years and revoked his builder registration.
The commission actively follows up on all consumer complaints. In 2008, the commission successfully assisted 268 consumers in achieving positive results.
IT'S EASY TO AVOID PENALTIES
While the commission gains no joy in banning builders, it is important for builders to realize that the commission will do what it must to in order to protect Texas homeowners. The commission has adopted administrative penalties of up to $10,000 per violation. It also has the authority to seek cease-and-desist orders in cases involving violations of law or commission rules.
For example, any individual or company that fails to respond to a commission request for information, continues to act as a builder/remodeler in Texas without registering or fails to register required projects may be subject to those administrative penalties.
If a builder receives a letter or other correspondence from the commission, they must communicate in writing with the commission by the date given. Otherwise, the matter may be set for a hearing with the State Office of Administrative Hearings to seek disciplinary action. Builders that fail to live up to financial obligations should understand that the commission will take actions to protect consumers and the vitality of the industry.
In this challenging economy, the commission urges builders to be mindful of good business practices. Often, builders that get into a bind will attempt to use funds from other future or concurrent projects to bridge the gap when shortfalls exist. Don't do it. The concept of "robbing Peter to pay Paul" never works in the long run.
Proactive attempts to resolve issues are best. If you find yourself in a situation, contact the commission and we'll work to assist you. For more information about commission functions, visit [www.TexasRCC.com|www.TexasRCC.com] or call 877-651-2722.
