SHODDY CONSTRUCTION – Last week some 80 San Antonio homeowners in The Hills of RiverMist were displaced when a 40-foot tall retaining wall collapsed. For many, their lives have been ruined. The culprit is both the builder and developer. Centex, which was acquired by Pulte Homes, installed the failing retaining wall and also built the homes, including those on top of the wall and those at its base. They charged $10,000 extra for homes on top and called it a “lot premium” because of the view. (See running news coverage at http://www.homeownersoftexas.org/San-Antonio-Sinkhole.html.)
SHIFTING BLAME – After the wall came down, Centex called it a “soil shift,” a “slope failure,” a “land slide,” and a “sinkhole” – all in veiled attempts to blame God or Mother Nature or anyone else. We even saw news reports saying the neighborhood was built on a fault line, implying that it might have been a “mild earthquake.” Give me a break.
DESTROYING EVIDENCE – Centex was quick to bring in its own engineers to do the analysis and to bring in their own crews and heavy equipment to remove the landfill (and evidence). The police kept others out. So there soon won’t be any evidence left for inspectors and engineers hired by homeowners to examine for themselves. Isn’t evidence tampering a crime?
APPEARING RESPONSIVE – Pulte and the City of San Antonio have been very quick to do Damage Control – both structurally before forecasted rains and PR-wise. They quickly issued press releases, held public meetings, created websites, and even put displaced homeowners up in hotels. Such public relations containment makes good business sense, but will it last until the homeowners are made whole? What do you think?
BLAME THE BUYERS – Builders like Centex want lawmakers to think that buyers have a choice of signing the builder’s contract or not – of buying the home or not. If they don’t want to be bound by binding arbitration, they can simply go to another builder. But can they? According to a 2009 study of the 13 builders in The Woodlands, all of them had binding arbitration clauses in their contracts and none of them would allow buyers to opt-out. Even the “free” home warranties they gave to the buyers as a gift at closing had arbitration clauses. That means you can’t buy a new home in The Woodlands without being forced into arbitration.
RESTRAINT OF TRADE – HOT testified yesterday in front of the House Committee on Judiciary & Civil Jurisprudence, asking for a ban on Pre-Dispute Binding Arbitration clauses in agreements for Texas homesteads and ending the practice that is so common among Texas builders. The refusal to negotiate contract terms of a sales contract and opt-out of arbitration is, in our view, an illegal restraint of trade. Nearly all sales contracts used by small and medium builders originate from the Texas Association of Builders, and many of these builders join the association so they can use the boilerplate contracts without needing their own teams of attorneys. Builders of all sizes have business reasons to disallow negotiated changes to the contracts.
PUT BLAME WHERE IT BELONGS – According to news reports, Centex said the wall was engineered to comply with city codes, but where’s the proof? Where are the plans with the engineering stamp? Who did the design work? If they knew a name, wouldn’t they have pointed the finger there instead of at God? Centex later admitted to never getting a building permit and that no inspections were done. So even if the wall was engineered properly, which we doubt, it doesn’t seem to have been built to spec.
NO INSURANCE OR WARRANTY COVERAGE – Most home insurance policies won’t cover structural defects or soil issues, and neither will the home warranties. Statewide warranty standards developed by the TRCC include important exemptions that make them nearly worthless. One such exemption is “soil conditions.” So with binding arbitration and no ability to file a civil suit, these homeowners have nowhere to turn.
THE BIGGER PICTURE – Centex may be at the center of this crime scene, but the Texas home building industry is at the center of a larger crime scene – one that contributed to the global economic collapse. See  Who's to Blame for the Financial Crisis? (http://www.homeownersoftexas.org/blame.pdf),  Texas Homebuilding and the Global Collapse (http://www.homeownersoftexas.org/collapse.pdf), and  CRUEL HOPE (http://www.liuna.org/Portals/0/docs/PressReleases/Report%20-%20Cruel%20Hope.pdf).