Lax regulations allow anyone to build in Texas, limit accountability
This is the last part of a three-part series examining the impact of the increased construction in Midland.
By Cale Ottens | firstname.lastname@example.org | Updated 5 months ago
A man in Nevada faces a felony charge because he allegedly agreed to complete a construction project and didn’t have a license -- something that wouldn’t be a crime in Texas.
A dozen states, including Texas, do not require builders to be licensed before they construct new homes, according to the National Association of State Contractors Licensing Agencies.
Industry experts fear the lack of regulatory oversight could welcome sloppy builders and bad business practice, posing an array of potential problems for homeowners.
Home builders can be held more accountable if each state requires them to obtain a license, said Angie Whitaker, NASCLA executive director.
“It’s for public safety and the welfare for consumers,” Whitaker said. “Protecting the public is the main concern.”
While the Nevada felony case of Uona Taumalolo may be extreme, it is not uncommon.
The Nevada State Contractors Board posts mug shots on its website of its “most wanted” builders and contractors. More than a dozen names are listed but the severity of the charge varies.
A contractor in Nevada is charged with a felony only if he or she breaks the law three or more times, said Scott Smith, a spokesman for the state’s board. Nevada has some of the most strict regulations in America, he added.
To obtain a license, builders must pass a “trade exam,” which ensures they’re competent in the work they’re doing, and a “law exam,” to show they understand business and building law, Smith said.
It costs $300 to apply for a license and another $600 to receive the license, pending exam results. The $600 is paid every two years, Smith said, adding the contractor must have at least four years experience before they can take the exams.
“It’s probably one of the most rigorous in the country -- the hoops we make the contractors jump through before we issue them a license,” he said. “It’s done that way on purpose.”
Texas laws, on the other hand, are among the most lax, said Evin Dugas, an Austin-based attorney who focuses on home-defect lawsuits.
“We’re in the wild west,” Dugas said. “If you and I wanted to go build a house tomorrow and we didn’t know anything about it, we could do it.”
Midland’s Building Official Steve Thorpe said he would like to require that contractors be licensed before the city allows them to build. The requirement would ensure competency and provide more accountability and consumer protection, he said.
“If we had a really bad builder, there is no way to reprimand them or force them to comply,” Thorpe said. “I look at it as an unfortunate card that we’re dealt.”
Additionally, real estate developers and homeowners associations are not regulated by the state, according to the Texas Real Estate Commission.
The TREC only regulates real estate brokers and salespersons, private real estate inspectors, education providers for real estate and inspection classes, residential service companies, timeshare developers and easement or right-of-way agents.
A Reporter-Telegram investigation found Midland is not exempt from “bad builders,” yet records do not indicate the issue runs rampant in the Tall City.
Within the last five years, two homeowners filed complaints to the city, claiming a property malfunction or hazard, an open-records request revealed.
Both claims were against Max Builders between 2010 and 2011 for leaving a home without completing work, leaving violations and a need for repairs, according to city records.
Thorpe said the company no longer conducts business in Midland. The city, however, could not penalize Max Builders, whereas it would have been able to revoke its license if the law allowed for it, he said.
But Midland likely will not add the requirement in the near future, primarily because the Permian Basin Builders Association is against the idea, Thorpe said.
“If you don’t have the support of the trade association, it may be difficult to convince council that it’s good for Midland,” he said.
Susan Yanacek, PBBA president, did not return multiple interview requests from the Reporter-Telegram.
But the association does not believe there is a problem with Midland’s builders, said Travis Pate, a PBBA member and chairman of the Parade of Homes committee.
“I totally understand the concern,” he said. “Where’s the concrete example though?”
The requirement would only be an inconvenience for builders, Pate said.
Other Texas cities
San Marcos and Seguin, two relatively small cities in east Texas, are the only communities in Texas to require contractors to obtain licenses before building in their cities.
Abigail Gillfillan, the permit center manager for San Marcos, said the city adopted the requirement about a decade ago.
It costs $100 to take the required test in San Marcos plus $150 for the license, which expires at the end of each calendar year. It’s another $100 to renew the license annually and contractors must also show proof they completed six hours of “continuing education” courses each year.
Unlike in Midland, contractors in San Marcos must obtain a license before the city will issue building permits. If builders do not renew their license or if it’s revoked, they essentially lose their right to build within city limits.
“That’s something contractors don’t want to lose, so it does provide more accountability for citizens,” Gillfillan said.
The city, in general, is pleased with how the process is working out so far, she said.
“It’s been real successful. It’s a good opportunity for us to touch base with all of our contractors and talk about any new codes,” Gillfillan said. “It provides a higher quality of work if you have somebody who does understand the codes.”