New houses of horrors

OLYMPIA – Rotted, buckled siding. Sodden floors. Sagging roofs. Filled-in wetlands. A house built in the wrong place.

It was a parade of horror stories Tuesday in a darkened Senate hearing room, as one homeowner after another described major building flaws they’d discovered after buying their dream homes.

“You can see the droppings there. …We have dead rats all over the house,” one man told the Consumer Protection and Housing Committee, illustrating his point with a photo projected on a screen.

Over the vigorous protests of the state’s home builders, committee chairman Sen. Brian Weinstein, D-Mercer Island, is proposing several laws designed to make it easier to hold contractors accountable for shoddy or dangerous construction. Chief among them: a “Homeowners’ Bill of Rights.”

“The way the existing law in the state of Washington is, I wouldn’t buy a home unless I hired a lawyer first,” said Weinstein, a lawyer himself. “I want to make sure they don’t have to hire a lawyer to buy a home.”

At the hearing, Grapeview resident Donald Lehman described having to shore up his garage walls with lumber when defective roof trusses started to give way. Centralia’s Michelle Rylands described a missing $10,000 heat pump, missing $1,700 gutters and no caulking at all around sinks, tubs or toilets. Attorney Sandy Levy showed photos of clients’ homes: plywood sheathing blackened with mold, waterlogged trim that could be squished with a finger, and sodden crawl spaces and insulation.

The state’s home builders association concedes that shoddy construction makes the industry look bad. But complaints like those aired Tuesday are unusual, attorneys representing the industry told lawmakers. And Weinstein’s cures, they said, would cause far worse problems.

“These bills are absolutely not the answer and would have such catastrophic unintended consequences for every citizen in this state,” said Timothy Harris, general counsel for the Building Industry Association of Washington.

If the laws pass, Harris said, Washington can expect soaring house prices, a wave of expensive litigation, insurers fleeing the state and thousands of small builders – which are by far the bulk of the home construction industry – driven out of business.

Too many state regulations and housing prices in Washington will start looking like those in California, real estate attorney Gregory Clark said.

“So (be) careful here,” he told lawmakers.

Here’s what Weinstein proposes:

“Senate Bill 5045 would require testing, licensing and continuing education for contractors, instead of just registration. Under state requirements, Weinstein said, being a beautician requires more mandatory training than being a contractor.

“Senate Bill 5049 would require that new homes include a warranty of two years on any defects in materials or workmanship; three years on electrical, plumbing and heating systems; five years on water penetration; and 10 years on structural defects.

“Senate Bill 5046 would allow any homeowner to sue builders, subcontractors, material suppliers, designers, manufacturers or general contractors for damages within four years of discovering a problem. Violation of any building code would constitute negligence.

The idea of a “bill of rights” comes from the Washington Homeowners Coalition, which wants the law to require financial responsibility from builders.

“These are rights that I call ‘I-can’t-believe-we-don’t-have-these-rights’ rights,” said group president Todd Hobart.

Attorney Sandy Levy told lawmakers that many builders offer “10-year warranties” that often exclude key things, waive all rights to damages caused by bad construction, and force legal disputes into expensive arbitration before an industry-picked arbitrator. Under such an agreement, even failure to finish building a home isn’t considered a defect, he said.

“This is a complete sham,” he said.

Although new homes carry an implied “warranty of habitability” – meaning the home is livable – that guarantee evaporates as soon as the original owner sells, Levy said. Nor can a homeowner sue because a builder violated the building code. And suing under the state’s Consumer Protection Act is difficult, Levy said, since the plaintiff needs to show a multitude of affected consumers and prove fraud.

As for filing an insurance claim, Levy said, most builders’ insurance and homeowners’ policies don’t cover “intentional acts” like shoddy construction.

Although builders have to post a performance bond of $12,000 when registering with the state, that money can cover multiple homes, Levy said, and any claims by homeowners on that money are second to unpaid wages claimed by workers.

Some on the committee sounded skeptical of the proposals. Sen. Bob McCaslin, R-Spokane Valley, said a large part of the problem is inspectors who don’t catch mistakes during construction. And Sen. Jim Honeyford, R-Sunnyside, seemed to suggest homeowners bear some responsibility for not consulting an attorney before signing builders’ documents.

Tuesday’s hearing was a so-called work session, during which lawmakers discuss a problem. The first hearing on one of the bills is Thursday, when the Senate’s labor and commerce committee will discuss SB 5045, the bill to require licensing of contractors.