A homebuilder's advice to hurricane Harvey victims

It was a heartbreaking event.  Hurricane Harvey has blown many homes away, and put many hundreds of thousands more underwater.  Property owners now have to decide what to do next.  Hopefully they have flood insurance, or if not, the financial ability to rebuild / repair out of pocket or with new loans.

Soon will come the next heartbreak.  Unscrupulous builders will be descending on hurricane victims like vultures on roadkill....they're easy pickings.  Already in a fragile state of mind, property owners will sign paperwork they don't understand and fork over what little money they have left, hoping to get their homes and lives put back together.  Here are some things property owners should know:

In Texas there is NO registration or licensing of builders.  Anyone can have some business cards printed that identifies them as a builder, and they're builders.  That's it.  Many people who might be plumbers or carpenters or painters (or insurance salesmen) might decide now is the time to try their hand at being a contractor, and these hurricane victims are their guinea pigs.  In addition there will be thousands of scoundrels from out of state who will show up, holding themselves out to be experienced builders.  They'll get as much money as they can up front, then skip town doing little if any of the promised work.

How do you know who you're dealing with?  For a start, check online here, enter the name of the contractor, and see if they are registered to do business in Texas.  On that page click "details" and see when they began doing business in Texas, their actual physical address, and the name of their principal / agent.  If they aren't listed, or if they were listed just recently....RED FLAG!

Beware of references.  Anyone can find 3 people who know them and will vouch for them. Even convicted felons have friends.  Instead ask for the names, addresses, and phone numbers of the last 10 or 15 clients they built or remodeled for, then call at least a sampling and confirm those clients are happy.  A reputable contractor should have no trouble providing that information.

Builders should provide you a current liability insurance certificate, and either a Workman's Compensation insurance certificate or have WC waivers signed by each vendor and subcontractor.

Ask where they do their business banking, and how many accounts they have.  They should have at least two, as it is illegal for a builder to co-mingle "construction funds" and "operating funds".  (Money paid to a contractor for work completed in stages MUST FIRST be used to pay for labor and materials.  Funds left over can then be transferred to an operating account and used to pay overhead and salaries.)

Property owners should understand that in Texas, even if they pay their contractor for work competed, if the contractor fails to pay for the labor or materials used, those unpaid vendors can turn to the owners directly to get paid.  If the vendors don't get paid, they can file liens on the property.  To prevent this, owners should insist the contractors provide them notarized "lien waivers", which are signed by the vendors acknowledging they have been paid.  And finally, when all work is completed and the final payment to the builder is made, insist the builder simultaneously provide a signed and notarized "all bills paid" affidavit.  If the builder signs and all bills have not been paid, he has committed a criminal offense.

New construction and remodeling contracts must contain certain specific verbiage mandated by the Texas Legislature.  A check with an attorney or perhaps a title insurance company can confirm if the contract meets the state requirements.  If it doesn't comply, that might be a tip-off the builder is less than professional.

Beware of builders from out of the area who come in to do repairs as they will likely not know reputable local building tradespeople.  Understand that builders generally don't "build" anything themselves.  Builders just schedule and arrange for the right materials to be at the right place at the right time for the right trades.  They hire local plumbers, electricians, carpenters, painters, etc to actually do the work.  

When an out-of-town builder arrives, how does he know which are the quality local carpenters and which are the "wood butchers"?  Unless he brings his own vetted, trusted subcontractors with him, it's likely that you'll get at least some shoddy workmanship along the way.  And once the job is completed, who will be there to honor the warranty when the builder is back home in Dallas or Little Rock or Atlanta?

Understand that building tradespeople will be in very short supply, and that the building process will likely take much longer than it would have during normal times.  Be especially aware of work done by unlicensed or unsupervised plumbers and electricians.  These critical trades require a state license.  On-site work must be done or at least directly supervised by someone with a Master's or Journeyman's license.  If stretched too thin, unlicensed rookies will be dropped off to do the work, and then a license-holder will drop by every few days for a cursory look.  Not good.

Don't put too much stock in municipal building inspections.  Larger cities generally have specialized, experienced inspectors who actually know the International Building Code(s), but the smaller jurisdictions might just have jack-of-all-trades inspectors.  And even in the large cities, they will likely be overwhelmed with the volume of work needing inspecting.  They'll pull up, run in, do a 360-look-around, leave a green / red tag, and then go on to the next one.  They'll see the critical things, but might miss some of the deficiencies they would have ordinarily caught in calmer times.  This is just going to be a by-product of the crisis.

I hope this gives the victims of Harvey at least some idea of what to look out for and what to expect.  I have nothing to gain or lose by passing this on as I myself am (semi) retired and have no intention of going to the storm area to work.  Feel free to pass this on to anyone you might know in those affected areas, and give them my best wishes for a happy ending to this horrible disaster.

S