Journal Newspapers Online: Governor may sign builder law

December 27, 2007

Governor may sign builder law

Building contractors who illegally leave their customers with shoddy work or who rip off homeowners will be subject to additional scrutiny and possible harsh punishment under a new set of laws signed approved by the Michigan Senate this week.

The four-bill package sponsored by Sen. Ray Basham (D-Taylor) will give law enforcement officials more incentive to prosecute bad contractors and allow prosecutors to seek compensatory damage from the contractor’s business and personal assets – which up until Monday was nearly impossible, Basham said.

“Past bills essentially gave contractors who rip off consumers immunity under the law,” he said. “Now, prosecutors will get funds from the state to aid in the prosecution of those who would commit a fraud on residents.”

Cases involving contractors have been notoriously difficult, and expensive to take to court. The legislation protects consumers by increasing penalties for illegal activity, providing tools and incentives to go after dubious contractors by limiting opportunities for abuse.

Basham said the bill will increase criminal penalties – such as jail time and fines – for builders and contractors operating without a license, give additional power to law enforcement to bring charges against offenders, and make information available to consumers when violations by contractors occur so they can avoid using unscrupulous workers.

The bills are the result of two years of hearings and research conducted by the Senate Bipartisan Bad Contractors Work Group, of which Basham is the chairman. The group sought input from the Michigan Association of Home Builders, the Builders Industry Association of Southeastern Michigan, the Prosecuting Attorneys Association of Michigan and the Michigan Department of Labor and Economic Growth.

The resulting legislation is supported by all of these groups, and addresses their issues in the industry and concerns over sub-par standards and fraud and illegal activity done by unlicensed builders.

Still, shoring up support for the bills was an obstacle early on, said Basham.

“We initially faced opposition from (some) builders, who were against it,” he said.

However, the builders eventually came around, said Basham. “It took a lot of work, and a lot of talking, but in the end we have something that benefits everyone.”

Representatives from the Michigan Association of Home Builders did not immediately return calls seeking comment.

Basham said Michigan homeowners, in today’s real estate and economic climate, need to be extra cautious about people they hire to do work at their home.

“When Michigan families build or repair their homes they shouldn’t have to worry about price gouging and poor construction,” he said.

He also said reputable builders and contractors who pay a price for the work of lesser competitors will be helped by the legislation.

“Unlicensed and unprofessional scam artists will no longer be able to damage the reputation of Michigan’s hardworking men and women of the building trade,” he said.

Basham said Gov. Jennifer Granholm has notified him that she will sign the bill.

http://www.journalgroup.com/Belleville/6664

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Reader comments [6]

Dec 27, 2007 | 9:43 PM

Nancy:

All citizens of Michigan should contact Senator Basham and thank him for his diligent efforts on behalf of all who purchase a newly built home or contract for remodeling. Substandard construction and the use of cheap products in construction without the knowledge of the homeowner is an epicemic all across the country. Few elected officials have worked so long and hard for the benefit of homeowners as has Senator Basham.

www.hadd.com Homeowners Against Deficient Dwellings, a national grass roots non profit advocating for safe and sound home construction.

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Jan 2, 2008 | 6:00 AM

Marcia:

I would like to echo the thoughts of Nancy. As a victim of shoddy construction one cannot imagine what it does to your life emotionally and physically.
There is really no amount of due diligence one can do in order to assume their new home will be habitable. I personally used the BBB to find my builder, I had inspections with a top notch inspector and that was not enough. Building a new home in my state takes no more than one’s name, social security number and $500 to hang a shingle. No degree, certification or license necessary thank-you. The amount of complaints this state has in reference to defective homes is startling and yet we have little to no recourse. MBA will probably get you nowhere except loosing more money to arbitrators who get repeat business from builders. It is basically a loose loose situation for victims.
12 hours straight of testimony from victims at out state capitol did little to move our lege to enact a home lemon law.
I applaud Senator Basham’s efforts and so should every person looking to purchase new construction.

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Jan 2, 2008 | 7:10 PM

Jackson:

Lucky Michigan people. Protection in that business has been sorely lacking most everywhere. I too am a victim of the business, and spent thousands of hours trying to get just a spec of justice from criminal builder negligence. It was just not possible in Virginia.

The builder just looked at it as if, “we can get away with it, there’s nothing you can do.” Customer service actually said this! Right or wrong is not an issue to some people. That’s why we have laws, though big business is usurping rule of law, and this is about a big business that breaks down into small factions often called private contractors.

Big name builders all use mostly private contractors, and it’s a business that has found every way to defeat both applicable laws and otherwise assured constitutional rights. That’s when it’s truly appropriate for government to step in, and lay down the law like this. You can’t have truly free markets without adequate consumer protection laws.

Unjust things like forced binding arbitration and tort reform may save some businesses their profit, but it will continue to erode consumer confidence over time, as we all one by one learn we’re losing security, having no real civil rights when faced with injustices set by some common business contracts. Under regulation of free trade is just as dangerous as over regulation to the economy long term in this case.

Totally unregulated markets in trying to go to self regulated free trade are what sprang from the fall of the USSR, and we called those black markets. Free trade didn’t thrive from conditions where no laws protected consumer confidence. Plus, it is not beneficial long term for standard corporate practices to remove individual civil liberties, as has happened more than most realize.

We’ve spent hundreds of years developing better individual rights, and within a couple of decades of configured loopholes, corporations are defeating much of the progress in the name of capitalism. This Michigan consumer protection law was certainly a case where more government actually protects freedom and can improve free trade, and in the long term should benefit all citizens of Michigan.

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Jan 4, 2008 | 2:09 AM

CSCH:

Builders kick and scream to get out of real regulation, but then prove again and again that tough regulation is needed. Build homes right and honor the warranty and the industry would not have to fear stronger legislation. I hope that these new laws will be what they appear to be, and will be enforced. Enforcement is lacking in so many cases. Builder fraud and related mortgage fraud has been rampant.

Just FYI for anyone getting a house built; the BBB may or may not even tell you about complaints on file when you research builders. I, too, was misled like Marcia, by a positive BBB report of “no complaints.” Later the BBB admitted in writing that there had been complaints when I researched, but stated they do not air them publicly. Their rating system is flawed, and consumers need to remember the BBB is a BUSINESS organization, not a consumer org, as they often masquerade as. State agencies can be equally evasive, assuming the state even regulates builders or deals with complaints on them, which many states do not.

Also, avoid Mandatory Binding Arbitration clauses (MBA also called BMA) in contracts. This takes away your right to sue, thus stripping you of critical leverage and it hides complaints in a biased, private process. Beware of “home warranties,” policies from separate companies that promise coverage on a house; these policies are often where the arbitration clause is, and there are very few ways out of it once you buy the house, even if the warranty arrives after closing as a “gift” from a builder or realtor.

I see home buyers signing contracts on homes that have major problems because they don’t know the defects when they see them. All the research in the world won’t save you if you can’t spot common builder shortcuts which have become industry standard, and virtually ensure the housing is disposable in nature, (though not in price!). Many new houses don’t even meet building codes. Another example of lack of enforcement.

It’s a sad commentary on the industry that a customer now has to learn construction, law, etc, to have a chance of getting a house built right. Either learn these things or hire competent, ethical experts to help you. You can’t rely on the industry or govt to do the right thing.

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Jan 4, 2008 | 4:13 AM

kls:

This is the first step in the right direction. I understand these bills have a provision: if there is any civil litigation and a builder must pay damages, the State of Michigan must be notified by the judge; but these bills have not addressed the issue regarding what happens if the judge fails to notify the state.
Also, under the Republican Engler administration Michigan’s Energy and Construction codes were lowered to just about the lowest in the nation. Construction codes only address safety, not durability, quality, maintenance or any other issue you would expect for the largest investment a person makes. It appears Michigan’s construction industry wants to create “money pits” causing a constant flow of $$$ back into the construction industry for repair.

YOU WILL BE SHOCKED :
See what happened in this OAKLAND COUNTY court case regarding residential construction built by a member of the Michigan Assoc. of Builders/BIA with masonry applied by illegals, where the improperly mixed mortar did not bond with the brick and lacks wall ties.

courthouseforum.com/forums/thread.php?id=974909

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Jan 4, 2008 | 7:09 AM

john cobarruvias:

The Governor should be commended, but I didn’t notice if any consumer organizations were in support.

Here in Texas the homebuilders and legislator were saying the same thing about a bill they passed. Praised it as good for the consumer and a hard fought bill, but in reality not one single consumer group was in favor of the bill or was consulted on it.

Anyone know?

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