It only takes a couple of horror stories to sour the public on the entire building and remodeling industry. Here's an example from Rhode Island: A young couple invested their life's savings in a new custom home, then lost their money when the partially built house was seized by the bank after the builder/developer failed to pay subcontractors. Eyewitness News Channel 12 (station WPRI) has the story here (see "Developers cause couple to lose brand new home," by Susan Hogan).
"A young couple who poured thousands of dollars into building their dream home watched it go up for auction on Thursday, to no fault of their own," the station reports. "Mark Hattoy and his wife, Gina, watched strangers bid on their brand new home. A home they had poured more than $140,000 into and never took ownership of."
According to the report, the developers and builders of the house, the Colucci Company of Cranston, Rhode Island, didn't pay suppliers and subs, even though the custom buyers had deposited thousands with the builders. The icing on the cake? At the auction, the developers bought the house back themselves.
The Valley Breeze describes the complex legal situation here (see "Trouble in Cumberland's Great Woods for homebuyers, town," by Marcia Green).
"Left high and dry ... are dozens of area subcontractors and suppliers who've filed complaints of nonpayment with the Rhode Island Contractors' Registration and Licensing Board after working on many of the Colucci Company homes here," the paper reports. "[The buyers] say they've learned from Atlantic Financial that the Coluccis are refusing to close with them because after [the buyers'] out-of-pocket spending is subtracted from the amount owed, and liens by contractors are settled, there's no money for the Coluccis who, in fact, may end up owing money."
In an editorial, Valley Breeze publisher Tom Ward called for stricter regulation of Rhode Island builders (see "Poor homebuilders should be banned from trade for life," by Tom Ward). "... it is a problem in Rhode Island for unsuspecting home buyers, as well as neighbors," wrote Ward. "Builders can disappear, form a new company under a new name, and go into business again. With partners, they can buy up land in a different town, hire attorneys, and begin anew. What is to stop them?" Ward contrasted Rhode Island's regulations with the rules in neighboring Massachusetts, where contractors must pass a test to become licensed, and can be banned for life from contracting if they misbehave.
"Holding home builders to higher standards of ethics is not anti-business, but pro-consumer," argued Ward. "This issue might not be top of mind for legislators and the state's professional home builders' association, but it should be."
Ward's editorial drew a response from Rhode Island Builders' Association president, Felix Carlone, in the New England Real Estate Journal (see "Calling for tighter regulations of builders," by Felix Carlone).
"I have assured Ward that, on the contrary, increasing contractor professionalism and fighting abuse is front and center for the Rhode Island Builders Association (RIBA)," Carlone wrote. "The builder involved is not a RIBA member, but any negative experience by any customer reflects badly on the entire residential construction industry. RIBA constantly and actively works for stronger requirements for builders to do business in this state, tough penalties for abusers, and sound laws governing development. RIBA is working closely with other trade associations and the Rhode Island Contractors' Registration and Licensing Board (CRLB) to develop an entire curriculum of mandated, continuing-education courses for contractors, to be unveiled later this year. These will include classes in sound business practices, building and fire codes, and contract law. Courses like this will also be necessary to prepare residential contractors for eventual licensing in Rhode Island."
In an email, George Whalen, Executive Director of the Contractors Registration and Licensing Board, confirmed that the state is working on developing a required curriculum for builders in the state. Wrote Whalen: "We are currently working on educational courses and just what will be required and are developing new rules and regulations to address this matter. We hope to be able to have a public hearing regarding these changes very soon. NASCLA, the National Association of State Contractor Licensing Agencies, has been working with states to assist states in this process and the Board may, still in the discussion stage, utilize this association to ease the burden of the state maintaining all the records and establishing standards which they have developed."
A July meeting of the board to discuss the evolving requirements was postponed for lack of a quorum, Whalen said. But he promised to provide more information after the board meets on August 13.