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Be careful – VERY careful – in entering into any Houston residential construction contract with a “small” and undercapitalized home builder.

I say this without any intent to disparage the good work of small builders or to suggest that a larger company would necessarily do a better job.  My concern has to do with the legal remedies of injured Houston home buyers if things go bad.

As an experienced Houston Residential Defects Attorney, my law firm is a hospital of sorts for defective Houston homes.  The problems vary from house to house but typically include the following:

  1. Bowing walls.
  2. Poorly constructed and leaking roof.
  3. Failure to follow building plans.
  4. Work done which is noncompliant with the building code.
  5. Water infiltration and mold/vermin infestation.
  6. Unlicensed electrical work.
  7. Improperly installed or damaged cabinets/appliances.
  8. Plumbing leaks through the floors to lower levels.
  9. Shifting foundation.

And that is just the beginning.

Frustrated clients find their way to my office and the first question is to find out more information about the builder.  If it is a national or statewide builder, that is not a buffer against bad construction work, but critically provides an avenue for recovery of damages to remedy the defects at hand.

In approximately 60% of our cases, the clients have entrusted their dream home to an undercapitalized builder.  This, in my professional opinion, is a horrific mistake as it offers no effective monetary recovery in many instances.  After taking the clients hundreds of thousands, many small builders plead poverty and simply walk off the job or refuse to finish.  This happens almost all the time, at least in cases which my office handles.

A financial defunct builder offers the aggrieved purchaser very few viable options.  Even if my firm is able to deliver a court order for damages, there is often very little hope of recovering anything given the dearth of available assets.

That said, alleged insolvency is not always the case.  In a statistically significant number of cases, the builder claiming poverty is actually “kiting” which means he/she/it is taking money from one job and channeling it into another or his own pockets.  This is illegal and often criminal but happens frequently.  The potential upside for clients is that with effective investigatory research, a law firm can locate hidden assets to attach once a judgment is obtained by the court.  So, all hope is not lost. My firm has a private investigator standing by for exactly that purpose.

Although I mentioned this before, large builders also construct defective homes and exhibit the same egregious level of neglect or outright fraud.  Our current list of active construction litigation includes many of the largest builders in Texas and the nation.  However, the financial magnitude of these construction companies absolutely offers our client a clear path to recovery whether that is the cost of repairs or even the replacement of the defective home.

My advice is to avoid any building contract with an undercapitalized builder.  If it ends up going bad, your entire investment can easily be lost.

Certainly harsh but prudent advice.

At the Moster Law Firm, we are here to help.  Give us a call for a complimentary consultation.


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