Bills aim at realty rogues

Legislature to take another crack at protecting consumers

Object is crooked builders

One measure requires registration

another sets up guarantee fund

January 02, 2000|By Robert Nusgart | Robert Nusgart,SUN REAL ESTATE EDITOR

Well, they are going to try again.

At least two bills will be introduced into the General Assembly this session that will require homebuilders to be registered in the state and will give consumers some recourse against rogue contractors.

Last year, a bill that would have created the Office of Home Builder Registration was bulldozed by the industry, which deemed it to be too expensive and bureaucratic for its members.

This time, the Maryland State Builders Association will be submitting its version of builder registration, and so will state Sen. Delores G. Kelley, a Baltimore County Democrat. The two agree that the time is now for some semblance of builder registration, but they differ on the means.

"The industry is as interested as we in not having the bad apples spoil the whole barrel," Kelley said. "We can say that we don't have congruent interests, but we certainly have overlapping interest within the industry."

Builder registration may be the most visible issue for the real estate industry in Annapolis, but other legislation may have ramifications for homeowners with septic systems.

Also, Del. Dan K. Morhaim, a Baltimore County Democrat, is planning to reintroduce legislation that would register home inspectors.

But the real tug-of-war seems to be over which builder-registration bill will get the most attention.

"We feel we will have challenge in the Senate, to be sure, because of the continuing discussions about what happened last year to the bill," said Kathleen McHugh, director of legislative affairs for the Maryland State Builders Association.

Both sides of the argument agree that builders should be required to have a state registration number before they can get a building permit to start construction of a home.

"Registration will be a requirement, and if [builders] violate the law they will lose their registration, and that will follow them as individuals as well as corporations throughout the state of Maryland," said John Kortecamp, executive director of the Home Builders Association of Maryland. "[They] will be kept from the business, which currently doesn't occur."

Kelley agreed.

"If a corporation or any of its principals who have a certain degree of equity have ever been bankrupt, ever walked away from a job, have a bad record in terms of fiduciary responsibility they [won't be able] to go to the next county and set back up again," she said.

Nonbinding arbitration

There are also provisions for using nonbinding arbitration as a means for resolving disputes.

Two main areas of disagreement center on which state bureaucracy will oversee the registration and over the creation of a guarantee fund for homebuyers who are financially harmed by a builder.

The state association wants the Consumer Affairs Division of the Office of the Attorney General to oversee the registration.

But Kelley and Del. A. Wade Kach, a Baltimore County Republican who has been at the forefront of crafting previous builder registration bills, want the Department of Labor, Licensing and Regulation to supervise the registration.

"The [attorney general's] office is not set up to do it. It doesn't have the staff. They're not interested in doing it," said Kelley, who added that there would be an inherent conflict of interest if the attorney general's office were to administer the program and then be responsible for enforcement.

Kach is willing to have the Consumer Affairs Division handle the registration.

McHugh, of the Maryland State Builders Association, criticized the effort to place oversight in the labor department, saying the Kelley bill fails to list "specific enforcement abilities" and a "specific fee structure.

"It allows the [labor] agency to promulgate all of the specifics through regulations," McHugh said.

Guarantee fund

For Kach, the more significant issue is the guarantee fund.

"I don't want legislation on the books where you are going to have a situation where the consumer is not going to be left [financially] whole, when this is all said and done," Kach said.

"And the builders, of course, don't support a guarantee fund, but said they would look into something that would work just as well as a guarantee fund. I'm waiting to see what the option is to a guarantee fund," Kach said.

Said McHugh: "Whenever you have two competing bills, that do very different things, there is a lot less certainty. But we certainly hope to get a resolution and get something that we can put on the governor's desk."

Although, the state builders association hasn't taken an official position, McHugh is wary of legislation that could affect the cost of septic systems for new homes and the repair or replacement of existing systems.

The Maryland Department of the Environment is exploring legislation that would require builders to use more expensive nitrogen-reduction technology septic systems in areas that are designated "special areas of concern," where ground water pollution poses a problem.

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