Attorney General Abbott Charges Roofing Contractor With Deceiving Homeowners
State enforcement action charges Holden Roofing with unlawfully capturing homeowners with misleading contracts
SINTON, TX – June 30, 2011 – (RealEstateRama) — Texas Attorney General Greg Abbott today charged a residential roofing contractor with deceiving Texas homeowners and unlawfully soliciting roof repairs.
Holden Roofing Inc. (HRI) and its president Brett Holden are named as defendants in the State’s enforcement action, which was filed in San Patricio County District Court today. The defendant’s principal office is located in Rosenberg near Houston. HRI also maintains branch offices in Corpus Christi, Dallas, San Antonio, Austin, Brownsville and Tyler.
According to State investigators, HRI’s sales representatives targeted communities that experienced severe weather events such as hail storms or hurricanes. The defendant’s sales representatives visit individual homeowners — including senior citizens — and market “consulting” services that facilitate roof repair or replacement.
HRI’s sales staff represent themselves as roofing specialists that homeowners can trust as intermediaries to negotiate insurance claims for roof damage. In this capacity, the HRI sales team purports to evaluate damage to homeowners’ roofs. The sales personnel offer to consult with adjusters and insurance carriers as insurers evaluate the damage to homeowners’ roofs. Many homeowners who sign up for the so-called “consultation and assistance agreement” think they are consenting to a free inspection and work estimate. Others are led to believe HRI is independently acting on their behalf to facilitate roof repairs or replacement under the terms of their homeowner insurance policies.
However, in reality the HRI contract obligates homeowners to hire the defendant to actually repair their damaged roofs – or pay a penalty if the company does not perform the roofing repairs. In an apparent effort to “capture” homeowners, HRI imposes a charge totaling 20 percent of the total roof replacement cost if homeowners engage another roofing contractor to perform the repair work.
Court documents filed by the Attorney General reveal that HRI failed to properly inform homeowners of their three-day right to cancel, as required by the Texas Home Solicitation Act. This requirement applies when business is solicited in person at individuals’ residences. The State’s enforcement action also explains that a 20 percent surcharge, even if assessed lawfully, is not a reasonable calculation of damages owed to HRI in the event a contract is breached.
In addition to its “consulting” services, HRI is a traditional contractor that also independently offers roof repair and replacement services. However, State investigators revealed that HRI’s sales personnel also fail to clearly communicate homeowners’ three-day right of cancellation under its roofing contract. Then, after HRI fails to advise customers of their cancellation rights, the contract imposes a so-called 15 percent “liquidated damages” payment against customers who cancel contracts outside the three-day window. The Attorney General’s Office alleges this forced payment under the contract is an invalid penalty, not “damages.”
According to investigators, homeowners who attempt to cancel their sales transactions receive letters from the defendant demanding that the “liquidated damages” be paid. HRI warns homeowners that failure to pay the “damages” will result in a lawsuit. The State alleges that because the debts accrued under an invalid penalty provision, the defendant may not threaten litigation to collect on debts that accrued under such a provision.
The Office of the Attorney General seeks civil penalties of up to $20,000 per violation of the Texas Deceptive Trade Practices Act and restitution for homeowners who were improperly forced to pay penalties under HRI’s contacts.
Texans who believe they have been deceived by improper or unlawful business practices may call the Office of the Attorney General’s toll-free complaint line at (800) 252-8011 or file a complaint online at www.texasattorneygeneral.gov.
