A common interest community association in Wildwood, NJ has had a crash course in the failure of the New Jersey New Home Warranty Act to protect the rights of New Jersey residents. The condominium is being forced to watch their decks decay and collapse before their eyes, while bureaucratic red tape and government inefficiency combine to create a disastrous situation for the unit owners. The decks had construction defects, and as such, have experienced water intrusion that has caused decay, mold and even mushrooms to grow on the wood, rendering them unusable. After the problem came to light, and it became clear that the general contractor would not stand behind its work or the work of its subcontractors, the association looked to the Department of Community Affairs (DCA) for assistance under the New Home Warranty Program. The DCA inspected the property and found that the construction was improper and the construction defects caused the decks to rot beyond repair. Under the New Home Warranty Program the DCA declared that the general contractor (who was unable to do the work properly the first time) had 30 days to draft and submit a plan of repair and 30 days after that to actually repair the property.
The general contractor, not surprisingly, has attempted to place blame with the Township inspectors, who should have caught the construction defects during their routine inspections. However, the general contractor knows full well that the responsibility of the Township inspectors is extremely limited, and they are surely not responsible for ensuring that the architectural plans or specifications are followed. They are merely there to make a cursory review of the property and ensure that the work meets very minimum requirements for safety. They do not ensure quality workmanship. That job, pursuant to the building code, is the general contractor’s alone. Their reliance on the Township inspectors is a transparent attempt to deflect the blame to someone else.
The common interest community association has learned a difficult lesson that many across New Jersey have learned the hard way. Because it chose to file a claim under the New Home Warranty Program, its fate is no longer in its own hands. The DCA will decide on the scope of the repair, who does that repair, and the cost at which the repair will be done. The association has little, if any, input going forward. If the association is not satisfied with the repairs suggested or eventually conducted, they are unable to appeal the decision in court. Once a person or association files a claim under the New Home Warranty Program, they are prohibited from suing any of the parties responsible for those construction defects in New Jersey Superior Court. The decision of the DCA (or the warranty company) is final and more often than not, the program favors builders and contractors over the homeowners.
Associations from Cape May to Bergen Counties should be aware of their rights before filing a construction claim with the New Home Warranty Program. In order to make a fully informed decision, the common interest community association should contact an attorney who is versed in the practice of construction in New Jersey and who knows condominium and homeowners association rules and regulations. For example, under the statute of repose in New Jersey, homeowners and condominium associations generally have 10 years from the date that construction is completed to sue the general contractor and its subcontractors for damages related to construction defects. Often times, depending on the type of damage that the association has incurred, the contractor’s insurance policies, including builders risk insurance, can be source of recovery for the association. This may provide a more complete recovery, a more favorable result for the association, and it will certainly provide the association more control over its destiny then they will receive by putting its fate in the hands of government officials who may not be completely interested in obtaining the most favorable result for the association.