New Home Building
Registration for the New Home Warranty Program
Who must register?
All builders of owner-occupied new homes, including single-family, townhouse, duplex, cooperative, condominium, factory built and modular residences are required to register with the New Home Warranty Program. Each new home building business is required to register separately. The name of the entity that is transferring title to the new home is the entity that must warrant the new home.
Definitions
■ A “new homebuilder” is defined as any individual, partnerships, corporation or any business entity engaged in the construction of new homes. It also is those who contract with a general or subcontractor for the construction of a new home for the purpose of sale to an owner.
■ The “business” of constructing new homes includes:
o Constructing any new home for sale or advertising, or holding oneself out as constructing or being available to construct new homes
o The sale or transfer of land to any person and the subsequent participation in the construction of a new home or any part of a new home by the seller or transferor No person shall be permitted to construct a new home for their own use and occupancy more often than once every five years without being registered as a new home builder.
Warranty Guidelines
Warranty Coverage
A builder’s liability under a warranty is limited by law to the purchase price of the home in the first, good faith sale, or the fair market value of the home on its completion date, if there is no good faith sale.
For 10 years from the commencement date of the warranty, a new home is covered against major structural defects. For the first two years, a new home is covered against defects in the design and delivery of heating, air conditioning, plumbing and electrical systems. During the first year, a new home is covered against defects in workmanship and materials including appliances, fixtures and equipment. The builder is the warrantor of the new home and must perform warranty service during the first two years of coverage.
Warranty Security
As a condition of registration, each new homebuilder is required to participate in a warranty guarantee program. A builder may apply for acceptance in any one of the DCA-approved private warranty plans or automatically become a participant of the State of New Jersey New Home Warranty Security Fund that is administered by DCA.
Warranty Responsibilities
The builder, or the warranty plan of which the builder is a member, is responsible for providing the homeowner with a full statement of warranty coverage and warranty claims procedures on forms preapproved by DCA. This transmittal should take place at closing, or if there is no transfer of title, when the builder delivers possession of the new home to the owner. Proof of warranty coverage must be presented by the builder to the local construction official prior to the issuance of a certificate of occupancy. The warranty commences upon first occupancy by the owner or the date of settlement, whichever is sooner.
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