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Blasi v. Bureau of Homeowner Protection

OAL Dkt. No. CAF 6941-03 (Bureau of Homeowner Protection 2004) (Unpublished)

CONTRACTORS; NEW HOME WARRANTY—The one year warranty coverage period under the New Home Warranty Program begins to run on the earlier of first occupancy of the home or issuance of the certificate of occupancy, not from the date a first claim was filed even if before either of the other two dates.

A buyer and a builder entered into a contract for the construction of a home. The estimated date of closing was January 31, 2001. Notwithstanding the completion of the house, difficulties arose because the buyer was unhappy with the builder’s work. For that reason, the buyer hired a separate contractor to review the construction that had taken place between November 2001 and February 2002. The contractor issued a report citing twenty-five problem areas and thirty-seven other individual items for future evaluation. On January 8, 2002, the buyer filed a notice of claim/demand for arbitration with American Arbitration Association. An arbitration hearing took place on August 8, 2002, the same date that title closed. On May 16, 2003, the buyer filed a notice of claim with the Bureau of Homeowner Protection and the New Home Warranty Program (BHP/NHWP). The BHP/NHWP ruled that his claim was out of time. It concluded that N.J.A.C. 5:25-3.8 limited the New Home Warranty Program’s liability because the owner’s claims were filed more than one year after January 8, 2002, when the buyer had commenced the arbitration proceedings.

The Administrative Law Judge (ALJ) disagreed, concluding that N.J.A.C. 5:25-3.8 is to be construed only to limit the dollar amount of liability. The ALJ also held that the date shown on the Certificate of Participation is not the commencement date of the warranty and does not fix or limit the duration of the warranty; it only limits the dollar amount of liability. Instead, the warranty period begins on the earlier of when the buyer first occupies the home or the closing date. N.J.S.A. 46:3B-2(1) provides a one year warranty against defects caused by faulty workmanship and against defective materials due to noncompliance with building standards. This meant the New Home Warranty began on August 8, 2002, the date of closing, not on the earlier date when the first claim was filed. Consequently, claims filed before August 8, 2003 were covered.

The Commissioner of the Department of Community Affairs adopted the ALJ’s decision as his final decision.

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