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Grotyohann v. Bureau of Homeowner Protection

OAL Dkt. No. CAF 01002-04 (Department of Community Affairs 2004)

CONTRACTORS; NEW HOME WARRANTY—Improper grading, improper insulation, air infiltration, and nail pops are minor defects whose warranty period is only one year under the New Home Warranty program.

A homeowner sued his home builder under the New Home Warranty and Builders Registration Act. According to the Act, a new home builder is liable to any owner, during the time period when the new home warranty is applicable, for any covered defects during the warranty period. A homeowner has only one year to report defects attributable to faulty workmanship, but has ten years to report major construction defects. The Act defines a major structural defect to mean an actual defect in a load-bearing element of the home. The defect must vitally affect, or be immediately likely to vitally affect, use of the home for residential purposes.

The dispute in this case was over whether the claimed defects were major structural defects, which the owner had ten years to report, or minor defects, which must be reported within one year. The owner asserted that the following were each major defects: improper grading, improper insulation, air infiltration into the master bedroom, and improper nail pops throughout the entire house. The builder contended that none of these were major structural defects, and that they were either first year warranty items or design defects. The Administrative Law Judge (ALJ) agreed that the claimed items were not major structural defects and therefore the owner had one year to report them. Accordingly, the ALJ dismissed the owner’s claims because they had been submitted more than one year after the date of closing. The Commissioner of the Department of Community Affairs adopted the ALJ’s ruling.

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