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NHWA and Construction Defects Litigation If It's Broken...Fix It

Few things are as frustrating and irksome as paying a contractor to execute a project in either a private home or a condo association's common areas and finding out after the dust has settled that the work you paid for is substandard or outright defective. Condominium boards and homeowner associations have the right to sue a developer for defective construction. But the situation is never as cut-and-dry as you might think; New Jersey has laws that can both help and hinder a condo owner whose building may have been victimized by negligent construction contractors.

Define "Defect"

New Jersey's Division of Consumer Affairs defines a "major structural defect" as "any actual damage to the load bearing portion of the home, including consequential damages, damage due to subsidence, (which means, "sinking," ed.) expansion, or lateral movement of the soil—excluding movement caused by flood or earthquake—that affects its load-bearing function and that vitally affects or is imminently likely to vitally affect use of the home for residential purposes."

While leaky roofs and poor foundations immediately spring to mind, there are defects one may not suspect. According to Samuel McNulty, a partner at Hueston McNulty Mueller & DeGonge P.C., in Florham Park, there was a lot of substandard insulation that was installed recently in buildings in Hoboken. Hot and cold areas were rampant, and there were even sound problems. "You'd have a unit owner who could hear a neighbor down the hallway drop a knife and fork on the kitchen floor," says McNulty. "Those are big problems, and those are problems that go beyond just the transition process or that initial defect and pertain to the real livability of the building."

The NHWA

The New Home Warranty and Builders' Registration Act (NHWA) is a New Jersey-specific program enacted in 1977 that requires a builder to register with the state of New Jersey before starting construction of any new home. It also requires the builder to register with the state before offering a warranty on any new home bought or sold in New Jersey. This is just one of the things that makes the NHWA so puzzling. "We constantly get inquiries from around the country about the warranty program," said Patrick O'Keefe, CEO of the New Jersey Builder's Association in Robbinsville. "When people look at it, they realize it is probably a far more sophisticated array of activities than would be [warranted] in most states, but it's worked fairly well in New Jersey."

According to Consumer Affairs, "Under the New Home Warranty Act…during the first year of a new home's warranty, warranty coverage extends to defective systems, workmanship, materials, plumbing, electrical and mechanical systems, appliances, fixtures, and equipment, and major structural defects. From the commencement date of the warranty up to two years from that date, the mechanical, electrical, and plumbing systems and major structural defects are covered. The builder is responsible for warranty coverage during the first two years. During the third through tenth years of coverage, only major structural defects are covered."

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3 Comments

  • I purchased preconstruction condo for $1,114,000 from Tarragon in NJ. Result is shoddy . Poor worksmanship, incomplete amentities, dwarfed closets that don't conform to plan .I don't want it. They refuse to return my deposit . Any recourse?
  • A friend purchased a condo in a 14 unit new development in Union and 4 years later....Major strcutural defects worth roughly $1m in repair to the building. Does the building assoc have any recourse against the builder and or city inspectors who allowed it to pass inspection?
  • We were informed that floor insulation that was to layed down before the floor never was and now it cant be done unless the floor is removed. It has been 11 years now. Is there anything that we can do?