Preventing & Dealing with Construction Defects An Expensive Do-Over!

Many people believe in the ethos of 'reduce, reuse, and recycle'—they buy vintage clothing, pre-owned cars, or refurbished electronic equipment. But most of us also like brand new things, including homes. And with markets across the country rebounding from the economic meltdown of the recession, new homes are becoming an option for more people and the lure of WiFi, designer name appliances and other state-of- the-art finishes can’t be ignored.

Living in shiny, fresh-out-of-the-box construction sometimes comes with problems, however; leaks in condo units, mechanical problems, insufficient noiseproofing, and other issues. While it might be better if every buyer could purchase a 2-year-old, already lived-in unit with the creaks worked out, real estate is often about timing as much as it is about location—so you buy when you can and when the market is right. If you’re buying new, it pays to take what steps you can to insure that the unit you're purchasing is as close to perfect as it can be. Caveat emptor isn’t just an adage to remind buyers to be careful. When the thing you’re buying is also where you’ll be living and likely represents your single biggest investment, naturally you want to protect that investment by every possible means. Ensuring your new home is in top shape before you move in is a good place to start.

What's a 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, ("sinking," in other words – 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." 

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. According to the DCA, "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."

The NHWA defines construction standards for the first two years after a home is built. During that period, the warranty focuses on all aspects of the construction, and for the remaining eight years applies to all the major structural elements. In all cases, predefined standards are established as to what constitutes structural adequacy or inadequacy. Of course, disputes can easily arise if the builder and the customer don't immediately agree that there's a construction defect that needs correction. The building owner has the option of electing dispute resolution in the context of the warranty, or going to court.

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