Current through Register Vol. 56, No. 24, December 18, 2024
(a)
Each builder not participating in an approved private plan shall contribute to
the State plan in an amount equal to a percentage of the purchase price of the
home, or of the fair market value of the home on its completion date if there
is no good faith arms' length sale, determined in accordance with (b) below,
each time such builder sells a home. When the cost of land is not included in
the sale, the purchase price shall be deemed to be 125 percent of the contract
amount and shall be the basis for calculating the premium and the dollar value
placed on the Certificate of Participation.
1.
Whenever the seller of a new home is not the builder who constructed it, or a
builder taking from the builder who constructed it, such as a mortgagee in
possession, receiver in bankruptcy, or executor of an estate, such person shall
not be excused from payment of premiums or from taking corrective action on
complaints, dispute settlement, or the like in the same manner as would any
builder. Such person may contract with a builder for follow-up services that
may be required pursuant to the warranty or may, at such person's option, pay
0.68 of one percent of the purchase price of the new home and be relieved of
the obligation to provide such follow-up services. The State plan shall then
stand in such person's place with regard to any claims made pursuant to this
subchapter, but shall not stand in such person's place if the homeowner elects
not to file a claim in accordance with this subchapter and elects, rather, to
pursue any other remedy against the seller. The claims procedure established by
this subchapter shall be the exclusive remedy whereby the State plan shall
stand in place of the seller. The Department shall inspect the new home for any
defects. The list of defects shall be attached to the Certificate of
Participation. Uncompleted portions shall be excluded from the warranty
coverage until completed, in accordance with
N.J.A.C.
5:25-3.4(a)1. The additional
amount paid shall not be passed through to the owner.
2. Where a builder is under contract with a
property owner to fully construct a new home and provide the required warranty
coverage, and fails to complete the contract and obtain a certificate of
occupancy, the owner may apply to the Department for a new home warranty and
pay a premium of 0.68 of one percent of the purchase price of the home. Such
procedure, and the coverage thereby secured, shall be as defined in
N.J.A.C.
5:25-5.4(a)1. A warranty
shall not be issued when the home is less than 80 percent complete or it is
determined by the Department that the cause of the builder's not completing the
home was the owners' failing to meet their responsibility under the
contract.
3. Each payment shall be
forwarded to the Department at least 10 days prior to date of settlement and
shall be accompanied by a completed and executed Certificate of Participation
on the form prescribed by the Director. The Department shall then validate the
Certificate of Participation and return four validated copies to the
builder.
4. In such instances where
the Department determines that there have been an excessive number of awards
against the New Home Warranty Security Fund on the part of an individual
builder, due to negligent construction practices, the Department may levy a
surcharge against such builder.
(b) The contribution percentage to be paid
for each new home by a builder not participating in an approved private plan
shall be determined as follows:
1. If, for at
least 10 years, there has been no payment made, and no final determination that
a payment must be made, under either the State Plan or an approved private
plan, as a result of a claim against the builder or a major structural defect,
the contribution percentage shall be 0.17;
2. If, for at least seven years, but less
than 10 years, there has been no payment made, and no final determination that
a payment must be made, under either the State Plan or an approved private
plan, as a result of a claim against the builder or a major structural defect,
the contribution percentage shall be 0.213;
3. If, for at least five years, but less than
seven years, there has been no payment made, and no final determination that a
payment must be made, under either the State Plan or an approved private plan,
as a result of a claim against the builder or a major structural defect, the
contribution percentage shall be 0.255;
4. If, for at least two years, but less than
five years, there has been no payment made, and no final determination that a
payment must be made, under either the State Plan or an approved private plan,
as a result of a claim against the builder or a major structural defect, the
contribution percentage shall be 0.298;
5. If a builder has not previously been
registered, or has been registered for less than two years and there has been
no payment made, and no final determination that a payment must be made, under
either the State Plan or an approved private plan, as a result of a claim
against the builder or a major structural defect, the contribution percentage
shall be 0.319;
6. If, within the
previous two years, there has been any payment made, or any final determination
that a payment must be made, under either the State Plan or an approved private
plan, as a result of a claim against the builder or a major structural defect,
the contribution percentage shall be 0.425;
7. If, at any time while the builder's
contribution percentage is in an amount determined in accordance with (b)6
above, by reason of the builder's having been responsible for a payment having
to be made on a claim under either the State Plan or an approved private plan,
there is any further payment made, or any final determination that a payment
must be made, under either the State Plan or an approved private plan, as a
result of another claim against the builder or a major structural defect, or if
a petition in bankruptcy filed by or against a builder and the builder has not
yet been discharged or is under the supervision of the court, the contribution
percentage shall be 0.595;
8.
Whenever a builder is or has been a builder designee, officer, or stockholder
or partner with at least a 10 percent ownership interest, of any builder
entity, the claim and payment record of that other entity, shall, if less
favorable than that of the builder individually, be attributable to the builder
for purposes of this subsection.
9.
Whenever a builder is a corporation, partnership or subsidiary, the claim and
payment record of any builder designee, officer, or stockholder or partner with
at least a ten percent ownership interest, or of any corporation, partnership
or subsidiary, having any builder designee, officer, or stockholder or partner
with at least a 10 percent ownership interest, in common with the builder,
shall, if less favorable than that of the builder, be attributable to the
builder for purposes of this subsection.
10. If a builder is an individual or group of
individuals who is or are the sole owner(s) of another builder that is a
corporation, partnership or subsidiary, or if a builder is a corporation,
partnership or subsidiary having the same builder designee, officers, and
stockholders or partners with at least a ten percent ownership interest, as
another builder, the claim and payment record of the one builder shall be
attributable to the other for purposes of this subsection.
11. For purposes of this subsection, "10
years" shall mean the 120 month period immediately prior to the date of
enrollment of a new home under the State Plan, "seven years" shall mean the 84
month period immediately prior to such date, "five years" shall mean the 60
month period immediately prior to such date, and "two years" shall mean the 24
month period immediately prior to such date; exclusive, in all cases, of any
consecutive 12 month period in which no new homes were enrolled in the State
Plan or in any approved private plan. Thus, for example, a builder who had no
payments or adverse final determinations for 10 years but enrolled no homes
during one of those years would not be eligible for the 10 year rate until
another year had passed in which he both enrolled at least one new home and had
no payments or adverse final determinations.
(c) The establishment of a contribution
percentage for a builder that is in excess of the minimum amount shall be in
addition to, and not to in lieu of, any punitive action taken pursuant to
N.J.A.C.
5:25-2.5 or 2.6 or any surcharge levied
pursuant to (a)4 above.
(d) The
initial contribution percentage for each builder shall be established as of
January 1, 1993 of this subsection. Thereafter, the contribution percentage
rate for each builder shall be reviewed by the Division, and revised if
necessary, when the builder's registration is renewed. The Department may
change the contribution percentage, and make the change effective at a time
prior to renewal at any time that a payment is made or there is a final
determination that a payment must be made.
(e) There shall be no appeal from the
establishment of a contribution percentage except upon the grounds that the
record used by the Division for that purpose is either incorrect or incomplete.
In any case in which a determination of builder responsibility for a payment
was not appealed as required in this chapter or was unsuccessfully appealed,
the builder shall not have the right to appeal a contribution percentage
determination based on any such prior determination of builder
responsibility.
(f) "Claim against
the builder" shall include any claim covered by the one-year, two-year, and/or
10-year warranty, as set forth in
N.J.A.C.
5:25-3.2. No major structural defect that a
builder is not obligated to repair shall be charged against a builder for
purposes of determining the builder's contribution percentage, if the
Department finds that such major structural defect was entirely attributable to
a product failure that was not known to the builder at the time of construction
and was caused by factors beyond the builder's control.
