May 17, 2005
New Jersey Acting Governor Dick Codey has signed an executive order intended to protect home buyers from unscrupulous builders. Codey's action came less than six weeks after the State Commission of Investigation (SCI) issued a blistering report on new-home building in New Jersey, describing an industry marked by waste, fraud and incompetence on the part of builders and municipal inspectors.
"Numerous examples of flagrant construction deficiencies, including structural and mechanical flaws ... were found in single homes and in housing developments, large and small, high-priced and affordable, in suburban and urban communities across New Jersey," the SCI said after a three-year study that uncovered numerous instances of shoddy construction.
Making matters worse, the enforcement process was "fraught with serious shortcomings," with overworked and sometimes incompetent municipal inspectors approving substandard work, leaving homebuyers to battle after the fact for needed repairs, the report found.
"The system is broken and badly in need of repair," said SCI Chairman W. Cary Edwards of Oakland.
Among the provisions of Codey's order:
• It directs the Department of Community Affairs (DCA) to develop a Web site where home buyers can access information on builders, including claims against them, as well as industry standard guides, housing codes, inspection information and warranty rights.
• It requires the DCA to publish and distribute to every new homeowner, within four months of the closing date, a booklet explaining warranty rights and how to protect them by filing timely claims.
• It eliminates the current multistep arbitration process in favor of a single arbitration hearing that will focus on the repair of defects rather than monetary settlement. The standard "should be the repair necessary to restore the home to 'as new' condition."
• It mandates that the DCA establish a system of engineering inspections to be conducted under municipal auspices, but paid for by builder fees, when code violations are found in a new home that received a certificate of occupancy.
In addition, Codey ordered the DCA "to promulgate a strict code of ethics for all state, county and municipal building inspectors and construction code officials."
Previous attempts at reform ran into the home construction industry's powerful lobby, allowing builders to escape the provisions of the state's tough Consumer Fraud Act. Instead, new home buyers got a warranty program that was largely ineffective.
