Posted On: December 7, 2011 by Gene Markin

Why the Homeowner Warranty Program Remedy is no Remedy At All – Part 5

This blog is the second in a series of blogs discussing the New Jersey Home Warranty and Builders’ Registration Act. This blog will discuss important considerations for new homebuyers. You can access previous installments of this series online here.

Considering the stringent ramifications of proceeding under the warranty program, the take-away is BUYER BEWARE. While the Act is in place to protect buyers of newly built homes, in practice, it actually greatly limits a buyer’s potential for recovery for damages arising out of construction defects. The real world application of the Act serves to exacerbate the divide between homeowners and builders when there is a dispute over defects. The remedy it offers – mediation and arbitration – is no remedy at all because once invoked it becomes the sole and exclusive remedy available to the homeowner. The homeowner has lost the option to bring a lawsuit and the best result that can be achieved through the warranty program is a determination that the defects claimed are covered under the warranty. However, in such a case, the builder, who supposedly created the defects, is then required to come back and make the appropriate fixes. Thus, a successful outcome through the warranty program does not appear to be as attractive as a successful lawsuit where the homeowner is awarded money damages.

In light of the onerous and prohibitive consequences of proceeding under the warranty program, there are a number of practical tips that homeowners should be aware of:
(1) Document and record all discovered defects and suspected defects (photographs & video);
(2) Provide prompt and detailed notice to your builder and/or warranty service representative of your builder;
(3) Engage in meaningful discussions with your builder regarding discovered and suspected defects as well as the remediation process;
(4) DO NOT be hostile, combative or adversarial;
(5) Be amenable, cooperative and amicable in all communications with the builder;
(6) Maintain a file of all written communications with the builder and/or warranty company;
(7) When necessary, consult with independent engineers, architects, construction professionals and/or attorneys in order to evaluate extent of defects, adequacy of proposed fixes and potential legal claims;
(8) DO NOT perform any repair, replacement or other corrective work yourself, unless absolutely necessary, and in that case, make sure to provide notice to your builder and/or warranty service administrator;
(9) CAREFULLY CONSIDER all options before deciding to avail yourself of the dispute resolution procedures afforded by the warranty program.

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