New Jersey Administrative Code › Title 5 - COMMUNITY AFFAIRS › Chapter 25 - REGULATIONS GOVERNING NEW HOME WARRANTIES AND BUILDERS' REGISTRATION › Subchapter 5 - THE STATE NEW HOME WARRANTY SECURITY PLAN › Section 5:25-5.4 - Warranty contributions, amount, date due

Current through Register Vol. 56, No. 14, July 15, 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 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
				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.