A purchase of a home to be newly constructed by the seller is much different than the resale of an existing property. Even before the purchaser's attorney is in the position to negotiate and review a contract for the home, there are factors that the purchaser should be aware prior to contracting with a developer.
The purchaser should make inquiry of other developments and homes which the builder has built and independently investigate the reputation, integrity, and competence of the builder by asking to inspect other homes built by the builder and visiting those properties. Exposure to other purchasers from the builder will also give the prospective purchaser a sense of whether other purchasers have been satisfied with the work of the builder. The builder's past and current financial situation should also be investigated. The source of the funding should indicate that the builder will have sufficient funds to complete not only the home in which the prospective purchaser is interested, but the other homes within the development and other common improvements as well. The governmental offices of the municipality where the builder will be constructing the home is also a source of information regarding the builder and the development. Representatives of the building department may be able to answer the purchaser's questions regarding the compliance of the development with the municipal regulations and requirements, and the posting of bonds by the builder to ensure the completion of improvements. The purchaser may also receive advice of problems experienced by other purchasers of which the municipality has been made aware.
The New Home Warranty and Builders' Registration Act, N.J.S.A. 46:3b-1 et seq., and the regulations promulgated pursuant thereto at N.J.A.C. 5:25-1.1 et seq., have two basic components. First, a significant portion of the act requires all new home builders to register under the Act with the New Jersey Department of Community Affairs. The name of the entity or individual transferring title to the new home is the entity which is required to register and warrant the new homes. The certificate issued to a registered entity is valid for two years and may be renewed for additional two periods.
The second component of the Act is the mandate that all new homes be enrolled in a warranty plan. Homes may be enrolled in the State or a private warranty plan. Warranty coverage under the program is for the following:
1. One year from and after the warranty date, the home is to be free from defects caused by faulty workmanship and defective materials due to non-compliance with the building standards as approved by the Commissioner of the Department of Community Affairs. This includes a broad range of defects, ranging from cosmetic to major structural defects.
2. Two years from and after the warranty date, the dwelling is to be free from defects caused by faulty installation of plumbing, electrical, heating and cooling delivery systems.
3. Ten years from and after the warranty date for major construction defects as defined in the Act.
"Off-site conditions" which are required to be disclosed are defined as: (1) sites included in the "National Priorities List" pursuant to the Comprehensive Environmental Response, Compensations and Liability Act of 11980, 42 U.S.C.§ 9601 et seq.; (2) the latest sites included on the New Jersey master list of known hazardous discharge sites; (3) certain classes of overhead electric utility transmission lines; (4) electrical transformer substations; (5) underground gas transmission lines; (6) certain sewer pump stations and sewer trunk lines; (7) sanitary landfill facilities (as defined under N.J.S.A. 12:1E-3); (8) public wastewater treatment facilities; and (9) airport safety zones.
All persons and entities owning, leasing or otherwise maintaining any of the regulated conditions must, within one year of the effective date of the law (i.e., by September 12, 1996), provide the municipalities with respect to National Priorities List Sites, sanitary landfills and know hazardous discharge sites. Every municipality is required to compile lists of reported off-site conditions which are located within its borders, which are to be made available to the public for inspection. The information is to be updated every August 31.
The Act requires sellers, builders, real estate brokers and real estate salespersons to disclose off-site regulated conditions where the transaction involves "newly constructed residential real estate." These parties must advise prospective purchasers that listings of such off-site conditions may be obtained from the municipality in which the land is situated, as well as from all municipalities within one-half mile of the property being sold. Additionally, a purchaser is afforded a statutory right to terminate a contract based on the existence of off-site condition(s) within five days of the seller's and purchaser's execution of the contract. Under the Act, by failing to terminate a contract within this five-day period, a purchaser is deemed to have waived their right to terminate based on off-site hazards. Once the notice has been given, the parties responsible for giving the notice under the Act will be deemed to have satisfied all obligations with respect to disclosure of off-site conditions.
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