WHEREAS, in July 2002 the State Commission of Investigation ("SCI") launched a formal investigation into reported abuses in new-home construction and inspection; and
WHEREAS, over the course of its nearly three-year inquiry into these complaints, the SCI conducted hundreds of field interviews; examined thousands of pages of documentary evidence; took sworn testimony from scores of witnesses; performed sophisticated accounting analyses; and held five days of hearings to present its findings to the public; and
WHEREAS, the SCI completed its investigation in March 2005 with the issuance of comprehensive report detailing the findings of the inquiry and proposing recommendations for reform; and
WHEREAS, the SCI report revealed examples of shoddy and deficient construction practices, lax regulatory oversight and poor remediation options for homebuyers; and
WHEREAS, the Department of Community Affairs ("DCA") has assisted the SCI in its investigation; and
WHEREAS, in response to the SCI investigation, the SCI and DCA have recommended a series of reforms designed to bolster oversight of the home construction industry, strengthen the inspection and enforcement process, and safeguard the interests of the home-buying public; and
WHEREAS, it is appropriate and just that this Office do everything in its power to protect the home-buying public and to restore consumer confidence in those charged with regulating the home construction industry;
NOW THEREFORE, I, RICHARD J. CODEY, Acting Governor of the State of New Jersey, by virtue of the authority vested in me by the Constitution and by the Statutes of this State, do hereby ORDER and DIRECT:
- The Department of Community Affairs ("DCA") to create a home-buyers web site containing information on registered builders including claims adjudicated against them, industry standard guides, housing codes, inspection information, and homebuyers' warranty
- The DCA to publish and distribute to every new homeowner, within four
months of the closing date, a booklet that explains their warranty rights
and how they can protect them by filing timely claims.
- That the current
multi-step arbitration process be eliminated and replaced with a single
arbitration hearing, which should focus on repair of the defects rather than
monetary settlement. The method-of-repair standard should be the repair necessary
to restore the home to "as new" condition and place the residence in
compliance with applicable codes and industry standards.
- That DCA oversight
of the arbitration process in New
Jersey be strengthened to include: reviewing of arbitrator qualifications; requiring that all arbitrators who handle major structural or fire safety defect claims be licensed as architects or professional engineers, specifically qualified in residential construction technology; and ensuring that arbitrators and arbitration services performing in New Jersey are in full compliance with disclosure requirements of New Jersey's arbitration law.
- That private warranty plans be required to actively eliminate conflicts of interest of arbitrators through a rigorous plan-administered economic disclosure and disqualification procedure, with copies of documents pertaining to this process forwarded to DCA with certification by the warranty plan as to due diligence.
- That DCA review any cases of homeowner dissatisfaction with the warranty process.
- That warranty plans provide DCA with records of all complaints, beyond mere numerical reporting.
- That DCA promulgate a strict code of ethics for all state, county, and municipal building inspectors and construction code officials.
- That given the critical importance of proper structural framing in new homes, the DCA adopt code provisions that require home builders to certify compliance with the Department's framing checklist.
- That the Department of Community Affairs establish a system of engineering inspections to be executed under municipal auspices, but paid for by builder fees, where code violations are found in a new home that has received a certificate of occupancy.
- This order shall take effect immediately.
GIVEN, under my hand and seal this
of May in the Year of Our Lord, Two Thousand
and Five, and of the Independence of the United
the Two Hundred and Twenty-Ninth.
/s/ Richard J. Codey
/s/ Paul T. Fader
Chief Counsel to the Governor