Recently in Contractor Issues Category

New Jersey Home Warranty Program

October 4, 2013

Thumbnail image for stock-photo-4688227-new-home-construction.jpgNew Jersey provides new home owners with a warranty under New Jersey's New Home Warranty and Builders' Registration Act ("HOW"). The Act provides that newly constructed homes must conform to certain construction and quality standards and provide buyer of the new home with insurance-backed warranty protection in the event any of the standards are not met. Simply put, the Act provides that every new home sold in New Jersey comes with a warranty.

Builders of new homes must register with the New Jersey Department of Consumer Affairs to be permitted to engage in the business of building new homes. Builders are then required to provide a three-tiered warranty program which provides coverage and protection against defects.

Warranty coverage extends to defects caused by faulty workmanship and defective materials during the first year of ownership. The one year begins to run on either the first day of occupation or the settlement date, whichever is sooner. Additionally, during the first two years new home owners have a warranty that covers defects caused by faulty installation of heating, electrical, plumbing, and cooling systems. The Act, however, does not extend the coverage to appliances beyond the warranty provided by the manufacturer. Finally, the Act provides for warranty coverage to major construction defects of the home for ten years.

At first glance the Act appears to provide homeowners a cost-savings means of resolving disputes concerning construction defects. However, in reality the Act makes it difficult for homeowners to resolve construction defects. For example, "major construction" defects have been interpreted by the courts very stringently. Generally, the act affords no protection unless the new home is practically collapsing. Additionally, common problems such as leaks, mold, and excessive settling are not covered.

Continue reading "New Jersey Home Warranty Program" »

New Jersey Law That Protects Creditors' Rights

July 2, 2012

Creditors in New Jersey should not be dissuaded from trying to collect what is owed to them because debtors transfer their assets. New Jersey law protects creditors' rights by imposing penalties for debtors who transfer assets to prevent collection of a valid debt.

The Fraudulent Conveyance Act of 1919 has protected creditors' rights in New Jersey for nearly a century. However, in 1988 the New Jersey Legislature updated New Jersey's fraudulent transfer laws by passing the Uniform Fraudulent Transfer Act ("UFTA"), which replaced the former Fraudulent Conveyance Act.

The purpose of UFTA is to protect creditors from debtors who hide assets. Debtors are therefore prohibited from transferring assets to avoid paying debts, once creditors have a "right to payment."

Under New Jersey's UFTA, there are two ways creditors can establish that a fraudulent transaction has occurred. Creditors can prove that a transaction was done with actual intent to defraud the creditor. However, the burden of proof is on the creditor and it is often very difficult to meet. Therefore, the UFTA also allows creditors to prove "constructive fraud." To prove this, creditors must show that a transfer was made without exchange of reasonably equivalent value, rendering a debtor insolvent.

Continue reading "New Jersey Law That Protects Creditors' Rights" »

Registration and Contracting Requirements for New Jersey Home Improvement Contractors - a Sword and a Shield

February 24, 2012

New Jersey's Contractors' Registration Act, passed in 2004, requires contractors to register with the Division of Consumer Affairs (known as "the DCA," a part of the Department of Law and Public Safety in the Attorney General's Office) and disclose specific information to homeowners in a written contract. Violation of this act carries significant penalties.

The Act requires disclosures such as start and stop dates; materials to be used; and payment amounts, breakdowns, due dates and bench marks. It also requires proof of insurance; display of registration numbers; certain other specific information; copies of warranties; and notices of the consumer's right to cancel within three business days.

Violations of same provisions of the Act can be crimes of the fourth degree, with sentences up to eighteen months in prison, and violation of New Jersey Consumer Fraud Act, which entitles homeowners to triple damages plus their attorneys fees. Therefore, it is good practice for contractors to have experienced attorneys who know the requirements of the Act draft their written contracts.

The Act specifically applies to "home improvement contractors" and "home improvement contracts" between an owner, tenant or lessee of residential or non-commercial property. It applies to remodeling, altering, renovating, repairing, restoring, modernizing, removing, demolishing, or in any way modifying any part of residential or non-commercial property. It includes insulation, renovation or any other type of work which could reasonably be interpreted as a "home improvement." However, it does not apply to new home warranties, builder's registration, people performing their own home improvements, architects, professional engineers, surveyors, or other licensed professionals, or people who are employed by the owner - even if that owner is a coop board or condo association.

The Act also prohibits people who have been convicted of certain felonies from being registered as a "home improvement contractor."

The Act is good news and bad news. First the good news - and it is good news, for both homeowners and reputable contractors. For homeowners, it provides a remedy with "teeth" for damages incurred because of a contractor who, for example, took their deposit and never performed the work, or did not perform what he represented that he would perform. It is also good news for reputable contractors, because it allows homeowners to distinguish between contractors who are reputable and those who are not.

It is not all peaches and cream even for good contractors, however. Any violation of the Contractor's Registration Act can be a crime. Moreover, many of the requirements of the Act are quite technical. They must be included and met with exactitude in a written contract. Failure to do so opens up the Consumer Fraud Act's draconian remedies, with triple damages and payment of homeowner's attorneys' fees a real possibility. Our attorneys have seen good faith but technical violations hurt excellent contractors even where the contractor had actually done the work and done it well, and even when the homeowners have not made payments.

All this shows the urgent need to have an experienced attorney draft a contract which meets the Act's requirements. Our attorneys have been doing so for many years.

Additionally, attorneys representing homeowners need to be aware of this Act and its penalties. It is one of the ways to force disreputable contractors to meet their obligations, or provide compensation for violations. Additionally, reputable contractors have technical and substantive defenses for suits by homeowners over technical violations of the Act. It is extraordinarily important that the attorney handling the matter be experienced in both the Contractors Registration Act and the Consumer Fraud Act.

Continue reading "Registration and Contracting Requirements for New Jersey Home Improvement Contractors - a Sword and a Shield" »