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Glaum v. Bureau of Construction Code Enforcement

Decided: November 6, 1987.


On appeal from Department of Community Affairs.

J. H. Coleman and Stern. The opinion of the court was delivered by J. H. Coleman, P.J.A.D.


[221 NJSuper Page 80] This is a case of first impression which requires us to decide whether a rehabilitated house is a "new home." Plaintiffs-homeowners have appealed from a final decision of the Commissioner

of the Department of Community Affairs (Commissioner) holding that their substantially rehabilitated home was not eligible to participate in the New Home Warranty Program under the New Home Warranty and Builders' Registration Act (Act), N.J.S.A. 46:3A-1 et seq., because the house they purchased was not a "new home." For the reasons which follow, we hold that "new home" means entirely new. Consequently, we affirm the Commissioner's final decision.

The house involved in this appeal is located at 127 Valley Drive, Rockaway Township, in Morris County. The property was sold to Douglas Kessel, later referred to as the builder, in March 1983. In August of the same year he transferred title to his girl friend, Candy McManus, whom he later married.*fn1 The consideration for this transfer was $1.00. Because the house had been damaged severely in a fire, Kessel as a builder applied to various sub code officials for building, electrical and plumbing permits to "repair a fire damaged house." A building permit was issued on August 17, 1983 and the plumbing and electrical permits were issued later.

Plaintiffs contracted on October 8, 1983 to purchase the premises from McManus and all construction was to be completed prior to closing of title. The contract obligated McManus "to provide at the time of closing a homeowner's warranty insurance policy for the benefit of the purchasers." After the work had progressed to a certain point, the township issued a Certificate of Continued Occupancy on January 31, 1984 to McManus as owner and Kessel as builder and agent. This certificate described the construction work as "alteration to house." By deed dated February 6, 1984, "Candy A. McManus, now known as Candy A. Kessel," transferred title to the house to plaintiffs for the consideration of $119,900. The deed states that "[T]he within premises are a new dwelling

never used as a marital abode of the grantor."*fn2 Plaintiffs were given a Certificate of Participation in the New Home Warranty Security Fund by Kessel as builder. This Certificate of Participation had been validated by the Bureau of Construction Code Enforcement/New Home Warranty Program (Agency) within the Department of Community Affairs on January 30, 1984.

The day following the closing plaintiffs submitted to the builder a list of items which needed to be corrected, repaired, or finished. A second list of defects was sent by plaintiffs to Kessel on April 17, 1984. Not having received a satisfactory response from Kessel, plaintiffs filed a notice of claim with the Agency on June 15, 1984 for the defects in the home. A report prepared by Paul Beck Associates, structural engineers, described numerous defects, some of which were structural in nature. The Agency conducted a conciliation meeting at the premises on August 6, 1984 and a consensus was reached as to all the repairs which had to be completed by September 30, 1984. Kessel did not make the repairs as promised so plaintiffs notified the Agency respecting all defects that had not been corrected.

On October 12, 1984 the Agency notified plaintiffs that its investigation revealed that plaintiffs had purchased a home which had been rehabilitated following major fire damage and that the home was not a "new home" within the contemplation of N.J.S.A. 46:3B-1 et seq. and N.J.A.C. 5:25-1 et seq. The warranty issued by Kessel was therefore cancelled. Plaintiffs then requested a hearing before the Office of Administrative Law. While a hearing was pending, plaintiffs filed a complaint in the Law Division, Morris County, against Douglas Kessel, Candy Kessel, a/k/a Candy McManus, Ralph Labenz (Attorney), and the State of New Jersey, Department of Community

Affairs, Bureau of Construction Code Enforcement, New Home Warranty Program, alleging, among other things, a cause of action under the Act. The Office of Administrative Law placed the matter on an inactive list pending disposition of the complaint filed in the Law Division. On August 2, 1985 the Attorney General obtained a dismissal of the complaint "with prejudice as to defendant State of New Jersey, or in the alternative summary judgment is granted as to defendant State of New Jersey, except that Plaintiffs' claim that the Agency erroneously determined that the house in question was not a new home is dismissed without prejudice on the ground of lack of jurisdiction."

After the partial dismissal of the complaint, a hearing was conducted before Administrative Law Judge R. Jackson Dwyer based on joint stipulated facts. The ALJ issued his initial decision on August 29, 1986 affirming the decision of the Agency. The Commissioner adopted the ...

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