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Lobiondo v. Dep't of Community Affairs

March 30, 2009

FRANK AND JUSTINA LOBIONDO, APPELLANTS,
v.
DEPARTMENT OF COMMUNITY AFFAIRS, DIVISION OF CODES AND STANDARDS, BUREAU OF HOMEOWNER PROTECTION, RESPONDENT.



On appeal from a Final Agency Decision of the Bureau of Homeowner Protection, Claim No. CL-07-0479-3.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted January 27, 2009

Before Judges Wefing and Parker.

Frank and Justina LoBiondo appeal from a decision of the Department of Community Affairs dismissing their claim under the New Home Warranty and Builders' Registration Act, N.J.S.A. 46:3B-1 to -20. After reviewing the record in light of the contentions advanced on appeal, we reverse.

The LoBiondos purchased a new home in Ventnor that had been constructed by Moraj, LP. In accordance with the statute the LoBiondos received a ten-year warranty from Moraj that commenced on August 11, 2005. Under the regulations enacted pursuant to the statute, the LoBiondos' home was warranted for the first year against defects arising from faulty workmanship and defective materials. It was warranted for two years against defects caused by faulty installation of plumbing, electrical, and heating and cooling systems. N.J.A.C. 5:25-3.2.

The regulations set out the procedure to be followed by a homeowner who experiences defects in a new home. A homeowner who experiences a covered defect within the warranty period must provide written notice to the builder within seven days of the expiration of the applicable warranty coverage. N.J.A.C. 5:25-3.3(d). Upon receipt of such notice, the builder has thirty days within which to conduct an inspection and provide the homeowner a written statement explaining when and how the builder will resolve the problem. If the builder does not respond within thirty days, the homeowner may file a notice of claim and demand formal dispute resolution with the Bureau of Homeowner Protection (the "Bureau"), located structurally within the Department of Community Affairs. N.J.A.C. 5:25-5.5(b)(3). A homeowner must file this notice of claim within fourteen days of the expiration of the thirty-day period afforded to the builder to respond to the homeowner. Ibid.

If the homeowner does file such a claim, the Bureau initiates a conciliation/arbitration hearing. N.J.A.C. 5:25-5.5(c)(3). If that is unsuccessful, the Bureau will decide the claim. If either party is dissatisfied with the Bureau's decision, an appeal can be filed with the Office of Administrative Law. Ibid. If the homeowner prevails, and the builder fails to correct the defect, the homeowner may file for compensation from the New Home Warranty Security Fund. N.J.A.C. 5:25-5.5(e).

The LoBiondos experienced a number of problems during their first year of ownership and notified Moraj as the first-year warranty period was coming to a close. The Bureau inspected the property and issued a decision which the LoBiondos appealed to the Office of Administrative Law. While that appeal was pending, the LoBiondos and Moraj entered settlement discussions. While those discussions were in progress, the LoBiondos encountered additional problems at the home that would, if sustained, be covered under the second-year warranty. They notified Moraj of these problems by letter dated August 10, 2007.

Under the procedural framework set down by the regulations, Moraj had thirty days to respond in writing and the LoBiondos had fourteen days from the expiration of that thirty-day period to file a claim with the Bureau. Thus if the LoBiondos were going to assert a claim with the Bureau with respect to these additional items, they had until September 23, 2007, to do so. While the settlement discussions continued, the LoBiondos filed a claim with the Bureau with respect to these additional problems on October 12, 2007. Their attorney, in filing this claim, noted the following:

In the month of August 2007, shortly after my clients' Year 2 notice of defects was issued to the builder, the parties began extensive negotiations to resolve the Year 1 Claims and Year 2 Claims amicably rather than continue with the OAL proceedings.

The terms of the settlement, which are in the process of being finalized in written form, provide a mechanism for addressing the Year 2 Claims that my clients, in the context of the overall settlement, have accepted as a satisfactory response. Accordingly, there may be no need for your office to adjudicate a formal Claim for Year 2 defects. However, the pending settlement agreement provides for the filing of a Year 2 Claim as a protective measure for my clients. Accordingly, while it is premature at this point to request your office to schedule an inspection, we are forwarding our clients' Year 2 Claim for filing to effectuate the portion of the pending settlement agreement that deals with Year 2 matters.

The attorney for Moraj received a copy of this filing and made no objection.

On October 19, 2007, the Bureau responded that the LoBiondos had entered the third year of their warranty period and that the matters set forth in the letter of October 12, 2007, were no longer covered by warranty. The Bureau explained that only major structural defects are ...


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