New Jersey § 46:3b-7

§ 46:3b-7.

a. There is hereby established a new home warranty security fund to be maintained

by the State Treasurer in a trust account, separate and apart from other funds and administered by the commissioner. The purpose of the fund is (1) to provide moneys sufficient to pay claims by owners against builders participating

in the fund for defects in new homes covered by the new home warranty ; and (2) to pay the costs of administering the new home warranty program established

in the department, including the costs of obtaining sufficient reinsurance to prudently

protect the fund against unanticipated risks and costs incurred by the board in the

discharge of its duties . The amounts payable by participating builders shall be established and may be changed

from time to time, as the experience of the fund shall require, by the commissioner,

and shall be sufficient to cover anticipated claims, to provide a reasonable reserve

and to cover the costs of administering the fund. Amounts paid by participating builders shall be forwarded to the State Treasurer

and shall be accounted for and credited by him to the new home warranty security fund. b. The State Treasurer shall hold, manage and, through the Division of Investment,

invest and reinvest moneys in the fund and credit all income earned thereon to the

fund in the same manner as provided by law for the investment of pension and retirement

funds administered by the State. The department shall keep the State Treasurer and the board advised of anticipated cash demands for payment of claims against the fund. No funds shall be spent, appropriated or transferred from the fund other than for

the express purposes of paying claims or costs related to administering the program

or the fund as enumerated in subsection a, c, or e of this section. In the event funds are spent, appropriated or transferred from the fund for other

purposes in violation of this subsection, the obligation of participating builders

to contribute to the fund shall be suspended until such time as the funds are replenished,

and if the amount in the fund shall become insufficient thereafter to pay claims or

make awards, the payment of claims and making of awards shall be made from the General

Fund. The Joint Budget Oversight Committee, or its successor, shall have the authority

to investigate complaints of violative fund transfers under this section, and shall

order the Commissioner of Community Affairs to suspend collection from participating

builders if it determines that the provisions of this subsection have been violated. c. Prior to making a claim against the fund for defects covered by the warranty, an

owner shall notify the builder of such defects and allow a reasonable time period

for their repair. If the repairs are not made within a reasonable time or are not satisfactory to

the owner, he may file a claim against the fund in the form and manner prescribed

by the commissioner. The commissioner shall investigate each claim to determine the validity thereof,

and the amount of the award that shall be made thereon, and shall hold a hearing if

requested by either party, in accordance with the provisions of the “Administrative

Procedure Act,” P.L.1968, c. 410 ( C.52:14B-1 et seq. ) applicable to contested cases. Reasonable hearing fees shall be assessed against the unsuccessful party. The amount of the award shall be sufficient to cover the reasonable costs necessary

to correct any defect or defects covered under the warranty, but the total amount

of awards from the fund for any new home shall not exceed the purchase price of the

home in the first good faith sale thereof or the fair market value on the home on

its completion date if there is no good faith sale. All claims submitted by an owner shall first be reviewed through a conciliation

or arbitration procedure by the department, and in the event that the owner is found

to be in the right, then the builder shall be required to correct such claims as determined

through the conciliation or arbitration procedure. If a builder is unable or willfully refuses to correct such deficiency, then an

amount sufficient to cure the problem shall be paid from the fund to the owner. In such cases, the commissioner may then proceed against the builder in accordance

with subsection b. of section 6 of P.L.1977, c. 467 ( C.46:3B-6 ) . Upon certification from the commissioner of the amount of an award, the State Treasurer

shall make payment to the claimant from the fund. d. (Deleted by amendment, P.L.2001, c.147 ). e. If the board determines that fund reserves and reinsurance may be insufficient

to cover anticipated claims, the board shall recommend steps to the commissioner to

restore fund resources to sufficiency, which may include increases in premiums and

fees, expanded reinsurance and changes in standards and claims adjudication procedures. f. The commissioner may provide for surcharges against those builders who are responsible for a significant number of awards against the fund and may discontinue the participation in the fund of any builder who is responsible

for an excessive number of awards against the fund after a hearing in accordance with

the provisions of the “Administrative Procedure Act,” P.L.1968, c. 410 ( C. 52:14B-1 et seq. ) applicable to contested cases. At no time shall the State be required to contribute any moneys to the fund, nor

shall the State have any liability to any person having any right to or claim against

the fund over and above the amount therein except in those instances where it is determined by the Joint Budget Oversight Committee

that the provisions of subsection b. of this section have been violated concerning

amounts spent, appropriated or transferred from the fund. g. The commissioner may order the return of funds to owners of enrolled homes as may

be recommended by the board pursuant to section 3 of P.L.2001, c. 147 ( C.46:3B-7.3 ).