Star-Ledger Staff
Justices hold builders liable years after sale
Ruling is a victory for new home buyers
Tuesday, January 25, 2005
BY ROBERT SCHWANEBERG

Giving homeowners a powerful new set of allies, the New Jersey Supreme Court ruled yesterday that municipal construction officials can fine builders for faulty craftsmanship years after the house is completed and sold.

The case, a major test of the powers of enforcement officials under the Uniform Construction Code, pitted the New Jersey State League of Municipalities against the New Jersey Builders Association
 
While the court ruled in favor of the municipal officials, lawyers involved said the real winners are buyers of new homes who belatedly discover construction flaws and turn to their local government for help.

The justices, 5-0, overturned an appeals court ruling that has found that a municipal construction official's power to fine a builder ends once a certificate of occupancy has been issued.

"I think it's a victory for home buyers in the State of New Jersey as much as it is for the municipal code officials," said Kristina Hadinger, the attorney for Montgomery Township, where the case arose.

William Kearns, who argued the case for the League of Municipalities, called it "an extremely important consumer protection case."

"This makes it very, very clear the construction code is there to protect consumers," Kearns said. "The obligation is on the builder to do it right."

Christine Petruzzel, who argued the case for the builders association, said, "Obviously we were disappointed and we disagree with the opinion."

"Really, what this opinion does is make the construction code official the steward of warranty claims that should be pursued by the homeowner," Petruzzel said. "It certainly opens the door to many more claims being asserted by code enforcement officials than would otherwise exist."

The case arose out of a dispute, which has since been settled, between purchasers in the upscale Cherry Valley development in Montgomery Township and the builder, DKM Residential Properties Corp. The homes were sold between 1995 and 1998, according to the ruling.

By May of 2000, the ruling continued, the township began getting complaints from some residents with synthetic stucco exteriors that faulty installation had resulted in "decay, rotting and mold accumulation."

"We were faced with the prospect of years of civil litigation to just get your house watertight," Arthur Skaar, who bought one of the affected houses, said.

The Montgomery Township construction board investigated, determined that 61 homes had not been built up to code and ordered the builder to make repairs or face fines of $500 per week, according to the opinion.

DKM settled. Skaar said some homeowners accepted cash payments and hired contractors to make repairs but he took DKM's offer to remove the stucco and install new siding.

"I liked the idea of the builder doing it for me for free," Skaar said. "What the town did for us worked." Hadinger said the fines were forgiven once the repairs were made.

But the case reached the appeals court, which ruled in 2003 that Montgomery Township had no power to fine the builder because the houses had been completed and sold. The appeals court said the rest of the township's taxpayers should not pick up the bill for what was really a "private" fight between the home buyers and the builder.

Yesterday, the state's highest court rejected that conclusion.

"Although the question before us is one that is not free from doubt, the UCC (Uniform Construction Code) Act is designed to protect the health, safety and welfare of people, and therefore its powers should be given liberal interpretation so the various enforcing authorities can act," Justice Jaynee LaVecchia wrote for the court. Chief Justice Deborah Poritz and Justice Barry Albin did not take part in the case.

William Dressell, executive director of the New Jersey State League of Municipalities, was "delighted" with the ruling.

"This upheld a municipality's power to assure code compliance in those cases where the damage caused by a construction code violation does not appear until after the CO (certificate of occupancy) is issued," Dressell said.

He added that helping buyers of houses that are not up to code is "part of public service as far as we're concerned."

Robert Schwaneberg covers legal issues. He can be reached at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it or (609) 989-0324.