Home-building report seeks to fix broken system
W. Cary Edwards is chairman of the State Commission of Investigation
The State Commission of Investigation, of which I am chairman, recently completed an inquiry into new-home construction and inspections in New Jersey, and the picture that emerged is not a pretty one. The final report of this unprecedented investigation sets forth a catalog of shoddy and deficient construction practices, lax regulatory oversight and poor remediation options that routinely plunge unsuspecting new-home purchasers into a quagmire of waste, fraud and abuse. And it's not just in one community, but all over the state — in single homes and housing developments, high-priced and affordable, in suburban and urban areas across New Jersey, particularly with regard to large-scale production builders.
Home-building report seeks to fix broken system
Published in the Asbury Park Press 04/20/05
By W. CARY EDWARDS
The State Commission of Investigation, of which I am chairman, recently completed an inquiry into new-home construction and inspections in New Jersey, and the picture that emerged is not a pretty one. The final report of this unprecedented investigation sets forth a catalog of shoddy and deficient construction practices, lax regulatory oversight and poor remediation options that routinely plunge unsuspecting new-home purchasers into a quagmire of waste, fraud and abuse.
And it's not just in one community, but all over the state — in single homes and housing developments, high-priced and affordable, in suburban and urban areas across New Jersey, particularly with regard to large-scale production builders. Imagine putting your hard-earned savings on the table and signing on the dotted line only to discover — too late — that the new home you've just bought has a structurally unsound roof, or wobbly walls, or cracked pipes, or a basement or crawl space prone to flooding, or an improperly installed heating system that vents carbon monoxide directly into the living space. How could this happen? We found that the construction code inspection and enforcement process, in particular, is fraught with serious shortcomings. Despite significant defects in newly built homes, including structural weaknesses that constitute potentially hazardous conditions, certificates of occupancy have been issued by local government authorities. In extreme situations, forged and fraudulent COs were generated in order to speed the closing of sales with buyers who, for their part, were led only to believe that everything was in proper order. The investigation also revealed instances in which local construction officials accepted gifts and other inducements from builders amid lax, deficient or non-existent inspections. In short, this is a broken system badly in need of repair. What can be done? As an independent fact-finding agency, the SCI has an obligation to set forth practical recommendations once it has identified systemic problems. Of course, we also have a statutory duty to refer evidence of potential criminal misconduct uncovered during our investigations to prosecutors. We have done that in a number of instances as a result of this probe. But the SCI's core mission — a unique mission in the construct of New Jersey government — is to conduct investigations from a systemic standpoint and to produce, based upon the facts, a road map for sensible systemic reform. In the context of new-home construction and inspections, the SCI's detailed findings provide a basis for comprehensive recommendations geared largely toward leveling the playing field for consumers, who all too often find themselves doubly victimized — first by negligent or unscrupulous builders and then by an unnavigable, unresponsive maze of government bureaucracy. Some of this is just fundamental common sense. For one thing, New Jersey needs a better, more effective structure for government oversight and regulation of the construction process. A good place to start would be stringent licensing and certification for builders, dictated by competence and skill and not merely by the ability to pay a filing fee. The Legislature should also consider expanding the state's Consumer Fraud Act, currently limited in its application to "home improvements," and enacting a "Lemon Law" for problem-plagued new homes similar to one that has been on the books for years to aid purchasers of defective new cars. To provide an additional shield for home buyers, the state's new-home warranty system should be overhauled and expanded, a "Home Buyers' Bill of Rights" should be developed and tougher criminal penalties should be on the books to deal effectively with builders, contractors and inspectors who corrupt the system and rip off consumers. It bears emphasis that this was a complex and difficult investigation, one which the SCI conducted as it does all of its work: Fairly, comprehensively and dispassionately. We know that not all builders are problem builders, that not all code inspectors are corrupt or incompetent, and that not all complaints filed by home buyers are necessarily valid. We thank the concerned individuals in each of those categories who assisted in this investigation. But our findings are undeniable. They clearly demonstrate that the new-home construction industry in this state, and those responsible for regulating it, are at a critical crossroad. To their credit, certain elements of the industry and the regulatory community began during the course of the investigation to respond to the need for change. That is the good news in all of this. For the sake of New Jersey's citizens, we hope it only gets better.
W. Cary Edwards is chairman of the State Commission of Investigation. He was attorney general during the Kean administration.
It has long been an article of faith in this country that buying a home is a fulfillment of the American dream. For many it still is. But for many others, it has turned into the worst sort of consumer nightmare. |
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