Buying New Construction When You Downsize in New Jersey: Warranties and the Public Offering Statement

New homes in New Jersey come with a State-backed warranty: one year on materials and workmanship, two years on heating, air conditioning, plumbing and electrical systems, and ten years on major structural defects. If the home is in a planned community covered by the State's disclosure law, the developer also has to give you a public offering statement by the contract date, and you can cancel without penalty until midnight of the seventh calendar day after you sign.

I'm Dennis Mark Interdonato with The Dennis Mark Group at Keller Williams Realty Ocean Living, and before I sold homes I built and remodeled them in New Jersey. A brand-new home is a popular answer when you're downsizing: new roof, new mechanicals, nothing to fix for a while. Here's what protects you.

What does New Jersey's new home warranty cover?

The Department of Community Affairs runs the New Home Warranty Program. Its consumer page says all defects in materials and workmanship are covered for the first year, heating, air conditioning, plumbing and electrical systems are covered for two years, and major structural defects are covered for ten years (NJ DCA).

The clock starts on the warranty date, which the regulations define as the date of first occupancy by the owner or the settlement date, whichever comes first (N.J.A.C. 5:25). Write that date down. Every deadline runs from it.

How do you check the builder?

A builder can't get a permit to build a new home in New Jersey without first registering with the Department of Community Affairs. You can look a builder up on DCA's builder search. Do it before you sign, and make sure the name on the contract matches the registration.

How do you make a warranty claim?

1. Notify the builder in writing. The notice has to reach the builder no later than seven calendar days after the warranty on that item expires.
2. Give the builder time. The builder has 30 days to respond.
3. File with the State if it isn't resolved. The owner can file a Notice of Claim with DCA within 14 days after that period. DCA moves the claim through conciliation and then arbitration (N.J.A.C. 5:25-5.5).

DCA's page is blunt about timing: a late claim will be denied. Keep a folder with the closing date, every email to the builder and photos of every issue.

What is a public offering statement?

It's the developer's official disclosure for a planned community. Under the Planned Real Estate Development Full Disclosure Act, the developer has to deliver a current public offering statement on or before the contract date, and the buyer can cancel without cause by midnight of the seventh calendar day after signing, with the deposit refunded in full (N.J.S.A. 45:22A-26).

Not every new home gets one. The Act exempts offerings of fewer than 100 lots or units, except condominiums and co-ops, which are covered at any size (45:22A-25). Ask the sales office whether the community is registered and where the statement is.

When you get it, read the association budget, the fee and what it covers, the reserve plan and the rules. Those numbers belong in your monthly cost on day one. My article on what HOA and condo fees cover lists what to look for.

When can you move in?

Not before the certificate of occupancy. Under the Uniform Construction Code, a new building can't be used or occupied until the town issues one (N.J.A.C. 5:23-2.23). Completion dates move, and that matters when you're also selling. A short rent-back after your sale or a sale timed to the builder's schedule keeps you from moving twice.

Taxes can move too. New construction finished during the year can get an added assessment, so ask the town how the first year will be billed. See will a smaller home lower your property taxes.

Before any of that, find out what your current home should bring on my home value page, and read the Downsizing Guide for how I line up the sale and the purchase.

Frequently Asked Questions

How long is the new home warranty in New Jersey?

One year for materials and workmanship, two years for heating, air conditioning, plumbing and electrical systems, and ten years for major structural defects, according to the NJ Department of Community Affairs.

Can I back out of a new construction contract in New Jersey?

In a planned community covered by the Full Disclosure Act, you can cancel without cause by midnight of the seventh calendar day after signing. Outside that, it depends on your contract, which your attorney should review before you sign.

What is a public offering statement?

It's the developer's required disclosure for a planned real estate development, delivered on or before the contract date under N.J.S.A. 45:22A-26.

This is general information, not legal, tax or lending advice. Your attorney reviews the builder's contract and the public offering statement.

About the author

Dennis Mark Interdonato is a REALTOR® and Master CDRE® who leads The Dennis Mark Group at Keller Williams Realty Ocean Living in Point Pleasant, NJ, helping buyers and sellers throughout New Jersey make their next move, with Monmouth and Ocean County as home base. Read more about Dennis Mark.

Keep reading

• Buying a home under construction in New Jersey
• What makes a home low-maintenance?
• The Downsizing Guide and how I plan a downsizing move
• Have a question this didn't answer? Send it to Dennis Mark.