ASSEMBLY, No. 2772

STATE OF NEW JERSEY

INTRODUCED MARCH 3, 1997

By Assemblywoman BUONO and Assemblyman BARNES

An Act concerning payments by builders into the new home warranty security fund and supplementing P.L.1977, c.467 (C.46:3B-1 et seq.).

    Be It Enacted by the Senate and General Assembly of the State of New Jersey:

    1. The commissioner shall submit a proposal to increase the amounts paid by builders into the new home warranty security fund established by section 7 of P.L.1977, c.467 (C.46:3B-7), to the Senate President and the Speaker of the General Assembly 90 days prior to the effective date of the increase. The increase shall take effect on the date stated in the proposal unless a concurrent resolution disapproving the increase is passed by the Legislature no later than 60 days after the Legislature's receipt of the proposal.

    2. Notwithstanding the provisions of section 7 of P.L.1977, c.467 (C.46:3B-7), or any other law, rule or regulation to the contrary, the commissioner shall decrease by 25 percent the amounts payable by builders participating in the new home warranty security fund to pay claims by owners against builders participating in the fund.

    3. This act shall take effect immediately.

STATEMENT

    The "New Home Warranty and Builders' Registration Act," P.L.1977, c.467 (C.46:3B-1 et seq.), requires all builders of new homes in the State to register with the Department of Community Affairs and to participate in either a private new home warranty plan or the State plan. Builders who participate in the State plan are required to make payments into the new home warranty security fund for each new home they build. The amount of the payments is established by the department to cover claims by new home owners against builders participating in the fund. The fund is required by section 7 of P.L.1977, c.467 (C.46:3B-7) to be "sufficient to cover anticipated claims, to provide a reasonable reserve, and to cover the costs of administering the fund."

    In the fiscal year 1997 budget, $4,250,000 was appropriated from the new home warranty security fund for transfer to the General Fund as State revenue. The Governor's budget for FY1998 proposes to appropriate $5,000,000 from the fund to the General Fund as State revenue.

    It is the sponsor's belief that if the surplus in the new home warranty security fund is so great that the excess can be appropriated as State revenue, the payments builders are required to make to the fund to cover claims against them are too high.

    This bill requires the Commissioner of Community Affairs to lower builders' payments to the new home warranty security fund by 25 percent. It prevents future excessive increases in the payments by requiring the commissioner to submit any proposal to increase these payments to the President of the Senate and the Speaker of the General Assembly 90 days prior to the effective date of the proposed increase. The bill provides that a proposed increase would take effect on the date stated in the proposal unless a concurrent resolution disapproving the increase is passed by the Legislature no later than 60 days after the Legislature's receipt of the proposal.

Requires fees paid by builders into new home warranty security fund to be lowered by 25 percent; requires Legislative approval of future increases.