New Jersey's New Home Warranty and Builders Registration Act: The Election of Remedies Issue

New Jersey’s New Home Warranty and Builders Registration Act (ACT) is a broad-base statute conceived to protect new home buyers. The Act requires the builder of a new home to purchase a warranty from the Department of Community Affairs that covers certain defects in workmanship or building materials.

The Act allows new home buyer who have claims against their builder to process those claims under a rather informal dispute resolution mechanism that requires the new home buyer to notify the builder of the problems and then to engage in a conciliation process. If the claim is not settled with discussion, the contest will be brought to an arbitrator. The Act further provides that the new home buyer can disregard this informal procedure and file a lawsuit. If, however, the claimant seeks arbitration under the Act, that election of remedies will ordinarily preclude a new home buyer from filing a lawsuit later.

At times, a new home buyer claimant will become disconcerted with the arbitration process or otherwise learn that the nature of their claim against the builder was a violation of New Jersey’s Consumer Fraud Statue. In those cases, the new home buyer may try to abandon the arbitration process under the Act and file a lawsuit. As a result of the election of remedies provision contained in the Act, the new home buyer may be barred from prosecuting their claims in a law suit.