If you are building a new home, warranties against defects may be express or implied. Your builder may offer you a formal written warranty and in some cases, may be required by state law to do so. When your builder doesn't offer you a warranty, the law may impose one. For instance, for new construction in New Jersey, there is a state-imposed one year warranty for material and workman ship problems, along with a two year state imposed warranty for HVAC, plumbing and electrical defects and a ten year warranty for structural defects. Unfortunately, while warranties are designed to protect you, sometimes your builder will die, disappear or will be insolvent (bankrupt or without assets) and you may not be able to recover the money that the law entitles you to.
Making a Claim for the Death, Disappearance or Insolvency of the Builder
The process you will take when making a claim against a missing, dead or insolvent builder for faulty workmanship or other problems is going to differ depending on the nature of the project, your contract with the builder, what the defect is and where you live.
If a defect develops during or shortly after construction, one option may be to consider whether your builder was bonded. "Bonded" means the builder bought a surety bond, which is a kind of insurance policy that protects the homeowner against defects or incomplete work. If your contractor was bonded and the amount of the protection is enough to cover your losses, you may be able to recover what you are owed through the bond the builder purchased.
If you are not able to recover money owed to you from the surety bond, then you have other options in the state as well. For instance, some states- including Maryland- have Guaranty funds that work to protect homeowners from loss. The rules for when and how you may recover from a Guaranty fund will differ depending on where you live. You are generally required to have tried to seek resolution from the builder first before making a claim from the fun; however, if you can show that the builder has died or is unreachable despite your best efforts, this requirement may be waived. You should speak to a lawyer about making a claim from a Guaranty fund because state laws differ so much on this issue and on the claims process.
Your final option is to try to recover money from the builder despite the death, disappearance or insolvency. You may seek to recover money from the builder's estate if there is money available after the builder has died, for example. If the builder is insolvent and you obtain a judgment against him, you may be able to go to court and have liens placed on property he owns or have his wages garnished. These and other options should be explored with an attorney who can assist you in handling your claim in the best way possible and in the manner most likely to allow you to recover the funds you deserve.