Builder Warranty Claims for Death, Disappearance or Insolvency of the Builder
UPDATED: August 7, 2013
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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 may even be required by state law to do so. When your builder doesn't offer you a warranty, the law may impose one. New Jersey imposes a one year warranty for material and workmanship problems, along with a two year state imposed warranty for HVAC, plumbing, and electrical defects, and a ten year warranty for structural defects in new construction projects. Unfortunately, while warranties are designed to protect you, sometimes your builder will die, disappear, or be insolvent by going bankrupt or being without assets. Then, you may not be able to recover the money to which the law says you are entitled.
Making a Claim for the Death, Disappearance, or Insolvency of the Builder
The process to take when making a claim for faulty workmanship or other problems against a missing, dead, or insolvent builder depends on the nature of the project, your contract with the builder, what the defect is, and where you live. If the defect develops during or shortly after construction, check if your builder was bonded. "Bonded" means the builder bought a surety bond, an insurance policy that protects the homeowner against defects or incomplete work. If your contractor was bonded and the amount of protection is enough to cover your losses, you may be able to recover what you are owed through this bond. If you are not able to recover money owed to you from the surety bond, you may have other options. For instance, Maryland has guaranty funds to protect the homeowner from loss. The rules for when and how to recover from a guaranty fund will differ depending on where you live. And, you are usually required to have attempted resolution from the builder first before making a claim from the fund. 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 claim process.
Other options can be explored if the builder has died or is insolvant. Despite the builder's death, you can try to recover money from the builder's estate, if there is money available after his death. If the builder is insolvent and you obtain a judgment against him, you may be able to go to court and place liens 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.