your new home - New Jersey workmanship, systems and structural warranty.

Transcription

1 your new home - New Jersey workmanship, systems and structural warranty.

2 Long live happy homes says it all. It says we are in the business of promises kept and promises kept, make our customers happy. It says we have protected over 5.5 million new and pre-owned homes. It says we partner with thousands of the nation s finest home builders, service contractors and real estate professionals who consider our protection the industry s gold standard. It says we relentlessly focus on reducing the financial risks for our millions of customers. It says a lot about promises kept. The Buyer will receive a Certificate of Participation within 30 days after the Builder/Seller took all steps required to make the express limited warranty effective. The Certificate of Participation will identify the coverage selected by Your Builder/Seller and the Warranty Limits. Once the Certificate of Participation is received, please keep it with this warranty booklet. You do not have a warranty without a valid Certificate of Participation. Register your warranty at Registration is not required for your warranty to be valid.

3 TABLE OF CONTENTS SECTION I SECTION II SECTION III SECTION IV SECTION V SECTION VI SECTION VII SECTION VIII SECTION IX SECTION X Your Warranty Booklet and Certificate of Participation The Warranties Provided By Your Builder/Seller The Option To Repair, Replace or Pay For Defect and/or Structural Defect Reporting a Warranty Claim The Effect of this Warranty on Your Legal Rights Arbitration of Disputes Your Responsibilities Under This Express Limited Warranty Exclusions Manufacturers and Other Similar Warranties Construction Performance Standards

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5 BUILDER/SELLER S EXPRESS LIMITED WARRANTY SECTION I. Your WARRANTY BOOKLET AND Certificate of participation. This booklet and the Certificate of Participation are very important legal documents that fully define the provisions of Your Builder/Seller s express limited warranty, Your rights and Your Builder/Seller s rights and obligations. Therefore, it is important to keep this booklet and the Certificate of Participation with other legal documents that are important to You. Your warranty is not a policy of insurance, a maintenance agreement or a service contract. If You have a mortgage on Your Home, Your lender may insist that You have a Homeowners insurance policy. This warranty is not a Homeowners insurance policy and it will not satisfy the lender s requirement. This warranty is independent of the contract between You and Builder/Seller for the construction and/or sale of the Home. The provisions of this warranty may not be changed or restricted by Your Builder/Seller or by any other person. If any provision of this warranty is found to be unenforceable, the remaining provisions will remain in full force and effect. New Home Warranties in the state of New Jersey are governed by The New Home Warranty and Builders Registration Act (P.L. 1977, c.467) and the Regulations Governing New Home Warranties and Builders registration (N.J.A.C. 5: et.seq.). For further information on New Home warranties and Homeowner rights in New Jersey, please visit the New Jersey Department of Community Affairs website: call A. Transferring Your Builder/Seller s Express Limited Warranty. If You sell Your Home during the term of the express limited warranty, this warranty can be transferred to the next owner, and any subsequent owners. This means all of Your rights and obligations under this warranty, up to the remaining amount of the Warranty Limit, will transfer to each purchaser of Your Home or any person who otherwise obtains title to Your Home, including any mortgagee in possession, for the remaining term of the warranty. When You sell Your Home, You agree to give this warranty booklet and the Certificate of Participation to Your buyer in order to make it possible for the buyer to understand his or her rights and fulfill his or her obligations under the provisions of this express limited warranty. If You are a successive owner of the Home, You may benefit from the coverage provided by this express limited warranty, but in return You are bound by all of the terms and conditions of this warranty including but not limited to the procedures that must be followed to make a claim and the obligation to participate in arbitration as set out in this warranty. THE HOMEOWNER MUST GIVE SUCCESSOR HOMEOWNERS A COPY OF THE CERTIFICATE OF PARTICIPATION (HBW 202 COP NHJ). B. Words With Special Meanings. Generally speaking, the words used in this warranty have their normal everyday meaning. In some cases, however, a word will be used as shorthand to describe specifically one of the key provisions contained in this express limited warranty. In those cases, the words will be capitalized, and the capitalized word will always have the same special meaning. Most defined terms are described in this section, however, other sections of this warranty booklet may contain other defined terms. The words being given a special meaning in this section are as follows: Builder/Seller means the Home Builder/Seller listed on the Certificate of Participation, and is the person or company providing You with this express limited warranty. Certificate of Participation is the document issued by 2-10 HBW confirming that Your Builder/Seller took all steps required to make the express limited warranty on Your Home effective. Common Element means any portion of a Multi-Family Building which is defined as a Common Element in either common interest ownership laws or in the declaration establishing such community. Unless excluded in Section VIII, Common Elements may include, without limitation, hallways, roofs, exterior finishes, and electrical, plumbing, and mechanical distribution systems. Common Element Effective Date of Warranty means the earlier of the date a certificate of occupancy is issued for the Multi- Family Building or the date a unit in the building is first occupied. Commercial Space means any unit within a Multi-Family Building that is used primarily for a non-residential purpose, including, without limitation, club houses, retail space, and recreational facilities. Construction Performance Standards mean the performance standard(s) the Home or element or component must satisfy. 1

6 Defect means a failure to meet the Construction Performance Standards for workmanship and systems set forth in Section X of this warranty booklet. Effective Date of Warranty means the date the express limited warranty goes into effect. That date will be the earliest of: (1) date of first occupancy, or (2) the date title to the Home was transferred to You if title was transferred before Your closing date. Homes With Original FHA/VA Financing If Your Home has original FHA/VA financing, the Effective Date of Warranty is the date of closing. Home means the dwelling unit and garage (if any) or the Commercial Space (if any) located at the address shown on the Certificate of Participation. Major Structural Defect is defined in Section IIB of this warranty booklet. Multi-Family Building is a building in a common interest community that may consist of dwelling units, shared parking spaces, Commercial Space(s) and/or Common Elements. You, Your, and similar words means the person or persons who are the legal owners of the Home covered by this express limited warranty. Warranty Insurer is the Builder/Seller s Warranty Insurer as stated on Your Certificate of Participation. Warranty Limit is the aggregate financial obligation of the Builder/Seller for all claims under this warranty. The Warranty Limit is equal to the final sales price of the Home as identified on the Certificate Of Participation when the final sales price includes the land. If the land was provided by You, the Warranty Limit is equal to the final sales price of the Home multiplied by a factor of 1.25 provided this calculation was performed on the Certificate of Participation. SECTION II. THE WARRANTIES PROVIDED BY Your Builder/Seller. A. One Year Workmanship and Two Year Systems Defect Warranty. Your Builder/Seller is providing a One Year Workmanship and Two Year Systems Defect Warranty for Your Home, and the Common Elements for a Home located in a Multi-Family Building. This means that Your Home will be free from Defects in materials and workmanship for one year as defined in the Construction Performance Standards in Section X; and for two years Your Home will be free from Defects in the electrical, plumbing, and mechanical distribution system as stated in Section X. The Workmanship warranty shall expire one year from the Effective Date of Warranty; and the Systems Warranty will expire two years from the Effective Date of Warranty. Pre-existing conditions such as walk through or punch list items are only covered to the extent that they qualify in accordance with the Construction Performance Standards. ROOFING CABINETS COUNTERTOPS SINK TOILET CERAMIC TILE DRYWALLS PAINT CARPET INTERIOR TRIM Workmanship Examples of items typically covered under the one year workmanship warranty. DOOR PANELS EXTERIOR SIDING HARDWOOD FLOOR/ RESILIENT FLOORING TILE BASEMENT FLOOR 2 2

7 ELECTRICAL WIRING SUPPLY PIPING Systems Examples of items typically covered under the two year systems warranty. WASTE PIPING DUCTWORK B. Structural Defect Warranty. Your Builder/Seller is providing a Major Structural Defect warranty. This means that the Builder/ Seller warrants that Your Home and Common Elements, if Your Home is located in a Multi-Family Building, will be free from Major Structural Defects from the Effective Date of Warranty for ten years. 1. Major Structural Defect is defined as actual damage to the load-bearing elements of the Home, including consequential damages, damages due to subsidence, expansion or lateral movement of the soil (excluding movement cause by flood or earthquake) that affects their load-bearing function and that vitally affects or is imminently likely to vitally affect the use of the Home for residential purposes. The load-bearing portion of a Home is defined as the framing members and structural elements that transmit both dead and live loads of the Home to the supporting ground. Examples of load bearing elements are: roof rafters and trusses, ceiling and floor joists, bearing partitions, supporting beams, columns, basement and foundation walls, and footings. 2. A structural failure will not be considered a defect until it has been established by the Warranty Insurer under the Uniform Construction Code in effect on the date that the Construction Permit under which the new Home was constructed was issued, as an actual or pending structural failure of some part of the load-bearing portion of the Home as defined above. To be eligible, such defect does not have to render the Home uninhabitable; however, it must be of such a serious nature that it vitally affects the use of the Home for residential purposes. ROOF FRAMING LOAD BEARING WALLS BEAMS STRUCTURE Examples of items typically covered under the ten year structural warranty. BEAMS COLUMNS FOUNDATIONS FLOOR FRAMING Non-exclusive lists of elements of Your Home that are not load-bearing elements under this Major Structural Defect warranty include: 1. Non-load-bearing partitions and walls; 2. Wall tile or paper, etc.; 3. Drywall and plaster; 4. Flooring and sub-flooring material; 3

8 5. Stucco, brick and stone veneer; 6. Any type of exterior siding; 7. Roof shingles, roof tiles, sheathing, and tar paper; 8. Heating, cooling, ventilating, plumbing, electrical and mechanical systems; 9. Appliances, fixtures or items of equipment; 10. Doors, trim, cabinets, hardware, insulation, paint, stains; and 11. Basement and other interior floating, ground-supported concrete slab Homes With Original FHA/VA Financing If Your Certificate of Participation indicates Your Home has FHA/VA financing, add the following to the definition of designated load-bearing elements that are covered: 12. Roof sheathing only if Your Home has original FHA/VA financing still in effect SECTION III. THE OPTION TO REPAIR, REPLACE OR PAY FOR Defect AND/OR Structural Defect. A. Provisions Applicable to Defect and/or Structural Defect. The Builder/Seller shall have the option to repair, replace or pay You the reasonable cost of repair for any Defect. If the Builder/Seller fails to perform his warranty obligations, the Warranty Insurer will assume the obligations and rights of the Builder/Seller with respect to qualifying Defects. The Warranty Insurer shall have the option to repair, replace or pay You the reasonable cost of repairing any Major Structural Defect. The design, method and manner of such repair will be with property of like kind and quality and will be within the sole discretion of the Builder/Seller or Warranty Insurer, as applicable. At the time of repair, replacement or payment for the repair of any Defect or Major Structural Defect, You must: 1. Assign to the Builder/Seller or Warranty Insurer any rights You may have against any other person with respect to the Defect or Major Structural Defect. You must not do anything to prejudice these rights of subrogation. 2. Upon completion of repairs, You agree to sign and deliver a full and unconditional release of the Builder/Seller and/or Warranty Insurer, in recordable form, of all legal obligations with respect to the warranted items and conditions arising from those items, subject to the homeowner s right to a compliance arbitration. If an improvement, fixture or property not constructed by the Builder/Seller is damaged or requires removal during the repair, it is Your sole responsibility, and not the responsibility of the Builder/Seller or Warranty Insurer, to pay for the cost of repair or removal of such improvement, fixture or property. No repair shall extend the term of this express limited warranty as to any Defect or Major Structural Defect, including without limitation, the Defect or Major Structural Defect that was the subject of the repair. The repair of Defects and Major Structural Defects will include payment of actual, reasonable shelter expenses during repairs if the Builder/Seller or Warranty Insurer finds relocation is necessary. If the performance by the Builder/Seller or Warranty Insurer of any of its obligations hereunder is delayed by factors beyond its reasonable control, such as (but not limited to) acts of God, strikes, non-availability of materials, acts of government, civil commotions, etc., the Builder/Seller or Warranty Insurer will be excused from performing until the effects of such event are remedied. Homes With Original FHA/VA Financing In the case of cash payments regarding Homes with original FHA/VA financing still in effect, the Warranty Insurer is required to make payment to You and Your mortgagee. In order for these obligations to be performed, in filing a claim, You must provide the name and address of Your mortgagee, the FHA/VA case number and the loan number (Your HUD settlement statement will have this information) when You file a claim with respect to a Home with a FHA/VA financed mortgage. B. Additional Provisions Applicable to the Repair of Structural Defect. The repair of a Structural Defect is limited to: 1. The repair of damage to designated load-bearing portions of the Home which is necessary to restore their load-bearing ability; 2. The repair of designated non-load-bearing portions, items or systems of the Home, damaged by the Major Structural Defect, which make the Home unsafe, unsanitary, or otherwise vitally affect the use of the Home for residential purposes (such as the repair of inoperable windows, doors and the restoration of functionality of damaged electrical, plumbing, heating, cooling, and ventilating systems); and 3. The repair and cosmetic correction of only those surfaces, finishes and coverings, original with the Home, damaged by the Major Structural Defect, or which require removal and replacement attendant to repair of the structural damage, or to repair other damage directly attributable to the Major Structural Defect. Repairs of the Major Structural Defect are intended to restore the Home to approximately the condition just prior to the Major Structural Defect, but not necessarily to a like-new condition. Consequential damages to real property as a result of a Major Structural Defect or repair of such Defect are covered under this warranty; however, consequential damages to personal property are excluded. If the Warranty Insurer finds that the Home is a total loss, then the Warranty Insurer has the right to pay You the remaining Warranty Limits in full settlement of the claim. 4 4

9 C. Access to Your Home for Inspecting and Making Repairs. In order to carry out the warranty responsibilities, the Builder/Seller or Warranty Insurer will require access to Your Home during normal business hours to inspect, repair and conduct tests. By seeking warranty coverage You have granted access to Your Home to the Builder/Seller and the Warranty Insurer. If Your Home is in a Multi-Family Building, at least three (3) days in advance, the Builder or Insurer will schedule an appointment with the Homeowner for access to perform work. If emergency repairs are necessary and You cannot be reached within a reasonable time period, You waive such notice. If You do not provide access to Your Home during normal business hours to inspect, repair, or conduct tests on Your Home as may be required to evaluate or repair a Defect or Major Structural Defect, You are relieving the Builder/Seller and Warranty Insurer of all responsibility to make repairs, replace or pay for any Defect or Major Structural Defect under this warranty. In addition to the right to inspect Your Home, the Builder/Seller or Warranty Insurer shall have the right, in advance of any arbitration concerning Your Home, to re-inspect Your Home if the request for arbitration is made more than thirty (30) days after the last claim decision concerning the claim that is the subject of the arbitration. D. The Limits of Your Warranty. Every time Your Builder/Seller or Warranty Insurer pays a claim under this warranty, the amount of that payment is deducted from the Warranty Limit. When the Warranty Limit is exhausted, there is no longer warranty coverage for Your Home. A claim payment includes the cost to the Builder/Seller or Warranty Insurer of repairing a Defect or Major Structural Defect in Your Home covered under this warranty plus the costs to repair consequential damages and shelter expense. However, a claim payment does not include the cost of investigating the claim. The Warranty Limit for Common Elements in a Multi-Family Building is equal to the sum of the Warranty Limits for all Homes in the building which are enrolled in the 2-10 HBW Program. In the event that all Homes in the Multi-Family Building were not enrolled, the Warranty Limit for Common Elements Defects or Common Elements Major Structural Defect coverage shall be reduced pro-rata based upon the ratio of the original sale price of the non-enrolled Homes compared to the total original sales price of all Homes in the Multi-Family Building. If the claim payment is for a Common Elements Defect or Common Elements Major Structural Defect, the Warranty Limit on each Home in the Multi-Family Building still covered shall be reduced pro-rata in the proportion which the Common Elements claim payment bears to the total original sales price of all enrolled Homes. Any coverage for Your Builder/Seller s express limited warranty shall be excess of any other valid and collectible insurance available to You or Your Builder/Seller, whether primary, pro-rata or excess, and whether or not collected. E. Emergency Repairs. An emergency means a substantial risk of serious physical damage to the Home or a substantial risk of serious bodily injury to its occupants if a Defect or Major Structural Defect is not immediately repaired. If You have an emergency involving a Defect or a Major Structural Defect, You must contact Your Builder/Seller and or the 2-10 HBW WARRANTY INSURER immediately, who is responsible for making emergency repairs or authorizing You to make emergency repairs. If You are unable to contact Your Builder/Seller, You must then (1) make minimal repairs necessary to avoid the emergency until authorization for more extensive repairs has been approved by Your Builder/Seller, (2) take any action reasonably necessary to limit additional damage, and (3) report the emergency to the Builder/Seller and 2-10 HBW at on the next business day. Except for authorized emergency repairs, do not repair or attempt to repair a claimed Defect or Major Structural Defect before the Builder/Seller has an opportunity to inspect the Defect or Major Structural Defect. Any attempt to repair a claimed Defect or Major Structural Defect, other than an authorized emergency repair, will make it impossible to assess whether the Defect or Major Structural Defect was covered by this warranty, whether the repair was correct, cost-effective, necessary, and effective, or whether the problem could be resolved in another way. Unless an emergency Defect or Major Structural Defect repair is authorized, the Builder/Seller and or the 2-10 HBW Warranty Insurer will have no responsibility to reimburse any costs due to repair, replacement, and expenses, including engineering and attorney s fees. SECTION IV. REPORTING A WARRANTY CLAIM. A. Workmanship and systems defects. If You believe Your Home has a Defect that is covered under Your Builder/Seller s Workmanship or Systems Warranty and that occurred during the applicable term of the warranties, You must take the steps described in this Section IV. C and D. b. structural defects. If You believe Your Home has a Major Structural Defect that is covered under Your Builder/Seller s Structural Warranty, You must take the steps described in Section IV.D.2. Notice of Major Structural Defect must be made by the Homeowner, except for Multi- Family Buildings, notice for each affected building must be made by the Homeowners association or its designated representative, along with a copy of the Certificate of Participation for each Home in the building. 5

10 C. Notice to Your Builder/Seller. 1. Workmanship and Systems Defect(s) must be reported to the Builder/Seller as soon as possible but no later than 7 days after the expiration of the applicable term of the warranty. Send written notification to Your Builder/Seller listing all the specific Defect(s) and the date the Defect(s) occurred. The Defect will not be covered under this warranty if the Notice is received more than 7 days after the expiration of the warranty term. These time limits are a material condition of this warranty. It is recommended (but not required) that Your letter be sent by certified mail, return receipt requested so You have a record of when Your letter was sent and received. If You are unable to contact the Builder/Seller or if for any reason You believe the Builder/ Seller is not fulfilling its warranty obligations, then You should immediately notify 2-10 HBW as described below. If You are unable to contact the Builder/Seller or make the Builder/Seller fulfill its obligations, 2-10 HBW may advise You to file a claim. Note: Pursuant to N.J.A.C. 5: (B) 3i, except in the case of claims which relate to structural problems or emergencies, a notice of claim shall not be submitted to the WARRANTY ADMINISTRATOR until the expiration of 120 days from the EFFECTIVE DATE OF WARRANTY. d. Notice to 2-10 HBW. 1. WORKMANSHIP AND SYSTEMS DEFECTS MUST BE REPORTED TO 2-10 HBW AS SOON AS POSSIBLE BUT NO LATER THAN 7 DAYS AFTER THE EXPIRATION OF THE APPLICABLE TERM OF THE WARRANTY. NOTIFICATION TO THE BUILDER/SELLER DOES NOT CONSTITUTE NOTICE TO 2-10 HBW FOR PROTECTING OR EXTENDING YOUR WARRANTY CLAIM RIGHTS. If covered repairs for the Workmanship or Systems Defects are not completed by Your Builder/ Seller within thirty (30) days of the date You sent Your notice to the Builder/Seller or before the expiration of the warranty term (whichever date comes earlier), You must complete the following three steps: a. Complete the appropriate Request For Arbitration Claim Form HBW 205 ( Notice ), which is found at the back of this warranty booklet. b. Send one copy of the Notice to Your Builder/Seller. c. Send one copy of the Notice to 2-10 HBW, and include: 1. A copy of Your Certificate of Participation; and 2. A copy of all correspondence with Your Builder/Seller regarding the Defect(s) in question to: 2-10 Home Buyers Warranty Warranty Administration Department East Harvard Avenue, Suite 100 Denver, CO warrantyadministration@2-10.com Phone: We recommended (but do not require) that You send this notice by certified mail, return receipt requested, so You have a record of when the notice was sent and received. If the Defect involves a Common Element in a Multi-Family Building the Homeowner Association (when it exists) must file Notice of Claim Form 204. The Notice of Claim Form must list each affected Home in the building and a copy of each Homeowner s Certificate of Participation must be included with the Notice of Claim Form sent to 2-10 HBW. The Common Element Defects must be reported during the applicable warranty term, which commenced on the Common Element Effective Date of Warranty. If the Builder/Seller retains control of more than fifty percent (50%) voting interest in the Homeowner Association ( Association ) or no Association exists, a Common Element claim may be made by ten percent (10%) of the Homeowner interests in the Association. WARRANTY COVERAGE FOR ANY NOTICE RECEIVED MORE THAN SEVEN (7) DAYS AFTER EXPIRATION OF THE WARRANTY TERM WILL BE DENIED AND THE BUILDER/SELLER AND WARRANTY INSURER WILL HAVE NO OBLIGATION FOR THE REPAIR OF THE SPECIFIC DEFECT. What 2-10 HBW will do. Once 2-10 HBW has received Your Request For Arbitration Claim Form, we will send the Claim to the arbitration service unless the Builder/Seller has agreed to resolve all of the alleged Workmanship and Systems Defects, in a written Agreement ( Agreement ) for repair, replacement, payment, or a combination thereof, which must include a reasonable time frame that is acceptable to the Homeowner for resolution of all repairs HBW will transmit the Agreement to the Homeowner and inform the Homeowner that the Agreement is to be treated as an Arbitration Award. As such, the Agreement is subject to a Compliance Arbitration. If Your Builder/Seller did not submit an Agreement, then You and Your Builder/Seller must arbitrate Your dispute under the arbitration agreement set forth in this booklet. 6 6

11 If 2-10 HBW determines that Your Builder/Seller cannot or will not participate in arbitration, or Your Builder/Seller refused to pay or perform an arbitration award in Your favor, 2-10 HBW will notify You of that fact HBW will then forward Your file to the Warranty Insurer, and within fifteen (15) days of the receipt of the claim, the Warranty Insurer will adjust the claim. 2. Major Structural Defect(s) must be reported to 2-10 HBW as soon as possible but no later than seven (7) days after the expiration of the applicable term of the Warranty. This means that You must complete the following two steps: a. Complete the appropriate Notice of Claim Form HBW 204 ( Claim ), which is found at the back of this warranty booklet. b. Send one copy of the Notice to 2-10 HBW, and include: 1. A copy of Your Certificate of Participation; and 2. A copy of all correspondence with Your Builder/Seller regarding the Major Structural Defect(s) in question to: 2-10 Home Buyers Warranty Warranty Administration Department East Harvard Avenue, Suite 100 Denver, CO warrantyadministration@2-10.com Phone: We recommended (but do not require) that You send this notice by certified mail, return receipt requested, so You have a record of when the notice was sent and received. WARRANTY COVERAGE FOR ANY CLAIM RECEIVED MORE THAN SEVEN (7) DAYS AFTER EXPIRATION OF THE WARRANTY WILL BE DENIED AND THE BUILDER/SELLER AND WARRANTY INSURER WILL HAVE NO OBLIGATION FOR THE REPAIR OF THE SPECIFIC MAJOR STRUCTURAL DEFECT. What 2-10 HBW will do. Upon receipt of the items identified in this section D.2, 2-10 HBW will forward Your file to the Warranty Insurer and within thirty (30) days after receipt of the Notice the Warranty Insurer will inspect and adjust the claim. The Warranty Insurer will inspect Your claimed Major Structural Defect within thirty (30) days after receiving Your Notice of Claim Form 204. You agree to make Yourself and the Home available for inspection between 9:00 a.m. and 6:00 p.m. Monday through Friday, or any other mutually agreeable time. If the Warranty Insurer finds that the Major Structural Defect is responsible for the problem, subject to the Warranty Limit, the Warranty Insurer will replace, repair or pay to correct those defects and all associated damages at the Warranty Insurer s expense less a one-time only $ deductible per Home which must be paid by You to the Warranty Insurer when the Warranty Insurer accepts the structural claim. If the Warranty Insurer denies the claim because there is no qualifying Major Structural Defect, You may arbitrate the Warranty Insurer s decision as provided in Section VI. If the Major Structural Defect involves a Common Element in a Multi-Family Building the Homeowner Association (when it exists) must file on Notice of Claim Form 204 with 2-10 HBW. The Notice of Claim Form must list each affected Home in the building, include a copy of each Homeowner s Certificate of Participation and all correspondence between the Homeowner Association ( Association ) and the Builder/Seller. The Common Element Major Structural Defects must be reported during the applicable warranty term, which for all Common Elements commenced on the Common Element Effective Date of Warranty. If the claim is accepted, the maximum deductible is $ per Home in the building, or $5000 per building, whichever is less. If the Builder/ Seller retains control of more than fifty percent (50%) voting interest in the Association or no Association exists, a Common Element claim may be made by ten percent (10%) of the Homeowner who have interests in the Association. Homes With Original FHA/VA Financing If You are the original owner and Your Home has original FHA/VA financing still in effect, the $250 fee will be collected after the claim is accepted and the amount of the loss is determined. SECTION V. THE EFFECT OF THIS WARRANTY ON YOUR LEGAL RIGHTS. You have accepted this express limited warranty provided in this warranty booklet. All other express or implied warranties, including oral or written statements or representations made by Your Builder/Seller or any implied warranty of habitability, merchantability or fitness, are disclaimed by Your Builder/Seller and waived by You to the extent possible under the laws of Your state. PURSUANT TO THE NEW JERSEY NEW HOME WARRANTY AND BUILDERS REGISTRATION ACT ONCE YOU SEND A NOTICE OF CLAIM OR A REQUEST FOR ARBITRATION CLAIM FORM TO 2-10 HBW, YOU HAVE ELECTED THE WARRANTY AND ARBITRATION AS YOUR SOLE REMEDY, BARRING YOU FROM ANY OTHER REMEDY. WHEN YOU FILE A NOTICE OF CLAIM OR A REQUEST FOR ARBITRATION CLAIM FORM, YOU WILL RELINQUISH YOUR RIGHT TO FILE IN ANY COURT A COMPLAINT, COUNTER-CLAIM, CROSS CLAIM OR THIRD PARTY COMPLAINT THAT ALLEGES MATTERS COVERED BY THIS WARRANTY IN PARTICULAR OR UNWORKMANLIKE IN GENERAL. ALL DISPUTES RELATED TO SUCH DEFECT OR MAJOR STRUCTURAL DEFECT SHALL BE RESOLVED BY BINDING ARBITRATION AS PROVIDED IN SECTION VI, BELOW. 7

12 SECTION VI. ARBITRATION OF DISPUTES.* To expedite the resolution of any and all claims, disputes and controversies by or between the Homeowner, the Builder/ Seller, 2-10 HBW, as administrator, the Warranty Insurer or any combination of the foregoing, arising from or related to this Warranty, claims or repairs covered by the Warranty, the Warranty Insurance Policy or the 2-10 HBW Program, will be settled by binding arbitration. Agreeing to arbitration means You are waiving Your right to a jury trial, trial to the court, class action or consolidation. IF THE APPLICABLE WARRANTY TERMS HAS EXPIRED THEN THE DEMAND FOR ARBITRATION MUST BE MADE NO LATER THAN THIRTY (30) DAYS AFTER THE OCCURRENCE OF THE ISSUE BEING ARBITRATED, SUCH AS BUT NOT LIMITED TO, THE BUILDER/SELLER S FAILURE TO RESOLVE A CLAIM BY THE DEADLINE, OR THE WARRANTY INSURER S DENIAL OF A CLAIM, OR COMPLETION OF REPAIRS ALLEGED TO BE NON-COMPLIANT WITH THE ARBITRATION AWARD. Matters subject to binding arbitration include, but are not limited to, the following: 1. Whether the alleged claim is covered by the warranty; 2. Whether the claim or consequential damage has been corrected in a manner covered by the Warranty; 3. Settlement offers or Agreements; 4. Whether there has been a failure to respond to any written notice; 5. The issues that can be submitted to binding arbitration; and 6. The timeliness of binding arbitration requests Any party shall be entitled to recover reasonable attorney s fees and costs incurred in enforcing this arbitration agreement. The decision of the arbitrator shall be final and binding and may be entered as a judgment in any State or Federal court of competent jurisdiction. A. Selecting an Arbitration Service. The arbitration will be conducted by the New Jersey Office of Dispute Settlement, or by any mutually agreeable arbitration services, pursuant to the applicable rules in effect at the time of the arbitration. The arbitration hearing will be held at the residence. No arbitration proceeding shall involve more than one single-family detached dwelling or more than one Multi-Family Building. The arbitrator will render an award within twenty (20) days from the date of the hearing in accordance with the substantive law of the state. The decision of the arbitrator will be final and binding and may be entered as a judgment in any State or Federal court of competent jurisdiction. Notwithstanding the foregoing, the decision of the arbitrator is reviewable only under such circumstances and to such extent as is available pursuant to the New Jersey Arbitration Act. B. Disputes Concerning the Application of this Arbitration Agreement. The parties expressly agree that this arbitration agreement involves and concerns interstate commerce and except as provided herein, interpretation of this arbitration agreement shall be governed by the Federal Arbitration Act (9 U.S.C. 1, et seq.) ( FAA ), to the exclusion of any different or inconsistent state or local law, ordinance or judicial rule. This arbitration agreement is a self-executing arbitration agreement. Any disputes concerning the interpretation or enforceability of this arbitration agreement, including without limitation, its revocability or voidability for any cause, the scope of arbitrable issues, and any defense based upon waiver, estoppel or laches, shall be decided by the arbitrator. C. Cost of Arbitration. The Builder/Seller is obligated to pay all arbitration fees for any arbitration requested by the Homeowner. D. arbitration award. If the arbitrator upholds the Homeowner s claim, the Builder/Seller will perform in accordance with the arbitration award. The arbitrator may make an award that is reasonable and fair based on the parties requests. An arbitration award should conform to the following: 1. The award should state the Homeowner s claimed defect in the Homeowner s language; 2. The award should state the condition as observed, measured and assessed by the arbitrator including any necessary explanation that clarifies the nature of the alleged defect if the Homeowner s language is not specific; 3. The award should state in narrative the arbitrator s findings and provide a reference to the applicable warranty coverage and standard, and the application of that standard to the claimed defect; 4. Arbitration awards and other guidance provided by the arbitrator should make it clear that submissions for building 8 8

13 permits to effect repairs will require (when called for by the arbitrator, the code official and/or the nature of repair) the preparation of design drawings by licensed design professionals. Those drawings are not subject to review or approval by the Homeowner. 5. All arbitration awards will include a time frame for completion of the repairs not to exceed sixty (60) days, if commercially practicable. This is referred to as the compliance period. E. COMPLIANCE ARBITRATION. Upon expiration of the compliance period, and if a party remains dissatisfied after the awarded repairs have been completed, the party(ies) may request a compliance arbitration conducted by the New Jersey Office of Dispute Settlement, or a mutually agreeable service. The requesting party will be charged the cost of the compliance arbitration fee. If the Homeowner is the requesting party, he/she will be reimbursed the cost by the Builder/Seller if the arbitrator finds in whole or in any part in favor of the Homeowner. The compliance arbitration shall determine one of the following for each of the items awarded: 1. The repair has been made in compliance with the arbitration award and the claim is closed; or 2. The repair has been made, but the compliance period will be extended to ensure that the defect does not reoccur (in the case of defects regarding heating and/or air conditioning, window leaks, roof leaks and basement water problems, the monitoring period may include the next full applicable season); or 3. The repair has not been made in compliance with the arbitration award and the Builder/Seller has made a reasonable, good faith effort to effect the repair, and will be granted an extension of specified length to the compliance period; or 4. The repair has not been made in compliance with the arbitration award and the Builder/Seller is in default; or 5. The Homeowner has been uncooperative and has thwarted the Builder/Seller s efforts to comply and the parties have agreed to an extension of time; or 6. The Homeowner has been uncooperative and has thwarted the Builder/Seller s efforts to comply, and the claim is closed. *Homes With Original FHA/VA Financing Any and all disputes between the Homeowner(s) and Builder/Seller arising from or relating to the Warranty may be submitted to judicial resolution. If You are the original owner and Your Home has original FHA/VA financing still in effect, in lieu of any right to have a claim resolved in a judicial proceeding, You may, at Your election, submit to arbitration all claims, disputes and controversies by or between You, the Builder/Seller, the Warranty Insurer and/or 2-10 HBW, arising from or related to the warranty SECTION VII. YOUR RESPONSIBILITIES UNDER THIS EXPRESS LIMITED WARRANTY. You are responsible for proper maintenance of Your Home including maintaining Builder/Seller-set grades around the Home, planting trees and shrubs at the proper distance from the Home, and conforming to generally accepted landscape practices for Your region. Your Builder/Seller is not responsible for problems that arise if You do not meet these responsibilities. Also, all new Homes go through a period of settlement and movement, and Your Home may experience some minor material shrinkage, cracking and other events which are normal and customary. Examples include small cracks in drywall and paint; and separation where dissimilar materials meet each other for example, where moldings meet sheetrock, or where tile grout meets a sink. In most cases, paint and caulking is all that is necessary to conceal these types of blemishes that result from the natural expansion and contraction of construction material. Because these events are normal and customary, they are not a Defect or Major Structural Defect that are covered by this express limited warranty. SECTION VIII. EXCLUSIONS. This Warranty does not provide coverage for any of the following items which are specifically excluded. A. Any portion of a covered Home which is not completed by the Effective Date of Warranty; except that, after completion by the Builder/Seller, such portions will be covered until the end of the warranty term. Builder/Seller s failure to complete construction of such portions may constitute the basis for denial, supervision, or revocation of registration pursuant to N.J.A.C. 5: Any item for the completion of which funds are being held in escrow will be deemed to be incomplete rather than a defect. If such item exhibits a defect after the release of the escrowed funds, the item will be included in the Warranty. In all cases, the warranty term will be deemed to have commenced on the Effective Date of Warranty for the Home. B. Defects or Major Structural Defects in outbuilding (except those out-buildings which contain the plumbing, electrical, heating, or cooling systems serving the Home are covered), swimming pools and other recreational facilities, driveways, walkways, unattached patios, boundary walls, retaining walls which are not necessary for the Home s structural stability, fences, landscaping (including sodding, seeding, shrubs, trees and plantings), off-site improvements, or any other improvements not a part of the Home itself. C. Bodily injury, damages to personal property, or damage to real property which is not part of the Home. D. Any defect or damage which is caused or made worse by any of the following causes, whether acting alone or in sequence or concurrent with any other cause or causes whatsoever, including any covered defect or damage or covered cause of any defect or damage: i. Negligent or improper maintenance or improper operation by anyone other than the Builder/Seller or his employees, agents 9

14 or subcontractors; or ii. Failure of anyone other than the Builder/Seller or his employees, agents or subcontractors to comply with the warranty requirement of manufacturers of appliances, equipment or fixtures; or iii. Failure to give notice to the Builder/Seller and 2-10 HBW of any defect within the time frame as stated in this Warranty; or iv. Changes of the grading of the ground by anyone other than the Builder/Seller, or his employees, agents or subcontractors; or v. Failure to take timely action in emergency cases to minimize any loss or damage. E. Any defect in, or caused by, materials or work supplied by anyone other than the Builder/Seller, or his employees, agents or subcontractors. The Builder/Seller shall, however, be responsible for any defects in or damage to any materials or work not installed by the Builder/Seller when the defect or damage is the direct consequence of defects in materials or work installed by the Builder/ Seller, which is not in accordance with accepted industry standards. F. Normal wear and tear or normal deterioration in accordance with normal industry standards. G. Accidental loss or damage from acts of nature such as, but not limited to, fire, explosion, smoke, water escape, changes which are not reasonably foreseeable in the level of the underground water table, glass breakage, windstorm, hail,lightning, falling trees, aircraft, vehicles, flood and earthquake. However, soil movement which causes a qualifying Major Structural Defect is not excluded, unless the movement was due to flood or earthquake. H. Insect damage. I. Any loss or damage which arises while the Home is being used primarily for non-residential purposes. J. Changes, alterations, or additions made to the Home by anyone after initial occupancy, except those performed by the Builder/ Seller as his obligation under this program. K. Any defect caused to a finished surface material or any work supplied by anyone other than the Builder/Seller, or his employees, agents, or sub-contractors, in that it is determined the installer has accepted the Builder/Seller s surface to apply the finish material. L. Any materials and/or workmanship furnished and installed by the Builder/Seller that does not comply with the specifications in a sales agreement or contract which is not defective. M. Consequential damages to personal property are excluded; consequential damages to real property as a result of a defect or repair of a defect are covered. N. Failure to complete construction is excluded from the Warranty coverage. O. The following are excluded as Major Structural Defects: i. Changes by the owner to the established grade lines affecting basement and foundation walls; ii. Movement caused by flood or earthquake; iii. Actual or resultant damage caused by lightning, tornado, unnatural high winds or hurricanes; iv. Damage caused by additions or alterations to the Home; v. Improper loading over the design criteria for which that portion of the house was intended; vi. Resultant structural damage due to fire; vii. Changes in the water level which is caused by new development in the immediate area or can be directly traced to an act of nature; and viii. Water seepage in basement or crawlspace after the first year of coverage. P. Damage to land and other real property that was not part of Your Home, or any property that was not included in the purchase price stated on the Certificate of Participation. Other exclusions are included in the Construction Performance Standards found in this Warranty booklet in order to define better those standards and are identified by Exclusion. *Homes With Original FHA/VA Financing If You are the original owner and Your Home has original FHA/VA financing still in effect, Diminished market value of the Your Home is deleted SECTION IX. MANUFACTURERS AND OTHER SIMILAR WARRANTIES. Your warranty does not apply to any manufactured item such as appliances, fixtures, equipment (except as specifically defined in the Construction Performance Standards) or any other item which is covered by a manufacturer s warranty, nor does it cover Defect in any systems that are caused by failure of any such manufactured item. Defects in appliances, fixtures and equipment only if such defects are covered under a manufacturer s warranty. No warranty for appliances, fixtures or equipment shall exceed the length and scope of the warranty offered by the manufacturer. 10

15 SECTION X.. The following Construction Performance Standards apply only to the One Year Workmanship and Two Year Systems Warranty. The Construction Performance Standards are standards that Your Builder/Seller s construction should meet. Noncompliance with these construction guidelines calls for corrective action by Your Builder/Seller. Builder/Seller will try to its best ability to match and replace with Your original choice of colors and materials, except where You custom-ordered the items. Builder/Seller cannot be responsible for discontinued items, changes in dye lots, colors or patterns, or items ordered outside of the original construction, or normal wear and deterioration. Pursuant to N.J.A.C. 5: (a) 1, to the extent that detailed minimum performance standards for construction have not been enumerated in these Construction Performance Standards, Builders shall construct Homes in accordance with good industry practice which assures quality of materials and workmanship. Likewise, the validity of any Homeowner s claims for defects for which a standard has not been enumerated here shall be determined on the basis of good industry practice which assures quality of materials and workmanship, and any dispute settlement procedures and arbitration of such claims shall be conducted accordingly. The following Construction Performance Standards are expressed in terms of required standards that the Builder s construction must meet. Noncompliance with these construction standards calls for corrective action by the Builder. All defects or deficiencies described in the following Construction Performances Standards are for the First Year Workmanship Warranty except for those items for which two years of coverage is specifically provided. 11

16 INDEX 1-YEAR SYSTEMS 1. Site Work 1.1 Grading Drainage Foundation and Concrete 2.1 Cast-In Place Concrete Construction and Control Joints Masonry 3.1 Unit Masonry (Brick, Block and Stone) Stucco and Cement Plaster Carpentry and Framing 4.1 Plywood and Joists Finish Carpentry Thermal and Moisture Protection 5.1 Waterproofing Insulation Ventilation and Moisture Control Sealants Exterior Siding Roofing Sheet Metal Doors and Windows 6.1 Doors: Interior and Exterior Garage Doors (Attached Garage) Wood, Plastic and Metal Windows Interior and Exterior Hardware Storm Doors, Windows and Screens Weatherstripping and Seals Glass and Glazing Finishes 7.1 Lath and Plaster Drywall Hard Surfaces Resilient Flooring Plywood Wall Covering Finished Wood Flooring Painting Wall Covering Carpeting Specialties 8.1 Fireplaces Built-in Sauna and Steam Bath Units Cabinets and Vanities 9.1 Kitchen Cabinets and Vanities Countertops Mechanical 10.1 Plumbing Water Supply Heating and Air Conditioning Electrical Components 11.1 Switches and Receptacles Service and Distribution 28 2-YEAR WORKMANSHIP 12. Mechanical Systems 12.1 Septic Tank Systems Plumbing Water Supply Heating and Air Conditioning Electrical Systems 13.1 Electrical Conductors 30 12

17 ITEMS COVERED UNDER THE 1-YEAR WORKMANSHIP COVERAGE DEFICIENCY BUILDER/SELLER RESPONSIBILITY 1. Site Work 1.1 Grading Settling of ground around foundation, utility trenches or other areas on the property where excavation and backfill have taken place that affect drainage away from Home. 1.2 Drainage Improper surface drainage and swales which cause standing water and affects the drainage in the immediate area surrounding the Home. Settling of ground around foundation walls, utility trenches or other filled areas that exceeds a maximum of six inches from finished grade established by Builder/Seller. Necessary grades and swales shall be established to provide proper drainage away from the Home. Site drainage, under the Limited Warranty, is limited to those immediate grades surrounding the Home. Standing or ponding water within the immediate surrounding area of the Home, shall not remain in these areas for a period longer than 24-hours after a rain. Where swales are draining from adjoining properties or where a sump pump discharges, an extended period of 48-hours is to be allowed for water to dissipate. The possibility of standing water after an unusually heavy rainfall should be anticipated and is not to be considered a deficiency. No grading determination is to be made while there is frost or snow or when the ground is saturated. If Builder/Seller has provided final grading, Builder/Seller shall fill settled areas affecting proper drainage, one time only, during the first year Warranty Term. Builder/ Seller is responsible for removal and replacement of shrubs and other landscaping (installed by Builder/ Seller) affected by placement of the fill. Builder/Seller is responsible for initially establishing the proper grades, swales and drainage away from Home. You are responsible for maintaining such grades and swales once properly established by the Builder/Seller to prevent runoffs and erosion of the soil. EXCLUSION Soil erosion and runoff caused by Your failure to maintain the properly established grades, drainage structures and swales; stabilized soil, sodded, seeded and landscaped areas; are excluded from Limited Warranty coverage. Grassed or landscaped areas, which are disturbed or damaged due to work performed by Builder/Seller on the property in correcting a deficiency. Landscaped areas that are distrubed during repair work are defects. Restore grades, seed and landscape to meet original condition. Replacement of trees and large bushes that existed at the time Home was constructed or those added by You after occupancy or those that subsequently die are excluded from Limited Warranty coverage. 2. Foundation and Concrete 2.1 Cast-In Place Concrete Basement or foundation wall cracks, other than expansion or control joints. Non-structural cracks are not unusual in concrete foundation walls. Cracks greater than 1/8-inch in width are deficiencies. Repair non-structural cracks in excess of 1/8-inch by surface patching. These repairs should be made toward the end of the second year of Limited Warranty coverage to permit normal stabilizing of the Home by settling. Repair cracks exceeding maximum tolerance by surface patching or other methods, as required. Shrinkage cracks are not unusual and are inherent in the concrete curing process. Cracking of basement floor. Minor cracks in concrete basement floors are common. Cracks exceeding 1/4-inch in width or 1/4-inch in vertical displacement are deficiencies. 13

18 ITEMS COVERED UNDER THE 1-YEAR WORKMANSHIP COVERAGE DEFICIENCY Cracking of attached garage floor slab. Cracks in concrete slab-on-grade floors, with finish flooring. Uneven concrete floor slabs. Pitting, scaling, or spalling of concrete work. Excessive powdering or chalking of interior concrete surfaces. Separation of brick or masonry edging from concrete slab or step. 2.2 Construction and Control Joints Separation or movement of concrete slabs within the structure at construction and control joints. Cracks in concrete garage floor greater than 1/4-inch in width or 1/4-inch in vertical displacement are deficiencies. Cracks that rupture or significantly impair the appearance or performance of the finish flooring material are deficiencies. Except for basement floors or where a floor or a portion of floor has been designed for specific drainage purposes, concrete floors in rooms finished for habitability by Builder/ Seller shall not have pits, depressions or area or unevenness exceeding 1/4-inch in 32-inches or slopes in excess of 1/240 or room width or length (i.e. 10 ft wide room is not to exceed 1/2-ince out of level). Concrete surfaces that disintegrate to the extent that aggregate is exposed and loosened under normal conditions of use are deficiencies. Excessive powdering or chalking of interior concrete surfaces is a deficiency, but should not be confused with normal surface dust that may accumulate for a short period after Home is occupied. It is common for the joint to crack between concrete and masonry due to the dissimilarity of the materials. Cracks in excess of 1/4-inch are a deficiency. BUILDER/SELLER RESPONSIBILITY Builder/Seller shall repair excessive cracks in the slab by filling, chipping out and surface patching, or other suitable methods as may be required. Determine the cause for the cracking, and correct (remove and replace if required). Repair cracks as required so as not to be apparent when the finish flooring material is in place. Repair or replace finish flooring. (See Finishes). Determine cause and repair/ replace to meet the Construction Performance Guidelines. Where applicable, surface patching is an accepted method of repair. Reinstall or replace any finish flooring material as necessary. Builder/Seller shall take whatever corrective action is necessary to repair or replace defective concrete surfaces. Take corrective action necessary to treat, repair or resurface defective areas. Grout crack fully and reset loose masonry where required. Replacement of masonry material, if required, shall match the existing as closely as possible. EXCLUSION Builder/Seller is not responsible for cracking or deterioration caused by the storage of unusually heavy equipment or placement of excessive loads that exceed the weight of a typical automobile or light truck, or by other factors beyond the Builder/Seller s control. Builder/Seller is not responsible for deterioration caused by salt, chemicals, mechanical implements, or other factors beyond the Builder/ Seller s control. NONE. NO COVERAGE. NONE. Concrete slabs within the structure are designed to move at construction and control joints and are not deficiencies. You are responsible for maintenance of joint material. 3. Masonry 3.1 Unit Masonry (Brick, Block and Stone) Cracks in non-bearing or non-supporting walls. Small shrinkage cracks running through masonry and mortar joints are not unusual. Cracks in excess of 1/4-inch in width are deficiencies. Repair non-structural shrinkage cracks in excess of 1/4-inch by pointing or patching. Repairs shall be made near the end of the first Warranty period. 14

19 ITEMS COVERED UNDER THE 1-YEAR WORKMANSHIP COVERAGE DEFICIENCY Cracks in bearing or supporting masonry walls. Horizontal cracks in basement and foundation walls. Cracks in masonry walls or veneer above grade. Cracking, settling, or heaving of stoops and steps. Standing water on stoops, steps, porches and attached concrete patios. 3.2 Stucco and Cement Plaster Cracking or spalling of stucco and cement plaster. Separation of coating from base on exterior stucco wall. 4. Carpentry and Framing 4.1 Plywood and Joists Floors squeak, due to improper installation or loose subfloors. Vertical or diagonal cracks that do not affect the structural ability of masonry bearing walls are not unusual. Cracks in excess of 1/8-inch in width are deficiencies. Horizontal cracks in the joints of the masonry walls are not common but may occur. Cracks 1/8-inch or more in width are deficiencies. Small cracks are common in mortar joints or masonry construction. Cracks 1/8-inch or greater in width are deficiencies. Stoops and steps are not to settle or heave in excess of one inch in relation to the house structure. Cracks, except hairline cracks less than 1/8-inch, are not acceptable in concrete stoops. A separation of up to 1/2-inch is permitted where the stoop or steps about the house or where an expansion strip has been installed. Standing water is a deficiency if it is a hazard to individuals and/or causes damage to the Home, or in cases where standing water exists due to settlement or heaving as defined under paragraph above. Hairline cracks in stucco or cement plaster are common especially if applied directly to masonry backup. Cracks greater than 1/8 inch in width or spalling of the finish surfaces are deficiencies. The coating shall not separate from the base on an exterior stucco wall. A large area of floor squeaks which is noticeable, loud and objectionable is a defect. BUILDER/SELLER RESPONSIBILITY Repair shrinkage cracks in excess of 1/8-inch by pointing or patching. Where the structural integrity of the wall is affected, suitable repair or replacement shall be done to eliminate the condition. The Builder/Seller shall repair cracks in excess of 1/8 and 3/16-inch width by pointing and patching. Cracks exceeding 3/16-inch shall be investigated by Builder/Seller to determine the cause. Builder/Seller shall take the necessary steps to remove the cause and make repairs by pointing and patching, reinforcement or replacement of the defective courses. Repair cracks and voids in excess of 1/8-inch by surface pointing. These repairs should be made toward the end of the first year of Warranty Coverage to permit the Home to stabilize and normal settlement to occur. Builder/Seller is not responsible for color variations between existing mortar and new mortar however, it shall be made to match as close as possible. Take whatever corrective action is required to meet acceptable standards. In a case where repair is amde to the concrete surface, it is required that such repair match the adjoining surfaces as closely as possible or the entire area be resurfaced and replaced. Take whatever corrective action is necessary to eliminate standing water. Scrape out cracks and spalled areas. Fill with cement plaster or stucco to match finish and color as close as possible. Builder/Seller shall repair areas where the coating has separated from the base. Builder/Seller will refasten any loose subfloor or take other corrective action to reduce squeaking to the EXCLUSION Builder/Seller is not responsible for failure to match color or texture, due to nature of material. A squeakproof floor cannot be guaranteed. An isolated floor squeak is not a defect. 15

20 ITEMS COVERED UNDER THE 1-YEAR WORKMANSHIP COVERAGE DEFICIENCY BUILDER/SELLER RESPONSIBILITY Uneven wood framed floors. Floors, which are more than 1/4- inch out of level within any 32-inch measurement, are a deficiency. Floor slope within any room, which exceeds 1/240 of the room width or length is a deficiency (that is, 10-ft wide room is not to exceed 1/2-inch out of level). Bowed stud walls or ceilings. All interior and exterior frame walls or ceilings have slight variations on the finish surfaces. Bowing should not be visible so as to detract from the finished surface. Walls or ceilings that are bowed more than 1/4-inch within a 32-inch horizontal or vertical measurement, are deficiencies. Wood frame walls out of plumb. Wood frame walls that are out of plumb more than 3/4-inch in an 8-ft vertical measurement are a deficiency. Warping, checking or splitting of wood framing which affects its intended purpose is a deficiency. Exterior sheathing and subflooring which delaminates or swells. 4.2 Finish Carpentry Unsatisfactory quality of finished exterior trim and workmanship. Minor warping, checking, or splitting of wood framing is common as the wood dries out and is not considered a deficiency. A condition that affects the integrity of the member or any applied surface material is a deficiency. Sheathing and subflooring delaminating or swelling on the side that the finish material has been applied is a deficiency. Joints between exterior trim elements and siding or masonry, which are in excess of 3/8-inch, are deficiencies. In all cases, the exterior trim abutting masonry siding shall be capable of performing its function to exclude the elements. extent possible within reasonable repair capability without removing floor and ceiling finishes. Correct or repair to meet the Construction Performance Guidelines. Exterior and interior frame walls or ceilings bowed in excess of the allowable standard shall be corrected to meet the allowances of the Construction Performance Guidelines. Make necessary repairs to meet the Construction Performance Guidelines. Where a problem exists and the surface material is affected, Builder/ Seller shall repair or replace or stiffen the frame member as required. Builder/Seller shall repair or replace subflooring or sheathing as required. Replacement of the finish materials, when necessary, shall be done to match the existing finish as closely as possible. Repair open joints and touch up finish coating where required to match existing as closely as possible. Caulk open joints between dissimilar materials. EXCLUSION Unsatisfactory quality of finished interior trim and workmanship. Surface defects in finished woodwork and millwork such as checks, splits, and hammer marks. Exposed nail heads in woodwork. Joints between moldings and adjacent surfaces that exceed 1/8-inch in width are deficiencies. Finished woodwork and millwork is to be smooth and without surface marks. Finished surfaces, which fall beyond what is reasonably expected in the industry, are deficiencies. Material used to fill nail holes has a tendency to shrink and dry up after a period of time and is not Repair defective joints and touch up finish coating where required to match as closely as possible. Caulking is acceptable. Correct repairable defects; sanding filing, or puttying is acceptable to return the surface to its original conditions. Replace materials not repairable, refinish and restore to match surrounding surfaces as closely as possible. Fill nail holes where required and if necessary, touch up paint, stain, or varnish to match as closely as possible. 16