The Montgomery County consumer affairs office has proposed legislation that would provide all buyers of new homes in the county with a two-year warranty on the major structural and mechanical systems.
The comprehensive measure still is subject to a public hearing and a final county council vote during the next several months. The legislation would set up a county warranty plan and fund to pay for unresolved complaints, require county approval of private warranty plans, set a time limit for resolving complaints and threaten an unscrupulous builder's right to do business in the county.
At least half of the new homes built in the county -- those without private warranties -- are not covered now if something happens to the builder, said Joe Giloley, program manager of the county's Office of Consumer Affairs. Under the new plan, all county home builders would be required to choose either private or county warranty coverage.
If the law is passed, owners of new homes will receive a booklet at settlement outlining warranty standards and complaint procedures. The proposed warranty would cover materials and workmanship for the first year and mechanical, electrical, plumbing, heating, air conditioning and structural systems for two years.
The county would register builders every two years, verifying which plan they were participating in. At registration, if there were past unpaid claims or numerous complaints against a builder, the county could refuse to register the builder or have his builder's license revoked.
Consumer affairs director Barbara Gregg said the warranty plan was developed in response to "numerous complaints" the agency has received about home builders.
A total of 800 of the 5,170 complaints received in the consumer affairs office in the fiscal year that ended June 30 were about new-home construction problems, Gregg said. About 7,000 homes were built in the county in 1984, and 4,000 in 1983, Giloley said.
New-home warranties are supported by the Suburban Maryland Building Industry Association. But Susan Matlick, executive vice president of the trade group, which represents 1,000 builders in five Maryland counties, said, "We do not believe circumstances in the county dictate the need for a mandatory warranty program. We do not agree with consumer affairs that complaints are at a level for government to intervene with mandatory legislation.
"But without sounding contradictory, we have always supported a builder giving a buyer a warranty. Most builders of any volume are already enrolling their houses in private warranty programs, those that build 30 to 40 units per year. It is mandatory for members of this association. So we are willing to work with the county government to make this legislation work," Matlick said.
Warranties make it clear to both parties what their responsibilities are and protect a builder from being called to make simple home or maintenance repairs, she added.
But she said her group still is concerned that the proposed law does not state what is not covered by the two-year warranty. "We do not want new homeowners misled into thinking they are covered for items that they are not," Matlick said.
Such common-property areas as parking lots, driveways and swimming pools and cosmetic concerns discovered after an owner's initial walk-through, such as a scratch on the wall or a nail pop, are not covered by warranties, and the legislation should plainly state so, she said.
Gregg said the consumer affairs office proposed the legislation in response to consumers who are frustrated because it now takes an average of 13 months to resolve the typical complaint. Also, she said her office wants to establish some controls over private warranty plans, some of which have no financial backing.
An existing state government-sanctioned, one-year implied warranty on all new homes "is not worth the paper it's printed on if the builder goes bankrupt," Giloley said. "There is no insurance backing it up."
The Montgomery measure would set a 105-day limit for a builder to resolve a complaint and would require county approval of all private warranty plans. If a builder were unwilling or unable to correct a defect, the homeowner would be able to tap the county or private warranty funds to pay for the work.
Builders joining the county's warranty fund would contribute a fee for each house they sold. The county has suggested a fee equal to three-tenths of 1 percent of the sale price, or, for example, $300 for a $100,000 home. Comparable amounts would be paid into the private warranty funds.