Chapter 09. New Home Warranty Security Plans
Regulation .01 Disclosure by Builders Not Participating in New Home Warranty Security Plan.LinkCopy Citation
A.
The disclosure shall be printed in at least 12-point type.
B.
The disclosure shall read as follows:
Regulation .02 Disclosure Required by Builders Participating in New Home Warranty Security Plan.LinkCopy Citation
A.
The disclosure shall be printed in at least 12-point type.
B.
The disclosure shall read as follows:
Regulation .03 Disclosure Required by Builder Leaving Decision to Participate in New Home Warranty Security Plan to the Buyer.LinkCopy Citation
A.
The disclosure shall be printed in at least 12-point type.
B.
The disclosure shall read as follows:
Regulation .04 Notification Required to be Given to Buyer on Warranty Date.LinkCopy Citation
A.
On the warranty date, if a builder participates in a New Home Warranty Security Plan or if a buyer has elected to have the builder participate in a plan, the builder shall provide the owner with evidence that the new home is covered by a new home warranty that meets the requirements of Maryland law.
B.
Evidence of participation is a letter from the New Home Warranty Security Plan certifying that the new home is covered by the minimum warranty required under Maryland law and specifically setting forth any additional express warranties or any exclusions to the warranty coverage.
C.
The letter in §B of this regulation shall include the address and telephone number of the New Home Warranty Security Plan. The letter shall contain the following statement in bold type:
Regulation .05 Notice to Buyer Required by Builders Participating in New Home Warranty Security Plan or Electing to Allow Buyer the Option of Participating in New Home Warranty Security Plan.LinkCopy Citation
A.
The notice shall be printed in at least 12-point type.
B.
The notice shall be incorporated into the contract in a conspicuous manner and shall read as follows:
Regulation .06 Financial Security Requirements for New Home Warranty Security Plan.LinkCopy Citation
A.
Approval of a new home warranty security plan shall continue only if the operator of the plan remains financially able to pay all valid claims.
B.
The operator shall demonstrate financial responsibility from time to time to the Secretary in the following manner:
(1)
The operator shall maintain and file with the Secretary a surety bond from an authorized insurer or an irrevocable letter of credit from a federally insured financial institution to ensure that the operator is able to meet its contractual obligations under the plan to the buyers. The amount of the bond or letter of credit is $100,000 unless a greater amount is required by the Secretary. The bond or letter of credit is in addition to any insurance or risk retention plan coverage the operator maintains to meet liability claims.
(2)
At such time as it appears to the Secretary that a bond or letter of credit in the amount of $100,000 is not adequate to meet potential new home warranty security plan claims, the Secretary shall require:
(a)
A bond or letter of credit in a higher amount;
(b)
The establishment by the operator of a reserve fund; or
(c)
Other measures to ensure financial responsibility.
(3)
The operator shall furnish such information and reports, and grant such access to its records, as the Secretary from time to time requires.
Regulation .07 Registration and Effective Date of New Home Warranty Security Plan.LinkCopy Citation
A.
If a contract for sale or construction of a new home between a buyer and a builder who participates in a new home warranty security plan provides, either by its terms or by virtue of an option exercised by the buyer, that the home will be registered in the plan, the operator of the plan shall register the home and shall do so at the cost agreed upon between the operator and the builder and disclosed to the buyer at the time the contract for sale or construction of the new home is entered into, unless the buyer is not charged directly or indirectly for the cost of the warranty.
B.
Protection under the new home warranty security plan begins on the warranty date.
C.
The provisions of Real Property Article, Subtitle 6, Annotated Code of Maryland, concerning new home warranties apply to each newly constructed private dwelling unit, the contract for sale or construction of which is entered into on or after January 1, 1991. The provisions of Real Property Article, Subtitle 6, Annotated Code of Maryland, do not apply in Montgomery County, except as provided in Real Property Article, §10-610, Annotated Code of Maryland.
Regulation .08 Other Warranties.LinkCopy Citation
The warranties provided under a new home warranty security plan are in addition to warranties otherwise provided by law, including those set forth in Real Property Article, §§10-202, 10-203, and 11-131, Annotated Code of Maryland.
Regulation .09 Notice Requirements for Denial of Coverage.LinkCopy Citation
A.
Notice of Denial.
(1)
The operator of a plan shall notify the buyer in writing of a decision to deny warranty coverage for all or part of a claim not later than 90 days after the claim is received by the operator.
(2)
The notice of denial shall include:
(a)
Reference to the specific terms of the plan on which the denial is based; and
(b)
The procedures which the buyer must follow to appeal the denial, including all time limitations.
B.
If the operator is unable to reach a decision on the claim within 90 days, the operator shall:
(1)
Before the end of the 90-day period, notify the buyer in writing of the:
(a)
Reasons for the inability to meet the deadline, and
(b)
Date by which the decision will be reached; and
(2)
When a decision on the claim is reached, notify the buyer of a decision to deny warrant coverage in accordance with §A of this regulation.
C.
The operator shall send copies of all notifications of denial of coverage to the Secretary at the same time that the notice is sent to the buyer.
Chapter annotations
Authority: Real Property Article, Title 10, Subtitle 6, Annotated Code of Maryland
History: Effective date:
History: Regulations .01—.03 amended as an emergency provision effective January 1, 2000 (26:27 Md. R. 2013); amended permanently effective May 1, 2000 (27:8 Md. R. 798)
History: Regulations .01—.03 amended as an emergency provision effective January 1, 2001 (28:2 Md. R. 97); emergency status expired June 1, 2001; amended permanently effective June 25, 2001 (28:12 Md. R. 1105)
History: Regulations .01—.08 adopted as an emergency provision effective January 1, 1991 (18:2 Md. R. 142); emergency status expired July 31, 1991
History: Regulations .01—.08 adopted as an emergency provision effective October 29, 1991 (18:23 Md. R. 2481); emergency status expired April 30, 1992; adopted permanently effective June 8, 1992 (19:11 Md. R. 1013)
History: Regulation .09 adopted effective January 24, 2000 (27:1 Md. R. 74)