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Ordinance Number 486ORDINANCE NO. 486 214 HOME WARRANTY PROGRAM AN ORDINANCE OF THE CITY OF SAN JUAN CAPISTRANO, CALIFORNIA, REPEALING CHAPTER 6, TITLE 8 OF THE SAN JUAN CAPISTRANO MUNICIPAL CODE AND ADOPTING A NEW CHAPTER 6, TITLE 8 - HOME WARRANTY PROGRAM (URGENCY) THE CITY COUNCIL OF THE CITY OF SAN JUAN CAPISTRANO, CALIFORNIA, DOES HEREBY ORDAIN AS FOLLOWS: SECTION 1. Repeal. Chapter 6, Title 8 of the San Juan Capistrano Municipal Code is hereby repealed and the following substituted in its place. "CHAPTER 6. HOME WARRANTY PROGRAM "Section 8-6.01. Purpose and Intent. "In keeping with objectives of the General Plan which call for programs which provide high quality housing and which also provide for maintenance of structures and appurtenant installations, the Home Warranty Program as described herein is established. Further, the program requires Sellers of new residential dwelling units to provide home warranties to insure against faulty workmanship and materials and major construction defects. "Section 8-6.02. Definitions. "(a) 'Buyer' shall mean any person, organization, or homeowners' association which acquires a possessory interest, other than a leasehold, to a dwelling unit from a Seller either directly or by mesne conveyance within the three (3) year warranty period. 'Buyer' shall also include occupancy under a contract of sale or an agreement granting an option to purchase. "(b) 'Seller' shall mean any person, firm, corporation, partnership, association, or organization selling, or soliciting for sale dwelling units within the City, whether in fee, under a contract of sale, option to purchase, or in a condominium development. 'Seller' shall include any assignees or successors in interest of original warranty seller but shall not include any person, firm, corporation, partnership, association, or organization selling or offering for sale not more than two (2) dwelling units during each twelve (12) month period. -- -1- 21 "(c) 'Date of Sale' means the date a Buyer acquires the right to occupy a dwelling unit or -the date of his actual occupancy, whichever shall first occur. "(d) 'Dwelling Unit' means any residential structure, accessory structure or condominium unit including common ownership structures and accessory structures not previously occupied for residential purposes. It shall, moreover, include the lot and the grading and drainage thereon. "(e) 'Faulty Workmanship and Materials' means: 11(1) Actual damages to the structural components of a dwelling unit, its driveway, service walks, gutters, masonry, roofs and overhangs proximately resulting from; (a) negligent or faulty design and/or installation; (b) the installation of defective or improper material; and/or (c) the failure to install materials. Such damage shall also include damages caused by or resulting from faulty grading or drainage. 11(2) Actual damage proximately resulting from improper grading or from warpage, and/or water penetration proximately resulting from faulty design or workmanship. "(3) Actual damage to the plumbing, heating, electrical and cooling systems serving the dwelling unit proximately resulting from faulty design, workmanship, or installation. "(f) 'Major Construction Defects' shall include actual damage to the pad or the load-bearing portion of a dwelling unit and/or appurtenant and accessory structures, such as damages due to soil movement which affects its load-bearing function and has a substantial adverse effect, or is imminently likely to produce a substantially adverse effect, on the use of the dwelling unit for residential purposes. Also included are major structure and/or construction defects which do or may render the structure unsafe or hazardous for occupancy. "(g) 'Residential Purposes' means the use of a structure for human habitation or the use of a common ownership or accessory structure for its intended purposes. -2- "Section 8-6.03. Warranties: Required. "Every Seller of dwelling units within the City, prior to the date of sale, shall warrant in writing to the Buyer of such dwelling units and/or such Buyer's heirs, devisees, assigns or successors in interest, that the units shall, for a period of three (3) years after the date of sale, be free from faulty workmanship and materials and major construction defects as defined in this Chapter. "Section 8-6.04. Warranties: Form. "The Seller shall deposit financial security for the warranties required by the provisions of this Chapter in an amount which shall be the equivalent of one percent (1%) of the aggregate valuation used to determine building permit fees of the dwelling units covered hereunder. The security shall be in such form and manner as to guarantee and secure the performance of the Seller under the terms of such warranties and shall consist of one of the following, at the option of the Seller and with the approval of the City: "(a) Bond or bonds by one or more duly authorized corporate sureties. "(b) A deposit, either with the City or a responsible escrow agent or trust company, of money or negotiable bonds of the kind approved for securing deposits of public moneys; or "(c) An instrument of credit, from one or more financial institutions subject to regulation by the State or Federal government, pledging that the funds necessary to carry out the warranty are on deposit and guaranteed for payment. "Such financial security shall constitute a revolving fund from which damages arising within any or all dwelling units covered herein shall be paid. There may be partial releases and exonerations of such security upon the expiration of the three (3) year warranty period for each dwelling unit. At the end of the warranty period, any remaining funds will be returned to the Seller by the City. "Section 8-6.05. Limits of Liability. "Notwithstanding the foregoing, the Seller shall not be liable under any warranty required hereinabove for: "(a) Defective design or materials supplied by the Buyer or installed under his direction. "(b) Normal wear and tear or deterioration of the dwelling unit. -3- 2117 "(c) Dampness or condensation due to failure of Buyer to maintain adequate ventilation or reasonable and proper use and maintenance of dwelling unit. "(d) Negligence, improper maintenance or operation, or alteration by parties other than Seller, or Seller's subcontractors or agents, with respect to the dwelling unit, its systems, appliances, equipment and fixtures. "(e) Changes or alterations by parties other than Seller, or Seller's subcontractors or agents, of the grading of the ground. "(f) Landscaping, including plants, grass and trees. "(g) Accidental loss or damage, including but not limited to fire, explosion, smoke, water escape, unforeseeable changes in the level of the underground water table, glass breakage, windstorm, hail or lightning, falling trees, aircraft and vehicles, flood or earthquake. "(h) Loss or damage which occurs after the dwelling unit is no longer used primarily as a residence. "(i) Notwithstanding anything contained herein to the contrary, this Ordinance is not intended and shall not be construed to abrogate or detract from any statutory or common law rights which a Buyer may have against a Seller for breach of warranty or other cause of action. "Section 8-6.06. Compliance with Terms of Warranty. "(a) Buyer shall promptly notify the Seller, with — a duplicate copy to the Administrative Services Officer of the City of San Juan Capistrano, of any defects which are covered by the Home Warranty pursuant to this Ordinance. "(b) Seller shall upon receipt of such notification promptly respond to the notification, cause an investigation to be made; and, subject to the approval of the City of San Juan Capistrano, either: "(1) at its sole cost and expense, correct all defects in the home covered by the Warranty; or ae 218 "(2) pay to Buyer the reasonable cost of correcting the same provided the Buyer has provided an estimate of two (2) licensed contractors specifying the full cost of correcting the defects. "(c) Should Seller refuse or fail to discharge his obligation(s) as specified in (b), above, the City will, upon request of Buyer, cause such defects to be corrected. Any and all costs and expenses shall be deducted from the funds pledged by Seller, as provided in Section 8-6.04 of this Chapter." SECTION 2. Urgency. This is an Urgency Ordinance adopted to preserve the health, safety and welfare of the residents of the City of San Juan Capistrano and shall, accordingly, become effective immediately. The nature of the urgency lies in the interpretation of the Ordinance in that the spirit and intent of the Ordinance is to secure the warranty of homes for a minimum period of three years regardless of the ownership; immediate clarification is required to specify such intent and, to verify practices in effect since adoption of the Ordinance. In addition, certain administrative difficulties have arisen in the implementation of the Ordinance and provisions of the Ordinance should be amended to enable the administration to be more efficiently carried out. SECTION 3. Citv Clerk's Certification. The City Clerk shall certify to the adoption of this Ordinance and cause same to be posted at the duly designated posting places within the City of San Juan Capistrano within fifteen (15) days after its passage. May PASSED, APPROVED AND ADOPTED this 3rd day of 1983 , by the following vote, to wit: AYES: Councilmen Friess, Hausdorfer, Buchheim, Schwartze and Mayor Bland NOES: None ABSENT: None ANTHONY L BLAND, MAYOR ATTEST: CITY CLIA? -5-