Ordinance Number 294231
ORDINANCE NO. 294
HOME WARRANTY PROGRAM
AN ORDINANCE OF THE CITY OF SAN JUAN CAPISTRANO,
CALIFORNIA, REQUIRING SELLERS OF NEW RESIDENTIAL
DWELLING UNITS TO PROVIDE HOME WARRANTIES TO IN-
SURE AGAINST FAULTY WORKMANSHIP AND MATERIALS,
AND MAJOR CONSTRUCTION DEFECTS
THE CITY COUNCIL OF THE CITY OF SAN JUAN CAPISTRANO
DOES HEREBY ORDAIN AS FOLLOWS:
SECTION 1. 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 mainte-
nance of structures, 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 con-
struction defects.
SECTION 2. Definitions.
A. "Buyer" means the person, organization, or home-
owners association which acquires a possessory interest, other
than leasehold, to a dwelling unit from a seller. The term also
includes the initial occupancy under a contract of sale or an
agreement granting an option to purchase.
B. "Seller" means any person, firm, corporation,
partnership or other association or organization selling, or
soliciting for sale, dwelling units within the City of San Juan
Capistrano, whether in fee, under a contract of sale or option
to purchase, or in a condominium development. Notwithstanding
the foregoing, the term "Seller" shall not include any person,
firm, corporation, partnership or other association or organiza-
tion building, constructing, selling,or offering for sale not
more than two dwelling units during each twelve (12) month period.
C. "Date of Sale" means the date a Buyer acquires the
right to occupy a dwelling unit or the date of his actual occu-
pancy, whichever shall first occur.
D. "Dwelling Unit" means any residential structure or
condominium unit including common ownership structures and
accessory structures not previously occupied for residential
purposes.
"Faulty Workmanship and Materials" means:
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 material; and/or (c) the failure to install materials.
2. Actual damage proximately resulting from
improper grading or from warpage, and/or water penetration proxi-
mately resulting from faulty design or workmanship.
3. Actual damage to the plumbing, heating, electri-
cal and cooling systems serving the dwelling unit proximately
resulting from faulty design, workmanship, or installation.
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F. "Major Construction Defects" means actual damage to
the pad or the load-bearing portion of a dwelling unit, 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.
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 purpose.
SECTION 3. Warrant. Unless specifically exempted in
Section 6, every Seller of dwelling units within the City of San
Juan Capistrano shall, prior to the da.te of sale, warrant in
writing to the Buyer of each such dwelling unit that the unit
shall, for a period of three (3) years from the date of sale, be
free from faulty workmanship and materials and from major construc-
tion defects.
SECTION 4. Form. The Seller shall deposit financial
security for the warranty herein required in an amount which shall
be the equivalent of one percent (1%) of the aggregate cost of
construction, as shown on the building permits, of the dwelling
units in the entire tract. The security shall be in such form
and manner as to guarantee and secure the performance of the
Seller under the terms of the aforesaid warranty and shall consist
of one of the following -- at the option of the Seller and sub-
ject to the approval of the City of San Juan Capistrano:
A. Bond or bonds by one or more duly authorized
corporate sureties.
B. A deposit, either with the City of San Juan Capistrano
or a responsible escrow agent or trust company, of money or
negotiable bonds of the kind approved for securing deposits of
public monies.
C. An instrument of credit from one or more financial
institutions subject to regulation by the state or federal govern-
ment and pledging that the funds necessary to carry out the
agreement are on deposit and guaranteed for payment.
The aforesaid financial security shall constitute a
revolving fund from which any damages arising within the entire
final tract shall be paid. There shall be partial releases and
exonerations of said security upon the expiration of the three
(3) year warranty period for each unit.
SECTION 5. 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. Any secondary damage caused by defect, including
personal injury or damage to personal property.
C. Normal wear and tear or deterioration of the
dwelling unit.
D. Dampness or condensation due to failure of Buyer
to maintain adequate ventilation.
E. 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.
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F. Changes or alterations bypartiesother than Seller,
or Seller's subcontractors or agents, of the grading of the ground.
G. Landscaping, including plants, grass and trees.
H. 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, wind-
storm, hail or lightning, falling trees, aircraft and vehicles,
flood or earthquake.
I. Loss or damage which occurs after the dwelling unit
is no longer used primarily as a residence.
J. Notwithstanding anything contained herein to the
contrary, this Ordinance is not included and shall not be con-
strued 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 6. Exemptions.
A. If a Seller participates in a home warranty program
which provides warranty protection comparable to those set forth
in this Ordinance, he may, upon approval of the City Council, be
exempted from the provisions hereof.
B. The provisions of this Ordinance shall not apply to
dwelling units for which building permits have been issued prior
to the effective date of this Ordinance. Furthermore, Sellers
who have received City approval of their final tract maps prior
to said effective date are granted a six (6) month period of
grace, and need not comply with the terms hereof until six (6)
months after the effective date.
SECTION 7. Arbitration of Disputes. Should there be a
dispute between the Buyer and Seller relating to any provision of
this Ordinance, either party may request the City Council or its
designee to appoint a conciliator to investigate the nature of
the dispute and to effect a resolution thereof. If the dispute
continues to be unresolved for a period of thirty (30) days,
either party may petition the City Council for an arbitration
hearing. The City Council shall select a qualified and dis-
interested third party or organization to act as arbitrator. This
selection shall be agreeable to both parties in the dispute. The
City Council may establish a schedule of fees for the conciliation
and arbitration services by resolution.
SECTION 8. This Ordinance shall take effect and be in
force thirty (30T days from and after its passage.
SECTION 9. The City Clerk shall certify to the adop-
tion of this Ordinance and cause the same to be posted in three (3)
public places within the City of San Juan Capistrano.
PASSED, APPROVED AND ADOPTED this 17th day of September,
1975, by the following vote, to wit:
ATTEST:
AYES: Councilmen Heckscher, Sweeney, and
Mayor Weathers
NOES: Councilman Byrnes
ABSENT: Councilman Nash
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STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss.
CITY OF SAN JUAN CAPISTRANO )
I, MARY ANN HANOVER, City Clerk of the City of San Juan
Capistrano, California, DO HEREBY CERTIFY that the foregoing is a
true and correct copy of Ordinance No. 294, adopted by the City
Council of the City of San Juan Capistrano, California, at a
regular meeting thereof held on the 17th day of September, 1975.
(SEAL) MARY ANN CITY/CLERK
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