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Pathway C Rental Compensation from Builders

When homeowners contracted with a Pathway C builder to repair their homes through the Reconstruction, Rehabilitation, Elevation and Mitigation (RREM) Program, the builder agreed to finish all construction work on the home within 90 days after a Notice to Proceed (NTP) was issued.

If the builder cannot complete construction within that 90-day timeframe, the builder is obligated to provide rental compensation for each unexcused day that the homeowner is required to vacate the house while construction occurs.

The builder will only be obligated to pay rental compensation for the number of days over the 90-day timeframe that are not approved as reasonable delays. The builder will not be obligated to pay rental compensation for any delays deemed reasonable.

The determination of the reasonableness of a construction delay is made by the RREM Project Manager (PM) at either Gilbane or CB&I Shaw.

The amount of compensation the builder must provide is based on the U.S. Department of Housing and Urban Development’s fair market rental cost and utility cost formula for the county of the damaged home and how many bedrooms are in that home. The amount of rental compensation is not based on any actual monthly lease payments.

For example, if a homeowner owns a 3-bedroom property in Ocean County, and the Pathway C builder incurred a delay of 15 unexcused days, the total amount owed by the builder is 15 x $77.16 = $1157.40. Please see the table below to find the daily rental compensation rate to be used in calculating builder rental compensation costs.

Table: Daily Rental Compensation Rate

County 1 Bedroom 2 Bedrooms 3 Bedrooms 4 Bedrooms
Atlantic $45.70 $53.16 $67.63 $76.14
Bergen $54.41 $61.81 $75.55 $83.67
Cape May $40.57 $49.41 $63.55 $66.15
Essex $50.40 $57.30 $69.50 $77.29
Hudson $51.35 $58.16 $69.86 $75.58
Middlesex $54.48 $63.65 $78.05 $97.58
Monmouth $51.16 $59.93 $77.16 $88.08
Ocean $51.16 $59.93 $77.16 $88.08
Union $50.37 $57.30 $69.50 $77.29

Only the builder (and not the NJ Department of Community Affairs) is obligated to pay homeowners rental compensation, a condition to which the builder has already agreed in Pathway C. This compensation is provided for any unexcused construction delays following the 90-day timeframe.

Should you need rental assistance prior to and during the 90-day construction, you may be able to receive help through the Rental Assistance Program, which launched in March 2015 and continues to accept applications. The program is designed to help homeowners in RREM pay the rent for temporary housing while their homes are undergoing repair, rebuilding or elevation. . You are encouraged to visit www.njhousing.gov/homeownership/owners/ssbg to learn more about the Rental Assistance Program.

After the 90-day construction deadline, if there are unexcused construction delays and you choose to accept the rental compensation from your builder to which you are entitled, you cannot receive help through the Rental Assistance Program. At that point, your builder is your primary source of rental compensation.

FAST FACTS:

  • All builders in the Pathway C qualified builder pool agreed to the general contractual requirement to finish all construction within 90 days of the issuance of a Notice to Proceed.
  • If the builder is unable to complete construction within that 90-day timeframe, the builder is obligated to provide rental compensation for each unexcused day that the homeowner is out of the home.
  • The RREM PM will complete the Ninety-Day Build Time Delinquency Compensation Form to document how much rental compensation is owed by the builder. This form is important because it stops the final retainage payment from going to the builder until the homeowner verifies that the compensation was paid or that the homeowner is waiving the right to it.
  • The 90-day clock starts when the Notice to Proceed is issued and not when the homeowner vacates the home.
  • Once the builder has gone over 90 days and it is determined that those delays are unreasonable, then the builder is the primary source of rental compensation.
  • However, homeowners may choose to voluntarily waive this builder compensation if they do not want it, are already receiving rental assistance as homeowners cannot receive rental compensation from more than one source, or have privately entered into a separate arrangement with the builder.
    View the Ninety-Day Build Time Delinquency Compensation Form.

Frequently Asked Questions for Pathway C Homeowners about Rental Compensation

If you are participating in the RREM Program under Pathway C, please read the following commonly asked questions regarding your right to rental compensation from your RREM builder.

Does this situation apply to me – I moved out of my home over 3 months ago?

  • Once the Notice to Proceed (NTP) is issued, that is when the 90-day construction clock starts.
  • However, there may be reasonable excuses as to why construction has taken over 90days. Examples could include: change orders, inclement weather conditions, or delays with the municipality issuing permits.

Who determines the reasonableness of a construction delay?

  • Your RREM Project Manager (PM) from Gilbane or CB&I Shaw makes this determination.

How does the RREM Program pay me my rental compensation?

  • The DCA does not pay you. Your builder is contractually obligated to pay you.
  • As a general condition of being part of the Pathway C qualified builder pool, your builder agreed to pay daily rental compensation for delays over the 90-day timeframe.

How can I be sure that my builder will pay me?

  • Your builder is obligated to pay you under the conditions of the builder contract. When your RREM PM has determined there has been an unreasonable construction delay, the RREM PM will complete and send to your builder the Ninety-Day Build Time Delinquency Compensation Form acknowledging what is owed to you as the homeowner.
  • Without your signature acknowledging payment of the rental compensation (or your signature waiving the right to this compensation), the RREM PM will not issue your builder’s final retainage draw.

When does my builder provide me with the approved rental compensation?

  • Your builder will be notified at the 75-day mark of the construction clock to offset rental costs should construction go beyond the 90-day timeframe.
  • The initiation and the frequency of rental compensation are negotiated between you and your builder.
  • The DCA will just ensure that your builder has compensated you or that you waived the right to receive this compensation.

How much rental compensation should I expect to receive from my builder?

  • The daily rental compensation rate is based on the U.S. Department of Housing and Urban Development’s (1) monthly fair market rental values and (2) fair market utility rate schedule for the county of the damaged property.
  • The RREM PM will calculate how many days over the 90-day build time, minus any days approved as reasonable construction delays. This is compensation will end when the home passes the RREM Final Inspection or the homeowner reoccupies the property, whichever occurs first.
  • The RREM PM will then multiply the number of days by the daily compensation rate.
  • For example, reference the table below. If your 3-bedroom damaged property is located in Ocean County and your builder went over the 90-day timeframe by 10 unexcused days of delays, then the amount of rental compensation owed by the builder is 10 x $77.16 = $771.60.
  • The RREM PM will determine the number of days over the 90-day timeframe at the time of the RREM Final Inspection

Table: Daily Rental Compensation Rate

County 1 Bedroom 2 Bedrooms 3 Bedrooms 4 Bedrooms
Atlantic $45.70 $53.16 $67.63 $76.14
Bergen $54.41 $61.81 $75.55 $83.67
Cape May $40.57 $49.41 $63.55 $66.15
Essex $50.40 $57.30 $69.50 $77.29
Hudson $51.35 $58.16 $69.86 $75.58
Middlesex $54.48 $63.65 $78.05 $97.58
Monmouth $51.16 $59.93 $77.16 $88.08
Ocean $51.16 $59.93 $77.16 $88.08
Union $50.37 $57.30 $69.50 $77.29

May I submit my lease and monthly expenses to show you how much rental compensation I need from my builder?

  • The values for rental compensation are calculated as fairly as possible, using HUD’s fair market value for rental costs for the county of the damaged property and by the number of bedrooms in that home.
  • To get an even more accurate value for rental compensation, the DCA has also used HUD’s utility model calculator to estimate your daily utility costs and have included that value for the daily rates seen in the table above.

What happens if one of the following situations applies to me:
I’m already receiving rental compensation from a long term recovery group or charitable organization;
I have a private arrangement with my builder already;
I am currently living with family and do not want or need the rental compensation?

  • In these situations, homeowners may voluntarily waive the right to receive the builder’s rental compensation.
  • Homeowners cannot receive rental compensation from more than one source.
  • If you have a prior arrangement with your builder regarding rental compensation, that arrangement will supersede the rates delineated above.

My neighbor is in the RREM Program and is using his own contractor. Can he collect this compensation from his builder?

  • Homeowners in Pathway B (utilizing a homeowner-selected contractor) cannot collect rental assistance from their builders unless that has been negotiated in the contract they have with their builder.
  • However, homeowners in Pathway B are still encouraged to seek rental assistance from long term recovery groups and other non-profit organizations should they need it.