Louisiana's New Home Warranty Act

For one year from the commencement date, the builder warrants that “the home will be free from any defect due to noncompliance with the building standards or due to other defects in materials or workmanship not regulated by building standards.”  In addition to violations of applicable building codes, deviations from the plans and specifications for construction of the home are also recoverable under the Act. Thorn v. Caskey, App. 2 Cir.1999, 745 So.2d 653, 32,310 (La.App. 2 Cir. 9/22/99).  

One instance where an appellate court found noncompliance with building standards stemmed from  evidence of smoke damage from fireplace where the fireplace came with installation manuals containing detailed standards, and contractor admitted these were “installation procedures” for fireplace that were not followed. Craig v. Adams Interiors, Inc., App. 2 Cir.2001, 785 So.2d 997, 34,591 (La.App. 2 Cir. 4/6/01).  Likewise, another court found there was sufficient evidence that recently built home contained defects caused by noncompliance with the building standards or due to other defects in materials or workmanship not regulated by building standards to support recovery for breach of warranty under the Act when an expert in home construction who conducted inspection testified that home was built out of level, causing walls to lean, chimney to slant, and sheetrock to crack, and that there were serious problems with the foundation system. Sowers v. Dixie Shell Homes of America, Inc., App. 2 Cir.2000, 762 So.2d 186, 33,390 (La.App. 2 Cir. 5/15/00), writ denied 768 So.2d 1286, 2000-1770 (La. 9/22/00).  

For two years from the relevant commencement date, the builder warrants “the plumbing, electrical, heating, cooling, and ventilating systems exclusive of any appliance, fixture, and equipment will be free from any defect due to noncompliance with the building standards or due to other defects in materials or workmanship not regulated by building standards.”  This warranty takes the one-year warranty, and extends it to specific issues related to plumbing, electrical, heating, cooling and ventilating systems. To the extent a purchaser seeks to recover under this warranty, the same standard required for recovery on the one-year warranty applies.

For five years from the commencement date, the builder warrants that “the home will be free from major structural defects due to noncompliance with the building standards or due to other defects in materials or workmanship not regulated by building standards.”  Louisiana law defines “major structural defect” to mean “any actual physical damage to the following designated load-bearing portion of a home caused by the failure of the load-bearing portions which affects their load-bearing functions to the extent the home becomes unsafe, unsanitary, or is otherwise unlivable: (a) Foundation systems and footings; (b) Beams; (c) Girders; (d) Lintels; (e) Columns; (f) Walls and partitions; (g) Floor systems; [and] (h) Roof framing systems.” 

It is important that a purchaser looking to recover under this five-year warranty pay close attention to the definition of “major structural defect.” Courts will readily distinguish between what falls under the one- and two-year warranties and what is a “major structural defect” triggering the five-year warranty. For example, one court held that the one-year warranty against defects in materials of workmanship in a new home, rather than the five-year warranty against major structural defects, applied to homeowners' claim that defective outdoor fireplace caused fire that destroyed their home because the alleged cause of the fire was defect in workmanship or materials surrounding the construction and installation of the outdoor fireplace, and there was no evidence that the fire was caused by a major structural defect in the home. Shields v. Alvin R. Savoie & Associates, Inc., App. 1 Cir.2017, 214 So.3d 27, 2016-0825, 2016-0826 (La.App. 1 Cir. 2/1, writ denied 220 So.3d 750, 2017-0506 (La. 5/19/17). On the other hand, another court found the five-year period applied to a purchasers’ claim against a builder, even though that claim involved plumbing (which would generally trigger the two-year warranty), given that the alleged defect was the failing foundation, which was a major structural defect, and the plumbing repairs were a consequence, or resulting damages, from that defect. Campo v. Sternberger, App. 5 Cir.2015, 179 So.3d 908, 15-52, 15-53 (La.App. 5 Cir. 11/19/15), rehearing denied, writ denied 190 So.3d 1196, 2016-0085 (La. 3/24/16).  

Each of the three warranties identified above contemplate defects “due to noncompliance with buildings standards or due to other defects in materials or workmanship not regulated by buildings standards.”  The purchaser or owner of the home may not waive the required warranties, and the builder may not reduce them, by contract or otherwise. That is, these three warranties exist by operation of law and cannot be derogated.  

The same statute that lists out the warranties also provides an exhaustive list of items that, unless the builder specifically agrees to warrant, are exempt from the warranties provided under the Act. This list includes items such as fences and landscaping, normal wear and tear, normal deterioration, insect damage, or any damage caused or made worse by someone other than the builder or an employee, agent, or subcontractor of the builder.  It is notable to mention that the exclusions listed in Footnote 10 are mere statutory exclusions from the minimum warranties required – because the Act provides minimum required warranties, it does not prohibit a builder from agreeing to increase, rather than reduce, his warranties to the owner of a new home; thus, a builder may contractually assume greater obligations or warranties than those afforded by the Act, and under those circumstances, the owner presumably has a separate cause of action based on the breach of those specific contract provisions rather than breach of the Act itself.  Allemand v. Discovery Homes, Inc., App. 1 Cir.2010, 38 So.3d 1183, 2009-1565 (La.App. 1 Cir. 5/28/10).

If a builder fails to make a required warranty, the purchaser/owner of the home has a legal cause of action against the builder and may be entitled to actual damages, including attorney’s fees and court costs. Damages for all defects may not exceed the home’s purchase price, and damages for a single defect are limited to the reasonable cost to fix the defect by repair or replacement.  La. Rev. Stat. § 9:3149(A).