In 1986, the Louisiana Legislature addressed a perceived lack of protection for new home purchasers against builders for the purchase of homes with certain defects. The New Home Warranty (NHWA) Act’s stated purpose is, “there is a need to promote commerce in Louisiana by providing clear, concise, and mandatory warranties for the purchasers and occupants of new homes in Louisiana and by providing for the use of homeowners’ insurance as additional protection for the public against defects in the construction of new homes.” The warranty, which is mandatory in most cases, ostensibly addresses this need. Following is a breakdown of the basic tenants of the NHWA.
Who is protected?
Owners of new homes are protected by the warranty. “Owner” means the initial purchaser of a home and any of his successors in title, heirs, invitees, or assigns to a home during the time the warranties are in effect.
What/Who is a “builder”?
“Builder” means any person, corporation, partnership, limited liability company, joint venture, or other entity which constructs a home, or addition thereto, including a home occupied initially by its builder as his residence. Courts do not interpret the NHWA so broadly that a subcontractor would be considered a “builder.”
Generally, under the Act, every builder warrants the following to the owner of the home:
(1) One year following the warranty commencement date, 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.
- Under this provision, for one year the builder warrants that the workmanship is not defective, whether the defect arises from noncompliance with the building standards or not.
(2) Two years following the warranty commencement date, 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.
- The builder warrants the plumbing, electrical, and HVAC systems are free from defects for two years.
(3) Five years following the warranty commencement date, 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.
- For five years, the builder warrants that the home is free from major structural defects.
“Major structural defect” means any actual physical damage to the following designated load-bearing portions of a home caused by 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, (h) Roof framing systems. Physical damage to home, however, does not always equate with structural damage for purposes of NHWA.
What’s Not Covered?
The Act also excludes certain defects from the warranty. Some of the more important exclusions are:
(1) Fences, landscaping, including but not limited to sodding, seeding, shrubs, existing and new trees, and plantings, as well as off-site improvements, all driveways and walkways, or any other improvement not a part of the home itself.
(3) Damage to real property which is not part of the home covered by the warranty and which is not included in the purchase price of the home.
(4) Any damage to the extent it is caused or made worse by anyone other than the builder
(6) Any defect in, or any defect caused by, materials or work supplied by anyone other than the builder, or any employee, agent, or subcontractor of the builder.
(7) Normal wear and tear or normal deterioration.
(9) Loss or damage resulting from war, accident, riot and civil commotion, water escape, falling objects, aircraft, vehicles, acts of God, lightning, windstorm, hail, flood, mudslide, earthquake, volcanic eruption, wind driven water, and changes in the level of the underground water table which are not reasonably foreseeable.
(11) Insect damage.
(14) Bodily injury or damage to personal property.
(19) Mold and mold damage.
In the event the owner of the home wants to make a claim under the warranty, he must first give the builder notice of the defect thereby allowing the builder to make the necessary repairs.
Before undertaking any repair himself or instituting any action for breach of warranty, the owner shall give the builder written notice, by registered or certified mail, within one year after knowledge of the defect, advising him of all defects and giving the builder a reasonable opportunity to comply with the provisions of the NHWA.
The builder shall give the owner written notice of these requirements at the time of the closing between the builder and the owner, or if there is no such closing, at the time of the execution of the construction contract between the builder and the owner.
Any warranty imposed under the NHWA and any insurance benefit shall automatically transfer without charge, to a subsequent owner who acquires title to the home. Any transfer of the home shall not extend the duration of any warranty or insurance coverage.
Damages for Violations of the NHWA
If a builder violates the NHWA by failing to perform as required, any affected owner shall have a cause of action against the builder for actual damages, including attorney fees and court costs, arising out of the violation. The damages with respect to a single defect shall not exceed the reasonable cost of repair or replacement necessary to cure the defect, and damages with respect to all defects in the home shall not exceed the original purchase price of the home.
Exclusive Remedy against the Builder
The New Home Warranty Act provides the exclusive remedies, warranties, and peremptive periods as between builder and owner relative to home construction and no other provisions of law relative to warranties and redhibitory vices and defects shall apply.
~ Andrew S. Mendheim