Hurricane Katrina hit Louisiana’s real estate market hard, but the past few years have seen a resurgence of construction. Many developers are interested in constructing or reconstructing new communities within the state, making offers to homebuyers in the burgeoning market.
As a buyer, you might purchase a home from a builder before it is actually constructed; your purchase is based upon renderings, contracts and plans. Unfortunately, not all construction turns out perfect. You might move into the home to find significant problems – the door frames might be uneven, the gas line improperly installed, or the water pressure weak.
The price you paid was based on a perfect home – a home that matched what was promised to you by the developer. Construction defects lower the value of your home. How can you hold your Louisiana builder accountable for such defects?
Unlike other states, Louisiana law does not require that you give your developer the ability to correct any construction defects before you file a lawsuit. However, doing so is still a good idea. Your first step should be contacting the developer over the phone, or suggesting an in-person inspection, to review the defects.
You could also send a formal demand letter asking for reimbursement, or remediation work. The developer, wanting to avoid litigation, may do the right thing and send inspectors or contractors to correct the issues.
If the developer ignores the letter or fails to properly address the situation, you’ll know that it’s time to file suit.
A lawsuit against your builder would be largely based on breach of contract. If you commissioned a newly constructed home, your builder or developer likely gave you extensive materials describing what it would eventually look like. You would have needed to sign a contract, outlining your payment and the builder's promise to construct the home.
Part of your lawsuit against the builder will be that it breached this agreement – it did not give you the building that it promised. Here, all of the materials the builder gave you, including photos, plans and descriptions of the home, and emails describing the work, will be useful to establishing your expectations at the time you entered into the contract.
For example, if the various documents clearly show that you thought you were getting a home with a two-car garage but the garage as built fits only one and a half cars, this demonstrates the builder’s breach.
Louisiana has a ten-year statute of limitations period on actions for breach of contract, under La. Civ. Code § 3499. This means that claims based on a contract with the builder must be brought within this period, or they are barred.
An exception to this is when a homeowner could not have reasonably discovered the existence of the breach until after the period – for example, if the roof caves in after eleven years because the builder used low-quality wood.
Breach of contract isn’t the only cause of action you might have against your builder. Imagine that the builder allowed water to leak into the electrical sockets in the basement, which ended up causing massive surges and destroying your appliances. In a situation like this, you can sue your builder under a legal theory known as negligence.
Ordinary negligence in the context of construction defects means the builder’s failure to exercise the correct standard of care. In Louisiana, in order to establish a claim for negligence, the homeowner must establish that: (1) a duty was imposed by law, (2) the builder failed to conform to that standard, (3) there was a causal link between the failure to meet the standard of care and the resulting construction defect, and (4) actual economic damages to your home resulted.
Louisiana has a very short, one-year statute of limitations for property damage caused by negligence under La. Civ. Code § 3492. This means that you should act quickly if you discover that negligent building was done on your home.
A somewhat unique facet of construction defect litigation in Louisiana is a law called the Statute of Repose for improvements to real property, La. R.S. § 9:2772. Under this legislation, homeowners have five years from the substantial completion (or the last specific act or omission of the builder) to file suit. After the builder has been “off the job” for five years, a homeowner is generally barred from filing a lawsuit for an alleged construction defect, regardless of when the defect was or is discovered.
The statutes of limitations for breach of contract or negligence can often be tolled (or delayed) based on circumstances. If, for example, you do not discover the construction defect for three years after you move in, a court may begin the limitations period from the date of discovery.
The statute of repose, however, is not nearly so flexible. It operates to give certainty to builders, so that they need not worry about claims after five years. This means homeowners must be vigilant to ensure that they do not get blocked by the statute.
There are a few clauses to check for in your contract before filing your lawsuit. First, it is common in construction contracts to find a dispute-resolution clause. That clause may provide that you were required to go to mediation with your builder or developer before filing your lawsuit. In this context, mediation is a facilitated negotiation for settlement, led by a third-party neutral individual. Often, that individual will have some experience with construction law, engineering, or building development.
Your contract may also contain an arbitration clause. This would require that you go to arbitration against the builder or developer, instead of litigation in a court of law. In arbitration, either one or three individuals – again, typically with experience in construction – will render a final determination on your dispute. The advantage of arbitration is that it is generally quicker than litigation, saving you money on legal fees. A potential disadvantage, however, is that these decisions cannot, in most cases, be appealed -- they are meant as a complete substitute for going to court.
Finally, take note of any language in the contract shortening your statute of limitations or ability to make legal claims. It is not uncommon that construction contracts will reduce the amount of time that you have in which to file a legal claim against the builder. An attorney who has experience in construction defect litigation in Louisiana will be able to carefully review the document for these sorts of limitations and advise you of your rights going forward.