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Regular Session, 2014
HOUSE BILL NO. 529
BY REPRESENTATIVE PUGH
CONTRACTORS: Requires contractors performing elevation, re-elevation, or restoration
services due to a flood or hurricane; to provide third-party insurance backed
warranties on each such project
AN ACT1
To enact Chapter 8 of Code Title IV of Code Book III of Title 9 of the Louisiana Revised2
Statutes of 1950, to be comprised of R.S. 9:2790.1.1 through 2790.1.11, relative to3
warranties required of contractors for elevation, re-elevation, or restoration services;4
to enact the Elevation, Re-elevation, or Restoration Warranty Act; to provide for5
warranties by contractors for certain elevation, re-elevation, or restoration work; to6
require insurance against certain defects; to provide for warranty periods; to provide7
for notice requirements; to provide definitions; and to provide for related matters.8
Be it enacted by the Legislature of Louisiana:9
Section 1. Chapter 8 of Code Title IV of Code Book III of Title 9 of the Louisiana10
Revised Statutes of 1950, comprised of R.S. 9:2790.1.1 through 2790.1.11, is hereby enacted11
to read as follows: 12
CHAPTER 8. ELEVATION, RE-ELEVATION, OR RESTORATION WORK13
WARRANTY ACT14
§2790.1.1. Purpose15
A. The legislature finds a need to protect property owners in Louisiana from16
economic loss due to defective workmanship on structures that are elevated, re-17
elevated, or restored. Many of these economic losses are caused by contractors18 HLS 14RS-471 ORIGINAL
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performing these improvements and not providing an enforceable warranty to the1
owners of the structures to pay for the damages and defects caused to their property2
arising from the work of the contractor.3
B. The legislature finds that these economic losses can be minimized by4
requiring an insured warranty on each such improvement required because of5
elevation, re-elevation, hurricane, or flood.6
C. This warranty shall define the responsibility of the contractor to the owner7
and subsequent purchasers during the warranty period. The warranty, which is8
mandatory, shall apply whether or not building code regulations are in effect in the9
location of the structure, thereby promoting uniformity of defined building standards.10
§2790.1.2. Definitions11
For purposes of this Chapter, the following words, phrases, and terms shall12
be defined and construed as follows:13
(1) "Contractor" means any person, natural or juridical, who undertakes, or14
attempts to undertake, on any elevation, re-elevation, or restoration to any pre-15
existing structure, or to structures which are adjacent to such structure. The term16
"contractor" shall include but not be limited to contractors, general contractors,17
residential building contractors, and home improvement contractors as defined by18
R.S. 37:2150.1.19
(2) "Flood" means water intrusion caused by wind driven water, rising tides,20
or wind produced surge, or any combination thereof.21
(3) "Hurricane" means any storm named by the National Weather Service.22
(4) "Improvement" means the elevation, re-elevation, or restoration, or any23
combination thereof, by a contractor to any residential or commercial structure24
damaged by a hurricane or flood. This definition shall include but not be limited to25
improvements undertaken pursuant to a government program, improvements paid for26
within proceeds of insurance, and improvements paid for by the owner of the27
structure on which the improvement is being made.28 HLS 14RS-471 ORIGINAL
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(5) "Insurer" shall mean an insurance company licensed to conduct business1
in the state of Louisiana.2
(6) "Major structural defects" means any actual physical damage to the3
following load-bearing portions of the building caused by failure of the load-bearing4
portions which affects their load-bearing functions to the extent that the structure5
becomes unsafe, unsanitary, and unliveable:6
(a) Foundation systems and footings.7
(b) Beams.8
(c) Girders.9
(d) Lintels.10
(e) Columns.11
(f) Walls and partitions.12
(g) Floor systems.13
(h) Roof framing systems.14
(7) "Owner" means the person or persons, natural or juridical, who held title15
to the structure at the time the original elevation, re-elevation, or restoration project16
was undertaken, or any successors in title.17
(8) "Structure" means a structure which is designed and used for residential18
or commercial use, or both, together with all attached and unattached structures and19
which was elevated, re-elevated, or restored.20
(9) "Warranty commencement date" means the date that the improvements21
are substantially complete, have been accepted by the owner, and the contractor has22
been paid in full.23
(10) "Workmanship" means the standard and quality of the work of the24
contractor or the skills used in the elevation, re-elevation, or restoration of the25
structure.26
§2790.1.3. Warranties; exclusions27
A. Subject to the exclusions provided in Subsection B of this Section and28
notwithstanding any provision to the contrary, every contractor shall warrant the29 HLS 14RS-471 ORIGINAL
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following to the owner of a structure for which an improvement is contracted for and1
described in the scope of work between the contractor and the owner:2
(1) One year following the warranty commencement date, the improvement3
will be free from any defect due to substandard workmanship.4
(2) Two years following the warranty commencement date, the improvement5
will be free from major structural defects due to substandard workmanship.6
B. The contractor's warranty shall exclude the following:7
(1) Any damage to the extent that it is caused or made worse by any of the8
following:9
(a) Negligence, improper maintenance, neglect, or improper operation by10
anyone other than the contractor or any employee, agent, or subcontractor of the11
contractor.12
(b) Failure by anyone other than the contractor or any employee, agent, or13
subcontractor of the contractor to comply with the warranty requirements of14
manufacturers of appliances, equipment, or fixtures.15
(c) Dampness, condensation, or other damages due to the failure of the16
owner to maintain adequate ventilation or drainage.17
(2) Any loss or damage which the owner has not taken timely action to18
minimize.19
(3) Any defect in, or any defect caused by, materials or work supplied by20
anyone other than the contractor, or any employee, agent, or subcontractor of the21
contractor.22
(4) Loss or damage resulting from war, accident, riot and civil commotion,23
water escape, falling objects, aircraft, vehicles, acts of God following the act of God24
which caused the damage originally contracted to be repaired, lightning, windstorm,25
hail, flood, mudslide, earthquake, volcanic eruption, wind driven water, and changes26
in the level of the underground water table.27
(5) Any damage caused by soil movement.28
(6) Insect damage.29 HLS 14RS-471 ORIGINAL
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(7) Any condition which does not result in actual physical damage to the1
improvement.2
(8) Any cost of transportation, food, moving, storage, or other incidental3
expense related to relocation during the repair.4
(9) Any defect not reported in writing by registered or certified mail to the5
contractor and insurer, as appropriate, prior to the expiration period specified in this6
Chapter for such defects plus thirty days.7
(10) Consequential damages including attorney's fees.8
(11) Mold and mold damage to the completed improvement.9
§2790.1.4. Warranty required in writing; implied warranty; waiver10
The warranty required by R.S. 9:2790.1.3 and the information regarding the11
insurance required by R.S. 9:2790.1.5 shall be set forth in writing in the contract12
between the owner and the contractor.13
§2790.1.5. Insurance backed warranty; requirement14
A. All of the contractor's obligations under the warranty required by this15
Chapter shall be insured by the contractor for the benefit of the owner through a third16
party insurance or bond company, referred to herein as "insurer", authorized and17
properly licensed to transact business in this state and that meets the following18
minimum qualifications:19
(1) Has been in business at least ten years and is in good standing in the state20
in which it is incorporated.21
(2) Has at least two years experience in furnishing warranties for elevation22
or re-elevation projects, or both, in Louisiana.23
(3) Be duly licensed to transact business in Louisiana.24
(4) Has a Louisiana licensed professional engineer registered in civil25
engineering on staff or on contract to perform inspections as needed.26
(5) Has a mandatory dispute resolution process in place which includes27
mediation and arbitration.28
(6) Has a rating of "B" or higher by A.M. Best.29 HLS 14RS-471 ORIGINAL
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(7) Holds a license issued by the Louisiana Department of Insurance for1
providing the type of insurance required to insure warranties.2
§2790.1.6. Required notice; owner3
A. Before undertaking any repair himself or instituting any arbitration action4
for breach of warranty, the owner shall give the contractor and insurer written notice,5
by registered or certified mail, within thirty days of knowledge of the defect. The6
notice to the contractor shall be sent to the contractor's last known address as7
registered with the secretary of state's office or to the last known address if the8
contractor is not registered with the secretary of state's office.9
B. The notice shall advise the contractor and insurer of all defects and give10
the contractor sixty days to repair, replace, or pay the owner the reasonable cost of11
repairing or replacing any defective improvement.12
§2790.1.7. Required response; insurer to owner; insurer to contractor13
A. The insurer shall provide the owner whom it receives notice from14
pursuant to R.S. 2790.1.6 with an inspection report of the alleged warranty defects15
prepared by a Louisiana licensed engineer registered in civil engineering.16
B. The insurer shall provide the contractor and the owner with a letter, by17
registered or certified mail, informing both whether the alleged defects are or are not18
warranted. If the defects are warranted, the letter shall detail which defects require19
repair pursuant to the warranty and the scope of the repair work. If the defects are20
not warranted, the letter shall specify reasons for making that determination.21
§2790.1.8. Procedure following response of insurer22
A. The owner shall notify the contractor and the insurer, by registered or23
certified mail, whether or not he accepts the scope of repair work stated in the letter24
required by R.S. 9:2790.1.7.25
B. Should the owner accept the scope of repair work stated in the letter,26
repair work shall begin within thirty days of receipt by the contractor.27 HLS 14RS-471 ORIGINAL
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§2790.1.9. Peremption1
Any action to enforce any warranty provided for in this Chapter shall be2
subject to a peremptive period of thirty days after the expiration of the appropriate3
time period provided in R.S. 9:2790.1.3.4
§2790.1.10. Transfer of warranty and insurance5
Any warranty imposed pursuant to this Chapter and any insurance benefit6
shall automatically transfer, without charge, to a subsequent owner who acquires title7
of the structure containing the improvement. Any transfer of the structure shall not8
extend the duration of any warranty or insurance coverage.9
§2790.1.11. Violations; limitations10
A. If a contractor or insurer violates this Chapter by failing to perform as11
required by the warranties and procedures provided in this Chapter, any affected12
owner shall have a cause of action against the contractor or insurer, or both, for13
actual damages arising out of the violation. The damages with respect to a single14
defect shall not exceed the reasonable cost of repair or replacement necessary to cure15
the defect and any damage determined to be caused by the defect.16
B. The parties shall provide for the arbitration of any claim in dispute. Any17
arbitration shall comply with and may be binding only to the extent provided for in18
this Chapter.19
Section 2. The provisions of this Act shall apply to contracts entered into after20
January 1, 2015.21
Section 3. This Act shall become effective upon signature by the governor or, if not22
signed by the governor, upon expiration of the time for bills to become law without signature23
by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If24
vetoed by the governor and subsequently approved by the legislature, this Act shall become25
effective on the day following such approval.26 HLS 14RS-471 ORIGINAL
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DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Pugh HB No. 529
Abstract: Requires contractors to offer third party insurance backed warranties for
elevation, re-elevation, or restoration work made necessary following a flood or a
hurricane.
Proposed law provides that the legislature finds economic losses caused by contractors not
offering enforceable warranties on elevation, re-elevation, or restoration work performed on
structures following a hurricane or flood can be minimized by requiring an insured warranty.
Proposed law provides for definitions.
Proposed law requires that every elevation, re-elevation, or restoration contract for
improvement to a structure damaged by a flood or hurricane be warranted and that the
warranty be backed by a third party insurer for the benefit of the owner of the structure
improved.
Proposed law provides that the warranty times shall run as follows:
(1) One year following the warranty commencement date, the improvement will be free
from any defect due to substandard workmanship.
(2) Two years following the warranty commencement date, the improvement will be free
from major structural defects due to substandard workmanship.
Proposed law excludes the following from the warranty required by proposed law:
(1) Any damage to the extent that it is caused or made worse by negligence, improper
maintenance, neglect, or improper operation by anyone other than the contractor or any
employee, agent, or subcontractor of the contractor, failure by anyone other than the
contractor or any employee, agent, or subcontractor of the contractor to comply with the
warranty requirements of manufacturers of appliances, equipment, or fixtures, dampness,
condensation, or other damages due to the failure of the owner to maintain adequate
ventilation or drainage.
(2) Any loss or damage which the owner has not taken timely action to minimize.
(3) Any defect in, or any defect caused by, materials or work supplied by anyone other than
the contractor, or any employee, agent, or subcontractor of the contractor.
(4) Loss or damage resulting from war, accident, riot and civil commotion, water escape,
falling objects, aircraft, vehicles, acts of God following the act of God which caused the
damage originally contracted to be repaired, lightning, windstorm, hail, flood, mudslide,
earthquake, volcanic eruption, wind driven water, and changes in the level of the
underground water table.
(5) Any damage caused by soil movement.
(6) Insect damage.
(7) Any condition which does not result in actual physical damage to the improvement. HLS 14RS-471 ORIGINAL
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(8) Any cost of transportation, food, moving, storage, or other incidental expense related
to relocation during the repair.
(9) Any defect not reported in writing by registered or certified mail to the contractor and
insurer, as appropriate, prior to the expiration period specified in proposed law for such
defects plus 30 days.
(10) Consequential damages including attorneys fees.
(11) Mold and mold damage to the completed improvement.
Proposed law requires the warranty and insurance requirements be set forth in writing
between the owner and contractor.
Proposed law requires all of the contractor's obligations under the warranty required by
proposed law be insured by the contractor for the benefit of the owner through a third party
insurance or bond company.
Proposed law provides for qualification of a third party insurance or bond company.
Proposed law provides that the owner shall notify the contractor and insurer of any
knowledge of a defect and give the contractor 60 days to repair, replace, or pay the owner
the reasonable cost of repairing or replacing any defective improvement.
Proposed law provides that the insurer shall provide the owner with an inspection report
prepared by a LA licensed engineer registered in civil engineering.
Proposed law provides that the insurer shall provide the contractor and the owner with a
letter informing both whether the alleged defects are or are not warranted. If the defects are
warranted, the letter will detail which defects require repair pursuant to the warranty and the
scope of the repair work. If the defects are not warranted, the letter shall specify reasons for
making that determination.
Proposed law provides that the owner shall notify the contractor and the insurer whether or
not he accepts the scope of repair work. Should the owner accept the scope of repair work
stated in the letter, repair work shall begin within 30 days of receipt by the contractor.
Proposed law provides that any action to enforce any warranty provided for in proposed law
shall be subject to a peremptive period of 30 days after the expiration of the appropriate time
period.
Proposed law provides that any warranty imposed pursuant to proposed law and any
insurance benefit shall automatically transfer without charge, to a subsequent owner who
acquires title of the structure containing the improvement. Any transfer of the structure will
not extend the duration of any warranty or insurance coverage.
Proposed law provides that if a contractor or insurer violates proposed law by failing to
perform as required by the warranties and procedures provided in proposed law, any
affected owner shall have a cause of action against the contractor or insurer, or both, for
actual damages arising out of the violation. The damages with respect to a single defect will
not exceed the reasonable cost of repair or replacement necessary to cure the defect and any
damage determined to be caused by the defect.
Proposed law provides that the parties shall provide for the arbitration of any claim in
dispute. Any arbitration shall comply with and may be binding only to the extent provided
for in proposed law. HLS 14RS-471 ORIGINAL
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Provisions of proposed law shall apply to contracts entered into after Jan. 1, 2015.
Effective upon signature of the governor or up lapse of time for gubernatorial action.
(Adds R.S. 9:2790.1.1-2790.1.11)