I represent the Buyer of a recently completed new construction home. The Seller bought the home six (6) months ago from the Builder, but the Seller was recently transferred out of State due to his job.
My Buyer wants to make sure the Louisiana New Home Warranty will transfer to him at closing.
Do we need to include in the Purchase Agreement, Addendums, Response to Inspections, etc. any language confirming transfer of the Louisiana New Home Warranty in order to ensure the Louisiana New Home Warranty transfers from Seller to Buyer?
The short answer is “No,” you do not need to include any language in the Purchase Agreement, Addendums, Response to Inspections, etc. in order for the Louisiana New Home Warranty to transfer from Seller to Buyer.
According to Louisiana Revised Statutes 9:3148 entitled “Transfer of warranty and insurance”:
Any warranty imposed under the (Louisiana New Home Warranty Act) 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.
The statute is very clear that the Louisiana New Home Warranty Act automatically transfers from Seller to Buyer so long as the one (1), two (2) and five (5) year warranty periods have not expired (we discussed the calculation of the warranty time periods in a previous Risk Management Newsletter).
But what about the “As Is” clause that is incorporated into many Cash Sales at the Closing – does this “As Is” clause vitiate the effect of the Louisiana New Home Warranty Act?
In other words, if a Buyer purchases the home “As Is” does this waive any claims the Buyer may or might have against the Builder under the Louisiana New Home Warranty Act?
That’s a great question! To date, I do not believe there is a Louisiana Court Case “directly on point.”
In other words, I don’t believe this issue has been raised by a savvy Attorney representing a Builder in a case involving transfer of the Louisiana New Home Warranty Act.
However, I could absolutely envision an Attorney making this argument and I could absolutely envision a Court somewhere in Louisiana being persuaded by the argument.
Out of an abundance of caution we include in all of our Cash Sales the following language:
Notwithstanding the foregoing, Buyer does not release Builder of the above described property from any rights, claims, and/or causes of action Buyer may or might have against the Builder as outlined in the Louisiana New Home Warranty Act found at Louisiana Revised Statute 9:3141, et. seq.
As a real estate agent, it might be wise for you to double check the Cash Sale prior to or at Closing to ensure language similar to the above is contained within the Cash Sale. I’d hate for your Buyer (and you) to be the “Case of First Impression” for the Court!!
Plus, it makes you look really good when you do things like “check the language of the cash sale to ensure your client is protected”!!