Most real estate sales contracts in Louisiana contain a Redhibition clause. I remember being a realtor and fumbling through the explanation of the clause to my clients. I knew it had something to do with whether the sale was "as-is" or whether the seller guaranteed the condition of the home after the date of the sale. But, that was about it.
It wasn't until I became a lawyer that I realized the law of redhbition was MUCH MUCH bigger than that. My clients and I had entered a fairly significant area of Louisiana's law and hadn't quite realized it. So I decided to give a quick overview here to at least make it clear to other realtors, buyers, and sellers that the law of redhibition is something to take seriously. Get help understanding it if you need to.
In a sales contract, a seller has certain obligations provided by law. Some can be modified by contract. Some cannot. Among the legal obligations, the seller warrants a buyer against redhibitory defects. (La. CC art. 2520) What is a redhibitory defect? It can be one of two things.
- It could be a defect causes the thing to be useless. A significantly cracked foundation may be redhibitory if the crack is so severe, the home cannot be occupied.
- It could be a defect that makes use of the thing so inconvenient that the buyer would not have bought it had she known of the defect. Or, even is she bought it, she would have paid a significantly lower price. (La. CC art. 2520) There is lots of case law that goes into determining whether a particular problem is a redhibitory defect. Consult a professional if you have a question.
SELLER'S LIABILITY/BUYER'S RIGHTS
So, what's the seller's liability when he sold something with a redhibitory defect? Well, this is where the analysis gets very complicated. The determination of liability depends largely on what the seller AND buyer knew, or should have known about the defect before the sale. But, the seller could be made to repair or correct the defect. He could also be made to return the purchase price. (La. CC art. 2531) In other cases, the seller could be made to pay expenses and attorney fees of the buyer who sues him to undo the sale. (La. CC art. 2545)
This article started out referring to the waiver of redhibition. So, that's a big hint that the seller's obligations can be waived. But, the waiver is not a simple as it sounds.
The law allows a seller and buyer to agree that the seller will not be bound by the laws of redhibition. But the waiver must meet certain legal requirements of form and contain particular wording. (La. CC art. 2548) I won't go into it here; but, if you are attempting a waiver, I would strongly suggest getting help. An improper waiver may be unenforceable. Sellers who thought they sold a property as-is may find themselves in hot water - and very unhappy with their realtor!
Another important point is that the protections of a proper waiver my still be lost of the seller, or the seller's agent, overstep the bounds in giving the sales pitch of the home. So be careful what you say!
SELLER'S RIGHTS & PROTECTIONS
A seller may have some defenses if he is sued under the law of redhibition. I will talk about three. I discussed the (1) Waiver above. Here, I will also mention (2) Notice, (3) Buyer's knowledge.
A seller may be entitled to notice of a defect before the buyer spends her own money to repair it. (La. CC art. 2522) Again, whether the seller has a legal right to notice depends largely on how much the seller knew about the defect. If the buyer repaired the defect at her own cost, the seller may defend reimbursing the buyer if he can show he could have made the repairs or made them cheaper had the buyer given him notice. (La. CC art. 2522)
A seller may also defend himself if the buyer knew or had reason to know of the defect before the sale. This is a fairly complex determination. But, in its simplest form, obvious defects are less likely to be covered. Waivers of certain inspections may also prevent the buyer from seeking relief under the law. (La. CC art. 2521) Question is - will the buyer who loses here now come after the realtor for errors and omissions? Be mindful when advising them on inspections. A simple "do as you want" may not protect you.
There you have it. A brief overview. Who knew so much law was under that simple clause on the real estate purchase contract. But, please, please remember - this is only a simple overview. There is a lot of written law and case law that must be considered when addressing an issue of redhiibition. My goal here was to make you aware of its depth and to encourage you to get help when you need it. Protect yourself!