Louisiana law is clear – all claims against a contractor or design professional arising out of the planning, construction, design or building immovable or movable property must be brought within 5 years of the date of registry in the mortgage office of acceptance of the work by the owner. If no such acceptance is recorded within six months of the date the owner occupied or took possession of the work, the claim must be brought within five years from the date of occupancy or possession. (La. R.S. 9:2772). The five year period of time applies to all claims, including those claims made by one contractor against another. The five year period cannot be interrupted, suspended or tolled. If suit is not filed within five years, the right to file suit is lost.
Although enacted by the legislature to protect contractors, the statute creates a “trap for the unwary” for those involved in projects where partial certificates for substantial completion are issued. For example, in the recent case Thrasher v. Gibbs Residential, LLC, 15-CA-607 (La. Ct. App. 4 Cir. 6/29/16) the court of appeal dismissed a general contractor’s claim against its subcontractor finding the claim was not timely. The court found that the general contractor filed its claim more than 5 years from the date a partial certificate of substantial completion had been filed. The general contractor unsuccessfully argued that it was improper to use a partial certificate of substantial completion because the project continued thereafter and additional certificates of substantial completion were ultimately filed. In the ruling the court noted that the statute did not specify what must be filed to constitute acceptance by the owner. The court also found that the parties were relying upon a recorded certificate of substantial completion as evidence of the owner’s acceptance. The fact that the entire project had not reached substantial completion did not prevent the court from finding that a partial certificate of substantial completion was sufficient to start the clock.
To eliminate the uncertainty as to what will or will not start the five year period, the parties to a construction contract would be wise to include language in the contract establishing precisely what must be filed to constitute “registry in the mortgage office of acceptance”.