Following thousands of complaints and suits, Knauf Plasterboard Tianjin Co. (KPT), a German manufacturer of Chinese drywall with subsidiaries in China, agreed to an $800 million settlement over homeowners’ claims that the defective wall boards contaminated their homes.

In a decision announced today before U.S. District Judge Eldon Fallon in New Orleans, Knauf agreed to resolve claims by about 4,500 residential and commercial properties that were built using the faulty drywall. Judge Fallon has been supervising a total of about 12,000 suits filed over contaminated drywall. In 2010, he awarded $2.6 million in damages to seven families in Virginia affected by drywall from Taishan Gypsum Co. Ltd.

“KPT has agreed to provide thousands of families the opportunity to recover losses caused by KPT drywall,” Russ Herman, a New Orleans-based lawyer representing property owners, said in a statement.

Used to build interior walls of residential and commercial buildings, Chinese drywall uses chemicals that emit sulfur fumes, according to the Consumer Product Safety Commission (CPSC). The fumes release an unpleasant odor and also corrode copper, therefore affecting air conditioners, electric coils, plumbing equipment, computer wiring and metal picture frames.

Though the CPSC found the gases create no immediate health threat, the drywall has long been a frustrating problem for homeowners in Louisiana, where about 1.1 million sheets were used for rebuilding projects following the hurricanes Katrina and Rita in 2005, according to state Attorney General James Caldwell.

Harmful Chinese drywall in Florida also led to a $55 million settlement earlier this year by Miami-based drywall supplier Banner Supply Co. Reports of defective drywall led to a three-year investigation that was presented at a U.S. Senate Commerce subcommittee hearing earlier this week, which addressed the effects of the product.