Louisiana Real Estate Practices
- Attorney Involvement
- Cancellation/Commitment Fee
- Certificate of Release (of Mortgage)
- Good Funds Requirements
- Joinder of Spouses
- Mortgage Tax
- Payment Customs
- Policy Countersignatures
- Real Estate Taxes
- Search and Examination Fees
- Search Requirements
- Security Instruments (Deed of Trust vs. Mortgage)
- Standard Exceptions and Requirements
- State-specific Policy Variations
- Title Insurance Form and Filing Regulations
- Transfer Taxes
- Withholding Taxes
- Witness Requirements
Please describe any requirements under applicable state law for attorney, abstractor or other special professional involvement, for example, in the search, examination, opinion of title, signing, closing, disbursement, recording, preparation of documents, and/or policy-issuance.
Any title insurance report or title insurance policy relating to immovable property shall be based upon an examination of title, which shall be conducted only by attorneys duly licensed and authorized to practice law in Louisiana. The examination and resulting opinion, if it furnishes the basis of a title insurance report or title insurance policy relating to immovable property, shall be reduced to writing by the attorney.
La R.S. 22:512(17)
Does your state permit or require a cancellation fee or commitment fee upon cancellation?
The Louisiana Department of Insurance requires that forms and fees be filed with and approved by the Department of Insurance. At this time, there is no filing relating to premium for a commitment or for premium relating to a cancellation of commitment. However, the required abstract and examination are services and products provided outside the realm of premium. The attorney/law firm/title company that provides these services and products in connection with producing a commitment will expect payment for services and products rendered regardless of whether or not a closing takes place. It is suggested that the person or entity placing the order inquire as to what the fees are and when payment will be expected.
Certificate of Release (of Mortgage)
If anyone other than the lender (such as a title agent, settlement agent, underwriter or attorney) has the authority to release the security instrument, please describe.
Individual parish clerks usually have preferred release forms available on their websites. R.S.9:5167.1 allows a notary, attorney or title agent (who paid a mortgagee that failed to return a cancellation form within 60 days) to file an affidavit and cancel the paid mortgage. Two other statutes allow for the filing of an affidavit by the notary, attorney, title agent or title insurer who has misplaced a release received from a mortgagee to cancel the released mortgage. See, R.S. 9:5167 and R. S. 9: 5168.
Please describe the kinds of deeds that are customary for commercial and residential transactions. Please describe the kinds of deeds that are generally not insurable.
Louisiana does not provide a statutory form of deed. There are customary general warranty deeds, special or limited warranty deeds, and quit claim deeds. Forms for a deed, referred to as "an act of sale" in Louisiana, must contain the true sales price. All acts of sale or other instruments affecting the transfer of real property must also contain the correct names, marital status and addresses of the vendee, the vendor, as well as the municipal or street address of the property transferred, if available. Louisiana law does not recognize the common law estates in property such as a joint tenancy, a tenancy in common, or a tenancy by the entirety.
Good Funds Requirements
Is there a good funds requirement in your state?
Yes, 22:2092.1 IB (9-4-19)
Joinder of Spouses
If a non-title holding spouse is required to join in the execution of a deed or a security instrument, please describe. Any analogous rights, such as those in a civil union or equivalent, should also be addressed.
In Louisiana, property is either community or separate. The marital status and the separate or community nature must always be stated in a deed of purchase. If the person is married and there is no mention of status, the property is presumed “community,” the spouses are presumed to own together, and both spouses must sign. For a Purchase or Refinance, a non-borrowing/non-vested spouse does not have to sign the security instrument or the deed. Your title examiner should clearly designate who the owner of the property is or will be. The deed of acquisition should clearly state that the property is the separate property of the acquiring spouse, purchased with separate funds and under the separate administration and control of that acquiring spouse. In order to convey the property, the non-acquiring spouse does not need to sign the deed if they are not on title and the recitations of non-ownership outlined above were made.
Louisiana law does not recognize the common law estates in property such as a joint tenancy, a tenancy in common, or a tenancy by the entirety.
Louisiana does recognize components of property ownership known as "usus," which is the right to use the property, "fructus," which is the right to use the fruits produced by the property, and "abuses," which is the right to alienate the property. A "usufruct," combining the components of usus and fructus, allows a person the right to enjoy the property while ownership of the property is vested in another. Ownership in division is the ownership of something by two or more persons, generally presumed to be by equal shares. All owners must sign a sale or a mortgage, including usufructuaries and naked owners, unless the usufructuary is given the power to sell or mortgage in his or her acquisition.
Frequently Asked Questions
For a Refinance, does a non-borrowing/non-vested spouse have to sign the security instrument? If they are required to sign, is there any specific language that should be on the security instrument? No, if the spouse is not borrowing and does not own an interest in the property, there is no need for that spouse to sign, even if the spouse lives in the property. Your title examiner, who must be a Louisiana licensed attorney, should clearly designate the property owner.
For a Purchase, if a spouse is a non-borrower who will not be deeded on to the property, are they required to sign the security instrument? No, same as above.
In order to convey the property, does spouse sign the deed if they are not on title? No, not if they are not in title.
In what manner is a title commonly held in this state? (for example, Joint Tenants, Tenants in Common, Joint Tenants with Rights of Survivorship?) None of these terms apply in Louisiana. Property is either community or separate.
If silent, what is the presumption? The marital status must always be provided in a purchase. If the person is married and there is no mention of status, the property is presumed “community,” the spouses are presumed to own together, and both spouses must sign.
How does each of these “vestings” affect the attachment of liens to the property? Liens, called “privileges” in Louisiana, are of two sorts, statutory and contractual. Statutory liens, such as that in favor of workmen and material suppliers, can attach to the property even if the services were ordered by a non-owner. However, the lien must identify the proper owner of the property to attach. Contractual liens, such as mortgages, attach when the proper owner signs a document, such as a mortgage, and the document is recorded. Where property is community, both spouses must sign the mortgage, and the signature of one spouse may not be effective, even as to that one spouse’s share.
If individuals took title as “husband and wife,” does that create “tenancy by the entirety”? Will judgments against the individual attach? This would identify the ownership as “community,” and judgments against either spouse would attach to the entire property, not just that spouse’s half.
Do Purchase Money Mortgages have priority over all judgment liens? No, there is no special or higher rank for PMMs filed against real estate under Louisiana law over and above that of a mortgage. The contrary applies under Louisiana’s UCC law which is in line for personal property.
Is there a Homestead exemption in this state? What does it mean in relation to the title? There are two “homestead exemptions” in Louisiana. The first deals with a special ad valorem tax break for home owners who live in their property. The first $75,000 of homestead value is exempt from real estate taxes. When ordinary people talk about their “homestead exemption,” they usually refer to this tax break. The second “homestead exemption” deals with bankruptcy, and allows a person who files bankruptcy to shield the first $25,000 of value from creditors who did not obtain a waiver of this “homestead exemption.” Thus, the owner of a homestead must waive this second “homestead exemption” in the mortgage, and most Louisiana mortgage forms contain such a waiver in boilerplate language. Under laws in existence in prior times, but now repealed, a non-owner spouse was required to join in the mortgage for the purpose of waiving this second homestead exemption. Although the law no longer requires this, some old forms still have the language for the non-owner spouse to join in the signing of the mortgage. Rather than argue with the lender on this point, it is often easier to have the non-owner spouse sign.
Is there a mortgage tax in your state? If yes, is it uniform across the state or does it vary? If it is uniform, please describe.
Orleans Parish only has a documentary tax that applies to conveyances and mortgages. Generally, the fee is $325 for the first 25 pages. Contact New Orleans Notarial Archives for an accurate calculation at 504-568-8577.
Who customarily pays for:
(a) Owner’s Policy?
(b) Transfer Tax & Recording Fee?
(c) Survey Charges?
(d) Closing/Settlement Fees?
(c) buyer/borrower most often; not unusual to see seller pay it—depends on agreement between parties
On commercial transactions, these charges are often negotiated on a per transaction basis by the parties.
Please describe any statutory or regulatory requirements for countersignatures in order to issue the policy (for example, residency requirements).
All title insurance policies and reports covering any insurable interest in title to immovable property located in the state shall be signed by an agent licensed in this state or by an employee of a title insurer issuing the title insurance policies and reports when such employee is an agent licensed in this state. La R.S. 22:2092.3.
Real Estate Taxes
Please describe the general tax year, due dates, and delinquency dates, including lien dates and payment cycle.
The Tax Year for all parishes—Jan 1 to Dec 31
The Due Date for Orleans Parish only is January 31 and is payable “in advance”
The Due Date for all other parishes is December 31 and is payable “in arrears”
The Tax Collector for Orleans Parish only is the Department of Treasury-City of New Orleans.
The Tax Collector for all other parishes is the Sheriff for the Parish.
These officials should be contacted for amount of tax due and any interest and/or penalties.
Search and Examination Fees
Is it permissible and/or customary to charge a separate search and/or examination fee, and under what circumstances? If your jurisdiction is all-inclusive, please state that.
Louisiana is not an “all-inclusive” jurisdiction.
It is customary and permissible in LA to have separate charges for search (generally referred to as “abstract”) and examination (generally referred to as “exam”) on the majority of real estate transactions. It is also common to see charges including, but not limited to, settlement fees, tax research, recording services, and courier fees.
Is there a minimum period of time for a title search required: (a) by state law, (b) pursuant to marketable record title acts, or (c) by any other applicable title examination standards (e.g., state bar association)? Please respond to each category. If a minimum search period exists for any category, please state it.
1. From the Insurance Code
La RS 22:512(17)(b)(vi)(gg)
(gg) Length of examiner's search and date of earliest recorded instrument reviewed by the examiner. If the transaction being insured is a sale, the minimum search period shall be thirty years, or longer, if necessary, in order to reach an arms-length sale between unrelated, third parties. If only a mortgage is being insured, then the search shall be for a minimum of ten years or two links in the chain of title, whichever is greater. However, such minimum search periods for a sale or mortgage shall not apply to any transaction made prior to and on January 1, 2013, by the Road Home Corporation, The Louisiana Land Trust, or any political subdivision, of property originally acquired in connection with the Road Home Program.
2. Louisiana State Bar Association - Uniform Title Standards Committee (2001 Edition)
Standard 2.1 Period of Search
The marketability of title shall be determined based upon a search and examination of the public records in the names of the record owners of the subject property for a period of 35 years or such longer period of time as may be necessary to commence the examination with a conveyance for consideration.
Background Notes: The Uniform Title Standards Committee recognized that the 35-year period may constitute a shorter period than has customarily been used in many localities. In the interest of establishing a standard, the committee agreed to rely upon the principle that prescription, including 30-year acquisitive prescription, generally runs against all persons absent any applicable exception. See, La. Civ.C. art. 3468. The period of 35 years was selected as a compromise. It does not address the issue of whether there was a patent properly signed or some other non-prescriptive claim. This standard therefore suggests a minimum time period.
Security Instruments (Deed of Trust vs. Mortgage)
Please describe the customary and permissible form(s) of security instruments used in your state.
Who can be listed as the trustee on the Deed of Trust (e.g., residency and/or natural person requirements, etc.)? Can an underwriter or title agent be designated as the trustee, and, if so, is it customary?
Where property is community, both spouses must sign the mortgage, and the signature of one spouse may not be effective, even as to that one spouse’s share.
In Louisiana, the mortgage is the instrument used to secure real property loans; common law deeds of trust are not permitted. A "conventional" mortgage is established by contract, a "legal" mortgage is established by operation of law, and a "judicial" mortgage is established by law to secure a judgment. A "general" mortgage burdens all present and future property of the mortgagor, while a "special" mortgage burdens only certain specified property of the mortgagor. Conventional mortgages are special mortgages. Judicial and legal mortgages are usually general mortgages.
Only a written contract may establish a conventional mortgage. The writing may be either an authentic act or an act under private signature, although it is customary for mortgages to be in authentic form for purposes of quick foreclosure. The conventional mortgage must state precisely the description of the immovable property over which it is granted, state the amount of the obligation or the maximum amount of the obligations that may be outstanding at any time and from time to time that the mortgage secures, and be signed by all those who have the power to alienate the property. The mortgagee need not sign the contract of mortgage.
When a creditor lends money to a Louisiana debtor, usually a promissory note is signed as evidence of the debt, although this is not absolutely necessary. The promissory note indicates the amount owed and the interest rate to be charged over a certain period of time.
Standard Exceptions and Requirements
Please identify the standard exceptions and requirements that are customarily used in your state.
- Rights or claims of parties in possession not shown by the public record.
- Easements, or claims of easements, not shown by the public record.
- Encroachments, overlaps, boundary line disputes, or other matters which would be disclosed by an accurate survey and inspection of the subject property.
- Any lien, or right to a lien, for services, labor, or material hereto or hereafter furnished, imposed by law and not shown on the public records.
- Taxes or special assessments which are not shown as existing liens by the public record.
In Louisiana, Owner Policies customarily have the standard exceptions shown above and also include the following:
- Community property, dower, curtesy, survivorship, or homestead rights, if any, of any spouse of the insured.
- Any titles or rights assessed by anyone including but not limited to persons, corporations, governments or other entities, to tide lands, or lands comprising the shores or bottoms of navigable rivers, lakes, bays, ocean or gulf, or lands beyond the line of the harbor or bulkhead lines as established or changed by the United States Government or water rights, if any.
- Reservations contained in Patent from the United States of America or State where the land described in Schedule A is located.
- Taxes for the year XXXX, which are not yet due and payable.
- Restrictive Covenants of record which affect the property described herein.
In Louisiana, Loan Policies have the standard exceptions shown above and also included the following:
- Taxes for the year XXXX, which are not yet due and payable.
- Restrictive Covenants of record which affect the property described herein.
Standard exceptions may be deleted. Stewart Underwriting Counsel should be consulted on a per transaction basis.
State-specific Policy Variations
If there are state-specific changes to the provisions in the ALTA policies (e.g., Arbitration, Minerals), please describe.
Any requirement of Arbitration in an insurance policy is not enforceable in Louisiana.
Title Insurance Form and Filing Regulations
Please describe the form and/or rate filing requirements, if any, related to policies and endorsements. Please describe any applicable rating bureau.
Louisiana Title Insurance Statistical Services Organization, a private rating organization was authorized in 2006 to make rate filings for its members. R. S. 22:1409(G)(1)(e); and 1409.1.
Act 459 of the 2007 Regular Session of the Louisiana Legislature, effective January 1, 2008, abolished the Louisiana Insurance Rating Commission and generally transferred its functions, including the setting of rates, to the Commissioner of Insurance. At the time of this writing, it is not possible to delineate when new regulations and procedures will be adopted by the Commissioner.
Change to existing forms, addition of forms, and/or deletion of forms are handled through LATISSO in a manner similar to the filing and approval process for rates. The “filing” is made by LATISSO on behalf of all of its members with the Department of Insurance. Once approval of a filing made by LATISSO is granted, any LATISSO member wanting to deviate from that approved filing must file a deviation with the Department of Insurance.
Is there a transfer tax in your state? If yes, is it uniform across the state or does it vary? If it is uniform, please describe.
Is usury coverage available?
Yes, ALTA 27-06 (rev 10-22-09) is a filed endorsement with a filed rate of $50—effective June 1, 2010.
What are your state’s requirements, if any, with regard to withholding proceeds from a sale, similar to but not including FIRPTA?
Are witnesses required? If so, please describe.
All mortgage documents and their riders should be in authentic form in accordance with La. Civ. Code art. 1833, that is, signed before a notary and two witnesses. The issue of authentic evidence is important when it comes to the collection of a debt secured by Louisiana real estate. The quickest and the most efficient way to foreclose is by way of "executory process," which is an ex parte in rem procedure whereby a creditor enforces a mortgage or security interest containing a confession of judgment. In order to qualify for an executory proceeding, the creditor must attach authentic evidence of each and every link needed to prove the right to use executory process.