LA Underwriting Summary

Search/Exam

• Minimum Search Requirements -- Statute requires 30 years for purchases or longer, if necessary, in order to reach an arms-length sale between unrelated, third parties. 10 years for refinance but still need a 20 year Fed Lien Search. La RS 22:512(17)(b)(vi)(gg). State Bar association requires 35 years or such longer period of time as may be necessary to commence the examination with a conveyance for consideration.
• Plant or other search restrictions -- No
• Additional Requirements for REO Searches --
• Foreclosure Checklist --
• Special Searches Required (Code, HOA, Utilities)? --
• Survey Requirements --
• Title examiner must be LA licensed Attorney.

UPL

• UPL Hot Button Issues -- Attorney Certification Required

Any title insurance report or title insurance policy shall be based upon an examination of title, which shall be conducted only by LA licensed attorneys. The examination and resulting opinion, if it furnishes the basis of a title insurance report or title insurance policy, shall be reduced to writing by the attorney. La R.S. 22:512(17). This information and other must be shown on face of the insured mortgage or deed. La. Rev. Stat. Ann § 22:513.1

Vesting

• Louisiana civil law is based on Roman, Spanish and French law. Tenancy types based on English law used in the other states are not recognized in Louisiana.

• The following tenancy types are recognized:
  • Community Property
    • Property acquired during marriage.
    • Donations to both spouses. Source: CC Art. 2338
  • Separate Property
    • Property acquired prior to marriage.
    • Property donated to individual spouse.
    • Inherited property.
    • Property acquired during marriage if act contains declaration that acquiring spouse is purchasing as his separate property with separate funds (referred to as double declaration). Other spouse if available should intervene in act and acknowledges that property is other spouse’s separate property. Creditors of the community and forced heirs may controvert the declaration, but a subsequent transfer by onerous title or a mortgage may not be set aside on grounds of falsity of the declaration.
    • Property designated as separate in a matrimonial agreement. After marriage, court approval is required for a valid matrimonial agreement that modifies or terminates the community regime. Source: CC Art. 2341, CC Art. 2342, CC Art. 2329
  • Usufruct - Usufruct is a right to possess property and collect its fruits and revenues. A person holding a usufruct (usufructuary) on immovable property does not have the right to sell or mortgage the immovable property unless the instrument creating the usufruct grants the usufructuary the right to dispose of the immovable property. A spouse in his or her last will often grants the surviving spouse the right to dispose of immovable property. In the absence of a will, the usufructuary and all naked owners must execute a sale, lease or mortgage of inherited property. The legal usufruct in favor of the surviving spouse terminates upon remarriage. Source: CC Art. 535, CC Art. 568, CC Art. 890

• 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.
• Attachment of Liens: 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. Judgment liens against either spouse will attach to the entire community property, not just that spouse’s half.

Property Tax

• Parish property taxes for the current year in all parishes except Orleans are due in December and are delinquent after December 31st. The sheriff of each parish is the ex officio tax collector. Source: R.S. 47:2127
• Property taxes for Orleans Parish for the current year are due and payable in January and are delinquent after January 31st. The City of New Orleans Department of Finance is the tax collector. Source: R.S. 47:1997.
• Municipalities may also collect ad valorem property taxes. Source: R.S. 33:1236

Mortgage/Transfer Tax

• There are no mortgage or transfer taxes in Louisiana except in Orleans Parish.
• In Orleans Parish, the City of New Orleans imposes a documentary tax. The amount of the tax is determined by the amount of the transaction and the type of property.
• In most cases the tax is $325 and is charged per transaction. If a sale and mortgage are filed together, only one tax of $325 is imposed.
• For owner occupied single family homes or residential doubles, the tax will not exceed $325. For all other property, if the document exceeds 25 pages, an additional $100 is collected for each additional page up to a maximum of $2,525.
• There are exemptions for certain transactions, e.g. quitclaims and acts of correction.
• Source: City of New Orleans Ord. No. 18736; New Orleans Code, Ch. 150, Article V

Contact New Orleans Notarial Archives for an accurate calculation at 504-568-8577

Spousal Joinder Requirements/Homestead

• Spousal joinder required if community property.
• 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.
  • The second “homestead exemption” deals with creditor claims. The homestead is exempt from seizure and sale up to $35,000. The exemption may be waived in favor of a creditor. For community property, both spouses must sign the waiver of homestead exemption. A waiver of the homestead exemption on separate property may be executed by the owner spouse alone and is binding on the non-owner spouse. Most LA form mortgages contain such a waiver in boilerplate language. Source: R.S. 20:1

Power Of Attorney

• A power of attorney is also referred to as a procuration or mandate. Source: CC Art. 2987, CC Art. 2989
• In order to insure a transaction executed with a power of attorney, the power of attorney should be executed before a notary and two witnesses.
• A power of attorney acknowledged before a notary public may be used if approved by WFG underwriting. However, a power of attorney to donate property must always be in authentic form, i.e., executed before a notary and two witnesses. Source: CC Art. 2993, CC Art. 1541
• A general power of attorney is insufficient to convey, donate, lease or mortgage property owned by the principal unless the power to convey, donate, lease or mortgage is expressly granted by the principal. It is not necessary that the power of attorney contain the specific property description. Source: CC Art. 2996, CC Art. 2997
• The power of attorney terminates upon the death or interdiction of the principal. Incapacity or incompetency of the principal does not terminate the power of attorney unless the power of attorney provides otherwise. Source: CC Art. 3024, CC Art. 3026
• An agent may not contract with himself unless authorized by the principal. Source: CC Art. 2998
• A trustee by power of attorney may only delegate the performance of ministerial duties. A power of attorney given by a trustee to sell trust property should recite the price and terms of the sale. Boilerplate language that gives the agent discretion or allows him to perform any acts he deems appropriate should be deleted from a power of attorney by a trustee. Source: R.S. 9:2087

Construction Liens

• Liens under the Louisiana Private Works Act (R.S. 9:4801 et seq.) are effective from the date a notice of contract is filed in the case of recorded contracts or from the date work begins if there is no recorded contract.
• Where a lender intends to acquire a mortgage on property upon which improvements will be constructed, the usual practice is to obtain an affidavit from an engineer, surveyor, architect or building inspector that states he inspected the immovable at a specified time and that work had not yet commenced nor had building materials been delivered to the site. The affidavit must be recorded within four business days after its execution, and the lender’s mortgage must be filed before or within four business days of the filing of the affidavit. Absent fraud, the correctness of the facts recited in the affidavit may not be controverted if the affidavit and mortgage are filed in accordance with the time periods set forth above. Source: R.S. 9:4820C

Foreclosure Review

State Specific Guidelines for Insuring Louisiana Properties Acquired at Sheriff’s Foreclosure Sale - Executory Proceeding or Sale in Ordinary Proceeding Pursuant to Writ of Fifa

1. Check service of citation and petition on defendants in ordinary proceeding.
2. Review mortgage to confirm that service of demand for payment has been waived and that mortgage contains a confession of judgment required for executory process.
3. Confirm that notice of seizure has been served on defendants.
4. Confirm that property description matches in mortgage, petition for executory process or request for writ of fifa, notice of seizure, advertisements and sheriff’s deed.
5. Review note of evidence filed by attorney appointed to represent absent or deceased defendants to confirm notice sent to absentees or heirs of deceased defendant.
6. Review mortgage and conveyance certificates obtained by sheriff and confirm that proper Mennonite notice was sent to all holders of subordinate mortgages, judgments or liens.
7. If subordinate IRS liens attach to property, confirm that adequate notice was sent to IRS. If policy will be issued during 120 day redemption period, list the right of redemption as an exception in the commitment and policy.
8. If a subordinate mortgage or lien in favor of United States or one of its agencies other than IRS is recorded, include exception for right of redemption during 1 year period following sheriff’s sale.
9. Except to all mortgages, judgments and liens superior to the mortgage or judgment of the seizing creditor.
10. Confirm that foreclosing creditor obtained relief from automatic stay if debtor has filed a bankruptcy proceeding.

From Bulletin LA14-01

Instrument Requirements

All acts (Deeds & Mortgages) must contain the following:

• Full name of each party and not initials alone. (The full name should include at least one given name and other initials in addition to the surname of each party.)

• The marital status of each party. The terms “single, married, widow or widower” may be used in lieu of reciting a complete marital history.

• The maiden name and prior married names for female parties signing the act.

• The permanent mailing address of each party.

• Typed or printed names of witnesses and Notary Public under their signature lines.

• The notary identification number or state bar roll number of the Notary Public.

• A sale or mortgage of one to four family residential property insured by a title policy must contain:
  • the name, address and Louisiana license number of the title producer
  • the name of the title insurance underwriter, and
  • the name and bar roll number of the Louisiana attorney who provided the title opinion upon which the policy is based.
  • This information may be typed or printed on the document or included in an addendum or rider.

Source: R.S. 35:11, R.S. 35:12, R.S. 22:513.1

Mortgage/Deed of Trust Requirements

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.

Time Limitations

LA Time Limitations/Prescriptive Periods

Odd Stuff

1. Louisiana has not adopted the concept of a purchase money mortgage. It is necessary to run the names of all purchasers in the mortgage records to determine if there are any recorded judgments or liens against purchasers. A prior recorded judgment or lien against a purchaser will have priority over the mortgage in favor of the purchase money lender. Therefore, the title insurer or producer must obtain releases or subordinations for any liens or judgments against purchaser prior to closing or except to such judgments or liens in any title policy issued.
2. A title insurer or title producer is required by law to obtain a written title opinion from a Louisiana attorney prior to issuance of a tile policy. The length of the search depends on the type of transaction. If the transaction is a sale, the search must be 30 years or longer if necessary to reach an arm’s length transaction. If the transaction is a refinance, the minimum search period is the longer of 10 years or 2 links. This requirement is contained in the Louisiana Insurance Code and is enforced by the Louisiana Department of Insurance. Louisiana does not permit a title insurer or title producer to issue a policy based on only a prior policy.
3. A title producer after paying a mortgage or judgment is responsible to ensure that the inscription of the mortgage or lien is cancelled from the mortgage records.
4. 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.
5. Any requirement of Arbitration in an insurance policy is not enforceable in Louisiana

Updated 9/18/14 Stephen G. Sklamba