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)

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.

Mortgage/Transfer Tax

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.

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 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.” the owner of a homestead must waive this second “homestead exemption” in the mortgage. Most LA forms contain such a waiver in boilerplate language.

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

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

• US Judgment Liens -- 20 years
• State Court Judgment Liens -- 10 years
• Federal Tax Liens -- 10 years (+ 30 days)
• State Tax Liens -- 10 years
• Estate Tax Lien -- 10 years
• State Inheritance Tax Liens --
• Mechanics Liens -- 1 year
• Financing Statements -- 5 years
• Mortgages --
• HOA Liens --
• Condominium assessments --
• Child Support Liens --

Odd Stuff

• 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.

• No Purchase Money Mortgage Protection for real property. Must search buyer for possible judgments.
• Any requirement of Arbitration in an insurance policy is not enforceable in Louisiana