USA – LOUISIANA Law and Practice Contributed by: Jeffrey P. Good, Susan M. Tyler, B. Trevor Wilson and Parker Hufft, Jones Walker LLP
Enforcing Security Rights In Louisiana, there are two methods to enforce secu - rity rights. Ordinary process with pre-judgment sequestration To enforce a mortgage by ordinary process, the lender files a petition in the district court where the property is situated, seeking a personal judgment against the borrower with recognition of the mortgage. Executory process In an executory process, the property can be seized and sold through an ex parte proceeding without a personal judgment against the borrower. A prerequi - site to the executory process is that the mortgage is in proper form and contains a confession of judgment by the borrower/mortgagor for the full amount of the indebtedness, including attorney’s fees. An additional prerequisite to the executory process is the production of original or certified copies of evidence of authority of the signatory to act on behalf of the entity, typically by means of a resolution of the board of directors or by a certificate of authority. Designating a keeper Under either scenario, the parties to a mortgage may designate a keeper in the mortgage, whereupon the keeper will be appointed upon the filing of the fore - closure (the Louisiana equivalent of a receiver) of the property. Otherwise, a contradictory hearing is required, which may delay the keeper’s appointment considerably. The keeper may be the seizing creditor or its agent, and the parties must also specify in the mortgage the method by which a keeper is to be selected. A keeper will be appointed in the order, without the requirement of a bond, if the mortgage contains the appropriate provisions for the appointment of a keeper pending the judicial sale of the collateral. Otherwise, an appli - cation must be filed with the court for the appointment of a keeper, and a bond will be required in an amount determined by the court. Sale Following the entry of a final judgment and the expira - tion of appeal delays in an ordinary proceeding, or the entry of an order of seizure and sale in an executory
pages, mortgage taxes, transfer taxes and documen - tary transaction taxes are not imposed in Louisiana, except in Orleans Parish (see 2.10 Taxes Applicable to a Transaction ). Current recording fees generally range from USD100 to USD300 for mortgage documents, depending on the parish and document length. In Orleans Parish, the documentary transaction tax applies to both sales and mortgages at a rate of USD325 minimum to USD2,525 maximum. 3.5 Legal Requirements Before an Entity Can Give Valid Security To give valid security, an entity must comply with its own internal organisational documents and all require - ments of its state of organisation. If a foreign entity intends to conduct business in Louisiana, it will have to qualify with the Louisiana Secretary of State. In acquisition or financing transactions, a seller and borrower will also have to demonstrate that the entity has authorised the transaction and the signatory to act on behalf of the entity in the transaction. Typically, this is accomplished by means of a resolution of the board of directors for a corporation, or by a written consent or certificate of authority for an LLC. For corporate borrowers, lenders typically require copies of articles of incorporation, by-laws and resolutions authorising the transaction. For LLCs, articles of organisation, operating agreements and certificates of authority or written consents are reviewed. 3.6 Formalities When a Borrower Is in Default Although borrowers are granted certain statutory protections in the event of a mortgage default, most commercial mortgages and loan documents contain waivers of statutory procedural and other protections, with such provisions being drafted heavily in favour of the lender. A sophisticated borrower may be able to negotiate some protections – typically, limited notice of default and cure rights. To give lender’s security interest priority over other creditors, commercial lend - ers typically use pre-closing lien and litigation search - es and title insurance.
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