USA – LOUISIANA Law and Practice Contributed by: Jeffrey P. Good, Susan M. Tyler, B. Trevor Wilson and Parker Hufft, Jones Walker LLP
Enforcement of Restrictions on Development and Designated Use The municipal or parish governing body may enforce zoning ordinances by injunction. In addition, neigh - bouring property owners may seek an injunction to enforce a zoning ordinance. In practice, the enforce - ment of zoning ordinances is handled during the per - mit process. As a general rule, an action to enforce a zoning restric - tion, building restriction or subdivision regulation must be brought within five years, although there are excep - tions, such as for properties in the French Quarter. Enforcement typically begins with a notice of viola - tion from the local code enforcement department, fol - lowed by administrative hearings and potential fines for non-compliance. For continuing violations, local authorities may issue stop-work orders, revoke per - mits, place liens on property or seek court orders to enforce compliance. Neighbouring property owners and community organ - isations may have standing to bring private actions to enforce zoning restrictions if they can demonstrate particularised harm from the violation. Some juris - dictions have established specialised administrative hearing procedures to address code violations more efficiently than through traditional court proceedings. 5. Investment Vehicles 5.1 Types of Entities Available to Investors to Hold Real Estate Assets Real estate assets may be owned by state-law cor - porations, partnerships, trusts or LLCs. An LLC is the most common type of entity used to hold real estate. For commercial properties, the single-member or mul - ti-member LLC structure dominates the market due to its liability protection and tax advantages. Limited partnerships with corporate or LLC general partners are also used, particularly for projects involving mul - tiple investors or institutional capital. S corporations are less common but may be utilised in certain cir - cumstances, particularly for operating businesses that own their real estate.
Special purpose entities (SPEs) or bankruptcy-remote entities are frequently required by lenders for signifi - cant commercial properties to isolate the asset from other liabilities and simplify the foreclosure process if necessary. 5.2 Main Features and Tax Implications of the Constitution of Each Type of Entity From a US income tax perspective, LLCs generally provide the most flexibility to mitigate federal and state income taxes. LLCs offer pass-through taxation (avoiding dou - ble taxation of corporate structures), limited liability protection for all members, management flexibility (member-managed or manager-managed) and mini - mal corporate formalities. They can be structured as disregarded entities, partnerships or corporations for federal tax purposes, providing significant planning opportunities. Limited partnerships offer similar tax benefits but require at least one general partner. C corporations face double taxation but may be advantageous for foreign investors seeking to minimise exposure for FIRPTA, branch profits taxes and US income taxation of the equity holder’s non-US operations. 5.3 REITs REITs are available in Louisiana. REITs must satisfy specific requirements under federal tax law. Sever - al Louisiana-focused REITs have emerged in recent years, particularly in the healthcare, multifamily and industrial sectors. 5.4 Minimum Capital Requirement There is no minimum capital requirement under Louisi - ana law for entities used to invest in real estate. How - ever, adequate capitalisation is advisable from both a business and legal perspective to maintain the limited liability protection offered by corporate structures. 5.5 Applicable Governance Requirements There are no special governance requirements for real estate investment entities; the general rules of govern - ance for the various types of entities apply. However, certain best practices have evolved, particularly for entities holding significant real estate assets.
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