USA – LOUISIANA Law and Practice Contributed by: Jeffrey P. Good, Susan M. Tyler and B. Trevor Wilson, Jones Walker LLP
documents contain waivers of statutory proce - dural and other protections, with such provisions being drafted heavily in favour of the lender. A sophisticated borrower may be able to negoti - ate some protections – typically, limited notice of default and cure rights. To give lender’s security interest priority over other creditors, commercial lenders typically use pre-closing lien and litiga - tion searches and title insurance. Enforcing Security Rights In Louisiana, there are two methods to enforce security 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 judg - ment 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 bor - rower. A prerequisite to the executory process is that the mortgage is in proper form and contains a confession of judgment by the borrower/mort - gagor for the full amount of the indebtedness, including attorney’s fees. An additional prereq - uisite to the executory process is the produc - tion 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, where - upon the keeper will be appointed upon the filing of the foreclosure (the Louisiana equivalent of a
receiver) of the property. Otherwise, a contradic - tory 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 mort - gage contains the appropriate provisions for the appointment of a keeper pending the judicial sale of the collateral. Otherwise, an application 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 expiration of appeal delays in an ordinary pro - ceeding, or the entry of an order of seizure and sale in an executory proceeding, the sheriff of the parish will set a sale date for the property. The sheriff must advertise the sale of the prop - erty at least twice and, typically, an appraisal of the property is submitted by or on behalf of the borrower and the lender. The lender must be careful to give notice of the judicial sale to any parties holding an interest in the property that may be affected by the sale. At the sale, the property will not be sold if the highest bid does not exceed two thirds of the appraised value, and the sheriff must re- advertise for a second sale, at which time the mortgaged property will be sold for cash at any price. The judicial sale of the property is sub - ject to superior liens, encumbrances and leases; all inferior liens, encumbrances and leases are cancelled. In some cases, a lender may be enti - tled to pursue a deficiency judgment against the borrower if the sale proceeds do not satisfy the judgment. Louisiana does not provide redemp -
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