USA – LOUISIANA Law and Practice Contributed by: Jeffrey P. Good, Susan M. Tyler and B. Trevor Wilson, Jones Walker LLP
3.9 Effects of a Borrower Becoming Insolvent The filing of a petition by or against a borrower in federal bankruptcy court effects an automatic stay (hold) of the foreclosure proceedings and makes enforcement of the mortgage and the sale of the property more difficult. It is not unu - sual for a borrower to file a bankruptcy on the date of the sheriff’s sale in a foreclosure, which delays the sale through the imposition of the automatic stay. If the sale has already occurred, the borrower is no longer the owner of the prop - erty, unless the purchaser at the foreclosure sale fails to pay the purchase price on time, in which case the borrower has no right of redemption. Security interests created within the 90-day peri - od (or one year for insiders) prior to a bankruptcy filing may be subject to avoidance as preferen - tial transfers if they secure previously unsecured debt. Security interests may also be challenged as fraudulent transfers if the debtor received less than reasonably equivalent value and was insol - vent at the time of the transfer. 3.10 Taxes on Loans There are no existing, pending or proposed rules, regulations or requirements that lenders or borrowers pay any recording or similar taxes in connection with mezzanine loans related to real estate. 4. Planning and Zoning 4.1 Legislative and Governmental Controls Applicable to Strategic Planning and Zoning Zoning ordinances in Louisiana may be enacted at both the municipal and parish levels, and can restrict owners’ enjoyment of real estate, typi - cally by providing limitations on permissive uses
tion rights to the borrower once the property has been sold at a foreclosure sale. 3.7 Subordinating Existing Debt to Newly Created Debt Typically, the filing of the mortgage or the financ - ing statement in the appropriate registry will establish the priority of that security interest against other competing security interests. In some cases, a lender may elect to voluntarily subordinate its mortgage or security interest to a newly created mortgage or security instrument through a subordination agreement. There are some circumstances in which new debt or liens may prime existing debt, including purchase money security interests, and priority treatment may be established for certain classes of lien claimants under the Louisiana Private Works Act. 3.8 Lenders’ Liability Under Environmental Laws Federal law exempts a lender who acquires title to property pursuant to a foreclosure sale or by dation en paiement (deed in lieu of foreclosure) from liability for clean-up costs due to contami - nation of the property, provided that the lender does not – before or after acquisition of the title – participate in the management of the property such that the lender exercises decision-making control over environmental compliance, or com - parable to a manager of the property. Louisiana law provides that it is the intent of the legisla - ture that secured lenders will have no greater exposure to environmental liability and financial responsibility under state law than they would under federal law. To minimise environmental liability risk, lenders typically require environmental assessments before loan origination and incorporate specific covenants in loan documents regarding environ - mental matters.
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