Louisiana Foreclosure Laws
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The State of Louisiana is usually referred to as a lien theory state in which the property is held as guarantee on the loan in question. A mortgage is the document through which lien in placed on the said property. The system of civil law that is customary in Europe is used as a basis for the law in Louisiana, unlike in the other parts of the country (U.S.A) where laws are based upon the system of the common English law.
A judicial foreclosure process through a court needs to be used by lenders in the State of Louisiana. The foreclosure’s final ruling is pronounced by a court. The two processes that are part of this foreclosure procedure are referred to as an ordinary process, where litigation is contested, and an executory process, where an existing confession of judgment is validated by the judicial procedure. A sale that has been publicly notified is then used to sell the property.
The legal paperwork is referred to as a mortgage or note, and when a commercial transaction is involved, it is referred to as a security agreement. At times, they are both merged. The filing of a mortgage is required to corroborate the loan in question along with its repayment terms, both of which find a mention in the note.
With the schedule of the court in view, it roughly takes 180 to 270 days for a foreclosure that is not contested to come into effect. However, if the borrower asks for the hearing to be postponed or adjourned by contesting the action, or if bankruptcy is filed for by the borrower, the process can be stalled. When the executory process is used to foreclose on a property, the borrower typically receives a notice three days after the default and the process generally takes place within six months. In case the loan isn’t made current, the property has to be advertised over a thirty day period, once every week, and can then be sold.
A Statutory right of redemption does not exist in Louisiana. Therefore, once a property has been foreclosed upon, the borrower can not lay claim to the property by paying the costs and the full payment on the loan in question.
A deficiency judgment can only be used if the ordinary process is followed, or if lawsuit is separately filed outside of the executory process; and the property would need to have been for lesser than the amount that the primary mortgaged secured, at the publicly advertised sale. This would result in the borrower having to pay the lender the balance between what original loan amount and what the property sells for at the auction.
Foreclosures in Louisiana are governed by laws that are part of the Louisiana Revised Statutes, Title 10:9-629.
