Louisiana Contract for Deed Law


Contract for Deed – General – Louisiana

Louisiana State Statutes

TITLE 9. CIVIL CODE ANCILLARIES
CODE BOOK III – OF THE DIFFERENT MODES OF ACQUIRING THE OWNERSHIP OF THINGS
CODE TITLE VII. OF SALE
CHAPTER 2. CONVENTIONAL SALES
PART I. BOND FOR DEED CONTRACTS

9:2941. “Bond for deed” defined

A bond for deed is a contract to sell real property, in which the purchase price is to be paid by the buyer to the seller in installments and in which the seller after payment of a stipulated sum agrees to deliver title to the buyer.

TITLE 9. CIVIL CODE ANCILLARIES
CODE BOOK III – OF THE DIFFERENT MODES OF ACQUIRING THE OWNERSHIP OF THINGS
CODE TITLE VII. OF SALE
CHAPTER 2. CONVENTIONAL SALES
PART I. BOND FOR DEED CONTRACTS

9:2942. Unlawful to sell encumbered real property by bond for deed without guarantee to release on payment

It shall be unlawful to sell by bond for deed contract, any real property which is encumbered by mortgage or privilege without first obtaining a written guarantee from the mortgage and privilege holders to release the property upon payment by the buyer of a stipulated mortgage release price, with which agreement the secured notes shall be identified. The agreement shall be recorded in the mortgage records of the parish where the property is situated before any part of the property is offered for sale under bond for deed contracts. The provisions of this Part likewise shall apply to any property offered for sale by bond for deed contract which may be subsequently mortgaged or encumbered by a privilege.

TITLE 9. CIVIL CODE ANCILLARIES
CODE BOOK III – OF THE DIFFERENT MODES OF ACQUIRING THE OWNERSHIP OF THINGS
CODE TITLE VII. OF SALE
CHAPTER 2. CONVENTIONAL SALES
PART I. BOND FOR DEED CONTRACTS

9:2943. Method of payment

All payments by the buyers under bond for deed contracts of property then or thereafter burdened with a mortgage or privilege, shall be made to some bank authorized to do business in this state, which shall have been designated as the escrow agent for all parties interested in the contract. The payments shall be distributed by the escrow agent between the seller and the holder of the mortgage or privilege, in such proportion as the secured obligation shall bear to the purchase price in order to insure the buyer an unencumbered title when all payments have been made as provided in the bond for deed contract.

TITLE 9. CIVIL CODE ANCILLARIES
CODE BOOK III – OF THE DIFFERENT MODES OF ACQUIRING THE OWNERSHIP OF THINGS
CODE TITLE VII. OF SALE
CHAPTER 2. CONVENTIONAL SALES
PART I. BOND FOR DEED CONTRACTS

9:2944. Timely payment of installments precludes foreclosure; change of description upon foreclosure

The payment as they fall due of all installments by buyers under bond for deed contracts, shall preclude the holder of any secured notes from foreclosure, but the failure of the buyers to make payments as they fall due, shall secure to the holder of the notes the right to foreclose when the notes become due and are unpaid. In the event of a foreclosure under such circumstances, the description as contained in the act of mortgage may be changed so as to leave unaffected those lots or tracts of land on which payments have been kept up and so as to affect and adjudicate under the foreclosure only such lots as may be in default of payments and other lots not sold under bond for deed contracts.

TITLE 9. CIVIL CODE ANCILLARIES
CODE BOOK III – OF THE DIFFERENT MODES OF ACQUIRING THE OWNERSHIP OF THINGS
CODE TITLE VII. OF SALE
CHAPTER 2. CONVENTIONAL SALES
PART I. BOND FOR DEED CONTRACTS

9:2945. Cancellation of bond for deed upon default

A. If the buyer under a bond for deed contract shall fail to make the payments in accordance with its terms and conditions, the seller, at his option, may have the bond for deed cancelled by proper registry in the conveyance records, provided he has first caused the escrow agent to serve notice upon the buyer, by registered or certified mail, return receipt requested, at his last known address, that unless payment is made as provided in the bond for deed within forty-five days from the mailing date of the notice, the bond for deed shall be cancelled.

B. Where there is no mortgage or privilege existing upon the property, and the buyer shall be in default, the seller shall exercise the right of cancellation in the same manner.

C. The fee of the clerk of court for the registry of the cancellation shall not exceed the legal rate per hundred words fixed for conveyance registries.[fn1]

[fn1] As appears in enrolled bill.

TITLE 9. CIVIL CODE ANCILLARIES
CODE BOOK III – OF THE DIFFERENT MODES OF ACQUIRING THE OWNERSHIP OF THINGS
CODE TITLE VII. OF SALE
CHAPTER 2. CONVENTIONAL SALES
PART I. BOND FOR DEED CONTRACTS

9:2946. Unlawful to require mortgage notes when property encumbered; act of sale

It shall be unlawful for any seller in a bond for deed contract to require promissory notes to represent the purchase price or any portion thereof, if the property should be encumbered with a mortgage or privilege. Upon the payment to the escrow agent of the sum necessary to release the property, the seller shall execute a deed to the buyer and may then exact one or more mortgage notes to represent any portion of the unpaid purchase price. Should the property not be encumbered with a mortgage or privilege, and a note has been executed to represent all or a part of the price under the bond for deed contract, when the buyer shall become entitled to demand a deed, the seller shall execute an authentic sale and the notary passing it shall require the production of the note or notes and shall cancel them at the time of passing the sale.

TITLE 9. CIVIL CODE ANCILLARIES
CODE BOOK III – OF THE DIFFERENT MODES OF ACQUIRING THE OWNERSHIP OF THINGS
CODE TITLE VII. OF SALE
CHAPTER 2. CONVENTIONAL SALES
PART I. BOND FOR DEED CONTRACTS

9:2947. Penalty for violations

Any person who sells by bond for deed contract any real property encumbered by mortgage or privilege without first obtaining and recording the guarantee required by R.S. 9:2942, shall be fined not more than one thousand dollars, or imprisoned for not more than six months, or both.

Any seller in a bond for deed contract of property encumbered with a mortgage or privilege, who requires promissory notes to represent the purchase price or any portion thereof, shall be fined not more than one thousand dollars, or imprisoned for not more than six months, or both.

TITLE 9. CIVIL CODE ANCILLARIES
CODE BOOK III – OF THE DIFFERENT MODES OF ACQUIRING THE OWNERSHIP OF THINGS
CODE TITLE VII. OF SALE
CHAPTER 2. CONVENTIONAL SALES
PART I. BOND FOR DEED CONTRACTS

9:2948. Bond for deed buyer deemed owner for purposes of homestead exemption

Notwithstanding any other provisions of law to the contrary, the buyer under a bond for deed contract shall be deemed, for purposes of the homestead exemption only, to own any immovable property he has purchased and is occupying under bond for deed, and may be eligible for the homestead exemption provided in Article VII, Section 20(A) of the Constitution of Louisiana if otherwise qualified. The buyer under a bond for deed contract shall apply for the homestead exemption each year.

Louisiana Case Law

Where a contract for the purchase of land provided that the seller had the option to demand specific performance or to cancel the agreement and retain all installment payments as earnest upon default in the payment of four monthly installments, the contract was a bond for deed and not an agreement of sale, irrespective of what label the parties gave the agreement. Leinhardt v. Marrero Land & Improvement Ass’n, 137 So. 2d 387, 1962 La. App. LEXIS 1547 (La.App. 4 Cir. 1962).

Under La. Rev. Stat. Ann. ยง 9:2941 a bond for deed is a contract to sell real property, in which the purchase price is to be paid by the buyer to the seller in installments and in which the seller after payment of a stipulated sum agrees to deliver title to the buyer; mortgage company was enjoined from seizing and selling property because buyer, on bond for deed contract, had not yet become the true owner. St. Landry Loan Co. v. Etienne, 227 So. 2d 599, 1969 La. App. LEXIS 5559 (La.App. 3 Cir. 1969).