Key Takeaways
- Property transfers in Louisiana use an "Act of Sale" (deed) which must be executed before a notary
- Louisiana is the ONLY state requiring a notary for the final act of sale (closing)
- Valid contracts require consent, capacity, lawful object, and lawful cause (NOT "consideration")
- Louisiana uses unique terms: "lesion beyond moiety" protects sellers from grossly inadequate prices
- Real estate is called "immovable property" under Louisiana civil law
Louisiana Contract Requirements
Louisiana real estate contracts are governed by civil law principles, which differ from the common law used in other states.
Civil Law vs. Common Law Contracts
| Aspect | Louisiana (Civil Law) | Other States (Common Law) |
|---|---|---|
| Legal basis | Louisiana Civil Code | Statute of Frauds |
| Writing requirement | Required for immovables | Required for real property |
| Term for real property | "Immovable property" | "Real property" |
| Consideration | "Cause" | "Consideration" |
Key Point: Louisiana calls real property "immovable property" in its civil code.
Essential Elements of Valid Contracts
Under Louisiana Civil Code, a valid contract requires:
| Element | Description |
|---|---|
| Consent | Genuine agreement of the parties |
| Capacity | Legal ability to contract |
| Lawful object | Legal subject matter (property) |
| Lawful cause | Legal reason for contract |
Consent
Consent must be:
- Free - Not obtained by fraud, duress, or error
- Informed - Parties understand the agreement
- Mutual - Meeting of the minds
Capacity
Parties must have legal capacity:
| Can Contract | Cannot Contract (Generally) |
|---|---|
| Adults 18+ | Minors under 18 |
| Competent persons | Mentally incapacitated |
| Authorized agents | Unauthorized persons |
Lesion Beyond Moiety
Lesion beyond moiety is a unique Louisiana doctrine that protects sellers:
| Element | Description |
|---|---|
| Definition | Seller received less than half the property's value |
| Remedy | Seller may rescind sale |
| Time limit | 1 year from date of sale |
| Buyer option | Buyer may pay difference to keep property |
Example: If a property is worth $200,000 but sold for $90,000, the seller may have grounds to rescind under lesion beyond moiety.
The Act of Sale
In Louisiana, property transfers use an Act of Sale (equivalent to a deed in other states):
Key Requirements
| Requirement | Description |
|---|---|
| Written document | Must be in writing |
| Notary required | Must be executed before a notary public |
| Two witnesses | In addition to the notary |
| Seller signature | Seller must sign |
| Description | Legal description of immovable property |
CRITICAL: Louisiana is the ONLY state that requires a notary for the final act of sale. The notary prepares and executes the closing documents.
Notary Role in Louisiana
Unlike other states where closings may be handled by attorneys or title companies alone, Louisiana requires:
| Louisiana Practice | Other States |
|---|---|
| Notary executes Act of Sale | Attorney or title company closes |
| Notary verifies identities | Varies by state |
| Two witnesses required | May not require witnesses |
| Notary retains original | Recording office holds original |
Types of Acts of Sale
| Type | Description |
|---|---|
| Cash sale | Buyer pays full price at closing |
| Credit sale | Part of price financed (mortgage) |
| Sale with assumption | Buyer assumes existing mortgage |
| Exchange | Trading properties |
Standard Contract Forms
Louisiana real estate professionals typically use:
| Form | Use |
|---|---|
| Louisiana Residential Agreement to Buy or Sell | Standard purchase agreement |
| Act of Sale | Final transfer document |
| Commercial Purchase Agreement | Business property transactions |
| Lease Agreement | Rental property |
| Exclusive Right to Sell Listing | Seller representation |
Note: The Louisiana Realtors Association provides standardized forms used by most licensees.
Earnest Money (Deposit)
Earnest money shows the buyer's serious intent:
Handling Requirements
| Requirement | Details |
|---|---|
| Deposit timeline | Within 24-48 hours of acceptance |
| Where deposited | Broker's trust account |
| Who holds | Broker (not salesperson) |
| Disbursement | Per contract terms or mutual agreement |
If Transaction Fails
| Situation | Earnest Money |
|---|---|
| Buyer default | May be forfeited to seller |
| Seller default | Returned to buyer |
| Contingency not met | Returned to buyer |
| Mutual cancellation | Per mutual agreement |
Common Contract Contingencies
| Contingency | Purpose |
|---|---|
| Financing | Buyer can cancel if loan not approved |
| Inspection | Buyer can negotiate repairs or cancel |
| Appraisal | Protection if property appraises low |
| Sale of buyer's home | Buyer must sell current home |
Termination of Contracts
Contracts may be terminated by:
| Method | Description |
|---|---|
| Performance | Both parties fulfill obligations |
| Mutual consent | Both parties agree to cancel |
| Contingency failure | Condition in contract not met |
| Rescission | Legal action to cancel (e.g., fraud) |
| Dissolution | Court-ordered termination |
Under Louisiana law, what is "lesion beyond moiety"?
In Louisiana civil law, what is the equivalent of "consideration" in common law?
What makes Louisiana unique regarding real estate closings?
In Louisiana, what is the "Act of Sale"?