Lagniappe Living in Lake Charles, Louisiana: You Can't Close on your Home With a Title Issue: Watch for New Louisiana Title Law in 2012

You Can't Close on your Home With a Title Issue: Watch for New Louisiana Title Law in 2012

 

You have probably heard the word "title" before in a real estate transaction. 

 When a Buyer makes an offer on a Lake Charles Home for Sale and the Seller agrees and signs the written contract, both parties have an accepted contract and  the Lake Charles Home goes "under contract".

The Lender begins working on the Buyer's loan and part of the process that the bank requires is called "review of title".  Usually the lender or the REALTOR delivers a copy of the contract and/or property Abstract to the Title Company where the closing will take place.  The lender will contact the title company with a request to "open title" on the Lake Charles Home the Buyer is purchasing.

A real estate attorney will review what is known as the "chain of title" to make sure the title is clear of liens, judgments, or other issues.  Buyers want to make sure they are receiving a "clear title" from the Seller.

During review of title to a Lake Charles Home, the real estate attorney may discover a title issue.  Perhaps the property conveyed to the current owner  as an heir but a succession was never done and the deed was not recorded correctly.

Sometimes the Buyer or Seller will prefer to use their own Attorney or an Attorney friend. Nothing against attorneys but not all of them practice real estate law on a daily basis and Louisiana real estate law is different from other states.

Louisiana is now known for having one of the more complex and difficult to understand state civil codes in the US.  

In contrast, to other US states who follow the traditional British “common law” system which is based on laws derived from judge-made decisions Louisiana follows Napoleonic law.

One of the main reasons that Napoleon implemented a unique civil code was that it was supposed to be simple enough for anyone to understand – especially the people of his time who lacked formal education  While the difference between common law vs Napoleon law is not always easy to explain, it can have very serious implications for people, businesses or other entities who own real estate in Louisiana.

 
Understanding Real Estate Law

 

Real estate is a legal term that includes your land (i.e., a lot) along with anything that is built on and upon your land (i.e., a home, a building). Real estate law is the body of law and rules (including zoning laws and restrictive covenants) regulating your title, ownership and use of real estate.

 

While most individuals use the term real estate, this is a term of art used in common law states. Louisiana is a civil law state, and the proper legal term for real estate is immovable property.

 

In addition to this difference, there are many other differences in laws and concepts between the other states and Louisiana. These include:

 

  • Settlement of property ownership disputes
  • Property usage and access contests
  • Zoning issues
  • Property settlement and divorce
  • Successions and inheritance
  • Usage (or usufruct) of property

 

I recently had a title issue discovered on a Lake Charles Home my Buyer is purchasing.  The previous transaction  (which was closed with a local bank) had a problem because the Notary who notarized the heir documents also witnessed the documents and that is a big no-no!  Now this has to be fixed.  This has held up the  transaction from closing on time .  Instead of doing an extension, the Seller wanted to use the time frame in the contract allowed to clear up title issues.

 

The Louisiana Agreement to Buy or Sell contains a clause addressing merchantible title allowing a certain length of time to clear up title issues should any be found when reviewing the title to the property.

 

Louisiana Contract Title Clause

 

Lake Charles, LA has a few Title Companies that close transactions without an "in house" attorney.   If a problem is discovered, the Title Company has to send the file to the attorney of record to review.  Sometimes the real estate attorney is in New Orleans or Shreveport, LA.  It is much easier to deal with a problem at the time it is discovered.  I prefer to close with a Title Company that has a real estate attorney present.  What if there are issues or disputes that arise in the closing?  If there are questions I would rather have the real estate attorney step in and explain.


A new  Louisiana law will go into effect January 2012  which will  require the real estate attorney reviewing title to put their stamp on each page of the title document.  This will document who has reviewed title and if there is a problem in the future, it can be traced back to the attorney who performed the title search.

I think this is an excellent idea, and will prevent errors and hopefully prevent delays in closing due to title issues.  Some Title Companies that have been careless could be held accountable in the future.

You always get what you pay for ....Sure we all want to save our clients money but I don't recommend cutting corners on your Lake Charles Home Purchase  with  discount title   or attorney fees!

 

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Comment balloon 7 commentsMarilyn Boudreaux • August 06 2011 02:18AM

Comments

I am glad we have a simple system here in CA.  We have escrows and there is not meeting at a closing table.

Posted by Elite Home Sales Team, A Tenacious and Skilled Real Estate Team (Elite Home Sales Team OC) almost 8 years ago

title seems to be a frequently misunderstood process. Today, there are so many issues that "cloud" title and many of them are misunderstood.

Posted by Paddy Deighan JD PhD, Paddy Deighan J.D. Ph.D (TimeshareLawyers.pro) almost 8 years ago

Good stuff Marilyn. Enjoyed learning about Napoleanic law. I did not realize this fact about Louisiana.

Cal

Posted by Cal Yoder, Homes For Sale in Lancaster PA - 717.413.0744 (Keller Williams Elite) almost 8 years ago

Good morning Marilyn,

Great post on a very relevant topic when purchasing a home. Not surprised about the new law coming into effect. They want the buck to stop somewhere :).

Posted by Dorie Dillard CRS GRI ABR, Serving Buyers & Sellers in NW Austin Real Estate (Coldwell Banker United Realtors® ~ 512.750.6899) almost 8 years ago

For once Louisiana Legislation that makes sense!

Posted by Doug Rogers, Your Alexandria Louisiana Agent (Bayou Properties) almost 8 years ago

I will second what Doug said - at last some legislation that makes sense!  Thanks for sharing some important news coming up in 2012.  In a "prior life" I was a paralegal for 18 years for an attorney where we did 95% of the real estate closings in that town.  That has served me well on the "mortgage" side of the desk!  Thanks for the post!

Posted by Louise Thaxton NMLS 69996, Military Mtg Specialist - 866-960-9115 VA FHA USDA (Fairway Independent Mortgage Corp Louisiana NMLS#2289 Equal Housing Lender) almost 8 years ago

I am glad to see the new law going into effect requiring the reviewing attorney to put their stamp on the title!

Posted by Marilyn Boudreaux, Lake Charles LA Century 21 Realtor (Marilyn Boudreaux, Century 21 Mike D. Bono & Co.'s) almost 8 years ago

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