A real estate agent in Lake Charles is advising a buyer who is financing the purchase of a home. The buyer asks whether Louisiana lenders can include a clause in the mortgage allowing the lender to sell the property without going to court if the buyer defaults. What should the agent tell the buyer?
Correct Answer
B) No, Louisiana mortgages do not include power-of-sale clauses; foreclosure requires court action
Louisiana does not recognize power-of-sale clauses in mortgages on immovable property. Because Louisiana uses the Civil Code mortgage (not a deed of trust), there is no mechanism for a non-judicial trustee's sale. Any foreclosure on immovable property in Louisiana must proceed through the court system — most commonly through the executory process under La. Code Civ. Proc. Art. 2631 et seq., which, while expedited compared to an ordinary proceeding, still requires a court order before the property can be seized and sold.
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Related Topics & Key Terms
Key Terms:
Related Concepts
TILA is a federal law that requires lenders to disclose the true cost of credit to borrowers, including the annual percentage rate (APR), total finance charges, and loan terms. It is implemented by Regulation Z.
A trustee sale is a type of foreclosure where a trustee, appointed under a deed of trust, sells the property at auction to satisfy the debt.
Usury is the practice of charging an interest rate that exceeds the maximum rate permitted by state law. Usury laws protect borrowers from excessive interest charges on loans.
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