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Louisiana real estate law:
The real estate closing in Louisiana

The closing generally refers to the formal execution of the transfer of the property, whether a mortgage loan is involved or not. The sale, in order to be valid, must be by authentic act. That is, the buyer and the seller must both sign the sale in front of two witnesses and a notary public. The mortgage, if one is involved, must also be by authentic act. A sale or mortgage can be authenticated after the closing if one of the witnesses goes before a notary public and two witnesses and swears that he was one of the original witnesses to the sale or mortgage.
 

Authentic Acts

The authentic act in Louisiana is extremely important. In general, any document that grants any property right must be in authentic act form. That is, it must be signed in front of a notary public and two witnesses. Any failure to comply with the format of an authentic act can make the entire document worthless. In other words, a mortgage signed in front of a notary and one witness would be invalid.
 

Related Topics

The typical closing in Louisiana is held at the office of the notary public who has prepared the closing documents. The notary public is usually an attorney who has some experience in examining titles. By custom, and usually by the terms of the purchase agreement, the buyer chooses the notary and is responsible for his fees. However, the lending institution has the last word in approving the notary because it wants an attorney who is familiar with its procedures and will render a title opinion that it can rely on. Most lending institutions have a list of approved attorneys that you can choose from. Some lending institutions, particularly savings and loan associations, require that you use its attorney at your expense.


 

The fees charged by the closing attorney vary, but might typically start at $120 for the document preparation and as low as $350 for a title opinion. These fees can vary greatly, especially if you are required to use a particular attorney.

Closing Costs

Unless the purchase agreement states otherwise, the buyer is usually responsible for closing costs such as origination fees, discount points, credit report, appraisal, survey, attorneys fees, and recording costs. Veteran's Administration loans, however, will restrict the charges paid by the veteran buyer.

The seller is usually responsible for the real estate commission, termite and any other type of certificate, and any costs involved in satisfying mortgages that he has on the property. If there is a first mortgage to be placed on the property, the seller and buyer must be provided with a settlement statement before the sale and mortgage are signed. Copies of the settlement< statement, if you make a request, must be provided to you as much as two days before the closing.

The closing attorney usually collects the deposit, if one was made, and a check from the buyer. The attorney then makes all of the disbursement checks from his trust or escrow account. Most attorneys will accept your personal check, but some attorneys and many title companies will require that you bring certified funds to the closing.

Transfer and Recording

The transfer of the property and the mortgage are complete as of the moment the documents are signed, witnessed, and notarized. The notary then has the responsibility for recording the sale and mortgage and for making sure that he has retained enough of the proceeds of the sale to pay off any of the seller's mortgages. The sale and mortgage are not effective as to third parties until they are recorded. This means that the public can rely on the mortgage and conveyance records of the clerk of court in the parish in which the property is located for information on ownership and mortgages. Theoretically, if the seller went immediately from your closing and sold the same property to someone else, the second buyer would own the property if he recorded his sale before you recorded yours. Your only recourse would be to sue the seller for fraud and try to recover the sales price.

 Documents that must be by authentic act can be authenticated after the fact by having the parties acknowledge the instrument in front of a notary and two witnesses or by the authentication by one of the witnesses. This can become a real problem if any of the parties cannot be found to perform the authentication.

There are other documents that Louisiana requires be in authentic act form. Trusts, for example, must be by authentic act. A trust that is merely notarized or merely witnessed would be null.