Louisiana Passes Act Allowing Cancellation or Partial Release of Inferior Privileges, Liens, and Mortgages

On May 23, 2018, Louisiana Governor John Bel Edwards signed into law Act No. 452—a piece of legislation which: (1) amends Code of Civil Procedure Article 2376 to provide for the partial release of inferior privileges, liens, and mortgages on property sold at a sheriff’s sale; and (2) enacts Revised Statute Title 13, Section 4368, a new section which outlines the process for the cancellation or partial release of inferior privileges, liens, and mortgages following a judicial sale.  Act No. 452 becomes effective on August 1, 2018.

Previously, Code of Civil Procedure Article 2376 allowed for the complete release of inferior mortgages only.  Act No. 452 amends Article 2376 to permit partial releases and provide for the release of liens and privileges, as well.

The newly-minted Revised Statute Title 13, Section 4368 outlines the procedures for cancelling or partially releasing the aforementioned inferior privileges, liens, and mortgages.  It provides that if the inscription of an inferior mortgage, lien, or privilege on property sold through a judicial sale is not cancelled as required by Code of Civil Procedure Article 2376, the seizing creditor or its attorney of record may have the instrument “cancelled or partially released” by recording it in the mortgage records of the parish.

The new section also:

• Carefully details what information must be included in the affidavit that must be filed in order to cancel or partially release the inferior mortgage, lien, or privilege in accordance with this Section;
• Defines the term “inferior creditor;”
• Explains the duties, effect, and liability for the filing of an affidavit; and
• Articulates exceptions, such as one for those mortgages, liens, or privileges which are superior to the seizing creditor’s foreclosed mortgage, lien, or privilege.

The full text of Act No. 452 is accessible here.