Louisiana Revised Statutes 13:4108.2 – Deficiency judgment when obligations based on consumer transaction
Terms Used In Louisiana Revised Statutes 13:4108.2
- Appraisal: A determination of property value.
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Mortgagee: The person to whom property is mortgaged and who has loaned the money.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
A. Notwithstanding any other law to the contrary, including but not limited to La. Rev. Stat. 13:4106 and 4107, if a mortgagee or other creditor holds a mortgage, pledge, security interest, or privilege which secures an obligation in a consumer transaction, the mortgagee or other creditor may obtain a deficiency judgment on the secured obligation against the debtor for the amount of the secured obligation less the reasonably equivalent value of property acquired from the debtor without appraisal or any other legal proceeding concerning such property acquired, only if the mortgagee or other creditor has acquired such property from the debtor pursuant to a written agreement with the debtor to waive the debtor’s rights to a judicial appraisal and sale and to voluntarily surrender title to the property to the creditor. The debtor must agree to the value to be attributed to the property transferred and must agree that a deficiency judgment for the amount of the secured obligations minus such value may be obtained by the mortgagee or creditor without appraisal of or any other legal proceeding concerning the property transferred. The debtor may obtain an appraisal for the purpose of determining the value of the property and if he does so the value assigned to the property may not be less than three-fourths of the appraised value.
B. For the purposes of this Section, the following terms shall have the following meanings:
(1) “Consumer transaction” means any transaction entered into for personal, family, or household (noncommercial) purposes and particularly includes transactions that are secured by residential immovable property, but excluding secured transactions for consumer purposes that are subject to Chapter 9 of the Louisiana Commercial Laws.
(2) “Reasonably equivalent value” means the value which the owner and the mortgagee or other creditor expressly agree to attribute to the property transferred, as provided in Subsection A of this Section.
C. This Section shall not be construed as prohibiting a debtor from selling his property to a third party purchaser and signing a promissory note to a mortgagee or other creditor for all or part of the balance due on the secured debt.
D. Every agreement for a voluntary surrender of title to property in connection with a consumer transaction as defined above shall contain a statement which notifies the debtor in laymen’s terms:
(1)(a) That he has a right to obtain an appraisal, and
(b) That the value of the property assigned has to be three-quarters of the appraised value, and
(2)(a) That by agreeing to the surrender of the property without judicial appraisal and sale, the debtor is waiving any rights he might have under the law to further judicial proceedings governing the judicial sale of his property,
(b) That he is waiving his right to a judicial appraisal and sale, and
(c) That the creditor may obtain a judgment to collect any remaining amount due under the obligation after subtracting the agreed upon value of the property.
Acts 1988, No. 675, §1, eff. July 15, 1988; Acts 1989, No. 137, §8, eff. Sept. 1, 1989.