The 2016 Louisiana Legislative Session, which began on March 14, 2016 and closed on June 6, 2016, resulted in the House filing 1,167 bills and the Senate filing 477. We have reviewed the legislation to see which bills will affect our clients and their business. Following are the highlights of the legislation that was passed and will become law.
Partial Cancellation of the Inscription of a Judgment by a Judgment Debtor
HB 174 – Act 88 amends La. R.S. 9:5175( C ), which provides that a judgment debtor may obtain a partial cancellation of the inscription of a judgment as it affects property acquired after the judgment debtor was discharged in Bankruptcy. The law as it is currently drafted only applies to a Chapter 7 Bankruptcy. Act 88 will make the law applicable to a Chapter 13 Bankruptcy as well. Effective 8/1/16.
Upshot: Under the Act, Judgment Debtors who filed for bankruptcy under Chapter 13 are permitted to obtain a partial cancellation of the inscription of a judgment as it affects property acquired after the bankruptcy discharge.
Continuation of Juridical Personality for the Purpose of Disposing of Immovable Property
HB 289 – Act 89 amends La. R.S. 12:1-1443(B) of the Business Corporation Act. The statute currently provides that a terminated corporation’s juridical personality ends except for the following purposes:
1. Reserving the corporation’s name as provided in R.S. 12:1-402( C ).
2. Concluding any proceeding to which the corporation is a party at the time of the termination.
3. Continuing to own any undistributed corporate assets and to owe any undischarged corporate obligations or liabilities.
Act 89 adds a fourth provision that allows the juridical personality of a terminated corporation to continue for the purpose of disposing of immovable property owned by the corporation pursuant to a resolution of the board of directors. Effective 8/1/16.
Upshot: The recent revision to the Business Corporation Act repealed a provision that allowed a corporation administratively terminated by the Louisiana Secretary of State for failure to file an annual report to maintain its existence for purposes of selling property belonging to the corporation, rather than dissolving the corporation as would be necessary under current law. This bill reinstitutes that concept to prevent the need for the time consuming and costly process of dissolution for this limited purpose.
Cancellation of Recorded Judgments and Liens in Favor of the State
SB 469 – Act 76 amends Civil Code article 3367 to make it mandatory that the Clerks of Court cancel upon receipt of a written signed application any mortgage, pledge, or privilege that has prescribed pursuant to R.S. 9:5685, which generally provides for a ten year prescriptive period for the effect of recorded judgments, liens, and privileges in favor of the state. Effective 8/1/16.
Upshot: In the past, it was difficult to get the Clerks to cancel prescribed judgments and liens in favor of the state that had prescribed. This Act will hopefully change that.
Period of Prescription on a Privilege Filed by a Condominium Association
HB 213 – Act 244 amends La. R.S. 9:1123.115, the provision of the Louisiana Condominium Act concerning a condominium association’s right to a privilege on a condominium parcel for unpaid assessments and other amounts, and provides the proper procedure for asserting that privilege. Act 244 changes the period of prescription on a claim of privilege filed by a condominium association against a condominium parcel from one year to five years, the same period applicable to liens under the Louisiana Homeowners Association Act (R.S. 9:1147).
Act 244 also adds a provision to R.S. 9:1123.115(A) that states that if the condominium association files a privilege for an amount that is not owed by the unit owner, in whole or in part, and if the unit owner affected by the privilege files suit to obtain a complete or partial release of that lien or privilege, the condominium association is liable to the unit owner for expenses in obtaining a release, including attorney fees. Effective 8/1/16.
Upshot: The period of prescription on a recorded claim of privilege by a condominium association will now be five years.
Recordation of Trust Instruments and Extracts of Trust
HB 286 – Act 544 amends certain provisions of the Louisiana Trust Code dealing with recordation of trust instruments or extracts of trust. The amendments make clear that if a trust instrument contains a conveyance of immovable property, then the trust instrument itself, rather than just an extract of trust, must be filed in the parish in which the property is located.
The act also amends La. R.S. 9:2092(B)(2) and La. R.S. 9:2262(B)(2) to require that any limitation of the power of the trustee to alienate, lease, or encumber immovable property must be recited in the extract of trust in order for that limitation to be affective against third parties. Previously, the law stated that unless the trust or extract of trust stated any restriction on the trustee’s powers, the trustee had all of the powers granted to trustees under the Louisiana Trust Code. Effective 8/1/16.
Upshot: The prior amendment to these statutes was changed just prior to adoption, and language that should have been revised was not. This created an anomalous situation not intended by the drafters of that amendment that a trust instrument containing a conveyance of immovable property, or an extract thereof, arguably did not have to be recorded any longer. This legislation corrects the errors to align the statutes with the original intent.
Notice Regarding Expropriation
HB 313 – Act 108 amends La. R.S. 19:2.2 to include a section requiring an expropriating authority, identified in La. R.S. 19.2, other than the state or its political corporations or subdivisions, to provide the property owner notice no more than thirty days after making an offer to acquire an interest in property that includes the following information:
1. A statement that the property owner is entitled to receive just compensation for the property to be acquired to the fullest extent allowed by law.
2. A statement that the property may be expropriated only by an authority 20 authorized by law to do so.
3. A statement that the property owner is entitled to receive from the expropriating authority a written appraisal or evaluation of the amount of compensation due.
4. A statement identifying the website of the expropriating authority where the property owner can read the expropriation statutes upon which the expropriating authority relies or a copy of the expropriation statutes upon which the expropriating authority relies.
5. A statement offering to provide upon request of the property owner a copy of the expropriation statutes upon which the expropriating authority relies.
6. A statement identifying an agency responsible for regulating the expropriating authority, including the name, website, and telephone number of the agency.
7. A statement that the property owner may hire an agent or attorney to negotiate with the expropriating authority and an attorney to represent the property owner in any legal proceedings involving the expropriation.
Upshot: This Act attempts to place property owners on a more even footing with quasi-public expropriating entities (e.g. utilities) by imposing an affirmative obligation on these entities to provide a detailed disclosure of the property owner’s right relative to the expropriation proceeding.
Dissolution by Affidavit of LLC
HB 806 – Act 147 amends La. R.S. 12:1335.2 to provide an additional condition upon which an LLC may be dissolved by affidavit. Currently, dissolution by affidavit is a method of dissolution that is available to an LLC that is no longer doing business and must owe no debts. Act 147 further limits the availability of dissolution by Affidavit to an LLC that own no immovable property. Effective 2/1/17
Upshot: Under the Act, limited liability companies that own immovable property can no longer be dissolved by filing an affidavit with the Louisiana Secretary of State.