Louisiana Real Estate Contracts: Exam Study Guide

Contract law in Louisiana is unlike contract law in any other state. While the national exam section tests standard common law contract principles, the Louisiana state section tests the state's unique civil law transaction framework. Understanding both is essential.

Valid Contract Elements (National Framework)

For the national section, every valid real estate contract requires:

1. Offer and acceptance (mutual assent)
2. Consideration (something of value)
3. Competent parties (18+, sound mind)
4. Legal purpose
5. In writing and signed (Statute of Frauds)

Louisiana Civil Code Contract Framework

In Louisiana, contracts are governed by the Louisiana Civil Code rather than common law. The civil code uses terms like "obligations," "conventional obligations" (contracts), and "mandate" (agency). For exam purposes, key differences to know:

Louisiana uses "purchase agreement" or "agreement to purchase" as the preliminary contract for buying and selling real property — similar in function to a purchase agreement in other states, but derived from civil code principles.

The Act of Sale is the final notarized document that transfers title. In common law states, this is equivalent to executing a deed at closing.

The Act of Sale — Louisiana's Closing

The Act of Sale is one of the most tested Louisiana-specific concepts:

• Equivalent to a closing/settlement in common law states
• Must be executed before a notary public
• The notary authenticates the transaction and verifies signatures
• The Act of Sale replaces what other states call a "deed" for transfer purposes
• Both the buyer and seller (and their spouses if married) typically appear before the notary

Key distinction: In other states, a licensed attorney or title company officer may handle closing. In Louisiana, the notary — often an attorney who is also a notary — plays the central role.

Community Property and Contracts

Louisiana's community property rules create important contract requirements:

Both spouses must sign contracts affecting community property. If a home is community property (acquired during marriage), both spouses must:

• Sign the listing agreement
• Sign the purchase agreement
• Appear at (or authorize someone at) the Act of Sale

A contract signed by only one spouse for community property may be voidable. The listing agent should verify at the outset whether the property is community property and ensure both spouses are parties.

Separate property (owned before marriage, or received as gift/inheritance during marriage) may be contracted without the other spouse's signature.

Purchase Agreement Elements in Louisiana

Louisiana purchase agreements include:

• Legal description of the immovable property
• Purchase price and deposit amount
• Financing contingency
• Inspection contingency
• Appraisal contingency
• Closing date (date of Act of Sale)
• Inclusions and exclusions (movables vs. immovables — Louisiana terminology)

Louisiana Property Disclosure Document

For most residential sales, Louisiana requires the seller to complete a Louisiana Property Disclosure Document disclosing known material defects in the immovable property. Key rules:

• Must be provided before or at the time of the purchase agreement
• Buyers have rights to inspect before the Act of Sale
• Does not create a warranty or replace a professional inspection

Predial Servitudes and Contracts

When a property is subject to a predial servitude (easement), this must be disclosed. Predial servitudes are real burdens that run with the land and must be disclosed in the contract and reflected in the Act of Sale.

Mortgage and Judicial Foreclosure in Louisiana

Louisiana uses mortgages (not deeds of trust) as the primary security instrument. Key contract implications:

• No power-of-sale clause possible (deeds of trust aren't used)
• Foreclosure is judicial only — requires court proceedings
• Lenders must obtain a court judgment before selling foreclosed property
• This makes Louisiana foreclosures slower than non-judicial states

Default and Remedies

Buyer defaults: - Seller may retain deposit as liquidated damages (if specified in contract) - Seller may seek specific performance through civil court

Seller defaults: - Buyer may seek return of deposit - Buyer may seek specific performance through civil court

Practice Louisiana contract questions at [CARealestate.com/states/louisiana](https://carealestate.com/states/louisiana).