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LA BAR > Code III - Security Rights > Flashcards

Code III - Security Rights Flashcards

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1
Q

Personal Security (Suretyship)

A

security right allowing a debt to be enforced against a person other than the obligor

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2
Q

Real Security Right

A

security right enforceable against property

  1. Mortgages - agreement on immovables
  2. Privileges - by law on immovables
  3. Security Interests - agreement on movables (NOT TESTED)
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3
Q

Suretyship

A

conventional obligation which a 3p (surety or guarantor) binds herself to a creditor to fulfill obligation of another on failing to do so

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4
Q

Suretyship Requirements

A

only by contract and must meet two formal requirements

  1. In Writing (act under private signature, signed by surety)
  2. Express: unambiguous
    - surety’s personal liability
    - obligations undertaking

(Parole evidence is NOT permitted)

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5
Q

Ostensible Suretyship

A

surety appears to be immediately liable as principal co-obligor

will be treated as a surety (with extra rights a defenses) IF:
1. principal cause of the contract with creditor is to guarantee performance rather than enjoying benefits of obligation
2. Creditor clearly knows this

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6
Q

Creditor’s Rights

A

Immediate, unconditional, and solidary

may collect the principal obligor’s debt from any surety as soon as it is enforceable

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7
Q

Guarantee of Payment

A

sureties cannot demand exhaust principal obligor first

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8
Q

Guarantee of Collection

A

may pursuit principal obligor first unsuccessfully

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9
Q

Surety’s Defenses

A
  1. Defense of Principal Obligor (duress, and other vices NO capacity or bankruptcy defense)
  2. Remission (release) of principal or accessory obligation
  3. Modification of Obligation
  4. Impairment of collateral security
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10
Q

Release of Co-Surety

A

releases that surety’s virile share of the guaranteed obligation

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11
Q

Effect of Modification or Impairment

A

Ordinary suretyship is totally extinguished by material modification or impairment

commercial is only extinguished to the extent the modification or impairment actually injury the surety

creditor has burden of proving extent has NOT injured

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12
Q

Commercial vs. Ordinary

A

ordinary = friend, family

commercial = all other

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13
Q

Rules of Construction

A

ordinary is strictly construed in favor of the surety

commercial is construed like any other

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14
Q

Surety’s rights against Principal Obligor

A

if surety is force to pay they are entitled to:

  1. Reimbursement (as long as debt was exigible - due and owing)
  2. Subrogation (step’s into creditor’s shoes)
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15
Q

Surety’s rights against Co-Sureties (Contribution)

A

collect from co-sureties to extent any one has paid more than virile share of the obligation

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16
Q

Insolvent Co-Surety

A

their share is reallocated to the others in equal shares unless modified by contract

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17
Q

Termination of Suretyship

A

specific obligations = extinction or unenforceability of principal obligation renders suretyship terminated

continuing guarantee = providing notice to the creditor of desire to terminate for FUTURE obligations

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18
Q

Notice of Death of Surety

A

operates as notice that surety’s estate will NO LONGER BE LIABLE for FUTURE obligations

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19
Q

Mortgages

A

gives creditor contingent right in immovable property

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20
Q

Parties to a Mortgage

A

Mortgagor = property rights affected

Mortgagee = creditor with security rights

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21
Q

Conventional Mortgage

A

created by contract (act of mortgage) which mortgagor grants security right in specifically identified property

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22
Q

Judicial Mortgage

A

party obtains judgment for the payment of money, files a certified copy of the judgment in parish where debtor’s immovable property is located

Automatically encumbers ALL present and future rights in immovable property in said parish

must be reestablished every 10 years

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23
Q

Legal Mortgages

A

arise as matter of law in certain limited circumstances

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24
Q

Special and General Mortgages

A

special = specifically identified immovable property (conventional)

General = anywhere in a defined region (legal and judicial)

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25
Q

Property Susceptible to Mortgage

A

absolute ownership and lesser rights (ususfruct, servitudes of right of use, lessee’s right of quiet use and enjoyment)

if movables become component parts, mortgage automatically extends

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26
Q

Creating Conventional Mortgage

A
  1. In Writing
  2. Signed by MORTGAGOR
  3. Value and describe secured obligation
  4. Describe Immovable Property
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27
Q

Mortgage Writing Requirement

A

Authentic act recommended BUT NOT required

if authentic act can be enforced quicker through “executory” process if not authentic must go through “ordinary” process

Paraphs - NO LONGER REQUIRED

28
Q

Recording of Mortgages (Perfection)

A

to be effective as to third parties must be filed for record in parish in which immovable property is located

29
Q

Priority Ranking

A

whoever properly filed first takes first precedence to the value of the property

Buyers of the property = have absolute and exclusive ownership if mortgagee fails to file before buyer files an act of sale

30
Q

Filing in Mortgage Records

A

acts of mortgage must be filed in the MORTGAGE RECORDS (ENTIRE MORTGAGE MUST BE FILED)

Acts of sale are filed in conveyance records

31
Q

Lapse - Effective Dates

A

any mortgage is effective for at least 10 years after the date on ACT OF MORTGAGE (NOT FILING)

Longer if:
1. mortgage describes the maturity date
2. The maturity date is nine years or longer

6 years after the maturity date

32
Q

Effect of Filed Amendments

A

if amended and refiled effective period of mortgage is recalculated according to new terms

33
Q

Reinscription

A

must sign and file a notice of reinscription BEFORE LAPSE

  1. states the name of the mortgagor
  2. states the recordation number or other information about the original filed mortgage
  3. declares the mortgage resinscribed

EXTENDS for another 10 years

34
Q

Judicial Mortgage Reinscription

A

must be revived in a separate proceeding

35
Q

Transfer of Secured Principal Obligation

A

original creditor-mortgagee transfers to 3p the right to enforce an obligation new creditor automatically acquires all original creditor’s rights under the mortgage

36
Q

Transfer of Mortgaged Property

A

buyer who files act of sale in conveyance records AFTER mortgagee properly filed takes the property SUBJECT to the mortgage

Called a third possessor

37
Q

Extinction of Mortgages

A
  1. Extinction or Destruction of Mortgaged Prop
  2. Extinction of Principal Obligation
  3. Confusion
  4. Termination (written notice from mortgagor when all outstanding debt is paid)
38
Q

Multiple Indebtedness Mortgages

A

secures fluctuating future advances

must state the max amount of secured debt that can be outstanding at any given time

Priority is given the date which is filed

remains effective against borrower even if paid all outstanding loans

39
Q

Scope of Pledge of Lease of an Immovable and its rents

A

owner of immovable gives creditor rights in one or more leases of that immovable and its rents to secure an obligation

40
Q

Creation and Effectiveness against 3ps (pledge of lease and its rents)

A
  1. in writing signed by pledgor
  2. states amount secured or the maximum secured amount that can be outstanding at any time
  3. precisely describes nature and situation of the immovable property NEED NOT describe specific leases

must be filed in mortgage records in parish of immovable property to be effective against third parties

41
Q

Privileges

A

Arises by operation of law

gives a creditor a right in identified property to serve as a source of value if the obligor fails to fulfill an obligation

ALL DEFINED BY LAW NOT BY AGREEMENT

42
Q

Privileges Limited Remedies

A

do not offer a quicker an more convenient method of seizing and selling property, its a RESERVATION of priority

43
Q

General and Special Privileges

A

General = all identified property

Special = specified property

44
Q

General Privileges

A

attach to ALL movable and immovable property of the person to whom the described goods or services have been supplied on credit

general privileges rank below SPECIAL privileges or security interest but ABOVE a mortgage

Examples: funeral charges up to $500 and winning litigants right to collect court-ordered costs from losing party

45
Q

Selected Special Privileges

A

only affect movable property

1.Artisan’s/Repairpersons Privilege
2. Lessor’s privilege
3. Vendor’s privilege

46
Q

Artisan’s/Repairpersons Privilege

A

Civil Code: only the price of labor and only so long as the thing remains in the artisan’s possession

Revised Statutes: secures both labor and materials and remains for 120 days from last day on which materials and/or labor was supplied OR until person relinquishes possession of the item whichever is later

120 days increased to 1 year if repaired item is farm equipment

Civil code privilege is TOP priority

Statute priority over all security right other than prior perfected chapter 9 interests

47
Q

Lessor’s Privilege

A

landowners who lease their farmland and buildings to secure payment of rent and other obligations

effects all lessee’s movables on property persists for 15 days for property removed

privilege extends to prop of sublessee but no 15 day right to pursuit

Priority over vendor’s privilege (except vendor’s on farm equipment) and all general privileges except funeral charges

48
Q

Vendor’s Privilege

A

Immovable credit sale = must be recorded in mortgage records to preserve privilege

Movables credit sale = persists only as long as stays in possession of buyer

Priority in movable over all general privileges but is subordinate to lessor’s privilege (except in farm implements)

Properly recorded vendor’s privilege in immovable property has priority over a filed mortgage only if the act of credit sale is properly recorded before the mortgage OR WITHIN 7 days of the date of the act of credit sale 15 days if recorded in different parish than where executed

49
Q

Private Works Act

A

protects contractors and suppliers for claims for unpaid wages and material costs

50
Q

PWA Rights

A
  1. claim against the owner of the immovable property over which work was done
  2. a privilege over the immovable over which work was done
51
Q

Owner’s Avoidance of PWA Claims

A

can avoid by filing a notice of contract and obtaining surety bond

52
Q

Notice of Contract

A

BEFORE WORK BEGINS

filed in mortgage records where immovable is located

Must be singed by owner and contractor and describe the immovable, work to be done, contract price, and when payment is due

53
Q

Work

A

Work begins when either
1. materials worth at least $100 are delivered to the site
2. other visible work is conducted on the site (except dirt work)

54
Q

Surety Bond

A

owner must obtain surety bond in an amount sufficient to cover potential claims

attach evidence of bond to notice of contract

55
Q

Establishing PWA Claims and Privileges

A
  1. Must arise
  2. Must be preserved
56
Q

Arising requirement

A

PWA claims and privilege arises as soon as a claimant is owed money

57
Q

PWA Exceptions for Privileges

A
  1. Claimant is general contractor and cost of construction is greater than $100,000, claimant MUST properly file notice of contract
  2. Claimant is lessor of movables, lacks privity of contract with owner, the claimant MUST deliver notice to the contractor (and owner if notice of contract is filed) that they have leased or intend to lease to a contractor or subcontractor for use in work
    NOTE: if notice is given more than 30 days from when leased movable is delivered then claim/privilege ONLY inlcudes rents that come due after notice is given
  3. Claimant is seller of movables (materialman) to a subcontractor and notice of contract has been filed, claimant must deliver notice of nonpayment of the price to the owner and contractor no later than 75 days from last day of the month on which the movables were delivered to the job site
58
Q

Preserving Requirement

A

claimant must file a statement of claim and/or privilege in proper time period

  1. be signed by claimant
  2. reasonably identify improved immovable
  3. describe the amount being claimed
  4. identify who failed to pay
    5 Describe the work that was done
59
Q

Preserving Timing

A

Statement of claim and/or privilege must be filed no later than 60 days from the earlier of:

  1. filing of a notice of termination of the work
  2. date of subtantial completion or abandonment of the work
60
Q

Preservation timing EXCEPTIONS

A
  1. 30 days after the notice of termination IF:
  2. a notice of contract has been timely filed, AND
  3. the claimant is not in privity of contract with the owner NO LATER THAN 6 MNTHS after the date of substantial completion or abandonment (delivered to owner in 30 days or 6 months if address is given in notice of contract
  4. 60 days after notice of termination if claimant is general contractor. If a notice of termination has not been filed, no later than 7 months after the date of substantial completion or abandonment
  5. 70 days after the earlier of the filing of a notice of termination or the date of substantial completion or abandonment if: 1. claimant is a seller or lessor of movables with privity of contract with the owner or any claimant does not have privity of contract with the owner 2. the work is residential 3. a notice of contract was not filed, and 4. the claimant gives notice of nonpayment to the owner before expiration of the general 60-day filing period and then waits at least 10 days before filing stmt of claim/privilege
61
Q

Substantial Completion and Abandonment

A

substantially complete when 1: last work is performed on or materials are delivered to the contstruction site OR 2: owner accepts the improvement or possesses or occupies the immovable

abandoned when: 1. owner terminates the work and notifies the person engaged no longer desire to continue OR 2: owner otherwise objectively and in good faith manifests the abandonment or discontinuance of the prroject

62
Q

Priority of PWA Privileges against 3ps

A

earlier of:
1. notice of contract is properly filed OR
2. when work begins

63
Q

No Work Affidavit

A

creates an irrebuttable presumption that work has not begun

Requirements:
1. singed by an engineer, surveyor, or architect
2. declare work has not begun
3. contain complete property description
4. filed in mortgage records no later than 4 business days before or after the filing of a mortgage or privilege
5. based on an inspection that occured no later than four business days before or after the filing of a mortgage or privilege

64
Q

Priority of PWA Privileges against other PWA Privileges

A
  1. Local Gov
  2. Laborers
  3. Mortgages and vendors’ privileges that became effective BEFORE PWA privileges
  4. Subcontractors, materialmen, and lessors
  5. General contractor, architects, surveyors, or engineers hired by owner or professional consultant
  6. Mortgages and vendors’ privileges effective AFTER PWA privileges effective
65
Q

Enforcing PWA Privilege

A

file suit under ordinary process

Prescription: 1 year from filing of statement of claim and/or privilege for PWA claims

Maintenance: notice of lis pendens msut be filed into the mortgage records within one year of filing the satement of claim and/or privilege

LA BAR (25 decks)

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