Here is a summary of some of the more significant results of the 2001 regular legislative session as may be of interest to the Louisiana notary.

Mandatory Continuing Legal Education Fails: HB 760 Deferred

The proposal to mandate continuing legal education for non-attorney notaries was deferred by the House Committee on Civil Law and Procedure. For those interested in viewing the testimony at the committee hearing, the broadcast is archived on the Louisiana Legislature's web site at http://house.legis.state.la.us/WebOnline/archvideo.htm. Look for the May 8 meeting of the House Committee on Civil Law & Procedure. Testimony starts at 00:11:20 min. into the clip and runs to the 34 minute mark.

These bills were withdrawn by their sponsors early in the session as a direct result of the calls in opposition from notaries around the state.

New Orleans representative Peppi Bruneau succeeded in passing his resolution requesting the secretary of state to study the possibility of making the office of notary public in Louisiana a statewide office with centralized management and mandatory continuing education requirements. From a reading of the resolution, it is unclear whether there is interest in handing the process to the New Orleans Custodian of the Notarial Archives or to the secretary of state

With this resolution, the secretary of state is requested to convene a study and report recommendations back to the House Committee on Civil Law and Procedure before January 1, 2003. He is required to invite and include in deliberations the Custodian of the New Orleans Notarial Archives and representatives of four notary associations based in New Orleans, Slidell, and Baton Rouge.

The legislature did not include other parish examiners and judicial administrators who currently administer the application process for this parish office in the deliberations regarding the possible changes in the commissioning process.

A representative of the secretary of state's office, when asked if the secretary of state would restrict deliberations to those required in the resolution, stated that anyone who wanted to be heard at any deliberations convened relative to HCR 81 should contact the secretary of state notary division and make his interest known.

When the comprehensive revisions to the succession law were passed in 1997 (Acts 1997, No. 1421), the Articles on disinherison were repealed inadvertently. With Act 573 of the 2001 legislature, the Articles which provide exclusive instances for just cause for disinheriting a forced heir are reinstated. (Adds C.C. Arts. 1617-1626 and R.S. 9:2502).

House Bill 113 proposed to repeal the ability to acquire immovable property by acquisitive prescription. This constituent bill was deferred after testimony in committee.

Act 178 provides that licensed real estate agents are required to give notice of the availability of the statewide sex offender database disclosing the locations of known sex offenders. However, the law as adopted may have created a technical provision that an act of sale of residential immovable property must contain the notice. The specific provision of the newly enacted statute (La. R.S. 37:1469) reads:

A. Every written lease or rental agreement executed by any licensee for residential immovable property and every written contract for sale of residential immovable property shall contain a notice of the availability to the public of access to a statewide database disclosing the locations of individuals required to register pursuant to R.S. 15:540 et seq. The notice shall include the telephone number and internet site for the statewide database.

Is the conveyance document itself a "contract for sale?" Was the intent of the legislature to assure inclusion of this notice in our conveyance documents?

Title 37 is law governing professions and occupations. The enactment of the new section falls under Chapter 17: Louisiana Real Estate License Law. Notaries closing real estate sales are not among those specifically exempted from the application of the statute. There is no penalty for failure to include the notice in the act, but there is also no provision declaring that the "contract shall not be invalid" if the notice is not included. I do not believe the contract would be declared invalid by its omission. However, notaries who hold real estate licenses should check with the real estate commission for any possible repercussions for failing to comply with the law.

Act 244 enacts the Uniform Electronic Transactions Act providing for the use of electronic records and electronic signatures in order to form a valid and binding contract and further provides definitions and general concepts. Addresses issues of technology and security procedures. (Adds R.S.9:2601-2620)

Act 941 provides for the use of electronically imaged records, documents, and other information as admissible evidence and defines electronic imaging. (Amends C.E. Arts. 1001(5) and 1003 and R.S. 13:3733(A), (B), and (D)(intro. para.); Adds C.E. Art. 1001(6)).

Act 128 enacts a revision of Louisiana's commercial laws concerning secured transactions to implement the revision of Article 9 of the Uniform Commercial Code. New UCC-1/UCC-3 forms have been adopted and will be required in Louisiana after 12/31/2001.

Recent Cases of Interest

MORTGAGES / COLLATERAL MORTGAGES - Liability of maker to secured third parties

Diamond Services Corporation v. Delores N. Benoit, No. 2000-0469 (La. 2/21/2001), 780 So.2d 367.

"After reviewing the applicable law, we conclude that, within the context of the collateral mortgage package, the maker of a collateral mortgage note is not personally liable beyond the value of the mortgaged property when the collateral mortgage note is pledged to secure the debt of a third party."

In July 1996, founding editor Greg DeKeyzer wrote: "Having just finished teaching a notarial preparatory class, I was once again reminded how difficult a time many people have understanding a collateral mortgage. This is unfortunate, for in reality there is nothing mysterious about it." Greg then presented a single page explanation that served as a thorough yet concise explanation.

Even so, the courts have apparently struggled for years with one of the underlying issues that is brought into question by collateral mortgages; namely that of the liability of maker of a collateral mortgage note for a sum beyond the value of the mortgaged property pledged to secure the obligation of a third party.

In covering this particular issue the Louisiana Supreme Court, in Diamond , provides a multifaceted treatment of the collateral mortgage. In addition to deciding a long unsettled issue, the court reviews the concept of the collateral mortgage and takes an in-depth look at several cases and provides a good understanding of the history of the use and application of the collateral mortgage as a special instrument of pledge.

The opinion is an excellent review in the concepts of mortgage, pledge, and the application of the concepts of suretyship. It's a lengthy discussion (32 legal pages, double-spaced), but for those who want a refresher in many aspects of law important to the Louisiana notary, it is worth taking the time to read.

A Primer on Liens

We talk about "filing a lien" or "recording a lien" and, as notaries, generally, we tend to think of the lien as the paper (i.e., the affidavit or the security agreement) that we record. That may not be completely incorrect, but there's more to it.

The first thing about a lien is that it is an incorporeal movable. It is a claim. It is a right. "Lien" appears in our Civil Code under headings of "Privilege." To discuss liens we must explore the civilian concept of "privilege."

Privilege: A privilege is the statutory right which extends to certain creditors to be paid ahead of other creditors depending upon the particular nature of the debt owed.

Another example is found in the "Innkeeper's lien." An innkeeper has a "lien" on the personal baggage left in his establishment, and has a privilege to be paid first from the proceeds of a sale of those effects to cover the required advertising expense and his bill for food and lodging. (CC Art. 3236)

These are examples of liens and privileges on movables. Others, such as that commonly referred to as a "mechanic's lien," give preference in payment from the proceeds of a sale to mechanics who repair machinery. If you don't pay your auto mechanic, he may sell your vehicle if it is in his possession and retain an amount to cover the repair bill and storage costs.

Privileges on movables (and in some cases on immovables) exist for funeral charges, law charges, charges of last illness, wages of servants, supplies of provisions made by bakers, butchers, grocers, innkeepers, teachers, wages of clerks. There are special privileges for a farm overseer on crops. The mechanic's lien is the privilege on the debt of a workman for the price of his labor on the movable which he has prepared or made. The list goes on. (CC Art. 3186-3248)

As to immovables, probably the most significant is the vendor's lien and privilege: that of the vendor for the "payment of the price or so much of it as is unpaid, whether it is sold on or without a credit." (CC Art. 3249). The vendor has the right to be paid before almost any other secured creditor. Preserving the privilege requires that the vendor record the act of sale (Vendor's Lien, Sale with Mortgage, Credit Sale) within seven (7) days if the act is done within the parish where the property is located, or fifteen (15) days if the act is done in another parish.

Caveat Notarius: Never wait until the last minute to record your acts. Do it as soon as possible after execution of the act to avoid being liable for damages a party may suffer for your failure to record the act timely.

The Private Works Act

Now that we have explored the basics of lien and privilege, let's examine how privileges are recorded and liens enforced.

The most frequent notarial involvement in "liens" today (other than that experienced by those handling real estate closings as relates to the vendor's lien) is the involvement of the notary in the preparation of affidavits of contractors, mechanics, materialmen, tradesmen, and laborers necessary to preserve their privilege and rank for payment of the amount due to them for their services. Many a notary's phone will ring daily with a request of "I need to file a lien to get paid for . . ." What do you do? Let's look at an example:

David is an air-conditioning contractor who has a good business. One summer afternoon, he did the neighborly thing and checked out his new neighbor's ailing air conditioner. He did a little work, installed a new fan motor, and it helped but not much. A little less than a month later, the neighbor, Piper, decided to have David install a completely new system. David agreed.

David's wife noticed that last month's bill had not been paid, but it was but $200, and this job was going to be around $3000. David said he'd just wait and get it all when the job was complete. He did the work, and the house was cool. Piper, however, was cool, too. Too cool. She ignored the bill. David went to his notary and said, "I want to file a lien!" He knew that along with all the other things creditors generally can do to collect accounts, he could "file a lien" and improve his chances of being paid, even if it took filing a lawsuit, getting a judgment, and later foreclosing on the house. He knew if he "filed the lien" he could wind up with a better chance of being paid because he would have a higher rank than other creditors. Especially if he could get to the courthouse before Piper took a second mortgage, or had other contractors improve her property.

The notary (through experience and having dealt with this area as a notary working with a collection attorney) knew what to do. The "lien" arose from the provisions of law, and particularly under La. R.S. 9:4801 et seq.: The Private Works Act.

Deadlines

There are deadlines for filing such liens, (and depending on the specifics, assorted notice requirements). Notwithstanding, a contractor must act soon after termination of the job to file the lien and preserve the privilege. Generally speaking, if there has been notice of a contract, the lien (affidavit) must be filed within 30 days of the notice of termination or substantial completion of work. If there has been no notice, the lien (affidavit) must be filed within 60 days of the filing of a notice of termination of the work or the substantial completion of the work. In the instant case, since movables were sold and attached to the house, an additional notice was required to be mailed pursuant to La. R.S. 9:4802.G.(2).

Often, the notice, or the subsequent affidavit, will spur the debtor to make payment. If not, the creditor must bring suit within one year of the filing of the lien (affidavit) or the privilege will expire.

The importance of timing and deadlines cannot be overstated. On several occasions, contractors or laborers have come to my office because the want to "file a lien," but they have waited too long. Their window of opportunity to take advantage of the privilege is long past. They may still be able to file a lawsuit to enforce their claim, but they will not have any privilege over other creditors beyond the order in which their judgment is taken and recorded. Also note that the filing deadline dates will be different and distinct for the each contractor, tradesman, or supplier depending upon when they complete their phase of the work.

It should be added that the private works act is more about rank and privilege among creditors than it is about collections. Lawsuits are often required for a creditor to receive payment, and even if one has a privileged position, he will not always receive full satisfaction of the debt. "Liens" are effective only in assuring one's position as a creditor nearer to the top of the list of those ultimately paid.

Notaries can benefit and help their constituency by developing relationships with contractors and tradesmen and their attorneys. The real experts in the procedure are experienced collection attorneys. Attorneys, especially those who handle collection cases, can benefit by working closely with notaries who are familiar with the notice requirements and deadlines, and requirements of form for lien affidavits.

The Louisiana Civil Code still provides fundamental guidelines for business dealings. The right of a farmer to be paid for the cane before you have a right to stir the sugar in your coffee keeps things in perspective. Somehow, it's nice to know that some things can remain just that simple. If you want to refresh your knowledge, the Civil Code articles on Privilege (Arts. 3182-3277) make for a short but interesting read.

L___ David A/C-Heating & Refrigeration
5 South Parkway
Baton Rouge LA 70800
November 16, 1995

D____ Piper
53 Rose Boulevard
Baton Rouge, LA 70800

RE: NOTICE OF NON-PAYMENT TO OWNER

LOTS 78 & 79, Rose Place

53 Rose Boulevard

Baton Rouge, Louisiana, Parish of East Baton Rouge

Dear Ms. Piper:

Please be advised that I, L_____ David, owner of L_____ David A/C-Heating and Refrigeration, 5 South Parkway, Baton Rouge Louisiana, do hereby, under the provisions of R.S.9:4802 G2, notify you of a ten day notice of nonpayment to you as owner of the above referenced property and of my intent under R.S. 9:4801 (3) to file a lien for protection from nonpayment of supplies, materials, & labor, in the amount of $3130.00. Together with the amount owed, I will be entitled to recordation fees and interest on that amount. This lien would affect the above referenced property for the amounts shown.

I reserve the right to file this lien when the ten days have lapsed from the date of this notice.

Sincerely,

L_____ David

BEFORE ME, the undersigned authority, personally came an appeared

L_____ David

who, after being duly sworn, did depose and state:

That he is the owner of L_____ David A/C-Heating & Refrigeration ("L_____. David A/C"), a sole proprietorship licensed to do business in the City of Baton Rouge, Parish of East Baton Rouge, and that "L_____ David A/C" did furnish to D_____ Piper ("Piper"), as owner, for certain materials for construction, improvement, repair, and/or renovation of the hereinafter described property, said property being described as follows:

Lots 78 & 79, Rose Place Subdivision Parish of East Baton Rouge, said property bearing the municipal address of 53 Rose Boulevard, Baton Rouge Louisiana

That "L_____. David A/C" did supply materials and labor from July 17, 1995 to October 23, 1995 to "Piper", which were used in the work done in the above described property.

That there is presently due and owing to "L_____ David A/C" for materials & labor the sum of $3130.00.

That affiant is further entitled to the additional sums for the preparation and recordation of this lien, together with legal interest on all sums from date, until paid.

This affidavit is made for the purpose of preserving the lien and privilege granted by law LSA-R.S. 9:4801 et seq., in the above described property; that said debt, plus costs of filing this lien.

__________________________________

L_____ David - Affiant

Sworn to and subscribed before me this ____ day of __________,_____

___________________________________

I am often asked about what to maintain as a "notary library." I will list here the volumes that I consider indispensable for a notary in Louisiana. They are listed in the order of proximity to my reach.

1) LA LAW for Notaries - Compiled by Alan Jennings - Publisher: The Golden Bough, Ltd.

Digital text (PDF file) searchable text of the Civil Code, Title 9 (Civil Code Ancillaries), Title 35 (Notary Law), Title 12 (Corporation Law), and the Code of Civil Procedure.

2) New Notary Kit - Edited by Alan Jennings - Publisher: Louisiana Notary Association

3) Louisiana Civil Code - Edited by A. N. Yiannopoulos - Publisher: West Group. Includes revision commentary and editorial, notes on articles of the Civil Code, and complete text of Title 9.

4) Louisiana Civil Code - Compiled by Daniel Claitor - Publisher: Claitor's Law Books (BR LA.)

Text of Civil Code and Title 9 published with an index and less than half the size and weight of the West edition.

5) Louisiana Statutes Compact Edition - Publisher: West Group

Eight-volume set (paperback) set containing text of La. Constitution and all statutes & codes.

6) A Basic Louisiana Notary Guide - Dr. James D. Johnson, Jr. & Susan L. Johnson - Publisher: Claitor's Law Books - Baton Rouge.

7) A Handbook for Louisiana Notary Study - Dr. James D. Johnson, Jr. and Susan L. Johnson - Publisher: Claitor's Law Books - Baton Rouge

8) The Louisiana Notarial Handbook & Study Guide, Sydney I. Horn - Publisher: Sydney I. Horn, Lake Charles

9) Black's Law Dictionary - Publisher: West

Questions I Have Been Asked: Additional Information

In our last issue, I answered a question about whether a notary can pass an act in a foreign language. The answer was, "As long as all the requirements of law for the act are met, the language of the document is immaterial except that it must be in a language understood by all."

Readers are reminded, however, of one of the "requirements of law" for corporations and other business organizations: filings in Louisiana are required to be in the English language.

This expands on, but does not change the answer. Be cautioned accordingly. These filings must be in English, and in such cases, the notary, the incorporator and the witnesses have to be able to understand the English language.