2019 Louisiana Legislative Update: Bills That Impact Real Estate
The 2019 Louisiana Regular Legislative Session convened on April 8, 2019 and closed on June 6, 2019. Governor John Bel Edwards signed 448 bills into law for this fiscal session. Several bills that will impact real estate interests are summarized below.
Private Works Act Revision
HB 203 – ACT 325 updates Louisiana’s Private Works Act by, among other things:
- * expanding the definitions of “owner” and “immovable.”
- * clarifying the circumstances under which subrogation operates in favor of contractors or subcontractors.
- * modifying the notices to the owner and/or contractor that are prerequisites for certain claims under R.S. 9:4801 and 9:4802.
- * requiring owners’ filings to include a complete property description equivalent to that used in mortgages.
- * providing that general contractors who fail to file a notice of contract on a project exceeding $100,000 are deprived of any privilege under the PWA.
- * modifying requirements related to surety bonds.
- * clarifying when certain privileges are effective as to third persons and the effect of suspension of work.
- * adding new rules regarding ranking of privileges against Chapter 9 security interests (due to the expanded definition of “immovable”).
- * adding a mechanism for partial cancellation against a non-responsible owner.
- * updating the communications provisions to allow for more modern delivery mechanisms such as commercial couriers and even e-mail in certain circumstances.
Section 4822, Preservation of Claims and Privileges, was significantly revised. It now provides that claimants are not required to wait until the commencement of the lien-filing period to file a lien, and it includes new outside deadlines for lien filing in the event that no notice of termination of the contract is filed. Most of these changes become effective on January 1, 2020, but some of the changes are retroactive.
Upshot: Those in the construction industry and their counsel should consult the new language of the Private Works Act before taking any new action under the Act, as many important provisions have changed.
Tax Sale Notice
HB 466 – Act 382 adds provisions describing required post-tax sale notice and outlines additional efforts the tax collector should make in the event that the initial notices were returned to ensure sufficient notice to tax notice parties, such as providing additional notice by first class mail, searching for other possible addresses for the debtor and posting the notice at the property. The amendment states that failure of the debtor to receive actual notice of the tax sale shall not affect its validity if the tax collector demonstrates a “reasonable and diligent effort” to provide the above described notice.
Upshot: Although this bill imposes additional tax sale notice requirements, tax sale purchasers should be aware that the courts ultimately determine what notice provides appropriate due process.
Affordable Housing Proposed Constitutional Amendment
SB 79 – Act 448 proposes a constitutional amendment to authorize the City of New Orleans to provide total or partial ad valorem tax exemptions on properties of 15 residential units or less in Orleans Parish in order to promote affordable housing. Short term rentals are not eligible for this benefit.
Upshot: In addition to the constitutional amendment described below, this amendment could provide longer-term tax relief to owners of properties in neighborhoods that have seen exponential increases in property values in Orleans Parish. This measure must be adopted at the statewide election on October 12, 2019.
Remote Notary Bill and Historic Tax Credit Reauthorization Bills Tabled
HB 514, which provided for electronic notarization of instruments that require a party to appear before a notary public at the time of execution of the instrument, such as affidavits and acknowledgements, was tabled for unknown reasons.
The proposed bill did not allow for electronic notarization of testaments or codicils thereto, trusts or acknowledgements thereof, donations inter vivos, matrimonial agreements or acknowledgments thereof, or acts modifying, waiving, or extinguishing obligations of final spousal support or acknowledgments thereof. It also did not allow for electronic passing or notarization of any authentic act as defined under Louisiana Civil Code Art. 1833. If authentic acts were electronically notarized, those acts would not be in authentic form, but might still be valid as acts under private signature or acknowledged acts, as provided for in existing laws. The bill provided that its provisions could not be altered by agreement of the parties.
HB 83 and SB 222, which extended the sunset of the tax credit for rehabilitation of historic structures from January 1, 2022 to January 1, 2026, were sent back to committee.
Tax Assessment Relief by Constitutional Amendment
La. Const. Art. VII, § 18 provides that, when properties are reappraised and valued for property taxes (generally every four years), if the assessed value of residential property subject to a homestead exemption increases more than 50% over the prior year, the tax collector must phase-in the additional tax liability over a four-year period, increasing in increments of 25%. However, if the property is transferred during the phase-in period, the phase-in benefit is lost. Further, if the increase in assessment is due to improvements or construction on the property, then the phase-in will not apply.
Upshot: The amendment will provide owners of properties in neighborhoods that have seen exponential increases in property values over the last four years relief by allowing them time to respond to the increased assessment over a period of four years, instead of feeling pressure to sell their property immediately.