Louisiana Real Estate Glossary

Key terms and definitions for title, closing, and property transactions under Louisiana civil law.

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1031 Exchange: A tax-deferred exchange under IRC Section 1031 that allows an investor to sell an investment property and reinvest the proceeds in a like-kind property while deferring capital gains taxes. Must be facilitated by a qualified intermediary.

Abstract of Title: A summary of the recorded history of a property, including all transfers, liens, and encumbrances. In Louisiana, an abstract traces the chain of title through public records in the parish where the property is located.
Act of Sale: The Louisiana term for the document that transfers ownership of real property from seller to buyer. Similar to a deed in common law states, the act of sale must be in authentic form (notarized) and recorded in the parish conveyance records.
ALTA (American Land Title Association): The national trade association for the title insurance industry. ALTA sets best practices standards for title companies and publishes the standard title insurance policy forms used in Louisiana and throughout the United States.

Bond for Deed: A Louisiana-specific installment sale contract where the buyer takes possession and makes payments, but the seller retains title until the purchase price is paid in full. Governed by Louisiana Revised Statutes 9:2941-2947.

Chain of Title: The chronological sequence of recorded transfers and transactions affecting ownership of a particular piece of property, traced from the original grant to the current owner.
Clear Title: Title to property that is free from liens, encumbrances, and defects that could challenge ownership. A clear title is required before title insurance can be issued.
Closing (Settlement): The final step in a real estate transaction where documents are signed, funds are exchanged, and ownership is transferred. In Louisiana, closings must be conducted before a notary public.
Community Property: Louisiana is a community property state. Property acquired during marriage is presumed to be owned equally by both spouses, regardless of which spouse's name is on the title. Both spouses must sign to sell community property.
Conveyance Records: The official parish records where all transfers of property ownership are recorded. Each Louisiana parish maintains its own conveyance records at the Clerk of Court's office.

Encumbrance: Any right or claim against a property that may diminish its value or restrict its use, such as a lien, easement, or restrictive covenant.
Escrow: An arrangement where a neutral third party (the escrow agent) holds funds and documents on behalf of the buyer and seller until all conditions of the sale are met.

Forced Heirship: A Louisiana civil law concept that restricts a parent's ability to disinherit certain children. Under forced heirship rules, children under 24 (or those with certain disabilities) are entitled to a portion of the parent's estate called the 'legitime.'

Lender's Title Insurance: A title insurance policy that protects the mortgage lender's interest in the property. Required by most lenders as a condition of the loan. The policy amount decreases as the loan is paid down.
Lien: A legal claim against a property, typically as security for a debt. Common liens include mortgage liens, tax liens, mechanic's liens, and judgment liens. All liens must be satisfied before clear title can transfer.

Millage Rate: The tax rate used to calculate property taxes in Louisiana. Expressed as mills (thousandths of a dollar), the millage rate varies by parish and ward. For example, a rate of 100 mills means $100 per $1,000 of assessed value.
Mortgage Records: The official parish records where mortgages, liens, and other encumbrances on property are recorded. Separate from conveyance records in Louisiana parishes.

Notary Public: In Louisiana, a notary public has significantly broader powers than in common law states. Louisiana notaries can prepare legal documents, take acknowledgments, and close real estate transactions. All real estate transfers must be notarized.

Owner's Title Insurance: A title insurance policy that protects the property buyer against loss due to defects in the title that existed before the purchase. Unlike lender's policies, owner's policies provide coverage for the full purchase price and last as long as the owner holds the property.

Parish: Louisiana's equivalent of a county. Louisiana has 64 parishes, each with its own system of public records for property transactions. Property taxes, millage rates, and certain fees vary by parish.

Quiet Title Action: A lawsuit filed to establish clear ownership of real property when there is a dispute or cloud on the title. Common in Louisiana succession situations where property has passed through multiple generations without proper documentation.

Redemption Period: In Louisiana, property owners who lose their property at a tax sale have a three-year period to reclaim (redeem) the property by paying the delinquent taxes, interest, and costs.

Succession: The Louisiana term for the probate process — the legal procedure for transferring a deceased person's property to their heirs. Louisiana succession law is based on civil law traditions and differs significantly from common law probate.
Survey: A professional measurement and mapping of a property's boundaries, structures, and features. Surveys may reveal encroachments, boundary disputes, or easements that affect the property.

Title Commitment: A document issued by a title company that describes the conditions under which the company will issue a title insurance policy. It includes the requirements that must be met before closing, any exceptions, and the proposed coverage amount.
Title Defect: Any issue in the chain of title that could affect the owner's right to the property. Common defects include missing signatures, incorrect legal descriptions, undischarged liens, and incomplete successions.
Title Examination: The process of reviewing public records to determine the current state of ownership and identify any liens, encumbrances, or defects in the chain of title. In Louisiana, this includes reviewing conveyance records, mortgage records, and judgment records.
Title Insurance: Insurance that protects against financial loss from defects in title to real property. Unlike other insurance that protects against future events, title insurance protects against past events that may affect current ownership.

Usufruct: A Louisiana civil law right that allows a person to use and enjoy property (including collecting income from it) that belongs to someone else. Commonly created in successions where a surviving spouse is granted usufruct over the deceased spouse's share of community property.

Wire Fraud: A growing threat in real estate transactions where criminals intercept or spoof closing instructions to redirect wire transfers. Always verify wire instructions by calling a known phone number — never use contact information from an email.

Our team is happy to explain any title or closing concept in more detail.