On the recommendation of the Louisiana Law Institute, the Louisiana Legislature passed Act 281 (the “Act”). The Act concerns amendments to the Louisiana Civil Code relative to security, pledge and recordation. Civil Code art. 3133 et seq. concerning pledge have been deleted in their entirety and replaced with general articles on the liability of an obligor for his obligations and the relationship of creditors vis-à-vis the obligor and other creditors. The articles concerning pledge have moved to Civil Code art. 3141 et seq. although the substance of the pledge articles has also changed.
Civil Code art. 3136 defines security as “an accessory right established by legislation or contract over property, or an obligation undertaken by a person other than the principal obligor to secure performance of an obligation.” The article is new, but the concept is not. It broadens the scope of security beyond simply an obligation created by contract. The new Civil Code art. 3133 et seq. are consistent with previous articles from the 1984 Civil Code Revision. The latest revision seeks to align the civil code articles on security rights with the Louisiana Uniform Commercial Code in Title 10.
Importantly, new Civil Code art. 3346 provides that a pledge of the lessor’s rights in the lease of an immovable and its rents is recorded in the mortgage records of the parish in which the immovable is located. Note that new Civil Code art. 3169 provides that the pledge of the lessor’s rights in the lease of an immovable is not effective as to third parties until the contract is recorded. This represents a change in the law, which formerly required recordation in the conveyance records. For transitional rules applicable to the continued effectiveness of assignments of leases and rents filed in the conveyance records in accordance with former R.S. 9:4401 prior to January 1, 2015, as well as rules that apply to the reinscription, release, transfer, amendment, or other modification of those assignments, see R.S. 9:4403.
For a complete text of the Bill, click here.