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Regular Session, 2011
SENATE BILL NO. 225
BY SENATOR MOUNT
Prefiled pursuant to Article III, Section 2(A)(4)(b)(i) of the Constitution of Louisiana.
FINANCIAL INSTITUTIONS. Requires a mortgagee to cancel a mortgage within sixty
days of full satisfaction of the obligation. (1/01/12)
AN ACT1
To amend and reenact R.S. 9:5557, relative to collateral mortgages and vendor's privileges;2
to provide for obligation to grant releases of mortgages; to provide for limitations;3
and to provide for related matters.4
Be it enacted by the Legislature of Louisiana:5
Section 1. R.S. 9:5557 is hereby amended and reenacted to read as follows: 6
ยง5557. Obligation to grant release of mortgage 7
A. Upon full payment or satisfaction of all the indebtedness secured by8
a mortgage on immovable property, extinction of the mortgage, the mortgagor or9
his successor may request the mortgagee to provide a written act of release directing10
the recorder to erase the mortgage from his records. The mortgagee shall deliver the11
act of release to the mortgagor within sixty days of receiving the request. If the12
mortgagee fails to deliver the act timely and in a form susceptible of recordation, the13
mortgagor may, by summary proceedings instituted against the mortgagee in the14
parish where the mortgaged property is located, obtain a judgment ordering the15
mortgage to be erased from the records and for the costs, reasonable attorneys fees,16
and any damages he has suffered from the mortgagee's default the mortgagee shall17 SB NO. 225
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words in boldface type and underscored are additions.
issue a request for cancellation in a form sufficient to cancel the mortgage from1
the mortgage records of the parish in which the mortgaged property is located.2
B. (1) This Section does not apply to a mortgage insofar as it secures3
payment of a note or other instrument paraphed for identification with the act of4
mortgage by the notary before whom it is executed when the indebtedness secured5
by the mortgage has been paid in full by the obligor personally, and not by a6
settlement agent, and the obligor has requested in writing that the mortgage not7
be cancelled. For purposes of this Section, a settlement agent is defined as a8
party conducting a settlement as defined in R.S. 22:512.9
(2) If the mortgagee receives written notice from the settlement agent10
who has paid the indebtedness in full requesting that the act of cancellation be11
sent to such settlement agent, the mortgage holder shall, within sixty days after12
receipt of the notice, send the request for cancellation to the settlement agent at13
the address specified in the notice. If such notice is not received from the14
settlement agent, the mortgagee shall, within sixty days of receipt of collected15
funds, cause to be recorded in the parish where the immovable property is16
situated a request for cancellation of the mortgage in a form acceptable for17
recordation by the clerk and recorder for the parish in which the immovable18
property is situated, together with sufficient funds to record the cancellation.19
C. If the mortgagee has not, within sixty days after payment, either20
provided the request for cancellation to the settlement agent or delivered it to21
the clerk's office with the necessary fee for recordation, the mortgagee shall be22
subject to a penalty of one thousand dollars payable to the mortgagor or his23
successor. This penalty shall escalate by one thousand dollars every thirty day24
period thereafter until the mortgage is cancelled, but in no event shall the fine25
be more than a total of five thousand dollars. If the mortgage records of the26
clerk and recorder of the parish in which the immovable property is situated27
shows that the request for cancellation has not been timely recorded, it shall be28
presumed that the mortgagee is in violation of this Section and liable for the29 SB NO. 225
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penalty imposed by this Section. If the mortgagee fails to deliver the act of1
cancellation within ninety days of funds being received and collected, and in a2
form susceptible of recordation, the mortgagor, his successor, or any interested3
party may, by summary proceedings instituted against the mortgagee in the4
parish where the immovable property is situated, obtain a judgment ordering5
the clerk of court for the parish where the property is situated to cancel and6
erase the mortgage from the mortgage records of his office and grant a7
judgment against the mortgagee or its assigns for the penalty imposed by this8
Section in favor of the mortgager or his successor, in addition to the costs,9
reasonable attorney fees, and damages the mover has suffered by reason of the10
failure to cancel the mortgage.11
Section 2. This Act shall become effective on January 1, 2012.12
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Alan Miller.
DIGEST
Present law provides that upon extinction of the mortgage, the mortgagor may request the
mortgagee to provide a written release directing the recorder of mortgages to erase the
mortgage. If the mortgagee fails to deliver the release within 60 days of receipt of the
request, present law allows the mortgagee to file a summary proceeding to obtain a judgment
ordering cancellation of the mortgage and awarding costs, attorney fees and any damages
sustained by mortgagor.
Proposed law requires the mortgagee, upon full payment of the mortgage by a settlement
agent, to issue a request for cancellation in proper form that allows mortgagor to obtain
cancellation of the mortgage. Where the mortgage has been paid by the mortgagor rather
than through a settlement agent, proposed law allows mortgagor to request in writing that
the mortgage not be cancelled.
Proposed law requires mortgagee to deliver a request for cancellation to the settlement agent
who has paid the mortgage in full within 60 days of receipt of a request from settlement
agent to forward the cancellation directly to the settlement agent. Where no such request is
received, mortgagee is required by proposed law to forward a cancellation of the mortgage
in proper form to the clerk of court with sufficient funds to pay the cost of filing the
cancellation.
Proposed law authorizes a penalty of $1,000 per month up to a maximum of $5,000 payable
to the mortgagor or his successor if the mortgagee fails to timely comply with the
requirements set forth in proposed law. SB NO. 225
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Proposed law authorizes the mortgagor, his successor, or any interested party to file a
summary proceeding to recover costs, attorney fees, damages and a penalty of up to $5,000
where the mortgagee fails to deliver the required request for cancellation within 90 days of
receipt of full payment of the mortgagee debt.
Effective January 1, 2012.
(Amends R.S. 9:5557)