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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. Provides relative to release and cancellation of mortgages.
AN ACT1
To amend and reenact R.S. 9:5557 and to enact R.S. 9:5165, relative to mortgages; to2
provide relative to release and cancellation of mortgages under certain3
circumstances; to provide certain procedures, terms, conditions, requirements,4
application and effects; to provide certain time periods; to provide for recovery of5
certain damages, fees, and costs under certain circumstances; to provide for the6
obligation to grant releases of mortgages; to provide for limitations; and to provide7
for related matters.8
Be it enacted by the Legislature of Louisiana:9
Section 1. R.S. 9:5557 is hereby amended and reenacted and R.S. 9:5165 is hereby10
enacted to read as follows:11
§5165. Issuance of release of mortgage by current mortgagee 12
A. The provisions of this Section shall apply only to residential13
mortgages, where a mortgage has been granted by a consumer on a one-to-four14
family residential immovable property, including a mortgage to finance the15
initial construction of the one-to-four family residential immovable property.16
The provisions of this Section shall apply only to mortgages recorded on and17 SB NO. 225
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after January 1, 2012.1
B. (1) Upon extinction of the mortgage in accordance with Louisiana2
Civil Code Article 3319, the mortgagor, his successor in ownership or settlement3
agent may submit a written request, signed by the mortgagor to the mortgagee,4
to issue a written act of release directing the appropriate recorder of mortgages5
to cancel the inscription of the mortgage from the public mortgage records.6
This written request that the mortgage be cancelled shall extinguish any7
obligation on the part of the mortgagee and all additional lenders, on whose8
behalf the mortgagee may be representing or acting for the benefit of, to make9
any further loan or advance that would be secured by the mortgage.10
(2) If the mortgagee has assigned, transferred, or delegated the servicing11
rights to a third party then the duties and liabilities of the mortgagee under this12
Section shall apply solely to the third party.13
(3) The written request shall be mailed to the mortgagee at the address14
designated by the mortgagee to be used for such written requests. If the request15
is accompanied by a payoff check from a settlement agent, the written request16
shall be delivered to the same address where the payoff check is sent.17
(4) The mortgagee shall submit the act of release of the mortgage18
directly to the settlement agent if a written request was received by the19
mortgagee from a settlement agent. The written request to issue an act of20
release of the mortgage must be accompanied by sufficient payment to the21
mortgagee to pay the mortgagee a reasonable fee for this service. The22
mortgagee may charge a reasonable fee to the mortgagor or his agent for all23
services and costs to prepare, execute, and mail the act of release. Any fees24
charged by the mortgagee under this Subsection shall be clearly itemized to the25
requesting mortgagor or settlement agent in the payoff letter or statement or26
other communication.27
(5) The mortgagee shall issue within forty-five days after receipt from28
the mortgagor of a written request for cancellation of the mortgage29 SB NO. 225
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accompanied by the fees required by Subsection (B)(4), the act of release along1
with a request for cancellation that complies with Louisiana Civil Code Article2
3366.3
(6) If the mortgagee receives a signed written request, in accordance with4
Subsection (B)(1), directly from the mortgagor or the successor in ownership,5
and there is no settlement agent involved in forwarding the request, and the6
required fees are received in accordance with Subsection (B)(4) along with the7
appropriate cancellation fees for the recorder of mortgages, then the mortgagee8
shall within forty-five days of receiving such request prepare and submit to the9
appropriate recorder of mortgages an act of release along with the request for10
cancellation that complies with Louisiana Civil Code Article 3366.11
C. Upon receipt of the act of release and request for cancellation, the12
settlement agent shall file same with the appropriate recorder of mortgages13
within forty-five days. 14
(1) The mortgagee shall not be liable for damages, fees or costs caused15
by the failure of the settlement agent to timely file the act of release and request16
for cancellation, if the act of release and request for cancellation are in17
compliance with the law and sufficient to cancel the inscription of the mortgage18
from the mortgage records. 19
(2) If the settlement agent fails to timely file the release, he shall be liable20
for the statutory and actual damages, costs and fees provided for in Subsection21
E.22
D. In the event either the mortgagee or settlement agent has failed to23
comply with the requirements of this Section, the mortgagee and settlement24
agent shall be provided with written notice of noncompliance identifying the25
mortgage at issue and the explanation of how they failed to comply with the26
requirements of this Section, and then the mortgagee and settlement agent shall27
be given an opportunity to prepare and submit an act of release of mortgage28
and request for cancellation to the appropriate recorder of mortgages within29 SB NO. 225
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fifteen days of receiving the notice before any rights accrue under Subsection1
E.2
E. If the mortgagee fails to perform the duty described in this Section,3
the mortgagor or his successor in ownership may, by summary proceedings4
instituted against the mortgagee, in the parish where the mortgaged property5
is located, obtain a judgment ordering the mortgage inscription to be cancelled6
from the records and for the costs, reasonable attorney fees, statutory damages7
in the amount of five hundred dollars, and actual damages he has suffered from8
the failure to comply with this Section. Any judgment for damages may be9
awarded individually, but not in a representative capacity. The rights to10
recover damages under this Section are personal to the mortgagor or his11
successor in ownership of the property and may not be assigned.12
F. A mortgagee complying with the provisions of this Section shall not13
be subject to the requirements of R.S. 9:5167.2. 14
* * *15
§5557. Obligation to grant release of mortgage16
A. The provisions of this Section shall apply only to mortgages recorded17
prior to January 1, 2012.18
B. A. Upon extinction of the mortgage, the mortgagor or his successor may19
request the mortgagee to provide a written act of release directing the recorder to20
erase the mortgage from his records. The mortgagee shall deliver the act of release21
to the mortgagor within sixty days of receiving the request. If the mortgagee fails22
to deliver the act timely and in a form susceptible of recordation, the mortgagor may,23
by summary proceedings instituted against the mortgagee in the parish where the24
mortgaged property is located, obtain a judgment ordering the mortgage to be erased25
from the records and for the costs, reasonable attorneys fees, and any damages he has26
suffered from the mortgagee's default.27
C. B. This Section does not apply to a mortgage insofar as it secures28
payment of a note or other instrument paraphed for identification with the act of29 SB NO. 225
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mortgage by the notary before whom it is executed.1
Section 2. This Act shall become effective on January 1, 2012.2
The original instrument was prepared by Alan Miller. The following digest,
which does not constitute a part of the legislative instrument, was prepared
by Dawn Romero Watson.
DIGEST
Mount (SB 225)
Present law relative to the obligation to grant a release of mortgage 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 retains present law, but adds that its provisions shall apply only to mortgages
recorded prior to January 1, 2012.
Proposed law adds certain requirements relative to release and cancellation of construction
and residential mortgages perfected on and after January 1, 2012, that have been granted to
a consumer and are relative to a single or up to four family unit properties.
Proposed law provides that upon extinction of the mortgage, the mortgagor, his successor
or settlement agent may submit a written request, signed by the mortgagor to the current
holder of the mortgage, to issue a written act of release directing the appropriate recorder of
mortgages to cancel the inscription of the mortgage from the public mortgage records.
Provides that the written request that the mortgage be cancelled extinguishes any obligation
on the part of the mortgagee and all additional lenders, on whose behalf the mortgagee may
be representing or acting for the benefit of, to make any further loan or advance that would
be secured by the mortgage. Provides that if the mortgagee has assigned, transferred or
delegated the servicing rights to a third party, the duties and liabilities of the mortgagee
under proposed law apply solely to the third party.
Proposed law provides that the written request shall be mailed to the mortgagee at the
address designated by the mortgagee to be used for such written requests, but if the request
is accompanied by a payoff check from a settlement agent, the written request is to be
delivered to the same address where the payoff check is sent.
Proposed law provides that the written request for an act of release must be accompanied by
sufficient payment to the current mortgagee to pay the mortgagee a reasonable fee for this
service. Allows the mortgagee to charge a reasonable fee to the mortgagor or his agent for
all services and costs to prepare, execute, and mail the act of release. Any fees charged by
the mortgagee has to be clearly itemized to the requesting mortgagor or settlement agent in
the payoff letter, statement or other communication.
Proposed law provides that within 45 days after receipt from the mortgagor or settlement
agent of a written request for cancellation of the mortgage accompanied by the fee, the
mortgagee shall issue the act of release along with a request for cancellation. If the written
request and fee was received from a settlement agent, the mortgagee issues the act of release
and request for cancellation to the settlement agent who then has 45 days to file same with
the appropriate recorder of mortgages. If the written request and fee was received from the
mortgagor, the mortgagee submits the act of release and request for cancellation to the
appropriate recorder of mortgages. SB NO. 225
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Proposed law provides that the mortgagee shall not be liable for damages, fees or costs
caused by the failure of a settlement agent to timely file the act of release and request or
cancellation if the documents are in compliance with the law and sufficient to cancel the
inscription of the mortgage from the mortgage records.
Proposed law provides that in the event that either the mortgagee or the settlement agent fails
to comply with proposed law, the mortgagee and settlement agent shall be provided with
written notice of noncompliance identifying the mortgage at issue and an explanation of how
they failed to comply with the law. The mortgagee and settlement agent shall then be given
an opportunity to prepare and submit an act of release and request for cancellation to the
appropriate recorder of mortgages within 15 days of receipt of the noncompliance notice.
Proposed law provides that if the mortgagee or the settlement agent fails to perform the
duties as described in proposed law, the mortgagor or his successor in ownership may, by
summary proceedings instituted against the mortgagee, in the parish where the mortgaged
property is located, obtain a judgment ordering the mortgage inscription to be cancelled from
the records and for the costs, reasonable attorney fees, statutory damages in the amount of
$500, and actual damages he has suffered from the failure to comply with proposed law.
Provides that any judgement for damages may be awarded individually, but not in a
representative capacity. Provides that the rights to recover damages are personal to the
mortgagor or his successor in ownership of the property and may not be assigned.
Effective January 1, 2012.
(Amends R.S. 9:5557 and adds R.S. 9:5165)
Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Judiciary A to the
original bill.
1. Added R.S. 9:5165 setting forth revised proposed law provisions.
2. Removed proposed law provisions from R.S. 9:5557 and added that its
present provisions applied only to mortgages recorded prior to 1/1/12.
Senate Floor Amendments to engrossed bill.
1. Adds provisions limiting application of proposed law to residential
mortgages granted to a consumer of a one-to-four family property.
2. Changes to whom the mortgagee submits the act of release and request for
cancellation when the written request is received from a settlement agent
from the appropriate recorder of mortgages to the settlement agent and
requires settlement agent to file same with appropriate recorder of mortgages
within 45 days.
3. Removes requirement that mortgagee provide a copy of request for
cancellation and cancellation information received from the recorder of
mortgages to the mortgagor or his agent.