ENROLLED
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Regular Session, 2012
HOUSE BILL NO. 466
BY REPRESENTATIVE ABRAMSON
(On Recommendation of the Louisiana State Law Institute)
AN ACT1
To amend and reenact Title X of Book III of the Civil Code, consisting of Articles 27782
through 2800, to consist of Articles 2778 through 2791, relative to annuities, the3
annuity contract, and the annuity charge; to provide for a definition of an annuity4
contract; to provide for the application of the Titles of Obligations in General and5
Conventional Obligations or Contracts, or the Title of Sales, or the Title of6
Donations; to provide for the recipient of payments; to provide for an annuity for life7
or a time period; to provide for the termination of an annuity in the absence of a8
designated term; to provide for the assignability and heritability of the rights and9
obligations of an annuity; to provide for an annuity in favor of successive recipients;10
to provide for an annuity in favor of several recipients of payments; to provide for11
the existence of a recipient; to provide for an annuity charge; to provide that an12
annuity charge must be express and in writing; to provide for the recordation of an13
annuity contract; to provide for the law applicable to an annuity charge; to provide14
for the duration of an annuity charge; to provide for the enforcement of an annuity15
charge; to suppress the concept of the rent of lands; to provide an effective date; and16
to provide for related matters.17 ENROLLEDHB NO. 466
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Be it enacted by the Legislature of Louisiana:1
Section 1. Title X of Book III of the Civil Code, consisting of Articles 2778 through2
2800, to consist of Articles 2778 through 2791, is hereby amended and reenacted to read as3
follows:4
TITLE X--OF RENTS AND ANNUITIES5
Art. 2778. Rent of land and rent of money.6
There are two species of rent; that of land which is properly called rent, and7
that of money.8
CHAPTER 1--OF RENT OF LANDS9
Art. 2779. Rent of lands, definition.10
The contract of rent of lands is a contract by which one of the parties conveys11
and cedes to the other a track [tract] of land, or any other immovable property, and12
stipulates that the latter shall hold it as owner, but reserving to the former an annual13
rent of a certain sum of money, or of a certain quantity of fruits, which the other14
party binds himself to pay him.15
Art. 2780. Perpetual duration essential; lease distinguished.16
It is of the essence of this conveyance that it be made in perpetuity. If it be17
made for a limited time, it is a lease.18
Art. 2780. Perpetual duration essential; lease distinguished.19
It is of the essence of this conveyance that it be made in perpetuity. If it be20
made for a limited time, it is a lease.21
Art. 2781. Sale and rent distinguished.22
A contract of sale, in which it is stipulated that the price shall be paid at a23
future time, but that it bears interest from the day of sale, is not a contract of rent.24
On the contrary, a contract made bearing the name of a sale in which the25
seller does not stipulate the payment of the price, but at a capital bearing interest26
forever, is a contract of rent.27
Art. 2782. Elements of sale and lease in rent contract.28
The contract of rent partakes of the nature of sale and of lease.29 ENROLLEDHB NO. 466
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Of sale, inasmuch as it transfers the ownership of the thing, and subjects the1
party to the same warranty which is imposed on the vendor.2
And of lease, inasmuch as it subjects the rentee to the payment of rent.3
Art. 2783. Applicability of rules of sale.4
The contract of rent is subjected to the same rules as the contract of sale,5
except in the cases hereafter specified.6
Art. 2784. Preservation of property by purchaser under reservation of rent.7
The thing sold with reservation of rent, becomes the property of the person8
receiving it, in the same manner as a thing sold becomes the property of the9
purchaser; but whereas the purchaser may make what use he pleases of the thing10
bought and may even destroy it, when he has paid the price, the purchaser under11
reservation of rent is bound to preserve the thing in good condition that it may12
continue capable of producing wherewith to pay the rent.13
Art. 2785. Total or partial destruction of property, rights and obligations of parties.14
When a thing sold is destroyed from unforeseen accident, the loss falls15
entirely on the purchaser; in case of a sale reserving rent, the loss is sustained by16
both parties; for on one side the lessee loses the enjoyment of the thing, and on the17
other the lessor loses the right to demand the rent which is extinguished.18
But in order that the rent be extinguished, the thing must have perished19
entirely; if it be lost only in part, the rent is only reducible in proportion to the loss.20
Art. 2786. Perpetual nature of rent charge.21
A thing sold and paid for may be alienated absolutely and unconditionally;22
but if it be sold with a rent reserved, it remains perpetually subject to the rent, into23
whatsoever hands it may pass.24
Art. 2787. Rent as charge on the property.25
The price of a thing sold is a debt personal to the purchaser. But where there26
has been rent reserved, it is a charge imposed on the property, and the person27
alienating it is only answerable for the arrears which become due while he was in the28
possession.29 ENROLLEDHB NO. 466
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Art. 2788. Redeemable nature of contract.1
The rent charge, although stipulated to be perpetual, is essentially2
redeemable. But the seller may determine the terms of the redemption and stipulate3
that it shall not take place until after a certain time, which can never exceed thirty4
years.5
Art. 2789. Price of redemption when valued in contract.6
If the value of the property has been determined by the contract, the possessor7
who wishes to redeem can not be made to pay anything beyond that value.8
Art. 2790. Determination of price in absence of valuation.9
If there has been no valuation, the rent is considered as fixed at the rate of six10
per cent. on the value, and the lessee may*pay the capital at that valuation.11
Art. 2791. Mortgage on property for payment of rent.12
The rentor has for the payment of this rent a right of mortgage on the13
property, commencing from the date of the contract. But he can not have it seized14
and sold, unless there be at least one entire year's rent due.15
Art. 2792. Mortgageability of rent charge.16
The rent, charged, [rent charge] being inherent to the property burdened with17
it, is itself susceptible of being mortgaged, except when it has been gratuitously18
established, for the benefit of a third person, on condition that it should not be liable19
to seizure.20
CHAPTER 1. ANNUITY CONTRACT21
Art. 2778. Annuity contract; definition22
A. An annuity contract is an agreement by which a party delivers a thing to23
another who binds himself to make periodic payments to a designated recipient. The24
recipient's right to these payments is called an annuity.25
B. A contract transferring ownership of a thing other than money for a26
certain or determinable price payable over a term is not an annuity contract.27
Revision Comments - 201228
(a) This Article is new. Under this Article, an annuity contract for an29
uncertain period of time may be established by delivering to the obligee all kinds of30
things, corporeals and incorporeals, consumables and nonconsumables, movables31 ENROLLEDHB NO. 466
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and immovables. Modern civil codes, including the Quebec Civil Code, the Dutch1
Civil Code, the German Civil Code, and the Italian Civil Code are in accord.2
(b) Under the principle of contractual freedom that prevails in Louisiana,3
parties are free to enter into contract whereby a person binds himself to make4
periodic payments to a designated recipient for a certain or determinable price5
payable over a term. Such contracts are not annuity contracts under this Article.6
They may be credit sales, or they may be innominate contracts governed by7
contractual provisions and general principles of law and conventional obligations.8
(c) Article 2793 of the Louisiana Civil Code of 1870 defines the nominate9
annuity contract. In Louisiana practice, however, the word annuity is at times used10
to denote an annuity contract and at other times the same word is used to denote the11
right to the payments that derive from an annuity contract or other provision of12
contract or law. See C.C. Art. 3494(2) (Rev. 1983). See also C.C. Art. 593 (Rev.13
1976) that refers to "the legacy of an annuity," namely, a testamentary provision14
intended to provide successive payments to a legatee. 15
(d) Article 2793 of the Louisiana Civil Code of 1870 contemplates two16
parties to the annuity contract: the first party delivers a sum of money to the second17
party who binds himself to make successive payments to the first party. In contrast,18
under C.C. Art. 2778 (Rev. 2012), the recipient of the payments may be a third19
person. In that respect, the annuity contract may be a stipulation pour autrui, a20
third-party beneficiary contract.21
(e) C.C. Art. 593 (Rev. 1976) refers to "the legacy of an annuity," namely,22
a testamentary provision for successive payments to a designated legatee. In the23
absence of other provision, payments under such legacy to a natural person terminate24
upon his death and payments to a juridical person terminate upon the dissolution of25
that person. See Yiannopoulos, Personal Servitudes, §1:7, §4:34, §6:4 (5th ed.26
2011). However, a legacy of an annuity for a determined period of time may exceed27
the lifetime of the legatee and may be heritable. 28
(f) The contract of annuity in this Article is distinguishable from a legacy of29
revenues under C.C. Art. 609 (Rev. 1976). A legacy of revenues may be a charge30
on the succession of a deceased or a charge on specified property of the deceased.31
A legacy of revenues burdening specified property of the deceased is a real right and32
a kind of usufruct. See Yiannopoulos, 3 Personal Servitudes, §6:4 (5th ed. 2011).33
(g) The right to the stream of income from an annuity contract is an34
incorporeal. C.C. Art. 473 (Rev. 1978). Moreover, the annuity contract is itself an35
incorporeal. An action for an arrearage of an annuity payment is subject to a36
liberative prescription of three years. C.C. Art. 3494(2) (Rev. 1983).37
Art. 2779. Applicability of the rules governing obligations38
In all matters for which no special provision is made in this Title, an onerous39
annuity contract is governed by the Titles of Obligations in General and40
Conventional Obligations or Contracts, and when the contract provides for delivery41
of a thing other than money, it is governed by the Title of Sales. A gratuitous42
annuity contract is governed by the Title of Donations.43 ENROLLEDHB NO. 466
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Revision Comments - 20121
(a) This Article is new. It restates a principle of existing law governing2
special contracts. Cf. C.C. Arts. 2892 (Rev. 2004) and 2927 (Rev. 2003). 3
(b) The definition of the annuity contract in C.C. Art. 2778 (Rev. 2012)4
indicates that such a contract is always at least partly onerous. In accord with that5
Article, this Article declares that a gratuitous annuity contract is governed by the6
Title of Donations. For application to an onerous donation of the rules peculiar to7
donations inter vivos, see C.C. Art. 1526 (Rev. 2008).8
(c) An onerous contract transferring ownership of a thing other than money9
for a certain or determinable price payable over a term is not an annuity contract.10
C.C. Art. 2778 (Rev. 2012).11
(d) According to this Article, in the absence of a special provision in this12
Title, an onerous annuity contract providing for delivery of a thing other than money13
is governed by the Title of Sales. An annuity contract providing for the transfer of14
a corporeal immovable may be rescinded for lesion beyond moiety. See C.C. Arts.15
1965, 2589 et seq., and 2663.16
Art. 2780. Recipient of payments17
The recipient of payments under an annuity contract may be a natural person18
or a juridical person.19
Revision Comment - 201220
This Article is new. It is based upon C.C. Arts. 24, 26, 29 (Rev. 1987), and21
549 (Rev. 1976; amended 2010) and restates a principle of existing law.22
Art. 2781. Annuity for life or time period23
The payments under an annuity contract may be for the lifetime of a24
designated natural person, or, alternatively, for a period of time.25
Revision Comments - 201226
(a) This Article is new. In accord with Article 2794 of the Louisiana Civil27
Code of 1870, which declares that "[the] annuity may be either perpetual or for life",28
certain or indefinite. The payments under an annuity contract may be for the life of29
a designated recipient or for a period of time. 30
(b) The right to periodic payments under an annuity contract is heritable and31
assignable in the absence of contrary provision of law or juridical act. See C.C. Art.32
2783 (Rev. 2012). 33
(c) An annuity contract is assignable and heritable. C.C. Art. 2783 (Rev.34
2012). However, an annuity charge cannot burden an immovable beyond the35
limitations of time provided in C.C. Art. 2790 (Rev. 2012).36 ENROLLEDHB NO. 466
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Art. 2782. Termination of annuity; absence of a designated term1
In the absence of a designated term, an annuity established in favor of a2
natural person terminates upon the death of that person, but one in favor of a juridical3
person is without effect.4
Revision Comment - 20125
This Article is new. According to C.C. Art. 2781 (Rev. 2012), an annuity6
established in favor of a juridical person may be "for a period of time." However,7
such an annuity cannot be for an indefinite period. In the absence of a designated8
term, an annuity established in favor of a juridical person is without effect because9
a substantive legal requirement for the formation of the contract has not been met.10
Art. 2783. Assignable and heritable rights and obligations11
In the absence of a contrary provision of law or juridical act, the rights and12
obligations of the parties under an annuity contract are assignable and heritable.13
Revision Comments - 201214
(a) The obligations of the parties to an annuity contract are heritable and15
assignable. Accordingly, the obligations of the party bound to make payments do16
not necessarily end with his death. In the absence of other provision of law or17
juridical act, the obligation to make payments passes to his successors in the same18
manner as other debts. Correspondingly, in the absence of other provision of law or19
juridical act, the right of a designated recipient of payments for a term of years does20
not terminate on his death. On his death, that right passes to his successors.21
(b) These provisions are suppletive. The parties to an annuity contract may22
freely provide that rights and obligations shall terminate upon the death of either23
party. Thus, they may provide that the obligation to make successive payments is24
extinguished upon the obligor's death or that the recipient's right to receive payments25
is likewise extinguished upon his death. 26
Art. 2784. Annuity in favor of successive recipients27
An annuity may be established in favor of successive recipients.28
Revision Comment - 201229
This Article is new. It restates a principle of existing law. Cf. C.C. Art. 54630
(Rev. 1976). 31
Art. 2785. Annuity contract in favor of several recipients of payments32
An annuity contract may be established in favor of several natural persons,33
whether in divided shares or in indivision. When an annuity contract is established34
for the lifetimes of several recipients of payments in indivision, the termination of35
the interest of a recipient inures to the benefit of those remaining unless the annuity36
contract expressly provides otherwise.37 ENROLLEDHB NO. 466
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Revision Comments - 20121
(a) This Article is new. It is analogous to the law governing the rights of2
several usufructuaries in indivision. Cf. C.C. Art. 547 (Rev. 1976). When an3
annuity contract is established for the lives of several recipients of payments in4
indivision, the termination of the interest of a recipient inures upon his death to the5
benefit of those remaining unless the annuity contract expressly provides otherwise.6
(b) This Article contemplates the constitution of a single annuity contract for7
the lives of several natural persons in indivision. Accordingly, this Article does not8
apply when an annuity is established in favor of several recipients for a designated9
period, whether in divided shares or in indivision, or when an annuity is established10
in divided shares for the lives of several recipients. Furthermore, this Article does11
not apply when an annuity is established in favor of several juridical persons. 12
Art. 2786. Existence of recipient13
When an annuity is established in favor of a natural person, that person must14
exist or be in utero at the time of the formation of the annuity contract.15
When an annuity is established in favor of a juridical person, that person must16
likewise exist at the time of the formation of the annuity contract.17
Revision Comment - 201218
This Article is new. It restates principles of existing law. Cf. C.C. Art. 54819
(Rev. 1976).20
CHAPTER 2--OF ANNUITIES21
Art. 2793. Annuity, definition.22
The contract of annuity is that by which one party delivers to another a sum23
of money, and agrees not to reclaim it so long as the receiver pays the rent agreed24
upon.25
Art. 2794. Perpetual or life annuities.26
This annuity may be either perpetual or for life.27
Art. 2795. Limitation on rate of interest.28
The amount of annuity for life can in no case exceed the double of the29
conventional interest.30
The amount of perpetual annuity can not exceed the conventional interest.31
Art. 2796. Redeemable nature of contract.32
Constituted annuity is essentially redeemable.33 ENROLLEDHB NO. 466
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The parties may only agree that the same shall not be redeemed prior to a1
time which can not exceed ten years, or without having warned the creditor a time2
before, which they shall limit.3
Art. 2797. Compulsory redemption against debtor.4
The debtor of a constituted annuity may be compelled to redeem the same:5
1. If he ceases fulfilling his obligations during three years.6
2. If he does not give to the lender the securities promised by the contract.7
Art. 2798. Insolvency of debtor, effect.8
If the debtor should fail, or be in a state of insolvency, the capital of the9
constituted annuity becomes exigible; but only up to the amount at which it is rated,10
according to the order of contribution amongst the creditors.11
Art. 2799. Right of debtor's surety to compel redemption.12
The debtor may be compelled by his security to redeem the annuity within13
the time which has been fixed in the contract, if any time has been fixed, or after ten14
years, if no mention be made of the time in the act.15
Art. 2800. Interest on sums lent and on arrears of annuity.16
The interest of the sums lent and the arrears of constituted and life annuity17
can not bear interest but from the day a judicial demand of the same has been made18
by the creditor and when interest is due for at least one whole year.19
CHAPTER 2. ANNUITY CHARGE20
Art. 2787. Annuity charge21
An annuity contract transferring an immovable may provide for the22
establishment of a charge on the immovable for the periodic payments due under the23
contract. In such a case, the recipient in whose favor the annuity was established24
acquires a real right for periodic payments. The establishment of the annuity charge25
must be express and in writing.26
Revision Comments - 2012 27
(a) This Article is new. It is intended to provide for Louisiana owners a28
modern, effective, and efficient tool for acquisition of financial resources as an29
alternative to the so-called reverse mortgage. The annuity charge is similar in nature30
to a legacy of revenues under C.C. Art. 609 (Rev. 1976).31 ENROLLEDHB NO. 466
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(b) An owner may transfer immovable property to another person who1
undertakes a personal obligation to make periodic payments to the transferor or to2
another recipient. The parties may agree that the obligation will be a charge on the3
immovable that has been transferred. In such a case, the transferor acquires a real4
right for periodic payments over the transferred immovable property. The annuity5
charge is an incorporeal immovable subject to the laws governing immovable6
property and a real obligation under C.C. Arts. 1763 and 1764 (Rev. 1984).7
Accordingly, in order to be effective toward third persons, the annuity charge must8
be recorded in the appropriate public records as provided by law. See C.C. Art. 27889
(Rev. 2012), infra.10
(c) In principle, the holder of the real right providing for periodic payments11
has an assignable right that he may dispose of as he pleases. If the immovable12
property is transferred to another person, the annuity charge continues to burden that13
property, and if the owner of the immovable fails to make payments, the annuity14
recipient has recourse against the obligor and the immovable burdened by the15
annuity charge.16
(d) For security and certainty of transaction and acquisition, certain juridical17
acts, including the establishment of an annuity charge, must be express and in18
writing. Cf. C.C. Arts. 771, 963, 1839, 3038, and 3450.19
Art. 2788. Annuity charge; recordation20
An annuity charge on an immovable is without effect as to third persons21
unless the annuity contract establishing it is recorded in the conveyance records of22
the parish in which the immovable is located.23
Revision Comments - 2012 24
(a) This Article is new. It accords with the principles established in C.C.25
Art. 3346(A) (Rev. 2005). 26
(b) In order to be effective against third persons, the contract establishing the27
annuity charge must be recorded in the conveyance records of the parish in which the28
immovable is located. This accords with the principles established in C.C. Art.29
3346(A) (Rev. 2005). The annuity charge is not merely security like a mortgage or30
privilege; therefore, recordation of the annuity contract in the conveyance records31
is appropriate and required by law. 32
(c) Recordation of the contract establishing the annuity charge in the33
mortgage records is not required. Accordingly, an annuity charge recorded in the34
conveyance records is effective against third persons without recordation in the35
mortgage records. 36
Art. 2789. Applicable law37
In all matters for which no special provision is made in this Chapter, the38
annuity charge is governed by the provisions of Chapter 1 of this Title.39
Revision Comment - 201240
This Article corresponds with C.C. Art. 2779 (Rev. 2012). 41 ENROLLEDHB NO. 466
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Art. 2790. Annuity charge for life or time period1
The annuity charge may not exceed thirty years, except that it may continue2
for the lifetime of a recipient who is a natural person.3
Revision Comments - 20124
(a) This Article is new. The payments under an annuity contract may be for5
the life of a designated recipient or for a period of time. See C.C. Art. 2781 (Rev.6
2012). In contrast, under C.C. Art. 2790 (Rev. 2012), the annuity charge may not7
exceed thirty years, except that it may continue for the life of a recipient who is a8
natural person.9
(b) The right to periodic payments under an annuity contract is heritable and10
assignable in the absence of a contrary provision of law or juridical act. See C.C.11
Art. 2783 (Rev. 2012). However, an annuity charge cannot burden an immovable12
beyond the time limitations provided in this Article.13
(c) The termination of the annuity charge does not affect the annuity contract14
for periodic payments. Accordingly, the personal obligation for periodic payments15
continues to exist until the termination of the annuity contract. See C.C. Arts. 278116
and 2782 (Rev. 2012).17
Art. 2791. Enforcement of the annuity charge18
A. Upon failure of payment of amounts due under a contract establishing an19
annuity charge, the recipient may obtain judgment for the amounts due and may20
enforce the judgment by execution upon the immovable subject to the annuity charge21
in accordance with law.22
B. The adjudication extinguishes the annuity charge for all amounts for23
which judgment was rendered as well as all charges and encumbrances on the24
immovable inferior to the annuity charge but does not extinguish the annuity charge25
for amounts thereafter becoming due under the contract.26
Revision Comments - 201227
(a) This Article is new. It creates a legal framework for the enforcement of28
the annuity charge by judicial process when the obligor fails to render payments due.29
Execution will be governed by the applicable provisions of the Louisiana Code of30
Civil Procedure.31
(b) The adjudication extinguishes the annuity charge as to all amounts for32
which judgment was rendered as well as all charges and encumbrances on the33
immovable inferior to the annuity charge. However, the adjudication does not34
extinguish the annuity charge for amounts thereafter becoming due under the35
contract. The annuity charge on the immovable property continues to exist for36
payments due under the annuity contract.37
(c) If the qualities of obligee and obligor are united in the same person, the38
principles of confusion are applicable. See C.C. Art. 1903 (Rev. 1984). Cf. C.C.39
Arts. 622, 765, and 3319(2).40 ENROLLEDHB NO. 466
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Section 2. This Act shall become effective on January 1, 2013, and shall apply to1
transactions within its scope entered into on or after that date.2
SPEAKER OF THE HOUSE OF REPRESENTATI VES
PRESIDENT OF THE SENATE
GOVERNOR OF THE STATE OF LOUISIANA
APPROVED: