Louisiana Senate Bill SB89 Latest Draft

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Regular Session, 2014	ENROLLED
SENATE BILL NO. 89
BY SENATOR PEACOCK (On Recommendation of the Louisiana State Law Institute)
AN ACT1
To amend and reenact Title XX of Book III of the Civil Code, to be comprised of Articles2
3133 through 3140, Civil Code Articles 3346, 3354, 3355, 3356, 3357, 3358, 3361,3
3362, 3363, 3365, 3366, 3367, and 3368, the heading of Part IV of Chapter 1 of4
Code Title XX-A of Code Book III of Title 9 of the Louisiana Revised Statutes of5
1950, R.S. 9:4401 and 5386, and R.S. 10:9-102(a)(2), to enact Title XX-A of Book6
III of the Civil Code to consist of Articles 3141 through 3175, R.S. 9:4402 and 4403,7
to repeal Civil Code Articles 3176, 3177, 3178, 3179, 3180, 3181, 3182, 3183, and8
3184, relative to security, pledge, and registry; to provide for the liability of an9
obligor for his obligation; to provide for ratable treatment of creditors; to provide for10
limitations upon recourse; to provide for a definition of security; to provide for11
personal or real security; to provide for kinds of security; to provide for the law12
governing a security interest; to provide for the nullity of an agreement of forfeiture;13
to provide for the general provisions of pledge; to provide a definition of pledge; to14
provide for property susceptible of pledge; to provide for the pledge of property15
susceptible of encumbrance by a security interest; to provide for the accessory nature16
of pledge; to provide for the preference afforded by pledge; to provide for17
obligations for which pledge may be given; to provide for pledge securing an18
obligation that is not for the payment of money; to provide for pledge securing an19
obligation of another person; to provide the formal requirements of a contract of20
pledge; to provide for the acceptance of a pledge; to provide for who has the power21
to pledge; to provide for the pledge of a thing not owned; to provide the general22
requirements for effectiveness of pledge against third persons; to provide for23
effectiveness against third persons of the pledge of the lease of an immovable; to24
ACT No. 281 SB NO. 89	ENROLLED
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provide for effectiveness against third persons of the pledge of other obligations; to1
provide for the pledgee's right of retention; to provide for the indivisibility of pledge;2
to provide for the enforcement of a pledge of a movable; to provide for fruits of thing3
pledged; to provide for the pledge of the obligation of a third person; to provide for4
performance by an obligor of a pledged obligation; to provide for defenses available5
to the obligor of a pledged obligation; to provide for a clause prohibiting pledge; to6
provide for the modification of a contract from which a pledge obligation arises; to7
provide for the attachment of pledge obligations arising under modified or8
substituted contract; to provide for modification as default by pledgor; to provide9
that pledgee is not bound for pledgor's obligations; to provide for the requirements10
of a contract of the pledge of the lessor's rights in the lease of an immovable and its11
rents; to provide for the effectiveness of a pledge of the lessor's rights in the lease of12
an immovable and its rents against third persons; to provide for a pledge contained13
in act of mortgage; to provide for pledge of all or part of the leases of an immovable;14
to provide for pledge of mineral payments by owner of land or holder of mineral15
servitude; to provide for accounting to other pledgees for rent collected; to provide16
for the prohibition of a judicial sale of the lessor's rights in the lease of an17
immovable and its rents; to provide for the applicability of the general rules of18
Chapter 1 of Title XX-A of Book III of the Civil Code to the pledge of the lessor's19
rights in the lease of an immovable and its rents when no special provision is made20
in Chapter 2 of Title XX-A of Book III of the Civil Code; to provide for the place of21
recordation of instrument creating, establishing, or relating to a mortgage or privilege22
over an immovable, or the pledge of the lessor's rights in the lease of an immovable23
and its rents and the duty of recorder; to provide for the general provisions of24
mortgage records; to provide for the applicability of Chapter 2 of Title XXII-A of25
Book III of the Civil Code to mortgages, privileges, and pledges; to provide for a26
mortgage, pledge, or privilege affecting property in several parishes; to provide for27
transfers, amendments, and releases; to provide for a general rule of duration of the28
recordation of an instrument creating a mortgage, pledge, or evidencing a privilege;29
to provide for the duration of recordation of certain mortgages, pledges, and30 SB NO. 89	ENROLLED
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privileges; to provide for the duration of recordation of judicial mortgages; to1
provide for the effect of amendment; to provide for the method of reinscription; to2
provide for the exclusiveness of the method of reinscription; to provide for the effect3
of timely recordation of notice of reinscription; to provide for the effect of notice4
recorded after cessation of effect of recordation; to provide for the form and content5
of cancellation upon written request; to provide for the cancellation of recordation6
after effect of recordation has ceased; to provide for cancellation of judicial7
mortgage arising from judgment that has prescribed; to provide for the pledge of8
leases and rents of an immovable; to provide for the pledge of the lessor's rights in9
the lease of an immovable and its rents; to provide for the right of pledgee to cash10
proceeds of rent; to provide for transitional filing rules for assignments of leases and11
rents recorded prior to January 1, 2015; to provide for mortgage to include pledge12
of mortgagor's rights to insurance; to provide a definition of an account for Chapter13
9 of Title 10 of the Louisiana Revised Statutes of 1950; to provide authorization for14
the Louisiana State Law Institute to add Comments for Civil Code Articles 3359 and15
3364; to provide authorization for the Louisiana State Law Institute to amend or to16
provide headings in the Civil Code and the Louisiana Revised Statutes of 1950; to17
provide for an effective date; and to provide for related matters.18
Be it enacted by the Legislature of Louisiana:19
Section 1. Title XX of Book III of the Civil Code, comprised of Articles 313320
through 3140, and Civil Code Articles 3346, 3354, 3355, 3356, 3357, 3358, 3361, 3362,21
3363, 3365, 3366, 3367, and 3368 are hereby amended and reenacted and Title XX-A of22
Book III of the Civil Code, comprised of Articles 3141 through 3175, is hereby enacted to23
read as follows:24
TITLE XX. OF PLEDGE25
Art. 3133. Pledge, definition26
The pledge is a contract by which one debtor gives something to his creditor27
as a security for his debt.28
Art. 3133.1. Relation to Chapter 9 of the Louisiana Commercial Laws29
This Title shall apply to pledges of movables that are delivered prior to the30 SB NO. 89	ENROLLED
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time Chapter 9 of the Louisiana Commercial Laws becomes effective, including1
without limitation those pledges that may secure future obligations and lines of2
credit, as well as to pledges entered into on or after the time Chapter 9 of the3
Louisiana Commercial Laws becomes effective that are exempt or otherwise4
excluded from coverage thereunder.5
Art. 3134.  Kinds of Pledge6
There are two kinds of pledge:7
The pawn.8
The antichresis.9
Art. 3135. Pawn and antichresis distinguished10
A thing is said to be pawned when a movable thing is given as a security; and11
the antichresis, when the security given consists in immovables.12
CHAPTER 1. GENERAL PROVISIONS13
Art. 3136. Obligations enforceable by pledge14
Every lawful obligation may be enforced by the auxiliary obligation of15
pledge.16
Art. 3137.  Conditional obligation as basis for pledge17
If the principal obligation be conditional, that of the pledge is confirmed or18
extinguished with it.19
Art. 3138. Effect of nullity of principal obligation20
If the obligation is null, so also is the pledge.21
Art. 3139.  Natural obligation as basis for pledge22
The obligation of pledge annexed to an obligation which is purely naturel, is23
rendered valid only when the latter is confirmed and becomes executory.24
Art. 3140. Object of principal obligation25
Pledge may be given not only for an obligation consisting in money, but also26
for one having any other object; for example, a surety.  Nothing prevents one person27
from giving a pledge to another for becoming his surety with a third.28
Art. 3141. Pledge for debt of another29
A person may give a pledge, not only for his own debt, but for that of another30 SB NO. 89	ENROLLED
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also.1
Art. 3142. Things susceptible of being pledged2
A debtor may give in pledge whatever belongs to him.3
But with regard to those things, in which he has an ownership which may be4
divested or which is subjected to incumbrance, he can not confer on the creditor, by5
the pledge, any further right than he had himself.6
Art. 3143. Pledgor's rights at date of pledge7
To know whether the thing given in pledge belonged to the debtor, reference8
must be had to the time when the pawn was made.9
Art. 3144. Subsequent acquisition of ownership of thing pledged10
If at the time of the contract the debtor had not the ownership of the thing11
pledged, but has acquired it since, by what tile soever, his ownership shall relate12
back to the time of the contract, and the pledge shall stand good.13
Art. 3145. Pledge of property of another, necessity for consent of owner14
One person may pledge the property of another, provided it be with the15
express or tacit consent of the owner.16
Art. 3146. Implied consent of owner17
But this tacit consent must be inferred from circumstances, so strong as to18
have [leave] no doubt of the owner's intention; as if he was present at the making of19
the contract, or if he himself delivered to the creditor the thing pawned.20
Art. 3147. Binding effect of pledge of thing of another21
Although the property of another can not be given in pledge without his22
consent, yet so long as the owner refrains from claiming it, the debtor who has given23
it in pledge, can not seek to have it restored until his debt has been entirely24
discharged.25
Art. 3148. Pledge by fiduciaries, authorization required26
Tutors of minors and curators of persons under interdiction, curators of27
vacant estates and of absent heirs, testamentary executors and other administrators28
named or confirmed by a judge, can not give in pledge the property confided to their29
administration, without being expressly authorized in the manner prescribed by law.30 SB NO. 89	ENROLLED
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Art. 3149. Pledge by mandatary, authorization1
An attorney can not give in pledge the property of his principal without the2
consent of the latter, or an express power to that effect.3
Nevertheless, where the power of attorney contains a general authority to4
mortgage the property of the principal, this power includes that of giving it in pledge.5
Art. 3150. Pledges by cities and other corporations6
The property of cities and other corporations can only be given in pledge,7
according to the rules and subject of [to] the restrictions prescribed on that head by8
their respective acts of incorporation.9
Art. 3152. Delivery and possession of thing pledged10
It is essential to the contract of pledge that the creditor be put in possession11
of the thing given to him in pledge, and consequently that actual delivery of it be12
made to him, unless he has possession of it already by some other right.13
Art. 3153. Delivery of incorporeal rights14
But this delivery is only necessary with respect to corporeal things; as to15
incorporeal rights, such as credits, which are given in pledge, the delivery is merely16
fictitious and symbolical.17
CHAPTER 2. OF PAWN18
Art. 3154. Things subject to pawn19
One may pawn every corporeal thing, which is susceptible of alienation.20
One may even pawn money as a security for performing or refraining to21
perform some act.22
Art. 3155.Incorporeal movables23
One may, in fine, pawn incorporeal movables, such as credits and other24
claims of that nature.25
Art. 3156. Claims against other persons26
When a debtor wishes to pawn a claim on another person, he must make a27
transfer of it in the act of pledge, and deliver to the creditor to whom it is transferred28
the note or instrument which proves its existence.29
Art. 3157. Privilege and preference of pledge creditor30 SB NO. 89	ENROLLED
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The pawn invests the creditor with the right of causing his debt to be satisfied1
by privilege and in preference to the other creditors of his debtor, out of the product2
of the movable, corporeal or incorporeal, which has been thus burdened.3
Art. 3158. Formalities and contents of pledge; requirements for pledge of4
promissory notes and other written obligations5
A. But this privilege shall take place against third persons only in case the6
pledge is proved by some written instrument, in which shall be stated the amount of7
the debt intended to be secured thereby, and the species and nature of the thing given8
in pledge; or the description of the thing pledged may be contained in a list or9
statement annexed to the instrument of pledge and giving its number, weight, or10
descriptive marks.11
B. (1) When a debtor wishes to pledge promissory notes, bills of exchange,12
bills of lading, stocks, bonds, policies of life insurance, or written obligations of any13
kind, he shall deliver to the creditor the notes, bills of exchange, bills of lading,14
stocks, bonds, policies of life insurance, or other written obligations, so pledged, and15
such pledge so made, except as hereinafter provided with regard to life insurance16
policies, shall without further formalities be valid as well against third persons as17
against the pledgor thereof, if made in good faith.18
(2)(a) All pledges may be made by private writing of any kind if only the19
intention to pledge be shown in writing, but all pledges, except of a life insurance20
policy in favor of the insurer, must be accompanied by actual delivery.21
(b) The pledge of a life insurance policy must also be evidenced by a written22
assignment thereof as security to the pledgee and by delivery of the pledge or23
assignment to the insurer and, unless the beneficiary thereof may be changed upon24
the sole request of the insured, or unless pledge or assignment without the consent25
of the beneficiary be specifically provided for in the policy, must be accompanied26
by the consent of any named beneficiary who is not the insured or his estate.27
C. (1) Whenever a pledge of any instrument or item of the kind listed in this28
Article is made or has been made to secure a particular loan or debt, or to secure29
advances to be made up to a certain amount, and, if so desired or provided, to secure30 SB NO. 89	ENROLLED
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any other obligations or liabilities of the pledgor or any other person, to the pledgee,1
or its successor, then existing or thereafter arising, up to the limit of the pledge, such2
as may be included in a cross-collateralization clause, and the pledged instrument or3
item remains and has remained in the hands of the pledgee or its successor, the4
instrument or item may remain in pledge to the pledgee or its successor, or without5
withdrawal from the hands of the pledgee or its successor, be repledged to the6
pledgee or its successor to secure at any time any renewal or renewals of the original7
loan or any part thereof or any new or additional loans, even though the original loan8
has been reduced or paid, up to the total limit which it was agreed should be secured9
by the pledge, and, if so desired or provided, to secure any other obligations or10
liabilities of the pledgor or any other person to the pledgee or its successor, then11
existing or thereafter arising, up to the limit of the pledge, without any added12
notification or other formality, and the pledge shall be valid as well against third13
persons as against the pledgor thereof, if made in good faith; and such renewals,14
additional loans and advances or other obligations or liabilities shall be secured by15
the collateral to the same extent as if they came into existence when the instrument16
or item was originally pledged and the pledge was made to secure them.17
(2) Such cross-collateralization clauses include but are not limited to pledges18
securing obligations of more than one person; pledges securing more than one19
obligation or future obligations; or any combination of these, whether such20
obligations are direct or indirect, absolute or contingent, liquidated or unliquidated,21
or otherwise. Such clauses are not and never have been against the public policy of22
Louisiana.23
D. (1) The assignment or transfer of the principal obligation does not:24
extinguish the pledge; constitute a new pledge or issuance; or affect the retroactive25
effect given by this Article for obligations to the original pledgee or its successor. In26
all cases, if the pledge at the time of its delivery, issuance, or reissuance was27
intended to secure obligations that may arise in the future, the pledge relates back to28
the time of delivery, issuance, or reissuance if and when such future obligations are29
incurred, as long as the pledgee, the pledgee's agents, or the pledgee's successors30 SB NO. 89	ENROLLED
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have maintained possession of the pledged item.1
(2)  Such future obligations include but are not limited to:2
(a)  Lines of credit;3
(b) Situations where monies have been advanced, paid in whole or in part,4
one or more times, and readvanced pursuant to one or more obligations that the5
pledge was given to secure; or6
(c) Situations in which the pledgor or any other persons could not have7
required the pledgee or its successors to advance funds under one or more8
obligations that the pledge was given to secure.9
E. The delivery of property on deposit in a warehouse, cotton press, or on10
storage with a third person, or represented by a bill of lading, shall pass to the11
pledgee by the mere delivery of the warehouse receipt, cotton press receipt, bill of12
lading, or storage receipt, showing the number, quantity or weight of the thing13
pledged; and such pledge so made, without further formalities, shall be valid as well14
against third persons as against the pledgor thereof, if made in good faith. Such15
receipts shall be valid and binding in the order of time in which they are issued for16
the number, quantity, or weight of the things pledged, if there should not be enough17
to meet all receipts so issued.18
F. Nothing herein contained shall be construed to repeal any part of Title 9,19
Sections 4301 to 4382, both inclusive of the Louisiana Revised Statutes of 1950.20
Art. 3159. Act of pledge in favor of banks21
Act of pledge in favor of any banks in this State, whether State banks or22
National banks, shall be considered as forming authentic proof, it they have been23
passed before the cashiers of those banks, and contain such description of the objects24
given in pledge, as is required by the preceding Article.25
Art. 3162.  Delivery to creditor or to third person26
In no case does this privilege subsist on the pledge, except when the thing27
pledged, if it be a corporeal movable or the evidence of the credit if it be a note or28
other instrument under private signature, has been actually put and remained in the29
possession of the creditor, or of a third person agreed on by the parties.30 SB NO. 89	ENROLLED
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Art. 3163.  Partial payment of debt secured by pledge of several things1
When several things have been pawned, the owner can not retake one of these2
without satisfying the whole debt, though he offers to pay a certain amount of it in3
proportion to the thing which he wishes to get.4
Art. 3164. Right of retention until payment of debt5
The creditor who is in possession of the pledge, can only be compelled to6
return it, but when he has received the whole payment of the principal as well as the7
interest and costs.8
Art. 3165.  Rights of pledgee on default of debtor; procedure9
The creditor cannot, in case of failure of payment, dispose of the pledge; but10
when there have been pledges of stock, bonds or other property, for the payment of11
any debt or obligation, it shall be necessary before such stocks, bonds or other12
property so pledged shall be sold for the payment of the debt, for which such pledge13
was made, that the holder of such pledge be compelled to obtain a judgment in the14
ordinary course of law, and the same formalities in all respects shall be observed in15
the sale of property so pledged as in ordinary cases; but in all pledges of movable16
property, or rights, or credits, stocks, bonds or other movable property, it shall be17
lawful for the pledger to authorize the sale or other disposition of the property18
pledged, in such manner as may be agreed upon by the parties without the19
intervention of courts of justice; provided, that all existing pledges shall remain in20
force and be subject to the provisions of this act.21
Art. 3166.  Ownership of thing pledged22
Until the debtor be divested from his property (if it is the case), he remains23
the proprietor of the pledge, which is in the hands of the creditor only as a deposit24
to secure his privilege on it.25
Art. 3167. Pledgee's liability for loss or decay of thing pledge; reimbursement of26
expenses of preservation27
The creditor is answerable agreeably to the rrules which have been28
established under the title: Of Conventional Obligations, for the loss or decay of the29
pledge which may happen through his fault.30 SB NO. 89	ENROLLED
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On his part, the debtor is bound to pay to the creditor all the useful and1
necessary expenses which the latter has made for the preservation of the pledge.2
Art. 3168.  Ownership of fruits of thing pledged3
The fruits of the pledge are deemed to make a part of it, and therefore they4
remain, like the pledge, in the hands of the creditor; but he can not appropriate them5
to his own use; he is bound, on the contrary, to give an account of them to the debtor,6
or to deduct them from what may be due to him.7
Art. 3169.  Imputation of interest earned by credit pledged8
If it is a credit which has been given in pledge, and if this credit brings9
interest, the creditor shall deduct this interest from those which may be due to him;10
but if the debt, for the security of which the claim has been given, brings no interest11
itself, the deduction shall be made on the principal of the debt.12
Art. 3170. Pledgee's right to enforce payment of credit pledged; imputation of13
proceeds14
If the credit which has been given in pledge becomes due before it is15
redeemed by the person pawning it, the creditor, by virtue of the transfer which has16
been made to him, shall be justified in receiving the amount, and in taking measures17
to recover it. When received, he must apply it to the payment of the debt due to18
himself, and restore the surplus, should there be any, to the person from whom he19
held it in pledge.20
Art. 3171.  Indivisibility of pawn as to heirs of debtor and creditor21
The pawn can not be divided, notwithstanding the divisibility of the debt22
between the heirs of the debtor and those of the creditor.23
The debtor's heir, who has paid his share of the debt, can not demand the24
restitution of his share in the pledge, so long as the debt is not fully satisfied.25
And respectively the heir of the creditor, who has received his share of the26
debt, can not return the pledge to the prejudice of those of his coheirs who are not27
satisfied.28
Art. 3172.  Surplus or deficiency after sale29
If the proceeds of the sale exceed the debt, the surplus shall be restored to the30 SB NO. 89	ENROLLED
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owner; if, on the contrary, they are not sufficient to satisfy it, the creditor is entitled1
to claim the balance out of the debtor's other property.2
Art. 3173.  Debtor taking pledge without creditor's consent3
The debtor who takes away the pledge without the creditor's consent,4
commits a sort of theft.5
Art. 3174.  Rights of creditor deceived as to pledge6
When the creditor has been deceived on the substance or quality of the thing7
given in pledge, he may claim another thin in its stead, or demand immediately his8
payment, though the debtor be solvable.9
Art. 3175.  Acquisitive prescription of pledge impossible10
The creditor can not acquire the pledge by prescription, whatever may be the11
time of his possession.12
CHAPTER 3. OF ANTICHRESIS13
Art. 3176.  Necessity for written instrument; rights acquired by creditor14
The antichresis shall be reduced to writing.15
The creditor acquires by this contract the right of reaping the fruits or other16
revenues of the immovables to him given in pledge, on condition of deducting17
annually their proceeds from the interest, if any be due him, and afterwards from the18
principal of his debt.19
Art. 3177.  Taxes, annual charges and repairs20
The creditor is bound, unless the contrary be agreed on, to pay the taxes, as21
well as the annual charges of the property which have been given to him in pledge.22
He is likewise bound, under penalty of damages, to provide for the keeping23
and useful and necessary repairs of the pledged estate, saving himself the right of24
levying on their fruits and revenues all the expenses respecting such charges.25
Art. 3178. Reclamation of property by debtor; return by creditor26
The debtor can not, before the full payment of the debt, claim the enjoyment27
of the immovables which he has given in pledge.28
But the creditor who wishes to free himself from the obligations mentioned29
in the preceding articles, may always, unless he has renounced this right, compel the30 SB NO. 89	ENROLLED
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debtor to retake the enjoyment of his immovable.1
Art. 3179. Ownership of property pledged; rights of creditor upon default of debtor2
The creditor does not become owner of the pledged immovable by failure of3
payment at the stated time; any clause to the contrary is null, and in this case it is4
only lawful for him to sue his debtor before the court in order to obtain a sentence5
against him, and to cause the objects which have been put in his hands in pledge to6
be seized and sold.7
Art. 3180.  Agreement that fruits or revenues be compensated with interest8
When the parties have agreed that the fruits or revenues shall be compensated9
with the interest, either in whole or only to a certain amount, this covenant is10
performed as every other which is not prohibited by law.11
Art. 3181.  Rights of third persons on immovable pledged not affected12
Every provision, which is contained in the present title with respect to the13
antichresis, can not prejudice the rights which third persons may have on the14
immovable, given in pledge by way of antichresis, such as a privilege or mortgage.15
The creditor, who is in possession by way of antichresis can not have any16
right of preference on the other creditors; but if he has by any other title, some17
privilege or mortgage lawfully established or preserved thereon, he will come in his18
rank as any other creditor.19
TITLE XX. SECURITY20
Art. 3133.  Liability of an obligor for his obligations21
Whoever is personally bound for an obligation is obligated to fulfill it out22
of all of his property, movable and immovable, present and future.23
Revision Comment - 201424
This Article, which restates the substance of Article 3182 of the Louisiana25
Civil Code of 1870, provides the general principle that an obligor is bound to fulfill26
his obligations out of all of his property. This general principle is subject to27
exceptions established by law for certain kinds of property that are exempt from28
seizure for the satisfaction of creditors' claims. See, e.g., La. Const. Art. 12, Section29
9 (1974); R.S. 9:2004-2006; R.S. 13:3881; R.S. 20:1; R.S. 20:33. La. Const. Art. 12,30
Section 10(C) (1974) exempts all public property from seizure, and that provision31
as well as R.S. 13:5109(B)(2) limits the enforcement of a judgment against the state,32
a state agency, or a political subdivision of the state to funds appropriated for that33
purpose by the legislature or political subdivision.  See Newman Marchive34
Partnership, Inc. v. City of Shreveport, 979 So.2d 1262 (La. 2008).35 SB NO. 89	ENROLLED
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Art. 3134.  Ratable treatment of creditors1
In the absence of a preference authorized or established by legislation,2
an obligor's property is available to all his creditors for the satisfaction of his3
obligations, and the proceeds of its sale are distributed ratably among them.4
Revision Comments - 20145
(a) This Article, derived from Article 3183 of the Louisiana Civil Code of6
1870, carries forward the familiar principle that the property of the debtor is the7
"common pledge of his creditors." The reference in the source Article to the concept8
of "pledge" has been deleted, because the term was used in that Article in a9
non-technical sense that was different from the security device known as pledge. See10
Slovenko, Of Pledge, 33 Tul. L. Rev. 59, 62-63 (1958).11
(b) This Article does not imply that all of an obligor's creditors will have an12
immediate right to share in the proceeds of each sale of the obligor's property.  In the13
case of a voluntary sale of property, the obligor retains whatever portion of the price14
remains after satisfying those creditors having secured rights in the thing sold, and15
both the price that he retains, and anything he may later acquire with it, form part of16
his patrimony that remains available to his creditors for satisfaction of the17
obligations owed to them. Even in the case of the enforcement of a mortgage or18
other security in a thing, the proceeds from the sale that remain after payment of the19
claims of the seizing creditor and those holding inferior security rights in the thing20
are delivered to the obligor, rather than to his other creditors. See C.C.P. Art. 2373.21
Art. 3135.  Limitations upon recourse22
A written contract may provide that the obligee's recourse against the23
obligor is limited to particular property or to a specified class or kind of24
property.25
Revision Comments - 201426
(a) This Article is new.  It expands a concept that was introduced by the27
1991 revision of the Articles on mortgage.  A similar provision is found in Article28
2645 of the Québec Civil Code.29
(b) When a contract limits an obligee's recourse to certain property, the30
limitation serves as an exception to the provisions of Article 3134 (Rev. 2014), and31
the obligee has no right to have the obligation owed to him satisfied from the32
obligee's other property.33
(c) An obligee's right of recourse may be limited to the security given for the34
performance of the obligation owed to the obligee. Under this Article, however, an35
obligee's right of recourse could be limited to specified property of the obligor even36
if the obligee holds no security at all.37
(d) The limitation contemplated by this Article may be made either by38
identifying the property against which the obligee will have recourse or, inversely,39
by identifying property against which the obligee will have no recourse.  The40
property may be identified with specificity or by employing general classifications41
of property, such as those found in Articles 448 (Rev. 1978) and 2335 (Rev. 1979).42
Art. 3136.  Security defined43
Security is an accessory right established by legislation or contract over44
property, or an obligation undertaken by a person other than the principal45 SB NO. 89	ENROLLED
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obligor, to secure performance of an obligation. It is accessory to the obligation1
it secures and is transferred with the obligation without a special provision to2
that effect.3
Revision Comments - 20144
(a) This Article is new, but it furthers the concepts stated in Article 19135
(Rev. 1984), which identifies certain types of security agreements as examples of6
accessory contracts.  This Article is broader in its scope, however, because it is not7
limited to rights established by contract. For instance, privileges, which are8
established only by law and never by contract, are a form of security.9
(b) The concept of security arises in numerous other Articles found10
throughout the Civil Code.  See, e.g., C.C. Arts. 474 (Rev. 1978); 571 (Rev. 1976;11
Amended 2004); 573 and 624 (Rev. 1976; Amended 2010); 1499 (Rev. 1996;12
Amended 2003); 1514 (Rev. 1996; Amended 2003); 1783, 1884, 1887, 1891, 1913,13
and 2023 (Rev. 1984); 2557 and 2569 (Rev. 1993); 3047, 3053, 3054, 3062, 3068,14
and 3070 (Rev. 1987).15
(c) When security consists of rights over property, it is a preference16
authorized or established by legislation and thus constitutes an exception to the17
ratable treatment principle of Article 3134 (Rev. 2014).18
Art. 3137.  Personal or real security19
Security is personal or real.20
It is personal when it consists of an obligation undertaken to secure21
performance of the obligation of another.22
It is real when it consists of a right of preference established over23
property of the obligor or of a third person to secure performance of an24
obligation.25
Revision Comments - 201426
(a) This Article is new, but it is not intended to change the law. On the27
distinction between real and personal security, see Slovenko, Of Pledge, 33 Tul. L.28
Rev. 59, 60 (1958).29
(b) Suretyship is personal security. Security consisting of a right over30
property, such as mortgage, pledge, security interest, or privilege, is real security.31
(c) Forms of real security are not necessarily real rights. Many privileges do32
not constitute real rights, even though they are a form of real security.  See Liquid33
Carbonic Corporation v. Leger, 169 So. 170 (La. App. 1st Cir. 1936).  See also34
Planiol et Ripert, Traité élémentaire de droit Civil, Volume 2, Part 2, No. 2548, 261835
(1939)(English translation by the Louisiana State Law Institute, 1959);36
Yiannopoulos, Real Rights in Louisiana and Comparative Law: Part 1, 23 La. Law37
Rev. 161, 223 (1963).38
Art.  3138. Kinds of security39
Kinds of security include suretyship, privilege, mortgage, and pledge.40
A security interest established to secure performance of an obligation is also a41
kind of security.42 SB NO. 89	ENROLLED
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Revision Comments - 20141
(a)  This Article is new, but it is not intended to change the law.2
(b) Article 3184 of the Louisiana Civil Code of 1870 defined lawful causes3
of preferences to include only privilege and mortgage. Those lawful causes of4
preference are forms of security that are mentioned in this Article along with5
privileges and security interests, as well as the contract of suretyship, which is a form6
of personal security.7
(c) The list contained in this Article is merely illustrative.  Other forms of8
security exist, such as a pignorative contract in the form of a sale with a right of9
redemption in favor of a seller who remains in possession. See C.C. Art. 2569 (Rev.10
1993); Latiolais v. Breaux, 154 La. 1006, 98 So. 620 (La. 1924); Jackson v. Golson,11
91 So.2d 394 (La. App. 2d Cir. 1956).12
(d) This Article gives express recognition to the concept of security interest,13
which has been the exclusive means of creating security by contract in most kinds14
of movable property since Louisiana's adoption of Chapter 9 of the Uniform15
Commercial Code effective January 1, 1990. See Acts 1988, No. 528 and Acts 1989,16
No. 135, enacting Chapter 9 of Title 10 of the Louisiana Revised Statutes of 1950.17
The definition of "security interest" in the Uniform Commercial Code, however, is18
broader than interests in movable property intended as security; it also includes19
outright sales of certain kinds of property, such as accounts receivable.  See R.S.20
10:1-201(35).  Only those security interests established for the purpose of securing21
an obligation qualify as "security" under this Title.22
Art. 3139.  Law governing security interest23
Security interest is defined by the Uniform Commercial Code, which24
specifies the kinds of property susceptible of encumbrance by a security interest25
and governs the manner of creation of security interests and the rights of the26
holders of security interests against obligors and third persons.27
Revision Comments - 201428
(a) This Article is new. It signals that security interests, though obviously a29
form of security when granted for the purpose of securing an obligation, are30
governed by special legislation.31
(b) Security interest, as defined in the Uniform Commercial Code, also32
includes certain transactions that do not secure the performance of an obligation. See33
R.S. 10:1-201(35). This Title is not intended to limit the definition of the term34
"security interest" found in the Uniform Commercial Code or the application of the35
Uniform Commercial Code to those transactions. 36
Art. 3140.  Nullity of agreement of forfeiture37
Unless expressly permitted by law, a clause in a contract providing in38
advance that ownership of a thing given as security will transfer upon default39
in performance of the secured obligation is absolutely null.40
A clause in a contract obligating the owner of a thing to give it to an41
obligee in payment of a debt upon a future default in performance of an42
obligation is absolutely null.43 SB NO. 89	ENROLLED
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Revision Comments - 20141
(a) The first paragraph of this Article furthers a longstanding civilian concept2
that an agreement of forfeiture of a thing given as security, known in Roman law as3
the lex commissoria, is null. An express prohibition of agreements of that nature in4
contracts of pledge was contained in Article 3132 of the Louisiana Civil Code of5
1825 and also in the second paragraph of Article 3165 of the Louisiana Civil Code6
of 1870, until the repeal of that paragraph by Acts 1872, No. 9.  Despite the repeal,7
agreements of forfeiture have continued to be viewed as unenforceable in Louisiana.8
See Alcolea v. Smith, 150 La. 482, 90 So. 769 (La. 1922), holding that agreements9
of forfeiture have been prohibited by the civil law "since the edict of Constantine"10
and that "it would require something more than a doubtful implication (i.e., the 187211
amendment of Article 3165) to justify any court in any civilized country in now12
reading it into a statute."13
(b) The prohibition of this Article is not limited to contracts of pledge but14
rather applies to all forms of security. Thus, a mortgage may not provide that15
ownership of the mortgaged property will transfer to the mortgagee upon default.16
(c) Many civil law jurisdictions continue to prohibit the lex commissoria.17
See, e.g., Québec Civil Code Art. 1801; Luxembourg Civil Code Art. 2078;18
Argentine Civil Code Art. 3222; B.G.B. § 1229; Spanish Civil Code Art. 1859.  In19
France, the agreement of forfeiture, known as the pacte commissoire, is now20
sometimes permitted. See French Civil Code Arts. 2348, 2459, and 2460 (Rev.21
2006).22
(d)  The second paragraph of the Article addresses a related concept: the23
inability of a debtor to promise before default to make a giving in payment. This24
paragraph follows, and makes more general, the holding of Guste v. Hibernia25
National Bank in New Orleans, 655 So.2d 724 (La. App. 4th Cir. 1995), writ denied26
660 So.2d 852 (La. 1995), which found to be absolutely null a 	dation en paiement27
executed at the time of an act of credit sale and held in escrow under an agreement28
providing for its release upon a future default. The reasoning of the court was that29
the law provides for the exclusive means of foreclosure of a mortgage and any30
attempt to "completely bypass and waive the laws concerning foreclosure" violates31
public policy. This Article does not by its terms prohibit an obligor from promising32
after default to make a future giving in payment in favor of the obligee, but other33
public policy considerations may nonetheless make such a promise unenforceable34
according to the circumstances.  On the invalidity of a promise to make a giving in35
payment, see Slovenko, Of Pledge, 33 Tul. L. Rev. 59, 116 (1958).36
(e) Chapter 9 of the Uniform Commercial Code permits a creditor, after37
default, to propose a "strict foreclosure" whereby he will acquire the collateral in full38
or partial satisfaction of the secured obligation without the necessity of a judicial sale39
or other disposition. See R.S. 10:9-620 through 9-622.  This Article does not limit40
the availability of strict foreclosure under the Uniform Commercial Code.41
TITLE XX-A. PLEDGE42
CHAPTER 1. GENERAL PROVISIONS43
Art. 3141. Pledge defined44
Pledge is a real right established by contract over property of the kind45
described in Article 3142 to secure performance of an obligation.46
Revision Comments - 201447
(a) This Article is new.  Article 3133 of the Louisiana Civil Code of 187048
defined pledge as a contract by which a debtor gives something to his creditor as49
security for his debt. Though that Article defined the term as a type of contract,50
ensuing Articles referred to "the obligation of pledge", and certain Articles referred51 SB NO. 89	ENROLLED
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to "the pledge" as the thing pledged. See, e.g., C.C. Art. 3175 (1870).  This Article1
defines pledge as the real right that arises from a contract of pledge, rather than the2
contract itself. 3
(b) Pledge is defined by the domain of things that are susceptible of pledge,4
as specified in Article 3142 (Rev. 2014). A pledge under this Title cannot exist over5
other kinds of property.6
(c) Since Louisiana's adoption of Chapter 9 of the Uniform Commercial7
Code effective January 1, 1990, the Articles on pledge contained in the Louisiana8
Civil Code of 1870 have been greatly reduced in their operation and to a large extent9
supplanted by the Uniform Commercial Code. The revision of this Title harmonizes10
the law of pledge with the Uniform Commercial Code by eliminating any overlap11
between the two wholly different regimes. Because of the very broad scope of12
Chapter 9 of the Louisiana Uniform Commercial Code, this Title has quite limited13
applicability to movables. It nonetheless fills a gap in the law that would otherwise14
exist with respect to encumbrance of movable property that is presently, or in the15
future becomes, excluded from coverage under the Uniform Commercial Code. See16
generally R.S. 10:9-109.17
(d) Under the Louisiana Civil Code of 1870, two kinds of pledge existed:18
the pledge of a movable, known as the pawn, and the pledge of an immovable,19
known as the antichresis. See C.C. Arts. 3134 and 3135 (1870).  With an antichresis,20
the creditor was given possession of an immovable for the purpose of reaping its21
fruits and other revenues and undertook the correlative obligations of paying taxes22
and providing for the upkeep and repair of the immovable. See C.C. Art. 3176-318123
(1870).  Because of the obligations imposed on the creditor, antichresis fell into24
disuse. See Slovenko, Of Pledge, 33 Tul. L. Rev. 59, 130 (1958).  Over a century25
ago, the Louisiana Supreme Court termed it "an antiquated contract."  See Harang26
v. Ragan, 134 La. 201, 63 So. 875, 877 (La. 1913).  Antichresis is suppressed in this27
revision and is no longer a form of pledge. Despite the suppression of the nominate28
contract of antichresis, parties might nonetheless, through the exercise of the29
freedom of contract recognized by Article 1971 (Rev. 1984), enter into an30
innominate contract providing for an arrangement similar to what was previously31
known as an antichresis, but the contract would create neither a pledge under this32
Title nor a real right in the immovable enforceable against third persons who acquire33
rights in it.  See Comment (d) to C.C. Art. 476 (Rev. 1978).34
(e) In modern times, the antichresis has given way to other forms of security35
that allow the creditor to be secured by the revenues of an immovable without the36
disadvantages of an antichresis. For instance, in France, antichresis was effectively37
replaced by the cession of anticipated rent. Planiol et Ripert, Traité élémentaire de38
droit civil, Volume 2, Part 2, No. 2507-07 (1939)(English translation by the39
Louisiana State Law Institute, 1959). A similar evolution has taken place in40
Louisiana; the assignment of leases and rents, which has become almost universal41
in commercial real estate financings and which requires no dispossession of the42
debtor, has supplanted antichresis. Since 1980, the assignment of leases and rents43
has been governed by former R.S. 9:4401. This Title gives express recognition and44
treatment within the Civil Code to this modern form of pledge.45
Art. 3142.  Property susceptible of pledge46
The only things that may be pledged are the following:47
(1) A movable that is not susceptible of encumbrance by security48
interest.49
(2)  The lessor's rights in the lease of an immovable and its rents.50
(3)  Things made susceptible of pledge by law.51
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(a) This Article is new. It contains an exhaustive list of things susceptible of1
pledge.2
(b) Civil law jurisdictions typically permit all movable property, corporeal3
or incorporeal, to be encumbered by pledge. See, e.g., French Civil Code Arts. 23334
and 2355 and B.G.B. § 1204. Similarly, Articles 3154 and 3155 of the Louisiana5
Civil Code of 1870 provided that every corporeal or incorporeal movable could be6
pawned. With the adoption of Chapter 9 of the Uniform Commercial Code in7
Louisiana effective January 1, 1990, however, security interest became the exclusive8
means of encumbrance of most kinds of movable property, thereby greatly narrowing9
the kinds of movable property that can be pledged under the Civil Code.10
Nonetheless, the exclusions that do remain, or that might exist in the future, require11
the continued existence of the legal framework under which property outside the12
scope of Chapter 9 of the Uniform Commercial Code can be encumbered. This13
Article makes the set of things susceptible of pledge and the set of things susceptible14
of encumbrance by a security interest mutually exclusive.15
(c) There are presently few, if any, corporeal movables that are excluded16
from coverage under Chapter 9 of the Uniform Commercial Code.  The few17
incorporeal movables that are excluded include rights under policies of insurance18
other than life insurance.  Even then, Chapter 9 still has limited applicability to the19
extent that amounts payable under an insurance policy constitute proceeds of other20
collateral.  See R.S. 10:9-109(d)(8).21
(d) Under this Article, the lessor's rights in the lease of an immovable and22
its rents are also susceptible of pledge. Chapter 2 of this Title contains rules that are23
specifically applicable to a pledge of that nature. Under prior law, the lessor's rights24
in the leases and rents of an immovable could be encumbered by an assignment or25
pledge effected under former R.S. 9:4401, a statute whose provisions suggested26
heavy influence from both the common law and the Uniform Commercial Code.27
This revision places the encumbrance of the lessor's rights in the lease of an28
immovable and its rents within the civil law framework of pledge and gives nearly29
complete treatment to pledges of that nature within the Civil Code itself.30
Art. 3143. Pledge of property susceptible of encumbrance by security interest31
A contract by which a person purports to pledge a thing that is32
susceptible of encumbrance by security interest does not create a pledge under33
this Title but may be effective to create a security interest in the thing.34
Revision Comment - 201435
This Article is new. In the case of property susceptible of encumbrance by36
a security interest, the Uniform Commercial Code contains the exclusive regime37
under which it can be encumbered as security, and parties are not permitted to negate38
the applicability of the Uniform Commercial Code by styling their contract as one39
of pledge. Nevertheless, it remains a common practice for property to be "pledged"40
under a contract styled as a "pledge," even though the property in question is41
susceptible of encumbrance under the Uniform Commercial Code and the security42
right created by the contract is actually a security interest. An example of this is the43
"pledge" of a collateral mortgage note.  This Article provides that a contract44
purporting to pledge property that is susceptible of encumbrance under the Uniform45
Commercial Code does not create a pledge under this Title. Whether the contract is46
sufficient to create a security interest is a matter governed exclusively by the47
Uniform Commercial Code.48
Art. 3144.  Accessory nature of pledge49
Pledge is accessory to the obligation that it secures and may be enforced50 SB NO. 89	ENROLLED
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by the pledgee only to the extent that he may enforce the secured obligation.1
Revision Comment - 20142
This Article is new. As a form of security, pledge is always accessory to the3
obligation that it secures. Consequently, a pledge may be enforced only to the extent4
of the obligation that it secures.  Another consequence of the accessory nature of5
pledge is that it is transferred with the obligation that it secures without a special6
provision to that effect.  See C.C. Art. 3136 (Rev. 2014).7
Art. 3145.  Preference afforded by pledge8
Pledge gives the pledgee the right to be satisfied from the thing pledged9
and its fruits in preference to unsecured creditors of the pledgor and to other10
persons whose rights become effective against the pledgee after the pledge has11
become effective as to them.12
Revision Comments - 201413
(a) This provision, which is based on Article 3157 of the Louisiana Civil14
Code of 1870, adds a ranking rule similar to that applicable to mortgages in Article15
3307(3)(Rev. 1992).16
(b) Because the kinds of property subject to security interest and pledge are17
mutually exclusive, there is no need for a rule ranking security interests against18
pledges except perhaps in the special case of insurance proceeds payable with respect19
to collateral that is subject to a security interest under the Uniform Commercial20
Code. Under R.S. 10:9-315, a security interest continues in the insurance proceeds,21
even though claims under insurance policies, other than life insurance, are otherwise22
outside the scope of Chapter 9 of the Uniform Commercial Code.  See R.S.23
10:9-109(d)(8). If, however, the owner of the collateral desires to encumber a claim24
to insurance proceeds in favor of another creditor, he must do so by granting a pledge25
under this Title. In that limited instance, there is the possibility of a ranking dispute26
between the secured party claiming rights to the insurance as proceeds of his27
collateral and the pledgee of the claim under the insurance policy.  This Article28
supplies the ranking rule: if the security interest was perfected under the Uniform29
Commercial Code before the pledge was made effective against third persons, the30
security interest primes the pledge of rights under the insurance policy.31
Art. 3146.  Obligations for which pledge may be given32
A pledge may be given to secure the performance of any lawful33
obligation, including obligations that arise in the future.  As to all obligations,34
present and future, secured by the pledge, notwithstanding the nature of the35
obligations or the date they arise, the pledge has effect between the parties from36
the time that the requirements for formation of the contract of pledge are37
satisfied and has effect as to third persons from the time that the applicable38
requirements of Articles 3153 through 3155 are satisfied.39
Revision Comments - 201440 SB NO. 89	ENROLLED
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(a) This Article restates the substance of Article 3136 of the Louisiana Civil1
Code of 1870 and expressly permits a pledge to secure future obligations, an2
arrangement that was also permitted under the complicated provisions of Article3
3158 of the 1870 Code, as amended.4
(b) Article 3158 of the Louisiana Civil Code of 1870 required, as a condition5
for effectiveness against third persons, that a pledge state the amount of the debt that6
it secured or a limit on the amount of the secured obligations. In contrast, Chapter7
9 of the Uniform Commercial Code does not require that a security agreement state8
the amount or limit of secured obligations. This Article follows the approach of the9
Uniform Commercial Code by omitting any requirement for a statement of the10
amount of the secured obligation. Chapter 2 of this Title requires, however, that a11
contract pledging the lessor's interest in the leases and rents of an immovable state12
the amount of the secured obligation or the maximum amount of secured obligations13
that may be outstanding from time to time.  See C.C. Art. 3168 (Rev. 2014).14
(c)  In the case of a pledge securing future obligations, the rights created by15
the pledge as security for the future obligations relate back to the time the pledge16
became effective between the parties or, insofar as third persons are concerned, from17
the time the pledge was made effective against third persons.  On that issue, this18
Article follows the pattern of Article 3298(B) (Rev. 1991; As Amended), which19
provides a similar rule for mortgages.20
(d)  Article 3140 of the Louisiana Civil Code of 1870 permitted a pledge to21
be given not only for an obligation consisting of money but also for one having22
another object. By permitting a pledge to secure any lawful obligation, this Article23
also allows a pledge to secure an obligation that is not for the payment of money.24
Article 3147 (Rev. 2014) specifies the effect of such a pledge.25
Art. 3147.  Pledge securing obligation that is not for the payment of money26
A pledge that secures an obligation other than one for the payment of27
money, such as an obligation for the performance of an act, secures the claim28
of the pledgee for the damages he may suffer from the breach of the obligation.29
Revision Comment - 201430
This Article is new. Although it has no counterpart in the Civil Code of31
1870, it is patterned after Article 3294 (Rev. 1991), which provides a similar rule for32
contracts of mortgage.33
Art. 3148.  Pledge securing an obligation of another person34
A person may pledge his property to secure an obligation of another35
person. In such a case, the pledgor may assert against the pledgee any defense36
that the obligor could assert except lack of capacity or discharge in bankruptcy37
of the obligor. The pledgor may also assert any other defenses available to a38
surety.39
Revision Comments - 201440
(a)  The first sentence of this Article is derived from Article 3141 of the41
Louisiana Civil Code of 1870. The second sentence expresses the same principle42
found in Article 3295 (Rev. 1991), which applies when a person mortgages his43
property as security for another person's obligation.44
(b)  When a person encumbers his property as security for the obligation of45 SB NO. 89	ENROLLED
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another, his status is similar to that of a surety against whom recourse has been1
limited by contract to the thing given as security.  French commentators refer to a2
third person who has mortgaged an immovable as security for the debt of another3
without obligating himself personally as a caution réelle, or real surety.  Planiol,4
Traité élémentaire de droit civil, Vol. 2, Part 2, No. 2368 (English translation by the5
Louisiana State Law Institute, 1959); Baudry-Lacantinerie, Traité de droit civil6
français § 1292 (3d ed. 1906); T. 2. 18 Laurent, Principes de droit civil français §7
126 at 160 (3d ed. 1878). See also Boyter v. Shreveport Bank & Trust, 65 B.R. 9448
(W.D. La.1986). Because the status of a person who has pledged his property as9
security for the debt of another is akin to that of a surety, this Article grants to him10
the same defenses that are available to a surety under Article 3046 (Rev. 1987).  In11
the event of a modification of the principal obligation without his consent, the12
pledgor is also entitled to assert the defenses available to a surety under Article 306213
(Rev. 1987).14
Art. 3149.  Formal requirements of contract of pledge15
The pledge of a corporeal movable is effective between the parties only16
if the thing pledged has been delivered to the pledgee or a third person who has17
agreed to hold the thing for the benefit of the pledgee. The pledge of other18
things is effective between the parties only if established by written contract, but19
delivery is not required.20
Revision Comments - 201421
(a) This Article greatly simplifies the complicated rules that were provided22
in Article 3158 and other Articles of the Louisiana Civil Code of 1870 governing the23
formal requirements of the contract of pledge, at the same time adopting a number24
of concepts from Chapter 9 of the Uniform Commercial Code. Between the parties,25
this Article retains the requirement that a pledged corporeal movable must be placed26
into the pledgee's possession; indeed, that remains the essence of a pledge, as it is in27
many civil law systems. See, e.g., Argentine Civil Code Art. 3212; B.G.B. § 1205;28
Luxembourg Civil Code Art. 2076; Spanish Civil Code Art. 1863. In the case of the29
pledge of an incorporeal, however, delivery is unnecessary, and the requirement of30
a written pledge agreement is substituted as the essential element that must exist for31
the pledge to have effect between the parties.32
(b) Under Article 3152 of the Louisiana Civil Code of 1870, delivery of the33
thing pledged was essential to the very existence of the contract of pledge, even34
between the parties. This provision was tempered, however, by Article 3153 (1870),35
which provided that delivery was necessary only with respect to corporeal things and36
that, in the case of incorporeal rights, delivery was merely fictitious and symbolical.37
Nevertheless, if the incorporeal right was evidenced by a writing, Articles 3156 and38
3162 (1870) required delivery to the pledgee of the note or other instrument39
evidencing the right. This Article continues the requirement of delivery of a pledged40
corporeal movable but removes that requirement entirely in the case of the pledge41
of an incorporeal. In modern practice, contracts are often executed in multiple42
originals, and parties frequently treat mere scanned facsimiles exchanged by43
electronic means as the equivalent of signed original documents.  Thus, a44
requirement of delivery of a contract or other instrument to the pledgee would further45
no purpose, except perhaps in the case of special types of writings such as46
promissory notes and certificates evidencing securities. The rights evidenced by47
those writings, however, are susceptible of encumbrance under the Uniform48
Commercial Code and therefore cannot be encumbered under this Title in any event.49
See C.C. Art. 3142 (Rev. 2014).50
(c) Though this Article requires delivery in the case of the pledge of a51 SB NO. 89	ENROLLED
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corporeal movable, there may actually be no corporeal movables to which that rule1
would presently apply, for Chapter 9 of the Uniform Commercial Code may cover2
all corporeal movables without exception. The first sentence of this Article is3
intended to apply only if, under present law or under some future change in the law,4
a particular corporeal movable is insusceptible of encumbrance under the Uniform5
Commercial Code and therefore is properly susceptible of encumbrance by pledge.6
See Article 3142 (Rev. 2014). The first sentence of this Article is not intended to7
apply to a corporeal movable that is susceptible of encumbrance by a security8
interest under the Uniform Commercial Code. In that case, Chapter 9 of the Uniform9
Commercial Code applies exclusively.10
(d)  Article 3162 of the Civil Code of 1870 allowed the thing pledged to be11
placed into the possession of "a third person agreed on by the parties." Though not12
expressly required by the text of the Article, the jurisprudence held that the third13
person must have knowledge of the arrangement and accept delivery with the14
obligation to hold the property in trust for the pledgee. See Wells v. Dean, 211 La.15
132, 29 So.2d 590 (La. 1947). This rule did not, however, necessarily require a16
written acknowledgment, and one case even presumed, in the absence of any other17
explanation why the pledgor of a life insurance policy had come into possession of18
the original policy before his death, that the pledgor's possession was as an agent pro19
hac vice for the pledgee. See Scott v. Corkern, 231 La. 368, 91 So.2d 569 (La.20
1956). By comparison, when a third party's possession is used as the means of21
perfection of a security interest, the Uniform Commercial Code requires that the22
third party authenticate a record acknowledging that he holds possession of the23
collateral for the secured party's benefit.  See R.S. 10:9-313(c)(1).  This Article24
requires that the third person agree to hold the thing for the benefit of the pledgee but25
does not require that agreement to be in writing.26
(e)  As a condition to the effectiveness of a pledge between the parties, this27
Article requires a written contract of pledge except in one instance: when the thing28
pledged is a corporeal movable that has been placed into the possession of the29
pledgee or a third person who has agreed to hold the thing for the benefit of the30
pledgee. In all other cases, a pledge cannot exist, even between the parties, unless31
it is established by a written contract.  The Louisiana Civil Code of 1870 generally32
did not require a writing for a pledge to exist between the parties; delivery of33
possession sufficed to evidence the pledge.34
(f)  Rules concerning the effectiveness of a pledge against third persons are35
contained in Articles 3153 through 3155 (Rev. 2014).36
Art. 3150.  Acceptance37
A written contract of pledge need not be signed by the pledgee, whose38
consent is presumed and whose acceptance may be tacit.39
Revision Comments - 201440
This Article is new. Although it has no counterpart in the Civil Code of 1870,41
it is patterned after Article 3289 (Rev. 1991), which provides a similar rule for42
contracts of mortgage.43
Art. 3151.  Power to pledge44
A contract of pledge may be established only by a person having the45
power to alienate the thing pledged.46
Revision Comments - 201447
This Article is new, although the Louisiana Civil Code of 1870 contained a48
number of Articles addressing a person's power to pledge the property of another.49 SB NO. 89	ENROLLED
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See C.C. Arts. 3148-3150 (1870).  This Article follows the simpler approach of1
Article 3290 (Rev. 1992), which provides the identical rule for contracts of2
mortgage. Similar provisions limiting the power to encumber a thing to those3
persons having the power to alienate it exist in the civil codes of other jurisdictions.4
See, e.g., Argentine Civil Code Art. 3213; Québec Civil Code Art. 2681; Zakona o5
Založnom Pravu na Pokretnim Stvarima Upisanim u Registar (The Law on Pledge6
of Movable Assets in the Pledge Registry) art. 17 (Serbia); Spanish Civil Code Art.7
1857.8
Art. 3152.  Pledge of a thing not owned9
A pledge given over a thing that the pledgor does not own is established10
when the thing is acquired by the pledgor and the other requirements for the11
establishment of the pledge have been satisfied.12
Revision Comments - 201413
This Article is derived from Article 3144 of the Louisiana Civil Code of14
1870.15
Art. 3153. General requirements for effectiveness of pledge against third16
persons17
A pledge is without effect as to third persons unless it has become18
effective between the parties and is established by written contract.19
Revision Comments - 201420
(a) This Article is derived from Paragraph A of Article 3158 of the Louisiana21
Civil Code of 1870, which stated the general rule that a pledge could have effect22
against third persons only if evidenced by a writing. Paragraph B of the same Article23
contained a number of exceptions to the writing requirement, in the case of24
promissory notes, bills of exchange, bills of lading, stocks, bonds, or other "written25
obligations of any kind." Other than the catch-all category of "written obligations26
of any kind," those kinds of collateral are all now encumbered under the Uniform27
Commercial Code, and an exception to the writing requirement for them in this Title28
is unnecessary.  Thus, this Article follows the simpler approach of Paragraph A of29
Article 3158 of the 1870 Code, requiring in all cases a written contract for a pledge30
to be effective against third persons. In the case of the pledge of an incorporeal, a31
written pledge is required under Article 3153 even for the pledge to be effective32
between the parties. In that case, therefore, this Article adds no additional33
requirement in order for the pledge to have effect against third persons.34
(b) This Article sets forth only the general requirements imposed upon all35
pledges in order for them to have effect against third persons.  Additional36
requirements must be satisfied in the case of the pledge of the lessor's rights in the37
lease of an immovable and its rents and in the case of the pledge of other third-party38
obligations.  See C.C. Arts. 3154 and 3155 (Rev. 2014).39
Art. 3154. Effectiveness against third persons of the pledge of the lease of an40
immovable41
The pledge of the lessor's rights in the lease of an immovable and its42
rents has effect against third persons in accordance with the provisions of43 SB NO. 89	ENROLLED
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Chapter 2 of this Title.1
Revision Comments - 20142
This Article is new. Chapter 2 of this Title specifies the requirements that3
must be satisfied for a pledge of the lessor's rights in the lease of an immovable and4
its rents to have effect against third persons.  See C.C. Art. 3169 (Rev. 2014).5
Art. 3155. Effectiveness against third persons of the pledge of other obligations6
If the thing pledged is another person's obligation not arising under the7
lease of an immovable, the pledge is effective against third persons only from8
the time that the obligor has actual knowledge of the pledge or has been given9
notice of it.10
Revision Comments - 201411
(a) This Article is new.  The Louisiana Civil Code of 1870 did not require12
notification to the person obligated on a pledged obligation in order for the pledge13
to have effect against third persons. In contrast, Article 2643 (Rev. 1993) requires14
notice to or knowledge by the person obligated on an assigned right in order for an15
assignment of that right to be effective against him or other third persons.  This16
Article applies the same rule to pledges, other than a pledge of the lessor's rights in17
the lease of an immovable and its rents.  See C.C. Art. 3169 (Rev. 2014).18
(b)  This Article does not require the obligor's consent to the pledge, nor an19
acknowledgment by the obligor that notice has been given.20
(c)  This Article does not address the issue of when the obligor is obligated21
to render performance to the pledge. That issue is governed by Article 3161 (Rev.22
2014), which requires not only the obligor's knowledge of the existence of the pledge23
but also a written direction to the obligor to render performance to the pledgee.24
(d) In the case of a mortgage that includes a pledge of the mortgagor's rights25
under policies of insurance covering the mortgaged immovable, R.S. 9:538626
provides an exception to the notice requirement of this Article: the pledge has effect27
as to third persons when the act of mortgage is recorded, without the necessity of28
notice to the insurer.29
Art. 3156.  Pledgee's right of retention30
If the thing pledged has been delivered to the pledgee or a third person31
for the benefit of the pledgee, the pledgee is not obligated to return it until all32
secured obligations have been extinguished.33
Revision Comments - 201434
(a) This Article restates the principle of Civil Code Article 3164 (1870)35
without intending to change the law.  The pledgee's right of retention is commonly36
recognized under the law of pledge in civilian jurisdictions. See, e.g., French Civil37
Code Art. 2339; Argentine Civil Code Art. 3229; Luxembourg Civil Code Art. 2083;38
Spanish Civil Code Art. 1866;39
(b)  This Article does not alter the longstanding rule that a pledgee may not40
resist seizure under judicial process, even if instituted by a creditor holding an41
inferior security right. See Pickens v. Webster, 31 La. Ann. 870 (1879) and Case v.42
Kloppenburg, 27 La. Ann. 482 (1875).43 SB NO. 89	ENROLLED
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Art. 3157.  Indivisibility of pledge1
The contract of pledge is indivisible, notwithstanding the divisibility of2
the secured obligations, and the pledgor may not demand return of all or part3
of the thing pledged until all secured obligations have been extinguished.4
Revision Comments - 20145
This Article restates the principle of indivisibility found in Civil Code Article6
3163 (1870), without intending to change the law. This principle is a common7
feature of the law of pledge in civilian jurisdictions.  See, e.g., French Civil Code8
Art. 2349; Argentine Civil Code Art. 3233; Luxembourg Civil Code Art. 2083;9
Spanish Civil Code Art. 1860.10
Art. 3158.  Enforcement of pledge of a movable11
If agreed in a written contract of pledge of a movable, the pledgee may,12
upon failure of performance of the secured obligation, dispose of the thing13
pledged at public auction or by private sale, but he shall act reasonably in14
disposing of the thing and shall account to the pledgor for any proceeds of the15
disposition in excess of the amount needed to satisfy the secured obligation.16
Otherwise, the pledgee may cause the sale of the thing pledged only by having17
it seized and sold under judicial process.18
Revision Comments - 201419
This Article is derived from Articles 3165 and 3172 of the Louisiana Civil20
Code of 1870. The requirement to act reasonably in the disposition of the thing21
pledged is similar to the requirement of the Uniform Commercial Code that every22
aspect of a secured party's actions in disposing of collateral after default must be23
"commercially reasonable."  See R.S. 10: 9-610.24
Art. 3159.  Fruits of things pledged25
The pledgee is entitled to receive the fruits of the thing pledged and to26
retain them as security. He may also apply them to the secured obligation, even27
if not yet due.28
Revision Comments - 201429
This Article is a restatement and simplification of Article 3168 of the30
Louisiana Civil Code of 1870.  The entitlement of a pledgee to fruits of the thing31
pledged is a common feature of the law of pledge in civilian jurisdictions. See, e.g.,32
French Civil Code Art. 2345 (2006); Argentine Civil Code Art. 3231; Zakona o33
Založnom Pravu na Pokretnim Stvarima Upisanim u Registar (The Law on Pledge34
of Movable Assets in the Pledge Registry) art. 21 (Serbia). 35
Art. 3160.  Pledge of obligation of a third person36 SB NO. 89	ENROLLED
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If the thing pledged is an obligation of a third person, the pledgee is1
entitled to enforce performance of the third person's obligation when it becomes2
due and to retain as security any payment or other thing received from the third3
person. The pledgee may apply any money collected to the secured obligation,4
even if not yet due. He must account to the pledgor for any payment or other5
thing remaining after the secured obligation has been satisfied.6
Revision Comments - 20147
(a) This Article is derived from Articles 3168 through 3170 of the Louisiana8
Civil Code of 1870. It clarifies that the pledgee may apply collections from the third9
person's obligation to the secured obligation, even if the secured obligation has not10
yet matured.11
(b)  Article 3169 of the Louisiana Civil Code of 1870 provided that interest12
accruing on a pledged credit was imputed to the interest owing on the obligation13
secured by the pledge and to principal if the latter obligation did not bear interest.14
That Article, which obviously did not cover all possible circumstances, has been15
omitted, because the second paragraph of Article 1866 (Rev. 1985) supplies the16
operative imputation rule: The payment received from the third-party obligor is17
imputed first to interest and then to principal of the secured obligation.18
Art. 3161.  Performance by obligor of a pledged obligation19
A third person obligated on a pledged obligation is bound to render20
performance to the pledgee only from the time that the pledgor or pledgee21
notifies him of the pledge and directs him in writing to render performance to22
the pledgee. Performance that the third person renders to the pledgor before23
that time extinguishes the pledged obligation and is effective against the pledgee.24
Revision Comments - 201425
(a)  This Article expands the principle expressed in Article 3170 of the26
Louisiana Civil Code of 1870 that the pledgee was "justified in receiving" the27
amount due from the obligor of a pledged obligation. That Article did not, however,28
directly address the duty of the obligor to render performance of the pledged29
obligation to the pledgee. This Article and Article 3162 (Rev. 2014) supply the30
operative rules, borrowing heavily from the Articles on assignment of rights.  See31
C.C. Arts. 2642-2654 (Rev. 1993).32
(b) Under Article 2643 (Rev. 1993), an assignment of a right is effective33
against the debtor only from the time the debtor has actual knowledge or has been34
given notice of the assignment. Article 2644 (Rev. 1993) provides that if the debtor35
renders performance to the assignor without knowledge or notice of the assignment,36
the performance extinguishes the obligation of the debtor and is effective against the37
assignee. Thus, notice of an assignment automatically obligates the third person to38
render performance to the assignee.  In contrast, in order to bind an account debtor39
to pay the assignee following an assignment of the account debtor's obligation under40
the Uniform Commercial Code, the account debtor must not only receive a41
notification of the assignment but also a direction that payment is to be made to the42
assignee.  See R.S. 10:9-406(a).  The reason for this added requirement is obvious:43
in the case of a mere secured transaction, rather than an outright assignment of44 SB NO. 89	ENROLLED
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ownership, the parties may very well intend that the assignor retain the right to1
collect payments on the pledged obligation until some later event, such as the2
occurrence of a default by the assignor.  This Article adopts the same concept: the3
obligor is not obligated to render performance to the pledgee until he has been4
notified of the pledge and directed in writing to render performance to the pledgee.5
Since mere notification to the third-party obligor of the existence of a pledge is not6
sufficient to require him to render performance to the pledgee, a fortiori the third7
party's actual knowledge of the pledge would not so obligate him in the absence of8
an express, written direction to render performance to the pledgee.9
(c) In addition to the pledge of other kinds of obligations, this Article applies10
to the pledge of the lessor's interest in the lease of an immovable and its rents.  It11
replaces former R.S. 9:4401(G), which provided that a lessee was not discharged12
from his debt if he paid anyone other than an assignee after receiving written notice13
that the assignment had become "absolute."14
Art. 3162.  Defenses available to obligor of a pledged obligation15
Unless the obligor of a pledged obligation makes a contrary agreement16
with the pledgor or pledgee, he may assert against the pledgee any defense17
arising out of the transaction that gave rise to the pledged obligation. He may18
also assert against the pledgee any other defense that arises against the pledgor19
before the obligor has been given written notice of the pledge.20
Revision Comments - 201421
(a) This Article is new.  It combines concepts found in the Uniform22
Commercial Code and elsewhere in the Civil Code.23
(b) Article 1900 (Rev. 1984) provides that an obligor who has been given24
notice of an assignment to which he did not consent may not claim compensation25
against the assignee for an obligation of the assignor arising after that notice.  The26
Civil Code does not expressly address the circumstances under which other defenses27
might be asserted by the obligor against the assignee.  By contrast, the Uniform28
Commercial Code provides that an account debtor, in the absence of an agreement29
to the contrary, retains the right to assert against a secured party any defense or claim30
arising from the transaction that gave rise to the account debtor's obligation31
irrespective of when the claim or defense arises. He may also assert against the32
secured party any other defense or claim he has against the assignor, even if not33
related to the contract in question, to the extent that the defense or claim accrues34
before he receives a notification of the assignment. See R.S. 10:9-404(a).  This35
Article largely adopts the approach of the Uniform Commercial Code.36
Art. 3163.  Clause prohibiting pledge37
A clause in a contract restricting the pledge of the rights of a party to38
payments that are or will become due under the contract, making the pledge or39
its enforcement a default under the contract, or providing that the other party40
is excused from performance or may terminate the contract on account of the41
pledge, is without effect.42
Revision Comments - 201443 SB NO. 89	ENROLLED
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(a) This Article is new.  It adopts concepts expressed in Chapter 9 of the1
Uniform Commercial Code and in former R.S. 9:4401. Under certain circumstances,2
it may effect a change in the law.3
(b) Under Article 2653 (Rev. 1993), a right cannot be assigned when the4
contract from which it arises prohibits the assignment of that right. Interpreting that5
Article, the Supreme Court has held that there is no public policy precluding a clause6
prohibiting assignment of rights under an insurance contract.  See In Re Katrina7
Canal Breaches Litigation, 63 So.3d 955 (La. 2011). By its terms, however, Article8
2653 (Rev. 1993) applies to sales and does not necessarily apply to a mere pledge or9
the granting of a security interest. Chapter 9 of the Uniform Commercial Code10
generally voids anti-assignment clauses that prohibit a security interest and11
specifically provides this rule prevails over Article 2653 (Rev. 1993).  See12
R.S.10:9-406. Similarly, former R.S. 9:4401(G)(4) provided that any term in a lease13
was ineffective if it prohibited assignment of rent, prohibited creation of a security14
right in rent or required the lessee's consent to the assignment or security right.15
(c) This Article applies to all pledges of an obligation of a third person to16
make payment, including both pledges of movables that are outside the scope of17
Chapter 9 of the Uniform Commercial Code and pledges of the lessor's interest in the18
lease of an immovable and its rents.  The effect of this Article is, however, limited19
to the pledge of payments that are or will become due under a contract. This Article20
does not apply to the encumbrance of other rights that the pledgor may have under21
the contract.22
(d) This Article does not invalidate the arrangement commonly known as a23
"negative pledge" by which an obligor agrees with one of his creditors that he will24
not encumber one or more of his assets in favor of another creditor.  Thus, a lessor25
may validly agree with one of his creditors that he will not pledge to another creditor26
his rights to rents arising under a lease of an immovable. The reason that this Article27
does not apply to such an agreement is that the contract restricting the pledge is not28
the contract under which the pledged payments will become due under the same29
contract. In the example given, the payments arise under the lease between the lessor30
and lessee, while the prohibition against pledging those payments arises under the31
contract between the lessor and his creditor. On the other hand, this Article32
invalidates a stipulation in a lease whereby the lessor agrees with the lessee that the33
rents under the lease may not be pledged to the lessor's creditors.  Such a stipulation,34
if it were permitted under this Article, would in effect make the rents under the lease35
insusceptible of pledge. There is no similar consequence with a negative pledge,36
which is a mere contractual covenant that does not have the effect of nullifying a37
pledge made in violation of its terms.38
Art. 3164.  Modification of contract from which a pledged obligation arises39
The parties to a contract from which a pledged obligation arises may40
agree to modify or terminate the contract or to substitute a new contract.  If41
made in good faith, the agreement is effective against the pledgee without his42
consent. Nevertheless, after written notice of the pledge is given to the obligor43
of a pledged obligation that has been fully earned by the pledgor's performance,44
an agreement modifying or extinguishing the pledged obligation is without45
effect against the pledgee unless made with his consent.46
Revision Comments - 201447
(a) This Article is new.  It addresses an issue for which no treatment was48
given in the Louisiana Civil Code of 1870: the circumstances under which the49 SB NO. 89	ENROLLED
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contract from which a pledged obligation arises can be modified or terminated by the1
parties to that contract without the consent of the pledgee.2
(b) For contracts that are susceptible of encumbrance by a security interest,3
Chapter 9 of the Uniform Commercial Code states the general rule that a4
modification of or substitution for an assigned contract is effective against the5
assignee (i.e., the secured party) if made in good faith.  R.S. 10:9-405(a). R.S.6
10:9-405(b) hinges the applicability of this rule, however, on two factors: whether7
the right to payment has been fully earned by performance and whether the account8
debtor has received notification of the assignment. Only where the right to payment9
has been fully earned by performance and the account debtor has been notified of the10
assignment is the general rule of R.S. 10:9-405(a) inapplicable. In other words, only11
in that event is the consent of the assignee necessary for a modification made in good12
faith.  Of course, under any circumstances in which a modification is made by the13
parties in bad faith, the modification is, by inference from R.S. 10:9-405(a),14
unenforceable against the assignee.15
(c) This Article restates the substance of R.S. 10:9-405. An agreement made16
in good faith by the parties to a contract from which a pledged obligation arises is17
generally effective against the pledgee without the necessity of his consent.  An18
exception arises after written notice of a pledge has been given to the obligor of a19
pledged obligation that has been fully earned by performance. In that specific case,20
an agreement for the modification of that obligation is without effect as to the21
pledgee unless made with his consent.22
(d) The rules expressed in this Article apply to all pledges of a third person's23
obligation, including the obligations of a lessee under a lease that is the subject of24
a pledge made under Chapter 2 of this Title. In the case of an assignment of leases25
and rents, former R.S. 9:4401(G) addressed the topic using terminology and concepts26
similar to those found in R.S. 10:9-405 but with somewhat different results.27
Art. 3165. Attachment of pledge to obligations arising under modified or28
substituted contract29
Upon the modification of a contract from which a pledged obligation30
arises, or the substitution of a new contract, the pledge encumbers the31
corresponding rights of the pledgor under the modified or substituted contract.32
Revision Comments - 201433
This Article is new.  It makes more general a principle that applied to34
assignments of leases and rents under former R.S. 9:4401(G)(3). Chapter 9 of the35
Uniform Commercial Code contains a similar principle.  See R.S. 10:9-405.36
Art. 3166.  Modification as default by pledgor37
The pledgor and pledgee may agree that a modification or termination38
of the contract from which a pledged obligation of a third person arises, or the39
substitution of a new contract, is a default by the pledgor.40
Revision Comments - 201441
(a) This Article is new.  It makes more general a principle that applied to42
assignments of leases and rents under former R.S. 9:4401(G)(3).  Chapter 9 of the43
Uniform Commercial Code contains a similar principle.  See R.S. 10:9-405.44
(b) Under Article 3164 (Rev. 2014), a modification or termination of a45
contract from which a pledged obligation arises is generally effective against the46 SB NO. 89	ENROLLED
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pledgee without his consent if it is made in good faith. Nevertheless, a pledge may1
provide that a modification or termination of the contract, or the substitution of a2
new contract, is a default by the pledgor.3
Art. 3167.  Pledgee not bound for pledgor's obligations4
In the absence of an assumption by the pledgee, the existence of a pledge5
does not impose upon the pledgee liability for the pledgor's acts or omissions,6
nor does it bind the pledgee to perform the pledgor's obligations.7
Revision Comments - 20148
This Article is new. It expands to all pledges a principle that applied to9
assignments of leases and rents under former R.S. 9:4401(G)(5).  Chapter 9 of the10
Uniform Commercial Code contains a similar principle.  See R.S. 10:9-402.11
CHAPTER 2.  THE PLEDGE OF THE LESSOR'S RIGHTS IN THE12
LEASE OF AN IMMOVABLE AND ITS RENTS13
Art. 3168.  Requirements of contract14
A contract establishing a pledge of the lessor's rights in the lease of an15
immovable and its rents must state precisely the nature and situation of the16
immovable and must state the amount of the secured obligation or the17
maximum amount of secured obligations that may be outstanding from time to18
time.19
Revision Comments - 201420
(a) This Chapter, which supplements the general provisions of Chapter 1,21
contains provisions that are specifically applicable to the pledge of the lessor's rights22
in the lease of an immovable and its rents.23
(b) There is no requirement that a pledge encumber both leases and rents, for24
the parties may choose to encumber in a pledge only leases or only rents.  There is25
also no requirement that all leases or all rents of an immovable be pledged; the26
parties may choose to encumber only one or more specific leases or the rents from27
those specific leases. See C.C. Art. 3170 (Rev. 2014).  The scope of what is pledged28
is a matter of contract between the parties.29
(c) This Article restates a number of formal requirements contained in30
former R.S. 9:4401(A) but in a manner that more closely follows the formal31
requirements applicable to a contract of mortgage. Cf  C.C. Art. 3288 (Rev. 1991).32
The degree of specificity required in the description of the immovable subject to the33
pledge and the requirements for description of the secured obligation are identical34
to the corresponding requirements that apply to a contract of mortgage.  See35
Comments (b) and (c) to C.C. Art. 3288 (Rev. 1991).36
(d) A pledge under this Chapter may be created by a sublessor.  In that event,37
the pledge encumbers his rights under the sublease, but not his rights under the38
underlying lease of the property from his own lessor.  The rights of a lessee under39
a lease, as well as the rights of a sublessee under a sublease, are not susceptible of40
pledge under this Chapter but instead are encumbered by mortgage. See C.C. Art.41
3286 (Rev. 1991; Amended 1993); R.S. 9:4401 (Rev. 2014).42 SB NO. 89	ENROLLED
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Art. 3169.  Effectiveness against third persons1
The pledge of the lessor's rights in the lease of an immovable and its2
rents is without effect as to third persons unless the contract establishing the3
pledge is recorded in the manner prescribed by law.4
Nevertheless, the pledge is effective as to the lessee from the time that he5
is given written notice of the pledge, regardless of whether the contract6
establishing the pledge has been recorded.7
Revision Comments - 20148
(a) This Article is new.  Recordation of a contract establishing a pledge of9
the lessor's rights in the lease of an immovable and its rents is required for the pledge10
to have effect against third persons other than the lessee. To that extent, the Article11
restates a requirement that was contained in former R.S. 9:4401. Unlike that statute,12
however, this Article does not specify the place where recordation must occur. The13
place of recordation is specified in Article 3346 (Rev. 2014), which changes the law14
by requiring recordation in the mortgage records, rather than in the conveyance15
records, as former R.S. 9:4401 previously provided.16
(b) This Article does not address the issue of when the lessee is obligated to17
render performance to the pledgee.  That issue is governed by Article 3161 (Rev.18
2014). Article 3164 (Rev. 2014) prescribes the circumstances under which an19
agreement by the lessor and lessee to modify a lease has effect against a pledgee.20
Art. 3170.  Pledge contained in act of mortgage21
A pledge of the lessor's rights in the lease of an immovable and its rents22
may be established in an act of mortgage of the immovable.  In that event, the23
pledge is given the effect of recordation for so long as the mortgage is given that24
effect and is extinguished when the mortgage is extinguished.25
Revision Comments - 201426
This Article is new. It recognizes the longstanding practice of the inclusion27
within a contract of mortgage of the pledge of the mortgagor's rights in the leases and28
rents of the mortgaged immovable. Similar recognition was contained in former R.S.29
9:4401(A). This Article omits, however, the provision of former R.S. 9:4401(A) to30
the effect that recordation of the contract of mortgage in the mortgage records31
obviated the need for separate recordation in the conveyance records in order for the32
pledge to have effect against third persons. Under this revision, all pledges of the33
lessor's interest in the lease of an immovable and its rents must be recorded in the34
mortgage records, rather than the conveyance records, in order to have effect against35
third persons, regardless of whether the pledge is contained in a contract of mortgage36
or in a separate contract of pledge.  See C.C. Art. 3346 (Rev. 2014).37
Art. 3171.  Pledge of all or part of the leases of an immovable38
A pledge may be established over all or part of the leases of an39
immovable, including those not yet in existence, without the necessity of specific40 SB NO. 89	ENROLLED
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description of the leases in the contract establishing the pledge. If the pledge is1
established over leases not yet in existence, the pledge encumbers future leases2
as they come into existence. The pledge has effect as to third persons, even with3
respect to leases not in existence at the time of formation of the contract4
establishing the pledge, from the time that the contract establishing the pledge5
is recorded in the manner prescribed by law.6
Revision Comments - 20147
This Article is new.  It restates the provisions of former R.S. 9:4401(A)(2),8
without any intent to change the law.9
Art. 3172. Pledge of mineral payments by owner of land or holder of mineral10
servitude11
By express provision in a contract establishing a pledge, the owner of12
land or holder of a mineral servitude may pledge bonuses, delay rentals,13
royalties, and shut-in payments arising from mineral leases, as well as other14
payments that are classified as rent under the Mineral Code.  Other kinds of15
payments owing under a contract relating to minerals are not susceptible of16
pledge under this Title.17
Revision Comments - 201418
(a) This Article, which is derived from former R.S. 9:4401(D), clarifies the19
law.20
(b) Like the source provision, this Article permits a landowner or holder of21
a mineral servitude to pledge mineral payments. This Article makes clear, however,22
that a contract of pledge encumbers mineral payments only if the contract includes23
an express statement to that effect. A mere statement that all leases and rents of the24
immovable are pledged will not suffice for the pledge to encumber mineral25
payments.26
(c) "Accounts" as defined in Chapter 9 of the Uniform Commercial Code and27
the kinds of mineral payments susceptible of encumbrance by pledge under this28
Chapter are mutually exclusive.  See R.S. 10: 9-102(a)(2) (Rev. 2014).29
(d) This Article clarifies an issue that was uncertain under former R.S.30
9:4401: whether mineral lease bonus payable to a landowner or holder of a mineral31
servitude is susceptible of encumbrance by a pledge, rather than by a security interest32
under Chapter 9 of the Uniform Commercial Code.  Under prior law, mineral33
payments that were classified as rent under the Mineral Code were susceptible of34
encumbrance under former R.S. 9:4401 and were excluded from the definition of35
"account" in Section 9-102 of the Uniform Commercial Code. Both that definition36
and the provisions of former R.S. 9:4401 were written, however, in a manner that37
seemed to presuppose that mineral lease bonus payable to a landowner or holder of38
a mineral servitude was not rent and would therefore be an "account" susceptible of39
encumbrance only by a security interest under Chapter 9 of the Uniform Commercial40
Code. Nevertheless, after the adoption of those statutes, the Supreme Court held, in41
a case involving claims of collation among heirs, that mineral lease bonus is a form42 SB NO. 89	ENROLLED
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of rent.  Succession of Doll v. Doll, 593 So.2d 1239 (La. 1992).1
This Article provides that mineral lease bonus payable to a landowner or2
holder of a mineral servitude is encumbered by a pledge under this Chapter, rather3
than by a security interest under Chapter 9 of the Uniform Commercial Code,4
without regard to whether the bonus is classified as rent under the Mineral Code.5
Similarly, delay rentals, royalties, and shut-in payments arising from mineral leases6
are encumbered by a pledge under this Chapter, as is any other payment that is owed7
to a landowner or holder of a mineral servitude and that is classified as rent under the8
Mineral Code. This treatment is in accord with cases holding a mineral lease bonus9
to be a civil fruit (See, e.g., Milling v. Collector of Revenue, 220 La. 773, 57 So.2d10
679 (La. 1952)), as well as the law of community property, which classifies as11
community property bonuses, delay rentals, royalties, and shut-in payments arising12
from mineral leases covering separate property.  See C.C. Art. 2339 (Rev. 1979;13
Amended 2008).14
(e) Mineral payments owing to a person other than a landowner or holder of15
a mineral servitude are not susceptible of pledge under this Title.16
Art. 3173.  Accounting to other pledgees for rent collected17
Except as provided in this Article, a pledgee is not bound to account to18
another pledgee for rent collected.19
A pledgee shall account to the holder of a superior pledge for rent the20
pledgee collects more than one month before it is due and for rent he collects21
with actual knowledge that the payment of rent to him violated written22
directions given to the lessee to pay rent to the holder of the superior pledge.23
After all secured obligations owed to a pledgee have been extinguished,24
he shall deliver any remaining rent collected to another pledgee who has made25
written demand upon him for the rent before he delivers it to the pledgor.26
Revision Comments - 201427
(a) This Article is new.  It changes the law by generally permitting an28
inferior pledgee to collect rent from the lessee without a duty to account to a superior29
pledgee for the rent collected. Nevertheless, the inferior pledgee must account to the30
superior pledgee for any rent he collects more than one month before it is due. The31
inferior pledgee must also account for any rent he collects with actual knowledge32
that payment of the rent to him violated written instructions to the lessee to pay rent33
to the superior pledgee.34
(b) Former R.S. 9:4401(G)(2) provided that, if a pledgee had not notified the35
lessee to make direct payment to him, the lessee was exonerated of liability for rent36
paid to the lessor or a subsequent assignee; however, the person to whom payment37
was remitted was nevertheless liable to the pledgee for the sums received.  Thus, an38
inferior pledgee who collected rent was exposed to liability to a superior pledgee for39
any rent he might collect. This Article now permits the inferior pledgee to retain rent40
he collects as it falls due, unless a superior pledgee has notified the lessee to make41
payment to him and the inferior pledgee has knowledge of these instructions. At any42
time, of course, the superior pledgee can give a direct payment notification to the43
lessee, in which event the lessee will no longer be able safely to pay the inferior44
pledgee. See C.C. Art. 3161 (Rev. 2014).  The inferior pledgee would still be able45
to retain any payments that the lessee might make to him in violation of these46
instructions if the inferior pledgee were unaware of those instructions.47 SB NO. 89	ENROLLED
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(c) The principles expressed in this Article are analogous to rules under1
Chapter 9 of the Uniform Commercial Code, which generally permit an inferior2
secured party to collect proceeds of collateral without liability to a superior secured3
party, provided that the inferior secured party does not know that his receipt of the4
proceeds violates the rights of the superior secured party. See Uniform Commercial5
Code Official Comment 5 to R.S. 10:9-331; Uniform Commercial Code Official6
Comment 7 to R.S. 10:9-330 and Uniform Commercial Code Official Comment 57
to R.S. 10:9-607.8
(d) This Article does not grant inferior pledgees the right to collect rent more9
than one month in advance of the date due. Without a rule limiting the ability of an10
inferior pledgee to collect future rents, a superior pledgee might have discovered that11
all future rents for the balance of the term of the lease had been paid in advance to12
an inferior pledgee.13
(e) Under Article 3160 (Rev. 2014), after the secured obligation has been14
satisfied, a pledgee must account to the pledgor for any excess payment received on15
a pledged obligation of a third person.  This obligation applies to any excess16
proceeds of rent collected from a lessee. Under this Article, if before delivering the17
excess proceeds to the pledgor the pledgee receives a demand for them from another18
pledgee, the pledgee who collected the rent is bound to turn the excess proceeds over19
to the other pledgee, rather than delivering them to the lessor.  Chapter 9 of the20
Uniform Commercial Code contains a similar rule.  See R.S. 10:9-608.21
(f) R.S. 9:4402 (Rev. 2014) addresses the rights of competing pledgees to22
rental collections that have been deposited into a deposit account maintained with23
a financial institution.24
(g) The provisions of this Article may be altered by agreement between25
pledgees.26
Art. 3174.  Judicial sale prohibited27
A pledge of the lessor's rights in the lease of an immovable and its rents28
does not entitle the pledgee to cause the rights of the lessor to be sold by judicial29
process.  Any clause to the contrary is absolutely null.30
Revision Comments - 201431
(a) This Article, which is new and has no counterpart in either the Louisiana32
Civil Code of 1870 or former R.S. 9:4401, highlights a fundamental distinction33
between the enforcement of the pledge of a movable and the enforcement of the34
pledge of the lessor's rights under the lease of an immovable. In the case of the35
pledge of a movable, Article 3158 (Rev. 2014) permits an extra-judicial disposition36
by the pledgee, if authorized in the contract of pledge, as well as seizure and sale by37
judicial process of the thing pledged.  This Article precludes the pledgee of the38
lessor's rights in the lease of an immovable and its rents from proceeding with either39
kind of disposition.  Allowing the pledgee to sell the lessor's rights under the lease,40
whether by private or judicial sale, would, in a sense, effect an undesirable41
dismemberment of ownership of the immovable.42
(b) The pledge of lessor's rights in the lease of an immovable and its rents43
is enforced only by collection of rents and enforcement of other obligations of the44
lessee under the lease. The pledgee is given the right to collect rents by Article 316045
(Rev. 2014) and, to effectuate this right, is permitted by Article 3161 (Rev. 2014) to46
direct the lessee to pay rent to him. If necessary, the pledgee may enforce his rights47
by bringing suit directly against the lessee. He may also employ remedies available48
under the Code of Civil Procedure to seize the rents in the hands of the lessee, but49
he cannot cause the lessor's rights under the lease to be sold by judicial process. See50
C.C.P. Arts. 2411 and 3503.51
Art. 3175.  Applicability of general rules of pledge52 SB NO. 89	ENROLLED
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In all matters for which no special provision is made in this Chapter, the1
pledge of the lessor's rights in the lease of an immovable and its rents is2
governed by the provisions of Chapter 1 of this Title.3
Revision Comments - 20144
This Article is new.  It states explicitly that the entirety of Chapter 1 of this5
Title applies fully to the pledge of the lessor's rights in the lease of an immovable6
and its rents except to the extent inconsistent with the provisions of this Chapter.7
*          *          *8
TITLE XXII-A OF REGISTRY9
CHAPTER 1. GENERAL PROVISIONS10
*          *          *11
Art. 3346.  Place of recordation; duty of the recorder12
A. An instrument creating, establishing, or relating to a mortgage or13
privilege over an immovable, or the pledge of the lessor's rights in the lease of an14
immovable and its rents, is recorded in the mortgage records of the parish in which15
the immovable is located. All other instruments are recorded in the conveyance16
records of that parish.17
B. The recorder shall maintain in the manner prescribed by law all18
instruments that are recorded with him.19
Revision Comments - 201420
Effective as of January 1, 2015, this Article provides that a pledge of the21
lessor's rights in the lease of an immovable and its rents is recorded in the mortgage22
records of the parish in which the immovable is located. This represents a change23
in the law, which formerly required recordation in the conveyance records. For24
transitional rules applicable to the continued effectiveness of assignments of leases25
and rents filed in the conveyance records in accordance with former R.S. 9:440126
prior to January 1, 2015, as well as rules that apply to the reinscription, release,27
transfer, amendment, or other modification of those assignments, see R.S. 9:4403.28
After January 1, 2015, despite the filing of the original assignment of leases and rents29
in the conveyance records, an instrument effecting the reinscription, release, transfer,30
amendment, or other modification of the assignment must be filed in the mortgage31
records, and a filing in the conveyance records is neither necessary nor effective to32
cause the instrument to have effect against third persons.33
*          *          *34
CHAPTER 2. MORTGAGE RECORDS35
SECTION 1. GENERAL PROVISIONS36
Art. 3354.  Applicability37 SB NO. 89	ENROLLED
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The provisions of this Chapter apply only to the mortgages records and1
privileges encumbering immovables and to pledges of the lessor's rights in the2
lease of an immovable and its rents.3
Revision Comments - 20144
(a) The primary purpose of the 2014 revision of this Chapter is to include the5
pledge of the lessor's rights in the lease of an immovable and its rents within its6
scope. Effective as of January 1, 2015, Article 3346 provides that the pledge of the7
lessor's rights in the lease of an immovable and its rents is recorded in the mortgage8
records of the parish in which the immovable is located.  This represents a change9
in the law, which formerly required recordation in the conveyance records. For10
transitional rules applicable to the continued effectiveness of assignments of leases11
and rents filed in the conveyance records in accordance with former R.S. 9:440112
prior to January 1, 2015, as well as rules that apply to the reinscription, release,13
transfer, amendment, or other modification of those assignments, see R.S. 9:4403.14
 After January 1, 2015, despite the filing of the original assignment of leases and15
rents in the conveyance records, an instrument effecting the reinscription, release,16
transfer, amendment, or other modification of the assignment must be filed in the17
mortgage records, and a filing in the conveyance records is neither necessary nor18
effective to cause the instrument to have effect against third persons.19
(b) This Chapter applies only to encumbrances upon immovables.  Privileges20
and pledges that encumber movable property are not subject to the registry or21
reinscription requirements of this Chapter or other provisions of this Title. See C.C.22
Arts. 3153 and 3155 (Rev. 2014); Art. XIX, Sec. 19 of the La. Const. of 1921, made23
statutory by Art. XIV, Sec. 16 of the La. Const. of 1974. References to pledges in24
later Articles of this Chapter are limited to pledges of the lessor's rights in the lease25
of an immovable and its rents.26
Art. 3355.  Mortgage, pledge, or privilege affecting property in several parishes27
An act of mortgage, contract of pledge, instrument evidencing a privilege,28
or other instrument that affects property located in more than one parish may be29
executed in multiple originals for recordation in each of the several parishes. An30
original that is filed with a recorder need only describe property that is within the31
parish in which it is filed.32
A certified copy of an instrument that is recorded in the records of a parish33
need only describe property that is within the parish in which it is filed.34
Revision Comments - 201435
This provision is consistent with Article 3345 (Rev. 2005) and reflects36
practices that have long been followed by practitioners. It expressly recognizes that37
recordation of a multiple original that omits the description of encumbered property38
located in other parishes does not affect the validity of the recordation.39
Art. 3356.  Transfers, amendments, and releases40
A. A transferee of an obligation secured by a mortgage	, pledge, or privilege41
is not bound by any unrecorded act releasing, amending, or otherwise modifying the42 SB NO. 89	ENROLLED
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mortgage, pledge, or privilege if he is a third person with respect to that unrecorded1
act.2
B. A recorded transfer, modification, amendment, or release of a mortgage,3
pledge, or privilege made by the obligee of record is effective as to a third person4
notwithstanding that the obligation secured by the mortgage, pledge, or privilege has5
been transferred to another.6
C. For the purpose of this Chapter, the obligee of record of a mortgage,7
pledge, or privilege is the person identified by the mortgage records as the obligee8
of the secured obligation.9
Revision Comments - 201410
Prior to the revision of the Title on Mortgages effective January 1, 1993,11
some courts, relying upon the general principle that one cannot transfer a greater12
right than he has under a contract, held that a transferee of the secured obligation was13
bound by unrecorded acts between the mortgagor and previous mortgagee. Other14
courts, seemingly recognizing that a mortgage is a real right and hence subject to the15
principle that contracts modifying or amending such rights must be recorded to affect16
third persons, held that a transferee of an obligation secured by a mortgage was not17
bound by a separate unrecorded contract between the mortgagor and mortgagee18
modifying, releasing or amending the mortgage. See Harrell, "Developments in the19
Law, Security Devices," 47 La.L.Rev. 452, 464 (1986). This Article adopts the latter20
view and requires that any act releasing a mortgage, pledge, or privilege, or21
amending or otherwise modifying the contract creating or evidencing it, be recorded22
in order to affect subsequent assignees of the secured obligation.23
SECTION 2. METHOD AND DURATION OF RECORDATION24
Art. 3357.  Duration; general rule25
Except as otherwise expressly provided by law, the effect of recordation of26
an instrument creating a mortgage or pledge or evidencing a privilege ceases ten27
years after the date of the instrument.28
Revision Comments - 201429
(a) This and the succeeding four Articles state the rules relative to the lapse30
of inscriptions of mortgages, pledges, and privileges in the mortgage records.31
(b)  This Article establishes a general rule that the effect of an inscription32
ceases ten years after the date of the document evidencing the mortgage, pledge, or33
privilege. This departs from the rule of Article 3369 of the Louisiana Civil Code of34
1870 that the period of inscription was counted from the date of the secured35
obligation.36
Art. 3358. Duration of recordation of certain mortgages, pledges, and vendor's37
privileges38
If an instrument creating a mortgage or pledge or evidencing a vendor's39 SB NO. 89	ENROLLED
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privilege describes the maturity of any obligation secured by the mortgage, pledge,1
or privilege and if any part of the described obligation matures nine years or more2
after the date of the instrument, the effect of recordation ceases six years after the3
latest maturity date described in the instrument.4
Revision Comments - 20145
Under this Article, the effect of recording a mortgage, pledge, or privilege6
that secures an obligation having a stated maturity of nine years or more ceases six7
years after the maturity of the obligation. This Article recognizes, however, that the8
particular terms of the secured obligations may or may not be apparent from the9
recorded instruments creating the mortgage or pledge or evidencing the privilege10
securing them. Consequently, this Article extends the period of inscription beyond11
the ten-year limit prescribed by Article 3357 (Rev. 2014) only in those cases in12
which the recorded instrument describes the maturity of a particular obligation that13
it secures. If the maturity occurs nine years or more from the date of the instrument,14
the effect of registry continues for six years from the date of the described maturity.15
*          *          *16
Art. 3361.  Effect of amendment17
If before the effect of recordation ceases an instrument is recorded that18
amends a recorded mortgage, pledge, or privilege to describe or modify the maturity19
of a particular obligation that it secures, then the time of cessation of the effect of the20
recordation is determined by reference to the maturity of the obligation last21
becoming due described in the mortgage, pledge, or privilege as amended.22
Revision Comments - 201423
If, before the effect of recordation ceases, an amendment to a mortgage,24
pledge, or privilege is filed that would bring about a longer period of effectiveness,25
as in the case of an amendment describing a note with a maturity of nine years or26
more from the date of the original instrument, then the period of inscription is27
calculated with reference to the maturity of the obligations described by the28
instrument as amended.29
Art. 3362.  Method of reinscription30
A person may reinscribe a recorded instrument creating a mortgage or pledge31
or evidencing a vendor's privilege by recording a signed written notice of32
reinscription. The notice shall state the name of the mortgagor or pledgor, or the33
name of the obligor of the debt secured by the privilege, as it appears in the recorded34
instrument and, as well as the registry number or other appropriate recordation35
information of the instrument or of a prior notice of reinscription, and shall declare36
that the instrument is reinscribed.37 SB NO. 89	ENROLLED
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Revision Comments - 20141
The method of reinscription provided for in this Article, which has been the2
exclusive means of reinscription since January 1, 1993, is much simpler than the3
method that was previously required. Formerly, one had to file a copy of the original4
mortgage with the recorder accompanied by a request for reinscription. Reinscription5
occurred when the recorder again copied the reinscribed act into his records. No6
useful purpose was served by refiling an instrument that was already filed, or by7
copying an existing document into the records again. This Article instead simply8
requires the person desiring to reinscribe an instrument to do so by expressing that9
intent in a signed document that identifies the instrument and the records where its10
inscription is found.11
Art. 3363.  Method of reinscription exclusive12
The method of reinscription provided in this Chapter is exclusive.  Neither13
an amendment of an instrument creating a mortgage or pledge, or evidencing a14
privilege, nor an acknowledgment of the existence of a mortgage, pledge, or15
privilege by the mortgagor, pledgor, or obligor, constitutes a reinscription of the16
instrument.17
Revision Comments - 201418
(a) This Article makes clear that the filing of a signed, written notice of19
reinscription is the exclusive means of reinscription. The Article rejects20
jurisprudence under former Civil Code Article 3369 (1870) to the effect that any21
document filed by the mortgagor which recognized an existing mortgage effected a22
reinscription of that mortgage. One case even appears to hold that a reinscription23
could occur if the acknowledgement was in an act filed in the conveyance records.24
Exxon Process & Mechanical v. Moncrieffe, 498 So.2d 158 (La. App. 1 Cir.1986).25
(b) Under Article 3367 (Rev. 2014), the recorder is required upon simple26
request to cancel from his records any mortgage, pledge, or privilege that has not27
been reinscribed within the required period. The rule under the 1870 Code placed a28
considerable burden upon both the recorder and the persons examining the records.29
Nor was the rule necessarily advantageous to the obligee. The present rule, which30
has been in effect since January 1, 1993, requires that there be an express notice that31
reinscription is sought, which is then accomplished when that notice is filed.32
*          *          *33
Art. 3365. Effect of request notice recorded after cessation of effect of recordation34
A. A notice of reinscription that is recorded after the effect of recordation of35
the instrument sought to be reinscribed has ceased, again produces the effects of36
recordation, but only from the time that the notice of reinscription is recorded. The37
effect of recordation pursuant to this Paragraph Article shall continue for ten years38
from the date on which the notice of reinscription is recorded, and the instrument39
may be reinscribed thereafter from time to time as provided by Article 3362.40
B. Reinscription pursuant to Paragraph A of this Article does not require that41 SB NO. 89	ENROLLED
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the mortgage or pledge or evidence of privilege be again recorded, even if the1
original recordation has been cancelled.2
Revision Comments - 20143
This Article restates a rule that the courts held was implied by provisions of4
the Louisiana Civil Code of 1870. If the notice of reinscription is timely recorded,5
it extends the period of inscription for ten years from its date of recordation in all6
cases. If it is recorded after the effect of recordation ceases, the reinscription gives7
the mortgage, pledge, or privilege the effect it would have if that were the first time8
the instrument was recorded.9
SECTION 3. CANCELLATION10
Art. 3366.  Cancellation upon written request; form and content11
A. The recorder of mortgages shall cancel, in whole or in part and in the12
manner prescribed by law, the recordation of a mortgage, pledge, or privilege upon13
receipt of a written request for cancellation in a form prescribed by law and that:14
(1) Identifies the mortgage, pledge, or privilege by reference to the place in15
the records where it is recorded; and16
(2)  Is signed by the person requesting the cancellation.17
B. The effect of recordation of the instrument ceases upon cancellation by18
the recorder pursuant to the provisions of this Article.19
Art. 3367.  Cancellation of recordation after effect of recordation has ceased20
If the effect of recordation of a mortgage, pledge, or privilege has ceased for21
lack of reinscription, the recorder upon receipt of a written signed application shall22
cancel its recordation.23
Art. 3368. Cancellation of prescribed judicial mortgage arising from judgment24
that has prescribed25
Notwithstanding the reinscription of a judicial mortgage created by the26
filing of a judgment of a court of this state, The the recorder shall cancel the27
judicial mortgage from his records a judicial mortgage created by the filing of a28
judgment of a court of this state that has been reinscribed, upon the written request29
of any person's written request to which is attached a certificate from the clerk of30
the court rendering the judgment that no suit or motion has been was filed for its31
revival within the time required by Article 3501 or of a certified copy of a final and32 SB NO. 89	ENROLLED
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definitive judgment of the court rejecting the demands of the plaintiff in a suit or1
motion to revive the judgment.2
Revision Comments - 20143
As Comment (b) to Article 3359 (Rev. 2014) explains, reinscription of a4
judicial mortgage and revival of the underlying judgment are entirely different5
concepts. Both timely reinscription and a timely suit for revival are necessary for a6
judicial mortgage to continue to have effect.  Under this Article, even if a judicial7
mortgage is reinscribed, the recorder must cancel the inscription of the judicial8
mortgage from his records upon any person's request accompanied by a certificate9
from the clerk of the court rendering the underlying judgment that no suit was filed10
for its revival within the time required by Article 3501 (Rev. 1983) or by a final and11
definitive judgment of that court rejecting the demands of the plaintiff in a suit to12
revive it.13
*          *          *14
Section 2. The heading of Part IV of Chapter 1 of Code Title XX-A of Code15
Book III of Title 9 of the Louisiana Revised Statutes of 1950, and R.S. 9:4401 and16
9:5386 are hereby amended and reenacted and R.S. 9:4402 and 4403 are hereby17
enacted to read as follows:18
CODE TITLE XX - OF PLEDGE SECURITY19
*          *          *20
CODE TITLE XX-A - PLEDGE21
CHAPTER 1. PLEDGES22
PART IV.  PLEDGE OR ASSIGNMENT OF LEASES23
AND RENTS OF AN IMMOVABLE24
§4401.  Conditional or collateral assignment of leases or rents25
A. Any obligation may be secured by an assignment by a lessor or sublessor26
of leases or rents, or both leases and rents, pertaining to immovable property.  Such27
assignment may be expressed as a conditional or collateral assignment, and may be28
effected in an act of mortgage, by a separate written instrument of assignment, or by29
a separate written instrument of pledge, and may be referred to, denominated, or30
described as a pledge or an assignment, or both. The instrument shall state the31
amount of the obligation secured thereby or the maximum amount of the obligation32
that may be outstanding at any time from time to time that such assignment secures.33
If such conditional or collateral assignment is made, it shall become absolute upon34 SB NO. 89	ENROLLED
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the assignor's default in respect to the obligation thereby secured or in accordance1
with the terms of the instrument creating such assignment, and shall become2
operative as to the debtor upon written notice to the debtor from or on behalf of the3
assignee or the assignor that such assignment has so become absolute.4
(1) An assignment relating to a lease or rent of an immovable is given the5
effect of recordation when an original or a certified copy of the instrument creating6
the assignment is filed in the conveyance records of the parish in which the7
immovable is situated; however, an assignment contained in an act of mortgage filed8
in the mortgage records of such parish on or after September 1, 1995, shall be given9
the effect of recordation when, to the extent, and for so long as the act of mortgage10
is given such effect, without the need for separate recordation in the conveyance11
records. An assignment given the effect of recordation has such effect with regard12
to all obligations, present and future, secured thereby notwithstanding the date of the13
incurrence of such obligations or the nature of such obligations.14
(2) Such assignment may include all or any portion of the assignor's15
presently existing and anticipated future leases and rents pertaining to the described16
immovable property.  As future leases or rents of an immovable come into existence17
the assignee's rights as to such leases and rents shall have effect as to third persons18
from the date of the filing of the instrument. It shall not be necessary to specifically19
describe the presently existing or future arising leases or rents; to affect the assignor,20
the assignee, the debtor, or other third parties the instrument shall suffice if it21
contains a general description of the leases and rents together with a description of22
the immovable affected by the lease.  The immovable property description shall be23
the kind of description which, if contained in a mortgage of the immovable, would24
cause such mortgage to be effective as to third persons if the mortgage were properly25
filed for record under the laws of this state.26
(3) Once an assignment relating to leases or rents of an immovable is so27
filed, the assignee shall have a superior claim to the leases and rents assigned and28
their proceeds as against all other creditors whose claims or security interests arise29
or are perfected after the filing of the assignment, notwithstanding the fact that the30 SB NO. 89	ENROLLED
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debtor is not notified of or does not consent to the assignment or that the assignee is1
not in possession of the immovable property.2
(4) Except for purposes of Subsection G, the term "lease" as used in this3
Section includes a sublease.4
B. This Section is intended to recognize one method of securing obligations,5
and shall not have the effect of repealing any other provision of law in respect to6
pledge, pawn, and assignment of incorporeal rights.7
C. This Section is remedial and shall be retroactive.  All assignments of8
leases or rents heretofore made in compliance with the provisions of this Section are9
hereby validated.10
D. A landowner or mineral servitude owner may make a conditional or11
collateral assignment pursuant to this Section of rents, royalties, delay rentals,12
shut-in payments, and other payments which are rent or rentals under Title 31 of the13
Louisiana Revised Statutes attributable to the landowner's sale, lease, or other14
disposition of his right to explore and develop his land for production of minerals or15
to the mineral servitude owner's sale, lease, or other disposition of his mineral right.16
This Section shall not otherwise apply to rents, royalties, overriding royalties,17
bonuses, and other payments and other rights under mineral leases and other18
contracts relating to minerals.19
E. This Section shall apply to assignments of leases of movable property20
subject to the Louisiana Lease of Movables Act entered into prior to the time Chapter21
9 of the Louisiana Commercial Laws (R.S. 10:9-101, et seq.) becomes effective,22
including without limitation those assignments of leases that affect rights arising23
after the effective date of Chapter 9 and those continuing assignments that may24
secure future obligations, lines of credit, and other ongoing credit facilities.  This25
Section shall further apply to assignments of leases of immovable property located26
in this state without regard to the time Chapter 9 becomes effective.27
F.(1) Except as otherwise agreed to by the parties, the assignee's interest in28
the leases or rents assigned continues in any identifiable proceeds including29
collections received by the assignor.30 SB NO. 89	ENROLLED
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(2) In the event of insolvency proceedings instituted by or against an1
assignor, the assignee has a perfected security interest in proceeds of the leases or2
rents or both leases and rents assigned, as follows:3
(a) In identifiable noncash proceeds and in separate deposit accounts4
containing only proceeds.5
(b) In identifiable cash proceeds in the form of money which is neither6
commingled with other money nor deposited in a deposit account prior to the7
insolvency proceedings.8
(c) In identifiable cash proceeds in the form of checks and the like which are9
not deposited in a deposit account prior to the insolvency proceedings.10
(d)  In all cash and deposit accounts of the assignor in which proceeds have11
been commingled with other funds, but the perfected security interest under this12
Section is subject to any right of set-off. It is further limited to an amount not greater13
than the amount of any cash proceeds received by the assignor within ten days before14
the institution of the insolvency proceedings, less the sum of:15
(i) the payments to the assignee on account of cash proceeds received by the16
assignor during such period; and17
(ii) the cash proceeds received by the assignor during such period to which18
the assignee is entitled under Paragraphs (a) through (c) of Subsection F(2).19
G.(1) The rights of an assignee against the debtor shall be subject to any20
dealing by the debtor with the assignor, any other assignee, or other successor in21
interest of the assignor until the debtor receives written notice from or on behalf of22
the assignee or the assignor that the assignment of the particular lease or rent of23
which he is debtor has become absolute.  A notification which does not reasonably24
identify the rights assigned is ineffective. If requested by the debtor, the assignee25
must seasonably furnish reasonable proof that the assignment has been made and26
unless he does so the debtor may pay the assignor.27
(2) Except as provided in this Subsection (G), a debtor who has received28
written notice that the assignment has become absolute will not be discharged from29
his debt if he pays anyone other than the assignee.  In any case in which a debtor is30 SB NO. 89	ENROLLED
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not notified of the assignment made in compliance with the provisions of this Section1
and, in good faith, makes payment of rent in whole or in part to the assignor or the2
assignor's successor, or to a subsequent assignee of the rent who shall have notified3
the debtor of that assignment, then to the extent of payment, the debtor shall be4
exonerated of liability to make payment to the first assignee; however, the person to5
whom payment was made shall be accountable and liable to the assignee for the6
sums received. The debtor may, at its option, commence concursus proceedings7
instead of making payment to the assignor or the assignee.8
(3) Notwithstanding the debtor's receipt of written notice of the assignment,9
a modification of or substitution for the lease made in good faith and in accordance10
with reasonable commercial standards is effective against an assignee, unless the11
debtor has otherwise agreed with the assignee. In either event the assignee acquires12
rights under the modified or substituted lease corresponding to the assignee's rights13
under the original lease. No termination or modification of or substitution for a lease14
shall be effective against an assignee as to the right to the payment of rent or a part15
thereof under an assigned lease which has been fully earned by performance.  The16
assignment may provide that modification of or substitution for the lease is a default17
by the assignor.18
(4)  A term in any lease between a debtor and an assignor is ineffective if it19
prohibits assignment of rent or prohibits creation of a security right in rent due or to20
become due or requires the debtor's consent to such assignment of rent or security21
interest in rent.22
(5) The mere existence of a conditional or collateral assignment does not23
impose contract or tort liability upon the assignee for the assignor's acts or omissions24
relating to such leases.25
H.(1) The  effect of recordation of all assignments recorded on or after26
September 1, 1990, ceases ten years after the date of the instrument creating the27
assignment, except, that if an instrument creating an assignment describes the28
maturity of an obligation secured thereby and if any part of the described obligation29
matures nine years or more after the date of the instrument, the effect of recordation30 SB NO. 89	ENROLLED
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ceases six years after the described maturity date.  A recorded instrument creating1
an assignment may be reinscribed by filing a signed, written notice of reinscription.2
The notice shall state the name of the assignor as it appears in the recorded3
instrument and recordation number or other appropriate recordation information of4
the instrument or of a prior notice of reinscription and shall declare that the5
instrument is reinscribed.  A notice of reinscription that is filed before the effect of6
recordation ceases continues that effect for ten years from the date the notice is filed.7
A notice of reinscription that is filed after the effect of recordation ceases produces8
the effects of recordation, but only from the date the notice is filed. The method of9
reinscription provided in this Section is exclusive, and neither an amendment of an10
instrument creating an assignment nor an acknowledgment of the existence of an11
assignment by the assignor constitutes a reinscription of the instrument.12
Notwithstanding the foregoing, the effect of recordation of an assignment contained13
in an act of mortgage filed on or after September 1, 1995, continues for so long as14
the act of mortgage is given the effect of recordation. In such cases, reinscription of15
the act of mortgage constitutes reinscription of the assignment contained therein.16
(2) Notwithstanding the foregoing provisions, the effect of registry of all17
assignments recorded on or before August 31, 1990, shall be determined by the other18
laws of registry applicable thereto.19
(3) The recordation of an assignment may be cancelled by the consent of the20
assignee evidenced by any written release, under private signature or otherwise.21
Cancellation or erasure of an act of mortgage containing an assignment constitutes22
cancellation of the assignment contained therein, whether the act of mortgage was23
recorded in the mortgage records or conveyance records, or both.24
I. The provisions of R.S. 9:4401(A), as amended and reenacted, and the25
provisions of R.S. 9:4401(G) and (H) as enacted by Acts of the 1990 Regular Session26
are remedial and shall, wherever possible, be given retroactive effect.  All27
assignments of present and future leases or rents heretofore made in compliance28
herewith are hereby validated.29
§4401.  Pledge of the lessor's rights in the lease of an immovable and its rents30 SB NO. 89	ENROLLED
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Any obligation may be secured by a pledge of the rights of a lessor or1
sublessor in the lease or sublease of an immovable and its rents made in2
accordance with Chapter 2 of Title XX-A of Book III of the Civil Code.  The3
rights of the lessee under a lease, or of a sublessee under a sublease, are not4
susceptible of pledge.5
Revision Comments - 20146
(a) From its enactment in 1980, former R.S. 9:4401 contained detailed7
provisions governing the assignment, or pledge, of the lessor's rights in leases and8
rents of an immovable. The 2014 enactment of Title XX-A of Book III of the Civil9
Code places the encumbrance of the lessor's rights in the lease of an immovable and10
its rents within the civil law framework of pledge and gives nearly complete11
treatment to pledges of that nature within the Civil Code itself. The provisions of the12
Civil Code are supplemented by this Section and those that follow.13
(b) This Section expressly provides that a pledge may be created by either14
a lessor or a sublessor. In the case of a pledge created by a sublessor, the pledge15
encumbers his rights under the sublease, but not his rights under the underlying lease16
from his own lessor.  The rights of a lessee under a lease, as well as the rights of a17
sublessee under a sublease, are not susceptible of pledge but instead are encumbered18
by a mortgage.  See C.C. Art. 3286 (Rev. 1991; Amended 1993).19
(c)  Former R.S. 9:4401 provided for the filing of the assignment or pledge20
in the conveyance records of the parish in which the immovable was located.  The21
2014 revision of the law of pledge amended Civil Code Article 3346 (Rev. 2014) to22
require recordation of the pledge of the lessor's rights in the lease of an immovable23
and its rents in the mortgage records, rather than the conveyance records.24
Transitional rules applicable to the continued effectiveness of assignments of leases25
and rents filed in the conveyance records in accordance with former R.S. 9:440126
prior to January 1, 2015, as well as rules that apply to the reinscription, release,27
transfer, amendment, or other modification of these assignments, are contained in28
R.S. 9:4403.29
§4402.  Right of pledgee to cash proceeds of rent30
A. Unless otherwise agreed, a pledge of the lessor's interest in the rents31
of an immovable encumbers any identifiable cash proceeds of rent, such as32
money, checks, deposit accounts, or the like.33
B. The right of a pledgee to proceeds of rent deposited into a deposit34
account maintained with a financial institution are subject to the rights of the35
following persons:36
(1) The financial institution with which the deposit account is37
maintained.38
(2) A transferee of funds from the deposit account, unless the transferee39
acts in collusion with the pledgor in violating the rights of the pledgee.40
(3) A secured party holding a security interest perfected by control of41 SB NO. 89	ENROLLED
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the deposit account in accordance with R.S. 10:9-104.1
(4)  Another pledgee holding a superior pledge of the rent.2
C. Notwithstanding Subsection B of this Section, the right of a pledgee3
to collections of rent deposited into a deposit account maintained by him or for4
his benefit is superior to the right of another pledgee to those collections, unless5
the pledgee who collected the rent has an obligation to account for the6
collections to the other pledgee under Civil Code Article 3173.7
Revision Comments - 20148
(a) Former R.S. 9:4401(F) provided that the assignee's interest in leases and9
rents continued in any identifiable proceeds, including collections. Subsection A of10
this Section limits the reach of the pledge of a lessor's interest in the rents of an11
immovable to identifiable cash proceeds, such as money, checks, deposit accounts,12
or the like.13
(b) When proceeds of rent are deposited into a deposit account maintained14
with a financial institution, Subsection B provides that the rights of the pledgee are15
subject to the rights of the depository bank, the rights of a secured party who holds16
a security interest perfected by control of the deposit account, and the rights of a17
transferee of funds from the deposit account who does not act in collusion with the18
pledgor in violating the rights of the pledgee. Except as otherwise provided in19
Subsection C, the rights of a pledgee to proceeds held in the deposit account are also20
subject to the rights of another pledgee holding a superior pledge of the rent. Thus,21
if a lessor who has granted pledges in favor of two or more pledgees deposits rent he22
has collected into a deposit account, the ranking of the rights of the competing23
pledgees to the deposited rent is preserved.24
(c) Subsection C applies when a pledgee collects rent which he then deposits25
into a deposit account that he maintains or that someone else maintains on his behalf.26
If the pledgee collected those rents without any obligation under Civil Code Article27
3173 (Rev. 2014) to account to a superior pledgee for them, the superior pledgee has28
no right to claim the collections held in the deposit account to the prejudice of the29
pledgee who collected them.30
§4403. Transitional filing rules for assignments of leases and rents recorded31
prior to January 1, 201532
A. An assignment of leases and rents that was recorded prior to January33
1, 2015, shall be subject to the reinscription requirements of Chapter 2 of Title34
XXII-A of Book III of the Civil Code, with the modifications provided in this35
Section.36
B. Except as otherwise provided in Subsection C of this Section, the37
effect of recordation of an assignment of leases and rents that was recorded in38
the conveyance records prior to January 1, 2015, and that remained effective39
against third persons on that date shall continue, without the necessity of40 SB NO. 89	ENROLLED
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recordation in the mortgage records, until the date that filing of a notice of1
reinscription is required under Chapter 2 of Title XXII-A of Book III of the2
Civil Code or December 31, 2024, whichever first occurs.  On that date, the3
effect of recordation of the assignment shall cease unless a notice of4
reinscription of the assignment has been filed in the mortgage records, as5
provided in Article 3362 of the Civil Code.  This Subsection shall not apply to6
assignments contained in an act of mortgage filed in the mortgage records.7
C. The effect of recordation of an assignment of leases and rents that8
was recorded on or before August 31, 1990, or was made effective against third9
persons on or before that date in another manner permitted by the law then in10
effect, and that remained effective against third persons on January 1, 2015,11
shall continue, without the necessity of recordation in the mortgage records,12
until the date that the effect of recordation would cease under the law in effect13
at the time the assignment was first made effective against third persons or until14
December 31, 2024, whichever first occurs. On that date, the effect of15
recordation of the assignment shall cease unless a notice of reinscription of the16
assignment has been filed in the mortgage records, as provided in Article 336217
of the Civil Code.18
D. The effect of recordation of an assignment of leases and rents as to19
which a notice of reinscription is filed in the mortgage records shall continue for20
ten years from the date on which the notice of reinscription is filed, and the21
assignment may be reinscribed thereafter from time to time as provided in22
Article 3362 of the Civil Code.23
E. The filing of a notice of reinscription in the conveyance records on or24
after January 1, 2015, is neither necessary nor effective to continue the effect of25
recordation of an assignment of leases and rents, regardless of whether the26
assignment or a previous notice of reinscription was filed in the conveyance27
records.28
F. Unless filed in the conveyance records before January 1, 2015, an29
instrument releasing, transferring, amending or otherwise modifying an30 SB NO. 89	ENROLLED
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assignment of leases and rents shall be without effect as to third persons until1
filed in the mortgage records. Filing the instrument in the conveyance records2
on and after January 1, 2015, is neither necessary nor effective to cause the3
instrument to have effect against third persons, regardless of whether the4
original assignment or any previous transfer, amendment, or other modification5
was filed in the conveyance records.6
G. An assignment of leases and rents that was recorded in the mortgage7
records within the period of ten years prior to January 1, 2015, shall be given8
the effect of recordation, without further action, on January 1, 2015, as if it9
were first filed on that date. This Subsection shall not apply to assignments that10
were also filed in the conveyance records prior to January 1, 2015, nor to11
assignments contained in an act of mortgage.12
Revision Comments - 201413
(a)  Former R.S. 9:4401 required recordation of an assignment or pledge of14
leases and rents in the conveyance records of the parish in which the immovable is15
located. Effective as of January 1, 2015, Civil Code Artricle 3346 (Rev. 2014)16
requires recordation of the pledge of the lessor's rights in the lease of an immovable17
and its rents in the mortgage records. This Section provides transitional rules18
applicable to the effect of recordation of assignments of leases and rents filed in the19
conveyance records in accordance with former R.S. 9:4401 prior to January 1, 2015,20
as well as transitional rules that apply to the reinscription, release, transfer,21
amendment, or other modification of those assignments.  Subsection A applies the22
reinscription rules of Chapter 2 of Title XXII-A of Book III of the Civil Code, as23
amended in 2014, to assignments of leases and rents that were filed prior to January24
1, 2015, but with the modifications provided under this Section.25
(b) Subsection B states the general rule that an assignment or pledge of26
leases and rents filed in the conveyance records prior to January 1, 2015 continues27
to have the effect of recordation, without the necessity of recordation in the mortgage28
records, until reinscription is required. Before the date that reinscription is required,29
a notice of reinscription must be filed in the mortgage records in order for the30
assignment to continue to have the effect of recordation.  The filing of a notice of31
reinscription in the conveyance records on or after January 1, 2015 is not only32
unnecessary, it is wholly without effect, regardless of whether the assignment or a33
previous notice of reinscription was filed in the conveyance records.  This is34
expressly stated in Subsection E.35
(c) The period within which reinscription of assignments or pledges of leases36
and rents filed prior to January 1, 2015 is required is not changed by this Section,37
except in two instances. First, Subsection B imposes an outside deadline of38
December 31, 2024 for the reinscription in the mortgage records of assignments or39
pledges of leases and rents that were filed in the conveyance records prior to January40
1, 2015. Thus, even if an assignment filed in the conveyance records prior to that41
date secures an obligation that is described to have a maturity such that reinscription42
would not have been required under prior law until after December 31, 2024, a notice43
of reinscription must nonetheless be recorded in the mortgage records on or before44
December 31, 2024 in order for the assignment to continue to have the effect of45
recordation after that date. The second change in the reinscription period is46 SB NO. 89	ENROLLED
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discussed in Comment (d), infra.1
(d) Under former R.S. 9:4401(H)(2), assignments of leases and rents2
recorded in the conveyance records on or before August 31, 1990 were subject to no3
reinscription requirement at all. Subsection C of this Section imposes a reinscription4
requirement upon those assignments and a reinscription deadline of December 31,5
2024. If a notice of reinscription of an assignment of leases and rents that was6
recorded on or before August 31, 1990 is not filed in the mortgage records on or7
before December 31, 2024, the assignment will cease to be effective against third8
persons after that date. Subsection C applies by its terms only to assignments that9
were recorded on or before August 31, 1990 and that remain effective against third10
persons on January 1, 2015.  If, for any reason, the effect of recordation of the11
assignment ceased prior to January 1, 2015, Subsection C would not operate to12
revive the assignment.13
(e) Between January 1, 1990 and August 31, 1990, it was possible to effect14
an assignment of the rents of an immovable through an assignment of accounts15
receivable in accordance with the Louisiana Assignment of Accounts Receivable16
Act, former R.S. 9:3101 et seq. (repealed by Acts 2001, No. 128).  The assignment17
was made effective against third persons by the filing of a financing statement in the18
U.C.C. records. This practice was ended by Acts 1990, No. 1079; however, Section19
9 of that act specifically provided that the change in the Assignment of Accounts20
Receivable Act "shall not impair or make invalid any assignments of accounts21
arising out of the leasing of immovable property entered into prior to the effective22
date of this Act."  Subsection C of this Section provides that any such assignments23
that might continue to be effective against third persons on January 1, 2015 are24
subject to the requirement of the filing of a notice of reinscription in the mortgage25
records by no later than December 31, 2024.  This is an outside deadline, however,26
and effectiveness of the assignment against third persons will be lost even sooner if27
a notice of reinscription is not filed in the mortgage records before lapse of the28
financing statement that is the basis of the perfection of the assignment. The filing29
of further continuation statements in the U.C.C. records on or after January 1, 201530
will not continue the effectiveness of the financing statement.31
(f) Subsection F is patterned after Civil Code Article 3356 (Rev. 2005),32
which provides a similar rule for instruments affecting acts of mortgage.  After33
January 1, 2015, instruments that release, transfer, amend, or otherwise modify an34
assignment of leases and rents are filed in the mortgage records, rather than the35
conveyance records, even if the original assignment was filed in the conveyance36
records.37
(g) Subsection G deals with the effectiveness against third persons of an38
assignment of leases and rents that, within the period of ten years prior to January39
1, 2015, was recorded, inappropriately, only in the mortgage records, rather than in40
the conveyance records as former R.S. 9:4401 required.  Subsection G grants these41
assignments the effect of  recordation as of January 1, 2015, as if the assignment42
were first filed on that date. The effect of recordation is not retroactive to the actual43
date of filing. Moreover, the reinscription deadline for such an assignment is not44
reckoned from January 1, 2015, but rather according to the normal rules of Chapter45
2 of Title XXII-A of Book III of the Civil Code.  Subsection G does not grant the46
effect of recordation to an assignment of leases and rents that was recorded in the47
mortgage records more than ten years prior to January 1, 2015. Such assignments48
(unless contained in an act of mortgage) were not given the effect of recordation49
when they were filed and are not given the effect of recordation by Subsection G.50
See Prudential Ins. Co. of America v. CC & F Baton Rouge Development Co., 64751
So.2d 1131 (La. App. 1st Cir.1994).52
(h) Former R.S. 9:4401 accorded the effect of recordation to an assignment53
of leases and rents contained in an act of mortgage filed in the mortgage records, to54
the extent and for so long as the act of mortgage was given such effect, without the55
need for separate recordation in the conveyance records. For this reason, Subsection56
G by its terms does not apply to assignments of leases and rents contained in an act57
of mortgage. Similarly, the outside reinscription deadline of December 31, 202458
contained in Subsection B does not apply to assignments contained in an act of59 SB NO. 89	ENROLLED
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mortgage recorded in the mortgage records. The purpose of that outside deadline is1
to cause evidence of all assignments or pledges of leases and rents to appear in the2
mortgage records in all events no later than December 31, 2024.  In the case of an3
assignment contained in a properly recorded act of mortgage, the assignment already4
appears in the mortgage records through a filing that was effective at the time made.5
The general rule of Subsection A applies to such assignments: they are subject to the6
normal reinscription requirements of Chapter 2 of Title XXII-A of Book III of the7
Civil Code.8
*          *          *9
§5386. Mortgage including collateral assignment and pledge of certain10
mortgagor's incorporeal rights to insurance11
A. A mortgage of an immovable property may provide for the contain a12
collateral assignment or pledge of the mortgagor's rights right to receive proceeds13
attributable to the insurance loss of the mortgaged property under policies of14
insurance covering the immovable. Such collateral assignment or In that event,15
the pledge shall have has effect, other than between the immediate parties, or those16
on whose behalf or for whose benefit they act, and shall be deemed perfected by the17
proper recordation of the mortgage in the mortgage records of the parish in which the18
immovable is situated as to third persons when the act of mortgage is recorded19
in the manner prescribed by law, without the necessity of notice to the insurer,20
and continues to have that effect for so long as the mortgage is given the effect21
of recordation.22
B. The rights of the mortgagee against the insurer shall be subject to any23
dealing by the insurer with the mortgagor, any other assignee or pledgee, or other24
successor in interest of the mortgagor until the insurer receives written notice from25
or on behalf of the mortgagee or the mortgagor of the collateral assignment or pledge26
of the right to receive the insurance proceeds. In any case in which an insurer is not27
notified in writing of the assignment or pledge of the right to receive insurance28
proceeds made in compliance with the provisions of this Section and, in good faith,29
makes payment of the insurance proceeds attributable to the loss of the mortgaged30
property in whole or in part to the mortgagor, any other assignee or pledgee, or other31
successor in interest of the mortgagor, then, to the extent of payment, the insurer32
shall be exonerated of liability to make payment to the mortgagee; however, the33
person to whom payment was made shall be accountable and liable to the mortgagee34 SB NO. 89	ENROLLED
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for the sums received.  Nothing contained in this Section shall be construed to The1
pledge of the mortgagor's rights to insurance does not modify the obligations of2
any the insurer under any simple or standard or other loss payee clause of its3
insurance policy.4
C. A mortgage pledge of the mortgagor's rights under policies of5
insurance covering an immovable shall not be invalid, ineffective, or fraudulent6
against other creditors by reason of the mortgagor's freedom to use, commingle, or7
dispose of proceeds from of the insurance loss of the mortgaged property, or by8
reason of the mortgagee's failure to require the mortgagor to account therefor for the9
proceeds.10
Section 3. R.S. 10:9-102(a)(2) is hereby amended and reenacted to read as follows:11
§9-102.  Definitions and index of definitions12
(a)  Chapter 9 definitions. In this Chapter:13
*          *          *14
(2) "Account," except as used in "account for," means a right to payment of15
a monetary obligation, whether or not earned by performance, (i) for property that16
has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (ii) for17
services rendered or to be rendered, (iii) for a policy of insurance issued or to be18
issued, (iv) for a secondary obligation incurred or to be incurred, (v) for energy19
provided or to be provided, (vi) for the use or hire of a vessel under a charter or other20
contract, (vii) arising out of the use of a credit or charge card or information21
contained on or for use with the card, or (viii) as winnings in a lottery or other game22
of chance operated or sponsored by a state, governmental unit of a state, or person23
licensed or authorized to operate the game by a state or governmental unit of a state.24
The term includes health-care-insurance receivables. The term further includes any25
right to payment owed to a landowner or the owner of a mineral right, such as a26
bonus, rent, or royalty, which is payable out of or measured by production of oil, gas,27
or other minerals, or is otherwise attributable to the mineral right, whether or not28
such payment is rent under Title 31 of the Louisiana Revised Statutes of 1950,29
except for rent payable to a landowner or mineral servitude owner that is payable30 SB NO. 89	ENROLLED
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out of or measured by production of oil, gas, or other minerals, or is otherwise1
attributable to a mineral right, whether or not the payment is classified as rent2
under the Mineral Code, except that the term does not include bonuses, delay3
rentals, royalties, or shut-in payments payable to a landowner or mineral4
servitude owner under a mineral lease, nor does the term include other5
payments to them that are classified as rent under the Mineral Code. The term6
does not include (i) rights to payment evidenced by chattel paper or an instrument,7
(ii) tort claims, (iii) deposit accounts, (iv) investment property, (v) letter-of-credit8
rights or letters of credit, (vi) rights to payment for money or funds advanced or sold,9
other than rights arising out of the use of a credit or charge card or information10
contained on or for use with the card, (vii) life insurance policies or rights to11
payment or claims thereunder, or (viii) judgments or rights to payment represented12
thereby.13
Revision Comments - 201414
The 2014 revision of the definition of "account" in this Section, made in15
tandem with the enactment of Civil Code Article 3172 (Rev. 2014), is intended to16
ensure that "accounts" as defined in this section and the kinds of mineral payments17
susceptible of encumbrance by pledge under Civil Code Article 3172 (Rev. 2014)18
are mutually exclusive. Bonus, delay rentals, royalties, and shut-in payments19
payable to a landowner or mineral servitude owner under a mineral lease, as well as20
any other payments to them that are classified as rent under the Mineral Code, do not21
constitute "accounts" susceptible of encumbrance by a security interest under this22
Chapter but instead are encumbered by a pledge under Civil Code Art. 3172. See23
Comment (d) to Civil Code Art. 3172 (Rev. 2014).24
Section 4. Civil Code Articles 3176, 3177, 3178, 3179, 3180, 3181, 3182, 3183, and25
3184 are hereby repealed. 26
Section 5. The Louisiana State Law Institute is hereby authorized to add Comments27
for Civil Code Articles 3359 and 3364 to read as follows:28
Art. 3359.  Duration of recordation of judicial mortgage29
*          *          *30
Revision Comments - 201431
(a)  This Article expressly declares that the effect of recording a judgment32
ceases ten years after the date of the judgment. This continues the interpretation of33
Article 3369 of the Louisiana Civil Code of 1870 and is implicit in present Article34
3357 (Rev. 2014).35
 (b) The failure to reinscribe a judicial mortgage within ten years of its date36
causes the effect of recordation to cease. As the courts have observed, there is a37 SB NO. 89	ENROLLED
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common misunderstanding as to the relationship between reinscribing a judicial1
mortgage and obtaining a judgment of revival under C.C.P. Art. 3334.  Bank One2
Louisiana v. Lacobee, 811 So.2d 164 (La. App. 2d Cir. 2002). See also Brunston v.3
Hoover, 945 So.2d 852 (La. App. 3d Cir. 2006) and Mouton v. Watson, 500 So.2d4
792 (La. App. 1st Cir.1986). Under Article 3300 (Rev. 2014), a judicial mortgage5
is created by the filing of a money judgment in the mortgage records. This Article6
provides that the effect of recordation of a judgment creating a judicial mortgage7
ceases ten years after the date of the judgment. A notice of reinscription filed in8
accordance with Article 3362 (Rev. 2014) continues the effect of recordation of a9
judicial mortgage, without the necessity of filing a judgment reviving the original10
judgment. The judgment itself prescribes, however, if a suit to revive it is not filed11
within ten years of its date and a judgment reviving it obtained in due course. If the12
judicial mortgage is not reinscribed, the effect of recordation ceases whether or not13
prescription on the underlying judgment is interrupted by a suit for revival. If the14
judicial mortgage is reinscribed, it nevertheless becomes unenforceable when the15
underlying judgment prescribes. Accordingly, Article 3368 (Rev. 2014) permits the16
recorder to cancel the inscription from his records upon the request of any person if17
the request is accompanied by a certificate from the clerk of the court rendering the18
judgment that no suit has been filed for its revival within the time required by Article19
3501 (Rev. 1983) or is accompanied by a final and definitive judgment of that court20
rejecting the demands of the plaintiff in a suit to revive it.21
*          *          *22
Art. 3364.  Effect of timely recordation of notice or reinscription23
*          *          *24
Revision Comments - 201425
Under this Article, reinscription is effective when a notice of reinscription is26
filed. The effect of the original recordation is extended for ten years from that time.27
Section 6. The Louisiana State Law Institute is hereby authorized to amend or to28
provide headings in the Civil Code and the Louisiana Revised Statues of 1950.29
Section 7. This Act shall become effective on January 1, 2015.30
PRESIDENT OF THE SENATE
SPEAKER OF THE HOUSE OF REPRESENTATIVES
GOVERNOR OF THE STATE OF LOUISIANA
APPROVED: