LA Notary - Louisiana Notary Exam Mortgages and Security Devices 1 — Questions and Answers
Question 1: What creates a judicial mortgage in Louisiana?
- A written agreement between the creditor and debtor filed with the clerk of court
- The recording of a final judgment in the mortgage records of the parish where the debtor owns immovable property (Correct answer)
- A court order directing the sheriff to seize the debtor's property
- The filing of a lawsuit against the debtor in district court
Correct answer: The recording of a final judgment in the mortgage records of the parish where the debtor owns immovable property
A judicial mortgage arises from the recordation of a final judgment in the parish mortgage records. The judgment itself does not create the mortgage — it is the act of recording that encumbers the debtor's immovable property located in that parish.
Question 2: When two conventional mortgages encumber the same Louisiana immovable property, how is their relative priority determined?
- By the amount of debt each mortgage secures, with the larger debt having priority
- By the date and time each mortgage was recorded in the parish mortgage records (Correct answer)
- By the date each mortgage was signed before a notary, regardless of recordation
- By negotiation between the two mortgage creditors
Correct answer: By the date and time each mortgage was recorded in the parish mortgage records
Under Louisiana law, mortgage priority follows the principle of 'first in time, first in right' based on recordation. The mortgage recorded earlier in the parish mortgage records takes priority over one recorded later, regardless of when the acts were signed.
Question 3: What does it mean for a Louisiana notary to 'paraph' a promissory note ne varietur?
- To certify that the note has been paid in full and can be cancelled
- To mark or sign the note so as to identify it with the act of mortgage and prevent alteration (Correct answer)
- To endorse the note as a co-maker guaranteeing repayment
- To attach the note permanently to the original act of mortgage in the notarial archives
Correct answer: To mark or sign the note so as to identify it with the act of mortgage and prevent alteration
Ne varietur means 'it shall not be altered.' When a notary paraphs a note ne varietur, the notary places an identifying mark or signature on the note tying it to the specific act of mortgage, establishing the connection between the two instruments and protecting against substitution or alteration.
Question 4: What is the purpose of 'reinscription' of a mortgage in Louisiana?
- To correct clerical errors in the original mortgage instrument
- To extend the effectiveness of the mortgage inscription and preserve its priority against third parties (Correct answer)
- To transfer the mortgage from one creditor to another
- To increase the amount of the debt secured by the original mortgage
Correct answer: To extend the effectiveness of the mortgage inscription and preserve its priority against third parties
A recorded mortgage loses its effectiveness against third parties after a set prescriptive period unless it is reinscribed before that period expires. Reinscription preserves the mortgage's rank and effect in the public records, preventing it from lapsing.
Question 5: Under Louisiana law, which type of property may be encumbered by a pledge as a security device?
- Immovable property such as land and buildings
- Movable property such as personal property and negotiable instruments (Correct answer)
- Both movable and immovable property equally
- Only real estate located within incorporated municipalities
Correct answer: Movable property such as personal property and negotiable instruments
A pledge is a security device that encumbers movable property by placing it in the possession of the creditor or a third party. Immovable property, by contrast, is encumbered by a mortgage. This distinction between pledge (movables) and mortgage (immovables) is fundamental under Louisiana law.
Question 6: What is the defining characteristic of a 'multiple indebtedness mortgage' under Louisiana law?
- A mortgage granted by multiple mortgagors on the same immovable property
- A mortgage that secures several present and future obligations up to a stated maximum amount rather than a single specified debt (Correct answer)
- A mortgage recorded simultaneously in more than one Louisiana parish
- A mortgage that automatically renews each time the underlying debt is refinanced
Correct answer: A mortgage that secures several present and future obligations up to a stated maximum amount rather than a single specified debt
A multiple indebtedness mortgage (MIM) encumbers immovable property to secure not just one identified debt but a series of present or future obligations owed to the mortgagee, up to a stated maximum amount. This flexibility makes it a common commercial lending tool in Louisiana.
LA Notary - Louisiana Notary Exam Mortgages and Security Devices 1
What creates a judicial mortgage in Louisiana?