Mortgages and Security Devices 1 Flashcards

What creates a judicial mortgage in Louisiana?

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.

When two conventional mortgages encumber the same Louisiana immovable property, how is their relative priority determined?

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.

What does it mean for a Louisiana notary to 'paraph' a promissory note ne varietur?

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.

What is the purpose of 'reinscription' of a mortgage in Louisiana?

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.

Under Louisiana law, which type of property may be encumbered by a pledge as a security device?

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.

What is the defining characteristic of a 'multiple indebtedness mortgage' under Louisiana law?

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.