Financing Real Estate

In Louisiana real estate, owner financing can be a powerful tool for both buyers and sellers, but it comes with unique legal considerations.
Owner financing refers to any arrangement where the seller provides direct financing to the buyer, rather than involving a traditional mortgage lender. This can benefit buyers who may not qualify for conventional loans, and sellers looking to close deals faster or attract more interest in a slow market.

​

Common Owner Financing Structures: 

• Bond for Deed and Flexible Financing Options: Our partnership with Priority Pay disrupts traditional financing models, providing secure, flexible solutions with bond for deed contracts and owner financing—empowering agents and clients to close confidently. These innovative financing structures offer additional pathways to homeownership while maintaining the legal protections and security that both parties need in Louisiana real estate transactions.

• Installment Land Contracts: Similar to a bond for deed in that ownership transfers after the last payment. However, they often lack clear statutory guidance, making them riskier without strong legal drafting. 

• Lease-Purchase Agreements: These combine a lease with an option to buy. A portion of rent may apply toward the purchase price, giving buyers time to build credit or savings. These are useful in transitional markets but require careful contract language. 
   

Legal Considerations: 

Owner financing arrangements should always be documented with clear terms, including: 

• Payment schedule and interest rate 

• Default triggers and remedies 

• Responsibilities for taxes, insurance, and maintenance 

• Recording of the contract, when applicable 
   

Each method carries default risks for sellers—especially if eviction or foreclosure becomes necessary. Buyers also face risks, including the lack of legal title until the contract is fully satisfied. 

Before entering into an owner financing agreement, consult with a real estate attorney to ensure the structure protects your interests and complies with Louisiana law. 

A promissory note is the foundation of most real estate financing—but it’s only one part of the bigger picture. 

​

When a buyer borrows money to purchase property, they typically sign two key documents: the promissory note (the IOU) and the mortgage or deed of trust (the security instrument). These documents work together to establish the borrower’s obligation and the lender’s rights. 

​

Key Terms Defined: 

• Promissory Note: A legally binding promise to repay the loan, including principal and interest, according to the agreed terms. It contains the payment schedule, interest rate, and late fees. 

• Mortgage vs. Deed of Trust: In Louisiana, a mortgage is more common. It pledges the property as collateral to secure the note. While deeds of trust are used in some states, Louisiana’s legal system primarily recognizes mortgages, which require judicial foreclosure if the borrower defaults. 
   

Recording and Priority: 

• Mortgages must be recorded with the parish Clerk of Court to establish their priority over other claims. 

• The first recorded mortgage typically takes precedence in the event of foreclosure. 

• Unrecorded mortgages may leave the lender unprotected against third-party claims or junior lienholders. 
   

Assigning Notes: 

Lenders may assign or sell promissory notes and mortgages to other parties. These transactions must be documented through properly executed assignments, and the public record updated to reflect the change. 

Working with an attorney ensures your documents are properly drafted, recorded, and enforceable—especially when multiple parties or complex loan terms are involved. 

When a borrower defaults, lenders have legal remedies—but the process depends on the type of financing and security instrument in place. 

​

Understanding your rights and enforcement options as a lender or seller is essential to mitigating risk and recovering losses. In Louisiana, remedies vary significantly between traditional mortgages and owner-financing arrangements like bond for deed. 

​

Key Clauses to Include: 

• Default Clause: Defines what constitutes a breach (e.g., missed payments, failure to maintain insurance). 

• Acceleration Clause: Allows the lender to demand full repayment upon default. 
   

Enforcement Methods: 

• Judicial Foreclosure (Mortgage): Louisiana requires court involvement to foreclose on a property secured by a mortgage. The process includes: 

• Filing a lawsuit 

• Obtaining a judgment 

• Auctioning the property at a sheriff’s sale 

• Bond for Deed Forfeiture: If the buyer under a bond for deed defaults, the seller may cancel the contract. However, Louisiana law requires a formal notice of default and a period to cure the default before cancellation. If not followed correctly, the seller risks legal challenges. 
   

Lease-Purchase Agreements: Depending on how the agreement is structured, the seller may need to follow landlord-tenant laws or seek eviction through court. 
 

Lenders and sellers should always work with counsel to ensure proper notice procedures are followed and enforcement rights are preserved. Mistakes can lead to costly delays—or even invalidate the right to recover the property. 

Whether you're financing a purchase or responding to a default, the structure and wording of your documents can make all the difference. Clear contracts and proper legal support are your strongest protections.