Real Property Auctions, Title, and Financing Basics
What this domain tests
This domain tests real-property auction practice in Louisiana: the auction agreement, reserve, buyer deposit, purchase agreement, title review, closing formalities, and financing basics.
Core rules
- Louisiana law uses civil-law terms: immovables, authentic act, notary, and recordation. A transfer of immovable property must be in writing and, for recordation and lending purposes, is typically executed before a notary in authentic form or as an acknowledged act.
- The auction agreement should state whether the sale is with reserve or absolute, the deposit, buyer premium, closing deadline, title standard, and who pays closing costs.
- The high bid usually leads to a written purchase agreement, not an immediate transfer. The buyer's deposit is held in trust; the balance is due at closing.
- Title work should identify mortgages, liens, judgments, servitudes, and property-tax issues. Title insurance or a title opinion protects the buyer and lender.
- Financing basics: loan-to-value, preapproval, appraisal, closing costs, and the difference between a cash sale and a financed sale. A financing contingency should be stated if one exists.
- Louisiana's seller's warranty against redhibitory defects can apply to real property, but sellers often seek waivers; enforceability and disclosure duties require care.
Worked example
A property sells at auction for a $250,000 hammer price with a 10% buyer premium, making the contract price $275,000. The buyer deposits 10% ($27,500). The lender approves 80% LTV, or $220,000. The buyer must bring $55,000 plus closing costs and prepaid items. The auctioneer must not treat the $250,000 bid as the final cash-to-seller figure without accounting for the premium, deposit, and closing adjustments.
Traps
Treating an auction bid as a completed real-property transfer; ignoring the notarial and recordation requirements; confusing buyer premium with seller commission; and promising financing that is not approved.