LA Real Estate cheat sheet

The Louisiana Real Estate Commission (LREC) is the licensing authority: it issues, suspends, and revokes licenses; investigates complaints; conducts hearings; and adopts rules published in LAC Title 46, Part LXXXVII.

A salesperson must hold an active license sponsored by a licensed Louisiana broker; the broker, not the salesperson, contracts with the public and receives and disburses compensation.

Any act of brokerage - listing, marketing, showing, procuring prospects, negotiating terms, or accepting deposits or rents for another for compensation - requires an active license before the act is performed.

Client funds such as earnest money, rents, and security deposits must be held in a broker trust/escrow account; commingling with operating funds, conversion, and failure to account are separate violations.

Grounds for discipline include fraud, misrepresentation or material omission, undisclosed dual compensation, undisclosed dual agency, failure to account for funds, and failure of a broker to supervise affiliated licensees.

Continuing education: Louisiana licensees normally satisfy renewal by completing 12 hours of CE each year, which includes the 4-hour mandatory course.

Paying a commission, referral fee, or other compensation to an unlicensed person for brokerage activity is prohibited and is grounds for disciplinary action.

A designated broker is responsible for the brokerage acts of affiliated licensees and must review and retain transaction documents as required by Commission rule.

Advertising must identify the brokerage and be truthful and non-misleading; advertising another broker's listing without that broker's or owner's permission violates license rules.

Agency is a fiduciary relationship created by written agreement, ratification, or estoppel; Louisiana listing and buyer-representation engagements must be in writing and signed by the parties.

Six core fiduciary duties: loyalty, obedience to lawful instructions, disclosure, confidentiality, accounting for money and property, and reasonable care and skill.

Agency status is determined by the agreement and the parties' conduct, not by who pays the commission; a seller paying a buyer's broker does not make that broker the seller's agent.

Dual agency (representing both buyer and seller in one transaction) is permitted only with the informed written consent of all parties; the dual agent may not advocate for either side or reveal one party's confidences to the other.

The duty of confidentiality survives termination of the agency relationship.

Agency terminates by performance, expiration of the term, mutual agreement, revocation by the principal, renunciation by the agent, or death or incapacity of a party.

Agency disclosure must be made in writing and in a timely manner, identifying whether the licensee represents the seller, the buyer, both, or neither, before the consumer commits to a written agreement or submits an offer.

An agent must disclose to the principal all known material facts affecting the transaction, including known property defects; a customer (unrepresented party) is owed honesty and fair dealing but not loyalty or confidentiality.

A principal is bound by the acts of an agent performed within actual or apparent authority, which is the basis of vicarious liability.

Elements of a valid Louisiana contract: capacity of the parties, free consent, a certain object, and a lawful cause; a transfer of immovable property must be in writing.

A purchase agreement should fix price, financing terms, deposit amount, closing date, inclusions/exclusions, and contingencies; every contingency needs a deadline and a remedy if unsatisfied.

Earnest money is held in the broker's trust account, credited to the buyer at closing, and is returned or forfeited according to the contract's default and contingency provisions.

Loan-to-value ratio = loan amount ÷ the lesser of purchase price or appraised value; down payment = price − loan amount.

One discount point = 1% of the loan amount, paid as prepaid interest; points generally buy down the note rate.

PITI = principal + interest + property taxes + hazard insurance; the housing ratio is PITI ÷ gross monthly income.

TRID timing: the Loan Estimate must be delivered within 3 business days of application, and the Closing Disclosure at least 3 business days before loan consummation.

Prorations divide ongoing items (property taxes, rent, mortgage interest) between buyer and seller by days of ownership; Louisiana property taxes are paid in arrears, billed the year after assessment.

Louisiana closing: the act of sale is passed before a notary and two witnesses, title is examined and insured, and the act is recorded in the parish conveyance records.

Louisiana civil law divides property into immovables (land, buildings, fixtures) and movables; ownership of the soil carries ownership of what is above and below it (accession).

Real rights include ownership, usufruct (right to use and take fruits while another holds naked ownership), habitation, predial servitudes (easements), and building restrictions (covenants).

Spouses own community property; separate property is acquired before marriage, by inheritance, or by donation. Louisiana has no common-law joint tenancy - survivorship requires a testament, trust, or usufruct.

Transfer of immovable property requires a written act of sale passed before a notary and two witnesses; recording in the parish conveyance records gives the transfer effect against third parties.

Acquisitive prescription: 10 years of possession in good faith with just title, or 30 years of possession without need of title, can vest ownership of immovables.

Valuation approaches: sales comparison (adjust comparable sales), cost (replacement cost − depreciation + land value), and income (value = net operating income ÷ capitalization rate; gross rent multiplier = price ÷ gross rent).

Depreciation has three sources: physical deterioration, functional obsolescence, and external (economic) obsolescence.

Louisiana assessment: land and residential improvements are assessed at 10% of fair market value (public service property at 25%); the homestead exemption excludes the first $75,000 of assessed value of a primary residence.

Property tax = (assessed value − exemptions) × millage ÷ 1,000; highest and best use must be legally permissible, physically possible, financially feasible, and maximally productive.

Federal fair housing protected classes: race, color, religion, sex, national origin, familial status, and disability; steering, blockbusting, redlining, and discriminatory advertising are prohibited.

Antitrust: never discuss or agree on commission rates, splits, or fee schedules with competitors; commissions are negotiable, and price fixing, group boycotts, and market allocation are violations.

RESPA Section 8 bars giving or receiving anything of value for referrals of business involving federally related mortgage loans; affiliated business arrangements require written disclosure of the ownership interest and may not require use of the affiliate.

Advertising must be truthful, identify the brokerage, avoid misleading or unsubstantiated claims, comply with fair housing law, and never advertise another's listing without permission.

Paying referral fees or commissions to unlicensed persons for brokerage services is prohibited and subjects the licensee to discipline.

Mandatory disclosures include the agency relationship, material facts and known latent defects, dual compensation, and a licensee's personal interest when buying or selling on their own account.

Trust fund handling: no commingling and no conversion; the broker must be able to account for every client dollar and disburse funds promptly as the contract directs.

Federal lead-based paint disclosure is required for housing built before 1978; undisclosed latent defects may also support a Louisiana redhibition claim.

Brokers must supervise affiliated licensees and retain transaction records; failure to supervise or to keep records is independently actionable by the Commission.