Contracts, Financing, and Closing
Louisiana contract basics
Under Louisiana civil law, a valid contract needs capacity, consent, a lawful object, and lawful cause. A transfer of immovable property must be in writing; title passes by an act of sale before a notary and should be recorded with the parish clerk of court. An oral agreement to sell land is generally unenforceable. Purchase agreements should address price, deposit, financing contingency, inspections, closing date, and remedies such as specific performance or return of deposit. Remember the seller’s warranty against latent defects (redhibition); buyers may waive it in some circumstances, but not for defects the seller knew and failed to disclose.
Financing and closing rules
Know conventional, FHA, VA, and USDA loans, plus RESPA, TILA, and TRID. A Loan Estimate is generally required within three business days of application, and a Closing Disclosure at least three business days before consummation. Escrow, PMI, and lender requirements are common test topics. At closing, prorations allocate taxes, rent, and similar items.
Traps
Questions often mix up “preapproval” and “prequalification,” or assume a loan contingency disappears because the buyer “should” be approved. Another trap is proration direction: who owes whom for taxes paid in advance?
Rule of thumb
Prorate on a 365-day year and state the closing-day convention. Worked example: Annual taxes are $3,650, and the seller paid the full year in advance. If the seller owns 200 days, the buyer owes the seller 165/365 × $3,650 = $1,650 at closing, unless the contract says otherwise.