Louisiana homebuyer guide

The notary and the act of sale: how Louisiana closings work

Louisiana closings run on civil law. Here's what the notary does, why there are two witnesses, why your spouse may have to sign, and what to bring to the act of sale.

The short version: In Louisiana you don't just 'close.' You pass an act of sale, usually signed as an authentic act before a notary and two witnesses, and then it's recorded in the parish records. Married buyers should expect both spouses to be involved because of community property rules, and New Orleans adds a $325 document tax on recorded sales and mortgages.

If you've bought a house in another state, a Louisiana closing will feel familiar in some ways and odd in others. You'll hear the phrase "passing the act." You'll sign in front of a notary, and there'll be two witnesses in the room. Your spouse may need to sign even if they're not on the loan. None of it is complicated once you know why it's done that way.

Why Louisiana does it differently

Louisiana's property law comes from the civil law tradition, not English common law. The document that transfers the house is called the act of sale, not a deed. And the person who runs the signing is a notary, who in Louisiana has a bigger role than notaries elsewhere. Many real estate notaries here are also attorneys.

What an "authentic act" is

Most acts of sale are signed as authentic acts. Article 1833 of the Louisiana Civil Code defines an authentic act as a writing signed before a notary in the presence of two witnesses. Each party, each witness and the notary signs it.

That's why you'll see two extra people at the table, often staff from the title office. An authentic act carries extra weight as proof, which is part of why it's the standard for property.

After signing, the act of sale is recorded in the parish conveyance records, and your mortgage is recorded in the mortgage records, both through the parish clerk of court. Recording puts the world on notice that you own the home.

Why your spouse may need to sign

Louisiana is a community property state. Under Civil Code Article 2347, both spouses must concur to sell, mortgage or lease community immovable property. If you're married and buying with your own income, the house may still be community property, so the closing agent and lender will often need your spouse to sign the mortgage paperwork.

It shows up in underwriting too. HUD's FHA handbook says that when the buyer lives in or buys in a community property state, the lender must pull a credit report on a non-borrowing spouse and count that spouse's debts in the qualifying ratios, unless state law excludes them. The spouse's credit history alone isn't a reason to deny the loan. More on that in credit and debts before a HomeStart loan.

If you're separated or have a marriage contract, tell your loan officer and closing attorney at the start, not the week of closing.

Who picks the closing attorney or title company?

You, the buyer, generally do. Federal law (RESPA) bars a seller from requiring you to buy title insurance from a particular company as a condition of the sale. Some programs add rules. For example, New Orleans' Direct Homebuyer Soft Second program requires a state-approved closing agency.

Shop the closing fees like you'd shop anything else. Ask each office for an estimate of its settlement fee, title insurance premium and recording costs.

Paperwork you'll see before the act of sale

Loan Estimate: your lender's early cost estimate after you apply.
Program reservation: on HomeStart loans, your lender reserves the first mortgage and the 4% second once you have a fully signed purchase agreement. Per the Louisiana Housing Corporation, the loan must go from reservation to purchase within 60 days, and there's a $125 reservation fee.
Closing Disclosure: federal rules require you to receive it at least three business days before closing. Compare it line by line with your Loan Estimate and ask about anything that moved.
Homebuyer education certificate: first-time buyers using HomeStart must finish it before closing.

The New Orleans document tax

In Orleans Parish, the Civil District Court clerk collects a documentary transaction tax on recorded real estate documents. Per the clerk's office, it's a flat $325 on sales, donations and mortgages, with lower amounts for mortgages under $9,000. The seller pays on the sale, and the party giving the mortgage, which is you, pays on your loan. Late payment brings interest and a $500 penalty, which is one reason the closing office collects it at the table.

Outside New Orleans, ask your closing office what the parish clerk charges to record your act of sale and mortgage.

What happens at the table

The notary or closing attorney walks you through the act of sale and the loan documents.
You sign the note and mortgage for your first loan, and the second mortgage for any down payment assistance. HomeStart's 4% help is signed at closing as a 0% second mortgage.
The witnesses and the notary sign the act.
Funds are paid out and the documents go to the clerk for recording.

Bring a government ID and whatever your closing office asks for. Expect to bring your cash to close as a wire or cashier's check. Before you wire anything, call the title office at a number you already know is real to confirm the instructions. Never trust wiring instructions that show up in an email alone.

A word about bond for deed

You may see "bond for deed" offered on some listings. That's a contract where you pay the seller over time and get the act of sale later. It isn't how HomeStart or other agency loans work. Under the Louisiana Constitution, bond for deed property generally can't get the homestead exemption. Talk to an attorney before signing one.

After the act of sale

File your homestead exemption with the parish assessor. See the homestead guide.
Keep the recorded act of sale with your important papers.
Live in the home. HomeStart's 4% second mortgage is forgiven after five years of owner occupancy.

If you're still a few steps back from the closing table, start here: check your eligibility for Louisiana's programs, then come back to this page the week before you sign.

Questions people ask

What is an act of sale in Louisiana?

It's the document that transfers ownership of the home, the Louisiana version of a deed. It's usually signed as an authentic act before a notary and two witnesses and then recorded with the parish clerk of court.

Why are there two witnesses at a Louisiana closing?

Louisiana Civil Code Article 1833 defines an authentic act as one signed before a notary in the presence of two witnesses, with each party, witness and notary signing.

Does my spouse have to sign if they're not on the loan?

Often, yes. Louisiana is a community property state, and Civil Code Article 2347 requires both spouses to concur to mortgage community immovable property. Your closing attorney confirms what your situation needs.

Is there a transfer tax in New Orleans?

Orleans Parish charges a $325 documentary transaction tax on recorded sales, donations and mortgages, with lower amounts for mortgages under $9,000.

When do I get my Closing Disclosure?

Federal rules require it at least three business days before closing, so you have time to compare it with your Loan Estimate.

Free download: our Louisiana homebuyer checklist. The paperwork, the steps, the programs and the questions worth asking, all on one printable page. Get the checklist