In this case, the contractor recorded his contract prior to the commencement of work. Thereafter a dispute arose between the contractor and the owner and the contractor filed a lien. The parties  settled the dispute whereby the owner gave the contractor a promissory note for the amount owed.

Then, the contractor canceled its lien and the owner obtained a loan to fund the remainder of the construction; the loan was secured by a mortgage on the property. The owner defaulted on the note given to the contractor and the contractor filed another lien.  A contest followed to determine which was the superior lien, the bank mortgage or the contractor’s lien filed after it.

The Court held that the contractor’s second lien primed the previously recorded bank mortgage because the contractor’s contract had never been cancelled.

Practical Tips:

• If you are a contractor and accept a note from an owner, do not cancel your contract until you are paid in full.
• However, if you are the owner or a banker, make sure both the contract and all liens are cancelled.

The case was sent back to the trial court, where conflicting witness testimony will be presented as to who dated the UM coverage section. There is no documentary evidence to prove who dated the rejection.

The insured will testify that she did not date the rejection. The agent will testify that, although she does not recall the specific circumstances surrounding this policy, she is certain that the insured filled in the date because she always has the policy applicants sign and date all policies before leaving the office and that she would not, under any circumstances, date a form for a policy applicant.

Practical Tips:

The name of the game is to minimize risk, or in the best of circumstances,  to create certainty. Yet it is far from certain to rely on witness credibility to determine the enforceablity of policy provisions.

Here are some practical tips to adopt depending on your risk threshold level.

1. Adopt a written office policy that (a) only policy applicants date the UM rejection or selection coverage and (b) all applicants initial the date.
2. In practice, make sure the applicant is the one that dates the rejection or selection coverage and it is done simultaneous with signing the application.
3. Add an acknowledgement to your document packet that reads: “I certify that I inserted the date printed on my UM rejection or coverage selection contemporaneously with my signature.”

Further analysis by the Court looked to a 2006 Louisiana Supreme Court decision.   In that case the Louisiana Supreme Court noted that the Louisiana UM statute requires only:

1. that the rejection or selection be made on a form prescribed by the commissioner of insurance;
2. that the form be provided by the insurer; and
3. that the form be signed by the named insured or his legal representative.

 The Court then noted that the UM form involves six tasks:

1. initialing the selection or rejection of coverage chosen;
2. if limits lower than the policy limits are chosen, then filling in the aoumt of coverage selected for each person and each accident;
3. printing the name of the insured or legal representative;
4. signing the name of named insured or legal representative;
5. filling in the policy number; and
6. filling in the date.

In this case, the contract limited the inspector’s liability for negligence to $200, the cost of the inspection. The court refused to enforce this provision in the contract, finding to do so was against public policy.

Although this decision is not binding on Louisiana courts, could it be the beginning of similar holdings in Louisiana and other states?

Practical Tips:

Buyers and realtors representing buyers:  Be advised that there may be recourse against negligent home inspectors.

Home Inspectors:  Talk to your insurance agent about possible insurance coverage for these services.

(1) uses the E-verify system to confirm that all of its employees in Louisiana are U.S. citizens or legal aliens,

(2) will verify the status of its new employees hired during the term of the contract and

(3) has obtained sworn statements from its subcontractors that requirements (1) and (2) have been also satisfied by the subcontractor.

Violations will result in cancellation of the contract, ineligibility for at least three years of other public contracts and liability for costs incurred by the political entity caused by the cancellation of the contract.

Is Louisiana ready for trusts for pets?

Remember the multi-million dollar trust Leona  Helmsley created for her beloved dog, Trouble? Well, trusts for pets are not currently allowed under Louisiana law.  But, that may be about to change.

The Louisiana legislature passed a resolution during its 2011 session asking the Louisiana Law Institute to study the issue.  The report is due back to the legislature no later than February 12, 2012.  So stay tuned for developments.

Currently, the federal tax code allows each person to give in a lifetime up to $5,000,0000 without paying gift taxes.  However, for any gift to any one person that exceeds $13,000 in one year, the giver must file a report with the IRS disclosing the gift. The report must also be filed even if the donation is within the $5,000,000 exemption. Please note that it is the giver, not the recipient, that must file the reports and will be taxed if the gift exceeds the federal limit.

Investigations by the IRS

The IRS is using donations recorded in real estate records to identify givers that failed to file the disclosure reports. Although Louisiana real estate records were not among the initial slate of states the IRS is reviewing, these actions by the IRS illustrate how important it is to file the reports..

Practical Tips:

• Consult with your accountant to determine if you have a tax liability for donations above $13,000.
• File the IRS report disclosing donations.

In 1995, forced heirs were redefined and are now:

1.  Any child, including an adopted child, who is under the age of 24 years when the parent dies; and

2.  Any child, including an adopted child, who is permanently unable to take care of himself/herself or or handling his/her affairs due to a permanent mental incapcity or physical infirmity, no matter his/her age.

3. Granchild under certain circumstances.

Consequently, parents can now give all of their property to their surviving spouse so long as there are no forced heirs and it is done by a last will and testament. Prior to 1995 this was not possible, except if there were grounds for disinheriting all children.

Please be aware that when a parent dies without a will, the children of the deceased parent, not the surviving spouse, inherit all of the property.  While the surviving spouse will be granted use of the community property inherited by the children, that can be fraught with problems and/or inconveniences that can simply be avoided with a will, assuming that is the desire of the deceased spouse.

Practical Tips:

1. If you have a child that has been diagnosed with or shows characteristics of bipolar disease, then you need to consult with an attorney about executing a last will and testament. This is only one of many reasons to execute a will.

2. If you have a child with bipolar disease, find out if that child is receiving any type of government assistance. This will be an important consideration in your estate planning.

Visit our website for more information and/or call us for an appointment to discuss these issues in greater detail.