PERFECTING AND CANCELLING A REAL ESTATE PROPERTY BOND. Real estate property bonds are perfected by way of a mortgage on land or land and

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1 PERFECTING AND CANCELLING A REAL ESTATE PROPERTY BOND I. INTRODUCTION Real estate property bonds are perfected by way of a mortgage on land or land and building (residential or commercial). The owner (hereinafter mortgagor), in all cases, will be either himself, a family member or close friend of the client. The client will be anxious to perfect the bond and be released, as will the mortgagor. The best advice to give to all concerned is that under the best circumstances, when everything is in order, the process of perfecting the bond will take a minimum of 3 days. Under less than ideal circumstances, such as when documents are missing or the property is located out of state, the process can take weeks. The complete cooperation of the mortgagor with your office is essential. The mortgagor will do all of the work involved in obtaining and recording documents. When requesting a mortgage certificate for the purpose of obtaining a property bond for court purposes, the clerks generally recognize the need for same day service. Most offices have their own forms and procedures to assist those 1

2 perfecting a bond in their jurisdictions; but when advised it is for use in federal court, they do not require their procedure to be followed. However, in Orleans Parish, the personnel require their own procedure to be followed. One must persist in advising the clerk that their procedure does not apply in this case, that all that is needed is a mortgage and conveyance certificate, and that a mortgage for the purpose of perfecting a bond in federal court will be recorded in the next 2 or 3 days. It is important that the mortgagor completely understand the implications of granting a mortgage on his or her property, including that if the client fails to appear for a court appearance or violates a condition of the bond, the Court could make demand on the note. Further, the equity (all or part) in the property will not be available, as it is encumbered with a mortgage. Finally, if the mortgagor contracts for the sale of the property, the sale proceeds will be reduced by an amount equal to the amount of the bond and that amount will be deposited into the Registry of the Court by way of a collateral substitution. The mortgagor must also understand that at the conclusion of the Court proceeding, judgement of dismissal, acquittal, or guilt, the mortgagor should 2

3 proceed to cancel the mortgage (See V. Cancellation Of Mortgage.) II. INITIAL DISCUSSION WITH THE PROPOSED MORTGAGOR: A. Identify mortgagor: 1. Title: a. Owner(s), (1). Named as purchaser(s) on title, b. No change in status, (1). If one party deceased, (a). (b). Succession, Judgment of (2). If divorced, possession, (a). Judgment of divorce, 3

4 c. Owner out of town, B. Description of the property: 1. Title (1). Execute a specific power of attorney a. Legal description, (1). Lot, square, parcel, township, parish, city and state, b. Municipal address. C. Ascertain the equity in the property: 1. s valuation; multiply by 10 for market value; minus the total balance due on any mortgage(s), lien(s) or 1 judgment(s), or 2. Current appraisal (less than 6 months old), minus the total balance due on any mortgage(s), lien(s) or judgment(s). III.. IF A, B AND C ABOVE INDICATE THE PROPERTY IS SUITABLE FOR PERFECTING A BOND: 1 In most cases, money judgments which are 10 years old and have not been re-inscribed can be cancelled and erased from the mortgage certificate; the clerk can be of assistance. 4

5 A. Have the mortgagor first go to the assessor s office, then 2 to the mortgage and conveyance (if applicable) offices in the parish where the property is located and obtain: 1. s valuation of the property. 2. Mortgage certificate reflecting the name(s) of the owner(s) and property description as they appear on the title, 3. Conveyance certificate, if the parish issues one, in the exact names and property description as appears on the title and, B. Have the mortgagor contact the holder(s) of any mortgage(s), lien(s) or judgment(s) recorded on the mortgage certificate and obtain written confirmation, on their letterhead, of the balance due. C. Have the mortgagor bring all of the above documents to your office. 2 Since different parishes handle mortgage certificates in different ways, the mortgagor must explain to the mortgage clerk that the certificate is needed for use in Federal Court to perfect a property bond, and that he or she will return a day or two later with the same certificate to record a mortgage on the property. Only East Baton Rouge, Jefferson and Orleans Parishes issue conveyance certificates. 5

6 D. Carefully examine the documents: 1. Ensure title is complete, dated, signed and notarized, recites the correct name(s) and marital status of owners, and includes the full legal description of the property; 2. Ensure mortgage and conveyance (if used) certificates are in the owner(s) s names(s) and include the same legal description that appears on the title; a. Investigate any inscriptions and verify validity of 3 inscriptions, especially regarding common names, e.g. William Jones. 3. Ensure the assessor s valuation form has the same owner name and legal description that appears on the title. 3 You can prepare a Null and Void Affidavit, citing the recordation information on the mortgage certificate, which the property owner can file declaring that he/she is/are not the same person(s) named in the inscription on the certificate. 6

7 IV. PREPARE THE BOND PACKAGE AND SUBMIT TO THE CLERK, U. S. MAGISTRATE COURT, FOR REVIEW AND APPROVAL BY THE DUTY JUDGE: 4 A. Prepare triplicate original mortgage, using the form of mortgage provided by our office (copy on disk); 1. In the title of the act, type in the name of the parish in which the mortgage will be recorded; 2. Under PERSONALLY CAME AND APPEARED, type in the name(s) of mortgagor, exactly as recited on the title, marital status and mailing address; 3. On page 1, paragraph 2, line 1, following acknowledged that, type he or she; 4 One original will be retained by the mortgage office at the time it is recorded. One original will be retained by the U.S. Magistrate Court at the time the bond is perfected. One original is for the mortgagor s records. 7

8 4. On page 1, paragraph 2, line 2, following the sum of, type, alpha and numeric, the dollar amount of the bond; 5. On page 1, paragraph 2, line 3, following evidenced by, type he or she; 6. On page 1, paragraph 2, line 4, following note dated, type the date; 7. On page 1, paragraph 3, line 4, following herein contained, type the name(s) of the mortgagor; 8. On page 1, paragraph 3, line 6, following in the Parish of, type in the legal description, word for word as it appears on the title; 9. On page 2, paragraph 2, line 1, following, declared that, type he or she; 8

9 10. On page 2, paragraph 2, line 3, following declared that, type he or she; 11. On page 3 type the name(s) of the mortgagor; and 12. On page 3 type your name or the name of Notary Public, Bar # and commission expiration information. B. Complete the demand note form (only one) provided by our office (copy on disk): 1. In the title of the note, type in the name of the parish in which the note will be recorded; 2. On line 1, paragraph 1, following Upon demand, I, type the name of the mortgagor, exactly as it appears on the mortgage; 3. On line 2, following the sum of, type, alpha and numeric, the dollar amount of the bond; 9

10 4. In paragraph 2, line 1, before hereby waives, type name of the mortgagor; 5. Opposite the date line type the name of the mortgagor(s); and 6. Beneath Paraphed NE VARIETUR, type your name or the name of Notary Public, Bar # and commission expiration information. C. In front of two witnesses, execute the mortgage in triplicate and the note (only one note): 1. Read the mortgage and note to the mortgagor; 2. Obtain the mortgagor s signature(s) on the triplicate original mortgages and note; 3. Notarize the triplicate original mortgages; 10

11 4. Notarize and paraph the note. D. Submit the Bond Package to the Duty Magistrate Judge, under letter of transmittal enclosing the below listed documents (properly tabbed): 1. Copy of title; 2. If applicable, copy of judgment(s) of possession, divorce; 3. Copy of conveyance certificate; 4 Copy of mortgage certificate; 5. Copy of mortgage(s) inscribed on mortgage certificate; 6. Copy of balance due to lender(s) and/or holder(s) of lien(s) or judgment(s); 11

12 7. Copy of assessor s valuation or appraisal if used; 8. Copy of calculation of equity, e.g. Assessed value $10, X 10 = $100, Less Balance due on mortgage(s) = 50, Equity = $50, One copy of executed mortgage in favor of the United States of America; 10. The original demand note. E. The Clerk, U.S. Magistrate Court, will advise of the Judge s approval or disapproval or of any changes that need to be addressed. F. Make any required changes. G. Upon approval by the Judge: 12

13 1. Ask the Magistrate Clerk for a court date to perfect the bond; 2. Retain the demand note in your office, and give the mortgagor the triplicate original mortgages and mortgage certificate, previously obtained, with instructions to bring them to the mortgage office in the parish where the property is located; 3. The mortgage clerk will record, certify and retain one original mortgage; certify the other two originals and return them to the mortgagor; 4. The mortgage clerk will also have the mortgage inscribed on the previously obtained mortgage certificate and return it to the mortgagor; 5. Have the mortgagor bring the two certified mortgages and mortgage certificate to your office and verify that everything is in order; 13

14 6. Instruct the mortgagor of the date and time he/she is to appear in Magistrate Court; A. Instruct the mortgagor or family member to bring street clothes for your client, as the U.S. Marshal Service will not release an inmate in prison attire. 7. On the date and time of hearing bring the now completed Bond Package and mortgagor to Magistrate Court where your client and the mortgagor will sign the Court s bond papers. 8. Bring the client s street clothes to the U.S. Marshal s Office (6 th floor U.S. District Court House). V. CANCELLATION OF THE BOND AND MORTGAGE A. Upon conclusion of the Court proceeding obtain a copy of the Judgment and Commitment Order which is available in the clerk s office or on PACER. 14

15 B. Instruct the mortgagor to take the J & C to the Financial Unit, Clerks s Office: 1. One of the clerks will complete the Application for Cancellation of Bond; a. The mortgagor will sign the application and return it to Clerk; 2. The Clerk s office will obtain the AUSA s and the District Judge s signature. C. The Clerk s Office will cancel the demand note and return it to the mortgagor via certified mail or have it available for pick up. D. Instruct the mortgagor to take the cancelled demand note to the mortgage office of the parish where it was recorded and have the inscription which recorded the mortgage cancelled and removed from their mortgage book. 15

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18 Louisiana Judicial District Courts Eastern District of LA plus Baton Rouge Mortgage, Conveyance and s Office DISTRICT PARISH; SEAT CLERK TELEPHONE CERTIFICATE COST RECORDATION COST (PAYABLE CASH OR CHECK) 17 th Lafourche; Thibodaux $ st name $3.00 each additional name $ st name $3.00 each additional name 18 th West Baton Rouge; Port Allen $ st name $10.00 each additional name $ st page $10.00 each additional page 19 th East Baton Rouge; Baton Rouge $ st name, $10.00 each additional name Ditto for 2 nd legal description $ st page $10.00 each additional page Conveyance Office Ditto N/A st St. Helena; Greensburg $30.00 each legal description $ st page $10.00 each additional page 21 st Tangipahoa; Amite $ st name $10.00 each additional name $ n legal description $ st page $10.00 each additional page $3.00 each stamped copy Rev. 10/23/09 Page 1 of 5

19 DISTRICT PARISH; SEAT CLERK TELEPHONE CERTIFICATE COST RECORDATION COST (PAYABLE CASH OR CHECK) 21 st Livingston; Livingston press 4 $ st name $10.00 each additional name nd legal description $ st page $10.00 each additional page $3.00 each stamped copy nd St. Tammany; Covington $ st name $10.00 each additional name $ st page $10.00 each additional page $3.00 each stamped copy $5.00 parish fee 22 nd Washington; Franklinton $ st name $10.00 each additional name $ nd legal description $ st page $10.00 each additional page $5.00 parish fee $3.00 each stamped copy 23 rd St. James; Convent $ st name $10.00 each additional name $ nd legal description $ st page $10.00 each additional page $5.00 each certified copy rd Ascension; Donaldsonville $ st name $10.00 each additional name $ st page $10.00 each additional page $5.00 each certified copy Rev. 10/23/09 Page 2 of 5

20 DISTRICT PARISH; SEAT CLERK TELEPHONE CERTIFICATE COST RECORDATION COST (PAYABLE CASH OR CHECK) 24 th Jefferson; Gretna $ st name $10.00 each additional name $5.00 date, sign fee $40.00 preparation fee $ st page $10.00 each additional fee $5.00 each certified copy Conveyance Office Ditto Ditto N/A th Plaquemine; Belle Chasse $ st name $10.00 each additional name $ st page $10.00 each additional page $5.00 index fee per name $5.00 each certified copy 29 th St. Charles; Hahnville $ st name, $10.00 each additional name $ st page $10.00 each additional page. $5.00 each stamped copy 32 nd Terrebonne; Houma $ st name $10.00 each additional name. $ nd legal description $ page $10.00 each additional page. $5.00 per name index fee $3.00 each stamped copy Rev. 10/23/09 Page 3 of 5

21 DISTRICT PARISH; SEAT CLERK TELEPHONE CERTIFICATE COST RECORDATION COST (PAYABLE CASH OR CHECK) 34 th St. Bernard; Chalmette $ st name $10.00 each additional name. $ st page $10.00 each additional page Orleans Judicial District Orleans New Orleans Amoco Building 4 th Floor 1340 Poydras St., N.O., LA $ st name $30.00 each additional name $ nd legal description $38.00 $ nd legal description N/A Conveyance Office Amoco Building 4 th Floor 1340 Poydras St., N.O., LA Achieves Amoco Building 5 th Floor 1340 Poydras St., N.O., LA $ st name $30.00 each additional name $ nd legal description $35.00 $ City of New Orleans Fee; check or money order only; if paid after 30 days, additional $ penalty fee See Telephone Book, Blue Pages Rev. 10/23/09 Page 4 of 5

22 DISTRICT PARISH; SEAT CLERK TELEPHONE CERTIFICATE COST RECORDATION COST (PAYABLE CASH OR CHECK) 40 th St. John the Baptist; Edgard $ st name $10.00 each additional name $ st page $2.00 each additional page Rev. 10/23/09 Page 5 of 5

23 UNITED STATES OF AMERICA STATE OF LOUISIANA PARISH OF XXXXXXXX MORTGAGE BY XXXXXXXXXXXXX IN FAVOR OF UNITED STATES OF AMERICA On this XX day of XXXXXXXX, 2009, before me, XXXXXXXXXXXX, a Notary Public duly commissioned and qualified, in and for the Parish of XXXXXXXXX, State of Louisiana, and in the presence of the witnesses hereinafter named and undersigned, PERSONALLY CAME AND APPEARED: XXXXXXXXXXX, of legal age and a resident of XXXXXXXXXXX Parish, Louisiana, who declared under oath that she has been married but once to XXXXXXXXXXX, from whom she was divorced in the Parish of XXXXXXXXXXX in proceedings numbered XXXXXXXXXXX on XXXXXXXXXXX, and she has not since remarried; Mailing address: XXXXXXXXXXX XXXXXXXXXXX, LA XXXXX AND WHO FURTHER declared and acknowledged that he/she is indebted to the United States of America in the sum of XXXXXXXXXXX ($XX,XXX.00) which indebtedness is evidenced by his/her note dated the XX day of XXXXXXXXXXX, 2009, paraphed Ne Varietur by me, notary, for identification with this act, which note is due upon demand. To secure to the United States payment of the indebtedness evidenced by the note and the performance of the covenants and agreements herein contained, XXXXXXXXXXX, does hereby mortgage and hypothecate to the United States of America the Page 1 of 3

24 following described property located in the Parish of XXXXXXXX, State of Louisiana: THAT PORTION OF GROUND, together with all the buildings and improvements thereon, XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXX, which said property is more fully described as follows to-wit: L O T N O. X X X X X X X X X X X XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXX. Improvements thereon bear Municipal No. XXXXXXXXXXX. Mortgagor declared that he/she is lawfully seized of the estate hereby mortgaged and has the right to mortgage and hypothecate the property. Mortgagor declared that he/she will not in any manner dispose of, further encumber or engage in any activity which will result in the diminution of the value of the property which is the subject of this mortgage. Mortgagor hereby waives any homestead exemption applicable to the property which is the subject of this mortgage. Mortgagor hereby confesses judgment in favor of the United States of America in the full amount of the sum secured by this mortgage. Thus done and passed on the XXX day of XXXXXXXXXXX, 2009, before me, the undersigned Notary Public, qualified in the State of Louisiana, and in the presence of the undersigned competent witnesses who have signed with Mortgagor and me, Notary, after full reading of the same. Page 2 of 3

25 WITNESSES: MORTGAGOR: XXXXXXXXXXXXXXXXXXXXXXXX NOTARY PUBLIC Page 3 of 3

26 STATE OF LOUISIANA PARISH OF XXXXXXXX NOTE Upon demand, I, XXXXXXXX, agrees to pay to the United States of America the sum of XXXXXXXX XXXXXXXX THOUSAND DOLLARS ($XX,000.00). XXXXXXXX hereby waives presentment for payment, demand, notice of non-payment, protest, and all pleas of division and discussion, and agrees that the payment hereof may be extended from time to time, one or more times, without notice, hereby binding himslef/herself unconditionally and as original promisor for the payment hereof, in principal, interest, costs and attorney s fees. DATE: XXXXXXXX Paraphed NE VARIETUR for identification with the mortgage of the day of, NOTARY PUBLIC

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28 UNITED STATES OF AMERICA STATE OF PARISH (COUNTY) OF SPECIFIC POWER OF ATTORNEY I,, hereby give power of attorney to, to represent me, act for me and to do all things which I could do, including, but not limited to; signing, executing and recording a mortgage in favor of the United States of America in the amount of dollars ($ ) on the real property owned by me described as bearing municipal address, signing and executing a promissory, demand note in favor of the United States of America in the amount of dollars ($ ) paraphed for identification with and evidence of the security describe in the above mortgage, signing and executing any and all documents as required by United States District Court, Eastern District of Louisiana for the perfection of a real estate property bond in the matter of U.S.A. v case #, all to the same force and legal effect as though I were personally present and acting for my self. This day of,20. Witness (Grantor s name) Sworn to and subscribed before me this day of, 20. NOTARY PUBLIC My Commission Expires.

29 PROBLEMS & SOLUTIONS I. Equity in the property is less than the amount of the bond; If the assessed value is low, order an appraisal; if there is a stale dated appraisal, order a windshield appraisal it is faster and less expensive than full appraisal. Petition the Magistrate Court to modify the amount of the bond to equal the amount of equity in the property. II. No copy of title; Contact the clerk of court of the parish wherein the property is located; mortgage, conveyance or notarial archives. III One owner deceased and succession not opened; The surviving owner must arrange with an attorney to open succession. Depending on the estate and heirs this could take a long time. Notice must be given to all potential heirs and the proceeding must be advertised. IV. One owner deceased and succession opened but not closed; The surviving owner must arrange with an attorney to closed the succession and put the surviving owner in possession. Depending of the state of the succession this could quick or protracted.. V. No judgment of divorce; Contact the attorney who handled the proceeding or the clerk of court wherein the divorce was adjudicated. VI. Owner of property out of town; Draft and execute a specific power of attorney authorizing a person to sign and act on his or her behalf. VII. Property out of state: I first advise the Magistrate Judge for the EDLA. The mortgage and note must be executed and recorded in the county in which the property is located. The bond package must be approved by the Magistrate Judge for the district where the property is located prior to submitting to the Magistrate Judge for EDLA. For more details, see me Page 1 of 2

30 VII. Prior mortgage paid off but not canceled and promissory note is lost; Writ of Mandamus commanding a ministerial act of the lender to cancel the mortgage. Page 2 of 2

31 GLOSSARY Mortgage. Mortgagor. Mortgagee. An interest in land created by a written instrument providing security for the payment of a debt. One who holding title to property, who by written instrument pledges that property for the purpose of securing a debt. One who takes or receives a mortgage. Mortgage Certificate. Document evidencing existence of a mortgage held by mortgagee. Title. Usually a notarial act evidencing the right to or ownership in land; cash sale, credit sale, bond for deed, judgement of possession, act of donation Conveyance Certificate. Document evidencing the described property as in the name(s) as appear on the title and the property has not been sold, transferred or otherwise hypothecated.