Transaction Guidance After a Natural Disaster

Short Answer:  Generally, no.  Timelines and closing deadlines contained in purchase agreements may be amended by agreement of the parties.  However, the failure of parties to perform within such timeframes, or agree to amended timelines, may result in the default of a purchase agreement.

Governor Edwards issued Proclamation Number 165 JBE 2021 on August 26, 2021 (the “Original Order”).  The Governor’s Order declared a statewide state of emergency due to Hurricane Ida (the hurricane was classified as Tropical Storm Ida at the time the Governor’s Order was issued).  Following the Original Order, on September 6, 2021, Governor John Bel Edwards issued Proclamation Order Number 170 JBE 2021, Amendment to State of Emergency – Hurricane Ida (“Amended Order”).  Governor Edwards’ Amended Order includes suspension of certain legal deadlines.  In suspending “legal deadlines applicable to legal proceedings in all courts, administrative agencies, and boards...”, the order does not specifically address closing deadlines contained in private contracts between private parties, such as purchase agreements.

On August 31, 2021, the Louisiana Supreme Court issued two emergency orders suspending all prescriptive, preemptive, and abandonment periods statewide for a period of thirty (30) days commencing from the Governor’s August 26, 2021 Order declaring a state of emergency  (the “LASC Orders”).  The LASC Orders also addressed certain deadlines in criminal, juvenile, wildlife and traffic matters within certain parishes that are not relevant to the analysis.

Timelines and closing deadlines contained in purchase agreements represent contractual terms that have been agreed upon by the parties to such contracts. Those timelines and deadlines are not established by statute or court order and are therefore not impacted by the Original Order, Amended Order or the LASC Orders.  Those time periods are not extended, nor are the parties relieved of their obligation to comply with those time periods unless some other contractual provision applies (i.e., force majeure clause).The failure of parties to perform within such timeframes required in the contract may result in a default of the purchase agreement.

Evictions for Residential and Commercial Real Estate:

The Governor’s Amended Order suspends the ability to obtain an order of eviction from a Louisiana court in all parishes until September 24, 2021. However, the suspension of deadlines applies to legal proceedings and would not prohibit the posting of an eviction notice or the commencement of legal action to obtain an eviction order.

Governor Edwards’ Amended Order includes suspension of certain legal deadlines.  In suspending “legal deadlines applicable to legal proceedings in all courts, administrative agencies, and boards...”, the Amended Oder encompasses eviction proceedings in state and municipal courts. 

This is merely a suspension of deadlines. This means that eviction proceedings can be initiated by a landlord/lessor but that the tenant/lessee will not be required to file an answer and the suit to evict cannot be finalized until the suspension ends on September 24, 2021. 

A similar issue arose in 2020 when the Governor suspended legal deadlines as a result of the COVID-19 pandemic.  Uncertainty arose with respect to the meaning of “suspension.” 

The Louisiana Civil Code defines suspension such that the period of suspension "is not counted toward accrual" and commences again when the suspension ends. Meaning, the period of time that the suspension continues is tacked on once the suspension ends. 

However, many courts issued orders providing that deadlines otherwise arising during a suspension period are only delayed until the first business day after the period of suspension concludes. There is no additional time added to the deadline once the suspension ends. 

In response, the Louisiana legislature passed Act. No. 162. That Act clarified that all deadlines in legal proceedings, as well as certain prescriptive periods that otherwise would have expired during the period of suspension, would expire on the date immediately following the end of the suspension period.  That Act was specific to the Governor’s orders issued in response to COVID-19 but would likely be used as guidance in this instance as well.

Security Deposits:

The suspension of deadlines applies to legal proceedings and would not govern the terms of a lease agreement with respect to deposits.

The terms of the written lease agreement and/or generally applicable Louisiana law will apply to the return and forfeiture of deposits. The process of accounting for, returning, or retaining a tenant’s deposit does not involve a legal proceeding that would be subject to the suspension period. 

The LASC Orders govern prescriptive, preemptive, and abandonment periods. The return of a tenant’s deposit is governed by La. R.S. 9:3251 and requires that the deposit be returned within 30 days from the lease termination date. That 30-day period is not a prescriptive, preemptive, or abandonment period. Those terms are used to described periods of time where potential litigants may lose their right to bring or maintain, a lawsuit.

Abandonment:  

The suspension of deadlines by the Amended Order does not prohibit an owner of immovable property from reclaiming leased property if abandoned as provided by law or entering the leased property to make necessary repairs as provided by law.  However, Louisiana REALTORS® advises property owners and property managers to consult their own legal counsel prior to taking possession of a property if they believe it to be abandoned by a tenant.

A property owner in Louisiana must still obtain an order from a court in order to properly evict a tenant but after the required notice has been given, the lessor or owner, or agent thereof, may lawfully take possession of the premises without further judicial process, upon a reasonable belief that the lessee or occupant has abandoned the premises. (La. CCP Art. 4731). 

Factors used when determining abandonment include a cessation of business activity or residential occupancy, returning keys to the premises, and removal of equipment, furnishings, or other movables from the premises.  

In an instance where a property is damaged due to a hurricane, it will be difficult to determine if the tenant has truly abandoned the property or intends to return. This will be determined by a court on a case-by-case basis based on the relevant facts. 

Therefore, Louisiana REALTORS® advises property owners and property managers to consult with their own legal counsel prior to taking possession of a property if they believe it to be abandoned by a tenant.

If you're an NFIP policyholder, the website outlines the steps to begin filing your flood claim and disaster assistance that is available.

Additional information regarding Hurricane Ida can be found here:

https://www.fema.gov/disaster/hurricane-ida

https://www.fema.gov/press-release/20210904/federal-response-recovery-efforts-continue-after-ida