10.2.1 Buyers’ Rights

In a bond for deed, as defined by La. R.S. 9:2941, the purchase price is paid in installments and the seller agrees to transfer title on completion of the payments.1  A rule to evict may be used to evict the buyer in a bond for deed or lease-purchase agreement.2

If an agreement is a “bond for deed,” the eviction can be defeated if the seller did not comply with the statutory requirements for cancelling a bond for deed.3  La. R.S. 9:2945 provides that a buyer has the right to cure a default within 45 days from the “mailing of the notice.” The notice must be by certified mail. Despite the literal language of La. R.S. 9:2945, it may be argued that the 45 days do not run when the buyer never receives the certified mail notice. Courts have held that similar language in other statutes means completion of service and that the right to cancel is defeated if the non-receipt of the notice is shown.4

A Chapter 13 bankruptcy may be used to cure a default in a bond for deed and pay arrearages.5  The vendor may argue that the bond for deed is an executory contract or lease and that the remedies are limited to assuming or rejecting the contract pursuant to 11 U.S.C. § 365. However, the bankruptcy court should allow the buyer to treat the bond for deed as a secured debt that can be cured in a Chapter 13 bankruptcy. If a bankruptcy reorganization is the best remedy for the buyer, it is important that the bankruptcy be filed before a judgment of possession or any cancellation of the buyer’s interests. A final eviction judgment may result in the loss of the § 362 automatic stay of pending cases.6

If the buyer fails to fulfill the conditions of the bond for deed, the purchaser is entitled to return of all monies paid on the purchase price and the seller is entitled to the fair rental value for the buyer’s occupancy.7  A waiver of the purchaser’s right to return the monies paid violates public policy and is unenforceable.8  Inclusion of such a waiver in a bond for deed contract may constitute an unfair trade practice.9

A buyer may sue for specific performance of the bond for deed and conveyance of title upon prepayment or payment of the price in full.10

• 1La. R.S. 9:2941; H.J. Bergeron, Inc. v. Parker, 2006-1855 (La. App. 1 Cir. 06/08/07), 964 So. 2d 1075, 1076; Lyons v. Pitts, 40,733 (La. App. 2 Cir. 03/08/06), 923 So. 2d 962, 963 (agreement to give warranty deed sufficient for bond for deed to exist).
• 2Bennett v. Hughes, 2003-1727 (La. App. 4 Cir. 05/26/04), 876 So. 2d 862.
• 3See La. R.S. 9:2945; Thomas v. King, 35,857 (La. App. 2 Cir. 04/03/02), 813 So. 2d 1227; Tabor v. Wolinski, 1999-1732 (La. App.1 Cir. 09/22/00), 767 So. 2d 972.
• 4Broadway v. All-Star Ins. Corp., 285 So. 2d 536 (La. 1973) (in different context, prima facie presumption of delivery of cancellation notice from proof of deposit of notice in mails was overcome by direct evidence of nonreceipt).
• 5In re Curtis, 500 B.R. 122, 123 (Bankr. N.D. Ala. 2013) (following jurisprudence holding that an Agreement for Deed should be treated as “a secured transaction for which defaults may be cured and payments maintained over the life of the [Chapter 13] Plan pursuant to Code [11 U.S.C.] § 1322(b)(5)” instead of “an executory contract, which must be assumed or rejected under Code §§ 365 and 1322(b)(7).”); In re Booth, 19 B.R. 53 (Bankr. D. Utah 1982) (finding a land sale contract should be considered a security instrument rather than an executor contract under the bankruptcy code); In re Johnson, 75 B.R. 927 (Bankr. N.D. Ohio 1987) (finding that a land installment contract was more akin to a security instrument than an executory contract, but nonetheless finding that proposed repayment schedule in Chapter 13 plan sought to modify the obligation and therefore rejecting). But see In re Rancho Chamberino, Inc., 89 B.R. 597, 600 (W.D. Tex. 1987) (declining to follow Booth and finding that the statutory definition of contract for deed under applicable state law supported treatment as an executory contract). Cf. In re Brown, 325 B.R. 169, 174 (Bankr. E.D. La. 2005) (examining amount owed to creditor in the context of a Chapter 7 bankruptcy where the debtor defaulted on a bond for deed contract).
• 611 U.S.C. § 362(b)(22).
• 7Berthelot v. Le Investment, 2002-2054 (La. App. 4 Cir. 01/21/04), 866 So. 2d 877.
• 8Seals v. Sumrall, 2003-0873, p.7 (La. App. 1 Cir. 09/17/04), 887 So. 2d 91, 96; Montz v. Theard, 2001-0768 (La. App. 1 Cir. 02/27/02), 818 So. 2d 181, 187.
• 9La. R.S. 51:1403.
• 10Lyons v. Pitts, 40,733 (La. App. 2 Cir. 03/08/06), 923 So. 2d 962 (buyer had right to prepay bond for deed where contract silent as to this issue).