Default Remedies - What Happens if it All Goes Wrong?
Louisiana REALTORS • March 16, 2020
DEFAULT REMEDIES IN THE
LOUISIANA RESIDENTIAL AGREEMENT TO BUY OR SELL
WHAT HAPPENS IF IT ALL GOES WRONG?
By: Patricia B. McMurray, JD and Melissa Grand, JD
Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
450 Laurel Street, Chase Tower North, 21st Floor
Baton Rouge, Louisiana 70801
Consider this scenario: Buyer Boudreaux finds the house of his dreams. The house is owned by Seller Sabine. After negotiations, Boudreaux and Sabine sign the Louisiana Residential Agreement to Buy or Sell (the “Agreement”). Then it all goes wrong. Sabine defaults under the Agreement. What can Boudreaux do now?
The Agreement has several available remedies for the buyer and seller in the event of default. The options include (1) declaring the Agreement null and void, (2) termination of the Agreement, (3) specific performance, and (4) stipulated damages. Other potential remedies include return of the deposit, and recovery of broker fees, attorney’s fees and costs.
DECLARE THE AGREEMENT NULL AND VOID
In the event of default, a buyer or seller may declare the Agreement null and void. The Agreement provides in Lines 258-260:
Further, the Agreement provides in Lines 268-270
This means that, in our scenario, Boudreaux can declare the Agreement null and void. Boudreaux and Sabine would both walk away from the sale.
TERMINATION OF THE AGREEMENT
In the event of default, a buyer or seller may seek to simply terminate the Agreement.[1] The Agreement provides in line 262:
Further, the Agreement provides in Line 270:
In our scenario, Boudreaux can file a lawsuit and request an order from the Court terminating the Agreement.
SPECIFIC PERFORMANCE
Upon default, a buyer or seller may also require specific performance under the Agreement. The Agreement provides in Line 262:
Further, the Agreement provides in Lines 270-271:
Specific performance is a Court ordered remedy with the goal being to put the damaged party back into a position as if the breach in contract never occurred.[2] This means that a buyer or seller may seek specific performance of completion of the home sale. So, Boudreaux can file a lawsuit requesting the Court to order Sabine to sell the home to Boudreaux.
If a Court determines that specific performance is not practical under the circumstances, a Court may alternatively award money damages.[3] In our scenario, if the Court finds that ordering Sabine to sell the home to Boudreaux is not practical, the Court may alternatively award Boudreaux money damages.
STIPULATED DAMAGES
The Agreement contains a stipulated damages clause.[4] The Agreement provides in Lines 262-263:
The Agreement provides in Lines 271-272:
The stipulated damages provision is provided in part to eliminate the need for a calculation of damages if the seller or buyer defaults; however, some courts have required a seller or buyer to provide proof of damage. Stipulated damage clauses are designed to both fix the amount of the damages caused by nonperformance of an obligation and to encourage performance of the obligation.[5]
A stipulated damages clause is for recovery of damages to compensate the wronged party for his or her loss. Stipulated damages are not punitive damages or damages intended to “punish” the defaulting party.
The Agreement provides that a buyer or seller may demand and/or sue to terminate the Agreement and for 10% of the Sale Price as stipulated damages. However, if the clause is challenged, the Court must determine the reasonableness of the amount stipulated in the contract by asking whether the parties attempted to approximate actual damages when they agreed to the stipulated damages provision of the Agreement.[6]
In our scenario, Boudreaux can file a lawsuit requesting the Court to order Sabine to pay 10% of the Sale Price to Boudreaux. If Sabine contests the stipulated damages clause, the Court will examine the reasonableness of the stipulated amount in making an award. This means the Court may award less than 10% of the Sale Price to Boudreaux.
DEPOSIT
The wronged party may also seek a return of the Deposit (in the case of the seller’s default) or to retain the Deposit (in the case of the buyer’s default).[7] The Agreement provides in Line 264:
The Agreement provides in Line 274:
Boudreaux’s lawsuit can ask the Court to order Sabine to return his deposit to Boudreaux.
BROKER FEES
The Agreement specifically provides that the seller or buyer may seek recovery of his or her Broker fees.[8] The Agreement provides in Lines 265-266:
Further, the Agreement provides in Lines 275-276:
So, Boudreaux may ask the Court to order Sabine to pay Boudreaux’s Broker fees.
A court has discretion in awarding Broker fees to the prevailing party,[9] so Boudreaux is not guaranteed to be successful in his request.
ATTORNEY FEES AND COSTS
In Louisiana, a party may recover attorney’s fees from an opposing party only in two specific instances: (1) where there is a contract between the disputing parties that explicitly provides for payment of the attorney’s fees incurred by the opposing party, or (2) where a specific Louisiana statute requires the payment of the opposing party’s attorney’s fees.[10]
The Agreement specifies that the prevailing party in litigation to enforce any provision of the Agreement “shall” be awarded their attorney’s fees and costs.[11] The Agreement provides in Line 265:
Also, the Agreement provides in Line 275:
In our scenario, Boudreaux hired a lawyer to file his lawsuit against Sabine. In the lawsuit, Boudreaux can request that the Court order Sabine to pay Boudreaux’s attorney’s fees and costs.
DISCLAIMER
These materials are to be used for informational purposes and should not be construed as specific legal advice. These materials are not designed to cover every aspect of a legal situation for every factual circumstance that may arise regarding the subject matter included.
This publication is for reference purposes only and association members or other readers are responsible for contacting their own attorneys or other professional advisors for legal or contract advice. The comments provided herein solely represent the opinions of the authors and is not a guarantee of interpretation of the law or contracts by any court or by the Louisiana Real Estate Commission.
[1] See Agreement, line 262.
[2] La. Civ. Code art. 1986 provides:
Upon an obligor’s failure to perform an obligation to deliver a thing or not to do an act, or to execute an instrument, the court shall grant specific performance plus damages for delay if the obligee so demands. If specific performance is impracticable, the court may allow damages to the obligee.
Upon a failure to perform an obligation that has another object, such as an obligation to do, the granting of specific performance is at the discretion of the court.
[3] Id.
[4] See Agreement, lines 258-276.
[5] See Philippi v. Vigueric, 606 So. 2d 577 (La. App. 5th Cir. 1992).
[6] See Camey v. Boles, 25, 905 (La. App. 2d Cir. 9/21/94) 643 So. 2d 339 writ denied. 94-2592 (La. 12/16/94) 648 So. 2d 391.
[7] See Agreement, lines 264 and 274.
[8] See Agreement, lines 266 and 276.
[9] See Whitbeck v. Champagne, 2014-245 (La. App. 3 Cir. 10/1/14), 149 So. 3d 372, 386.
[10] See generally Dipaola v. Municipal Police Employees’ Retirement System, 2014-0037 (La. App. 1 Cir. 09/25/14); 155 So.3d 49, 52, writ denied, 2014-2575 (La. 02/27/15); 159 So.3d 1071.
[11] See Agreement, lines 264-265 and 274-275.
From the Louisiana Department of Insurance: During a press conference today with Governor Jeff Landry, Insurance Commissioner Tim Temple announced that registration for the next round of the Louisiana Fortify Homes Program (LFHP) will open at 8 a.m. on Monday, June 1, and will include 3,000 grants. The registration period for this lottery will be open for three weeks, closing at 5 p.m. on Friday, June 19. During the press conference, Gov. Landry signed HB 1187 by Rep. Paul Sawyer, which will allow Louisiana Citizens Property Insurance Corporation to transfer $50 million in additional Katrina bond assessment funds to the LFHP. Combined with the $30 million in funding the program will receive through taxes and fees on insurance entities, the LFHP will receive a total of $80 million this year. “By lowering overall losses, we can reduce insurance and reinsurance costs, draw more insurers into the market, motivate existing companies to write additional policies and lower insurance premiums,” said Commissioner Temple. “That is exactly what the Louisiana Fortify Homes Program is designed to do.” The list of coastal parishes that are eligible to participate is expanding to include Acadia, Jefferson Davis and Lafayette parishes. Additionally, homeowners who live in the portions of Ascension, Calcasieu, Iberia, Livingston, St. Martin, St. Tammany, Tangipahoa and Vermilion parishes that were previously not included in the program will now be eligible to participate. A map showing the full list of eligible parishes is available on FortifyHomes.La.Gov . “Louisiana is the fastest growing state in the country for Fortified roofs, and that growth is not by accident—it is the result of strong support from Governor Landry and legislators like Chairman Talbot, Chairman Firment and Representative Sawyer, targeted program design, and a clear recognition that strengthening homes is one of the most effective ways to reduce insurance losses,” said Commissioner Temple. “At the end of the day, this program is about more than just roofs. It is about protecting families, it is about strengthening communities, and it is about putting Louisiana in a stronger position—both physically and economically—to face the challenges ahead.” To participate in the lottery, homeowners must register during the June registration period. Homeowners who registered for a previous round but were not selected must register again to participate. People who register on the last day of the registration period have the same chance of being selected as those who register on the first day, so there is no need to rush to register as soon as the period opens. When registering, homeowners will need to upload their homestead exemption, insurance policy declarations page that includes wind coverage, and flood insurance declarations page if the residence is in a flood zone. Homeowners who need assistance obtaining a copy of their homestead exemption should contact their parish tax assessor. Homeowners can contact their homeowners and flood insurance companies or agents for a copy of their policy declarations page. Homeowners are required to create a profile in the LFHP system before registering for the lottery and may do so by visiting the LFHP website and clicking the Login button. Homeowners who previously created a profile may use the same one for this and future rounds. Once the lottery registration period closes, the LFHP will randomly select 3,000 participants and send email notifications to registrants about whether they were selected to participate. These selection notices will be sent via email beginning on Monday, June 22. There are several program requirements that homeowners should be aware of before registering. Those interested in the program are encouraged to review eligibility information and frequently asked questions at FortifyHomes.La.Gov to determine whether their home meets the requirements for the program. If selected to participate in the grant program, homeowners will be financially responsible for having the home evaluated by a FORTIFIED-certified Evaluator as well as costs for the roof upgrade including permits, inspections and construction costs beyond the amount of the grant The LFHP provides grants of up to $10,000 for homeowners to upgrade their roofs to standards set by the Insurance Institute for Business & Home Safety. The program helps Louisiana homeowners strengthen their roofs to better withstand hurricane-force winds.
Learn how real estate agents can educate buyers about Louisiana homeownership costs, including taxes, insurance, HOA fees, and maintenance.
The 2026 Regular Legislative Session has officially adjourned, and Louisiana REALTORS® closes the session with a strong record of legislative wins, defensive victories and meaningful progress on issues that directly impact property owners, homebuyers, housing providers and real estate professionals across Louisiana. This session touched nearly every major pressure point in the real estate market: insurance affordability, transaction transparency, appraisal certainty, leasing law, property taxes, blight redevelopment, litigation costs, consumer protection and private property rights. Louisiana REALTORS® successfully advanced several major policy priorities this session, including residential wholesaling reform, vacant residential land disclosure, appraisal certainty, security deposit reform, insurance mitigation funding and redevelopment tools for blighted property. At the same time, the association helped stop or reshape proposals that would have harmed housing supply, increased practitioners' liability, or created uncertainty for property owners and housing providers. Major Wins for You and Real Estate Residential Wholesaling Reform The signature victory of the session was HB 468 by Rep. Troy Hebert , Louisiana REALTORS®’ residential wholesaling reform bill. For years, residential wholesaling operated in a gray area of Louisiana law. HB 468 creates a clear statutory framework for residential wholesaling, strengthens consumer protection, increases transparency, and gives the Louisiana Real Estate Commission meaningful enforcement authority. The bill’s conference report passed unanimously in both chambers, with votes of 94-0 in the House and 35-0 in the Senate. This is a major structural reform for Louisiana real estate law. This bill will be state law effective August 1, 2026. Please note that the law does not affect any wholesale contracts between now and the effective date. Vacant Residential Land Disclosure HB 1166, by Rep. Kim Carver, passed the Legislature and has been sent to the Governor for his signature. The bill addresses disclosure gaps in vacant residential land transactions where buyers may discover late-stage issues involving access, utilities, drainage, flood risk, prior use or other material facts. HB 1166 creates a clearer process for buyers, sellers and real estate practitioners, and should help reduce failed transactions, disputes and closing-table surprises. As new industry forms and disclosures are developed, Louisiana REALTORS® will monitor the process closely and work to ensure the final requirements are practical, clear and consistent with sound industry practice. The Louisiana Real Estate Commission will complete the forms and disclosure process, with final implementation expected to be legally required for agents beginning January 1, 2027. Appraisal Liability Protections Louisiana REALTORS® secured two important appraisal-related wins. HB 1027 also by Rep. Troy Hebert , signed as Act No. 187 , clarifies that appraisers should not be held liable for compliance with obligations that belong to other parties in the transaction. HB 300 by Rep. Neil Riser , signed as Act No. 149 , addresses appraisal thresholds for bank-owned property. Together, these measures support greater transaction certainty and fairness in the appraisal process. The pair of these measures will take effect as law on August 1, 2026. Housing & Market Stability Security Deposit Reform HB 292, by Rep. Delisha Boyd and signed by Governor Landry as Act No. 63 , creates a more workable process for addressing damage discovered at the end of a lease and provides greater flexibility through written agreements regarding security deposit timelines. The measure offers practical clarity for housing providers, tenants and property managers when property damage is identified after move-out, allowing additional time to assess damage, obtain repair estimates and document costs before final security deposit accounting is completed. By creating a clearer statutory framework, the law helps reduce disputes and ensures that both landlords and tenants have a better understanding of their rights and responsibilities. Property managers can mark August 1, 2026, on their calendars, as that is the effective date for this legislation. Protections for Victims & Landlords HB 297, by Rep. Mandie Landry and signed by Governor Landry as Act No. 64 , expands Louisiana's early lease-termination protections to include victims of stalking and cyberstalking. The law recognizes that personal safety may require a tenant to leave a residence before the end of a lease term. To exercise these protections, a tenant must provide documentation from a qualified third party or other authorized evidence demonstrating that they are a victim of stalking or cyberstalking and that continued occupancy would present a safety concern. The measure also clarifies and expands who may serve as a qualified third party for purposes of supporting a tenant's request. These changes will take effect into law on August 1, 2026. Insurance Affordability and Mitigation Insurance affordability remained one of the most significant issues facing Louisiana homeowners and the real estate market. HB 1187 by Rep. Paul Sawyer , signed by Governor Landry as Act No. 416 , transfers an additional $50 million in Katrina bond assessment funds to the Louisiana Fortify Homes Program. Combined with other insurance-related funding, the program reaches approximately $80 million for the year. The Fortify Homes Program remains one of Louisiana’s most direct tools for reducing property risk, strengthening homes, improving market stability, and placing downward pressure on insurance costs over time. Several additional insurance measures did not reach final passage, including legislation on fortified roof endorsements, nonrenewal protections for homeowners who mitigate risk, and a pre-suit review process for residential property insurance disputes. These remain important long-term priorities. This became law and took effect upon the Governor’s signature. Blight, Redevelopment, and Property Taxes Louisiana REALTORS® supported policies this session aimed at returning neglected property to productive use and strengthening property-tax fairness. HB 214 by Rep. Chance Henry , now Act No. 272 with Governor Landry’s signature, will appear on the ballot as a constitutional amendment authorizing an optional property tax exemption for rehabilitated blighted or derelict property. HB 217, also by Rep. Chance Henry , is the enabling legislation for HB 214 and has received the Governor’s signature, becoming Act No. 422. Together, these measures would give local governments another tool to encourage private investment, neighborhood revitalization, and redevelopment. SB 180 , now Act No. 39 , will also appear on the ballot. The measure allows the surviving spouse of a deceased veteran with a service-connected disability to transfer an expanded property tax exemption. This is both a property-tax fairness measure and a homeownership stability measure for Louisiana veterans’ families. If passed in the fall election, the measures would take effect on January 1, 2027, as well as SB 180. Defensive Victories Some of the most important wins in this session came from stopping harmful legislation before it became law. Rent Stabilization Stopped Twice HB 472 by Rep. Alonzo Knox , the rent price control bill, was stopped after being involuntarily deferred. Louisiana REALTORS® opposed the bill and provided testimony in committee because rent-control policies can discourage investment, reduce housing supply, create uncertainty for housing providers and ultimately worsen affordability challenges. Knox brought the bill to the House Committee on Municipal, Local and Parochial Affairs twice due to the opposing testimony of our organization and opposition from the Home Builders Association and the Louisiana Apartment Association. Hidden Fees Bill Reshaped Yet Still Thwarted HB 617 by Rep. Mandie Landry , the hidden fees bill, raised concerns because it could have imposed liability on real estate professionals for fees they do not control, including those set by lenders, title companies, insurers, government entities and other third parties. Louisiana REALTORS® successfully negotiated a House-side amendment exempting real estate transactions from the bill’s scope. The bill later died in the Senate Commerce Committee. It is worth noting that the author agreed to include us in an amendment by Rep. Troy Hebert from the House floor, exempting real estate transactions. Automatic Renewal Bill Monitored HB 750, by Rep. Vincent Cox, addressing automatic renewal provisions, was closely monitored by Louisiana REALTORS® to ensure the legislation did not unintentionally apply to residential or commercial leases, property management agreements, association operations, nonprofit activities or standard real estate practices. Those concerns were successfully addressed through a Louisiana REALTORS® amendment offered by Senator Pressly during Senate consideration. When the bill returned to the House, Rep. Cox accepted the amendment and supported concurrence, preserving the bill's consumer protection goals while ensuring Louisiana's real estate industry, housing providers, associations and nonprofits were not subjected to unintended regulatory burdens . Missed Opportunities Two broader legal reform measures passed the House but stalled in the Senate Judiciary A Committee. HB 437, by Rep. Michael Melerine, addressing expert witness fees, and HB 1089, by Rep. Dennis Bamburg, establishing CARE Accounts, both reflected broader efforts to reduce litigation costs, improve Louisiana’s legal climate, and address cost drivers affecting insurance affordability and business competitiveness. Their failure to reach final passage was a missed opportunity, but the issues remain central to Louisiana’s long-term affordability conversation. Louisiana REALTORS® will continue to monitor these proposals and hope to see similar reforms return next session with a different outcome. What Comes Next The end of the session does not end the work. Louisiana REALTORS® will now turn to implementation, member education, ballot engagement and preparation for the next legislative cycle by directly engaging you, the driving force behind all of our efforts. The issues that shaped this session — housing affordability, insurance availability, redevelopment, legal costs, and private property rights — are not going away. Neither are we. Louisiana REALTORS® remain committed to serving as a consistent, credible and effective voice for property owners, homebuyers, housing providers and real estate professionals across Louisiana. Thank You As the Legislature adjourns, Louisiana REALTORS® expresses sincere appreciation to the leadership, members, public officials and advocacy partners who helped make this a productive and successful session for the real estate industry and property owners across Louisiana. We are especially grateful to Louisiana REALTORS® President Ginger Maulden, President-Elect David Favret, Treasurer Misty Ingersoll, Legislative Committee Director Keary Coffin, Outside General Counsel Eric Landry, LARPAC Chairwoman Marsha McGraw-Barbera, the Louisiana Real Estate Commission Commissioners and Executive Team, and the members of the Louisiana REALTORS® Legislative Committee for their leadership, guidance, resources and engagement throughout the session. We also extend a special thank you to those who attended this session’s REALTOR® Day and helped strengthen our presence at the Capitol. Your participation amplified our ability to advocate with one united voice when it mattered most. We further extend our appreciation to the legislators and partners who worked alongside us this session, including Rep. Troy Hebert, Rep. Kim Carver, House Commerce Chairman Daryl Deshotel, Rep. Delisha Boyd, Rep. Stephanie Hilferty, Rep. John Wyble, Sen. Beth Mizell, Sen. Greg Miller, Speaker Phillip DeVillier, Senate President Cameron Henry and Governor Jeff Landry for their leadership, accessibility and commitment to addressing issues impacting housing, property rights, insurance affordability, redevelopment and Louisiana’s economic future. Strong policy outcomes are only possible through collaboration, professionalism and sustained engagement. Louisiana REALTORS® remains grateful for the relationships and partnerships that helped move meaningful legislation across the finish line this year. Please view the session wrap-up tracking report provided by our lobbying team over at Harris, DeVille and Associates.
