Impact of the Executive Order (Legal Deadlines) on Purchase Agreements and Closing
Louisiana REALTORS • March 19, 2020
By: Patricia B. McMurray, JD and Patrick Willis, JD
Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
450 Laurel Street, 21st Floor, Baton Rouge, Louisiana 70801
1. DOES GOVERNOR EDWARD’S ORDER EXTEND DEADLINES IN REAL ESTATE CONTRACTS?
Short Answer: No, it does not appear to affect legal documents such as purchase agreements.
Governor Edward's Order dated March 16, 2020, Proclamation JBE 2020-30 includes suspension of certain legal deadlines. In suspending all deadlines in “legal proceedings... in all courts, administrative agencies, and boards...”, the order does not appear to specifically encompass closing deadlines contained in private contracts between private parties, such as purchase agreements.
Louisiana citizens may contract with one another, about all subjects which the law does not prohibit. Timelines and closing deadlines contained in purchase agreements represent terms of contracts which are freely negotiable between the parties to such contracts. The failure of parties to perform within such timeframes required in the contract may result in a default of the purchase agreement[2].
2. DOES THE MANDATORY LOUISIANA RESIDENTIAL AGREEMENT TO BUY OR SELL FORM PROVIDE AN AUTOMATIC EXTENSION OF THE CONTRACT DEADLINES BECAUSE OF THE PANDEMIC?
Short Answer: No, but BUYERS and SELLERS may want to consider an amendment to the Louisiana Residential Agreement to Buy or Sell. A sample amendment is provided. This sample form is not a mandatory form.
The Louisiana Residential Agreement to Buy or Sale (“Purchase Agreement”) form does not contain an Act of God or Fortuitous Event Clause which might provide an automatic extension. In the absence of such a provision, it is possible that the Purchase Agreement could be deemed in default upon the expiration of the deadline for closing, despite the occurrence of such disaster. Generally, there is no Louisiana law that specifically grants purchasers in private contracts an automatic extension of time to perform such obligations in the event of a pandemic or natural disaster. However, the parties may certainly agree in writing to extensions of deadlines in the Purchase Agreement. Also, additional government Orders or the concepts of equity may impact the granting of additional time to complete a transaction as further detailed below.
If the BUYER and SELLER are agreeable, an amendment of the Purchase Agreement could be signed. A sample amendment with several options BUYERS and SELLERS can consider is attached. An annotated version with explanation on using the form is also attached.
3. WHAT IS AN ACT OF GOD OR FORTUITOUS EVENT?
Short Answer: It is something that at the time the contract was made could not reasonably be foreseen.
Some contracts contain provisions specifying how the contract is to be completed in the event that an “Act of God” or fortuitous event, such as war, natural disasters or pandemics occur, which prohibits the parties from completing the transaction or the obligations pursuant to the contract. Louisiana Civil Code Article 1875 specifically defines a "fortuitous event" as "one that, at the time the contract was made, could not have been reasonably foreseen." These clauses in contracts are sometimes referred to as “force majeure” provisions. It is important to remember that each contract’s “force majeure” provision can be different and may be applied differently. Reviewing the precise language of the “force majeure” provision is critical to determining whether it excuses or delays performance of the contract.
Louisiana case law has recognized war, floods, hurricanes, and even gas explosions as fortuitous events. It has also recognized "disease" as a fortuitous event as well.[3] While a "pandemic" has not been explicitly stated to be a "fortuitous event" in any Louisiana case, it stands to reason the impact of Covid-19 and accompanying governmental orders will rise to that level.
4. IS THE PANDEMIC A FORTUITOUS EVENT THAT WILL DELAY THE OBLIGATIONS DUE UNDER THE PURCHASE AGREEMENT?
Short Answer: The pandemic may not automatically terminate or extend deadlines in any contracts existing before the pandemic began in Louisiana, absent specific provisions in a contract to the contrary.
Louisiana Civil Code Article 1873 provides:
- An obligor (such as BUYER or SELLER) is not liable for his failure to perform when it is caused by a fortuitous event that makes performance impossible.
- An obligor is, however, liable for his failure to perform when he has assumed the risk of such a fortuitous event
- An obligor is liable also when the fortuitous event occurred after he has been put in default.
- An obligor is likewise liable when the fortuitous event that caused his failure to perform has been preceded by his fault, without which the failure would not have occurred.
Impossibility of performance is a rare occurrence even when a fortuitous event has occurred. A fortuitous event prevents obligor from performing his or her obligation in a manner contemplated at the time of contracting, obligor must pursue reasonable alternatives to render performance in a different manner before obligor can take advantage of the defense of impossibility.[4] Therefore, the pandemic should not automatically terminate any existing contracts, absent specific provisions in a contract to the contrary.
One such difficulty that may surface is a party becoming too ill to attend a closing or execute documents. As in other cases where a person is or may become indisposed, one solution would be to have powers of attorney in place ahead of time.
5. WILL THE PANDEMIC, IF IT TEMPORARILY PREVENTS THE PERFORMANCE OF CONTRACT ONLY TEMPORARILY EXTEND THE DEADLINES IN THE CONTRACT?
Short Answer: Maybe, it depends on the facts and the circumstances in the parish at the time.
The Civil Code does not directly address when a “fortuitous events” suspends the performance of contracts, but the Attorney General, following Hurricanes Katrina and Rita, issued an opinion to the effect that:
"As a general rule when fortuitous events … prevent timely performance of an obligation but do not make that performance impossible in an absolute sense, performance may be suspended for as long as the fortuitous event prevents it; an obligee must give reasonable written notice of the intention to demand performance after the fortuitous event to trigger abatement of the suspensive period."[5]
Thus, the argument is that the recent pandemic constitutes a fortuitous event sufficient to temporarily suspend a buyer’s performance under the terms of an otherwise valid purchase agreement. Upon the termination of the impediment, it is arguable the law would require the obligation to be satisfied as originally contemplated by the parties. This analysis and outcome of the delay requested will depend upon the facts of each transaction. Some BUYERS and SELLERS may be able to close in some Parishes. In other Parishes, if for example the Clerk of Court is closed for an extended period of time, this may not be possible.
Further, Louisiana law contains provisions such as Louisiana Civil Code Articles 2054 and 2055 that address “equity” in contracts, which is based on the principles “that no one is allowed to enrich himself unjustly at the expense of another.” These types of principles might also be applied by a Court in determining whether the performance of a contract is due, suspended, or impossible.
DISCLAIMER
Information and additional guidance and orders regarding the pandemic are being issued daily. The information is the article was last updated on March 19, 2020 at 10:30 a.m.
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] Information and additional guidance and orders regarding the pandemic are being issued daily. The information is the article was last updated on March 19, 2020 at 10:30 a.m.
[2] See Louisiana Civil Code Article 2017.
[3] Strickland v. Winn, 4 La. App. 8, 8 (1926).
[4] Schenck v. Capri Const. Co., App. 4 Cir.1967, 194 So.2d 378. Payne v. Hurwitz, App. 1 Cir.2008, 978 So.2d 1000, 2007-0081 (La.App. 1 Cir. 1/16/08).
[5] Op.Atty.Gen., No. 05-0359 (November 10, 2005).
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Week seven of the 2026 Regular Session was one of the most active weeks yet for legislation affecting the real estate industry. Louisiana REALTORS® remained heavily engaged as lawmakers advanced bills dealing with property disclosures, appraiser liability, rent regulation, insurance, blight, redevelopment and other issues that directly affect real estate professionals, property owners and consumers across the state. One of the most important bills this week was HB 1166 by Rep. Kim Carver , which would require disclosures for vacant residential property. The bill was reported from House Commerce with amendments on a 14-0 vote and then amended on the House floor, ordered engrossed, and passed to third reading. Louisiana REALTORS® testified on the bill in committee and worked closely with the author to better posture the legislation. Amendments advanced by our team were accepted by the author, helping improve the bill while preserving a practical disclosure framework that increases transparency without creating unnecessary confusion in the transaction process. Another closely watched issue this week was consumer-fee disclosure legislation. HB 617 by Rep. Mandie Landry moved this week, advancing from House Commerce and then the House floor, while HB 580 , another hidden-fee disclosure bill touching real estate transactions, remains pending. Louisiana REALTORS® is opposed to these measures in their current form to the extent they apply to real estate professionals because they are not well-tailored to the realities of real estate transactions, where many costs are negotiated, variable or controlled by third parties. Louisiana REALTORS® testified in opposition to the bills we oppose and is actively working with the author to better posture the legislation and remove real estate professionals from its scope altogether. On HB 472 by Rep. Alonzo Knox , the rent stabilization bill, the author is expected to try to bring the measure back before the committee next week with amendments. Even so, Louisiana REALTORS® remain opposed to the bill on principle. Price gouging is already illegal under existing law, and government-imposed rent regulation is not the right answer to housing affordability challenges. Louisiana REALTORS® testified in opposition to the bill and continues to oppose the measure because policies like this risk discouraging investment, reducing housing supply, and creating further market distortions rather than solving the underlying problem. HB 468 by Rep. Troy Hebert , which regulates the wholesale of residential real property, remains pending in the Senate Commerce Committee and continues to be an important bill for the industry. Likewise, HB 1027 by Rep. Troy Hebert , dealing with appraiser liability, had a strong week, passing the House 90-0 and moving to the Senate. Both measures are significant because they promote greater clarity, consumer protection and confidence in the real estate marketplace. Blight and redevelopment issues also remained active. HB 284 by Rep. John Wyble , which would allow certain local governments to expropriate blighted property through a declaration-of-taking process, remains subject to call and continues to raise serious concerns about private property rights. By contrast, HB 214 and HB 217 by Rep. Chance Henry , which create tax incentives for the rehabilitation of blighted property, represent a more constructive redevelopment approach by encouraging reinvestment rather than expanding government taking authority. Insurance legislation also remained a major focus this week, with multiple bills heard that could affect homeownership costs, market stability and post-storm recovery. Measures dealing with Louisiana Citizens assessments, pre-suit insurance claim review, the Fortified Homes Program and insurance market transparency all carry real implications for affordability and transaction viability. In Louisiana, insurance remains one of the most important issues affecting the real estate market, and Louisiana REALTORS® continues to closely track that legislation. Taken together, week seven showed that Louisiana REALTORS® remains actively engaged where it matters most: supporting practical transaction standards, protecting private property rights, testifying for and against legislation when necessary, pushing back on unworkable regulation and rent-control-style policies, and advancing policies that strengthen housing opportunity and market stability across Louisiana. Please view the weekly bill tracking report provided by our lobbying team over at Harris, DeVille and Associates.
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