The Birth of a Real Right: An Overview and Analysis of the Recent Revision of Book III, Title X of the Civil Code

AuthorBradley Schwab
PositionUniversity of New Orleans
Pages821-848
The Birth of a Real Right: An Overview and Analysis
of the Recent Revision of Book III, Title X of the Civil
Code
Bradley Schwab
TABLE OF CONTENTS
I. Introduction ....................................................................822
II. Revisions to Chapter 1 of Title X, Book III: The
New and Improved Annuity Contract ............................823
A. Expanded Definition of Annuity Contract (Article
2778) ........................................................................823
B. Designated Recipients of Annuity Payments
(Articles 2780, 2784, 2785, 2786) ...........................825
1. Annuity Contracts with a Single Designated
Recipient ............................................................825
2. Annuity Contracts with More Than One
Designated Recipient ..........................................827
C. Limits on the Contractual Duration of Payments
Due Under Annuity Contracts
(Articles 2781, 2783) ...............................................828
1. Term and Life Annuities ....................................828
2. Availability of Perpetual Annuities ...................830
D. Annuity Contracts That Fail to Provide a
Designated Term (Article 2782) ..............................831
1. Defining Without Effect .....................................832
2. Seeking a Justification for the Juridical
Discrimination ....................................................834
E. Default Rules When No Title X Rule Applies
(Article 2779) ...........................................................835
III. Revisions to Chapter 2 of Title X, Book III:
Creation of the Annuity Charge .....................................838
A. General Characteristics of the Annuity Charge
as a Real Right .........................................................841
Copyright 2013, by BRADLEY SCHWAB.
J.D. 2013, Tulane University School of Law; M.S., 2010, University of
New Orleans. B.S., 2009, Louisiana State University. I would like to thank
Professor A. N. Yiannopoulos for his invaluable guidance over the past two
years; Professor Ron Scalise for his remarkable tolerance of my tendency to
overuse his open door policy; the editorial staff of the Louisiana Law Review for
its tireless efforts to improve the quality of this Article; and my loving girlfriend,
Emma, for her enduring patience and support.
822 LOUISIANA LAW REVIEW [Vol. 73
B. Limits on the Duration of the Annuity Charge ........842
C. Enforcement of the Annuity Charge ........................843
IV. The Need for the Revision: The Reverse Mortgage
Problem ..........................................................................841
V. Ancillary Financial Benefits of the Annuity Charge
Contract ..........................................................................844
A. Bankruptcy Protection .............................................844
B. Medicaid Benefits ....................................................846
VI. Conclusion .....................................................................847
I. INTRODUCTION
On January 1, 2013, Act 258 of the 2012 Regular Session of
the Louisiana Legislature acquired the force of law. This
legislation, which came on the heels of over two years’ work by
the Louisiana Law Institute’s Rent of Lands and Annuities
Committee,1 contained a comprehensive revision of the articles in
Title X, Book III, of the Civil Code. Specifically, Act 258
completely repealed the prior Civil Code articles governing rents
and annuities2 and replaced them with revised articles 2778
through 2789 governing annuities. These new provisions embody a
number of fundamental changes in Louisiana property law, most
notably the creation of a new real right—the annuity charge.
This Article provides a first look at the newly revised articles in
Title X, Book III, of the Civil Code. Parts II and III closely examine
revised Chapters 1 and 2 pertaining to the annuity contract and the
annuity charge respectively. These Parts aim to provide practitioners
with a simplified outline of these new provisions, to resolve any
latent ambiguities possibly concealed within their terms, and to
highlight any potential problems that they may pose with respect to
other Civil Code articles. Part IV surveys the likely beneficiaries of
this new legislation in light of the limited alternatives that
preexisted its enactment. Finally, Part V briefly discusses some
economic benefits that these new articles may create.
1. Pursuant to its charter, a principal functio n of the Louisiana Law Institute
is “[t]o recommend the repeal of obsolete articles in the Civil Code and Code of
Civil Procedure and to suggest needed amendments, additions, and repeals.” LA.
REV. STAT. ANN. § 24:204(A)(8) (2007).
2. LA. CIV. CODE arts. 2778–2792 (2012).

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