Opening the Can of Worms and Putting Them Back in: An Analysis of New Louisiana Civil Code Article 2695

• Author: Brad R. Resweber
• Pages: 571-598

Opening the Can of Worms and Putting Them Back in: An Analysis of New Louisiana Civil Code Article 2695¹

Page 571

Introduction

The lessee-lessor relationship is one of the most common juridical relationships known to the law. As such, one would expect the law to clearly define the parameters of this relationship and to detail the rights and obligations of the parties thereto. Unfortunately, Louisiana's law of property and lease does virtually nothing to address one of the most fundamental concerns of these contracting parties-constructions or improvements the lessee makes on land during the lease term.

Suppose, for example, a lessee builds a house and swimming pool on land belonging to the lessor. Suppose further that the lessee decides that he does not want an above-ground pool, but also does not want to pay the cost of installing a concrete pool. So, the lessee decides to dig a hole himself, buy an above-ground pool, and put it in the hole. What happens at the end of the lease? Under Louisiana's law of lease prior to 2005, there was no clear answer to questions such as who owns the pool, whether the landowner must pay the lessee for the pool, or whether the landowner could demand that the lessee remove the pool.

What happens to the house constructed by a lessee on leased premises? Must it be torn down, and if so, at whose expense? May it remain? If so, must the landowner pay the lessee for the increased value of the land due to the construction of the house? Under Louisiana's law of lease prior to 2005, the lessee owns the house and has the right to remove it.² If the lessee does not remove it, the landowner may either become the owner of thePage 572 house or let it stay on his land without becoming the owner.³ Is this not an unfair result for unsightly and unwanted constructions? Should the landowner be forced to keep such items on his land?

These issues were exceptionally problematic when the landowner did not consent to the lessee's construction of the house. According to Louisiana's law of lease prior to 2005, the unconsenting landowner owns the house and owes nothing to the lessee.⁴ Is it not unfair to the lessee to provide no measure of reimbursement for his legitimate expenses in constructing this improvement, which may be quite substantial? Is forcing a landowner to own a construction he does not desire a sufficient remedy to the problem?

Louisiana's law of lease prior to 2005 created these and other troubling issues with respect to the resolution of landlord-tenant construction disputes. However, after a ten-year revision process, the Louisiana Law Institute recently completed a comprehensive revision of the Civil Code's law of lease. The lease revision was adopted during the 2004 legislative session and became effective January 1, 2005.⁵ This comment focuses on one particular change made by the new Louisiana Civil Code articles on lease. In particular, it will analyze new article 2695 addressing attachments, additions, or other improvements to leased things.⁶

Prior to the 2005 revision, improvements to leased things were regulated solely by cross-reference to the general accession code articles in the Property section of the Louisiana Civil Code.⁷ This cross-reference created a number of gaps in the Code andPage 573 incorporated "numerous deficiencies and inequities" of the law of accession into the law of lease.⁸ Those demonstrated in the opening hypothetical give just a small glimpse of the problem.

This comment compares pre-revision Louisiana Civil Code article 2726, dealing with improvements made to leased property by cross-reference to the law of accession, with its replacement, article 2695. Part I explores the gaps and inequities of the pre- revision cross-reference to the law of accession. Part II considers whether the 2005 lease revision and creation of new article 2695 solves those problems, and notes some new, and likely unforeseen, problems created by the new article.

I The Pre-revision Law of Lease: Chaos Created by Cross-reference to the Law of Accession

To appreciate the extent to which the revised law of lease solves the problems of constructions made to leased property, it is necessary to examine the rules from which the Lease Committee expressly chose to depart. Again, prior to 2005, cross-reference made general law of accession the Louisiana law of lease regarding improvements made to leased property as well.⁹

A Accession in General

The Louisiana Civil Code's lynchpin article on accession provides that "[t]he ownership of a thing includes by accession the ownership of everything that it produces or is united with it, either naturally or artificially."¹⁰ Consider, for example, the situation where a lessee constructs a building on the land of the lessor. The law of accession provides the rules for what happens now that the building and land are united. The laws on accession control both ownership (who owns the building) and remedies (what rights the landowner has to remove the building from his land, as well asPage 574 what rights the builder has to either remove it or be compensated for his expenses).¹¹ The following sections explore the ownership and remedial rules of accession, with particular emphasis on the flaws of the articles as applied in the lease context.

B The Accession Articles' Rules of Ownership

Who owns an improvement will depend on two fundamental questions. First, is it even possible for an improvement to be owned separately from the underlying immovable? Second, if it is possible, which types of improvements are capable of being owned separately?

1. Is Separate Ownership Possible?

Historically, if a person constructed a building or planted crops on another's land, there was no question that the new thing belonged to the owner of the ground.¹² In Roman law and in the Louisiana Civil Code of 1870, component parts of a tract of land could not be owned by someone other than the owner of the ground.¹³

Gradually, however, jurisprudence and legislation changed.¹⁴

Courts began by recognizing that standing crops and timber could be owned by someone other than the owner of the ground.¹⁵ Now, the Louisiana Civil Code recognizes that "buildings, other constructions permanently attached to the ground, standing timber, and unharvested crops or ungathered fruits of trees" may belong to a person other than the owner of the ground.¹⁶ Not all "constructions" may be separately owned, though. Some constructions, such as things "incorporated into a tract of land, a building, or other construction, so as to become an integral part ofPage 575 it,"¹⁷ are still subject to the old Roman rule and may not be owned separately from the ground.¹⁸

2. Distinguishing Between Things That Can Be Owned Separately and Things That Cannot

Obviously, determining whether an improvement falls within the category of things that can be owned separately from the ground, or within the category that cannot, is a prerequisite to determining ownership of the improvement. However, in the case of constructions attached to the ground, this is an especially challenging task because the categories overlap.

Ownership of an improvement is governed by either Louisiana Civil Code article 493 or 493.1, depending on what type of thing is united with the underlying immovable. Article 493 covers the things that are capable of being owned separately from the ground.¹⁹ Within this category, ownership depends on the consent of the landowner.²⁰ If these constructions are made without the landowner's consent, they belong to the landowner.²¹ If, however, they are made with the landowner's consent, they belong to the maker.²²

Article 493.1, on the other hand, covers things that are not capable of being owned separately from the ground.²³ ThesePage 576 things are owned by the landowner regardless of his consent because they are incapable of separate ownership.

Recall, for example, the opening hypothetical. Should the underground swimming pool be treated under article 493 or 493.1? Is it an "other construction permanently attached to the ground" or a thing so incorporated into a tract of land as to become an "integral part" of it? If it is the former, the lessee owns the pool because the landowner consented to its addition to the land. If it is the latter, the landowner owns the pool. Under the current legislation, there is no way to determine whether the pool is "permanently attached" to or an "integral part" of the ground, and thus no way to know who owns it.

This overlap has been noted by a number of legal scholars, and Louisiana courts have provided little help in defining the parameters of the two articles.²⁴ Often courts simply assume the thing falls into one category or the other and move on with little or no analysis. For instance, wood pilings,²⁵ oil well casings,²⁶ underground pipelines,²⁷ permanent billboards,²⁸ and underground drainage systems²⁹ have all been assumed to be...