Annuity Charge- A New Real Right

Posted on: October 31, 2013 | Posted in: News

The recently enacted legislation providing for the establishment of a charge on an immovable under an annuity contract was the topic of discussion on Wednesday, Oct. 30th at the Real Property Law Committee’s CLE program.  Committee Chair Bob Thibeaux (Sher Garner) hosted the presentation, entitled “Annuity Charge – A New Real Right.”  Historically, Mr. Thibeaux explained, the concept comes from the contractual regime known as rent of land.  However, rent of land has come to be functionally ineffective and has been repealed as part of the changes made to Title X of the Civil Code, which now solely governs annuities (La. C.C. Art. 2778 et seq.).  Instead, Louisiana has created a new real right called an annuity charge.  The annuity contract and charge are designed to provide a method for disposing of property now and receiving periodic payments over time that is preferable to a reverse mortgage.  However, as Mr. Thibeaux clarified, there may prove to be some practical challenges to this regime as well. For example: complex tax consequences, lesion, and the added complexity to transfer of title of the immovable property subject to the annuity contract.