La. Admin. Code tit. 7 § V-111

Current through Register Vol. 50, No. 11, November 20, 2024

Section V-111 - Disbursement of Market Commission Loan Proceeds and Market Commission Concurrence in Loan Guarantees

A. Prior to the setting of a date for the loan closing, the applicant must submit satisfactory proof that the facility, if new construction and/or additions to the existing facilities, has been completed in accordance with the plans submitted to the commission for its consideration of the loan application.

B. Prior to the setting of a date for the loan closing, the applicant must provide a copy of the note and the mortgage to be executed at the closing for examination and approval by the department attorney.

C. Prior to the setting of a date for the loan closing, the applicant must provide a copy of a plat survey by a registered surveyor, provided, however, that the department attorney is authorized to waive, in writing, provision of the survey, at his discretion.

D. Prior to the setting of a date for the loan closing, the applicant must provide evidence of adequate title insurance.

E. Prior to the setting of a date for the loan closing, the applicant must carry and provide evidence of the following insurance coverage:

1. public liability insurance of $500,000, naming the market commission as additional insured. The applicant must also provide a certificate evidencing such insurance, which certificate must provide that the insurance cannot be cancelled without 30 days prior notice to the State Market Commission;

2. fire and extended coverage and vandalism insurance to the full extent of the amount loaned or guaranteed by the market commission, naming the market commission as loss payee, the total amount of the insurance to meet the 80 percent co-insurance requirements. The applicant must also provide a certificate evidencing such insurance, which certificate must provide that the insurance cannot be cancelled without 30 days prior notice to the State Market Commission.

F. Prior to the setting of a date for the loan closing, the applicant must provide satisfactory proof that all materials suppliers and workmen have been fully paid.

G. Prior to the setting of a date for the loan closing, all legal instruments must be examined and approved by the department attorney.

H. On or before the loan closing date, the applicant must provide a title opinion by a title attorney selected in accordance with §113, which title opinion shall provide evidence of clear title and shall include, but not be limited to, the following:

1. a property description;

2. identification of the property owner, with pertinent recordation data;

3. satisfactory evidence that all taxes due on the property have been paid;

4. a full and complete list of all mortgages, liens, encumbrances, and/or servitudes on the property; and

5. such other information as may be necessary for a full recital of the facts surrounding such property.

I. On or before the loan closing date, the applicant must provide a mortgage certificate from the clerk of court for the parish in which the property is located.

J. On the loan closing date, in the case of direct loans or participation loans paid direct to the borrower, the borrower must execute a note secured by a first or second mortgage payable to the market commission setting forth in full the terms and conditions under which the loan will be repaid, and containing such endorsements as the market commission shall require.

K. On the loan closing date, in the case of direct loans or participation loans paid direct to the borrower, the borrower must execute a first or second mortgage payable to the market commission, which mortgage shall contain, but not necessarily be limited to, the following:

1. the amount loaned;

2. the rate of interest;

3. the repayment schedule;

4. description of real property and all equipment and/or furnishings to be included in the security;

5. provision for executory process;

6. provision for payment of all costs of foreclosure, including attorney's fees at 25 percent of the principal balance and interest accrued at foreclosure;

7. authorization for the addition to the principal balance of the amount of any taxes and/or insurance premiums paid by the market commission, upon failure of the mortgagee to pay such amounts when due, to protect the security position of the market commission.

L. On the loan closing date, in the case of participation loans the proceeds for which are paid direct to the bank or other lending institution, the borrower shall provide a participation certificate executed by the bank or other lending institution, payable to the State Market Commission, setting forth in full the terms and conditions under which the commission agrees to such participation, the security pledged for repayment, and the time within which the loan shall be liquidated.

M. On or before the loan closing date, in the case of a loan guaranty, the borrower must pay to the State Market Commission an amount equal to 1 percent of the amount guaranteed by the State Market Commission, which payment shall be deposited in the Market Loss Fund.

N. In the case of all direct loans and participation loans paid directly to the borrower, the individual borrower and/or all partners of a partnership shall personally endorse the note securing the first or second mortgage.

O. In the case of all direct loans and participation loans paid directly to the borrower, all members of the board of directors, by whatever name known, of the corporation or cooperative association shall personally endorse the note, in solido, securing the first or second mortgage.

P. In the case of a loan guaranty, the borrower must provide for the market commission file record a copy of the note and the mortgage payable to the lending institution and any other data deemed necessary by the market commission staff.

Q. The State Market Commission shall authorize the setting of a loan closing date and the disbursement of loan proceeds upon presentation of all information required in §111

R. The commissioner of agriculture, or his designee, as official representative of the State Market Commission, shall execute all necessary legal instruments at the loan closing.

S. The loan guaranty agreement shall be executed by the borrower, the lending institution, and the commissioner of agriculture, or his designee, as official representative of the State Market Commission.

La. Admin. Code tit. 7, § V-111

Promulgated by the Department of Agriculture, Market Commission, LR 6:254 (June 1980).

AUTHORITY NOTE: Promulgated in accordance with R.S. 3:407, R.S. 3:413 and R.S. 3:404.