SB 77 — LEASES: Provides for effects of leases of movable property. (8/1/26)

words in boldface type and underscored are additions.

SB NO.

77 ENROLLED the parties." Moreover, under U.C.C.

(d)ThisArticlerequires"actualdelivery"ofthemovabletothelesseeforthe leasetobeeffectiveagainst third persons."Actualdelivery,"whichoccurswhenthepersons. movable is physically handed over to the lessee, is contrasted with "constructive delivery,"whichoccurswhenthetransferofpossessionisnot physicalbut isinstead symbolizedbyotheractionsoragreements,suchashandingoverthekeytotheplace wheretheitemisstored,negotiatingadocumentoftitle,orevenbythemereconsent of the parties if the thing cannot be transported at the time of the lease.

"Actual delivery," whichoccurswhenthe movable is physically handed over to the lessee, is contrasted with "constructive delivery,"whichoccurswhenthetransferofpossession is not physicalbutisinstead symbolizedbyotheractionsoragreements,suchashandingoverthekeytotheplace wheretheitemisstored,negotiatingadocumentoftitle,orevenbythemereconsent of the parties if the thing cannot be transported at the time of the lease.

(e)Theeffectivenessoftheleaseagainst thirdpersonsisdependentuponthethird personsisdependentuponthe lessee's good faith.

For example, in the caseof successiveleases, aasubsequent subsequent lease is enforceable against the first lessee if the subsequent lessee takes actual delivery first in time and is in good faith.

(f) Under this Article, the effectiveness of the lease against third persons ceases when the thing is returned to the lessor, whether voluntarilyorvoluntarily or involuntarily.

If, for example, the lessee temporarilytemporarilyreturns returns the movable to the lessor for repairs, and, while the thing is in the possession of the lessor, the lessor enters into a new lease with a subsequent lessee in good faith to whom the lessor actuallydelivers the leased movable, the subsequent lessee takes the movable free of the existing lease.

Section 2A-304(2) provides that when the leasedgoods are"entrusted"to thelessor,the lessor, a subsequent lessee in thetheordinarycourse ordinarycourse ofbusinessfromthelessorobtainsthegoodsfreeoftheexistingcontractifthelessor was a merchantdealingin goods ofthatkind.of thatkind.

SectionSection2-403provides 2-403for providesthe forsame result if the Pagelessor, 4having ofbeen 9"entrusted" Coding:with the goods during the lease, sells them to a third person.

WordsBy whichcontrast, areunder struckthis throughArticle, area deletionssubsequent fromlessee or transferee of a lessor to whom the thing has been returned acquires the thing free of the existing law;lease regardless of whether the lessor is a merchant and irrespective of whether the subsequent transfer was made in the regular course of the lessor's business.

wordsTherulesetforthinthisArticleapplieswhetherthethingisreturnedto inthe boldfacelessororthelessor'ssuccessor.Inthiscontext,"successor"hasthemeaningprovided typein andArticle underscored3506. are additions.

SLS(g) 26RS-291This ENGROSSEDArticle SBalone NO.does not address all possible disputes that may arise betweenalesseeofacorporealmovableandathirdpersontothelease.Forexample, to resolvecontestsbetweenalesseeanda transfereeof thesamecorporealmovable, this Article must be read in pari materia with Article 518, which provides that the transferofownershipofacorporealmovabletakes place against third personswhen thepossessionofthemovableisdeliveredtothetransferee,andifpossessionhasnot yet been delivered, then a subsequent transferee in good faith to whom possession is delivered acquires ownership.

77 same result if the lessor, having been "entrusted" with the goods during the lease, sells them to a third person.

By contrast, under this Article, a subsequent lessee or transferee of a lessor to whom the thing has been returned acquires the thing free of the existing lease regardless of whether the lessor is a merchant and irrespective of whether the subsequent transfer was made in the regular course of the lessor's business.Therulesetforthin this Articleapplieswhetherthethingisreturnedtothe lessororthelessor'ssuccessor.Inthiscontext,"successor"hasthemeaningprovided in Article 3506.

(g) This Article alone does not address all possible disputes that may arise betweenalesseeofacorporealmovableandathirdpersontothelease.Forexample, to resolvecontestsbetweenalesseeandatransfereeof the same corporealmovable, this Article must be read in pari materia with Article 518, which provides that the transferofownershipofacorporealmovable takes place against third personswhen thepossessionofthemovableisdeliveredtothetransferee,andifpossessionhasnot yet been delivered, then a subsequent transferee in good faith to whom possession is delivered acquires ownership.

Contests may also arise betweenthe lessee and a third person who claims a right in the thing byvirtue of the dissolution, simulation, or nullity of the contract by which the lessor obtained the thing.Page 4 of 7 Coding:

Words which are struck through are deletions from existing law;

words in boldface type and underscored are additions.

SB NO.

77 ENROLLED thing.

This Article combines former Articles2711 and2712 tomakeclearthattheprinciplestatedinthesecondsentenceto ofmakeclearthattheprinciplestatedinthesecondsentence formerArticleofformerArticle2712 2712appliesequallyto appliesmovablesand equallytomovablesandimmovables.immovables.

AsunderpriorAs under prior law, the transfer of the leased thing does not terminate the lease, which continues to have effects between the lessor and lessee.

This is consistent with the principle that "[a] lease of a thing that does not belong to the lessor may nevertheless be binding on the parties,"parties,"Article Article 2674, and that "ownership of the thingbythething bythe lessor is not an essential element of the contract of lease." Id., cmt.

(b)Following a transferof a leasedthing,thelesseehasanactionagainst the lessor for anylossany loss that the lessee sustains as a result of the transfer.

For example, if the lease was not enforceableagainst third personsatthepersons timeatthetime ofthetransferand the lessortransferstheleasedthingtoapersonwhoexercisestherighttoevictthelessee before the end of the transferandterm, the Pagelessor 5has offailed 9to Coding:perform obligations under the warrantyof peaceful possession.

Words which are struck through are deletions from existing law;

words in boldface type and underscored are additions.

SLS 26RS-291 ENGROSSED SB NO.

77 lessortransferstheleasedthingtoapersonwhoexercisestherighttoevictthelessee before the end of the term, the lessor has failed to perform obligations under the warrantyof peaceful possession.

ThePage transferee5 of a7 thingCoding: that is subject to a lease is not legally subrogated to the rights of his transferor and is not personally bound by the transferor's obligations under the lease unless the transferee assumes them.

Words which are struck through are deletions from existing law;

words in boldface type and underscored are additions.

SB NO.

77 ENROLLED The transferee of a thing that is subject to a lease is not legally subrogated to the rights of his transferor and is not personally bound by the transferor's obligations under the lease unless the transferee assumes them.

In all other respects, a provision that Pageprohibits 6subleasing, the lessee of 9an Coding:immovable from assigning, or encumbering, or subleasing is to be strictly construed against the lessor.

Words which are struck through are deletions from existing law;

words in boldface type and underscored are additions.

SLS 26RS-291 ENGROSSED SB NO.

77 prohibits subleasing, the lessee of an immovable from assigning, or encumbering, or subleasing is to be strictly construed against the lessor.

Art.Page 6 of 7 Coding:

Words which are struck through are deletions from existing law;

words in boldface type and underscored are additions.

SB NO.

77 ENROLLED Art.

Revision Comments – 2026 (a) This Article restates a principle that has long been recognized in the LouisianaLouisianajurisprudence.See jurisprudence.See Standard Oil Co.

ofLouisianav.Joy,150So.of Louisiana v.Joy,150So.443(La.

443 (La.

"[A] buyerbuyerorsublessee or sublessee from the lessee of goods underanexistingleasecontractobtains,under an existing leasecontractobtains, to the extent of the interest transferred, the leasehold interest in the goods that the lessee had or had power to transfer, and…takes subject to the existing lease contract." (b) As an exception to the general rule found in this Article, Article 2674 allows a good faith sublessee of a corporeal movable to acquire greater rights than those provided bythe prime lease under the limited circumstances described in that article.Thisexceptionisdesignedtoprotecttherightsofasublesseewhoreasonably andhonestlybelieves that the person with whom he is dealingis not restrictedinrestrictedinhis his power to lease the movable.

First, this Article must be read in pari materia with Article 2681.2, under which a sublease, like any lease, has effect against third persons, including the prime lessor, upon actualactualdeliveryofthe deliveryofmovable themovabletoto thesublesseeinthe sublesseein good faith.

InIncasesofdissolution, cases of dissolution, simulation, or nullity of the contract bywhichby which the sublessor obtained the thing, this Article must also be read in pari materia with Articles 2021, 2028, and 2035.

Thus, if the sublessor's lessor annuls the prime lease on grounds of fraud or error, the sublease Pageremains 7effective ofif 9the Coding:sublessee took deliveryof the thing in good faith before the primeleasewasdeclarednull.ThisresultisconsistentwiththeUniformCommercial Code, according to which a sublessor with a "voidable leasehold interest" has the power to transfera good leasehold interest to a "good faithsublessee for value."See U.C.C.

Words which are struck through are deletions from existing law;

words in boldface type and underscored are additions.

SLS 26RS-291 ENGROSSED SB NO.

77 remains effective if the sublessee took deliveryof the thing in good faith before the primeleasewasdeclarednull.ThisresultisconsistentwiththeUniformCommercial Code, according to which a sublessor with a "voidable leasehold interest" has the power to transfera good leasehold interest to a "good faithsublessee for value."See U.C.C.

ThePRESIDENT originalOF instrumentTHE andSENATE theSPEAKER followingOF digest,THE whichHOUSE constitutesOF noREPRESENTATIVES partGOVERNOR ofOF theTHE legislativeSTATE instrument,OF wereLOUISIANA preparedAPPROVED: by Senate Legislative Services.

ThePage keyword,7 summary, and digest do not constitute part of the7 lawCoding: or proof or indicia of legislative intent.

[R.S.

1:13(B) and 24:177(E)] DIGEST SB 77 Engrossed 2026 Regular Session Miller Presentlaw(C.C.Art.2674)providesforeffectsofleasesbynonownersbetweentheparties to the lease.

Proposed law retains present law and provides for circumstances under which leases of goods by nonowners have effect against the owner of the goods.

Presentlaw(C.C.

Art.2681)provides form requirementsfor leasesandprovidesthatleases of immovables have effect against third persons upon being filed for registry.

Proposed law (C.C.

Arts.

2681 and 2681.1) retains and restructures present law.

Proposed law (C.C.

Art.

2681.2) provides that leases of goods have effect against third personsupondelivery.Proposedlawalsoprovidesforthecessationofthiseffectuponreturn of the goods.

Present law (C.C.

Art.

2711) provides that the transfer of a leased thing by the lessor does not terminate the lease unless the parties have agreed to the contrary.

Present law (C.C.

Art.

2712) provides that the transferee of an immovable subject to an unrecorded lease is not bound by the obligations of the transferor under the lease.

Present law also provides that the lessor is liable to a lessee who has sustained a loss as a result of such a transfer, unless the parties have agreed to the contrary.

Proposed law (C.C.

Arts.

2711 and 2712) retains, clarifies, and restructures present law.

Present law (C.C.

Art.

2713) provides that a lessee has the right to sublease or to assign or encumber the lessee's rights in the lease, unless prohibited by the terms of the lease.

Proposed law retains present law and clarifies that the right to assign or encumber lease rights applies to the lessor in addition to the lessee.

Present law (C.C.

Art.

2713) provides that a lease term prohibiting sublease or assignment or encumbrance of the lessee's rights in the lease is deemed to prohibit all of these transactions,unlessacontraryintentisexpressed.Presentlawalsoprovidesthataleaseterm containing such a prohibition is to be strictly construed against the lessor.

Proposed law limits the applicability of present law to leases of immovables.

Proposed law (C.C.

Art.

2713.1) clarifies that a sublessee or a person to whom a lessee assigns the lessee's rights in the lease acquires no greater rights than the lessee, except as otherwise provided by legislation.

Page 8 of 9 Coding:

Words which are struck through are deletions from existing law;

words in boldface type and underscored are additions.

SLS 26RS-291 ENGROSSED SB NO.

77 Effective August 1, 2026.

(AmendsC.C.Arts.2674,2681,2711,2712,and2713;

addsC.C.

Arts.2681.1,2681.2,and 2713.1) Page 9 of 9 Coding: