## Facts

- Dr. Jeffrey S. Levine bought a Louisiana home in 1996 using a mortgage loan from First National Bank of Commerce (FNBC).
- The mortgage note included an OCC-approved due-on-sale clause allowing acceleration if Levine conveyed “title or any interest” in the property without the bank’s consent.
- In 1997, after moving out of state, Levine entered into a Louisiana bond-for-deed contract with Richard and Sandra Carrara without notifying or obtaining consent from FNBC.
- The Carraras received immediate, exclusive possession and made monthly payments to an escrow agent, which forwarded funds to satisfy Levine’s mortgage payments.
- The contract gave the Carraras enforceable rights to demand conveyance of title after completion of payments and satisfaction of the remaining mortgage balance.
- After learning of the bond-for-deed, FNBC treated it as a transfer triggering the due-on-sale clause and initiated foreclosure; Levine claimed no trigger occurred because legal title remained with him and payments were current.
- The trial court ruled for Levine and awarded him damages; the court of appeal largely affirmed. The Louisiana Supreme Court granted review to determine whether federal law required enforcement of the due-on-sale clause.

## Issues

1. Whether a Louisiana bond-for-deed transaction constitutes a transfer of an “interest” in real property that triggers a mortgage due-on-sale clause under federal law, despite contrary state-law limitations.
2. If the due-on-sale clause was properly triggered, whether damage awards against the bank for wrongful seizure/foreclosure efforts must be reversed.

## Decision

- The Louisiana Supreme Court held that the bond-for-deed transferred an “interest” in the property sufficient to trigger the due-on-sale clause.
- The Court held that federal law governing due-on-sale clauses preempted any state-law restrictions that would bar enforcement in these circumstances.
- Because the bank’s enforcement efforts were authorized, the Court reversed the judgment awarding damages to Levine based on wrongful seizure/foreclosure.

## Legal Principles

- Under the Garn–St. Germain Depository Institutions Act and related federal banking regulations, federally regulated lenders may enforce due-on-sale clauses upon the transfer of “any interest” in the secured property, subject only to limited statutory exceptions.
- A bond-for-deed that grants immediate and exclusive possession plus an enforceable right to obtain title (e.g., via specific performance) constitutes a substantial property interest, not merely a personal contractual right.
- State-law doctrines limiting due-on-sale enforcement based on continued payment or retention of record title cannot restrict federally authorized enforcement by a national bank.

## Conclusion

A bond-for-deed arrangement that transfers possession and enforceable rights to obtain title is a transfer of an “interest” triggering a federally governed due-on-sale clause; federal preemption required reversal of damages premised on wrongful foreclosure efforts.


Levine v. First Nat'l Bank of Com., 948 So. 2d 1051 (La. 2006)