Opinion ID: 509575
Heading Depth: 2
Heading Rank: 2

Heading: The effect of cancellation/release of the mortgages

Text: 21 Appellants state that in Louisiana, structures of a permanent nature are deemed an integral part of the real estate beneath them, and add, So too are insurance proceeds arising therefrom. They do not cite authority for the latter proposition, however, and case law in Louisiana clearly is to the contrary. Numerous Louisiana cases hold that a residential property insurance policy is a personal contract, and does not run with the land. See Eagle Star Insurance Co. v. General Accident, Fire & Life Assurance Corp., 315 So.2d 826, 828-29 (La.App.1975). Appellants' argument that the government's cancellation or release of its mortgages on the one-acre lot, at that time with no building on it, somehow also cancelled or released their obligation as to the insurance policy is, therefore, without merit. 22 Moreover, the terms of the cancellation specifically reserved the obligation secured by the mortgages and any property described in them other than that specifically released. The duty to insure for the benefit of FmHA was undoubtedly an obligation secured by the mortgages. The fact that the government permitted the Reeses to sell the one-acre lot on which the destroyed home had been situated and apply the proceeds of that sale against their continuing indebtedness to FmHA does not mean that the government forgave or cancelled the remainder of that debt. The home and the acre of land were security for the obligation; but the obligation existed apart from and independently of the security. We also reject appellants' contention that the government's acceptance of the $2,000 proceeds from the sale of their one-acre lot and its cancellation or release of the mortgages on that property constituted accord and satisfaction absolving them from their obligation to repay the remainder of their debt. 6 23 We conclude that the government's cancellation or partial release of the remaining mortgages on appellants' destroyed home and lot had no effect upon their obligation to repay the funds obtained as crop production loans. 24