Talking Title

Do You Have A Question?

2008-09-03T12:30:00.001-05:00

If you have a question pertaining to real estate title insurance or transaction closings, click on "comment" below and post your question. You may have a question regarding the closing process if you are a buyer, seller, or Realtor. Our attorney will post a reply to you here on the blog site. There are postings currently available below and more can be accessed from the column on the right.

Affadavit of Heirship

2008-09-03T12:22:00.002-05:00

Question: Why would my mother want me to sign an affadavit of heirship to be able to sell the house my deceased step-father owned? They were married for 27 years (until he passed last April). Now she wants to sell, but says I have to sign this form.

Answer: Your stepfather owned a house in which your mother had no legal interest. He died in April, and your mother now requests that you sign an affidavit of heirship on his life. This indicates that he died without leaving a written will, but not necessarily. If the document is an affidavit of heirship, she simply wants you to verify certain facts about your stepfather's life history, although you are under no obligation to do so. Before I could answer further, I would need to have all the facts. As I do most often, I recommend that you have an attorney or some knowledgeable person explain your specific situation. Perhaps then you can understand the nature of your mother's request.

PrePrinted Forms

2008-08-28T15:43:00.003-05:00

Question: I purchased an acre of land, and there is a clear deed. Is there a form at an office supply that you can suggest I use to take to the records building, without having to go through a title company?

Answer: The subject of office supply real estate forms still comes up from time to time. Early in my career title companies, attorneys and others used preprinted real estate forms almost exclusively. Such forms were published by the Steck Company, Odee Publishing and others. State Bar promulgated real estate forms were initially preprinted. About 20 years ago, with the advent of sophisticated computers and word processors, preprinted legal forms all but disappeared from the scene.

To answer your question, for the above reasons I have no preprinted forms to suggest. I would also point out that preparation of real estate documents is a learned craft far more involved than just completing preprinted forms. My best recommendation is for you to acquire the requisite skills to correctly prepare these documents, or find someone who is adequately able to assist you.

Forclosure Property With A Lien

2008-08-15T11:41:00.000-05:00

Question: I recently purchased a sheriff's deed property at a county auction. I believe there may be a lien on the property, and I have done some searching at the court house and found some documents pertaining to a lien on the property. Is there any way I could get a title or title insurance on this property, and if not what are my options regarding extinguishing the lien or disposing of it?

Answer: I assume the county auction to which you refer was a tax foreclosure sale. Generally speaking, foreclosure of an ad valorem tax lien extinguishes all other liens created under state law, even if they are prior. Since you own the property from time of sale upon recording your deed, there is no title insurance available to retroactively cover any liens. For this situation I recommend that you obtain a complete title search on the property, locate and determine potential liens and consult someone knowledgeable about this problem. For example, you may not even have a lien, or if you do you can pay it off, wait for it to be barred by limitations or take other steps to release, minimize or remove it.

Foreclosure Purchase Lost

2008-07-29T13:22:00.003-05:00

Question: I took a property at the county foreclosure sale. The owner, a 501c3, filed bankruptcy 15 minutes prior to the sale. The deed was filed just after the sale. We are now in bankruptcy court. I have not asked for the money back from the bank. I want the property. Is there any way I can wait through the bankruptcy proceedings and end up with a valid title or am I going to have to request my money back and go through the sale again?

Answer: Section 362 of the U. S. Bankruptcy Code creates the "automatic stay" at the very moment the bankruptcy petition is stamped and filed. The stay then prohibits any creditor action to seize property, enforce liens, conduct foreclosures or in any way disturb the status quo of the debtor's estate. Any enforcement efforts made after filing are voidable, even when unaware of the filing. Anyone who knowingly violates the automatic stay can be found in contempt. Such is the power and far reaching effect of the automatic stay.

In your instance, while you were bidding on property at foreclosure, the owner was a few miles away filing a bankruptcy petition just minutes before the sale. You then recorded the foreclosure deed and thereafter became aware of the bankruptcy. Since your title is now clouded, you must do something to correct the problem caused by the filing.

The bankruptcy courts frown on last minute filings, especially when filed on the eve of foreclosure to avoid or neutralize a sale. This is especially true of single asset entities. If the foreclosure sale was otherwise valid and without question, the most common remedy is to promptly file a motion to validate the foreclosure sale ab initio (from the beginning) in the proceedings. The motion can be filed by the foreclosing creditor, the bidder at sale, or preferably both. If the court grants this relief, a certified copy of the court's order filed of record will correct the title problem.

If this remedy is not sought, or if not granted, then the foreclosure is voided and the automatic stay returns the parties to the status quo prior to the sale, i.e., the bank is again the secured creditor, the debtor is in default (although protected by the bankruptcy), and the foreclosure purchaser is entitled to a return of his funds. When the bankruptcy ends, or if the stay is lifted, then a new sale can take place with possibly a new bid price and bidder. Alternatively, you might possibly buy the property from the debtor or trustee in the bankruptcy proceedings.

This scenario is a prime example of the risk one takes when buying property at a foreclosure sale. The more paid at sale, the greater the risk. Needless to mention, you need a competent bankruptcy lawyer to guide you in this situation.

Roofing Dispute

2008-07-28T09:56:00.004-05:00

Question: I installed a new roof using casual labor on my home. I then marketed the home with a "new" roof. After the home sold and closed I received a call from my real estate agent telling me that the buyer was experiencing a leak in the new roof. I sent my casual labor over to repair it. Now the gentleman wasn't happy with the labor performed and is insisting that I replace the roof with a roofing company. What is my obligation to him?

Answer: I am unfamiliar with the term "casual labor" which suggests work performed by someone who has rudimentary skills such as an inexperienced day laborer. In this instance "casual labor" would mean an ordinary handyman installing a roof instead of a roofing company willing to guarantee the installation and/or materials. I realize that expertise can be relative and very subjective. A day laborer can be capable of excellent craftsmanship, and this is where the complications begin.

Even more troublesome is the term "new roof" which has different meanings. A "new roof" could be one installed today, or installed a few years ago that is as functional now as it was on the day of installation. This term should be avoided in favor of a statement that a roof was installed on a particular day or month or in a certain year, a more accurate representation. While this is a fertile source of litigation, in your case the age of the roof appears not in dispute.

Generally speaking, one cannot be compelled to replace an installed product such as a roof unless it is totally worthless and there is no other remedy. To do so would involve unreasonable economic waste. In your situation, presumably the buyer inspected, or had ample opportunity to inspect, the roof and was satisfied or at least accepted it. At this juncture I would hesitate to have a company install a new roof at your expense, unless in your estimation the job is truly botched beyond correction.

In the event the buyer's complaint does not go away on its own, you may receive an attorney's letter under the Texas Deceptive Trade Practices Act making demand upon you to cure the defect or otherwise settle. You will then have a 60 day window to cure, or attempt to cure the problem, or make a monetary offer in settlement, or a combination of these alternatives. Your willingness to attempt settlement cannot keep the buyer from suing you for misrepresentations, etc., but it can prevent treble damages from being assessed against you under the Act.

Unless you can somehow settle this case on your own, which may not be advisable under threat of lawsuit, I recommend that you seek counsel familiar with this problem at your earliest opportunity, especially if you receive a formal demand. In these situations I recommend settlement if at all possible, unless the demand is totally unreasonable or other factors are present.

Seller Closing Agent for Own Property

2008-07-22T11:06:00.003-05:00

Question: Is there any ethics violation for a seller to be the closing agent for their own property?

Answer: What you describe may not be an ethics violation per se, but multiple capacities assumed in a closing such as owner, agent, attorney, closer etc. raise possible ethics issues. Potential violations are conflicts of interest, misrepresentation and/or failure to disclose. I can only recommend that you use your best judgment in these situations, and in cases of doubt, do it some other way. Ethics questions often involve gray areas and can be subjective. Especially in areas of professional conduct, we are to avoid even the suggestion or appearance of impropriety.

Judgment Can Affect Mineral Rights

2008-07-22T11:00:00.002-05:00

Question: If you own a homestead in Texas where mineral rights have never been severed and a non-secured creditor files a judgment and records that judgment does that create a lien on the mineral rights?

Answer: If a creditor abstracts a judgment against a Texas homestead owner, the creditor does not secure a lien on any part of the property because it is homestead. If the property is not homestead and the minerals have not been severed, the judgment attaches to both the surface and the mineral estates. If either the surface or the minerals have been severed, then the judgment attaches to whatever interest remains.

Wrapped Mortgages

2008-07-03T15:27:00.002-05:00

Question: Given the first and second mortgages are assumable: may they be wrapped into one contract to purchase or should they be in severalty?

Answer: Your question is whether two assumable mortgages can be wrapped together or must they be wrapped separately. The answer is either way. However, if a wrap note includes the unpaid balances of two existing independent mortgages, should one of them be paid off or modified before the other, the wrap note must be credited accordingly or likewise modified. How this occurs depends upon how the wrap documents are drafted. Before you decide to wrap two underlying notes together, I suggest you think through all possible payment scenarios.

Heirship vs. Adoption

2008-06-11T11:16:00.003-05:00

Question: Does a child which was given up for adoption have any rights to an estate? An Heirship affidavit would normally state "no other children living or deceased", however there was another child which was given up at birth. How should the Affidavit reflect this birth?

Answer: In Texas, a child given up for adoption does not lose the right to inherit from his or her natural, biological parents. The problem arises when a biological parent gives an infant up for adoption and soon knows nothing about the child or the child's whereabouts, especially in later years. If the biological parent then dies intestate, the long-ago adopted child nonetheless becomes an heir. The adopted child at that point is usually unknown and perhaps should remain unknown. This is awkward from both a family and title perspective.

An adopted child inherits from the adoptive parents the same as a natural child and the adoptive parents can inherit from an adopted child; the law makes no distinction between natural and adopted. However, although the child can inherit from them, the biological parents who gave the child up for adoption cannot inherit from the child according to Section 40 of the Probate Code.

An exception to this rule of inheritance is found in Section 162.507 of the Family Code, where the adopted person is an adult when adopted. The adopted adult and adoptive parents have the same rights as a natural child or parents, i.e., they can inherit from each other. But 162.507(c) provides that a person adopted as an adult can no longer inherit from his or her biological parents. So the age at which a person is adopted, i.e., child or adult, affects the right to inherit from a biological parent.

Section 40 of the Probate Code makes express reference to this Family Code exception and provides that "nothing herein shall prevent any parent by adoption from disposing of his property by will according to law." The same testamentary right applies to biological parents whose parental rights are terminated; they can will their property to whomever they desire. A properly drafted and duly executed will solves this problem

Another exception appears in Section 161.206(b) of the Family Code in the order terminating parental rights, which is required before a child is eligible for adoption. The court enters an order in such instances terminating the parental rights, "except that the child retains the right to inherit from and through the parent unless the court otherwise provides" (emphasis added). So, for good cause the court can also terminate the child's right to inherit from his or her biological parents.

Your question also mentions an heirship affidavit, and whether a child given up at birth should be disclosed. Since the affidavit is a sworn statement, I must answer that the child who was born yet given up for adoption must be accounted for. If some of the above exceptions mentioned above apply, you may cite them. If you no longer know the adopted child's whereabouts, or if the child is still a minor, you may have a considerable problem.

For what it is worth, Section 42(2) of the Probate Code addresses the affidavit of heirship situation. If the affidavit fails to mention a child who is not a "presumed child" of the decedent or not entitled to treatment as a child under a decree from the court, and if the purchaser is not on notice as to a child's claim, then a good faith purchaser of real estate for value will be protected from such a claim. Whether a child who has been adopted out is a "presumed child" of a decedent may well depend upon external facts and circumstances, including questionable paternity. This discussion is by no means exhaustive on the subject. Here is another example where advice from a competent lawyer is indispensable. One final reminder, if you have given up a child for adoption and do not want the child to inherit from you, then do not die intestate. Dispose of your property according to your own testamentary wishes.

Small Claims Judgment

2008-06-05T09:59:00.002-05:00

Question: I have a small claims judgment against me. What is the statue of limitations?

Answer: A small claims judgment duly abstracted becomes a general lien with a duration of 10 years, subject to renewal. If the judgment is in favor of the state or a state agency, the lien is valid for 20 years with one possible 20 year renewal. For further explanation, review Section 52.006 of the Property Code and my discussion on judgments and liens posted in February, 2008.

Tax Record Error

2008-06-05T09:53:00.002-05:00

Question: I went on a listing appointment the other day and found that the tax records reflect a 4/2/2 and 2,839 sq. ft. home, when in fact that address is actually a 3/2/2 with approximately 2,000 sq. ft. The owner was aware and said they messed up when he bought the house so to fix it they just swapped names with his neighbors home info! Who is to correct this error properly? TAD or the title company that holds the policy?

Answer: From what you describe, it appears that your listing owner has been paying taxes on a house far larger than the one he occupies, of which he is aware. In whatever case, this problem must be corrected by the appraisal district. The title company insured title to the land and its permanent attachments, not the characteristics, size or square footage of the structure.

Closing With Non Durable Power of Attorney

2008-05-30T10:10:00.002-05:00

Question: I have a listing where the Mrs. is the power of attorney for the Mr., as he is currently residing in our local jail. I have a Limited Non Durable Power of Attorney, notarized form. Is this all I will need to close?

Answer: A spouse may grant this authority with a valid, properly drafted power of attorney. In this instance the power must be specific, unequivocal and should accurately describe the subject property. The power being non durable is a disadvantage since it could be revoked by the subsequent incapacity of the principal, an event occurring outside the document requiring further investigation. The best way to determine if the power is acceptable is to present it to the title company for ultimate approval. Let me caution that instruments executed in a jail or prison are suspect, and title companies are often reluctant to insure their validity. If the spouse is in a local jail, your seller may well be required to have the incarcerated spouse execute the deed and furnish the usual photo ID.

Disclosure of a Fatality

2008-05-20T10:45:00.002-05:00

Question: The question present has to do with disclosure. In the State of Texas is the Seller of a multi-family property (50 units) required to disclose to the Buyer, that there has been a fatality on the property or in one of the units? What document should the information be presented on?

Answer: Bob's question involves a fatality that occurred in a multi-family project, in one of the units or elsewhere on the property, and whether the seller has a duty to disclose it to the buyer. Section 5.008(c) of the Property Code addresses this issue, but first note that it applies to property "comprising not more than one residential dwelling unit located in this state."
Would the same code provision give like protection to a seller of multi-family property? Most probably it would.

Section 5.008(c), Texas Property Code:

"A seller or seller's agent shall have no duty to make a disclosure or release information related to whether a death by natural causes, suicide or accident unrelated to the condition of the property occurred on the property or whether a previous occupant had, may have had, has or may have AIDS, HIV related illnesses or HIV infection."

If the death is related to the property condition, then it must be disclosed. What might be "related" can be specific or general. A dangerous condition on the property may involve a fire or explosion, perhaps a toxic environmental hazard, or more commonly a loose step, rail or banister on an upper floor causing a fatal accident. If the property is located in a dangerous area and subject to external threats, then the death should be disclosed unless clearly unrelated to such conditions.

Not only need AIDS, HIV related illnesses or HIV infection not be disclosed, but such conditions cannot be disclosed even upon inquiry. This condition is deemed immaterial since one cannot contract such a disease from the property itself. Also, those infected with such diseases are considered persons with disabilities and are protected against discrimination under the Fair Housing Act of 1988. Real estate agents who decline to make such disclosure or release information are protected by Section 1101.802 of the Texas Real Estate License Act.

The less common, but more serious areas of concern, are those properties that are "psychologically impacted" or "stigmatized" due to an actual or suspected dramatic event or occurrence. Examples are the mass shooting deaths at Luby's in Killeen (property drastically remodeled); O. J. Simpson's Rockingham Estate (bulldozed and scraped) and Jeffrey Dahmer's apartment building in Milwaukee (structure razed and the lot fenced in). In most cases, the stigma attaches to the site as well as the improvements and represents substantial lost value to the property. Needless to say, in such instances full disclosure should be made whether or not the event is sensational or notorious.

If Bob decides he needs to reveal the fatality, he can use any written document that clearly discloses the death and its cause, including a statutory form.

Judgment Against Prior Owners

2008-05-18T16:47:00.002-05:00

Question: I am in process of selling my home. New title search discovered that 2 or 3 owners ago had a judgment lien from a phone company against property. We discovered that when we bought the property the title company that searched for us knew about this but neglected to tell me or fix the problem. I did not purchase owner's policy. The closing agent for the title company said I really did not need it. That there was no problems. We are now told that the prior owner is not the same person who the lien is against. Now what do I do? The new buyer's bank wants this cleared up.

Answer: There are a few available remedies for your problem. First, review my discussion on "Judgments and Liens" posted in February, 2008 for an overview of this subject. If the judgment in question has been recorded over ten (10) years and not renewed, then it is barred by the statute of limitations. Since the judgment occurred two or three owners ago, a considerable time may have passed. If the abstract of judgment was recorded against the prior owner for a period of four (4) years before the prior owner conveyed the title, the judgment is barred. If the judgment was recorded against the prior owner after he conveyed title, your property is not affected. This determination depends upon the facts.
You mention that the buyer's bank wants the judgment question cleared up. I assume a title company has issued a commitment scheduling this judgment to the bank as a lender, and the bank wants it removed.
Since the property is a homestead, you can follow the procedure outlined in Section 52,0012 of the Property Code and have the judgment removed by an affidavit. But before that, if you confirm that the prior owner is not the party against the person against whom the judgment is taken, you might have the prior owner (if he can be found), give a credible affidavit to that effect. You might also offer the judgment creditor clear and convincing evidence that your prior owner and his judgment debtor are not one and the same, and demand that the creditor execute a release of your property from the lien. Or perhaps the title company can be convinced that the judgment debtor and your prior owner are not one and the same and declare the judgment as not affecting your property.
This is a prime example of why an owner's title policy is a good investment, especially when questionable items appear of record.

Deed vs. Will

2008-05-15T16:24:00.003-05:00

Question: My husband passed away 2 years ago on August 15th, 2005. Fred died intestate. We purchased our home on April 15, 1992. What do I need do to transfer our Deed of Trust into my name at Dallas County Records?

Answer: A deed is the means of transferring title by living persons, and a will or (other testamentary process such as joint tenancy agreements, etc.) is the means of transferring title by those deceased. If the decedent made no lifetime transfer by deed, or left no will at death, then there is no written transfer instrument available for the decedent's interest. The result is the passage of title by intestate death as set forth in the Probate Code and the process by which title is evidenced and established of record. Please review my answer to "Deceased Without a Will" in the September, 2007 archive, which discusses the affidavit of heirship and the judicial determination of heirship. I further recommend that you consult an attorney familiar with this situation for assistance.

Affidavit/Release of Lien

2008-05-15T16:13:00.001-05:00

Question: Will Land America American Title accept filing of a homestead affidavit to release an abstract of judgment to facilitate the closing of a home sale in Texas based upon Section 52.001 amended Sept 2007?

Answer: You have probably reviewed my answer in the September, 2007 archive "Title Insurance Company Affidavit as Release of Lien." You will note from my discussion and the wording of the Property Code that there are strict notice requirements and time periods before such a release (more accurately, an affidavit that functions as a release) becomes effective. Similar requirements are found in Section 52.0012 effective June 15, 2007 for homesteads. While I am not underwriting counsel for any title company and cannot declare what a company will or will not accept, I see no reason why such a procedure, if properly followed, would not be accepted. This is brand new law, but it is nonetheless statutory and clear as to its intention. If this procedure is your only practical remedy, try it and find out what happens. That is what I would recommend to place a client in the most favorable position.

Contract With Dower Rights

2008-05-07T11:12:00.002-05:00

Question: Closing date was supposed to be on 4/30/08. This was contingent on spouse signing off of dower rights. Spouse refused to sign off on dower rights. Is this a breach of contract for buyer if this was written in purchase agreement that offer contingent on spouse signing off dower rights?

Answer: I may not completely understand your question, but I believe you ask if there is a purchase agreement, i.e., a contract that is subject to a party signing off on dower rights, is there is a breach of contract if the party refuses to sign and the transaction does not close. No, there is no breach, but who would accept a contract with this type of contingency?

Small Claims Judgement

2008-05-07T11:07:00.003-05:00

Question: I was able to obtain a small claims judgement against my Auto Manufacturer 'BMW' in Harris County, TX. BMW has refused to pay, and 30 days have passed since the judgement date. I was trying to see where I can locate BMW's specific property (their vehicles) and seek an Abstract of Judgment.

Answer: You apparently reviewed my post on abstracts of judgment and similar remedies for judgment creditors. Your judgment in small claims court is probably $5,000.00 or less and you are most likely pro se, that is, not represented by counsel.

I cannot imagine BMW losing a case in small claims court and refusing to pay the judgment, unless they have perfected an appeal. In whatever case, if they do not pay, you should order an abstract of judgment and record it in Harris County, then obtain a writ of execution and send the sheriff or constable to a known business address of BMW.
What you need even more is legal counsel to guide you in collecting the judgment, or at least some business or agency in the business of making such collections.

Our blog is primarily concerned with real estate issues, but if BMW owns real property in its name in Harris County, your abstract of judgment will certain impose a lien on it.

Who is Entitled to Notice of Default

2008-03-25T15:48:00.001-05:00

Question: The mortgage is under my husband's name, the deed is under both of our names, the property is homestead, the lender foreclosed on a deed that only had hubby's name and not the current deed which was executed the same day of the loan and then deed back to me(us). Who is notified about a trustee sale -- both deed trustors or only the borrower?

Answer: Your question is who is entitled to notice in the event of a default on a mortgage, assuming a nonjudicial foreclosure under a deed of trust and not a judicial foreclosure in a court proceeding. The answer is everyone who is personally liable for payment of the debt. This includes the original maker, comaker, cosigner or guarantor of the note and subsequent assumptors of the debt.

As I understand, your husband bought a homestead and made a purchase money mortgage. All documents, including the deed, note and deed of trust, were solely in his name. At the same time, or immediately thereafter, he conveyed the property to the two of you by a separate deed. Unless that deed contained language that you assumed the indebtedness, or unless you became liable by some separate agreement, you were not personally liable for payment of the debt although the property was subject to the mortgage and possible foreclosure. In other words, you could lose the property but the lender could not sue you personally for any amount still owed on the debt.

The law of nonjudicial foreclosure is set out in Section 51.002 of the Texas Property Code. For foreclosure of a debtor's residence, the debtor is entitled to notice of default and opportunity to cure for a period of 20 days before the debt can be declared fully due and foreclosure proceedings commenced, paragraphs (d) and (e). If the default remains uncured, upon posting and notice of sale given for the 21 days prior to sale, (b)(3) provides that written notice by certified mail must be sent to each debtor who, according to the records of the mortgage servicer (the holder of the note or an agent acting on behalf of the holder), is obligated to pay the debt. This means that the mortgage servicer is not obligated to investigate outside its own records in determining debtor status. In your case, the servicer gave notice to your husband only at whatever address the servicer had for him, most probably at the residence itself, but not necessarily.

While this might be sufficient to satisfy the Code, in my view the best practice is to check the title to date and give notice to all present owners of record and obligors on the indebtedness, whether one and the same. If there is to be a challenge or dispute over a default, notice or foreclosure issue, it is best that it occur at the earliest possible time.

Can We Get Out of Contract?

2008-03-13T10:31:00.004-05:00

Question: I have a client that is building a home on the 1-4 contract and the completion date was December 15, 2007 and is not completed yet. The brick work is also poorly done and now my client would like out of it. What are his options now?

Answer: Under the circumstances you describe, your client may have several available options depending upon how the contract is drafted. Since your question pertains to a specific written contract which is not before me, I will offer a few general guidelines that may apply to your situation.

The phrase "getting out of a contract" can mean everything from refusing to perform when performance is possible (known as a "breach") to those possibilities where the party, in this instance the Buyer, can declare the contract unfulfilled by the other party and legally avoid the consequences of non-performance. I believe you are interested in the latter possibility. From this point forward, references to a contract mean the promulgated TREC One to Four Family Residential Contract (Resale) available at the TREC website.

If construction must be completed by last December 15 and it is not, in absence of a written extension the contract becomes unenforceable on that date if it provides that "time is of the essence" for completion. "Time is of the essence" means that an event or condition happening by a specified time is part of the consideration for the contract. If the event or condition is not performed or met on time, the consideration then fails and the contract becomes void This is a special provision usually (but not necessarily) addressed in Paragraph 11. Special Provisions.

Paragraph 23. Termination Option. If the contract provides for a long option period and your client is within the time frame, the client can give notice and walk away with no loss but the option consideration.

Paragraph 4. Financing, and the separate Third Party Financing Condition Addendum. If the Buyer is unable to obtain third party financing through no fault of its own within the requisite time, that condition is not met and the contract becomes void unless the parties agree otherwise.

Paragraph 5. Earnest Money. If earnest money is held by the title company and is to be returned to the Buyer under certain conditions, the Buyer may get its money back. If the Seller holds the earnest money it is rarely returned, particularly if the Buyer fails or refuses to perform on the contract, regardless of the conditions. Hopefully your client has a relatively small amount of earnest money or deposit at stake if held by the Seller.

Paragraphs 6. and 7., title and property condition issues and notice requirements. Objections in a timely manner to problem issues in these areas can absolve a buyer from performing the contract.

Paragraph 15. Default. This paragraph provides remedies for breach of contract, with unfavorable provisions to be lined out and initialed by the parties during negotiations. Hopefully, a breach will boil down to a dispute over the earnest money and nothing more so the parties can disengage at the earliest opportunity. Paragraph 18 deals further with notices and demands relative to escrowed funds.

Federal vs. State Jurisdiction

2008-02-26T16:03:00.003-06:00

Question: When my case was removed into Federal Court and under Federal jurisdiction, a state court continued on without jurisdiction and with fraudulent deed and void judgment auctioned off my condo. How do I vacate a void judgment and correct my title to the property?

Answer: From your question I must assume that you were litigating an issue in state court concerning your condo, and the case was subsequently removed from state to federal court. I mention this to preclude the possibility that the federal court to which you refer was a bankruptcy court, in which instance a totally different set of rules apply.

It appears that after removal, your adverse party obtained an order from the state court and foreclosed on your property. If at that point the state court was without jurisdiction to issue such an order the sale would be void and subject to being set aside by the court with actual jurisdiction. Obviously this matter must be referred to your attorney for whatever action might be appropriate.

Title Premiums on New Construction

2008-02-26T15:58:00.003-06:00

Question: We are refinancing a construction loan. We first bought the lot in 9/05, then got a construction loan in 10/07, now we are getting a mortgage loan. We have been charged title insurance each time. Is this fair?

Answer: In reviewing the closings for your home, four separate title policies were issued in the first two and one policy in the last. Each policy represented an increased amount insured in both the owner's and mortgagee's policy. When the company incurs more risk with each policy it charges a new premium, but at a discounted rate due to closely occurring closings. Your lenders required a new mortgagee's policy in each closing, which increased the costs. I have not attempted to recalculate these premiums, since your question is one of fairness.

Your question is understandable considering that these recurring costs seem to be for the same service, but in actuality they are not. The title company has no alternative but to follow the lender's instructions and requirements, and charge premiums at the uniform rates promulgated by the State Board of Insurance. It is at that level that the issue of fairness should be addressed, and I would invite you to refer this issue to the board for its consideration. Premiums and procedures are reviewed periodically, and are subject to public hearings on the very concerns you raise.

Judgment and Lien(s)

2008-02-19T10:01:00.005-06:00

Question: I won my case in a small claim court (Travis county, Austin Texas). However, the defendant refuses to pay the judgment. I am trying to place a lien(s) on his property and/or vehicles and/or personal belongings. However, I found out that the defendant has already removed his name from his house and his two vehicles. They are under his wife’s name now. At this point, I’d like to know if I can still place a lien(s)?

Answer: A court judgment for monetary damages by itself does not create or impose a lien. A judgment lien is created when a prevailing plaintiff obtains an abstract of judgment from the clerk of the court and records it in each county in which the defendant owns non-homestead real property. Upon recording, the abstract establishes a lien on all the defendant's non-homestead real property in that particular county. An abstract of judgment is valid for a period of 10 years with exceptions for certain government entities which extend them to 20 years. At that point the plaintiff is also known as the "judgment creditor" and the defendant the "judgment debtor." The statutory provision for judgment liens is Section 52.001 et seq of the Texas Property Code. Due to the nature of this blog, answers are confined to the aspect of liens on real property.

An abstract of judgment does not create a lien against specific property of the debtor, but a general lien against any property the debtor might own which can be executed upon and sold by legal process in satisfaction of the judgment. The judgment lien is subject to certain defenses, the most common being homestead, to which a judgment lien will not attach. See Section 41.001 et seq of the Property Code. The homestead owner alleges this defense when seeking a release of the judgment from the creditor under Section 52.0012 of the Code. When the judgment creditor records an abstract of judgment, identifies the defendant's property and obtains a writ of execution to have the property sold in satisfaction of the judgment, the debtor can raise the homestead issue in defense of that action. Executions on judgments are addressed in Sections 34.001 et seq of the Texas Civil Practices and Remedies Code.

In most cases the creditor records an abstract of judgment in hopes that a title company will discover the lien on a judgment debtor seller's property and require the seller to obtain a release from the creditor. The seller may then be forced to pay off the judgment to get a release,. Many transactions fail because of a judgment against the seller's property that cannot be settled or released, and in those transactions the creditor usually remains unpaid.

What about those situations where the property is in the name of the other spouse - does the judgment lien attach? That answer depends upon the ownership status between the spouses, whether the property is separate or community or a gift from one spouse to the other, or whether it is, or was ever non-homestead property when the abstract was recorded, and other factual circumstances. Spousal ownership subject to creditor's claims and liens is set out in Section 3.202 of the Texas Family Code, Rules of Marital Property Liability. Spousal defenses are made whenever the creditor moves to execute on its judgment lien. The issue becomes clear only when the property is in the name of the spouse against whom the judgment was taken at the time the abstract is recorded. Again, homestead is the usual defense. The complexity of this issue defies simple or definite answers. In practical terms, the amount of the judgment that stands to be collected rarely justifies the expense of litigating the issue in the event of complications.

From these comments, you will note that the subject of judgment liens and their enforcement is too extensive to adequately explore in a blog. Those needing assistance with specific problems in this area should consult a knowledgeable real estate attorney who is familiar with these laws and remedies.

Joint Names On Deed

2008-01-25T16:54:00.001-06:00

Question: I purchased a property in Houston last year when I was single. I got married recently, and I want to get the property title and mortgage in joint names. We'd appreciate if you please let us know where we need to start from? Who can help us? How much does this cost?

Answer: Please review my previous blog titled "Adding Your Spouse to a Deed" (found below) which is basically the same question. If you have any further questions that reply does not address, please let us know.