Texas Real Property

Question 1

In Texas, conveyances that are ambiguous are considered to be Fee Simple Absolutes unless what?

Answer 1

1) The conveyance is expressly limited, OR

2) A lesser estate is created

Question 2

The majority of jurisdictions require specific language to create a life estate. What does Texas require?

Answer 2

No particular words are necessary to create a life estate. “For life,” “until his/her death,” etc.

Question 3

What is the Texas distinction with regard to Joint Tenancies?

Answer 3

Unlike most states, a joint tenancy is Texas does not automatically include a right of survivorship. INSTEAD, joint tenants can create a right of survivorship by expressly agreeing to allow their interests to pass under a right of survivorship. NEED SPECIFIC LANGUAGE.

Question 4

T/F - Tenancy by the Entirety exists in Texas.

Answer 4

No

Texas is a community property jurisdiction and thus does not recognize the tenancy by the entirety.

Question 5

T/F - Texas limits the duration of a possibility of reverter and rights of re-entry.

Answer 5

False

Texas has no durational limits for a posibility of reverter or right of re-entry. Further, RAP does not apply to these types of interests.

Question 6

T/F - In Texas, a contingent remainder is not destroyed if it has not vested by the time the prior estate terminates.

Answer 6

True

Like in most states, Texas will wait to see if the contingent remainder ultimately vests.

Question 7

What is the Rule Against Perpetuities?

Answer 7

Under RAP, specific future interests are valid ONLY if they must vest OR FAIL by the end of a life in being, plus 21 years (and 9 months gestation).

Question 8

In Texas, how are Charitable Trusts treated if RAP is violated? What happens if the Charity ceases to exist?

Answer 8

Property held in trust is subject to RAP. In Texas, perpetual trusts and indefinite period trusts violate RAP.

HOWEVER, IN TEXAS, RAP DOES NOT APPLY TO CHARITABLE TRUSTS.

Cy Pres - Texas courts use the doctrine of cy prees to reform a charitable trust when its particular purpose has become impossible or impractical. The court can modify the trust to support a different program or charity of similar purpose.

Question 9

How do Periodic Tenancies terminate in Texas?

Answer 9

Month-to-Month Leases - the tenancy ends on the LATER of (a) the day given in the termination notice, OR (b) one month after the day notice is given.

Week-to-Week (less than a month) - tenancy ends on the LATER of (a) the day given in the termination notice, OR (b) the day following the expiration period.

Question 10

In Texas, what must a landlord do to evict a holdover tenant. Can the landlord seek double rent?

Answer 10

The landlord must provide the holdover tenant with at least THREE DAYS’ NOTICE to vacate before the landlord can evict the tenant.

Texas does NOT allow landlords to collect double rent from a willful holdover.

Question 11

In Texas, what are the landlord’s remedies when a tenant fails to pay rent?

Answer 11

Money - If the landlord provides written notice, he may recover one month’s rent PLUS $500.

Lockout - Further, Texas allows a landlord to “lock out” a tenant (literally change the locks). If a residential lease, landlord can lock out a resident if the lease ONLY IF THE LEASE EXPRESSLY SAYS SO. In a commercial lease, landlord can lock out a tenant after placing a NOTE on the tenatn’s FRONT DOOR, explaining where a new key may be obtained after back rent is paid. NOTE: A Commercial tenant can get a new key REGARDLESS of whether back rent has been paid!

IF THE LOCKOUT WAS WRONGFUL - the tenant can get two remedies:

1) Possession of the property or terminate the lease; AND
2) One month’s rent PLUS $1,000 in damages and costs.

Question 12

How does a security deposit work in Texas lease agreements?

Answer 12

A COMMERCIAL landlord must refund a tenant’s security deposit WITHIN 60 DAYS after tenant surrenders the premises.

A RESIDENTIAL landlord must return the tenant’s security deposit WITHIN 30 DAYS after the tenant surrenders the premises.

If the landlord retains all or part of the security deposit, the landlord must provide a WRITTEN REPORT of the DEDUCTIONS. HOWEVER, if the tenant OWES BACK RENT, then the landlord doesn’t have to provide the written report.

Question 13

Does a commercial landlord have a duty to mitigate?

Answer 13

YES. In Texas, if the tenant surrenders the leasehold before the lease is up, a commercial landlord has a duty to take reasonable steps to mitigate damages.

This can be changed by the lease terms. Burden is on the tenant to prove the landlord failed to mitigate.

This is not the majority view.

Question 14

Does Texas follow the majority view preventing landlords to sue for future rent due like an anticipatory breach?

Answer 14

NO, Texas does allow anticipatory breach in a lease. Landlord can treat the breach as anticipatory and either:

1) Repossess and sue for the value of future rentals LESS the current value of the remaining term, OR
2) Re-lease and sue for the difference between the original contract price and the new tenant’s rent.

Question 15

With regard to habitability, what duty to landlords have?

Answer 15

In Texas, RESIDENTIAL Landlords must provide a SAFE, DECENT, and SANITARY dwelling, as well as make REPAIRS to threats on health or safety of an ORDINARY TENANT.

Question 16

Does a Texas residential landlord have a duty to make repairs?

Answer 16

Yes. A landlord must make a DILIGENT effort to repair a condition, IF:

1) Tenant gives PROPER NOTICE of the condition in need of repair;
2) Tenant is NOT DELINQUENT on rent at time notice is given; AND
3) Condition HAS TO MATERIALLY AFFECT to health and safety of an ORDINARY TENANT.

Question 17

What is the statutory period for adverse possession in Texas?

Answer 17

25 Years - General Rule

10 Years - If the land is FEWER than 160 acres.

5 Years - If the claimant has: (1) cultivated, used, or enjoyed the property; (2) PAID TAXES; AND (3) is claiming rights to the property UNDER A DEED (with color of title after acquiring a deed and good faith).

Question 18

How can a landowner stop adverse possession in Texas?

Answer 18

Language is not enough. Can’t just tell them to leave. Adverse possession in Texas is terminated only when the owner FILES A LAWSUIT to recover possession of her land.

A true owner MUST BRING SUIT TO EVICT a trespasser WITHIN THREE YEARS in the case where a trespasser has based title on color of title or an improper recording.

Question 19

How are disabled owners treated in Texas in the case of adverse possession?

Answer 19

If the true owner is disabled at the time the adverse possession COMMENCES (steps on to land), then the 3-year, 5-year, and 10-year statutes of limitation dont begin running.

Question 20

What is the executory period?

Answer 20

This is the period in a land sale contract between the contract and the closing on the property.

Question 21

What are the rights and duties of the seller during the executory period?

Answer 21

Seller holds the land in trust for the buyer. Seller has the right to possess the property. Seller also has the DUTY TO MAINTAIN the property in GOOD CONDITION.

Question 22

Who bears the risk of loss in a land sale contract in the executory period?

Answer 22

Majority of states - buyer

TEXAS has adopted the UNIFORM VENDOR AND PURCHASER RISK ACT. Under this statute, the risk of loss during the executory period is placed on the SELLER.

Question 23

T/F - Lenders in Texas, upon default, have the power to force a foreclosure in a mortgage note to satisfy the debt.

Answer 23

True

Question 24

Does Texas have Statutory Redemption?

Answer 24

NO, a foreclosure sale is FINAL.

Question 25

How does Texas treat installment contracts with regard to mortgages?

Answer 25

In most states, if a buyer can’t continue to make payments, the buyer defaults, and the seller gets to keep the buyer’s interest.

IN TEXAS, the SELLER must give STATUTORY NOTICE before forfeiting the purchaser’s interest. If the purchaser has paid 40% or more of the AMOUNT DUE, the seller has the power to sell the purchaser’s interest in the property to a new purchaser.

Question 26

T/F - In a Non-Judicial Foreclosure, in Texas, a purchaser takes the property “AS IS,” without ANY express or implied warranties.

Answer 26

True

Question 27

What happens in Texas when a foreclosure sale brings in less than the outstanding debt?

Answer 27

Court may issue a DEFICIENCY JUDGMENT.

Question 28

Is Equity of Redemption allowed in Texas?

Answer 28

Yes. A homeowner may pay off her debt BEFORE the foreclosure sale BEGINS.

Question 29

What is a Deed in Lieu of Foreclosure?

Answer 29

If the homeowner can’t pay off her debt, she can convey the property to the lender in exchange for releasing or canceling any outstanding debt.

Question 30

Texas recognizes the Strips and Gores Doctrine. What is it? Does it always apply?

Answer 30

Comes up when property that abuts a roadway or right-of-way is conveyed.

Has the grantor explicitly reserved an easement or right-of-way interest in a strip of land between the conveyed property and the center of a public road?

If yes, then the grant does NOT convey title up to the center of the roadway.

If no, then the grant does convey title up to the center of the roadway.

DOES NOT APPLY IF:

1) Grantor owns land abutting BOTH sides of the strip, OR
2) The strip is larger and MORE VALUABLE than the conveyed tract.

Question 31

How are errors in a deed fixed in Texas?

Answer 31

1) Non-Material Corrections - Any person with personal knowledge of the error can execute a correction instrument to correct a non-material error.
2) Material Corrections - ONLY a party to the ORIGINAL transaction may execute a correction instrument to fix a material error in the deed.

Question 32

How are restraints on alienation handled in Texas?

Answer 32

If the restraint is void, then it does not render the entire deed void (just the restraint).

Question 33

T/F - In Texas, restraints on use, sale, or rental to a person because of race, color, religion, or national origin are prohibited.

Answer 33

True

Question 34

T/F - In Texas, all types of easements are transferable and assignable.

Answer 34

False. An easement in gross in Texas is NOT transferable or assignable, EXCEPT for CONSERVATION EASEMENTS.

Question 35

What is the statutory period for creating an easement by prescription?

Answer 35

In Texas, the prescription period to create a prescriptive easement is 10 YEARS.

Question 36

Explain how water rights work in Texas.

Answer 36

Riparian Rights - Landowners who can trace title back between 1823 and 1895 can make use of the Riparian Rights Doctrine. This allows owners of land that abuts a water way to reasonable use of the water (not interfering with other riparian owners’ rights).

Prior Appropriation - This is TEXAS. First in time, first in right no matter where your land is located. Users must put the water to a BENEFICIAL USE (a productive use).

Groundwater - A landowner owns the groundwater BELOW THE SURFACE of the landowner’s property. Landowner has ABSOLUTE CONTROL over that groundwater.

Question 37

Explain Homesteads in Texas.

Answer 37

Texas provides a homestead exemption for single adults and heads of households. This protects a home from a forced sale to satisfy creditors after the death of the head of household.

Rural Homesteads - 200 acres are allowed for families, and 100 acres is allowed for single adults.

Urban Homesteads - Must:

1) Consist of NOT MORE THAN 10 acres of one or more contiguous lots;
2) Be located within the city limits; AND
3) Be served by municiple police, fire protection, and at least THREE of either: electric, natural gas, sewer, storm sewer, or water services.

NOTE: There cannot be a mixed homestead (part urban and part rural). Also, you are limited to ONE homestead.

Question 38

How is personal property located on a homestead treated?

Answer 38

In Texas, personal property is only protected if it is on the owner’s land and has some level of ATTACHMENT to the land. The best example is a fixture attached to the land (barn or related building).

Question 39

T/F - A business cannot be a homestead in Texas.

Answer 39

False.

A business may be a homestead if it is:

1) On the same lot or a lot contiguous to the homestead, AND
2) Does NOT exceed 10 acres.

Example - Bob’s Burgers

Question 40

Can non-contiguous parcels of land ever qualify as part of a homestead?

Answer 40

Yes but ONLY in a RURAL homestead.

Owner must show that the parcel is NECESSARY to the USE AND ENJOYMENT of her home.

Question 41

What are the legal effects of a homestead? Are there any exceptions?

Answer 41

Protects a home from a forced sale to satisfy the owner’s creditors. NOTE: The homestead is only protected from creditor’s rights in the homestead that occurred AFTER the property became a homestead.

EXCEPTIONS:

1) Purchase Money - Texas Constitution permits creditors to force a sale if the purchase money on the home is due.
2) Taxes on the Property - Homestead not protected from forced sale for payments of any TAXES assessed and levied on the property.
3) Refinance of a lien - Encumbrances may be properly fixed on homestead property for the refinance of a lien against the homestead.
4) Construction Improvements - Forced sale permitted for loans made in connection with improvements to the property PROVIDED THAT the work was contracted for IN WRITING and WITH THE CONSENT OF BOTH SPOUSES.
5) Home Equity Loans - Forced sale allowed for the payments of a home equity loan.
6) Reverse Mortgage - Forced sale allowed for payments of a reverse mortgage. This is a line of credit available to people over the age of 62, which enables them to access a portion of the equity in their home.
7) Owelty - Forced sale allowed to satisfy an owelty of partition. Owelty is the money paid following the partition (division) of a co-tenancy when an equal partition isn’t possible.

Question 42

Can spouses transfer or encumber a homestead?

Answer 42

Yes ONLY WITH THE AGREEMENT OF THE OTHER SPOUSE.

Question 43

When does a homestead terminate?

Answer 43

Ends in the following situations:

1) If the claimant dies without a survivor to take the homestead, OR
2) Abandonment - must show CLEAR AND PRESENT intent not to use the property as a homestead.

Question 44

T/F - Divorce destroys a homestead effectively terminating it.

Answer 44

False. Divorce does not destroy the homestead PROVIDED THAT one of the spouses is able to MAINTAIN the homestead.

Question 45

What is a mechanic’s lien? Who may get one?

Answer 45

IN TEXAS, a contractor, subcontractor, architect, engineer, surveyor, or other supplier of materials (materialman) or labor to be used for the CONSTRUCTION OR REPAIR of a home or building, may secure a mechanic’s lien on the home or building to secure repayment.

SCOPE: Covers payment for LABOR PERFORMED, MATERIALS FURNISHED OR FABRICATED, or for the PREPARATION OF A PLAN. DOES NOT extent to sidewalks, streets, or utilities that are public.

Question 46

How much can a subcontractor claim on a mechanic’s lien?

Answer 46

Not more than the amount equal to the labor performed, materials used, reasonable overhead costs, AND proportionate profit margin.

Question 47

What must one do to get a mechanic’s lien?

Answer 47

1) A person claiming the lien must FILE AN AFFIDAVIT with the COUNTY CLERK NOT LATER THAN the 15th DAY of the 4TH CALENDAR MONTH (or 3rd calendar month for residential projects) AFTER THE DAY INDEBTEDNESS ACCRUES.
2) After filing, the filer must NOTIFY the OWNER at her LAST KNOWN ADDRESS by CERTIFIED MAIL. If the filer is not the original contractor, the filer must also send a COPY to the ORIGINAL CONTRACTOR. All notifications must be made NO LATER THAN THE FIFTH DAY AFTER THE AFFIDAVIT IS FILED IN COURT.
3) If the filer is a subcontractor, he/she must give the ORIGINAL CONTRACTOR WRITTEN NOTICE OF ANY UNPAID BALANCE NO LATER THAN THE 15TH DAY OF THE SECOND MONTH IN WHICH THE SUBCONTRACTOR’S LABOR WAS PERFORMED OR MATERIALS FURNISHED.

Question 48

When does “indebtedness accrue” for a mechanic’s lien?

Answer 48

It depends on who you are:

1) Original Contractor - Indebtedness accrues on the last day of the month in which: (1) a written declaration is received by the original contracting parties stating that the original contract has terminated OR (2) the original contract has been completed, settled, or abandoned.
2) Subcontractor - Indebtedness accrues on the last day of the month in which: (1) labor was performed OR (2) materials were furnished.

Question 49

What priority does a mechanics lien have over other creditors?

Answer 49

A mechanic’s lien attaches to the house, building, or improvements in preference to ANY PRIOR lien, encumbrance, or mortgage on the land.

HOWEVER, the mechanic’s lien DOES NOT AFFECT any lien, encumbrance, or mortgage on the land at the time of inception of the mechanic’s lien.

Question 50

Is Texas a Lien or Title State? What does that mean?

Answer 50

Texas is a LIEN STATE. This means that the mortgagee or creditor has a lien or security interest in the mortgaged property, NOT TITLE to the property. This affects when the creditor can possess the property upon default.

Question 51

What is a Vendor’s Lien? How does it work?

Answer 51

In a contract for a deed (installment contract), a breach may give rise to a lien in favor of the seller (vendor). This is an equitable lien for the benefit of the vendor who passed legal title to the buyer BUT DID NOT RECEIVE THE ENTIRE PURCHASE PRICE.

IN TEXAS, a vendor’s lien SHOULD BE EXPRESSLY RESERVED in the deed of trust. However, it is normally done in the deed itself.

If the buyer defaults, the vendor may foreclose the lien and sue for the balance owed, rescind the contract and take possession (because the vendor retains legal title), OR sue to recover title and possession.

Question 52

T/F - A tenant can get rent and damages for delays by the landlord in repairing property.

Answer 52

True

Question 53

What is required to make property your homestead?

Answer 53

For a homestead to exist, there must be a present enforceable right plus the right to possession of the property. The homestead claimant must have the intent to occupy the property as a homestead and there must be overt acts of occupation and dedication to such intention.

Question 54

When is an owner liable to a subcontractor for paying a contractor?

Answer 54

An owner who receives lawful notice of a claim between the subcontractor against a contractor may withhold from payments owed to the original contractor an amount necessary to pay a claim to a subcontractor.

The owner is not liable for any money paid to the original contractor before he received notice. If the owner received notice, a lien has been secured and reduced to a final judgment, the owner is liable, and his property is subject to a claim for any money paid to the original contractor.

Question 55

What must the affidavit that is filed with the county clerk for a mechanic’s lien contain?

Answer 55

The affidavit:

1) Must be signed by the person claiming the lien and must include a sworn statement of the amount of the claim;
2) The names and last known addresses of the owner, original contractor, and claimant; a statement of the work performed and material furnished (a subcontractor must specify the month the work was performed or the material furnished); AND
3) A legally sufficient description of the property to be charged with the lien.

Question 56

T/F - The Texas Constitution extended the meaning of the “homestead of a family” to embrace not only the home or residence of the family, but also the place where the head of the family could exercise his calling or business.

Answer 56

True

Question 57

What must a party do to effect a non-judicial foreclosure sale on property?

Answer 57

The nonjudicial foreclosure process is used if a power-of-sale clause exists in a mortgage or deed of trust authorizing the sale of the property to pay off any default loan balance. For residential property, a notice of default must be served by certified mail and provide at least 20 DAYS to cure the default before notice of sale will be given. After the 20 DAYS’ notice, notice of the sale must be filed with the county clerk, posted on the courthouse door, and served on the debtor by certified mail at least 21 DAYS before the sale date. However, Texas homeowners may end the foreclosure process by paying off the debt before the foreclosure sale begins. This process is known as an equity of redemption. The seller must notify a purchaser who is in default their right to cure the debt and allow the purchaser at least 60 DAYS to do so.