TREC Accepting Applications for 2 Broker Slots on Broker Lawyer Committee

San Antonio Texas Real Estate Attorney Trey Wilson wrote:

The Texas Real Estate Commission (TREC) is currently accepting letters of interest and resumes for open positions on the Broker Lawyer Committee. This volunteer committee periodically reviews and recommends revisions as necessary to the TREC promulgated contract forms. Quarterly meetings are held in person in Austin. The Broker Lawyer Committee is looking for two qualified candidates to serve as broker members for a term of six years. 

TREC is also seeking to fill available positions on the Texas Real Estate Inspector Committee and the Broker Responsibility Working Group.

To be considered for an appointment, individuals should send a cover letter and resume to Loretta DeHay, General Counsel, at the Texas Real Estate Commission, P.O. Box 12188, Austin, TX 78711-2188, by fax to 512-936-3788, or by e-mail to general.counsel@trec.texas.gov. The deadline for applying for all open positions is July 15, 2013.

Texas Deeds Must Contain Adequate Property Descriptions

San Antonio Texas Real Estate Attorney Trey Wilson wrote:

Texas law reporters are brimming with cases involving failed sales or transfers of land based on vague, confusing or just plain wrong descriptions the real property intended to be conveyed.  Under Texas law, inadequate property descriptions -- particularly those that don't identify the property location -- will render a deed or other conveyance document ineffectual. This is true because location is an essential element of a deed, without which the deed is void. See Wilson v. Fisher, 144 Tex. 53, 188 S.W.2d 150, 152 (1945). 

To be sufficient, a writing conveying title must provide within itself, or by reference to some other existing writing in existence at the time of the deed, the means or information by which the land being conveyed can be identified with reasonable certainty. Williams v. Ellison, 493 S.W.2d 734, 736 (Tex.1973). This has been termed the "nucleus of description" theory. 

"If enough appears in the description so that a party familiar with the locality can identify the premises with reasonable certainty, it will be sufficient." Gates v. Asher, 154 Tex. 538, 541, 280 S.W.2d 247, 248 (1955) (citations omitted).  Likewise, "if there appears in the instrument enough to enable one by pursuing an inquiry based upon the information contained in the deed to identify the particular property to the exclusion of others, the description  will be held sufficient." Templeton v. Dreiss, 961 S.W.2d 645, 658 (Tex.App.-San Antonio 1998, pet. denied). However, "a deed purporting to convey land, which describes it only by quantity and as being part of a larger tract (i.e. "25 acres out of he King Ranch"), with nothing whereby to identify what specific portion of the larger tract is intended to be conveyed, is VOID for uncertainty of description." Smith v. Sorelle, 126 Tex. 353, 358-59, 87 S.W.2d 703, 705 (1935).

San Antonio's Fourth Court of Appeals addressed the "nucleus of description" theory in a real estate case it considered in 2009. In that case, Gaut v. Daniel, 293 S.W.3d 764, 767 (Tex. App. — San Antonio 2009), the Court considered a 1990 deed conveying 28 acres in Duval County. The acreage in question was part of a larger (399.5 acre) tract, but the deed conveying the property, which purported to contain surveyor's notes, failed to identify any discernible location of the 28 acre tract.  The Court's holding:  "Because nothing identifies which 28 acres out of the 399.5 are being conveyed, the deed is void" Gaut, 293 S.W.3d at 770.

With the significant rush to obtain, break and transfer property interests, including deeds and leases, caused by the boom in the Eagle Ford shale and other oil and gas formations in Texas, sufficiency of property descriptions have become of preeminent importance. 

In an interesting case decided by the 5th Circuit appeals court in 2012, Chesapeake Exploration  unsuccessfully attempted to invalidate its agreement to purchase deep rights held by Peak Energy Corporation in certain oil and gas leases    Coe v. Chesapeake Exploration, L.L.C., 695 F.3d 311, 316 (5th Cir. 2012). When the price of natural gas plummeted several months later, Chesapeake refused to honor its commitment. When Peak filed suit, Chesapeake argued that the parties' agreement was unenforceable under the Texas statute of frauds and fatally indefinite based upon the flawed property descriptions. The district court disagreed, rendering judgment in favor of Peak and its principals and awarding them damages in the amount of more $19 million. This judgment was affirmed by the appeals court.

Thus, persons drafting deeds and other conveyance documents, as well as those contemplating the sufficiency of existing deed documents, must be mindful of the nucleus of description theory. 

Even Missing Documents Forming a Title Chain Can Have Serious Implications on Real Property Use

San Antonio Texas Real Estate Attorney Trey Wilson wrote:

When considering the purchase of residential or commercial real estate in Texas, it is of the utmost importance for the Buyer to obtain a full abstract of title, and to obtain copies of all documents comprising a particular property's chain-of-title.

So important is having this information, that the laws pertaining to real estate agents in Texas mandates that real estate licensees include in all purchase offers a written notice to each buyer that he or she should (among other things) “have the abstract covering the real estate that is the subject of the contract examined by an attorney chosen by the buyer.” See Texas Occupations Code § 1101.555. 

A cursory examination of the law pertaining to the effect of chain of title documents reveals part of the reason having this information is essential to a Buyer and his plans for the property.

First, the Texas Property Code Section 13.002(1) expressly provides that “an instrument that is properly recorded in the proper county is notice to all persons of the existence of the instrument.” This means that failure to obtain a copy of the instrument, or to discover its contents has no bearing on the validity and enforcement of the instrument. Put simply: if a document is on file, you have imputed knowledge of its existence. 

However, proper recordation of an instrument is not the SINE QUA NON of its validity and enforceability. The Texas Supreme Court has recognized two rules relating to the purchase of real property, the second of which can produce harsh results:

1.      "A purchaser is charged with knowledge of the provisions and contents of recorded instruments;”  and

2.     “Purchasers are also charged with notice of the terms of deeds which form an essential link in their chain of ownership."  

See Cooksey v. Sinder,682 S.W.2d 252 (Tex.1984) (per curiam) see also Peters v. Clements,46 Tex. 114, 123 (1876).  

The second of these rules ("subsequent purchasers are bound by the recitals in the deeds through which they claim") applies regardless of whether the purchaser read the prior deeds or had any actual knowledge of their contents.

In some situations, a restriction prohibiting the use of a property for a particular purpose or in a particular manner (mobile home, retail gas business, sexually-oriented business, for multi-family residence, etc.) may not appear in the most recent deed by which the property was conveyed to (or “vested in”) a Seller.  However, if that restriction appears in an earlier deed affecting the property, the restriction will likely apply – sometimes even if that earlier deed is not recorded.  See generally City of Dallas v. Rutledge, 258 S.W. 534, 539 (Tex.Civ.App.-Dallas 1924, no writ)("The law of notice is that a purchaser of land must take notice of all instruments recorded or unrecorded in his chain of title or affecting title, and is bound by all recitals therein, although in fact ignorant of the contents."); Matthews v. Rains County, 206 S.W.2d 852, 854 (Tex.Civ.App.-Amarillo 1947, writ ref'd n.r.e.) ("[The purchaser] is bound by every matter contained in or fairly disclosed by any instrument which forms an essential link in the chain of title under which he claims ... even though he had never read these instruments or had any actual knowledge of their contents, and this would be true regardless of whether the instruments were recorded.").

In addition to restrictions, easements and other encumbrances (roadways and access licenses) upon real property are implicated by title chains, even if not readily apparent from the immediate transaction.  See Adams v. Rowles,228 S.W.2d 849, 853 (Tex. 1950) (respondent's chain of title showed dedication of roadway, and respondent was charged with knowledge of its existence and "took his land burdened with the roadway"); McDaniel v. Calvert,875 S.W.2d 482, 484 (Tex. App.-Fort Worth 1994, no writ) (transfer of dominant estate "automatically includes the [appurtenant] easement across the servient tenement's land" regardless of whether easements are referenced in deed or not).

The foregoing demonstrates the serious implications of documents comprising a property’s chain-of-title.   Obtaining copies and qualified review of those documents is an essential component of a Buyer’s due diligence analysis of the feasibility of purchasing real estate in Texas.  Failure to learn and understand all instruments forming the chain of title can be costly and disasterous.

New Chair and Commissioners Appointed to Texas Real Estate Commission

Governor Rick Perry has made four appointments to the Texas Real Estate Commission: Broker member Avis Wukasch, currently serving as a broker member of the commission with a term to expire January 31, 2013, was appointed to serve as the Chair. Governor Perry also newly appointed broker member Bill L. Jones and public member Weston Martinez, and reappointed broker member Troy Alley, all three with terms to expire January 31, 2017.

Spanish Land Grant Heirs -- Jousting at Windmills?

A recent article in the San Antonio Express News about a gathering of alleged heirs of the grantees of land grants made by the Spanish crown and Mexican government hundreds of years ago really piqued my interest. My fascinations with Texas history, real estate law, and landowner rights prompted me to examine the claims of this group of descendants of families in South Texas, who assert that their long-dead ancestors never received royalty payments from oil producers operating on family property.

According to the group -- which appears to be largely represented by a single, very determined lawyer -- their ancestors died without leaving proper wills or other payment instructions for the oil companies. Thus, hundreds of millions of dollars in royalties are either unpaid by the oil producers, or have been paid, but are unclaimed and being held by the State of Texas (Comptroller) under the Texas Unclaimed Property Act. This mountain of money will remain "unclaimed," until its rightful owners can be validly identified and their entitlements to the funds proven in accordance with the Act. In order to establish their claims to the millions held by Texas, the heirs seek to have the Texas Legislature amend the Unclaimed Property Act in a way that eases a claimant's burden of proof.

My research reveals that a bill outlining the specific types of information that holders of unclaimed property must disclose was passed last Session (SB 1589), and has now been incoprorated into the Act. According to the Express News article, the families are proposing a new bill that "would set up a method by which the state can identify and qualify descendants of the original grantees using legal and historical documents as well as family genealogical research." I was unable to locate a filed bill as of this writing, but the 82nd Legislative Session is still in its early stages.

At first glance, these folks' chances of getting their hands on hundreds of millions of dollars being held by the State of Texas (who gets to keep all of the interest) seems like jousting at windmills, a la another Spaniard -- Don Quixote. I am quickly reminded of those dreamers who talk about suing Swiss banks to recover unclaimed funds, undoubtedly stolen, that Nazis deposited there and never retrieved.

But, this case might be very different. The families are represented by the same "land grant attorney" who represented some of the descendants of Padre Nicholas Balli -- a priest who held the original Spanish Land Grant to Padre island. The heirs of the good father -- who sold the island to a New York lawyer in 1938 -- won mineral rights to the island after a lengthy jury trial in 2005. The jury's verdict was upheld on appeal, but reversed by the Texas Supreme Court in 2008.

Thus, the stage is set for a very exciting effort that involves real estate, and lots of money derived from it. In the words of Quixote, "Paciencia y barajar" (Patience, and shuffle the cards). We'll be watching this one from the front row.