Why Smart Sellers Hire Real Estate Agents

San Antonio Texas Real Estate Attorney Trey Wilson wrote:

As a real estate lawyer in San Antonio -- and one who frequently deals with real estate brokers and agents -- friends and clients frequently ask me about the cost versus benefits of hiring a real estate professional when selling property.  Suffice it to say that I believe that the benefits of professional representation are numerous, and I never recommend that a friend, client or family member sells real estate without the assistance of a licensed professional.

The counter-arguments I receive from Sellers are: 1) that the San Antonio Real Estate market is "hot"and should result in a quick/easy sale;   2) that in the modern era of social media, Trulia, and Zillow, marketing real estate is "easy;" and 3) that not paying a real estate agent a commission helps the seller "save money." 

I don't find ANY of these arguments compelling.  Rather, I think that the following five (5) reasons, alone, justify using a real estate broker as a Seller's agent in every transaction:

1)  Real estate agents help establish a market-supported, realistic listing price.  It's no secret, most FSBOs are overpriced.  Virtually every Seller thinks that their home is WORTH the amount that they WISH TO RECEIVE. You know --  worth enough to satisfy the existing mortgage, pay closing costs, and still have enough for a tidy down-payment on a new property. The truth, however, is that the Seller's perceived value of the property is rarely the fair market value (what a willing buyer would pay).    

By contrast, a licensed real estate agent can establish a realistic asking price formulated by data produced from performing a market analysis of comparable listings and recent sales. Further, the agent doesn't assign an "emotional premium" on the property. Thus, a real estate broker's involvement may help the Seller avoid the common pitfall of overpricing their home.

2)  Real estate agents are not emotionally attached to your property.  In addition to helping you avoid a hefty, unsupportable price tag based on an "emotional premium" (which has no value to anyone except you -- the Seller), a broker will  not be offended by a low offer, a less than perfect inspection report, or critical statements from prospective buyers.  This helps the process become more of a business transaction, and less akin to parting with a beloved family heirloom.

3) Real estate agents understand the law.  There can be dire consequences to failing to make certain disclosures, not meeting deadlines and discrimination against certain categories of buyers.  Chances are, you don't know the real estate laws that apply to and bind you. A licensed broker does. This can save you lots of money and grief later -- especially if you avoid a lawsuit.  Further,  selling a property implicates lots of paperwork.  Having a broker explain the significance of each document is invaluable.

4)  Selling a property creates an adversary relationship with prospective buyers.  While there is no need to be nasty, it is axiomatic that the objectives of the Seller (get as much $ as possible) are naturally and necessarily adverse to the objectives of the Buyer (pay as little $ as possible).  To achieve their objectives, Buyers usually "focus on" imperfections in the property to argue that a lower price should be acceptable. Sellers don't like hearing how their most valuable possession has "fleas"  -- even when these statements are made in the course of price negotiations Having a real estate broker to "run interference" can remove some of the tension from this relationship.  

5)  Real estate agents achieve higher sales prices.  The statistics don't lie. The average Realtor-assisted sales price is significantly higher than the average sale by owner.  This difference usually more-than compensates the fees charged by the agent.

For all of these reasons, unless you want to enlist the services of a Texas real estate lawyer, a prudent Seller should engage a licensed and reputable real estate broker when it comes time to sell.

Landlocked Property? An Implied Easement May Exist By Operation of Law

San Antonio Texas Real Estate Attorney Trey Wilson wrote:

As a San Antonio lawyer with an active real estate law practice, I routinely field inquiries about landlocked property, and disputes concerning the existence (or non-existence) of easements for access.  Many times, an easement will exist by operation of law -- even if no written grant of easement is contained in a deed or other conveyance document.

WHAT IS AN EASEMENT? 

An easement is a liberty, privilege, or advantage without profit granted to a person, either personally or by virtue of his ownership of a specified parcel of land, to use another parcel of land for some limited purposes. Daniel v. Fox, 917 S.W.2d 106, 111 (Tex.App.-San Antonio 1996, writ denied). Most often, the limited purpose is for access to the easement owner's parcel of land over another owner's contiguous parcel.

When discussing easements, Texas  courts use certain terms whose legal meanings are significant. Two of the most important terms used in connection with easements are "servient estate" and "dominant estate."   The parcel owned by the grantor of the easement is called the servient estate and the parcel benefitted by the easement is called the dominant estate. Miller v. Babb,263 S.W. 253, 254 (Tex.Comm'n App.1924, judgm't adopted).  A simple example would arise when a piece of property (Tract A) abuts a county road , and is contiguous to a separate tract (Tract B) that does not touch the county road. When an easement is established over Tract A for the purpose of providing access to/from  Tract B from the county road, Tract B is the dominant estate, and Tract A the servient estate.  

HOW DO EASEMENTS ARISE?

In a perfect world, easements are obvious, identifiable and are the subject of an express grant in a written conveyance document. For example, the deed conveying ownership to Tract B (from the example above) would (in Utopian legal society) contain a clearly articulated grant of a right to cross Tract A (at a designated location) for the purpose of accessing the county road from Tract B.  

However, it is frequently that case that there contains no such express grant of an easement -- even when the owner of Tract B either sold to or bought from the owner of Tract A.  In these cases (and upon strict proof of certain elements), easements may arise by necessity and implication (operation of law), based upon the general principle that Texas law disfavors landlocked property.

EXAMPLES OF IMPLIED EASEMENT TYPES

Two types of easements arising by implication (and necessity) are an EASEMENT BY IMPLIED GRANT and an EASEMENT BY IMPLIED RESERVATION. Under Texas law, if a grantor seeks an easement by necessity over a part of the land she once owned, but has conveyed, she seeks a way of necessity by implied reservation. If, on the other hand, a grantee seeks an easement by necessity over lands once owned by a common grantor but conveyed to third parties, he seeks a way of necessity by implied grant. For a detailed discussion on the distinction between easements by reservation versus grant, see, e.g., Drye v. Eagle Rock Ranch, Inc., 364 S.W.2d 196, 205-09 (Tex.1962).

WHAT MUST BE SHOWN TO ESTABLISH AN IMPLIED EASEMENT?

A party seeking to establish the existence of an implied easement must show that:

(1) there was unity of ownership of the dominant and servient estates and that the use was 
(2) apparent, 
(3) in existence at the time of the grant, 
(4) permanent, 
(5) continuous, and 
(6) reasonably necessary to the enjoyment of the premises granted.** 

Bickler v. Bickler,403 S.W.2d 354, 357 (Tex. 1966); Drye, 364 S.W.2d at 207; Hoak v. Ferguson, 255 S.W.2d 258, 260 (Tex.Civ. App.—Ft. Worth 1953, writ ref'd n.r.e.); Miles v. Bodenheim, 193 S.W. 693, 696 (Tex. Civ.App.—Texarkana 1917, writ ref'd).

The elements of proof for each of the foregoing easement types (implied reservation vs. implied grant) differ. Most significantly,  an easement by implied reservation requires a showing of "strict necessity," while an easement by implied grant  requires only that the easement in question was reasonably necessary to the convenient and comfortable enjoyment of the property (dominant estate) as it existed at the time the severance was made.

HOW CAN I HAVE EASEMENT RIGHTS RECOGNIZED?

The most common way to establish the existence of disputed access easement rights is by filing a suit under the Texas Declaratory Judgment Act. Such a suit would seek to have the Court make a judicial declaration -- in the form of a Judgment -- that an easement exists. That Judgment would define the purpose, scope, location  and limitations of the easement, and would become part of the title chain of both the dominant and servient estates.

Cases concerning the existence of easements by necessity can be high-stakes, and difficult to prove. If you find yourself facing litigation concerning an easement, you should contact an experienced real estate litigation attorney.

Language in Deed Generally Supersedes that of Real Estate Purchase / Sale Contract

San Antonio Texas Real Estate Attorney Trey Wilson wrote:
As a San Antonio lawyer with an active real estate practice, I am frequently questioned about the legal effect of terms contained in a real estate purchase/sale agreement (earnest money contract) that do not appear in the deed. Some of examples of contractual provisions that may be omitted from deeds are:  rights of first refusal on adjacent property of the Seller,  easements or access reserved for the Seller, the right of the Buyer to cross adjacent property retained by the Seller, and the provision of a warranty on the property's condition.  The pattern is usually the same -- the parties negotiated a contract, and included certain "Special Provisions" in their written agreement, but those terms were never incorporated into the Deed recorded by the Seller after closing.

When this occurs, several legal doctrines may be implicated. This post focuses on the legal doctrine of MERGER.

It is the law in Texas that  a purchaser takes title to real property solely through a deed. See Stephens Cnty. Museum, Inc. v. Swenson, 517 S.W.2d 257, 261 (Tex. 1974). An instrument that does not operate as a present conveyance of title to real property is a contract to convey rather than a deed. See TEX. PROP. CODEANN. § 5.002; see also 30 Tex. Jur. 3d Deeds § 9 (2007). A contract to convey real property contemplates further acts leading up to the actual conveyance of title in the deed. See 30 Tex. Jur. 3d Deeds§ 9; see also Cont'l Royalty Co. v. Marshall, 239 S.W.2d 837, 840-41 (Tex. Civ. App.-Texarkana 1951, no writ). When a deed is delivered by the Seller and accepted by the Buyer as performance of a contract to convey real estate, the contract is MERGED in the deed.   

Though the terms of the  deed may vary from those contained in the contract, still the deed must be looked to alone to determine the rights of the parties. 2 DEVLIN, LAW OF DEEDS § 850a.  This principle is what Texas courts call "Merger. " See Baker v. Baker, 207 S.W.2d 244 (Tex.Civ.App. —San Antonio 1947, writ ref'd n.r.e.).

The Rule applicable in all contracts, that prior stipulations are merged in the final and formal contract executed by the parties, applies, of course, to a deed based 49upon a contract to convey. When a deed  is delivered and accepted as performance of a contract to convey, the contract is merged in the deed . Though the terms of the deed may vary from those contained in the contract, still the deed  must be looked to alone to determine the rights of the parties. No rule of law is better settled than that where a deed  has been executed and accepted as performance of an executory contract to convey real estate, the contract is functus officio and the rights of the parties rest thereafter solely in the deed .

Id. at 249-50, quoting 2 DEVLIN, LAW OF DEEDS § 850a.

Thus, when a Buyer accepts a deed as performance of an earnest money contract requiring the Seller to convey legal title top real property, it is the general rule that any collateral agreements contained in the contract are extinguished.  

This Rule, as most in the law, has exceptions.  For example, the Texas Supreme Court has held that the doctrine of merger may not be applied to defeat a cause of action under the DTPA for breach of an express warranty made in an earnest money contract and breached by deed.  See Alvarado v. Bolton, 749 S.W.2d 47, 48 (Tex.1988).  Likewise,  the doctrine of merger does not apply when a real estate contract was procured by fraud, accident or mistake in transactions leading up to the deed. ECC Parkway Joint Venture v. Baldwin, 765 S.W.2d 504, 511-12 (Tex.App.-Dallas 1989, writ denied);see also 1464-Eight, Ltd. v. Joppich, 154 S.W.3d 101, 104 n. 1 (Tex.2004) (disapproving court of appeals cursory analysis that based on merger doctrine earnest money contract was superseded by documents executed at closing).

The Practical Effect of Agreeing to Buy Real Estate "AS IS"

San Antonio Texas Real Estate Attorney Trey Wilson wrote:

Many boilerplate/form/template contracts providing for the sale of Texas real estate (including the TREC promulgated form 20-11) provide that the buyer will accept the property "in its present condition." See Section 7(D) of TREC Form 20-11.  Other real estate purchase and sale agreements expressly state that the Buyer is purchasing the property "AS IS."  

What does this mean, and what are the possible legal implications of buying Texas real estate on an AS-IS basis?

The Texas Supreme Court has held that when the terms of a Purchase and Sale Agreement (Earnest Money Contract) provide that the sale is one for the property in its "AS IS" condition, the buyer will be prevented from holding the seller liable if the thing sold turns out to be worth less than the price paid. Prudential Ins. Co. of Am. v. Jefferson Assocs., Ltd., 896 S.W.2d 156, 161 (Tex. 1995).  See also, e.g., Prudential Ins. Co. of Am. v. Jefferson Assocs., Ltd., 896 S.W.2d 156, 161 (Tex. 1995) (refusing to hold a seller responsible for alleged misrepresentations when the buyer was a sophisticated real estate purchaser who agreed to purchase the property "as is" and assumed the risk of properly determining the property's value); Isaacs v. Bishop, 249 S.W.3d 100, 110 (Tex. App.-Texarkana 2008, pet. denied) (suggesting the appellee was negligent for failing to read a promissory note, but still upholding rescission based on fraud by the appellant).   

That is, the risk of the property being different than the Buyer believed it was before the transaction is consummated is borne by the Buyer. By agreeing to purchase something "as is," a buyer agrees to make his own appraisal of the bargain and to accept the risk that he may be wrong. Mid Continent Aircraft Corp. v. Curry County Spraying Serv. Inc., 572 S.W.2d 308, 313 (Tex.1978). The seller gives no assurances, express or implied, concerning the value or condition of the thing sold.See Tex.Bus. & Com.Code § 2.316(c)(1) ("as is" agreement excludes implied warranties in contract covered by UCC).

Texas courts have also interpreted contract language stating "in its present condition" to be an agreement to purchase the property "as is." See Cherry v. McCall, 138 S.W.3d 35, 39 (Tex. App.-San Antonio 2004, pet. denied) (construing "in its present condition" as an "as is" agreement); Larsen v. Carlene Langford & Assocs., Inc., 41 S.W.3d 245, 251 (Tex. App.-Waco 2001, pet. denied) (construing to be "as is" certain contract language stating that "[b]uyer accepts the Property in its present condition. Buyer shall pay for any repairs designated by a lender"); Fletcher v. Edwards, 26 S.W.3d 66, 75 (Tex. App.-Waco 2000, pet. denied) (construing "in its present condition" in earnest money contract to be an agreement to purchase the property "as is"); Smith v. Levine, 911 S.W.2d 427, 431 (Tex. App.-San Antonio 1995, writ denied) (construing "in its present condition" to be an agreement to purchase the property "as is"); see also Sims v. Century 21 Capital Team, Inc., No. 03-05-00461-CV, 2006 WL 2589358, at *2 (Tex. App.-Austin Sept. 8, 2006, no pet.) (mem. op.) (construing "in its current condition" as the plain-English equivalent to "as is").

Thus, a valid "AS IS" clause will often work to the advantage of a Seller and the detriment of the Buyer.  

As with most legal topics, however, this is not universal -- especially where fraud is used to induce the Buyer to enter the "AS-IS" agreement:

A buyer is not bound by an agreement to purchase something  "AS IS" that he is induced to make because of a fraudulent representation or concealment of information by the seller. Weitzel v. Barnes, 691 S.W.2d 598, 601 (Tex.1985); Dallas Farm Mach. Co. v. Reaves, 307 S.W.2d 233, 240 (Tex.1957); see Cockburn v. Mercantile Petroleum, Inc., 296 S.W.2d 316, 326 (Tex.Civ.App.—Dallas 1956, writ ref'd n.r.e.). A seller cannot have it both ways: he cannot assure the buyer of the condition of a thing to obtain the buyer's agreement to purchase "AS IS", and then disavow the assurance which procured the "AS IS" agreement. Also, a buyer is not bound by an "AS IS" agreement if he is entitled to inspect the condition of what is being sold but is impaired by the seller's conduct. A seller cannot obstruct an inspection for defects in his property and still insist that the buyer take it "AS IS". In circumstances such as these an "AS IS" agreement does not bar recovery against the seller.

 Prudential Ins. Co. of Am. v. Jefferson Assocs., 896 S.W.2d 156, 161 (Tex.1995).

RECOVERING UNDER THE TEXAS REAL ESTATE RECOVERY TRUST ACCOUNT

San Antonio Texas Real Estate Attorney Trey Wilson wrote:

The statute allowing recovery under the Real Estate Recovery Trust Account is found in Chapter 1101 of the Occupations Code. See generally TEX. OCC. CODE ANN. ch. 1101, subch. M & N (West 2012). The statute states that the Trust Account is maintained "to reimburse aggrieved persons who suffer actual damages" at the hands of a license holder. TEX. OCC. CODE ANN. 1101.601(a) (West 2012).  

Texas appellate courts agree "[t]he purpose of the Account is to `guarantee the fidelity and honesty of the real estate salesman in his dealings with the public and to insure and indemnify any member of the public against damages or injury caused by a violation of the Act.'" Wilson v. Bloys, 169 S.W.3d 364, 366 (Tex. App.-Austin 2005, pet. denied) (quoting State v. Pace, 640 S.W.2d 432, 433 (Tex. App.-Beaumont 1982), aff'd, 650 S.W.2d 64 (Tex. 1983)). The statute requires the claimant to show "that the judgment is based on facts allowing recovery under this subchapter." Id. § 1101.607(1) (West 2012).

Simply put, a person who obtains a judgment for actual damages caused by the misconduct of real estate license holders can, when certain specified statutory conditions are met, obtain reimbursement from the Account if the license holder is unable to pay the judgment. Tex. Occ.Code Ann. § 1101.601.  

To recover under the Act, a person who has an uncollectable judgment against a real estate broker may file a verified claim in the court in which the judgment was rendered and, upon notice to the commission and the judgment debtor, apply for an order directing payment out of the fund. Id.  A hearing is then conducted on the application at which the commission is authorized to appear for the limited purpose of protecting "the fund from spurious or unjust claims...." Id.  At this hearing, the claimant must show, among other things, that its prior judgment is against a licensed real estate broker who caused the claimant's damages while acting as a broker. Id. § 8, part 1(a) and part 3(c). 

NOTE:  TEX. OCC. CODE ANN. § 1101.602 provides that when a license holder is selling property in his own name instead of as an agent for someone else, a claimant may not recover from the Trust Account unless the license holder engages in the following enumerated wrongful conduct:

1101.653(3):  acting in bad faith;

1101.652(a)(3): engaging in misrepresentation, dishonesty, or fraud when selling, buying, trading, or leasing real property in the name of himself, his spouse, or his relatives; 

1101.652(b): See list here;

1101.653(1): engaging in dishonest dealing, fraud, unlawful discrimination, or a deceptive act;

1101.653(2):  making a misrepresentation; or 

1101.653(4):  demonstrating untrustworthiness.

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.

NEW COURT OPINION -- REAL ESTATE COMMISSIONS CAN BE RECOVERED FROM UNLICENSED "BROKERS" BUT ONLY BY THOSE WHO PAID THEM

San Antonio Texas Real Estate Attorney Trey Wilson wrote:

In Texas, persons engaging on certain real estate activities for a commission or other consideration are generally required to hold a license or certificate of registration issued by the Texas Real Estate Commission (TREC). TEX. OCC. CODE ANN. § 1101.351(a). In particular, broker functions, including negotiating or attempting to negotiate the listing, sale, exchange, purchase or lease of real estate, usually require a TREC license. TEX. OCC. CODE ANN. § 1101.002(1)(A)(iii). NOTE: There are notable exceptions to the rule including attorneys (See TRELA §1101.005(1), and persons selling their own property (regulated real estate brokerage activities must be "for another" person or entity. This means that persons who are buying, selling or leasing their own property do not need a license; they are acting for themselves and not for another person).

In fact, Section 1101.758 of the Real Estate License Act (RELA) establishes that it is a crime for an unlicensed person to engage in activity for which a real estate license is required.  

Further there exists a statute expressly creating a PRIVATE CAUSE OF ACTION, and right to file suit, against persons who receive a commission or other consideration as a result of acting as a broker or salesperson without holding a license or certificate of registration issued by TREC. TEX. OCC. CODE ANN. § 1101.754.  Under that statute, an unlicensed person is  liable to an "aggrieved person" for a penalty of not less than the amount of money received or more than three times the amount of money received. Id. The statute, however, does not define the term "aggrieved person."

In an opinion issued earlier this week (May 14, 2013) the Houston Court of Appeals (1st District) interpreted TEX. OCC. CODE ANN. § 1101.754 to mean "that the aggrieved person must have paid that commission to have standing to pursue a private cause of action under RELA." See Shanklin vs. Bassoe Offshore USA, Inc. Tex. App. 1st Dist [Houston] 2013.  Thus, the Court reasoned, a person does not have standing under the statute unless the payed  a commission "because a claimant is aggrieved by the specific conduct of the person receiving a commission without having a license." See Id.

If you have paid a real estate commission to an unlicensed person (including a TREC licensee whose license is suspended), you should contact an experienced real estate litigation attorney to evaluate whether you might recover that commission under Section 1101.754 or another provision of law.  NOTE: Conducting real estate brokerage activity with an inactive license is considered a violation subject to sanctions. [TRELA §1101.351(c)]

The (Not So) Long Arm of the Law -- Geographic Limitation of Civil Subpoenas in Texas

San Antonio Texas Real Estate Attorney Trey Wilson wrote:

On more than a few occasions over the years, a client has contacted me after reciving a subpoena to appear or produce documents in a distant texas county they have never heard of.  With 254 counties and 254 corresponding courthouses, chances are that there's more than a few that virtually none of us have heard of.

The question is always the same -- do I really have to spend the time and money to travel from South Texas to Amarillo or Orange?  Fortunately, the Answer is frequently "Probably Not."

This because the Texas Rules of Civil Procedure contain an express geographic / distance limitation on civil subpoenas.  Specifically, Texas Rule of Civil Procedure 176.3(a) provides that subpoenas are not effective if they require the witness to appear or produce documents in a county that is more than 150 miles from where the person resides or is served.  

As with any Rule of Court, however, there are important exceptions to the Rule:

1.  Rule 176 applies only to discovery sought from non-parties. See TEX. R. CIV. P. 199.2(b)(5); see also Tex. R. Civ. P. 199.3. If you are a party to a lawsuit, you can be compelled (even without a subpoena) to appear in the county of suit or a variety of other counties.

2.  Rule 176 does not apply to Criminal subpoenas.  Under the Code of Criminal Procedure Procedure, a defendant charged with a felony or a misdemeanor punishable by confinement is entitled to subpoena out-of- county witnesses. See Tex.Code Crim. Proc. Ann. art. 24.16

3.  Rule 176 may or may not apply to administrative or other qausi-judicial tribunals, such as those before the Texas State Office of Administrative Hearings (SOAH).

Further, no subpoena should ever be ignored.  Even if you believe that you have been served with an ineffective subpoena, it is still imperative that you contact the Court or attorney who issued it to explain why you don't believe you should appear.

After all, lawyers -- and especially judges -- don't handle being ignored very well.

Limitations of the Quitclaim Deed in Texas

With surprising frequency, Texans seeking to transfer title to real estate without the assistance of an experienced real estate lawyer utilize Quitclaim Deeds. Perhpas this is because of the wide availability of these forms on the internet, and in free databases. However, there are many pitfalls associated with using the Quitclaim Deed, and its limitations are plenty. For these reasons, quitclaim deeds are viewed with disfavor in Texas.

The essence of a quitclaim deed is an effort to pass any title, interest or claim of the grantor, but not professing that such title is valid, nor containing any warranty or covenants for title. See Porter v. Wilson, 389 S.W.2d 650, 655-56 (Tex.1965). A quitclaim deed is not a conveyance or a muniment of title. Adamson v. Doornbos, 587 S.W.2d 445, 447-48 (Tex.Civ.App.—Beaumont 1979, no writ).

By itself, a Quitclaim Deed does not establish any title in those holding the deed, but merely passes the interest of the grantor (if any) in the property. Stated simply, a Quitclaim Deed suffices only to give the grantee whatever title that grantor has. If the Grantor has no title to the property interest in question, then none passes.

More importantly, a subsequent purchaser is not a bona fide purchaser if the conveyance is made by quitclaim (conveyanvce without warranty). See Woodward v. Ortiz, 150 Tex. 75, 237 S.W.2d 286, 291-92 (1951) (purchaser of a quitclaim deed takes with notice of all defects in the title and equities of third persons); Kidwell v. Black, 104 S.W.3d 686, 691 (Tex.App.-Fort Worth 2003, pet. denied); Hall v. Tucker, 414 S.W.2d 766, 769 (Tex.Civ.App.-Eastland 1967, writ ref'd n.r.e.).

Although there is an appropriate application for quitclaim deeds in Texas, these circumstances are rare, and a General Warranty Deed or Special Warranty Deed is the preferential instrument for conveyance.

New Changes to TREC Contract Forms

The Texas Real Estate Commission took emergency action at the February 14, 2011 commission meeting to adopt revisions to standard contract forms including the Unimproved Property Contract, the One to Four Family Residential Contract (Resale), the New Home Contract (Incomplete Construction); the New Home Contract (Completed Construction); the Farm and Ranch Contract; and the Residential Condominium Contract. The effective date for the emergency action is March 1, 2011.

This action was taken based on a recommendation from the Broker Lawyer Committee. The Broker Lawyer Committee is a committee appointed by the Commission to draft and revise contract forms that are capable of being standardized to expedite real estate transactions and minimize controversy.

With this action the forms were amended to remove new sub-paragraph 15B, which was recently added to the contract forms to require a seller or buyer to file an action for specific performance within 45 days of the Closing Date of the contract. The Commission took emergency action to remove sub-paragraph 15B with an effective date of March 1, 2011. The updated contract forms are available for immediate use on the TREC website with a date of February 14, 2011 on the right-hand corner.

TENANT's PERSONAL PROPERTY -- ADEQUATE COLLATERAL FOR UNPAID RENTS?

Is the landlord ever justified in seizing a Tenant's property?

Yes, but only if the Tenant is delinquent on the rent and the lease gives the landlord a lien on the Tenant's property. Such a provision must be underlined or in bold print in the lease.

In seizing the property under a landlord's lien, the landlord may not take exempt property, but may remove non-essential items (TVs, stereos, VCRs, CD players), provided s/he can enter the apartment peacefully. But s/he must do the following:

The landlord must leave a notice of entry along with a written inventory of the items removed.
The notice must state the name, address, telephone number of the person whom the tenant may contact about the amount owed.
The notice must show the amount of delinquent rent and state that the items will be promptly returned when the full amount of delinquent rent is paid.
The landlord cannot collect or charge for parking, removing, or storing items unless authorized previously in a written lease.
In addition, a landlord may remove property if a tenant abandons the unit. If a landlord obtains a court order of eviction, the landlord may also remove the tenant's property, but this must be done under the supervision of a law officer.

Can the landlord sell a Tenant's possessions in order to recover back rent?

Unless otherwise permitted in the written lease, any property seized by a landlord under a landlord's lien cannot be sold or disposed of. If the lease permits such a sale, the landlord must give the tenant 30 days written notice before the date of the sale. This notice must be sent to the tenant by both first class and certified mail, or Return Receipt Requested at the tenant's last known address.

FAQ -- SECURITY DEPOSITS

What is the purpose of a security deposit?

The security deposit law serves as a protection for the landlord. The deposit can be used to cover costs for which the tenant is liable by providing some sort of collateral to protect a landlord's property against abuse by the tenant and by recapturing actual financial losses as a result of the tenant's breach of a lease. Texas law protects the right of renters to get their deposit back.

Can I assume that my security deposit will automatically cover the last month's rent?

No, not automatically. Normally, the tenant cannot deduct the security deposit from the last month's rent without permission from the landlord. Assuming that the security deposit will cover the rent / balance of the rent and therefore withholding payment, constitutes a lease violation for which the tenant may be evicted. In addition, a tenant who withholds the last month's rent may be liable for an amount equal to three times the amount of the rent wrongfully withheld and the landlord's reasonable attorney's fees.

I've just moved out of my rental unit. When can I expect to receive my security deposit?

According to the Texas Property Code, a tenant has the right to receive his / her security deposit (or the balance of the security deposit with a list of itemized deductions) on / before the 30th day after leaving a dwelling, provided the tenant has given the landlord written notice of her forwarding address for the return of her deposit. For more information, see Procedure to Refund.

Are there any qualifications to my receiving my security deposit?

Yes. You should receive your security deposit provided you have met the following conditions:

Your lease term has ended
You have given thirty days written notice prior to leaving the dwelling
You do not owe any back rent or other charges
You have not damaged the apartment in excess of normal wear and tear

Is it true that if I do not provide my forwarding address, I lose my deposit?

No, but the landlord is not required to return a deposit until 30 days after the tenant
moves out or 30 days after the landlord receives the tenant's forwarding address in writing.

I've received my security deposit, but not the full amount. Is my landlord required to provide an itemized account of deductions?

Yes, unless the tenant owes rent and there is no dispute over the amount owed. Otherwise, the landlord must provide an itemized list of deductions within 30 days. If the landlord doesn't include an account of itemized deductions within 30 days, s/he may forfeit the right to withhold any part of the deposit and may be liable for court costs, statutory penalties and attorney's fees. If the deposit is not returned in full within 30 days, and the court finds that the landlord acted in bad faith, the landlord can be held liable for $100 and three times the amount of the deposit wrongfully withheld, plus attorney's fees and court costs.

Can the landlord deduct from my security deposit for normal wear and tear on the unit?

No. Landlords cannot charge for normal wear and tear on the apartment. For example, the landlord should not charge for such routine procedures as shampooing the carpet or painting the unit, unless there are egregious stains, damages, etc.


If my landlord fails to return my deposit within 30 days, can I receive more than the amount of the security deposit?

Not necessarily. A tenant will receive more than the amount of the security deposit only if it can be proven in court that the landlord acted in bad faith.

My rental unit is about to be sold. Will I lose my security deposit?No. Under Texas law, there is no requirement that the landlord put the security deposit into an escrow account to be transferred to the new owner. Nor is there an automatic transfer of security deposits to new owners. The old landlord is still responsible for returning all security deposits to tenants until the new owner gives the tenant a signed statement that s/he has received and is responsible for the security deposits.

I've decided not to take an apartment, after all, despite signing the lease. Can I get my security deposit back?

Texas does not have a Buyer's Remorse Law, so the lease becomes binding as soon as it is signed. Many rental application forms allow the landlord to keep the entire deposit if the tenant is approved and then decides not to sign the lease. Even if there is no written agreement about the deposit, the landlord is entitled to recover out-of-pocket expenses (including advertising and lost rent) after taking the property off the market.

However, if the tenant secures a replacement tenant, approved by the landlord, the landlord may not keep the deposit if the replacement tenant occupies the unit by the date the lease was to begin. On the other hand, if the landlord secures the replacement tenant, s/he may keep a sum agreed to in the lease as a cancellation fee or the actual expenses incurred by the landlord.

Laws Setting-forth important rights you have as a homebuyer

When buying a home, you should consider several important considerations. Among them are finding competent representatives knowledgable in real estate and law to assist you. You should also be aware that the following provisions of law establish and protect your important rights as a homebuyer:

Consumer Credit Protection Act (1960) - Guarantees confidentiality of credit reports and allows consumers to correct inaccurate information in their reports.
Equal Credit Opportunity Act of 1975 (ECOA) - Prohibits the discrimination in any credit action based on race, sex, marital status, color, religion, age, handicap, or national origin.
Equal Housing Opportunity - Prohibits housing discrimination based on race, sex, marital status, color, religion, age, handicap, family status or national origin.
Fair Housing Act - Prohibits the discrimination based on race, sex, marital status, handicap, or national origin in any real estate transaction.
Federal Consumer Credit Protection Act (commonly known as the Truth in Lending Act) (1969) - Requires that lenders disclose the actual terms and conditions of a loan before an applicant commits to the loan.
Home Mortgage Disclosure Act (1975) - Provides information to help determine whether public institutions are assisting the housing needs of their communities and neighborhoods.
Real Estate Settlement Procedures Act of 1974 (RESPA) - Encouraging homeownership through consumer protection, this act regulates certain lending actions related to closing/settlement. Some of its provisions are:
RESPA requires lenders to provide buyers a good faith estimate of the cost of the loan, including disclosure of the Annual Percentage Rate (APR). RESPA requires lenders to provide buyers with general information about settlement costs. Lenders must provide buyers a copy of the Mortgage Servicing Disclosure Statement, regarding loan servicing and transfer. Within three days after receiving the loan application, lenders must provide the buyer with an estimate of closing costs and monthly payments. RESPA provides the borrower the opportunity to see the HUD-1 Settlement Statement one day before the actual settlement. Prohibits kickbacks between Real Estate professionals for referrals and prohibits fee-splitting and receiving unearned fees for services not rendered.
Regulation B of the Consumer Credit Protection Act - Requires lenders to inform potential borrowers of any adverse actions taken on their loan applications.
Regulation Z - Includes regulations related to consumer credit disclosures identified in the Consumer Credit Protection Act.
Veterans Housing Benefits Act (1978) - Increases the housing benefits for eligible veterans including increased loan amounts.

Trey Wilson is an experienced real estate lawyer in San Antonio. In addition, he is a licensed real estate agent, and is intimately familiar with the laws affecting buyers and sellers of real property in Texas. Trey Wilson was voted as one of San Antonio's best real estate litigation lawyers in San Antonio in August 2008.