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.

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.

Understanding the 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 (sometimes erroneously called "quick claim 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.

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.

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.

We've Re-Located Our Offices -- Stop by and say hello!

San Antonio Texas Real Estate Attorney Trey Wilson wrote:

Trey Wilson has moved his law practice to 111 W. Olmos Dr., San Antonio, Texas 78212.  Phone, fax and email will remain the same.

Annual Accounting Requirements Under the Texas Contract for Deed

I've previously posted articles on this real estate blog describing some of the pitfalls associated with buying and selling property in Texas under a Contract for Deed. A Contract for Deed is one type of an "executory contract," or contract that remains unperformed by both parties. Contracts for the purchase and sale of real estate that have not yet closed are executory in that the Buyer has not yet paid the full purchase price, and the Seller has not yet conveyed title by way of executing a deed.

Executory contracts of all stripes -- including contracts for deed -- have been under fire in texas for more than a decade. This disfavor results from frequent abuses of unsophisticated Buyers by malevolent Sellers. In order to stem these abuses, the Texas Legislature adopted sweeping revisions to the Texas Property Code in 2001.The major change was to make applicable statewide amended versions of provisions that had previously applied only in certain economically distressed (mostly border) counties. The revised provisions are set-forth in Subchapter D of Chapter 5 of the Texas Property Code ("Prop. Code").

One of the frequently violated provisions of Subchapter D is the annual accounting requirement of Texas Property Code Section 5.077. This provision REQUIRES Sellers under Texas Contracts for Deed to provide Buyers with an annual statement in January of each year that the Contract for Deed is in place.

The annual statement must include the following information:

(1) the amount paid under the contract;
(2) the remaining amount owed under the contract;
(3) the number of payments remaining under the contract;
(4) the amounts paid to taxing authorities on the purchaser's behalf if collected by the seller;
(5) the amounts paid to insure the property on the purchaser's behalf if collected by the seller;
(6) if the property has been damaged and the seller has received insurance proceeds, an accounting of the proceeds applied to the property; and
(7) if the seller has changed insurance coverage, a legible copy of the current policy, binder, or other evidence of insurance.

Failure to timely provide this statement can be costly to a Seller. The statute provides for liquidated damages, and attorneys' fees. In some instances, a Buyer might retain remedies under the Texas Deceptive Trade Practices Act. These penalties are most severe for Sellers who enter more than 2 Contracts for deed in a single year.

A savvy Seller of Texas real estate under a Contract for Deed should contact an experienced real estate attorney to advise them on all of the legal hurdles associated with this type of transaction, and to ensure that an innocent mistake doesn't end-up leading to a costly legal problem.