Articles Posted in Real Estate

For Sale.jpgDriving around town you might see signs posted at intersections advertising that a person buy’s houses or sells them to investors. These signs are typically posted by real estate scammers who have attended seminars that you see advertised on TV on how to become wealthy in real estate using other people’s money. If you are contacted by any of these individuals you should be very cautious in your dealings with them since the catch is that they become wealthy using other people’s money.

These type of transactions usually involve people who are underwater on their mortgage or who need a quick sale. The real estate scammer convinces the sellers that they should deed their property into a trust set up for them and the scammer will manage the property by finding a buyer or a renter until the property is sold. The scammer also provides disclosures to the seller advising that he or she will use their best efforts to sell the property but that it may never be sold. The scammer convinces the seller to provide them with mortgage information for the scammer to make the mortgage payments in connection with the management of the property. In the disclosures the seller acknowledges that he or she will continue to be obligated to pay the mortgage payment until the property is sold but there is no guarantee that the mortgage will ever be paid off. Lastly, the scammer will present the seller with a document that transfers the seller’s interest in the trust and in the property to a corporation or other entity owned or managed by the scammer.

The net result of the transaction is that the scammer obtains title to the property without making an actual purchase and the seller is still on the hook for the mortgage until the property is sold. But in the transaction the property is never sold because the scammer (who has title to the property) offers to owner finance to new buyers thereby making money off the difference between the new buyer’s payment and the cost of the original owner’s mortgage. Typically these new buyers are persons with bad credit who don’t qualify for conventional funding. Hence they have a high foreclosure rate and the scammer ends up foreclosing on the property and reselling to another high risk purchaser over and over. For most sellers who have been hooked into these transactions the only way out is to stop paying the mortgage and ruin their credit.

Fences.jpgAdverse possession is a legal doctrine that allows a person to lawfully claim ownership to real property originally owned by another person. The statute governing the rules of adverse possession is Texas Civil Practices & Remedies Code Sec.16.021 et seq. (“CPRC”). The statute defines adverse possession as “an actual and visible appropriation of real property, commenced and continued under a claim of right that is inconsistent with and is hostile to the claim of another person.” A person seeking to establish adverse possession must show that they actually do possess the property. The mere belief of a right to possess it is not enough. The person must also continuously possess the property for the requisite period of time and that person must peaceably and intentionally assert a claim of ownership to the property to the exclusion of the rights of the original owner. Possession shared with or with the consent of the original owner is not enough. However, the doctrine of adverse possession does not apply to public lands or against a governmental entity.

The statute sets forth rules and conditions under which the doctrine applies. These must be conclusively met. The statute is drafted in such a way as to require an affirmative act by the original owner to reclaim the property within certain periods of time. These are known as statutes of limitation. Once an owner discovers the presence of a potential adverse possessor or is otherwise put on notice of an adverse possession claim, the owner must timely act to defeat the adverse possessor’s claim within the period prescribed by one of the statutes of limitation or lose title. If the original owner is prevented from regaining possession of the property by the person claiming title by adverse possession, then owner must file what is known as a trespass to try title suit in order to reclaim possession and establish legal ownership. If the original owner does not take timely action to regain possession within the statute of limitations period, his claim of ownership of the property will be barred and the adverse possessor will considered the owner of the property.

The most commonly used statutes of limitation to establish a claim for adverse possession are sections 16.024, 16.025 and 16.026 of the CPRC.

Lien.jpgIn order to prevent persons from asserting false liens or claims against real or personal property, the Texas Legislature enacted Chapter 12 of the Texas Civil Practices and Remedies Code.

Under Chapter 12, a person may not make, present, or use a document or other record with:

  • knowledge that the document or other record is a fraudulent court record or a fraudulent lien or claim against real or personal property or an interest in real or personal property;

990755_meeting.jpgMany new subdivisions that are being built in Texas today contain restrictive covenants that require mandatory membership in the Property Owners Association (POA).These restrictive covenants give the POA the right to collect membership dues and other assessments for maintaining common areas. Typically, these restrictive covenants also give the POA control over architectural decisions concerning the homes located in the subdivision and allow for imposition of fines for failing to comply with the POA ‘s rules and regulations. But what happens when you lose your job or suffer from some other financial crises, such as a divorce, and you are having trouble making ends meet and the POA notifies you that your home is being foreclosed on for failing to pay your membership dues to the POA. To address the problems with POA run amuck, Texas has passed the Residential Property Owners Protection Act which is contained in Chapter 209 of the Texas Property Code.

Chapter 209 of the Texas Property Code applies only to a residential subdivision that is subject to restrictions or provisions in a declaration that authorize the POA to collect regular or special assessments on all or a majority of the property in the subdivision and applies only to a POA that requires mandatory membership in the association for all or a majority of the owners of residential property within the subdivision.

Sections 209.009 through 209.011 regulate the POA’s foreclosure rights. A POA may not foreclose a POA ‘s assessment lien if the debt securing the lien consists solely of fines assessed by the association or attorney’s fees incurred by the association solely in connection with the fines assessed by the association.

990755_meeting.jpgMany new subdivisions that are being built in Texas today contain restrictive covenants that require mandatory membership in the Property Owners’ Association. These restrictive covenants give the Property Owners’ Association the right to collect membership dues and other assessments for maintaining common areas. These restrictive covenants often give the Property Owners’ Association control over architectural decisions concerning the homes located in the subdivision and allow for imposition of fines for failing to comply with the Property Owners’ Association’s rules and regulations. But what happens when you lose your job or suffer from some other financial crises, such as a divorce, and you are having trouble making ends meet and the Property Owners’ Association notifies you that you are being fined or your right to use common areas of the subdivision is being restricted. To address the problems with Property Owners’ Associations run amuck, Texas has passed the Residential Property Owners Protection Act which is found in Chapter 209 of the Texas Property Code.

Chapter 209 of the Texas Property Code applies only to a residential subdivision that is subject to restrictions or provisions in a declaration that authorize the Property Owners’ Association to collect regular or special assessments on all or a majority of the property in the subdivision and applies only to a Property Owners’ Association that requires mandatory membership in the association for all or a majority of the owners of residential property within the subdivision.

Before a Property Owners’ Association may suspend an owner’s right to use a common area, file a suit against an owner, other than a suit to collect a regular or special assessment, foreclose under an association’s lien, charge an owner for property damage, or levy a fine for a violation of the restrictions, bylaws or rules of the association, the association or its agent must give written notice to the owner by certified mail, return receipt requested.

The notice must describe the violation or property damage that is the basis for the suspension action, charge, or fine, state the amount due the association from the owner and inform the owner that the owner is entitled to a reasonable period to cure the violation to avoid the fine or suspension, unless the owner was given notice and a reasonable opportunity to cure a similar violation within the preceding six months. The notice must also advise the owner that the owner may request a hearing on or before the 30th day after the date the owner receives the notice.

If the owner is entitled to an opportunity to cure the violation, the owner has the right to submit a written request for a hearing to discuss and verify facts and resolve the matter in issue before a committee appointed by the board of the Property Owners’ Association or before the board if the board does not appoint a committee. If a hearing is to be held before a committee, the notice of the hearing must state that the owner has the right to appeal the committee’s decision to the board by written notice to the board.

The association is required to hold a hearing not later than 30 days after the date the board receives the owner’s request for a hearing and must notify the owner of the date, time, and place of the hearing not later than 10 days before the date of the hearing. The board or the owner may request a postponement, and, if requested, a postponement can be granted for a period of not more than 10 days. Additional postponements may be granted by agreement of the parties. The owner or the association may make an audio recording of the hearing.

However, the notice and hearing requirements do not apply if the association files a lawsuit seeking a temporary restraining order or temporary injunctive relief or files a lawsuit that includes foreclosure as a cause of action. The notice and hearing provisions also do not apply to a temporary suspension of a person’s right to use common areas if the temporary suspension is the result of a violation that occurred in a common area and involved a significant and immediate risk of harm to others in the subdivision. The temporary suspension is effective until the board makes a final determination on the suspension.

A Property Owners’ Association may collect reimbursement of reasonable attorney’s fees and other reasonable costs incurred by the association relating to collecting the amounts, including any damages, due the association for enforcing the restrictions or the bylaws or the rules of the association only if the owner is provided a written notice that attorney’s fees and costs will be charged to the owner if the delinquency or violation continues after a date certain.
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