Articles Posted in Real Estate Law

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Nuisance claims are a bit of a muddled area of Texas law. As Justice Boyd stated in the opinion: “This is a nuisance case, but that does not tell you much. As a legal concept, the word nuisance ‘has meant all things to all people.’ ” Because of the confusion, in a recent case the Texas Supreme Court articulated the standard for a landowner who wants to assert a noise-nuisance claim in Texas. The case is Crosstex North Texas Pipeline L.P. v. Andrew and Shannon Gardiner. In its opinion, the Texas Supreme Court noted that a nuisance is a particular legal injury that occurs where a landowner’s use or enjoyment of their land is interfered with by another party. The party could be a neighbor or an easement holder using the land. Nuisances often take the form of noise, vibrations, overpowering smells and other conditions that impede or inhibit a person from enjoying their property.

In this case, Crosstex North Texas Pipeline obtained an easement from the Gardiners and then built and operated a gas compressor station on the easement on a neighboring property. The compressor station included four diesel engines that were each “bigger than mobile homes.” Witnesses described the sound as similar to a jet engine. At least one of the engines runs continuously all day and night. Crosstex implemented a variety of other sound reduction and mitigation measures to stop the travel of sound, such as building walls around the compressor and planting vegetation around the compressor. However, the Gardiners claimed that the sound level was still unacceptable and that it interfered with the use and enjoyment of their property. The Gardiners sued on a noise nuisance claim. The jury awarded them $2,000,000 for dimunition in value of their ranch because of the compressor station.

The Court confirmed that Texas precedent characterizes a nuisance, not as an invasion of an interest but as a condition that substantially interferes with the use and enjoyment of land by causing

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On November 7, 2017, Texas voters approved SJR 60. You can review the text of the new law here. This law includes several amendments to Article XIV, Section 50 of the Texas Constitution that concern home equity loans. Highlights of the amendments include but are not limited to:

  1. changing the percentage limitation on fees charged to the borrower from 3% to 2%;
  2. removing the prohibition against encumbering homestead property which is being taxed at agricultural valuation;
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The Texas Supreme Court recently addressed whether a lender is required to forfeit payment and interest payments made by a borrower when the lender has violated the terms of a home equity loan, and whether this a remedy is a matter of right available under the Texas Constitution or through a breach of contract action.

In the case of Garofolo v. Ocwen Loan Servicing LLC, Ms. Garofolo took out a home equity loan, and repaid the amount she borrowed plus interest in less than five years. Upon repayment, her loan holder, Ocwen Loan Servicing, recorded a release of the lien with Travis County, but failed to provide her with a copy of this release in recordable form, which was required of the lender under the home equity loan agreement.

After Ms. Garofolo notified her lender that they had not provided her with a copy of the lien release, and the lender failed to provide the document for sixty days, Ms. Garofolo sued the lender  seeking forfeiture of all the principal and interest she paid on her home equity loan, claiming this was a constitutional right afforded to her either under the Texas Constitution or because the lender had violated the loan agreement.

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What happens when a Texas family discovers that the home equity loan on their home did not satisfy the constitutional requirements for homestead liens in the Texas Constitution? In the case of Wood v. HSBC Bank, the Wood family took out a home equity loan on their home in 2004. Their loan changed hands a number of times and ended up with HSBC Bank NA. In 2012, the Woods’ notified HSBC that there were defects in the loan that did not comply with the Texas Constitution. HSBC failed to cure the defects. Although it was eight years after closing when the issue was raised, the Woods’ sued HSBC to invalidate the lien on their property securing their loan and for quiet title to the property and forfeiture of all principal and interests payments made on the loan.

The Question For the Texas Supreme Court

The question before the Texas Supreme Court was whether, once the lender declined to cure the defect, was the lien void, or merely voidable. If the lien was void, then the lien was invalid and no statute of limitations applies. On the other hand, if the lien was voidable, then the four-year statute of limitations under Texas Civil Practice and Remedies Code §16.051 applies to the Woods’ case. In other words, because they did not bring suit within four years from the date the loan closed, their claim for quite title and forfeiture of all principal and interests payments made on the loan would be time barred.

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In a case that is probably a recurring nightmare for oil and gas attorneys, the Texas Court of Appeals recently addressed the question of what constitutes a material change to a written agreement involving the purchase of oil and gas leases in the case of Ranger Energy LLC v. Tonya McCabe Trust et al. In 2008, Mark III Energy Holdings purchased eight oil and gas leases from Tomco Energy. Mark III Energy paid for the leases with a $4 million dollar loan from Peoples Bank. However, two of the leases were accidentally left out of the assignment to Mark III Energy from Tomco Energy. The mortgage lien also failed to include the same two leases. In 2011 and 2012, certain trusts purchased overriding royalty interest in these leases. One of the assignments to the trusts also omitted reference to the same two leases.

Mark III Energy defaulted on the loan and Peoples Bank sued. In settlement of that litigation, Mark III conveyed the leases to Peoples Bank in lieu of foreclosure and gave the Bank a modified deed of trust. Later, the Bank discovered that two leases were missing from the mortgage lien and modified deed of trust, so they took it upon themselves to unilaterally file a corrected mortgage and deed of trust which added the missing leases. Neither the Bank nor Mark III Energy signed the revised agreements. Instead the Bank just added the signature pages from the old documents. In 2013, the Bank sold the lien and indebtedness to an affiliate, Ranger Energy, who then proceeded to foreclose on the loan.

Ranger Energy filed suit to extinguish the overriding royalty interest in the eight leases. The litigation centered on the “correction instrument” statute in the Texas Property Code §§ 5.027–.031. Specifically, the Texas Property Code permits “a nonmaterial change that results from a clerical error,” [§5.028(a)], “a nonmaterial change that results from an inadvertent error,” [§ 5.028(a-1)] and in certain cases “a material correction” to a recorded instrument of conveyance. (§5.029). The statute also allows correction of nonmaterial clerical errors by a person who has personal knowledge of the facts relevant to the correction and the kinds of errors that can be corrected include “a legal description prepared in connection with the preparation of the original instrument but inadvertently omitted from the original instrument”.

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The Texas Supreme Court recently decided an important real estate case in Town of Lakewood Village v. Bizios. Bizios was lived outside of Lakewood Village, Texas. Bizios was sued by Lakewood Village for not applying for or obtaining building permits when he began building his home. Lakewood Village, which is a general law municipality, asserted that it has the authority to extend its rules and ordinances to its extraterritorial jurisdiction. The extra-territorial jurisdiction (“ETJ”) of any particular city is based on the city’s population. Extra-territorial jurisdiction is the unincorporated area around the city’s corporate boundaries over which a city can exert control for certain activities.

In this case, the Texas Supreme Court determined that home rule cities are permitted to enforce their building codes in their extraterritorial jurisdiction, but general law cities, such as Lakewood Village, cannot.

What is a General Law City?

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A new statute will provide new rights to co-tenant heirs and a new option for the Texas real estate attorneys assisting them. The Texas legislature recently passed and Governor Abbott signed  Section 16.0265 of the Texas Civil Practice and Remedies Code that provides assistance to heirs who have collectively inherited real estate from a common ancestor. In particular, it gives some additional rights to the heir or heirs who live on, use and pay taxes on the land to the exclusion of the other heirs. You can read the full text of the new law here.

This new statute applies to cotenant heirs, which the statute defines as one of two or more people who simultaneously acquire identical and undivided ownership interests in real property through intestate succession. Intestate succession means the passage of title to property according to the Texas Estates Code, which applies when someone dies without leaving a will or if someone has left will, but the will was not probated. This is a common situation, and is sometimes difficult to remedy short of filing a lawsuit.

Specifically, the new statute says that one or more cotenant heirs may acquire interests of the other heirs by adverse possession if, for a continuous and uninterrupted ten year period:

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The Texas Court of Appeals in Houston recently decided a case, UNION PACIFIC RAILROAD COMPANY v. AMERITON PROPERTIES INCORPORATED, that contains an important caveat for anyone preparing or interpreting a deed.

Background

Galveston, Harrisburg & San Antonio Railway Company (GHSR), the predecessor to Union Pacific Railroad Company, acquired title to certain Texas land in 1879 after commencing a condemnation proceeding against the owner, Mary Lawrence. GHSR and Mrs. Lawrence agreed to settle the condemnation proceeding, and Mrs. Lawrence gave GHSR a deed in return for GHSR’s payment of $437 for a portionthe land.

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In Caffe Ribs, Inc. v. State of Texas, the State of Texas filed an eminent domain suit to obtain property from Caffe Ribs to use for a storm water detention pond as part of an expansion of Interstate 10. The property is near the intersection of Beltway 8 and Interstate 10.

Prior to ownership by Caffe Ribs, the property was used to store and manufacture oil field equipment, which resulted in environmental contamination on the property. Weatherford owned the property from 1977 to 1988, until the property was foreclosed on by Paul Revere Variable Annuity Insurance Company. Weatherford continued operations on the property as a lessee into the 1990s.

In February 1995, Paul Revere sold the property “as is” to Caffe Ribs for $487,000.  Ribs expressly agreed “to accept the conveyance of the Property subject to any presently known or subsequently discovered Hazardous Materials or Hazardous Materials Contamination.” Paul Revere retained the exclusive right to evaluate and analyze the environmental condition of the property and take any actions that Paul Revere determined to be necessary regarding environmental conditions. Subsequently, Weatherford and Paul Revere  began remediation of the property. They were well into that process when their efforts were interrupted by the condemnation lawsuit.

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The  Texas Court of Appeals in Texarkana published an interesting decision in the case of  In re Estate of Hardesty, in which they discussed who had standing in Texas to challenge a foreclosure sale of real estate.

Background

Carolyn Hardesty obtained a home equity loan for $500,000.00 from PrimeLending in 2004. The loan was secured by a lien classified as an extension of credit under Article XVI, Section 50(a)(6)(A) of the Texas Constitution. Carolyn signed a sworn fair market value agreement at closing stating that the value of the property was $625,000.00. Kenneth Hardesty, Carolyn’s son, assisted Carolyn in the loan process but was not a party to the transaction with PrimeLending. In October 2005, CitiMortgage began servicing the loan. The lien was assigned to CitiMortgage in April 2010.