TREC Adopts New Form for "Information About Broker Services" - to Take Effect on 2/1/16

Trey Wilson San Antonio Texas Real Estate Attorney, Trey Wilson Real Estate Lawyer in San Antonio wrote:

The Texas Real Estate Commission met on November 2, 2015, and approved all of the proposed changes to the promulgated TREC contract forms. Use of these new contract forms will become mandatory for all TREC licensees on January 1, 2016.

In addition, the Commissioners adopted a new form for the "Information About Broker Services" disclosure.  The new form will go into effect on February 1, 2016, and can be found HERE.  The "old" IABS form was adopted in October 2011. 

The new form contains clear consumer notices related to the duties of brokers-- and to the respective parties -- as follows:

A BROKER’S MINIMUM DUTIES REQUIRED BY LAW (A client is the person or party that the broker represents): 

• Put the interests of the client above all others, including the broker’s own interests;  

• Inform the client of any material information about the property or transaction received by the broker;  

• Answer the client’s questions and present any offer to or counter-offer from the client; and 

• Treat all parties to a real estate transaction honestly and fairly. 

 The new form also contains a written recommendation that agreements with brokers should be in writing:

0. TO AVOID DISPUTES, ALL AGREEMENTS BETWEEN YOU AND A BROKER SHOULD BE IN WRITING AND CLEARLY ESTABLISH:

   
   

   • The broker’s duties and responsibilities to you, and your obligations under the representation agreement. 

   
   

   •  Who will pay the broker for services provided to you, when payment will be made and how the payment will be calculated.

Another significant feature is a space for real estate licensees to provide all parties with contact information (as opposed to just a signature)

LICENSE HOLDER CONTACT INFORMATION: This notice is being provided for information purposes. It does not create an obligation for you to use the broker’s services. Please acknowledge receipt of this notice below and retain a copy for your records. 

Check Out my New Magazine Articles

San Antonio Texas Real Estate Attorney Trey Wilson wrote:

My article on the rise of water rate litigation and my news brief on a proposed ban of taxation on real estate transactions both appear in this month's issue of Elite Attorney SA. Be sure to check them out in this high-quality magazine that highlight's San Antonio's legal community.

San Antonio Texas Real Estate Attorney Trey Wilson wrote:

Fourth Court of Appeals: Mother's Transfer of Land to Sons Included Mineral Interests, Even if Never Discussed

San Antonio Texas Real Estate Attorney Trey Wilson wrote:

In an opinion issued in mid-February 2015, San Antonio's Fourth Court of Appeals rejected an elderly mother's claims against her sons related to deeds she executed 12 years earlier. The deeds -- executed in 2000 -- granted to the sons, respectively, parcels of rural property, but made no mention of mineral interests. That is there was neither an express grant nor reservation of the minerals contained in the deeds. 

By the time she filed suit in 2012 (12 years after the deeds were executed), mom decided that she did not intend to convey the minerals -- or at least that she regretted doing so. Notably, the properties are located in the booming Eagle Ford shale play of south Texas by the time of suit, but no mineral activity had occurred on the property at the time that the deeds were granted.

Although the case largely turned on the timeliness of mom's suit for breach of fiduciary duty (i.e. whether the claim was barred by limitations), the Court correctly noted that the deeds' silence as to minerals resulted in all of the surface estates and the mineral interests owned by mom transferred to the sons under Texas real estate law. See Cockrell v. Tex. Gulf Sulphur Co., 157 Tex. 10,  299 S.W.2d 672, 675(1956) (“[I]t is fundamental that a warranty deed will pass all of the estate owned by the grantor at the time of the conveyance unless there are reservations or exceptions which reduce the estate conveyed.”). Thus, even though mom and her sons never discussed or considered the mineral interests at the time of the conveyance, they were conveyed under the deed because it did not expressly reserve mineral rights. 

The complete opinion, rendered in Mary Moczygemba v. Thomas and Harry Moczygemba, can be found here. 

Changes in Life Circumstances May Require Deed Changes

San Antonio Texas Real Estate Attorney Trey Wilson wrote:

Each week we receive several calls from folks whose life circumstances have changed, and, as a result, they desire to change the name on a deed.  The typical requests relate to marriage and/or divorce, and consist of adding or removing another individual's name to the title of residential real estate. In other cases, property owners wish to grant property to loved ones.

While the process of creating a deed or other legal instrument to convey or change title is somewhat simple for an experienced Texas real estate lawyer, the implications and legality of such an instrument may be more complex. Here are some important considerations associated with adding or removing names from existing deeds:

1.  Removal of a person's name from title to property does not alleviate that person from mortgage or other indebtedness. Stated simply, if you are a borrower (or co-borrower) on a loan for the purchase of real estate, conveying your interest in title to another person (including your co-borrower) does not in any manner absolve you of your indebtedness under a mortgage note.  The note is a contract between you and the lender, and unless such lender agrees to allow a co-borrower to assume the full indebtedness, you are still "on the hook" for the loan, even if you do not reside in or desire to own the collateralized property.

2.  Likewise, addition of a new spouse's or other person's name to title to property encumbered by a mortgage lien (or deed of trust evidencing such an encumbrance), does not mitigate the existing borrower's obligations under mortgage note indebtedness, or work as an assumption by the added-person of the mortgage note balance.

3.  Conveying an interest in the property could violate the terms of an existing mortgage lien (deed of trust), and result in acceleration of the entire mortgage balance. Most deeds of trust contain a "due on sale" clause. This clause should be reviewed before changing title to real property that is not owned free and clear of any indebtedness.

4.  Adding a spouse's name to real property might change the character of that property from separate property to community property. This is all well and good until a divorce is looming or inheritance of the property is considered.

If you have considered these factors, and still desire to move forward with making deed changes, you should be sure that a real estate lawyer who is knowledgeable about deed drafting and real estate transactions handles the process for you.

Introduction to WHY WE CHARGE A “CONSULTATION FEE” WHEN OTHER LAWYERS MAY NOT

San Antonio Texas Real Estate Attorney Trey Wilson wrote:

Some prospective clients are surprised to hear that we charge a $350.00  “consultation fee” for a 1 hour in-person or telephonic discussion of whether we can and should undertake to represent them.  We know that many attorneys in San Antonio offer “free consultations.”  We do not – and for what we believe are very good reasons.

For the first several years of our firm's existence, we did not charge for consultations.  Resultantly, we gave away thousands of hours, and expended substantial resources visiting with hundreds of prospective clients who were “lawyer shopping,” “kicking tires,” or simply looking for free advice. 

We are blessed with dozens of potential new client calls each week, so consulting (for free) quickly became a full-time job. That business model was plainly unsustainable when we reached the point where we had to have non-lawyers conduct most of our initial consultations. I was never comfortable with this, especially since many of our real estate cases are highly complicated, involve challenging  factual scenarios, and have tremendous implications for the involved parties.

Just like any other business enterprise, a law firm’s clients are its lifeblood, and fresh blood is an essential component for sustaining. Nevertheless, we came to dread consulting with prospective clients because...well... there were just too many requests for our time.  We were so busy conducting free consultations that we fell behind in the work required to service our existing clients’ legal matters.  Even worse, it became obvious that lots of prospective clients had visited with us solely  to obtain free free advice, with no intention of ever retaining ANY lawyer's services.

So, in the year 2010, I decided to start charging a nominal consultation fee, and simultaneously enhanced the initial consultation/meeting with prospective clients into a valuable “strategy session,” as opposed to a generic interview.  This was a great business decision  – for us and for the people who  genuinely interested in obtaining the services of a serious, and hard-working real estate lawyer in San Antonio. 

There are 5 key reasons why we charge a $350.00 “consultation fee.”   In the coming days, we will list those reasons one-by-one.

San Antonio Lawyers Name the "Best" of their Peers

S.A. Scene Magazine has issued its annual list of the Best Lawyers in San Antonio, as named and voted on by their Colleagues.  I was proud to find out that I had been named as the top vote recipient in 3 categories:

• Real Estate Transactions

• Environmental & Land Use; and 

• Environmental Litigation

In past years, I have been recognized as one of the best lawyers in Real Estate Litigation, and was a little surprised (disappointed) to have not earned that distinction this year.  But, I'll take that as a challenge for next year!

I am especially proud of being named in this list because it is not influenced by advertising dollars spent in the magazine (I don;t have any), and being named is based upon polling of other practicing lawyers in and around San Antonio. It is humbling to be recognized by your peers as being good at what you do!  I appreciate the recognition by my colleagues, and congratulate the other lawyers whose names appear on the list.

Remedies Available for Breach of a Contract to Buy and Sell Real Estate

San Antonio Texas Real Estate Attorney Trey Wilson wrote:

Unfortunately, not all real estate purchase agreements come to fruition through a closing. For a host of reasons, Buyers and Sellers sometimes refuse or fail to close on contracts -- even those that are "hard." 

In most instances, the fact that closing will not occur is known ahead of time. Sometimes, however, a party doesn't learn of the other party's intention of not honoring the contract until they are left waiting at the closing table. This is a feeling that I have heard likened to being "left at the altar on your wedding day." The financial implications can also be substantial.

Most real estate purchase and sale contracts, including the promulgated forms in Texas (TAR 1601 (residential) TAR 1801 (commercial),  expressly provide for recovery of certain damages if the opposing party breaches, including by failing to close. Generally speaking, the damages available to the non-breaching party are:

• enforce "specific performance;"

• terminate the contract and receive the earnest money; and/or

• seek damages resulting from the other party's breach.

Specific performance is a remedy of equity that Courts impose as a substitute for damages, when monetary compensation would not be adequate for the non-breaching party. In essence, under specific performance, the is Court mandating that the breaching party perform its obligations under a contract.  In the real estate contract context, the Court would order the party against whom specific performance is awarded to consummate the purchase/sale truncation by closing.

It is important to understand that "specific performance" is not an independent cause of action, but rather,  an equitable remedy, the grant of which is a matter committed to the trial court's discretion. 

Seeking to force a party to close a transaction through a lawsuit requesting specific performance may sound appealing at first blush. This is especially true if you are a Seller who has been left at the closing table by a non-performing Buyer.  However, like most Court remedies, obtaining a Judgment commanding the other party to perform its contractual obligations can come at an unreasonable cost, and such Judgment may arrive way too late!  In practical terms, specific performance is sought through a brand new lawsuit that has all of the built-in scheduling -- delay in serving the opposing party, prescribed time for the Defendant to Answer, etc.  More often than not, specific performance comes too late for the non-breaching party...

Contract Termination and Recovery of Earnest Money is an option that likely appeals more to Sellers than Buyers under real estate contracts in Texas. Under this remedy, the earnest money that the Buyer has deposited with the title company/escrow officer is released to the non-breaching party. When the innocent party is the Buyer, release of the earnest money is essentially a refund of monies paid, rather than any form of compensation. When the Buyer has expended sums or incurred damages  based upon their expectation that the real estate contract would close (typical examples are inspector fees, appraiser fees, attorneys' fees, etc.), a mere refund of the earnest money will usually leave the Buyer in a position of loss, since he is put back in the position he was prior to making such expenditures.

By contrast, a Seller who receives earnest money as the result a Buyer's breach of an earnest money contract has received some compensation (though not always full compensation) for the costs and hassles associated with a contract that has not closed.  However, when the Seller has lost the opportunity to pursue another offer during the time that the then-breached contract was pending, the earnest money, alone, is rarely adequate compensation. 

Where this remedy is selected, receipt of the earnest money (whether by Buyer or Seller) typically results in a release by the non-breaching party of claims against the breaching party,  and both Buyer and Seller are free to contract with others.

Damages are generally defined as a remedy in the from of monetary compensation awarded or paid to a harmed party. In relation to breach of contract actions in Texas, they represent the cost of making the non-breaching party "whole."  These damages can include actual damages (losses related to costs incurred in connection with anticipated closing) and damages associated with lost profit and lost opportunity. As with suits for specific performance, suits for damages can be costly and time-consuming.  Further, the opposing party may not have the resources to satisfy any Judgment that may be entered.

In sum, none of the remedies available to a non-breaching party to a real estate purchase agreement are perfect. Each has its limitations, and drawbacks. Nevertheless, if you are left at the closing table, it is key to consult with an experienced Texas real estate lawyer to fully appose your options and remedies.