TEXAS REAL PROPERTY DISTINCTIONS PROFESSOR ZACHARY KRAMER ARIZONA STATE UNIVERSITY COLLEGE OF LAW

Transcription

1 TEXAS REAL PROPERTY DISTINCTIONS PROFESSOR ZACHARY KRAMER ARIZONA STATE UNIVERSITY COLLEGE OF LAW CHAPTER 1: OWNERSHIP (PRESENT ESTATES AND CONCURRENT OWNERSHIP) The primary gal f this lessn is t highlight the key differences between real prperty law in general and real prperty law in Texas. The secndary gal f this lessn is t reinfrce yur understanding f sme f the cre cncepts f prperty law. We start with the frms f wnership, which cnsists f three interrelated tpics: Present Estates Cncurrent Estates Future Interests Keep in mind that real prperty is alienable, which means it can be. Cmmn methds f transfer are sale, gift, devise, and. In a transfer f real prperty, the seller/dnr is called and the buyer/recipient is called the. A. Present Estates A present estate gives the wner the t currently the prperty. Nte 1: An wner need nt actually use r ccupy the prperty. The imprtant pint is that the wner has the right t pssess the prperty. 1. Fee Simple Abslute The fee simple abslute is the wnership interest recgnized by law and therefre, nt surprisingly, the mst cmmn frm f wnership f real prperty. Alienable Freely alienable, which means the wner can easily transfer the prperty Duratin Has an infinite duratin, which means it s capable f lasting Creatin At cmmn law, a grantr needed t use particular wrds f limitatin t create a fee simple abslute: and his/her heirs. Texas Distinctin: In Texas, cnveyances that are ambiguus are cnsidered a fee simple unless 1) the cnveyance is r a is created.

2 Example 1: O cnveys Blackacre t A. At cmmn law, this wuld nt have created a fee simple abslute. Under Texas law, hwever, a fee simple is created. Example 2: O cnveys Blackacre t A fr life. This wuld nt create a fee simple abslute under Texas law because the wrds f limitatin ( fr life ) create a lesser estate. Future Interest N future interest assciated with a fee simple abslute. 2. Defeasible Fees A fee simple can als be made t be defeasible, which means it may be by the ccurrence f an event. Fee Simple Determinable A fee simple that is limited by specific language. Classic examples f duratin are s lng as, while, during, until, etc. The future interest assciated with a fee simple determinable is a pssibility f reverter. This future interest is held by the and it vests nce the duratinal perid ends. Example 3: O cnveys Blackacre t A and her heirs s lng as the land is farmed. A acquires a fee simple determinable and O retains a pssibility f reverter. If A r her heirs ever stps farming the land, title will vest autmatically in O r O s heirs. Fee Simple Subject t Cnditin Subsequent A fee simple that is limited by specific language. Classic examples include prvided that, n the cnditin that, but if, etc. The future interest assciated with a fee simple subject t a cnditin subsequent is a right f entry. This future interest is held by the and it des nt vest autmatically. A grantr must exercise her right t re-enter the prperty. Example 4: O cnveys Blackacre t A and her heirs, but if the land isn t used as a farm, O may re-enter and re-take. A acquires a fee simple subject t cnditin subsequent and O retains a right f entry. If A stps farming the land, O must exercise the right t retake in rder t take pssessin f Blackacre. Fee simple Subject t Executry Interest A fee simple that will end upn the happening f an event and the future interest will vest in, i.e. smene ther than the grantr r the grantee Themis Bar Review, LLC TX Real Prperty Distinctins

3 The future interest assciated with this fee simple is an executry interest. An executry interest vests autmatically. Example 5: O cnveys Blackacre t A and her heirs, but if liqur is served n the premises, then t C and her heirs. A has a fee simple subject t executry limitatin and C has an executry interest. 3. Life Estate A life estate is a present estate that is limited t duratin. The lifetime can be measured against the grantee s lifetime r a third-party s lifetime. Example 6: O cnveys Blackacre t A fr life. This life estate will end at A s death. Example 7: O cnveys Blackacre t A fr B s life. A has the life estate, which is measured against B s life. This is knwn as a life estate pur autre vie. Creatin Mst life estates are created with the wrds f limitatin fr life. Example 8: O cnveys Blackacre t A fr life. A has a life estate. Texas Distinctin: N t create a life estate. Example 9: O cnveys Blackacre t A until her death. In Texas, this will create a life estate in A. Future Interest The future interests assciated with the life estate are the and the. Waste Althugh a life tenant has the right t ccupy and use the prperty, the life tenant cannt use the prperty in such a way as t cause a decrease in the value f the prperty. The future interest hlders can enter the prperty t inspect fr waste, r bring suit t btain damages r an injunctin t prevent such waste. B. Cncurrent Estates A cncurrent estate is wnership r pssessin f real prperty by tw r mre persns. 1. Tenancy in Cmmn The cncurrent interest. Tenants in cmmn have equal rights t psses r use the prperty. N exists. This means that each tenant can transfer her interest individually, even at death. Presumptin that a cnveyance t tw r mre peple creates a tenancy in cmmn. TX Real Prperty Distinctins 2017 Themis Bar Review, LLC 3

4 2. Jint Tenancy A cncurrent estate where tw r mre individuals wn prperty with the Fur Unities ( PITT ) There are fur unities necessary t have a jint tenancy: Pssessin: Each jint tenant must have an equal right t pssess r use the prperty. Interest: Each jint tenant must have an equal interest. Time: Each jint tenant must acquire their interest at the same time. Title: Each jint tenant must acquire their interest in the same instrument. Nte: If any unity is brken, then jint tenancy is severed and becmes a. Texas Distinctin: Unlike mst states, a jint tenancy in Texas des nt autmatically include a right f survivrship. Instead, jint tenants can create a right f survivrship by agreeing t allw their interests t pass under a right f survivrship. 3. Tenancy by the Entirety A jint tenancy between persns. Includes a right f survivrship Texas Distinctin: Because it is a jurisdictin, Texas des nt recgnize the tenancy by the entirety. CHAPTER 2: FUTURE INTERESTS Future Interest: An interest in prperty that gives the wner the right t pssess the prperty in the future. A cuple key features: Present vs. Future Thugh it cncerns the future, a future interest is a presently-existing right. Pssessin Like with present estates, future interests are cncerned with the wner s right t the prperty. A. Grantr Interests Reversin Future interest held by the after the grantr cnveys a life estate r an estate fr years but des nt cnvey the balance t a third party. Nte that the reversin is nt subject t the Rule Against Perpetuities. Example 10: O cnveys Blackacre t A fr five years. A has a term f years; O retains a reversin. Pssibility f Reverter Future interest held by the fllwing a fee simple determinable Themis Bar Review, LLC TX Real Prperty Distinctins

5 Example 11: O cnveys Blackacre t A s lng as the prperty is used fr cmmercial purpses. O retains a pssibility f reverter. Texas Distinctin: Texas des nt have a statute that limits the duratin f the pssibility f reverter. Nte als that the pssibility f reverter is nt subject t the Rule Against Perpetuities. Right f Entry Future interest held by the fllwing a fee simple subject t cnditin subsequent. Example 12: O cnveys Blackacre t A and her heirs, but if liqur is served n the premises, O can re-enter and re-take. O retains a right f entry. Texas Distinctin: Texas des nt have a statute that limits the duratin f the right f entry. Nte als that the right f reentry is nt subject t the Rule Against Perpetuities. B. Grantee Interests Remainder A future interest held by a that is capable f becming pssessry upn the natural expiratin f a prir pssessry estate. Vested Remainder An interest that is: 1. Given t an grantee, and 2. That is nt subject t a. Example 13: O cnveys Blackacre t A fr life, then t B and her heirs. B has a vested remainder. B is ascertained and B des nt have t satisfy any cnditin in rder t take the interest. Vested Subject t Open An interest given t a class f grantees and at least ne member f the class has. Example 14: O cnveys Blackacre t A fr life, then t A s children wh reach 21. A has three kids B is 25, C is 18, and D is 15. The remainder is vested as t B, but the class remains pen until C, D, r any ther kids brn t A reach 21. Vested Subject t Cmplete Divestment An interest that will be divested upn the happening f a specific event. Example 15: O cnveys Blackacre t A fr life, then t B and her heirs, but if B becmes a lawyer, t C and her heirs. B s remainder is vested, but if B becmes a lawyer, B s remainder will be divested by C. [C has an executry interest]. TX Real Prperty Distinctins 2017 Themis Bar Review, LLC 5

6 Cntingent Remainder An interest that is: 1. Given t an grantee, r 2. Subject t a. Example 16: O cnveys Blackacre t A fr life, then t A s heirs. This is a cntingent remainder because A s heirs are nt ascertained. We wn t knw A s heirs until A is dead. Example 17: O cnveys Blackacre t A fr life, then t B if B survives A. This is a cntingent remainder because B s interest is subject t a cnditin precedent. B must survive A in rder t vest. Texas Pint f Law: In Texas, a cntingent remainder is nt destryed if it has nt vested by the time the prir estate terminates. Like in mst states, Texas will wait t see if the cntingent remainder ultimately vests. Example 18: O cnveys Blackacre t A fr life, then t B if B graduates frm law schl. Say that B is in her secnd year f law schl when A dies. B s cntingent remainder is nt destryed. The prperty will revert t O t wait and see if B ultimately graduates frm law schl. Nte 2: N fancy remainder cases! Executry Interests An interest in a that cuts shrt the prir estate upn the ccurrence f a specified cnditin. Executry interests are transferrable and they are subject t the Rule Against Perpetuities. Example 19: O cnveys Blackacre t A fr life, then t B and her heirs, but if B becmes a lawyer, t C and her heirs. C s interest is a executry interest. In rder t vest, C must cut shrt anther grantee s interest (B s vested remainder). Example 20: Prf. Kramer cnveys $1000 t Themis students wh pass the Texas Bar. The Themis students wh pass the bar have a executry interest. In rder t vest, the students must divest the grantr (Prf. Kramer s fee simple). Helpful hint: A remainder will never fllw a vested fee. C. The Rule Against Perpetuities ( RAP ) Under RAP, specific future interests are valid nly if they must vest r fail by the end f a life in being, plus 21 years. RAP is best understd by example: Themis Bar Review, LLC TX Real Prperty Distinctins

7 Example 21: O cnveys Blackacre t A and her heirs, but if the land is ever used as a business, t B and her heirs. This vilates RAP. It is pssible that sme time in the future, lng after O, A, and B have died, ne f A s heirs will perate a business n Blackacre. Thus we strike B s interest entirely. Example 22: O cnveys Blackacre t A fr life, then t A s children wh reach the age f 18. The children s cntingent remainder des nt vilate RAP. Eighteen years after A dies, we will knw whether the interest vests r fails. This is within the perpetuities perid f a lifetime plus 21 years. D. Texas Distinctins: RAP, Charitable Trusts, and Cy Pres Prperty held in trust is subject t RAP. In Texas, and trusts vilate RAP. Hwever, in Texas, RAP des nt apply t charitable trusts. Example 23: Richie Rich cnveys Blackacre t A, in trust, s lng as the land is farmed, then t the city f Hilly Flats t be used as a public park. The gift t Hilly Flats is nt subject t RAP. Curts use the dctrine f cy pres t a charitable trust when its particular purpse has becme impssible r impractical. Example 24: Richie Rich cnveys Blackacre t the Hilly Flats Schl f the Arts, in trust, t supprt the schl s pttery prgram. Say that because f lw enrllment, the schl ends its pttery prgram and replaces it with a graphic design prgram. Using the cy pres dctrine, the curt can mdify Rich s trust t supprt the schl s new graphic design prgram. CHAPTER 3: LANDLORD AND TENANT A. Types f Tenancies Tenancy fr Years An estate measured by a amunt f time. Estate ends when time perid is up. Example 25: O leases Blackacre t A fr tw years. A has a term f years, which ends autmatically after tw years. Peridic Tenancy An estate that is and fr a set perid f time. Example 26: O leases Blackacre t A n mnth-t-mnth basis. A has a peridic tenancy. TX Real Prperty Distinctins 2017 Themis Bar Review, LLC 7

8 Terminatin The big issue in peridic tenancies is terminatin. Texas Distinctin fr terminating a peridic tenancy. Situatin 1: Perid is Mnth-t-Mnth In this situatin, the tenancy ends n the later f: 1) The day given in the terminatin ntice, r 2) One mnth after the day ntice is given. Nte: A tenant can give mre than a mnth s ntice Situatin 2: Perid is less than A Mnth (e.g. week-t-week) The tenancy ends n the later f: 1) The day given in the terminatin ntice, r 2) The day fllwing the expiratin perid Tenancy at Will A tenancy that may be terminated by either r Tenancy at Sufferance Case f the tenant, the tenant wh stays in pssessin after her tenancy has ended Terms f the prir lease cntrl Texas Distinctin 1: A landlrd must prvide a hldver tenant at least days ntice t vacate befre the landlrd can evict the tenant. Texas Distinctin 2: Unlike mst states, Texas des nt allw landlrds t cllect duble rent frm a willful hldver. B. Tenant s Duties A tenant has a number f imprtant duties (e.g. pay rent). We re nly ging t fcus n particular bits f Texas law. 1. Damage Resulting in Inhabitability If damage t the premises causes cmplete inhabitability i.e., then either landlrd r tenant can terminate by giving written ntice. Limitatin: The tenant r tenant s family r guest cannt have been the cause f the damage. Scpe: We re talking really bad damage, e.g.,,, etc Themis Bar Review, LLC TX Real Prperty Distinctins

9 2. Assignments and Subleases A tenant may nt assign r sublease t anther tenant withut the f the landlrd. C. Landlrd Remedies and Duties (Texas Distinctin) 1. Remedies Say the tenant fails t pay rent. What are the landlrd s remedies? Damages: If landlrd prvides prper written ntice, the landlrd may recver, plus $500. Lck Out: Texas allws a landlrd t lck ut a tenant, i.e.. Cmmercial Lease: In a cmmercial setting, landlrd can lck ut tenant after placing a nte n the tenant s frnt dr, explaining where a new key may be btained after back rent is paid. Residential Lease: Landlrd can lck ut a residential tenant if the lease prvides fr this remedy. Nte 1: A tenant can get a new key regardless f whether back rent has been paid! If the lck ut was, tenant can get tw remedies: Pssessin f the prperty r terminate the lease, and Damages One mnth s rent plus $1000 in damages and csts. Security Depsit: A landlrd must refund a tenant s security depsit within days after tenant surrenders the premises fr a cmmercial lease. (Nte: Fr residential leases, the time perid is nly 30 days.) Nte 1: If Landlrd retains all r part f the security depsit, the landlrd must prvide a reprt f the deductins. Nte 2 Exceptin: Landlrd desn t have t prvide the written reprt if tenant wes back rent. 2. Duties Duty t Mitigate: Say the tenant surrenders the leasehld befre the lease is up. In Texas, a cmmercial landlrd has a duty t mitigate damages. A cmmercial landlrd must make t mitigate damages Unless, the cmmercial landlrd and tenant agree therwise in the lease. Editr's Nte 1: The prfessr misspke. Bth cmmercial and residential landlrds have a duty t make reasnable effrts t mitigate damages when a TX Real Prperty Distinctins 2017 Themis Bar Review, LLC 9

10 tenant breaches the lease and abandns the prperty. A lease prvisin that waives a right r exempts a landlrd frm this duty t mitigate is vid. The burden is n the t prve that the cmmercial landlrd failed t mitigate damages Anticipatry Breach: Say the tenant abandns the premises. Mst jurisdictins d nt permit landlrds t sue fr future rent due. Texas des permit it. In Texas, a landlrd can treat the breach as anticipatry and either:, and sue fr value f future rentals less the current value f remaining term, r, and sue fr difference between riginal cntract price and new tenant s rent. Warranty f Habitability: Landlrds in Texas must prvide a safe, decent, and sanitary dwelling, as well as make repairs that threaten the health r safety f an rdinary tenant. Nte: We re talking abut leases. If the tenant is ging t live there, it must be a safe place t live. Landlrd s duty t make repairs: In Texas, a landlrd must make a effrt t repair a cnditin, if: The tenant gives f the cnditin in need f repair; The tenant is n rent at time ntice is given; and The cnditin the health and safety f an rdinary tenant. CHAPTER 4: ADVERSE POSSESSION The Gist: Adverse pssessin grants t a persn wh wrngfully prperty fr a certain amunt f time. The Test: T acquire title by adverse pssessin, a trespasser s use must be:. This is where we will spend the bulk f ur time in this lecture.. The basic idea f the pen and ntrius requirement is that the pssessr s use must be ut in the pen, such that a reasnable true wner wuld be aware that smene is using her land Themis Bar Review, LLC TX Real Prperty Distinctins

11 Example 27: O wns Blackacre but has never visited it. A trespasses n Blackacre and begins living there. T cnceal her trespass, A nly ges ut at night and never uses lights. A s use wuld nt be pen and ntrius, as it is designed t avid detectin. Hstile. The basic idea f the hstility requirement is that the pssessr s use must be adverse t the true wner s interest. An easy way t think f this is that use will nt ripen int gd title. Example 28: O wns Blackacre. O invites her friend A t live n Blackacre while O is ut f the cuntry. A s use is permissive; it cannt frm the basis f an adverse pssessin claim.. The adverse pssessr cannt share pssessin with the true wner. Example 29: O wns Blackacre. O uses the land as a grazing spt fr his cattle. A puts her cattle n Blackacre. A s use is nt exclusive; she is sharing the space with O. Texas Distinctin: Cntinuus Use: Texas has particular rules gverning the cntinuity requirement. The basic rule is that an adverse pssessr s use must be cntinuus fr years. Editr's Nte 2: Prfessr Kramer misspke. An adverse pssessr des nt need t shw that she paid taxes n the prperty fr the adverse pssessin perid f 25 years. In specific cases, the adverse pssessin perid is shrter than 25 years: 10-Year Perid: If the land is fewer than acres, then the adverse pssessin perid is ten years. 5-Year Perid: The statutry perid is reduced t five years if the claimant has: Cultivated, used, r enjyed the prperty; Paid taxes, and Is claiming rights t the prperty. This is ften referred t as clr f title, where the adverse pssessr acquired a deed in and tk pssessin thinking she had acquired gd title. Example 30: A is gullible and B is a shady character. B sells A title in Blackacre. The prblem is that B desn t have any rights t Blackacre. When A takes pssessin, A des s under clr f title frm an invalid deed. 3-Year Perid: A true wner must bring suit t evict a trespasser within three years when the trespasser based title n clr f title r an imprper recrding. TX Real Prperty Distinctins 2017 Themis Bar Review, LLC 11

12 Texas Distinctin: Tlling fr Disabilities: If the true wner f the prperty is disabled at the time the adverse pssessin, then the 3-year, 5- year, and 10-year statutes f limitatin dn t begin running. Why? Because, if disabled, the true wner can t the adverse pssessr Texas Distinctin: Terminating Adverse Pssessin Adverse pssessin is terminated when the wner files a t recver pssessin f her land. Example 31: O wns Blackacre. A takes pssessin f Blackacre and begins farming it. When O realizes A is in pssessin, O enters Blackacre and shuts at A, Get ff my land, yu gd-fr-nthing creep! O has nt terminated the adverse pssessin under Texas law. CHAPTER 5: LAND SALE CONTRACTS AND RECORDING PROBLEMS Editr's Nte 3: We are nly ging t cver land sale cntracts t the extent that they diverge frm general prperty law. A. Equitable Cnversin and Risk f Lss Nrmally, there is a gap in time between when parties enter int a real estate cntract and the clsing n the prperty, what we call the perid. Under the dctrine f equitable cnversin, the seller effectively hlds the prperty fr the buyer during the executry perid. As trustee, the seller has the the prperty, as well as the duty t the prperty in gd cnditin. Mst states place the risk f lss n the. This means that the buyer bears the burden f risk fr damage during the executry perid. Texas Distinctin: Texas has adpted the Unifrm Vendr and Purchaser Risk Act. Under this statute, the risk f lss during the executry perid is placed n the. Example 32: Seller and Buyer enter int a cntract fr the sale f Blackacre Manr. Their clsing will take place in a week. Befre the clsing, a freak strm sweeps thrugh the area and destrys Blackacre Manr. Seller may nt enfrce the cntract against Buyer and Buyer may recver the prtin she already paid under the cntract Themis Bar Review, LLC TX Real Prperty Distinctins

13 B. Mrtgages and Security Interests A mrtgage is a t secure repayment f a debt. Cnsider tw kinds f mrtgages: Purchase mney mrtgage: Device used where persn takes ut a lan fr the purchase f prperty. Example 33: Buyer is interested in purchasing Blackacre Manr. Buyer has a small amunt f cash t put dwn and will receive the balance frm a lan frm Lender. In exchange fr the lan, Buyer gives Lender a mrtgage n Blackacre. Future Advance Mrtgage: Device used where brrwer receives a line f credit (ften referred t as a ) used fr hme equity, cnstructin etc. Example 34: Years after purchasing Blackacre Manr, Buyer needs t put n an additin t accmmdate her grwing family. Buyer takes ut a line f credit frm Lender. Buyer gives Lender a mrtgage interest in Blackacre Manr. 1. Default What happens when brrwers default n their lans? In a mrtgage nte, lenders reserve the pwer t frce a sale t satisfy the debt. Statutry Redemptin: Many states have a prvisin that enables buyers/brrwers frm recvering the prperty after a freclsure sale. The effect f such a prcess is t the freclsure sale. Example 35: Buyer purchased Blackacre Manr fr $100,000, paying $20,000 in cash and taking ut a lan, which was secured by a mrtgage, fr $80,000 at an interest rate f 5% per year. Buyer can t affrd t make payments and defaults. Purchaser buys the huse at a freclsure sale. In a state with a statutry redemptin, Buyer can nullify the subsequent sale t Purchaser. Texas Distinctin: Texas des nt have a statutry redemptin perid. Therefre, in Texas, a freclsure sale is. 2. Mrtgage Alternatives Installment Cntracts: An installment cntract is a cntract fr a. The seller retains title until the buyer makes final payment. Nrmally, if a buyer can t cntinue making payments, the buyer defaults and the seller gets t keep the buyer s interest. TX Real Prperty Distinctins 2017 Themis Bar Review, LLC 13

14 Texas Pint f Law: Texas law seeks t prtect in cntracts fr a deed. The seller must give statutry befre frfeiting the purchaser s interest. Nte: If the purchaser has paid r mre f the amunt due, the seller has the pwer t sell the purchaser s interest in the prperty t a new purchaser. 3. Freclsure in Texas Judicial Freclsure: A freclsure supervised. Once the curt declares a freclsure, the prperty is at a public sale. Nn-Judicial Freclsure: A freclsure sale that is verseen by the. A purchaser at a nn-judicial freclsure sale in Texas takes the prperty, withut any express r implied warranties. Deficiency Judgments: When the freclsure sale brings in less than the utstanding debt n the prperty, a curt may issue a deficiency judgment. The curt determines the f the prperty. Redemptin: A hmewner may her debt the freclsure sale begins. This prcess is knwn as an equity f redemptin. Remember: There is n after-sale right f redemptin in Texas. Deed in Lieu f Freclsure: If a hmewner can t pay ff her debt, she can cnvey the prperty t the lender in exchange fr r canceling any utstanding debt. C. Deeds and Recrding Prblems 1. Valid Deed: In rder t be valid, a deed must the parties (grantr and grantee), include (e.g. d grant and cnvey ), and the prperty. Texas Distinctin: Texas recgnizes the Strips and Gres dctrine. This dctrine cncerns prperty that a radway r right-f-way. Helpful Hint: Did the grantr an easement r right-f-way interest in the strip f land between the cnveyed prperty and the center f the public rad? If yes, then the grant des nt cnvey title up t the center f the radway. If nt, then the grant des cnvey title up t the center f the radway Themis Bar Review, LLC TX Real Prperty Distinctins

15 Nte 1: Strips and Gres des nt apply when the grantr wns land abutting bth sides f the strip. Nte 2: Strips and Gres des nt apply if the strip is larger and mre valuable than the cnveyed tract. 2. Crrectin Instruments: Say that an riginal deed r recrd has an in it. Texas allws a persn t recrd a crrectin instrument t fix the errr in the recrd. Nnmaterial Crrectin: A persn with persnal f the errr can execute a crrectin instrument t crrect a nnmaterial errr. Example 36: Oliver inherited Blackacre Manr frm his father. A nut fr all things histrical, Oliver discvered an errr in his father s deed t Blackacre Manr. The deed spells the father s name incrrectly and incrrectly states that the father was single at the time. Oliver is entitled t execute an instrument crrecting the recrd. Material Crrectins: Only a party t the transactin may execute a crrectin instrument t fix a material errr in the deed. Example 37: Shrtly after buying Blackacre Manr, Oliver discvers that the deed he received fr the prperty did nt describe the adjacent lt, which Oliver paid fr and believed was part f the deal. Oliver can execute a crrectin instrument t fix this material errr. 3. Restraints n Alienatin: A restraint n alienatin is a prvisin in a deed that seeks t restrict an wner frm the prperty. In Texas, if a restraint n alienatin is vid, it des nt render the entire deed vid. Example 38: Buyer purchases prperty frm Seller. Because Seller is a racist, Seller includes a prvisin in the deed that prhibits Buyer frm selling the prperty t a mixed-race family. Such a restraint n alienatin is vid. The deed is still valid, hwever. Nte: The facts in example 38 raise an imprtant pint abut Texas law. Under Texas law, a restrictin that affects real prperty cannt prhibit the use, sale, r rental t a persn because f race, clr, religin, r natinal rigin. This cvers bth and. TX Real Prperty Distinctins 2017 Themis Bar Review, LLC 15

16 CHAPTER 6: LAND USE A. Easements An easement is a right t anther persn s prperty. The land burdened by an easement is called the estate. The land benefited by an easement is called the estate. 1. Classifying an Easement Appurtenant: An easement that is. The hlder f an easement appurtenant is benefited in her use f the land. Example 39: Dminic and Sally are neighbrs. Dminic has the right t crss Sally s land t reach the highway. Dminic has an easement appurtenant. Dminic s estate is the estate and Sally s estate is the estate. In Grss: An easement that benefits the hlder. Example 40: Sally has a lvely pl. Dminic is an avid swimmer. Sally permits Dminic t use her pl. Dminic has an easement in grss. Sally has the estate. Nte 1: In an easement in grss, there is n dminant estate, nly a servient estate. Nte 2: Texas Distinctin: In Texas, an easement in grss is nt transferable r assignable, except fr. 2. Types f Easements: Express Easements An easement affirmatively created by the parties that satisfies the statute f frauds. The scpe f an express easement is determined by the terms f the written grant r reservatin. Easement by Necessity An easement where a piece f prperty is severed, rendering ne f the tracts landlcked. Easement by Implicatin An easement that is implied by prir use, where use was cntinuus, apparent, and reasnably necessary t the dminant estate. Prir wner must have used the prperty as a befre cnveying the dminant tract Themis Bar Review, LLC TX Real Prperty Distinctins

17 Easement by Prescriptin An easement that is created thrugh. B. Water Rights Texas Distinctin: In Texas, the prescriptin perid t create an easement is. Example 41: Oliver wns a tract f line that brders a highway. Sally lives n the neighbring tract. Sally starts crssing a small path n Oliver s prperty t reach the highway. Her use is pen and hstile t Oliver s rights. Sally will have t use the path fr ten years in rder t create an easement by prescriptin. Editr's Nte 4: Prfessr Kramer misspke in the abve example. Sally s use need nt be exclusive in rder t btain an easement by prescriptin. It is sufficient that her use was actual, pen, hstile, and cntinuus fr ten years. Tw basic theries f water rights: 1. Riparian Rights: Hlds that landwners wh a waterway wn the rights t the waterway. Riparians share the right t f the water, such that ne riparian is liable t anther fr interference with the ther s use. Texas Distinctin: Texas used a riparian rights regime until Only landwners wh can trace their title back between 1823 and 1895 can make use f this dctrine tday. 2. Prir Apprpriatin: Texas, like mst ther western states, fllws the dctrine f prir apprpriatin. First in Time, First in Right: The first persn t use the water, regardless f where their land is lcated, has the rights t the water. Beneficial Use: In a prir apprpriatin jurisdictin, the user must put the water t a use. Any prductive use satisfies this standard. Exceptin Grundwater: Texas des nt fllw the prir apprpriatin dctrine when it cmes t grundwater. Texas Distinctin: A landwner wns the grundwater f the landwner s prperty. Landwner has ver the grundwater. TX Real Prperty Distinctins 2017 Themis Bar Review, LLC 17

18 CHAPTER 7: HOMESTEAD Texas prvides a hmestead exemptin fr and. A hmestead exemptin is designed t prtect a family s frm a t satisfy after the death f the head f husehld. A. Types f Hmestead 1. Rural Hmestead Cnsists f nt mre than: acres fr a ; r acres fr a. 2. Urban Hmestead Cnsists f nt mre than acres f ne r mre cntiguus lts. What makes it urban? Lcated within the ; and Served by,, and at least three f either electric, natural gas, sewer, strm sewer, r water services. Nte 1: There cannt be a mixed hmestead f part urban and part rural. Nte 2: The tw types f hmesteads cannt exist simultaneusly. 3. Persnal Prperty Can persnal prperty qualify as hmestead? In rder t qualify as a hmestead under Texas law, persnal prperty must be n the wner s land and have sme level f t the land. The best example is a attached t the land, e.g. a barn r related building. A prminent Texas case invlved a man wh lived n a bat and tried t claim the bat as his hmestead. The curt cncluded that the bat was nt a hmestead because it wasn t sufficiently t the land. A fixture needs t be a part f the realty. 4. Business Hmestead A business may als be a hmestead in Texas. Urban: A business can qualify as a hmestead if it is n the same as the hmestead r a lt t the hmestead, and des nt exceed acres. Imagine a persn living abve their business Themis Bar Review, LLC TX Real Prperty Distinctins

19 Rural: A nn-cntiguus parcel can qualify as a rural hmestead prvided the wner can shw the parcel is t the use and enjyment f her. B. Legal Effects f Hmestead Basic Prtectin: The hmestead exemptin prtects a hme frm a frced sale t satisfy the wner s creditrs. Exceptins Situatins where the hme is nt prtected: Purchase Mney: The Texas Cnstitutin permits creditrs t frce a sale if the purchase mney n the hme is due. Taxes n the Prperty: Hmestead prperty is nt prtected frm the frced sale fr the payments f any taxes assessed and levied n the prperty. Refinance f a lien: Encumbrances may be prperly fixed n hmestead prperty fr the f a lien against the hmestead. Cnstructin Imprvements: The Texas Cnstitutin permits the frced sale f the hmestead fr lans made in cnnectin with imprvements t the prperty, prvided the wrk and material used were cntracted fr and with the f bth spuses. Hme Equity Lans: Hmestead prperty is nt prtected frm the frced sale fr the payments f a hme equity lan. Reverse Mrtgage: Hmestead prperty is nt prtected frm the frced sale fr the payments f a reverse mrtgage. A reverse mrtgage is a line f credit available t peple ver the age f, which enables them t access a prtin f the equity in their hme. Owelty: Hmestead prperty is nt prtected frm the frced sale t satisfy an welty f partitin. Owelty is the mney paid fllwing the partitin (that is, ) f a c-tenancy when an equal partitin isn t pssible. Transfers: Spuses cannt transfer r encumber a hmestead withut the f the ther spuse. Terminatin: A hmestead ends in the fllwing situatins: If a claimant dies withut a t take the hmestead, r T prve abandnment, there must be intent nt t use the prperty as a hmestead. Divrce des nt destry the hmestead, prvided ne f the spuses is able t the hmestead. TX Real Prperty Distinctins 2017 Themis Bar Review, LLC 19

20 CHAPTER 8: LIENS Definitin: A lien is a in a piece f prperty t secure payment f a. A. Mechanic s Lien In Texas, a cntractr, subcntractr, architect, engineer, surveyr, r ther supplier f materials ( materialman ) r labr t be used fr the r f a hme r building, may secure a mechanic s lien. Purpse: The purpse is t ensure that thse engaged in building prjects will receive payment fr their labr. Scpe: It cvers payment fr, materials, r fr the. The lien des nt extend t,, r that are public. A subcntractr may nt claim a lien that exceeds an amunt equal t the labr perfrmed, materials used, and prprtinate prfit margin. Pririty: The hlder f a mechanic s lien has preference ver ther creditrs f the riginal cntractr. Practical Issues Affidavit f lien: A persn claiming the lien must file an affidavit with the cunty clerk nt later than the f the after the day the indebtedness accrues. Indebtedness depends n whether we re dealing with the riginal cntractr r a subcntractr. Original Cntractr: Indebtedness accrues n the last day f the mnth in which: A is received by the riginal cntracting parties stating that the riginal cntract has terminated, r The riginal cntract has been cmpleted, settled, r. Subcntractr: Indebtedness accrues n the last day f the last mnth in which the r the. Ntice: Any persn wh files an affidavit must ntify the at her last knwn address. Ntificatin is dne by Themis Bar Review, LLC TX Real Prperty Distinctins

21 If the filer is nt the riginal cntractr, the filer must als send a cpy t the riginal cntractr. Ntificatin must ccur n later than the day after the affidavit is filed in curt. A subcntractr must give the riginal cntractr written ntice f any unpaid balance n later than the day f the mnth in which the subcntractr s labr was perfrmed r material delivered. Pririty: A mechanic s lien attaches t the huse, building, r imprvements in preference t any prir lien, encumbrance, r mrtgage n the land. Hwever, the mechanic s lien des nt affect any lien, encumbrance, r mrtgage n the land at the time f the inceptin f the mechanic s lien. B. Liens and Mrtgages Texas is a state, nt a state. This means that the mrtgagee r creditr has a lien r security interest in the prperty, nt title t the prperty. C. Vendr s Lien In a cntract fr a deed ( ), a breach may give rise t a lien in favr f the (als knwn as the vendr). An equitable lien may be impsed fr the benefit f a vendr wh passed legal title t the buyer (vendee) but did nt receive the entire purchase price. In Texas, a vendr s lien shuld be expressly in the deed f trust. If the buyer (vendee) defaults, the vendr may the lien and sue fr the balance wed under the cntract, rescind the cntract and take pssessin, r sue t recver title and pssessin. Editr's Nte 5: As Prfessr Kramer ntes, Texas permits a vendr t expressly reserve a lien fr the payment f the purchase price f the real prperty. Typically, a vendr will d s in dcument f cnveyance (deed), nt the deed f trust. Upn the buyer s default, the vendr retains legal title t the prperty and may sue the buyer fr the utstanding bligatin wed t the vendr. [END OF HANDOUT] TX Real Prperty Distinctins 2017 Themis Bar Review, LLC 21

22 Themis Bar Review, LLC TX Real Prperty Distinctins