The Title Objection Letter

Transcription

1 19 h Annual Rbert C. Sneed TEXAS LAND TITLE INSTITUTE The Title Objectin Letter December 3-4, 2009 Hyatt Regency Hill Cuntry Resrt & Spa San Antni Mr. Acie C. McAda Acie C. McAda, Attrney At Law P. O. Bx W. Mill Street New Braunfels, TX acmcada@bcsnet.net Mr. Paul McNutt, Jr. Title Resurces Guaranty Cmpany 8111 LBJ Fwy Ste 1200 Dallas, TX pmcnutt@trgc.cm

2 Acie C. McAda Attrney at Law 267 West Mill Street New Braunfels, TX Ph: Fax: Educatin: Prfessinal: Texas Tech University J.D Texas Tech University MS 1986 (Agricultural Ecnmics) Texas A & M University BS 1983 (Animal Science) I have practiced law in New Braunfels since 1988 and at different times in my career handled all levels f criminal defense, family law, business and general civil litigatin I have been a fee attrney fr First American Title since 2003 with ffices in New Braunfels, Seguin, and Canyn Lake. My current practice includes representing all participants in real estate transactins, lender cunsel and civil litigatin invlving real estate disputes. In additin, I serve as city attrney fr tw small Suth Texas cities. I gratefully acknwledge the help and input f my wife, Janine, wh as an escrw fficer, has been in the trenches f real estate transactins and at sme pint in time has prbably already seen it and dne it.

3 INSTRUCTOR PROFILE PAUL MCNUTT Cmpany: Title Industry Backgrund: Executive Vice President and General Cunsel Title Resurces Guaranty Cmpany Dallas, Texas Current psitin 19 years. Prir experience as cmmercial escrw fficer in Hustn, Texas with several cmpanies and as underwriting cunsel. Educatinal Backgrund: B.B.A., University f Texas L.L.B., University f Texas Dale Carnegie, Effective Speaking and Human Relatins, 1989 Previus Teaching Experience: Industry Assciatins: Speaker, TLTA Reginal Seminar 2007 Marital Rights 2007 Freclsures 2008 Surveys Speaker, Texas Land Title Institute 2000 Optimizing Plicy Cverages 2002 Illegal Subdivisins: Nt Just a Platting Issue 2003 Pwers f Attrney: Hw and When t Use 2004 Clsing the Cnstructin Prject 2005 Maximizing Yur Premium Dllar 2006 Cmmitments and Binders 2007 Access: Physical vs. Legal 2008 Frequently Asked Questins Resulting frm Rule Changes Speaker, State Bar f Texas Advanced Real Estate Curse 2005 Premium Saving Tricks-Strategies Speaker fr numerus training classes n cmmitments, rates and rules, ethics, current issues f the title industry, and fr real estate agents Recipient: Peggy Hayes Teaching Excellence Award, 2000 frm the Texas Land Title Assciatin State Bar f Texas Dallas Bar Assciatin Texas Land Title Assciatin - Directr 2000/2001 Texas Real Estate Cmmissin Certified Instructr Legal Update MCE and Ethics MCE

4 Reslving Attrney Title Objectins: Dudley D-Right s Pint f View Paul McNutt, Jr. Title Resurces Guaranty Cmpany Dudley D-Right, Underwriter f Title Insurance Answers the Objectin Letter f Wyly Slimebaugh, Esq. Attrney at Law Answer t Objectin 1 Effective Date. A Cmmitment date is effective thrugh the date a title plant is psted cmpletely, and that has t always be a few days earlier than the cmmitment is issued. The difference in that date is nt material at clsing, as the gap is insured at clsing t the Purchaser frm the latest updated title cmmitment used at the clsing, thrugh the filing f the title dcuments. Hwever, any matter filed after the effective date f the title cmmitment, and befre clsing, will nt be cvered if added befre clsing and disclsed t the buyer and attrney fr the buyer befre clsing. 1

5 Answer t Objectin 2 Request t add reciprcal easements t insurance plicy. Agreed, as they benefit the prperty. With the additin f stating in Sch. A. #2 that these will be easement estate tracts instead f fee simple estate tracts. Answer t Objectin 3 Item 2 Schedule B. T agree t delete the survey exceptin dwn t shrtages in area as requested we must be furnished an acceptable survey that has been reviewed and apprved by ur examiners. We may nt delete in the cmmitment the language f the prmulgated cmmitment wrding. But we may place in Sch. C. a statement that when then a survey is reviewed and apprved we will agree t delete in the Owner s title plicy t be issued the exceptin as requested,. Further, if we have apprved the survey, we may als state in Sch. C we have apprved deletin f the survey exceptin as requested when the Owner s title plicy is issued. Answer t Objectin 4 Item 4 Schedule B is prmulgated by the Texas Department f Insurance as cverage nt allwed t be insured in the Owner s title plicy in Texas, therefre the cmmitment may never be altered t remve this exceptin. The exact exceptin appears in the Owner s title plicy. 2

6 Answer t Objectin 5 Item 5 Schedule B. Upn payment f the 2008 taxes this exceptin may be changed t read 2009, as requested. But, fr the Owner s title plicy it is nt allwed t delete the exceptin fr pssible rll back taxes, described by the phrase, and subsequent taxes and assessments by any taxing authrity fr prir years due t change in land usage r wnership,. The risk f pssible rll back taxes is always brne by the parties and the cntract must be examined t determine wh will carry frward the risk, if any rll back taxes culd ccur. Answer t Objectin 6 Item 6 Schedule B This will nt appear in the Owner s title plicy, but any exceptins taken in the dcuments presented at clsing will be added t the plicy. Therefre this exceptin puts the parties n ntice t review the dcuments presented and be aware any matters in the dcuments that make reservatins r restrictins will be added t the Owner s title plicy t be issued. Answer t Objectin 7 Item 7, Schedule B. Agreed that it will nt appear in the Owner s title plicy, but it cannt be deleted frm the cmmitment, which clearly states it des nt apply t the Owner s title plicy. The attrney shuld remember that the title cmmitment is issued t multiple parties in ne frmat, s certain prtins nly apply t lenders while thers t wners. 3

7 Answer t Objectin 8 Item 8 and 9 Schedule B. Same answer as #7 abve. Answer t Objectin 9 Item 10 a Schedule B. If the parties have furnished a list f existing leases in the cntract, r prvided fr ne, then upn being furnished the list each lease may be excepted t instead f the general exceptin t unrecrded leases, as requested. Answer t Objectin 10 Item 10 c Schedule B. Request t delete this exceptin fr reciprcal easements, as being an insured tract under the revised cmmitment. While as t the Tract 3, nw added easement estate this is crrect, the easements are still a burden t the Tracts 1 and 2 fee simple estates, therefre must be listed as applying t thse tracts. 4

8 Answer t Objectin 11 Items 10 e and f. Oil and gas leases. As t e, the 1951 lease, with a prperly dcumented affidavit f nn-prductin, this lease may be remved. As t the item f, 2006 lease, the term may have nt expired, therefre this exceptin must remain unless released by the hlder f the lease. Cverage fr T-19.1 as t damage t buildings nly may be given if the tracts insured meet the underwriter criteria fr allwing this affirmative cverage. Generally, if the City f San Antni has a n drilling rdinance that wuld prhibit drilling n the tracts insured, the cverage requested under T-19.1 may be given. P-39a express cverage fr this risk is prhibited as t the matters that may be insured with the T-19.1 endrsement. The request t require an assignment f the seller s interest is a cntract matter that is between the parties. Answer t Objectin 12 Item 10 g. Blanket easement request t remve. The best evidence that can be btained by the surveyr, wner, and examiner shuld be utilized t see if any easement exists n any part f the larger tract this easement was granted acrss. Als, research shuld determine the present wnership f the easement and if the entity can be cntacted, direct infrmatin as t the existence, r lcatin f the easement shuld be btained. If satisfactry evidence f n easement affecting this tract is btained the easement may be remved. If incnclusive evidence is ffered the cverage under T-19.1 des prvide against damages t buildings. Answer t Objectin 13 Item 10 j Prtrusin f building int adjacent lt at the suthern-mst prtin f the East bundary line. Request t eliminate. This exceptin states a fact that must have an exceptin. The adjining wner rights must be evaluated, and if material intrusin exists f the building, deletin f cverage fr this exceptin frm T-19.1 shuld be made. Alternatively, easement r purchase agreement frm adjining land wner fr prtin f land encrached n by building shuld be btained and added t descriptin f insured tract and then T-19.1 can be given withut deletin fr this exceptin. 5

9 Answer t Objectin 14 Items 10 k. Deletin request fr all matters. As t factual matters that culd require remval, such as f masnry wall int 10 TXU easement, underwriter wuld evaluate the degree f interference with the use f the easement, and if minr might agree t give express cverage under P- 39 a t the plicy. As t Nrtheast crner f ne-stry retail building extends ver/int 10 ft utility easement, T-19.1 cverage culd be given fr this exceptin if nly a small encrachment that wuld nt interfere with the utility serving the prperty is invlved. Pssible request t btain a cnsent t encrach frm the utility may be made if a material encrachment is shwn. As t sanitary sewer manhles water valves, cleanuts and inlets, if nly used fr service t the prperty by the utility invlved the exceptin can be remved. If lcated in utility easements can be remved. Answer t Objectin 15 Eliminate all Schedule C items befre clsing. Agreed. Answer t Objectin 16 Insufficient survey certificate, want purchaser cvered. Agreed. 6

10 Answer t Objectin 17 Prvide fr T-19.1 Endrsement in Owner s title plicy withut exceptin. Depends n answers btained earlier. Prvide fr T-23 Access endrsement. Requires names f streets and surveyr certificate t include access t street requested. Prvide fr T-25 Cntiguity Endrsement. Requires certificate f surveyr t assure the cntiguity between Tract 1 and Tract 2. Thank Yu fr Yur Attentin! 7

11 SUMMARY OF TRANSACTION This is a sale f an apartment cmplex fr $8,665, lcated n Tract 1, tgether with an adjining unimprved Tract 2 that maintains an agricultural exemptin. Seller has an existing survey frm Seller des nt wn 100% f the minerals and has tw il & gas leases (ne ld and ne new). The examinatin shws bth an ld blanket easement and new designated easement. The survey reveals bth majr (building acrss a prperty line) and minr (prtrusin in the utility easements) issues.

12 Effective Date: Nvember 1, 2009, 8:00 am COMMITMENT FOR TITLE INSURANCE SCHEDULE A Cmmitment N. issued: Nvember10, 2009 (if applicable) 1. The plicy r plicies t be issued are: (a) OWNER'S POLICY OF TITLE INSURANCE (Frm T-1) (Nt applicable fr imprved ne-t-fur family residential real estate) Plicy Amunt: $8,665, PROPOSED INSURED: James D. Smith and Judy L. Jnes (b) TEXAS RESIDENTIAL OWNER POLICY OF TITLE INSURANCE - ONE-TO-FOUR FAMILY RESIDENCES (Frm T-1R) Plicy Amunt: PROPOSED INSURED: (c) (d) G.F. N. r File N. TLTA LOAN POLICY OF TITLE INSURANCE (Frm T-2) Plicy Amunt: $5,900, PROPOSED INSURED: Pacific Capital Bank Prpsed Brrwer: James D. Smith and Judy L. Jnes TEXAS SHORT FORM RESIDENTIAL MORTGAGEE POLICY OF TITLE INSURANCE (Frm T-2R) Plicy Amunt: PROPOSED INSURED: Prpsed Brrwer: (e) MORTGAGEE TITLE POLICY BINDER ON INTERIM CONSTRUCTION LOAN (Frm T-13) Binder Amunt: PROPOSED INSURED: Prpsed Brrwer: (f) OTHER Plicy Amunt: PROPOSED INSURED: 2. The interest in the land cvered by this Cmmitment is: Fee Simple 3. Recrd title t the land n the Effective Date appears t be vested in: TRACT 1: RETAIL PROPERTIES II, L.P., a Texas limited partnership and RETAIL PROPERTIES III, L.P., a Texas limited partnership TRACT 2: RETAIL PROPERTIES III, L.P., a Texas limited partnership 4. Legal descriptin f the land: SEE ATTACHED EXHIBIT "A" Title Insurance Crpratin Page 1

13 Cntinuatin f Schedule A G.F. N. TLTA EXHIBIT "A" TRACT 1: Lt 2A, Blck A, RETAIL CORNERS ADDITION, an Additin t the City f San Antni, Bexar Cunty, Texas, accrding t the map r plat theref recrded in Vlume 2008, Page 309, f the Map Recrds f Bexar Cunty, Texas. TRACT 2; Ls 6, Blck A, RETAIL CORNERS ADDITION, an Additin t the City f San Antni, Bexar Cunty, Texas, accrding t the map r plat theref recrded in Vlume 2006, Page 508, f the Map Recrds f Bexar Cunty, Texas. Title Insurance Crpratin Page 2

14 COMMITMENT FOR TITLE INSURANCE SCHEDULE B EXCEPTIONS FROM COVERAGE In additin t the Exclusins and Cnditins and Stipulatins, yur Plicy will nt cver lss, csts, attrneys' fees, and expenses resulting frm: 1. The fllwing restrictive cvenants f recrd itemized belw (We must either insert specific recrding data r delete this exceptin): Vlume 6032, Page 2295; Cunty Clerk's N ; Cunty Clerk's N ; all f the Real Prperty Recrds f Bexar Cunty, Texas, but mitting any cvenant r restrictin based n race, clr, religin, sex, handicap, familial status, r natinal rigin. 2. Any discrepancies, cnflicts, r shrtages in area r bundary lines, r any encrachments r prtrusins, r any verlapping f imprvements. Cmpany has apprved the current land title survey and upn request, and payment f any prmulgated premium, this item will be amended in the plicy(ies) t be issued t read: 'shrtages in area'. 3. Hmestead r cmmunity prperty r survivrship rights, if any, f any spuse f any insured. (Applies t the Owner Plicy nly). 4. Any titles r rights asserted by anyne, including, but nt limited t, persns, the public, crpratins, gvernments r ther entities, a. t tidelands, r lands cmprising the shres r beds f navigable r perennial rivers and streams, lakes, bays, gulfs r ceans, r b. t lands beynd the line f harbr r bulkhead lines as established r changed by any gvernment, r c. t filled-in lands, r artificial islands, r d. t statutry water rights, including riparian rights, r e. t the area extending frm the line f mean lw tide t the line f vegetatin, r the rights f access t that area r easement alng and acrss that area. (Applies t the Owner Plicy nly.) 5. Standby fees, taxes and assessments by any taxing authrity fr the year 2009, and subsequent years; and subsequent taxes and assessments by any taxing authrity fr prir years due t change in land usage r wnership, but nt thse taxes r assessments fr prir years because f an exemptin granted t a previus wner f the prperty under Sectin 11.13, Texas Tax Cde, r because f imprvements nt assessed fr a previus tax year. (If Texas Shrt Frm Residential Mrtgagee Plicy (T-2R) is issued, that plicy will substitute "which becme due and payable subsequent t Date f Plicy" in lieu f "fr the year and subsequent years.") 6. The terms and cnditins f the dcuments creating yur interest in the land. 7. Materials furnished r labr perfrmed in cnnectin with planned cnstructin befre signing and delivering the lien dcument described in Schedule A, if the land is part f the hmestead f the wner. (Applies t the Mrtgagee Title Plicy Binder n Interim Cnstructin Lan nly, and may be deleted if satisfactry evidence is furnished t us befre a binder is issued.) 8. Liens and leases that affect the title t the land, but that are subrdinate t the lien f the insured mrtgage. (Applies t Title Insurance Crpratin Page 1

15 Cntinuatin f Schedule B G.F. N. TLTA Lan Plicy (T-2) nly.) 9. The Exceptins frm Cverage and Express Insurance in Schedule B f the Texas Shrt Frm Residential Mrtgagee Plicy (T-2R). (Applies t Texas Shrt Frm Residential Mrtgagee Plicy (T-2R) nly. Separate exceptins 1 thrugh 8 f this Schedule B d nt apply t the Texas Shrt Frm Residential Mrtgagee Plicy (T-2R). 10. The fllwing matters and all terms f the dcuments creating r ffering evidence f the matters (We must insert matters r delete this exceptin.): THE FOLLOWING AFFECT ALL TRACTS: a. Rights f tenants in pssessin under unrecrded written leases r rental agreements. b. Easement executed by Retail Prperties II, LP, t TXU Electric Delivery Cmpany, dated September 14, 2005, filed Octber 14, 2005, recrded in Vlume 6024, Page 11 f the Real Prperty Recrds f Bexar Cunty, Texas, and as shwn n survey by David Jnes, R. P. L. S. N. 0000, dated April 18, 2009, last revised June 18, c. Terms, prvisins, cnditins and easements cntained in Reciprcal Easement Agreement and Declaratin f Cvenants and Restrictins filed Octber 26, 2005, recrded in/under Vlume 6032, Page 2295 f the Real Prperty Recrds f Bexar Cunty, Texas; Amended and Restated by Cunty Clerk's N and First Amendment in Cunty Clerk's N f the Real Prperty Recrds f Bexar Cunty, Texas, and as nted n survey by David Jnes, R. P. L. S. N. 0000, dated April 18, 2009, last revised June 18, d. One-furth f all the il, gas and ther minerals, the ryalties, bnuses, rentals, and all ther rights in cnnectin with the same are excepted herefrm, as set frth in instrument recrded in Vlume 259, Page 519, Deed Recrds, Bexar Cunty, Texas. e. Oil and gas lease between Mrris G. Lrd and Marie Lrd, as lessr and Ge. S. Berry, Jr., as lessee, dated May 19, 1951, recrded in Vlume 369, Page 288, Deed Recrds f Bexar Cunty, Texas. f. Oil and gas lease by and between Shale Drilling Cmpany, as lessr and Madisn Runs LP, as lessee, dated June 1, 2007, recrded under Instrument N f the Real Prperty Recrds f Bexar Cunty, Texas. g. Easement executed by William and Beth Smart t Texas Rural Electric Department dated June 2, 1939, filed June 2, 1939, recrded in Vlume 1, Page 3, Real Prperty Recrds f Bexar Cunty, Texas. (Nted as Blanket n survey by David Jnes, R.P.L.S. N. 0000, dated April 18, 2009, last revised June 18, 2009.) h. All leases, grants, exceptins r reservatins f cal, lignite, il, gas and ther minerals, tgether with all rights, privileges, and immunities relating theret, appearing in the Public Recrds whether listed in Schedule B r nt. There may be leases, grants, exceptins r reservatins f mineral interest that are nt listed. THE FOLLOWING AFFECTS TRACT 2: i. Easement executed by Madisn Runs LP, t TXU Electric Delivery Cmpany, dated Nvember 20, 2006, filed April 27, 2007, recrded under Cunty Clerk's N f the Real Prperty Recrds f Bexar Cunty, Texas, and as shwn n survey by David Jnes, R. P. L. S. N. 0000, dated April 18, 2009, last revised June 18, j. Easements created in Amended and Restated Reciprcal Easement Agreement and Declaratin f Cvenants and Restrictins filed June 18, 2007, recrded under Cunty Clerk's N and First Amendment Title Insurance Crpratin Page 2

16 Cntinuatin f Schedule B G.F. N. TLTA filed January 10, 2008, recrded under Cunty Clerk's N f the Real Prperty Recrds f Bexar Cunty, Texas. THE FOLLOWING AFFECTS TRACT 1: k. The fllwing, all accrding t plat recrded in Vlume 2008, Page 309, f the Map Recrds f Bexar Cunty, Texas: Frty (40) ft building line alng the Suth prperty line; 10 ft water easements alng the Suth, Nrth, West and East prperty lines; 30 ft pedestrian easement alng the Suth prperty line; 10 ft utility easement alng the East and Nrth prperty lines; 24 ft firelane and mutual access easement alng the East prperty line; 26 ft mutual access easement alng the Suth prperty line; Variable width water and drainage easement alng the West prperty line; 15 ft x 15 ft utility easement alng the Nrth prperty line; 23 ft firelane and mutual access easement alng the Nrth prperty line; 25 ft sanitary sewer, water and drainage easement alng the Nrth prperty line; Variable width mutual firelane and access easement alng the West prperty line; 40 ft firelane and mutual access easement alng the East prperty line; and l. The fllwing as shwn n survey by David Jnes, R. P. L. S. N. 0000, dated April 18, 2009, last revised June 18, 2009: Prtrusin f building int adjacent lt at the suthern-mst prtin f the East bundary line. Prtrusin f cncrete sidewalk alng the Sutheast crner f subject prperty; Trash dumpsters extend ver/int the 10 ft TXU Easement in the Nrthwest and Nrtheast crners; Masnry wall extends ver/int the 10 ft TXU Easement alng the Nrth prperty line; Nrtheast crner f ne-stry retail building extends ver/int 10 ft utility easement; and Sanitary Sewer manhles, water valves, cleanuts and inlets ver and acrss the subject prperty. THE FOLLOWING AFFECT TRACT 2: m. The fllwing, all accrding t plat recrded in Vlume 2006, Page 508, f the Map Recrds f Bexar Cunty, Texas, and as shwn n survey by David Jnes, R. P. L. S. N. 0000, dated April 18, 2009, last revised June 18, 2009: Frty (40) ft building line alng the Suth prperty line(s) - Lt 3C; Title Insurance Crpratin Page 3

17 Cntinuatin f Schedule B G.F. N. TLTA 30 ft pedestrian easement alng the Suth prperty line(s) - Lt 3C; 10 ft water easement alng the Suth and Nrth prperty line(s) - Lt 3C; Variable width water easement alng the West prperty line(s) - Lt 3C; Variable width firelane and mutual access easement alng the West prperty line(s) - Lt 3C; 25 ft sanitary sewer, water and drainage easement alng the Nrthwest prperty line(s) - Lt 3C; 24 ft firelane, water, sanitary sewer and mutual access easement alng the Nrth prperty line(s) - Lt 3C; 10 ft utility easement alng the Nrth prperty line(s) - Lt 3C; 26 ft firelane and mutual access easement alng the Suth prperty line(s) - Lt 3C; 24 ft firelane, water, sanitary sewer and mutual access easement alng the Nrth prperty line(s) - Lt 6; 10 ft sanitary sewer easement alng the Nrth prperty line(s) - Lt 6; 10 ft utility easement alng the Nrth prperty line(s) - Lt 6; 10 ft drainage easement alng the East prperty line(s) - Lt 6; 30 ft pedestrian easement alng the Suth prperty line(s) - Lt 6; 10 ft water easement alng the Suth prperty line(s) - Lt 6; 24 ft mutual access easement alng the East prperty line(s) - Lt 6; 26 ft firelane and mutual access easement alng the Suth prperty line(s) - Lt 6; and Frty (40) ft building line alng the Suth prperty line(s) - Lt 6. n. The fllwing as shwn n survey by David Jnes, R. P. L. S. N. 0000, dated April 18, 2009, last revised June 18, 2009, as t Lt 6: sign extends ver/int 10 ft sanitary sewer easement; trash dumpster extends ver/int 10 ft utility easement and 10 ft water easement; and water valves, sanitary sewer manhles, and cleanut valves ver and acrss subject prperty. Title Insurance Crpratin Page 4

18 COMMITMENT FOR TITLE INSURANCE SCHEDULE C Yur Plicy will nt cver lss, csts, attrneys' fees, and expenses resulting frm the fllwing requirements that will appear as Exceptins in Schedule B f the Plicy, unless yu dispse f these matters t ur satisfactin, befre the date the Plicy is issued: 1. Dcuments creating yur title r interest must be apprved by us and must be signed, ntarized and filed fr recrd. 2. Satisfactry evidence must be prvided that: a. n persn ccupying the land claims any interest in that land against the persns named in paragraph 3 f Schedule A, b. all standby fees, taxes, assessments and charges against the prperty have been paid, c. all imprvements r repairs t the prperty are cmpleted and accepted by the wner, and that all cntractrs, subcntractrs, labrers and suppliers have been fully paid, and that n mechanic's, labrer's r materialmen's liens have attached t the prperty, d. there is legal right f access t and frm the land, e. (n a Lan Plicy nly) restrictins have nt been and will nt be vilated that affect the validity and pririty f the insured mrtgage. 3. Yu must pay the seller r brrwer the agreed amunt fr yur prperty r interest. 4. Any defect, lien r ther matter that may affect title t the land r interest insured, that arises r is filed after the effective date f this Cmmitment. AS TO TRACT 1: 5. COMPANY REQUIRES PAYMENT OF AND RELEASE OF LIEN FOR: Vendr s Lien retained in Deed, executed by Big Guy 37, L.P., a Texas limited partnership t Retail Prperties II, L.P., dated December 30, 2003, filed January 2, 2004, recrded in Vlume 5576, Page 2050 f the Real Prperty Recrds f Bexar Cunty, Texas, securing Last Standing Bank, SSB in the payment f ne nte in the principal sum f Fur Millin Tw Hundred Fifty Thusand and 00/100 ($4,250,000.00), due and payable and bearing interest as therein prvided; said Nte being additinally secured by Deed f Trust t Rbert K. Pwer, Trustee, recrded in Vlume 5576, Page 2056 f the Real Prperty Recrds f Bexar Cunty, Texas; and all the terms, cnditins and stipulatins cntained therein, including, but nt limited t, any additinal indebtedness, if any, secured by said instrument. Said lien has been mdified by instrument dated January 31, 2006, filed February 7, 2006, recrded under Cunty Clerk's N f the Real Prperty Recrds f Bexar Cunty, Texas. Said lien has been mdified by instrument dated May 19, 2006, filed June 5, 2006, recrded under Cunty Clerk's N f the Real Prperty Recrds f Bexar Cunty, Texas. Said lien has been mdified by instrument dated May 2, 2007, filed June 4, 2007, recrded under Cunty Clerk's N f the Real Prperty Recrds f Bexar Cunty, Texas. 6. UCC-1 Financing Statement executed by My Family, Inc., Debtr, t Bank f Grace, Secured Party, filed May 5, 2005, recrded in Vlume 5912, Page 2232 f the Real Prperty Recrds f Bexar Cunty, Texas. (Affects tenant fixtures)

19 Cntinuatin f Summary Page G.F. N. TLTA AS TO TRACT 2: 7. COMPANY REQUIRES PAYMENT OF AND RELEASE OF LIEN FOR: Vendr s Lien retained in Deed, executed by Retail Prperties II, L.P., a Texas limited partnership t Retail Prperties III, L.P., a Texas limited partnership, dated June 6, 2006, filed June 8, 2006, recrded under Cunty Clerk's N f the Real Prperty Recrds f Bexar Cunty, Texas, securing Big Texas Bank, N.A. in the payment f ne nte in the principal sum f Tw Millin Fur Hundred Frty Seven Thusand and 00/100 ($2,447,000.00), due and payable and bearing interest as therein prvided; said Nte being additinally secured by Deed f Trust t Jhn C. Smug, Trustee, recrded under Cunty Clerk's N f the Real Prperty Recrds f Bexar Cunty, Texas; and all the terms, cnditins and stipulatins cntained therein, including, but nt limited t, any additinal indebtedness, if any, secured by said instrument. 8. UCC-1 Financing Statement executed by Retail Prperties III, LP, Debtr, t Big Texas Bank, N.A., Secured Party, filed June 8, 2006, recrded under Cunty Clerk's N f the Real Prperty Recrds f Bexar Cunty, Texas. AS TO ALL TRACTS: 9. COMPANY REQUIRES Warranty Deed cnveying recrd title f all tracts frm recrd wners shwn n Schedule A heref t vest title in prpsed Brrwer, be recrded prir t any mrtgage dcuments being recrded which establish the lien t be insured in this transactin. 10. COMPANY REQUIRES THE FOLLOWING FROM RECORD OWNER PRIOR TO AND/OR AT CLOSING: - Cpy f signed limited partnership agreement; - Cpy f Certificate f Limited Partnership issued by Secretary f State; - Cpy f general partner entity dcuments with apprpriate certificates frm Secretary f State evidencing filing; - Crprate Reslutin f general partner ratifying and affirming Cntract, listing fficers f crpratin, prviding specific authrity fr fficer(s) executing dcuments n its behalf in its capacity as general partner f limited partnership; - Affidavit as t Debts & Liens; - Sectin 1445 Nn-Freign Affidavit; - Tax Prratin Agreement; - Federal Tax Identificatin Number f limited partnership; - Substitute Frm 1099S. Cmpany reserves the right t make further requirements based upn its receipt and review f entity dcuments and authrity evidence. 11. COMPANY REQUIRES THE FOLLOWING FROM PROPOSED INSURED OWNER/BORROWER PRIOR TO AND/OR AT CLOSING: - Tax Prratin Agreement; - Waiver f Rights f Parties in Pssessin.

20 Wyly Slimebaugh, Esq. Attrney at Law 1000 Alam Avenue San Antni, Texas Nvember 15, 2009 Retail Prperties II, L.P. and Retail Prperties III, L.P. 100 Cyte Trail, Suite 201 San Antni, TX Majr Title Cmpany 845 Big Deal Blvd. San Antni, TX Re: Agreement f Sale and Purchase ( Cntract ) by and between Retail Prperties II, L.P. and Retail Prperties III, L.P. ( Seller ) and James D. Smith and Judy L. Jnes ( Purchaser ) fr prperty in Retail Crner Additin, San Antni, Texas. Dear Addressees: Our firm represents Purchaser in cnnectin with the referenced Cntract. We have received and reviewed the Cmmitment fr Title Insurance issued by Majr Title Cmpany, n GF # TLTA, n Nvember 10, 2009 with an Effective date f Nvember 1, 2009 ( Cmmitment ) and cpy f survey, prepared by David Jnes, Registered Prfessinal Land Surveyr, N. 0000, dated April 18, 2009, last revised June 18, 2009 ("Survey"). Based upn ur review f the Cmmitment and Survey, we have the fllwing bjectins, requirements and bservatins: 1. Items 3 and 4, Schedule A f the Cmmitment d nt include the Reciprcal Easement Agreement and Declaratin f Cvenants and Restrictins recrded in Vlume 6032, Page 2295, Real Prperty recrds f Bexar Cunty, Texas, as Amended and Restated under Cunty Clerk's N and First Amendment under Cunty Clerk's N , bth f the Real Prperty Recrds f Bexar Cunty, Texas. The rights granted by these instruments must be insured t Purchaser in the wner's plicy t be issued in this transactin.

21 2. Item 2, Schedule B f the Cmmitment shuld be revised t read shrtages in area in the wner s title plicy t be issued in this transactin. 3. Item 5, Schedule B, f the Cmmitment shuld be amended t read in its entirety as fllws: Standby fees, taxes and assessments by any taxing authrity fr the year 2010, and subsequent years. Purchaser requires the payment f all ad valrem taxes and assessments fr all prir years, up t and including the year Item 10. a, Schedule B f the Cmmitment shuld be deleted frm the wner s plicy t be issued in this transactin r replaced with an itemized listing f existing tenants and the term f each f their leases. 5. Item 10. c., Schedule B f the Cmmitment shuld be deleted frm the wner s plicy t be issued in this transactin because the easements described therein cnstitute a part f the prperty t be insured in this transactin. 6. Items 10. e. and f., Schedule B f the Cmmitment shuld be deleted frm the wner s plicy t be issued in this transactin r the Purchaser must be insured against the exercise by the respective lessees f the surface rights assciated with the sub-surface mineral rights. With regard t this item, Purchaser shall require an assignment f Seller's interest in the lease(s) if either r bth f the leases has nt expired. 7. Item 10.g., f Schedule B f the Cmmitment must either be deleted r the Survey revised t include the lcatin f the Easement n the Prperty insured in Schedule A f the Cmmitment and wner s plicy t be issued in this transactin. 8. Item 10.h., Schedule B f the Cmmitment: Buyer bjects t the general exceptin fr minerals. 9. Item 10.j, Schedule B f the Cmmitment lists a prtrusin f building ver the East prperty line. This item shuld be deleted frm the wner s plicy t be issued in this transactin. 10. Item 10. k., Schedule B f the Cmmitment, Purchaser bjects t each matter listed therein and all shuld be deleted frm the wner s plicy t be issues in this transactin. 11. All items in Schedule C f the Cmmitment must be satisfied and deleted at r befre the clsing f the Cntract.

22 12. The certificate n the Survey is nt addressed t Purchaser and des nt certify that the survey was made in accrdance with the Minimum Standard Detail Requirements fr ALTA/ACSM Land Title Surveys. Purchaser will require a revised certificate, which meets these bjectins. 13. Upn payment f the applicable premium at clsing, we will require the issuance f a T-19.1 Endrsement, a T-23 Access Endrsement and a T-25 Cntiguity Endrsement. We will nt accept any deletin f any cverage prvided by the prmulgated frm each f these endrsements. We reserve the right t make additinal bjectins fllwing receipt and review f any revisins that may be made t the Cmmitment r Survey. If yu shuld have any questins, please d nt hesitate t cntact the undersigned. Sincerely, cc: Seller s Attrney Wyly Slimebaugh, Esq.

23 Dudley D-Right, Underwriter f Title Insurance Underwriter Answers t the Objectin Letter f Wyly Slimebaugh, Esq. Attrney at Law 1. Request t add reciprcal easements t insurance plicy. Agreed, as they benefit the prperty. With the additin f stating in Sch. A. #2 that these will be easement estate tracts instead f fee simple estate tracts. 2. Item 2 Schedule B. T agree t delete the survey exceptin dwn t shrtages in area as requested we must be furnished an acceptable survey that has been reviewed and apprved by ur examiners. We may nt delete in the cmmitment the language f the prmulgated cmmitment wrding. But we may place in Sch. C. a statement that when then a survey is reviewed and apprved we will agree t delete in the Owner s title plicy t be issued the exceptin as requested,. Further, if we have apprved the survey, we may als state in Sch. C we have apprved deletin f the survey exceptin as requested when the Owner s title plicy is issued. 3. Item 5 Schedule B. Upn payment f the 2009 taxes this exceptin may be changed t read 2010, as requested. But, fr the Owner s title plicy it is nt allwed t delete the exceptin fr pssible rll back taxes, described by the phrase, and subsequent taxes and assessments by any taxing authrity fr prir years due t change in land usage r wnership,. The risk f pssible rll back taxes is always brne by the parties and the cntract must be examined t determine wh will carry frward the risk, if any rll back taxes culd ccur. 4. Item 10 a Schedule B. If the parties have furnished a list f existing leases in the cntract, r prvided fr ne, then upn being furnished the list each lease may be excepted t instead f the general exceptin t unrecrded leases, as requested. 5. Item 10 c Schedule B. Request t delete this exceptin fr reciprcal easements, as being an insured tract under the revised cmmitment. While as t the Tract 3, nw added easement estate this is crrect, the easements are still a burden t the Tracts 1 and 2 fee simple estates, therefre must be listed as applying t thse tracts. 6. Items 10 e and f. Oil and gas leases. As t e, the 1951 lease, with a prperly dcumented affidavit f nn-prductin, this lease may be remved. As t the Item f, 2008 lease, the term may have nt expired, therefre this exceptin must remain unless released by the hlder f the lease. Cverage fr T-19.1 as t damage t buildings nly may be given if the tracts insured meet the underwriter criteria fr allwing this affirmative cverage. Generally, if the City f San Antni has a n drilling rdinance that wuld prhibit drilling n the tracts insured, the cverage requested under T-19.1 may be given. P-39a express cverage fr this risk is prhibited as t the matters that may be insured with the T-19.1 endrsement. The request t require an assignment f the seller s interest is a cntract matter that is between the parties.

24 7. Item 10. g. Blanket easement request t remve. The best evidence that can be btained by the surveyr, wner, and examiner shuld be utilized t see if any easement exists n any part f the larger tract this easement was granted acrss. Als, research shuld determine the present wnership f the easement and if the entity can be cntacted, direct infrmatin as t the existence, r lcatin f the easement shuld be btained. If satisfactry evidence f n easement affecting this tract is btained the easement may be remved. If incnclusive evidence is ffered the cverage under T-19.1 des prvide against damages t buildings. 8. Item 10.h., General Mineral Exclusin: Effective Nvember 1,2009, the exceptin that has been added is permissible fr a title agent t add t any title cmmitment. Hwever, when this exceptin has been added it entitles the buyer and their lender t request, under the new Prcedural Rule 5.1, and the agent will be required when requested, that the title cmpany issue them either the new T-19.2 r T-19.3 endrsements, fr each tract f land being insured, depending n the exact type f prperty and use f each tract. As this exceptin was fr all tracts we wuld be required t give, upn request, fr a Premium f $50 each, under Rate Rule 29, the new endrsements entitled Minerals and Surface Damage Endrsement, fr each T-19.2 r T-19.3 endrsement issued. In this case, as tract 1 is a develped tract, with multi-family apartments, we wuld be required t give the wner and lender, upn request, the new T-19.2 endrsement. It wuld prtect against damage t the imprvements (excluding lawn shrubbery r trees) by anyne utside f the wner wh has rights at the time the plicy is issued and later damages the imprvements because they drill fr il and gas, r develp the land fr cal r lignite. The Prcedural Rule 50.1 definitin f the types f prperties entitled t the T-19.2 states: 1. As t real prperty f ne acre r less imprved r intended t be imprved fr ne t fur family residential use; and 2. As t real prperty imprved r intended t be imprved fr ffice, industrial, retail, mixed use retail/residential, r multifamily purpses. Therefre the apartments qualify fr this endrsement fr Tract 1. The T-19.3 endrsement is given fr ther real prperty. As t Tract Number 2, this being an undevelped tract f land, we wuld be required, upn request by the buyer r lender, t issue the T-19.3 endrsement, and it s prtectin is limited t damages t permanent imprvements (excluding lawn shrubbery r trees) n the prperty, bth nw and later. In additin, the buyer may request fr bth tracts the T-19.1 endrsement that has ther prtectins, but as t parties having a right t use the Land fr the Extractin r develpment f minerals fr any damage t imprvements (excluding lawns, shrubbery r trees). Nte, this may be a greater cverage, as the T-19.3 was nly fr damage t permanent buildings.

25 9. Item 10. k, Prtrusin f building int adjacent lt at the suthern-mst prtin f the East bundary line. Request t eliminate. This exceptin states a fact that must have an exceptin. The adjining wner rights must be evaluated, and if material intrusin exists f the building, deletin f cverage fr this exceptin frm T-19.1 shuld be made. Alternatively, easement r purchase agreement frm adjining land wner fr prtin f land encrached n by building shuld be btained and added t descriptin f insured tract and then T-19.1 can be given withut deletin fr this exceptin. 10. Items 10. l. Deletin request fr all matters. As t factual matters that culd require remval, such as f masnry wall int 10 TXU easement, underwriter wuld evaluate the degree f interference with the use f the easement, and if minr might agree t give express cverage under P-39 a t the plicy. As t Nrtheast crner f ne-stry retail building extends ver/int 10 ft utility easement, T-19.1 cverage culd be given fr this exceptin if nly a small Encrachment that wuld nt interfere with the utility serving the prperty is invlved. Pssible request t btain a cnsent t encrach frm the utility May be made if a material encrachment is shwn. As t sanitary sewer manhles water valves, cleanuts and inlets, if nly used fr service t the prperty by the utility invlved the exceptin can be remved. If lcated in utility easements can be remved. 11. Eliminate all Sch. C items befre clsing. Agreed. 12. Insufficient survey certificate, want purchaser cvered. Agreed. Als, we will nt generally accept a frmer survey frm 2001 fr a cmmercial transactin, even thugh Prcedural Rule 2 allws, with a T-47 affidavit f smene with knwledge, use f a prir survey. 13. Prvide fr T-19.1 Endrsement in Owner s title plicy withut exceptin. Depends n answers btained earlier. Prvide fr T-23 Access endrsement. Requires names f streets and surveyr Certificate t include access t street requested. This is nly available by rule fr imprved prperties, therefre nly available t Tract 1 in this transactin. Prvide fr T-25 Cntiguity Endrsement. Requires certificate f surveyr t assure the cntiguity between Tract 1 and Tract 2. In Texas we are limited in insuring with this endrsement t nly the facts presented in this case, where bth tracts are insured.