Real Estate Law & Asset Protection for Texas Real Estate Investors - 2016 Edition

J. Willis David

Description

This book is a pragmatic and creative approach to legal and asset protection issues faced by investors in Texas real estate, particularly investors in residential and smaller commercial properties. It is not intended to be a textbook or comprehensive academic treatise. Rather, it contains practical perspectives and techniques developed over the years in the course of advising and representing investors. Since there are usually as many opinions as there are lawyers in a room, it should be no surprise if other lawyers disagree with at least some of my conclusions. In response, I would point out that there is nothing theoretical in this book. Every strategy I describe has been tried and has succeeded in the real world. Having said that, every reader should consult his or her attorney prior to implementing any of my suggestions in order to insure compatibility with individual circumstances. Business plans vary and so do investments and asset protection strategies. This book does not offer legal guidance to any particular person with regard to any particular case. Note also that the law changes and evolves, often rapidly. While cases and statutes are cited in this book, the reader should do independent research to ascertain the current status of the law before relying on any of these citations. If you are a real estate investor who owns (or aspires to own) 10, 20, or 50 or more properties, then you should consider reading this book. If you use creative methods such as wraparounds and "subject to" transactions then you may find this volume very useful indeed. However, if your goal is to assemble an international consortium to purchase Rockefeller Center or Trump Tower, then this is probably not the volume for you. All real estate investors should form the habit of doing thorough due diligence prior to investing in real estate. This includes consulting attorneys, accountants, insurance advisors, and other qualified professionals on overall methods and goals as well as specific transactions. Every investor should have a team of seasoned professionals available to answer questions, offer input, and provide customized services. A professional investor will also acquire a basic level of competence in searching and obtaining information and copies from real property and appraisal district records. On the subject of transactional documentation, I urge readers to avoid most standard forms, especially those obtained from the Internet, except for contracts and addenda promulgated by the Texas Real Estate Commission and the Texas Association of Realtors. Consider all others suspect. Lastly, it has been my experience that good ethics make for good business. Avoid any transaction that even hints of fraud or deception. If it appears too good to be true it probably is. I welcome comments and criticism. I can most easily be reached by email at [e-mail].

Sujets

• Contract
• Personal finance
• Reference work
• Property law

Informations

• Publié par: First Edition Design Publishing
• Date de parution: 15 février 2016
• Nombre de lectures: 0
• EAN13: 9781622879441
• Langue: English

Extrait

R EAL E STATE L AW
&
A SSET P ROTECTION
For Texas Real Estate Investors

2016 Edition

By David J. Willis, J.D., LL.M.

First Edition Design Publishing
Sarasota, Florida
Real Estate Law & Asset Protection
For Texas Real Estate Investors
2016 Edition
Copyright ©2013, 2014, 2015, 2016 David J. Willis

ISBN 978-1622 879-43-4 PBK
ISBN 978-1622-879-44-1 EBOOK

LCCN 201594404

February 2016

Published and Distributed by
First Edition Design Publishing, Inc.
P.O. Box 20217, Sarasota, FL 34276-3217
www.firsteditiondesignpublishing.com



ALL R I G H T S R E S E R V E D. No p a r t o f t h i s b oo k pub li ca t i o n m a y b e r e p r o du ce d, s t o r e d i n a r e t r i e v a l s y s t e m , o r t r a n s mit t e d i n a ny f o r m o r by a ny m e a ns ─ e l e c t r o n i c , m e c h a n i c a l , p h o t o - c o p y , r ec o r d i n g, or a ny o t h e r ─ e x ce pt b r i e f qu ot a t i o n i n r e v i e w s , w i t h o ut t h e p r i o r p e r mi ss i on o f t h e a u t h o r or publisher .
Table of Contents
CONTRACTS & CLOSINGS . 1
Chapter 1 . 3
RESIDENTIAL SALES CONTRACTS

Chapter 2 . 17
SELLER DISCLOSURE

Chapter 3 . 30
TITLE INSURANCE

Chapter 4 . 38
EARNEST MONEY DISPUTES IN RESIDENTIAL TRANSACTIONS

Chapter 5 . 42
AFFIDAVITS OF HEIRSHIP

Chapter 6 . 47
LIS PENDENS

OWNERSHIP & TRANSFER OF TEXAS REAL ESTATE . 51
Chapter 7 . 52
COOWNERSHIP OF PROPERTY

Chapter 8 . 57
DEEDS IN TEXAS

Chapter 9 . 71
DEEDING PROPERTY TO AN LLC

Chapter 10 . 75
DEEDING PROPERTY TO THE LENDER
NOTEWORTHY STATE & FEDERAL LAW ... 80
Chapter 11 . 81
EXECUTORY CONTRACTS IN TEXAS REAL ESTATE

Chapter 12 . 88
THE STATUTE OF FRAUDS

Chapter 13 . 93
MORTGAGE LOAN FRAUD

Chapter 14 . 100
SAFE ACT AND DODDFRANK

Chapter 15 . 110
HIGHERPRICED MORTGAGE LOANS

CREATIVE TRANSACTIONS . 113
Chapter 16 . 114
LEASEOPTIONS, LEASEPURCHASES, AND RIGHTS OF FIRST REFUSAL

Chapter 17 . 122
WRAPAROUND TRANSACTIONS

Chapter 18 . 132
“SUBJECT TO” TRANSACTIONS

Chapter 19 . 136
ASSUMPTIONS

Chapter 20 . 142
DUEONSALE

Chapter 21 . 150
LAND TRUSTS

Chapter 22 . 156
LIVING TRUSTS FOR THE HOMESTEAD

Chapter 23 . 160
ADVERSE POSSESSION

ASSET PROTECTION STRUCTURING .. 168
Chapter 24 . 169
LLC FORMATION

Chapter 25 . 176
LLC GOVERNING DOCUMENTS

Chapter 26 . 182
THE SERIES LLC

Chapter 27 . 190
LLCs: A BRIEF TAX INTRODUCTION

Chapter 28 . 195
PIERCING THE VEIL OF AN LLC

Chapter 29 . 203
PARTNERSHIPS

Chapter 30 . 210
BUYING OR SELLING YOUR LLC


ASSET PROTECTION STRATEGIES . 217
Chapter 31 . 218
ASSET PROTECTION IN TEXAS

Chapter 32 . 235
ANONYMITY IN TEXAS REAL ESTATE

Chapter 33 . 242
ASSUMED NAMES

Chapter 34 . 250
HOMESTEAD PROTECTIONS IN TEXAS

Chapter 35 . 260
LIEN REMOVAL

Chapter 36 . 271
EQUITY STRIPPING FOR ASSET PROTECTION

Chapter 37 . 274
FRAUDULENT TRANSFERS

EVICTIONS, FORECLOSURE, & LITIGATION .. 278
Chapter 38 . 279
EVICTIONS

Chapter 39 . 286
FORECLOSURES

Chapter 40 . 298
TEXAS LITIGATION – A PROCESS OVERVIEW


Chapter 41 . 308
WHAT IS A DECEPTIVE TRADE PRACTICE?

Chapter 42 . 320
MEDIATION

Chapter 43 . 327
JUDGMENTS IN TEXAS

Chapter 44 . 332
CHARGING ORDERS

OTHER ISSUES OF INTEREST TO INVESTORS . 336
Chapter 45 . 337
REDEMPTION ISSUES FOR INVESTORS

Chapter 46 . 341
SECURITY DEPOSITS IN TEXAS RESIDENTIAL LEASES

Chapter 47 . 346
HARD MONEY LENDING

Chapter 48 . 351
PARTITON IN TEXAS
PREFACE

This book is a pragmatic and creative approach to legal and asset protection issues faced by investors in Texas real estate, particularly investors in residential and smaller commercial properties. If you are a real estate investor who owns (or aspires to own) 10, 20, or 50 or more properties, then you should consider reading this book. If you use creative methods such as wraparounds and “subject to” transactions then you may find this volume very useful indeed. If, however, your goal is to assemble an international consortium to purchase Rockefeller Center or Trump Tower, then this is probably not the book for you.
It is not my intention to offer a textbook or comprehensive academic treatise. Rather, this volume contains practical perspectives and techniques developed over the years in the course of advising and representing investors, both in transactions and in the courtroom. Since there are usually as many opinions as there are lawyers in a room, it should be no surprise if other lawyers disagree with at least some of my conclusions. In response, I would point out that there is nothing theoretical presented here. Every strategy I describe has been tried and has succeeded in the real world. Having said that, readers should consult an attorney prior to implementing any of my suggestions in order to insure compatibility with individual circumstances. Business plans vary and so do investments and asset protection strategies. Note also that the law changes and evolves, often rapidly. While cases and statutes are cited in this book, the reader should do independent research to ascertain the current status of the law before relying on any of these citations. I do not offer legal guidance to any particular person with regard to any particular case.
As you consult this book, I suggest that you make sure you have the latest edition. You can check on this by going to our website, www.Lone StarLandLaw.com.
All real estate investors should form the habit of doing thorough due diligence prior to investing in real estate. This includes consulting attorneys, accountants, insurance advisors, and other qualified professionals on overall methods and goals as well as specific transactions. Every investor should have a team of seasoned professionals available to answer questions, offer input, and provide customized services. A professional investor will also acquire a basic level of competence in searching and obtaining information and copies from real property and appraisal district records.
On the subject of transactional documentation, I urge readers to avoid most standard forms, especially those obtained from the Internet, except for contracts and addenda promulgated by the Texas Real Estate Commission and the Texas Association of Realtors. Consider others suspect.
There are many resources for investors, not the least of which is the Texas Property Code. I suggest that every investor have a paperback copy of the Code on his or her desk and refer to it regularly (go to www. JonesMcClure.com). There are also a number of quality educational opportunities in the marketplace, including real estate schools and mentorship programs, enough so that there is no excuse for an investor not to master the trade.
Since the Texas legislature meets every two years, it is also prudent to check for recent legislative changes that may affect the business of real estate investment. This is most easily done at the official website for the Texas legislature at www.capiol.state.tx.us.
Lastly, it has been my experience that good ethics make for good business. Avoid any transaction that even hints of fraud or deception. If it appears too good to be true it probably is.
I welcome comments and criticism. I can most easily be reached by email at [e-mail].
David J.Willis
PART I
CONTRACTS & CLOSINGS
Chapter 1
RESIDENTIAL SALES CONTRACTS
The TREC One to Four Family Residential Contract

The most commonly used residential sales contract in Texas is the One to Four Family Residential Contract (Resale) promulgated by the Texas Real Estate Commission as form number 2013. The blank form is available at www.trec.state.tx.us. I will refer to it as the “TREC 14 contract.” All licensed brokers and agents are required to use this contract and other TREC promulgated forms when representing clients in the purchase and sale of real property. Nonlicensees and attorneys may use any format they wish. Note that our comments in this chapter are not intended as comprehensive instructions on how to complete the TREC 14 contract or as a substitute for using the services of broker, agent, or real estate attorney. We merely touch upon the highlights.
Real estate investors will find that they are almost always better off using the TREC 14 contract with appropriate addenda rather than anything simpler that is supposedly designed or streamlined for investor use—and that includes the modified contracts that emerge from the multitude of real estate “guru” seminars. Accordingly, an experienced investor will become familiar with the various options and boxes to be checked in TREC forms and learn how to tailor a contract to his or her advantage.
The truth is, even when amicably conducted, the sale and purchase of real estate is by definition an adversarial transaction. From a lawyer’s perspective, producing a contract and closing documents that advance the client’s best interests is the whole point of the exercise. Experienced negotiators, however, know that it is better not to demand changes that you yourself would not be willing to grant if you were on the other side of the transaction.

StrikeOuts versus an Addendum
Let’s assume that you find the existing text and format of the TREC 14 contract to inadequate for an upcoming transaction. How should revision of the TREC 14 contract be accomplished? One way is to make changes on the form itself—strike, insert, and initial with pen. This is legally valid although it can get messy if there are lots of alterations. It is often cleaner to attach a special provisions addendum that supersedes any printed form provisions that may conflict. Only items to be altered are mentioned in the addendum. This method of modifying the contract has an obvious advantage in negotiations: it is immediately apparent, on a single page or two, which ter