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When can a judgment creditor take my home?
Posted by: David Leon in Consumer & Credit, Foreclosure, Litigation and judgments, Real Estate Law on January 1st, 2010
In order to answer this question, one need to review Texas Property Code (Sec. 41.001) and Section 50(a)(6), Article XVI of Texas Constitution. These statutes govern which debts can “attach” to a homestead.
In simple terms, a lien will attach to a homestead if the lien was for:
(1) purchase money of the home;
(2) taxes on the property;
(3) work and material used in constructing improvements on the property (under specific circumstances)
(4) an owelty of partition or pursuant to a divorce proceeding;
(5) the refinance of a lien against a homestead, (including a federal tax lien in certain circumstances) resulting from the tax debt of both spouses, if the homestead is a family homestead, or from the tax debt of the owner;
(6) an extension of credit that meets the requirements of Section 50(a)(6), Article XVI, Texas Constitution; or
(7) a reverse mortgage that meets the requirements of Sections 50(k)-(p), Article XVI, Texas Constitution.
Here’s the statute:
SUBCHAPTER A. EXEMPTIONS IN LAND DEFINED
Sec. 41.001. INTERESTS IN LAND EXEMPT FROM SEIZURE. (a) A homestead and one or more lots used for a place of burial of the dead are exempt from seizure for the claims of creditors except for encumbrances properly fixed on homestead property.
(b) Encumbrances may be properly fixed on homestead property for:
(1) purchase money;
(2) taxes on the property;
(3) work and material used in constructing improvements on the property if contracted for in writing as provided by Sections 53.254(a), (b), and (c);
(4) an owelty of partition imposed against the entirety of the property by a court order or by a written agreement of the parties to the partition, including a debt of one spouse in favor of the other spouse resulting from a division or an award of a family homestead in a divorce proceeding;
(5) the refinance of a lien against a homestead, including a federal tax lien resulting from the tax debt of both spouses, if the homestead is a family homestead, or from the tax debt of the owner;
(6) an extension of credit that meets the requirements of Section 50(a)(6), Article XVI, Texas Constitution; or
(7) a reverse mortgage that meets the requirements of Sections 50(k)-(p), Article XVI, Texas Constitution.
(c) The homestead claimant’s proceeds of a sale of a homestead are not subject to seizure for a creditor’s claim for six months after the date of sale.
And the portion of the Texas Constitution:
Sec. 49. PROTECTION OF PERSONAL PROPERTY FROM FORCED SALE. The Legislature shall have power, and it shall be its duty, to protect by law from forced sale a certain portion of the personal property of all heads of families, and also of unmarried adults, male and female.
Sec. 50. HOMESTEAD; PROTECTION FROM FORCED SALE; MORTGAGES, TRUST DEEDS, AND LIENS. (a) The homestead of a family, or of a single adult person, shall be, and is hereby protected from forced sale, for the payment of all debts except for:
(1) the purchase money thereof, or a part of such purchase money;
(2) the taxes due thereon;
(3) an owelty of partition imposed against the entirety of the property by a court order or by a written agreement of the parties to the partition, including a debt of one spouse in favor of the other spouse resulting from a division or an award of a family homestead in a divorce proceeding;
(4) the refinance of a lien against a homestead, including a federal tax lien resulting from the tax debt of both spouses, if the homestead is a family homestead, or from the tax debt of the owner;
(5) work and material used in constructing new improvements thereon, if contracted for in writing, or work and material used to repair or renovate existing improvements thereon if:
(A) the work and material are contracted for in writing, with the consent of both spouses, in the case of a family homestead, given in the same manner as is required in making a sale and conveyance of the homestead;
(B) the contract for the work and material is not executed by the owner or the owner’s spouse before the fifth day after the owner makes written application for any extension of credit for the work and material, unless the work and material are necessary to complete immediate repairs to conditions on the homestead property that materially affect the health or safety of the owner or person residing in the homestead and the owner of the homestead acknowledges such in writing;
(C) the contract for the work and material expressly provides that the owner may rescind the contract without penalty or charge within three days after the execution of the contract by all parties, unless the work and material are necessary to complete immediate repairs to conditions on the homestead property that materially affect the health or safety of the owner or person residing in the homestead and the owner of the homestead acknowledges such in writing; and
(D) the contract for the work and material is executed by the owner and the owner’s spouse only at the office of a third-party lender making an extension of credit for the work and material, an attorney at law, or a title company;
(6) an extension of credit that:
(A) is secured by a voluntary lien on the homestead created under a written agreement with the consent of each owner and each owner’s spouse;
(B) is of a principal amount that when added to the aggregate total of the outstanding principal balances of all other indebtedness secured by valid encumbrances of record against the homestead does not exceed 80 percent of the fair market value of the homestead on the date the extension of credit is made;
(C) is without recourse for personal liability against each owner and the spouse of each owner, unless the owner or spouse obtained the extension of credit by actual fraud;
(D) is secured by a lien that may be foreclosed upon only by a court order;
(E) does not require the owner or the owner’s spouse to pay, in addition to any interest, fees to any person that are necessary to originate, evaluate, maintain, record, insure, or service the extension of credit that exceed, in the aggregate, three percent of the original principal amount of the extension of credit;
(F) is not a form of open-end account that may be debited from time to time or under which credit may be extended from time to time unless the open-end account is a home equity line of credit;
(G) is payable in advance without penalty or other charge;
(H) is not secured by any additional real or personal property other than the homestead;
(I) is not secured by homestead property that on the date of closing is designated for agricultural use as provided by statutes governing property tax, unless such homestead property is used primarily for the production of milk;
(J) may not be accelerated because of a decrease in the market value of the homestead or because of the owner’s default under other indebtedness not secured by a prior valid encumbrance against the homestead;
(K) is the only debt secured by the homestead at the time the extension of credit is made unless the other debt was made for a purpose described by Subsections (a)(1)-(a)(5) or Subsection (a)(8) of this section;
(L) is scheduled to be repaid:
(i) in substantially equal successive periodic installments, not more often than every 14 days and not less often than monthly, beginning no later than two months from the date the extension of credit is made, each of which equals or exceeds the amount of accrued interest as of the date of the scheduled installment; or
(ii) if the extension of credit is a home equity line of credit, in periodic payments described under Subsection (t)(8) of this section;
(M) is closed not before:
(i) the 12th day after the later of the date that the owner of the homestead submits a loan application to the lender for the extension of credit or the date that the lender provides the owner a copy of the notice prescribed by Subsection (g) of this section;
(ii) one business day after the date that the owner of the homestead receives a copy of the loan application if not previously provided and a final itemized disclosure of the actual fees, points, interest, costs, and charges that will be charged at closing. If a bona fide emergency or another good cause exists and the lender obtains the written consent of the owner, the lender may provide the documentation to the owner or the lender may modify previously provided documentation on the date of closing; and
(iii) the first anniversary of the closing date of any other extension of credit described by Subsection (a)(6) of this section secured by the same homestead property, except a refinance described by Paragraph (Q)(x)(f) of this subdivision, unless the owner on oath requests an earlier closing due to a state of emergency that:
(a) has been declared by the president of the United States or the governor as provided by law; and
(b) applies to the area where the homestead is located;
(N) is closed only at the office of the lender, an attorney at law, or a title company;
(O) permits a lender to contract for and receive any fixed or variable rate of interest authorized under statute;
(P) is made by one of the following that has not been found by a federal regulatory agency to have engaged in the practice of refusing to make loans because the applicants for the loans reside or the property proposed to secure the loans is located in a certain area:
(i) a bank, savings and loan association, savings bank, or credit union doing business under the laws of this state or the United States;
(ii) a federally chartered lending instrumentality or a person approved as a mortgagee by the United States government to make federally insured loans;
(iii) a person licensed to make regulated loans, as provided by statute of this state;
(iv) a person who sold the homestead property to the current owner and who provided all or part of the financing for the purchase;
(v) a person who is related to the homestead property owner within the second degree of affinity or consanguinity; or
(vi) a person regulated by this state as a mortgage broker; and
(Q) is made on the condition that:
(i) the owner of the homestead is not required to apply the proceeds of the extension of credit to repay another debt except debt secured by the homestead or debt to another lender;
(ii) the owner of the homestead not assign wages as security for the extension of credit;
(iii) the owner of the homestead not sign any instrument in which blanks relating to substantive terms of agreement are left to be filled in;
(iv) the owner of the homestead not sign a confession of judgment or power of attorney to the lender or to a third person to confess judgment or to appear for the owner in a judicial proceeding;
(v) at the time the extension of credit is made, the owner of the homestead shall receive a copy of the final loan application and all executed documents signed by the owner at closing related to the extension of credit;
(vi) the security instruments securing the extension of credit contain a disclosure that the extension of credit is the type of credit defined by Section 50(a)(6), Article XVI, Texas Constitution;
(vii) within a reasonable time after termination and full payment of the extension of credit, the lender cancel and return the promissory note to the owner of the homestead and give the owner, in recordable form, a release of the lien securing the extension of credit or a copy of an endorsement and assignment of the lien to a lender that is refinancing the extension of credit;
(viii) the owner of the homestead and any spouse of the owner may, within three days after the extension of credit is made, rescind the extension of credit without penalty or charge;
(ix) the owner of the homestead and the lender sign a written acknowledgment as to the fair market value of the homestead property on the date the extension of credit is made;
(x) except as provided by Subparagraph (xi) of this paragraph, the lender or any holder of the note for the extension of credit shall forfeit all principal and interest of the extension of credit if the lender or holder fails to comply with the lender’s or holder’s obligations under the extension of credit and fails to correct the failure to comply not later than the 60th day after the date the lender or holder is notified by the borrower of the lender’s failure to comply by:
(a) paying to the owner an amount equal to any overcharge paid by the owner under or related to the extension of credit if the owner has paid an amount that exceeds an amount stated in the applicable Paragraph (E), (G), or (O) of this subdivision;
(b) sending the owner a written acknowledgement that the lien is valid only in the amount that the extension of credit does not exceed the percentage described by Paragraph (B) of this subdivision, if applicable, or is not secured by property described under Paragraph (H) or (I) of this subdivision, if applicable;
(c) sending the owner a written notice modifying any other amount, percentage, term, or other provision prohibited by this section to a permitted amount, percentage, term, or other provision and adjusting the account of the borrower to ensure that the borrower is not required to pay more than an amount permitted by this section and is not subject to any other term or provision prohibited by this section;
(d) delivering the required documents to the borrower if the lender fails to comply with Subparagraph (v) of this paragraph or obtaining the appropriate signatures if the lender fails to comply with Subparagraph (ix) of this paragraph;
(e) sending the owner a written acknowledgement, if the failure to comply is prohibited by Paragraph (K) of this subdivision, that the accrual of interest and all of the owner’s obligations under the extension of credit are abated while any prior lien prohibited under Paragraph (K) remains secured by the homestead; or
(f) if the failure to comply cannot be cured under Subparagraphs (x)(a)-(e) of this paragraph, curing the failure to comply by a refund or credit to the owner of $1,000 and offering the owner the right to refinance the extension of credit with the lender or holder for the remaining term of the loan at no cost to the owner on the same terms, including interest, as the original extension of credit with any modifications necessary to comply with this section or on terms on which the owner and the lender or holder otherwise agree that comply with this section; and
(xi) the lender or any holder of the note for the extension of credit shall forfeit all principal and interest of the extension of credit if the extension of credit is made by a person other than a person described under Paragraph (P) of this subdivision or if the lien was not created under a written agreement with the consent of each owner and each owner’s spouse, unless each owner and each owner’s spouse who did not initially consent subsequently consents;
(7) a reverse mortgage; or
(8) the conversion and refinance of a personal property lien secured by a manufactured home to a lien on real property, including the refinance of the purchase price of the manufactured home, the cost of installing the manufactured home on the real property, and the refinance of the purchase price of the real property.
(b) An owner or claimant of the property claimed as homestead may not sell or abandon the homestead without the consent of each owner and the spouse of each owner, given in such manner as may be prescribed by law.
(c) No mortgage, trust deed, or other lien on the homestead shall ever be valid unless it secures a debt described by this section, whether such mortgage, trust deed, or other lien, shall have been created by the owner alone, or together with his or her spouse, in case the owner is married. All pretended sales of the homestead involving any condition of defeasance shall be void.
(d) A purchaser or lender for value without actual knowledge may conclusively rely on an affidavit that designates other property as the homestead of the affiant and that states that the property to be conveyed or encumbered is not the homestead of the affiant.
(e) A refinance of debt secured by a homestead and described by any subsection under Subsections (a)(1)-(a)(5) that includes the advance of additional funds may not be secured by a valid lien against the homestead unless:
(1) the refinance of the debt is an extension of credit described by Subsection (a)(6) of this section; or
(2) the advance of all the additional funds is for reasonable costs necessary to refinance such debt or for a purpose described by Subsection (a)(2), (a)(3), or (a)(5) of this section.
(f) A refinance of debt secured by the homestead, any portion of which is an extension of credit described by Subsection (a)(6) of this section, may not be secured by a valid lien against the homestead unless the refinance of the debt is an extension of credit described by Subsection (a)(6) or (a)(7) of this section.
(g) An extension of credit described by Subsection (a)(6) of this section may be secured by a valid lien against homestead property if the extension of credit is not closed before the 12th day after the lender provides the owner with the following written notice on a separate instrument:
“NOTICE CONCERNING EXTENSIONS OF CREDIT DEFINED BY SECTION 50(a)(6), ARTICLE XVI, TEXAS CONSTITUTION:
“SECTION 50(a)(6), ARTICLE XVI, OF THE TEXAS CONSTITUTION ALLOWS CERTAIN LOANS TO BE SECURED AGAINST THE EQUITY IN YOUR HOME. SUCH LOANS ARE COMMONLY KNOWN AS EQUITY LOANS. IF YOU DO NOT REPAY THE LOAN OR IF YOU FAIL TO MEET THE TERMS OF THE LOAN, THE LENDER MAY FORECLOSE AND SELL YOUR HOME. THE CONSTITUTION PROVIDES THAT:
“(A) THE LOAN MUST BE VOLUNTARILY CREATED WITH THE CONSENT OF EACH OWNER OF YOUR HOME AND EACH OWNER’S SPOUSE;
“(B) THE PRINCIPAL LOAN AMOUNT AT THE TIME THE LOAN IS MADE MUST NOT EXCEED AN AMOUNT THAT, WHEN ADDED TO THE PRINCIPAL BALANCES OF ALL OTHER LIENS AGAINST YOUR HOME, IS MORE THAN 80 PERCENT OF THE FAIR MARKET VALUE OF YOUR HOME;
“(C) THE LOAN MUST BE WITHOUT RECOURSE FOR PERSONAL LIABILITY AGAINST YOU AND YOUR SPOUSE UNLESS YOU OR YOUR SPOUSE OBTAINED THIS EXTENSION OF CREDIT BY ACTUAL FRAUD;
“(D) THE LIEN SECURING THE LOAN MAY BE FORECLOSED UPON ONLY WITH A COURT ORDER;
“(E) FEES AND CHARGES TO MAKE THE LOAN MAY NOT EXCEED 3 PERCENT OF THE LOAN AMOUNT;
“(F) THE LOAN MAY NOT BE AN OPEN-END ACCOUNT THAT MAY BE DEBITED FROM TIME TO TIME OR UNDER WHICH CREDIT MAY BE EXTENDED FROM TIME TO TIME UNLESS IT IS A HOME EQUITY LINE OF CREDIT;
“(G) YOU MAY PREPAY THE LOAN WITHOUT PENALTY OR CHARGE;
“(H) NO ADDITIONAL COLLATERAL MAY BE SECURITY FOR THE LOAN;
“(I) THE LOAN MAY NOT BE SECURED BY HOMESTEAD PROPERTY THAT IS DESIGNATED FOR AGRICULTURAL USE AS OF THE DATE OF CLOSING, UNLESS THE AGRICULTURAL HOMESTEAD PROPERTY IS USED PRIMARILY FOR THE PRODUCTION OF MILK;
“(J) YOU ARE NOT REQUIRED TO REPAY THE LOAN EARLIER THAN AGREED SOLELY BECAUSE THE FAIR MARKET VALUE OF YOUR HOME DECREASES OR BECAUSE YOU DEFAULT ON ANOTHER LOAN THAT IS NOT SECURED BY YOUR HOME;
“(K) ONLY ONE LOAN DESCRIBED BY SECTION 50(a)(6), ARTICLE XVI, OF THE TEXAS CONSTITUTION MAY BE SECURED WITH YOUR HOME AT ANY GIVEN TIME;
“(L) THE LOAN MUST BE SCHEDULED TO BE REPAID IN PAYMENTS THAT EQUAL OR EXCEED THE AMOUNT OF ACCRUED INTEREST FOR EACH PAYMENT PERIOD;
“(M) THE LOAN MAY NOT CLOSE BEFORE 12 DAYS AFTER YOU SUBMIT A LOAN APPLICATION TO THE LENDER OR BEFORE 12 DAYS AFTER YOU RECEIVE THIS NOTICE, WHICHEVER DATE IS LATER; AND MAY NOT WITHOUT YOUR CONSENT CLOSE BEFORE ONE BUSINESS DAY AFTER THE DATE ON WHICH YOU RECEIVE A COPY OF YOUR LOAN APPLICATION IF NOT PREVIOUSLY PROVIDED AND A FINAL ITEMIZED DISCLOSURE OF THE ACTUAL FEES, POINTS, INTEREST, COSTS, AND CHARGES THAT WILL BE CHARGED AT CLOSING; AND IF YOUR HOME WAS SECURITY FOR THE SAME TYPE OF LOAN WITHIN THE PAST YEAR, A NEW LOAN SECURED BY THE SAME PROPERTY MAY NOT CLOSE BEFORE ONE YEAR HAS PASSED FROM THE CLOSING DATE OF THE OTHER LOAN, UNLESS ON OATH YOU REQUEST AN EARLIER CLOSING DUE TO A DECLARED STATE OF EMERGENCY;
“(N) THE LOAN MAY CLOSE ONLY AT THE OFFICE OF THE LENDER, TITLE COMPANY, OR AN ATTORNEY AT LAW;
“(O) THE LENDER MAY CHARGE ANY FIXED OR VARIABLE RATE OF INTEREST AUTHORIZED BY STATUTE;
“(P) ONLY A LAWFULLY AUTHORIZED LENDER MAY MAKE LOANS DESCRIBED BY SECTION 50(a)(6), ARTICLE XVI, OF THE TEXAS CONSTITUTION;
“(Q) LOANS DESCRIBED BY SECTION 50(a)(6), ARTICLE XVI, OF THE TEXAS CONSTITUTION MUST:
“(1) NOT REQUIRE YOU TO APPLY THE PROCEEDS TO ANOTHER DEBT EXCEPT A DEBT THAT IS SECURED BY YOUR HOME OR OWED TO ANOTHER LENDER;
“(2) NOT REQUIRE THAT YOU ASSIGN WAGES AS SECURITY;
“(3) NOT REQUIRE THAT YOU EXECUTE INSTRUMENTS WHICH HAVE BLANKS FOR SUBSTANTIVE TERMS OF AGREEMENT LEFT TO BE FILLED IN;
“(4) NOT REQUIRE THAT YOU SIGN A CONFESSION OF JUDGMENT OR POWER OF ATTORNEY TO ANOTHER PERSON TO CONFESS JUDGMENT OR APPEAR IN A LEGAL PROCEEDING ON YOUR BEHALF;
“(5) PROVIDE THAT YOU RECEIVE A COPY OF YOUR FINAL LOAN APPLICATION AND ALL EXECUTED DOCUMENTS YOU SIGN AT CLOSING;
“(6) PROVIDE THAT THE SECURITY INSTRUMENTS CONTAIN A DISCLOSURE THAT THIS LOAN IS A LOAN DEFINED BY SECTION 50(a)(6), ARTICLE XVI, OF THE TEXAS CONSTITUTION;
“(7) PROVIDE THAT WHEN THE LOAN IS PAID IN FULL, THE LENDER WILL SIGN AND GIVE YOU A RELEASE OF LIEN OR AN ASSIGNMENT OF THE LIEN, WHICHEVER IS APPROPRIATE;
“(8) PROVIDE THAT YOU MAY, WITHIN 3 DAYS AFTER CLOSING, RESCIND THE LOAN WITHOUT PENALTY OR CHARGE;
“(9) PROVIDE THAT YOU AND THE LENDER ACKNOWLEDGE THE FAIR MARKET VALUE OF YOUR HOME ON THE DATE THE LOAN CLOSES; AND
“(10) PROVIDE THAT THE LENDER WILL FORFEIT ALL PRINCIPAL AND INTEREST IF THE LENDER FAILS TO COMPLY WITH THE LENDER’S OBLIGATIONS UNLESS THE LENDER CURES THE FAILURE TO COMPLY AS PROVIDED BY SECTION 50(a)(6)(Q)(x), ARTICLE XVI, OF THE TEXAS CONSTITUTION; AND
“(R) IF THE LOAN IS A HOME EQUITY LINE OF CREDIT:
“(1) YOU MAY REQUEST ADVANCES, REPAY MONEY, AND REBORROW MONEY UNDER THE LINE OF CREDIT;
“(2) EACH ADVANCE UNDER THE LINE OF CREDIT MUST BE IN AN AMOUNT OF AT LEAST $4,000;
“(3) YOU MAY NOT USE A CREDIT CARD, DEBIT CARD, OR SIMILAR DEVICE, OR PREPRINTED CHECK THAT YOU DID NOT SOLICIT, TO OBTAIN ADVANCES UNDER THE LINE OF CREDIT;
“(4) ANY FEES THE LENDER CHARGES MAY BE CHARGED AND COLLECTED ONLY AT THE TIME THE LINE OF CREDIT IS ESTABLISHED AND THE LENDER MAY NOT CHARGE A FEE IN CONNECTION WITH ANY ADVANCE;
“(5) THE MAXIMUM PRINCIPAL AMOUNT THAT MAY BE EXTENDED, WHEN ADDED TO ALL OTHER DEBTS SECURED BY YOUR HOME, MAY NOT EXCEED 80 PERCENT OF THE FAIR MARKET VALUE OF YOUR HOME ON THE DATE THE LINE OF CREDIT IS ESTABLISHED;
“(6) IF THE PRINCIPAL BALANCE UNDER THE LINE OF CREDIT AT ANY TIME EXCEEDS 50 PERCENT OF THE FAIR MARKET VALUE OF YOUR HOME, AS DETERMINED ON THE DATE THE LINE OF CREDIT IS ESTABLISHED, YOU MAY NOT CONTINUE TO REQUEST ADVANCES UNDER THE LINE OF CREDIT UNTIL THE BALANCE IS LESS THAN 50 PERCENT OF THE FAIR MARKET VALUE; AND
“(7) THE LENDER MAY NOT UNILATERALLY AMEND THE TERMS OF THE LINE OF CREDIT.
“THIS NOTICE IS ONLY A SUMMARY OF YOUR RIGHTS UNDER THE TEXAS CONSTITUTION. YOUR RIGHTS ARE GOVERNED BY SECTION 50, ARTICLE XVI, OF THE TEXAS CONSTITUTION, AND NOT BY THIS NOTICE.”
If the discussions with the borrower are conducted primarily in a language other than English, the lender shall, before closing, provide an additional copy of the notice translated into the written language in which the discussions were conducted.
(h) A lender or assignee for value may conclusively rely on the written acknowledgment as to the fair market value of the homestead property made in accordance with Subsection (a)(6)(Q)(ix) of this section if:
(1) the value acknowledged to is the value estimate in an appraisal or evaluation prepared in accordance with a state or federal requirement applicable to an extension of credit under Subsection (a)(6); and
(2) the lender or assignee does not have actual knowledge at the time of the payment of value or advance of funds by the lender or assignee that the fair market value stated in the written acknowledgment was incorrect.
(i) This subsection shall not affect or impair any right of the borrower to recover damages from the lender or assignee under applicable law for wrongful foreclosure. A purchaser for value without actual knowledge may conclusively presume that a lien securing an extension of credit described by Subsection (a)(6) of this section was a valid lien securing the extension of credit with homestead property if:
(1) the security instruments securing the extension of credit contain a disclosure that the extension of credit secured by the lien was the type of credit defined by Section 50(a)(6), Article XVI, Texas Constitution;
(2) the purchaser acquires the title to the property pursuant to or after the foreclosure of the voluntary lien; and
(3) the purchaser is not the lender or assignee under the extension of credit.
(j) Subsection (a)(6) and Subsections (e)-(i) of this section are not severable, and none of those provisions would have been enacted without the others. If any of those provisions are held to be preempted by the laws of the United States, all of those provisions are invalid. This subsection shall not apply to any lien or extension of credit made after January 1, 1998, and before the date any provision under Subsection (a)(6) or Subsections (e)-(i) is held to be preempted.
(k) “Reverse mortgage” means an extension of credit:
(1) that is secured by a voluntary lien on homestead property created by a written agreement with the consent of each owner and each owner’s spouse;
(2) that is made to a person who is or whose spouse is 62 years or older;
(3) that is made without recourse for personal liability against each owner and the spouse of each owner;
(4) under which advances are provided to a borrower based on the equity in a borrower’s homestead;
(5) that does not permit the lender to reduce the amount or number of advances because of an adjustment in the interest rate if periodic advances are to be made;
(6) that requires no payment of principal or interest until:
(A) all borrowers have died;
(B) the homestead property securing the loan is sold or otherwise transferred;
(C) all borrowers cease occupying the homestead property for a period of longer than 12 consecutive months without prior written approval from the lender; or
(D) the borrower:
(i) defaults on an obligation specified in the loan documents to repair and maintain, pay taxes and assessments on, or insure the homestead property;
(ii) commits actual fraud in connection with the loan; or
(iii) fails to maintain the priority of the lender’s lien on the homestead property, after the lender gives notice to the borrower, by promptly discharging any lien that has priority or may obtain priority over the lender’s lien within 10 days after the date the borrower receives the notice, unless the borrower:
(a) agrees in writing to the payment of the obligation secured by the lien in a manner acceptable to the lender;
(b) contests in good faith the lien by, or defends against enforcement of the lien in, legal proceedings so as to prevent the enforcement of the lien or forfeiture of any part of the homestead property; or
(c) secures from the holder of the lien an agreement satisfactory to the lender subordinating the lien to all amounts secured by the lender’s lien on the homestead property;
(7) that provides that if the lender fails to make loan advances as required in the loan documents and if the lender fails to cure the default as required in the loan documents after notice from the borrower, the lender forfeits all principal and interest of the reverse mortgage, provided, however, that this subdivision does not apply when a governmental agency or instrumentality takes an assignment of the loan in order to cure the default;
(8) that is not made unless the owner of the homestead attests in writing that the owner received counseling regarding the advisability and availability of reverse mortgages and other financial alternatives;
(9) that requires the lender, at the time the loan is made, to disclose to the borrower by written notice the specific provisions contained in Subdivision (6) of this subsection under which the borrower is required to repay the loan;
(10) that does not permit the lender to commence foreclosure until the lender gives notice to the borrower, in the manner provided for a notice by mail related to the foreclosure of liens under Subsection (a)(6) of this section, that a ground for foreclosure exists and gives the borrower at least 30 days, or at least 20 days in the event of a default under Subdivision (6)(D)(iii) of this subsection, to:
(A) remedy the condition creating the ground for foreclosure;
(B) pay the debt secured by the homestead property from proceeds of the sale of the homestead property by the borrower or from any other sources; or
(C) convey the homestead property to the lender by a deed in lieu of foreclosure; and
(11) that is secured by a lien that may be foreclosed upon only by a court order, if the foreclosure is for a ground other than a ground stated by Subdivision (6)(A) or (B) of this subsection.
(l) Advances made under a reverse mortgage and interest on those advances have priority over a lien filed for record in the real property records in the county where the homestead property is located after the reverse mortgage is filed for record in the real property records of that county.
(m) A reverse mortgage may provide for an interest rate that is fixed or adjustable and may also provide for interest that is contingent on appreciation in the fair market value of the homestead property. Although payment of principal or interest shall not be required under a reverse mortgage until the entire loan becomes due and payable, interest may accrue and be compounded during the term of the loan as provided by the reverse mortgage loan agreement.
(n) A reverse mortgage that is secured by a valid lien against homestead property may be made or acquired without regard to the following provisions of any other law of this state:
(1) a limitation on the purpose and use of future advances or other mortgage proceeds;
(2) a limitation on future advances to a term of years or a limitation on the term of open-end account advances;
(3) a limitation on the term during which future advances take priority over intervening advances;
(4) a requirement that a maximum loan amount be stated in the reverse mortgage loan documents;
(5) a prohibition on balloon payments;
(6) a prohibition on compound interest and interest on interest;
(7) a prohibition on contracting for, charging, or receiving any rate of interest authorized by any law of this state authorizing a lender to contract for a rate of interest; and
(8) a requirement that a percentage of the reverse mortgage proceeds be advanced before the assignment of the reverse mortgage.
(o) For the purposes of determining eligibility under any statute relating to payments, allowances, benefits, or services provided on a means-tested basis by this state, including supplemental security income, low-income energy assistance, property tax relief, medical assistance, and general assistance:
(1) reverse mortgage loan advances made to a borrower are considered proceeds from a loan and not income; and
(2) undisbursed funds under a reverse mortgage loan are considered equity in a borrower’s home and not proceeds from a loan.
(p) The advances made on a reverse mortgage loan under which more than one advance is made must be made according to the terms established by the loan documents by one or more of the following methods:
(1) an initial advance at any time and future advances at regular intervals;
(2) an initial advance at any time and future advances at regular intervals in which the amounts advanced may be reduced, for one or more advances, at the request of the borrower;
(3) an initial advance at any time and future advances at times and in amounts requested by the borrower until the credit limit established by the loan documents is reached;
(4) an initial advance at any time, future advances at times and in amounts requested by the borrower until the credit limit established by the loan documents is reached, and subsequent advances at times and in amounts requested by the borrower according to the terms established by the loan documents to the extent that the outstanding balance is repaid; or
(5) at any time by the lender, on behalf of the borrower, if the borrower fails to timely pay any of the following that the borrower is obligated to pay under the loan documents to the extent necessary to protect the lender’s interest in or the value of the homestead property:
(A) taxes;
(B) insurance;
(C) costs of repairs or maintenance performed by a person or company that is not an employee of the lender or a person or company that directly or indirectly controls, is controlled by, or is under common control with the lender;
(D) assessments levied against the homestead property; and
(E) any lien that has, or may obtain, priority over the lender’s lien as it is established in the loan documents.
(q) To the extent that any statutes of this state, including without limitation, Section 41.001 of the Texas Property Code, purport to limit encumbrances that may properly be fixed on homestead property in a manner that does not permit encumbrances for extensions of credit described in Subsection (a)(6) or (a)(7) of this section, the same shall be superseded to the extent that such encumbrances shall be permitted to be fixed upon homestead property in the manner provided for by this amendment.
(r) The supreme court shall promulgate rules of civil procedure for expedited foreclosure proceedings related to the foreclosure of liens under Subsection (a)(6) of this section and to foreclosure of a reverse mortgage lien that requires a court order.
(s) The Finance Commission of Texas shall appoint a director to conduct research on the availability, quality, and prices of financial services and research the practices of business entities in the state that provide financial services under this section. The director shall collect information and produce reports on lending activity of those making loans under this section. The director shall report his or her findings to the legislature not later than December 1 of each year.
(t) A home equity line of credit is a form of an open-end account that may be debited from time to time, under which credit may be extended from time to time and under which:
(1) the owner requests advances, repays money, and reborrows money;
(2) any single debit or advance is not less than $4,000;
(3) the owner does not use a credit card, debit card, or similar device, or preprinted check unsolicited by the borrower, to obtain an advance;
(4) any fees described by Subsection (a)(6)(E) of this section are charged and collected only at the time the extension of credit is established and no fee is charged or collected in connection with any debit or advance;
(5) the maximum principal amount that may be extended under the account, when added to the aggregate total of the outstanding principal balances of all indebtedness secured by the homestead on the date the extension of credit is established, does not exceed an amount described under Subsection (a)(6)(B) of this section;
(6) no additional debits or advances are made if the total principal amount outstanding exceeds an amount equal to 50 percent of the fair market value of the homestead as determined on the date the account is established;
(7) the lender or holder may not unilaterally amend the extension of credit; and
(8) repayment is to be made in regular periodic installments, not more often than every 14 days and not less often than monthly, beginning not later than two months from the date the extension of credit is established, and:
(A) during the period during which the owner may request advances, each installment equals or exceeds the amount of accrued interest; and
(B) after the period during which the owner may request advances, installments are substantially equal.
(u) The legislature may by statute delegate one or more state agencies the power to interpret Subsections (a)(5)-(a)(7), (e)-(p), and (t), of this section. An act or omission does not violate a provision included in those subsections if the act or omission conforms to an interpretation of the provision that is:
(1) in effect at the time of the act or omission; and
(2) made by a state agency to which the power of interpretation is delegated as provided by this subsection or by an appellate court of this state or the United States.
(v) A reverse mortgage must provide that:
(1) the owner does not use a credit card, debit card, preprinted solicitation check, or similar device to obtain an advance;
(2) after the time the extension of credit is established, no transaction fee is charged or collected solely in connection with any debit or advance; and
(3) the lender or holder may not unilaterally amend the extension of credit.
(Amended Nov. 6, 1973, and Nov. 7, 1995; Subsecs. (a)-(d) amended and (e)-(s) added Nov. 4, 1997; Subsecs. (k), (p), and (r) amended Nov. 2, 1999; Subsec. (a) amended Nov. 6, 2001; Subsecs. (a), (f), and (g) amended and (t) and (u) added Sept. 13, 2003; Subsec. (p) amended and (v) added Nov. 8, 2005.)
I have a judgment against me for a credit card debt. Can they take my house?
Posted by: David Leon in Consumer & Credit, Litigation and judgments, Real Estate Law on January 1st, 2010
It is unlikely. The Texas Property Code (Sec. 41.001) and Section 50(a)(6), Article XVI of Texas Constitution govern which debts can “attach” to a homestead. Credit card suits do not normally attach to a homestead, even if they are reduced to a judgment.
How do I add someone to the title of my real estate?
Posted by: David Leon in Real Estate Law on December 26th, 2009
Transfers of interests in real estate in Texas usually done by deeds. In many cases, a person can be added to title to real estate by having the owner of the property execute a warranty deed specifying the amounts of interest to be retained by the grantor and the amount to be given to the grantee. If the property is mortgaged, then this transfer may trigger a “due on sale” clause which is present in most Texas mortgages.
I’ve been charged with hindering a secured creditor? What is the punishment for hindering a secured creditor?
Posted by: David Leon in Criminal Defense on December 25th, 2009
This is governed by Texas Penal Code Sec. 32.33(e):
(1) a Class C misdemeanor if the proceeds obtained
from the sale or other disposition are money or goods having a value
of less than $20;
(2) a Class B misdemeanor if the proceeds obtained
from the sale or other disposition are money or goods having a value
of $20 or more but less than $500;
(3) a Class A misdemeanor if the proceeds obtained
from the sale or other disposition are money or goods having a value
of $500 or more but less than $1,500;
(4) a state jail felony if the proceeds obtained from
the sale or other disposition are money or goods having a value of
$1,500 or more but less than $20,000;
(5) a felony of the third degree if the proceeds
obtained from the sale or other disposition are money or goods
having a value of $20,000 or more but less than $100,000;
(6) a felony of the second degree if the proceeds
obtained from the sale or other disposition are money or goods
having a value of $100,000 or more but less than $200,000; or
(7) a felony of the first degree if the proceeds
obtained from the sale or other disposition are money or goods
having a value of $200,000 or more.
What is hindering a secured creditor?
Posted by: David Leon in Foreclosure, Real Estate Law on December 25th, 2009
Hindering a secured creditor is a criminal offense per Texas Penal Code 32.33. The statute says:
(b) A person who has signed a security agreement creating a
security interest in property or a mortgage or deed of trust
creating a lien on property commits an offense if, with intent to
hinder enforcement of that interest or lien, he destroys, removes,
conceals, encumbers, or otherwise harms or reduces the value of the
property.
(c) For purposes of this section, a person is presumed to
have intended to hinder enforcement of the security interest or
lien if, when any part of the debt secured by the security interest
or lien was due, he failed:
(1) to pay the part then due; and
(2) if the secured party had made demand, to deliver
possession of the secured property to the secured party.
[...]
(e) A person who is a debtor under a security agreement, and
who does not have a right to sell or dispose of the secured property
or is required to account to the secured party for the proceeds of a
permitted sale or disposition, commits an offense if the person
sells or otherwise disposes of the secured property, or does not
account to the secured party for the proceeds of a sale or other
disposition as required, with intent to appropriate (as defined in
Chapter 31) the proceeds or value of the secured property. A person
is presumed to have intended to appropriate proceeds if the person
does not deliver the proceeds to the secured party or account to the
secured party for the proceeds before the 11th day after the day
that the secured party makes a lawful demand for the proceeds or
account.
Common examples include, hiding a vehicle in order to prevent it from being repossessed and vandalizing a house that is about to be foreclosed.
Are life insurance proceeds subject to the debts of the deceased person?
Posted by: David Leon in Estate planning and probate, Insurance Law on December 25th, 2009
In most cases, no, life insurance proceeds are not subject to estate debts. The most common exception is when the “estate” is a listed beneficiary (which is improper under Texas law, but that’s a discussion for another day.) In most cases, life insurance is a contract between the insured and the life insurance company, to pay benefits to a beneficiary. The deceased person’s estate (to which most debts attach) is not involved in the process. The notable exceptions are life insurance policies specifically geared towards credits. A common example is a credit life policy. In this policy, an insured purchases a policy to cover a specific debt, such as a mortgage. This way, should the insured die, the mortgage is paid off in full.
Can a common law spouse be a beneficiary of a life insurance policy?
Posted by: David Leon in Contract law, Estate planning and probate, Insurance Law on December 25th, 2009
Yes. A life insurance applicant may appoint anyone (or any entity) as a beneficiary on a life insurance policy, even a common law spouse. Also, if a common law marriage was in existence, then a common law spouse may have community property interests in a life insurance policy (purchased after the marriage) if the spouse is not listed as a beneficiary.
Is it possible to prove a common law marriage after death?
Posted by: David Leon in Estate planning and probate, Insurance Law on December 25th, 2009
Yes. However, the burden of proof shifts after the second anniversary of the death of the purported spouse. If successfully proven, the date of the inception of the common law marriage may be determined by the court.
What is a wrap around mortgage?
Posted by: David Leon in Real Estate Law on December 25th, 2009
A typical wrap around mortgage is when a borrower sells a house to buyer, and the buyer is responsible for paying the first mortgage. In many cases, the seller takes the payments from the buyer and pays the first mortgage directly.
For example, Joe has a mortgage on his house with First National Bank for $10,000, payable in $100 monthly payments. Joe then sells his house to Jessica for $12,000, for $120 monthly payments. Jessica puts no money down. Jessica is making payments to Joe for $120 per month. Joe, in turn, pays the $100 per month to First National Bank, and keeps the extra $20 per month.
Most of these scenarios violate the “due on sale” provisions contained in most Texas residential mortgages.
I’ve been charged with providing a false statement to obtain credit. What exactly is this and what can they do?
Posted by: David Leon in Consumer & Credit, Criminal Defense, Real Estate Law on December 25th, 2009
This is a very serious offense. This is governed by Texas Penal Code Sec. 32.32. The more common activities include falsely stating an inflated income on a mortgage application, or falsely increasing your income to obtain a loan. Either way, if the amount of credit granted as a result of a false statement is greater than $1,500, then the actor may be charged with a felony. Also, there may be federal charges in many cases.
Can a credit card company sue you in the state of Texas?
Posted by: David Leon in Consumer & Credit on December 25th, 2009
Yes. Most likely, the credit card company will first send you a notice of default. After that, the debt is typically sold to a third party collection agent, who then attempts to collect the debt. This usually involves a litany of letters and phone calls. If the collectors are still unsuccessful, then the collection agent may fire a lawyer to file a lawsuit against the borrower. By law, you are required to be given notice of any lawsuit against you.
I am a co-signor on a real estate note. The primary borrower has abandoned the property. Can the bank come after me?
Posted by: David Leon in Foreclosure, Real Estate Law on December 25th, 2009
Possibly. Unless the loan was “non-recourse” note (which is most often the case for home equity based loans), then the bank is limited to looking at the property for satisfaction of the loan. If this is a recourse loan (most common) then the bank can go after any borrower or co-borrower for any deficiency. The bank will also likely report to everyone’s credit.
I am a co-borrower on a house. I want out. How do I get my name off of the loan?
Posted by: David Leon in Real Estate Law on December 25th, 2009
Unfortunately, a bank does not have to let a borrower out of a note. The most common way to get your name off of a note is to have the co-borrower refinance the property without you, or to sell the property.
What is the law in Texas regarding a common law spouse and life insurance?
Posted by: David Leon in Estate planning and probate, Insurance Law on December 25th, 2009
A common law marriage in Texas, if proven, carries the same validity as a ceremonial marriage. Accordingly, if there is a proven common law marriage, then the Texas rules regarding life insurance beneficiaries would apply.
New federal rules in effect December 1, 2009
Posted by: David Leon in Litigation and judgments on December 17th, 2009
Here’s a link to the changes to the federal rules. The new rules went into effect Dec. 1, 2009.
http://www.uscourts.gov/rules/supct0309.html
I was in an accident, but not at fault. My insurance paid the claim. What about my deductible?
Posted by: David Leon in Insurance Law, Personal injury, auto accident, slip and fall law on September 20th, 2009
The insurer may go after a third party for your deductible, or authorize the insured to go after himself or herself.
The controlling statute is Texas Insurance Code Sec. 542.204. ACTION TO RECOVER DEDUCTIBLE. (a) Notwithstanding any other provision of this code and except as provided by Subsection (b), if an insurer is liable to an insured for a claim that is subject to a deductible payable by the insured and a third party may be liable to the insurer or the insured for the amount of the deductible, the insurer shall:
(1) take action to recover the deductible against the third party not later than the first anniversary of the date the insured’s claim is paid; or
(2) pay the amount of the deductible to the insured.
(b) An insurer is not required to take action or pay the amount of the deductible as required by Subsection (a) if, not later than the earlier of the first anniversary of the date the insured’s claim is paid or the 90th day before the date the statute of limitations for a negligence action expires, the insurer:
(1) notifies the insured in writing that the insurer does not intend to take further collection actions against the third party; and
(2) authorizes the insured to take further collection actions.
(c) This section applies regardless of whether the third party who may be liable for the amount of the deductible is insured or uninsured.
An insurance company wrongfully delayed paying my claim. Is there a penalty?
Posted by: David Leon in Insurance Law on September 20th, 2009
Yes, if there is an unreasonable delay in paying a claim, an insurance company can be held liable for attorney fees, 18% interest and other damages. The controlling statutes from the Texas Insurance Code are listed below.
Sec. 542.058. DELAY IN PAYMENT OF CLAIM. (a) Except as otherwise provided, if an insurer, after receiving all items, statements, and forms reasonably requested and required under Section 542.055, delays payment of the claim for a period exceeding the period specified by other applicable statutes or, if other statutes do not specify a period, for more than 60 days, the insurer shall pay damages and other items as provided by Section 542.060.
(b) This section does not apply in a case in which it is found as a result of arbitration or litigation that a claim received by an insurer is invalid and should not be paid by the insurer.
Sec. 542.060. LIABILITY FOR VIOLATION OF SUBCHAPTER. (a) If an insurer that is liable for a claim under an insurance policy is not in compliance with this subchapter, the insurer is liable to pay the holder of the policy or the beneficiary making the claim under the policy, in addition to the amount of the claim, interest on the amount of the claim at the rate of 18 percent a year as damages, together with reasonable attorney’s fees.
(b) If a suit is filed, the attorney’s fees shall be taxed as part of the costs in the case.
The insurance company stated that they have accepted and will pay my claim. How much time do they have?
Posted by: David Leon in Insurance Law on September 20th, 2009
Generally speaking, an insurance company has five business days to pay an accepted claim. If the insurance company requires paperwork from a party, then the five days begins on receipt of the paperwork.
The controlling statute is Texas Insurance Code Sec. 542.057. PAYMENT OF CLAIM. (a) Except as otherwise provided by this section, if an insurer notifies a claimant under Section 542.056 that the insurer will pay a claim or part of a claim, the insurer shall pay the claim not later than the fifth business day after the date notice is made.
(b) If payment of the claim or part of the claim is conditioned on the performance of an act by the claimant, the insurer shall pay the claim not later than the fifth business day after the date the act is performed.
(c) If the insurer is an eligible surplus lines insurer, the insurer shall pay the claim not later than the 20th business day after the notice or the date the act is performed, as applicable.
How will I know if an insurance company has accepted or rejected my claim?
Posted by: David Leon in Insurance Law, Personal injury, auto accident, slip and fall law on September 20th, 2009
An insurance company generally has fifteen days to accept or reject a claim, or ask for more information. If there is a reasonable suspicion of arson, then the time extends to 30 days. If a claim is rejected, the insurance company is obliged to tell the claimant the reasons why.
The controlling statute is Texas Insurance Code Sec. 542.056. NOTICE OF ACCEPTANCE OR REJECTION OF CLAIM. (a) Except as provided by Subsection (b) or (d), an insurer shall notify a claimant in writing of the acceptance or rejection of a claim not later than the 15th business day after the date the insurer receives all items, statements, and forms required by the insurer to secure final proof of loss.
(b) If an insurer has a reasonable basis to believe that a loss resulted from arson, the insurer shall notify the claimant in writing of the acceptance or rejection of the claim not later than the 30th day after the date the insurer receives all items, statements, and forms required by the insurer.
(c) If the insurer rejects the claim, the notice required by Subsection (a) or (b) must state the reasons for the rejection.
(d) If the insurer is unable to accept or reject the claim within the period specified by Subsection (a) or (b), the insurer, within that same period, shall notify the claimant of the reasons that the insurer needs additional time. The insurer shall accept or reject the claim not later than the 45th day after the date the insurer notifies a claimant under this subsection.
What is Online Harassment?
Posted by: David Leon in Criminal Defense on September 20th, 2009
Sec. 33.07 of the Texas Penal Code makes it a third degree felony if a person uses the name or persona of another to create a web page or post on a commercial networking site without permission and with the intent to harm, defraud, intimidate, or threaten another person.
The code section makes it a Class A misdemeanor to send an email, IM, text or similar communication that references any identifying information belonging to any person without obtaining the person’s consent, with the intent to cause the recipient to believe that the other person authorized the communication, and with the intent to harm or defraud any person. If the intent is to solicit responses by emergency services, then the act is a third degree felony.
(Full text of this statute was not available at press time.)
What are the different types of felonies and punishments in Texas?
Posted by: David Leon in Criminal Defense on September 20th, 2009
Absent extenuating circumstances, the “ordinary” felony punishments are listed below, as set forth in the Texas Penal Code. Felonies are broken down from capital felonies (most severe, to degrees (1st, 2nd, 3rd) and then state jail felonies (least severe.) There are enhancements to the punishments available in many circumstances.
Sec. 12.31. CAPITAL FELONY.
(a) An individual adjudged guilty of a capital felony in a case in which the state seeks the death penalty shall be punished by imprisonment in the institutional division for life without parole or by death. An individual adjudged guilty of a capital felony in a case in which the state does not seek the death penalty shall be punished by imprisonment in the institutional division for life without parole.
(b) In a capital felony trial in which the state seeks the death penalty, prospective jurors shall be informed that a sentence of life imprisonment without parole or death is mandatory on conviction of a capital felony. In a capital felony trial in which the state does not seek the death penalty, prospective jurors shall be informed that the state is not seeking the death penalty and that a sentence of life imprisonment without parole is mandatory on conviction of the capital felony.
Sec. 12.32. FIRST DEGREE FELONY PUNISHMENT.
(a) An individual adjudged guilty of a felony of the first degree shall be punished by imprisonment in the institutional division for life or for any term of not more than 99 years or less than 5 years.
(b) In addition to imprisonment, an individual adjudged guilty of a felony of the first degree may be punished by a fine not to exceed $10,000.
Sec. 12.33. SECOND DEGREE FELONY PUNISHMENT.
(a) An individual adjudged guilty of a felony of the second degree shall be punished by imprisonment in the institutional division for any term of not more than 20 years or less than 2 years.
(b) In addition to imprisonment, an individual adjudged guilty of a felony of the second degree may be punished by a fine not to exceed $10,000.
Sec. 12.34. THIRD DEGREE FELONY PUNISHMENT.
(a) An individual adjudged guilty of a felony of the third degree shall be punished by imprisonment in the institutional division for any term of not more than 10 years or less than 2 years.
(b) In addition to imprisonment, an individual adjudged guilty of a felony of the third degree may be punished by a fine not to exceed $10,000.
Sec. 12.35. STATE JAIL FELONY PUNISHMENT.
(a) Except as provided by Subsection (c), an individual adjudged guilty of a state jail felony shall be punished by confinement in a state jail for any term of not more than two years or less than 180 days.
(b) In addition to confinement, an individual adjudged guilty of a state jail felony may be punished by a fine not to exceed $10,000.
(c) An individual adjudged guilty of a state jail felony shall be punished for a third degree felony if it is shown on the trial of the offense that:
(1) a deadly weapon as defined by Section 1.07 was used or exhibited during the commission of the offense or during immediate flight following the commission of the offense, and that the individual used or exhibited the deadly weapon or was a party to the offense and knew that a deadly weapon would be used or exhibited; or
(2) the individual has previously been finally convicted of any felony:
(A) under Section 21.02 (Continuous Sexual Abuse of a Child) or listed in Section 3g(a)(1), Article 42.12, Code of Criminal Procedure**; or
(B) for which the judgment contains an affirmative finding under Section 3g(a)(2), Article 42.12, Code of Criminal Procedure.
**Article 42.12, Code of Criminal Procedure, Limitation on Judge Ordered Community Supervision, Sec. 3g(a)(1) states that it shall not apply to a defendant adjudged guilty of an offense under:
(A) Section 19.02, Penal Code (Murder);
(B) Section 19.03, Penal Code (Capital murder);
(C) Section 21.11(a)(1), Penal Code (Indecency with a
child);
(D) Section 20.04, Penal Code (Aggravated kidnapping);
(E) Section 22.021, Penal Code (Aggravated sexual assault);
(F) Section 29.03, Penal Code (Aggravated robbery);
(G) Chapter 481, Health and Safety Code, for which
punishment is increased under:
(i) Section 481.140, Health and Safety Code; or
(ii) Section 481.134(c), (d), (e), or (f), Health and Safety
Code, if it is shown that the defendant has been previously
convicted of an offense for which punishment was increased under
any of those subsections; or
(H) Section 22.011, Penal Code (Sexual assault); or
(2) to a defendant when it is shown that a deadly weapon as
defined in Section 1.07, Penal Code, was used or exhibited during
the commission of a felony offense or during immediate flight
therefrom, and that the defendant used or exhibited the deadly
weapon or was a party to the offense and knew that a deadly weapon
would be used or exhibited. On an affirmative finding under this
subdivision, the trial court shall enter the finding in the
judgment of the court. On an affirmative finding that the deadly
weapon was a firearm, the court shall enter that finding in its
judgment.
(b) If there is an affirmative finding under Subsection
(a)(2) in the trial of a felony of the second degree or higher that
the deadly weapon used or exhibited was a firearm and the defendant
is granted community supervision, the court may order the defendant
confined in the institutional division of the Texas Department of
Criminal Justice for not less than 60 and not more than 120 days. At
any time after the defendant has served 60 days in the custody of
the institutional division, the sentencing judge, on his own motion
or on motion of the defendant, may order the defendant released to
community supervision. The institutional division shall release
the defendant to community supervision after he has served 120
days.
What are misdemeanor punishments?
Posted by: David Leon in Criminal Defense on September 20th, 2009
Crimes in Texas are divided into two categories: felonies (serious crimes) and misdemeanors (less serious.) Misdemeanors are further broken down into classes A (most severe) through C (least severe.)
Punishments for misdemeanors are set forth in the Texas Penal Code as follows:
SUBCHAPTER B. ORDINARY MISDEMEANOR PUNISHMENTS
Sec. 12.21. CLASS A MISDEMEANOR. An individual adjudged guilty of a Class A misdemeanor shall be punished by:
(1) a fine not to exceed $4,000;
(2) confinement in jail for a term not to exceed one year; or
(3) both such fine and confinement.
Sec. 12.22. CLASS B MISDEMEANOR. An individual adjudged guilty of a Class B misdemeanor shall be punished by:
(1) a fine not to exceed $2,000;
(2) confinement in jail for a term not to exceed 180 days; or
(3) both such fine and confinement.
Sec. 12.23. CLASS C MISDEMEANOR. An individual adjudged guilty of a Class C misdemeanor shall be punished by a fine not to exceed $500.
Legislative update: DWI warrantless blood tests
Posted by: David Leon in Criminal Defense on September 20th, 2009
Transportation Code Sec. 724.017 now allows law enforcement to extract a blood sample from a DWI suspect who is arrested (as defined in Ch. 49 of the Texas Penal Code) without a warrant. (See: SB 238). The blood test may be taken if the person is arrested, refuses a voluntary blood test and:
a.) an individual other than the arrestee has suffered bodily injury and was transported to a hospital or other medical facility for medical treatment;
b.) the person is under arrest for DWI with a child passenger under the age of 15;
c.) the officer has reliable information that the person has been previously convicted of DWI two or more times; or
d.) the office has reliable information that the person has been previously convicted of DWI with a child passenger under 15, intoxication assault, or intoxication manslaughter
Legislative updates: New driving laws
Posted by: David Leon in Criminal Defense, Personal injury, auto accident, slip and fall law on September 20th, 2009
SB 61 Requires children under the age of 8, or who are less than 4 foot 9 are required to be in booster seats.
HB 55 prohibits the use of a cellular telephone in an active school zone, unless the user is over 18, and using a hands free device.
HB 339 prohibits a driver under the age of 18 from using a cellular telephone while driving (either with or without a hands free device)
How does one qualify to be an administrator or executor of an estate?
Posted by: David Leon in Estate planning and probate on August 9th, 2009
If someone is appointed as an executor in a will, or someone applies to be an administrator of an estate, the person cannot be “disqualified” under Sec. 78 of the Texas Probate Code. This section specifically prohibits the following people from administering an estate:
(a) An incapacitated person;
(b) A convicted felon, under the laws either of the United States or of any state or territory of the United States, or of the District of Columbia, unless such person has been duly pardoned, or his civil rights restored, in accordance with law;
(c) A non-resident (natural person or corporation) of this State who has not appointed a resident agent to accept service of process in all actions or proceedings with respect to the estate, and caused such appointment to be filed with the court;
(d) A corporation not authorized to act as a fiduciary in this State;
or
(e) A person whom the court finds unsuitable.
How is it decided who will administer an estate?
Posted by: David Leon in Estate planning and probate on August 9th, 2009
Sec. 77 of the Texas Probate Code handles the order of persons who can administer an estate of a deceased person.
The code provides (in order):
(a) To the person named as executor in the will of the deceased (assuming the person is available, and qualified to serve.)
(b) To the surviving spouse.
(c) To the principal beneficiary under the will, or the person who is to receive the majority of estate assets under the will.
(d) To any devisee or legatee of the testator.
(e) To the next of kin of the deceased, the nearest in order of descent first, and so on, and next of kin includes a person and his descendants who legally adopted the deceased or who have been legally adopted by the deceased.
(f) To a creditor of the deceased.
(g) To any person of good character residing in the county who applies therefor.
(h) To any other person not disqualified under the following Section.
If more than one person qualifies, the court has discretion in choosing an administrator.
Someone I know died having written a will. I know who has the will, but s/he refuses to file it for probate.
Posted by: David Leon in Estate planning and probate on August 9th, 2009
Unfortunately, this is not uncommon. If you have possession of a deceased person’s will, you have a duty to either file the will for probate (assuming you have standing or capacity to do so) or you should deliver the will to the clerk of the court.
If you fail to do so, a person may file an action in the appropriate county’s probate court and compel you to appear before a judge and explain why the will was not delivered to the county clerk in accordance with Sec. 75 of the Probate Code. If the custodian of the will fails to deliver the will to court, the court may find the person in contempt of court. A judge may find that any person refusing to deliver such will to be liable to any person aggrieved for all damages sustained as a result of such refusal.
For example, let’s suppose Jose dies after making a will, leaving his house to Anna. Jesse has Jose’s will, but refuses to deliver it to the county clerk. Anna misses an opportunity to sell Jose’s house because of Jesse’s refusal to deliver the will. Anna may have a cause of action against Jesse for his wrongful refusal to deliver the will to the court.
(See: Sec. 75 of the Texas Probate Code)
FBI releases 2008 Mortgage Fraud statistics
Posted by: David Leon in Legal news and errata on July 13th, 2009
From NYT: From Treasury to Banks, an Ultimatum on Mortgage Relief
Posted by: David Leon in Legal news and errata on July 12th, 2009
By JOE NOCERA
Published: July 11, 2009
The federal government is taking the largest mortgage servicers to the woodshed on their efforts to modify shaky loans.
I have a home mortgage that is greater than 12% per year. I’d like to pay it off, but there is a prepayment penalty. What can I do?
Posted by: David Leon in Foreclosure, Real Estate Law, loan modifications on July 5th, 2009
Absent loans under Federal programs, Sec. 302.102 of the Texas Finance Code prohibits pre-payment penalties on a residential homestead of the borrower if the interest rate is greater than 12 percent a year.
See also: Sec. 343.201 – 205 of the Texas Finance Code, as prepayment penalties may also not apply to high cost home loans.
Does a late fee make a loan usurious?
Posted by: David Leon in Contract law on July 5th, 2009
Not necessarily. The Texas Finance Code (Sec. 302) provides a safe harbor for late fees. In order to comply with the safe harbor, the late fee must not accrue until after 10 days past the due date, and the late fee must not be larger than five percent of the late payment (or $7.50, if that amount is greater.)
What is community property?
Posted by: David Leon in Family Law on July 5th, 2009
In the context of marital property, all property that is not specifically separate property is community property. Texas Family Code Sec. 3.002. A presumption of community property exists under Sec. 3.003.
Who can bring a lawsuit for wrongful death?
Posted by: David Leon in Estate planning and probate, Litigation and judgments, Personal injury, auto accident, slip and fall law on July 5th, 2009
Wrongful death causes of action are controlled by Chapter 71 of the Texas Civil Practice and Remedies Code (CPRC).
Per Sec. 71.004, the surviving spouse, children, and parents of the deceased are the only ones who can bring an action for wrongful death.
If none of the individuals entitled to bring an action have begun the action within three calendar months after the death, then the personal representative of the estate shall bring and prosecute the action unless requested not to by all those individuals.
In most cases, it is advisable to have the wrongful death beneficiaries and the beneficiaries of the estate sign a family settlement agreement prior to taking any action.
What is an organizational meeting?
Posted by: David Leon in Business law on July 5th, 2009
After forming a new corporation, an organizational meeting is to be held by the directors. At this meeting, the officers and directors of the corporation are elected, the bylaws adopted, and the stock is issued to the shareholders. (Texas Business & Corp. Act, Sec. 3.06)
Is it possible for a debt collector to garnish my wages?
Posted by: David Leon in Consumer & Credit, Foreclosure, Litigation and judgments on July 5th, 2009
In may circumstances, a creditor cannot garnish your wages, due to language in the Texas Constitution (Art. 16, Sec. 28). There are exceptions for child support and spousal maintenance. There are also exceptions under federal laws.
What is separate property?
Posted by: David Leon in Estate planning and probate, Family Law on July 5th, 2009
Community property versus separate property deals with marriages. Texas Constitution Art. 16, Sec. 15 gives a lengthy explanation. The definitions are further spelled out in Texas Family Code Sec. 3.001.
All property, both real and personal, of a spouse owned or claimed before marriage is separate property. Further, property acquired afterward by gift, devise or descent, shall be the separate property of that spouse. Additionally, damages for personal injuries are considered separate property (with the exception of loss of earning capacity.)
For example, Bobby and Allison are about to marry. Before marriage, Bobby buys a boat. After marriage, Bobby’s uncle gives Bobby a car. Bobby’s aunt then dies, leaving Bobby a house. Because the boat was purchased prior to the marriage, it’s separate property. Because the gift of the car was a gift to Bobby, it’s separate as well. Finally, because Bobby received the house by inheritance, it’s also Bobby’s separate property. If Bobby gets into a car wreck and receives a check for settlement of his personal injury, that would be (in most instances) his separate property as well.
What is usury?
Posted by: David Leon in Business law, Contract law on July 5th, 2009
Usury is the charging of excessive interest rates. The default maximum interest rates are 10% with a written contract, and 6% without a contract, pursuant to Article 16, Sec. 11 of the Texas Constitution. Other Texas statutes govern maximum interest rates for financial institutions, mortgage companies, etc.
What is a DWI enhancement?
Posted by: David Leon in Criminal Defense on July 5th, 2009
A penalty for a DWI conviction may be enlarged or enhanced under Sec. 49.09 of the Texas Penal Code. Typically, a punishment (or level of offense) is increased due to either a prior conviction for DWI, or because an emergency service worker was injured or killed as a result of a DWI.
What happens if someone dies as a result of a DWI?
Posted by: David Leon in Criminal Defense, Personal injury, auto accident, slip and fall law on July 5th, 2009
There are a number of things that can occur. On the criminal side, Texas Penal Code Sec. 49.08 make such action a second degree felony. The deceased person’s personal representative can also sue the drunk driver for wrongful death and for injuries that the deceased suffered before death.
What happens if someone is seriously injured in a DWI?
Posted by: David Leon in Legal news and errata on July 5th, 2009
The person was was intoxicated may be charged with Intoxication Assault, under Sec. 49.07 of the Texas Penal Code. if the intoxicated actor causes “a substantial risk of death or that causes serious permanent disfigurement or protracted loss or impairment of the function of any bodily member or organ” that person may be charged with Intoxication Assault, a third degree felony.
What about flying or boating while intoxicated?
Posted by: David Leon in Criminal Defense on July 5th, 2009
Secs. 49.05, 49.06 and 49.065 cover flying, boating and assembling and/or operating an amusement ride while intoxicated. In most circumstances it would be a Class B misdemeanor.
What happens if you are charged with driving while intoxicated and you have a minor in the car with you at the time?
Posted by: David Leon in Criminal Defense on July 5th, 2009
You would violated Texas Penal Code Sec. 49.045. DRIVING WHILE INTOXICATED WITH CHILD PASSENGER.
That statute says:
(a) A person commits an offense if:
(1) the person is intoxicated while operating a motor vehicle in a public place; and
(2) the vehicle being operated by the person is occupied by a passenger who is younger than 15 years of age.
(b) An offense under this section is a state jail felony.
What is the legal definition of “intoxicated” in Texas?
Posted by: David Leon in Criminal Defense on July 5th, 2009
Texas Penal Code Sec. 49.01. (2) “Intoxicated” means:
(A) not having the normal use of mental or physical faculties by reason of the introduction of alcohol, a controlled substance, a drug, a dangerous drug, a combination of two or more of those substances, or any other substance into the body;
or
(B) having an alcohol concentration of 0.08 or more.
This means that if you have a Blood Alcohol Concentration (BAC) of less than .08, but you are not in the normal use of mental or physical faculties due to alcohol, you may still be considered to be intoxicated.
What statutes cover driving while intoxicated?
Posted by: David Leon in Criminal Defense on July 5th, 2009
Texas Penal Code Title 10 (Offenses against the public health, safety and morals) Chapter 49 “Intoxication and Alcoholic Beverages Offenses”
Is it a defense if a person who is charged with online solicitation of a minor, but the person with whom he was chatting wasn’t underage, and/or the meeting never occurred?
Posted by: David Leon in Criminal Defense on July 5th, 2009
No. It does not matter if the person to whom the actor is chatting is underage. 33.021 (1) states:
(1) “Minor” means:
(A) an individual who represents himself or herself to be younger than 17 years of age; or
(B) an individual whom the actor believes to be younger than 17 years of age.
Texas Penal Code Sec. 33.021:
(d) It is not a defense to prosecution under [TPC 33.021] Subsection (c) that:
(1) the meeting did not occur;
(2) the actor did not intend for the meeting to occur; or
(3) the actor was engaged in a fantasy at the time of commission of the offense.
(e) It is a defense to prosecution under this section that at the time conduct described by Subsection (b) or (c) was committed:
(1) the actor was married to the minor; or
(2) the actor was not more than three years older than the minor and the minor consented to the conduct.
What is the “online solicitation of a minor”?
Posted by: David Leon in Criminal Defense on July 5th, 2009
This is covered by Texas Penal Code Sec. 33.021. The gist of the code is that if a person who is 17 or older “commits an offense if, with the intent to arouse or gratify the sexual desire of any person, the person, over the Internet, by electronic mail or text message or other electronic message service or system, or through a commercial online service, intentionally:
(1) communicates in a sexually explicit manner with a minor; or
(2) distributes sexually explicit material to a minor”
The statute goes further, “A person commits an offense if the person, over the Internet, by electronic mail or text message or other electronic message service or system, or through a commercial online service, knowingly solicits a minor to meet another person, including the actor, with the intent that the minor will engage in sexual contact, sexual intercourse, or deviate sexual intercourse with the actor or another person.”
These actions are considered felonies.
I figured out my ex-(spouse/employer/friend)’s computer password. What happens if I log into their account?
Posted by: David Leon in Criminal Defense, Family Law on July 5th, 2009
This conduct is covered by Sec. 33.02 of the Texas Penal Code “Breach of Computer Security.” (Depending on what happened after the breach, there may be other issues as well.)
Merely accessing the information is a Class B misdemeanor. If a harm occurs (such as a file being altered or deleted) or a benefit to the actor occurs (such as accessing financial accounts) the level of offense escalates. To calculate the offense, the State may aggregate all conduct.
For example, if Joe breaks into his ex-boss’s computer once and does nothing, it may be a misdemeanor. If Joe then breaks in three more times, and deletes files, or steals money, all four actions may be taken together to determine the appropriate level of offense.
Is it still a crime if I use identification from a deceased person?
Posted by: David Leon in Criminal Defense on July 5th, 2009
Yes. Sec. 32.51 specifically references falsely using the identification credentials of a deceased person as your own.
Is it illegal if I hire someone to do my term papers for me?
Posted by: David Leon in Contract law, Criminal Defense on July 5th, 2009
Sec. 32.50 of the Texas Penal Code makes this a Class C misdemeanor.
The statute says, “A person commits an offense if, with intent to make a profit, the person prepares, sells, offers or advertises for sale, or delivers to another person an academic product when the person knows, or should reasonably have known, that a person intends to submit or use the academic product to satisfy an academic requirement of a person other than the person who prepared the product.
(c) A person commits an offense if, with intent to induce another person to enter into an agreement or obligation to obtain or have prepared an academic product, the person knowingly makes or disseminates a written or oral statement that the person will prepare or cause to be prepared an academic product to be sold for use in satisfying an academic requirement of a person other than the person who prepared the product.”
The statute has a safe harbor provision for jointly prepared assignments with school employees, tutors and transcriptionists.
I want to force someone to pay me a debt. Can I make a letter that looks like a summons, but says it’s not in order to scare them into paying me?
Posted by: David Leon in Consumer & Credit, Criminal Defense on July 5th, 2009
No, this is a criminal offense under the Texas Penal Code Sec. 32.48. Under subsection (c) it is NOT a defense if the document states that it is not legal process.
First offense is a misdemeanor (class A), second one is a felony (state jail).
What is LTV?
Posted by: David Leon in Consumer & Credit, Foreclosure, Real Estate Law, loan modifications on July 4th, 2009
LTV is a common acronym for “Loan to Value”. It’s often listed as a ratio, or a percentage. This refers to the amount of a mortgage compared to the value of a property. The higher the LTV, the greater the risk for the lender. Accordingly, the higher the LTV, the less likely a lender will proceed with a loan.
For example:
Let’s suppose that we have a house that is worth $100,000. John wants to buy the house, but only has $20,000 that he can pay up front. John is asking the bank to supply the remaining $80,000 of the purchase price. From the lender’s perspective, the house is at 80% LTV. The more money that John puts in as his down payment, the lower the LTV ratio, and the more likely the bank is to make the loan.
What is a sub-prime loan?
Posted by: David Leon in Consumer & Credit, Foreclosure, Real Estate Law, loan modifications on July 4th, 2009
“Prime” loans (also referred to as “A paper” loans) refer to loans made to borrowers with good credit. “Sub-prime” loans (also known as “B paper” loans) refer to loans made to borrowers with less than perfect credit. Sub-prime loans are considered riskier than A paper loans. This means that B paper loans will usually have higher interest rates, or larger down payments, to reduce the financial institution’s exposure should a borrower default.
What is a ladybird deed?
Posted by: David Leon in Real Estate Law on July 4th, 2009
A ladybird deed is a type of life estate, with added features. In a normal life estate, the holder of the life estate interest may not sell, mortgage or encumber the property, absent permission from the remainderman. The life estate owner only has occupancy and use rights for the duration of the person’s life.
A ladybird deed (also called an enhanced life estate) allows the enhanced life estate owner to sell, mortgage or encumber the property. If the enhanced life estate owner sells the entire property, the remainderman’s interest is extinguished.
How is a life estate set up?
Posted by: David Leon in Real Estate Law on July 4th, 2009
There are a number of ways to set up a life estate. Most common are life estates that are set up by operation of law (under the Texas probate code) and life estate pursuant to a deed.
The most common life estates under the Texas probate code occur when a person dies without a will (called an intestate death.) In very specific circumstances, a surviving spouse may have a life estate in the deceased spouse’s homestead, with a remainder interest in the deceased’s children.
Otherwise, people may, as part of estate planning, or probate avoidance planning, set up life estates in land, and transfer them by use of a life estate deed.
What is a remainderman?
Posted by: David Leon in Estate planning and probate, Real Estate Law on July 4th, 2009
A remainderman, more commonly referred to as a remainder interest, is a person or entity that receives a property after a certain condition has been met.
The most common remainder interest occurs when someone who has a life estate interest in a parcel of land dies. The property then becomes owned by the remainderman.
For example:
John owns a farm. John grants Juan a life estate interest in the farm, with a remainder interest to Joe. Juan has the ability to occupy the farm for his lifetime. Upon Juan’s death, Joe inherits the property, because he is the remainderman.
What is a life estate?
Posted by: David Leon in Legal news and errata on July 4th, 2009
A life estate is the right to occupy or use a specified parcel of land for the period of a person’s life.
For example:
John owns a farm. John grants a life estate in the farm to Juan. This means that Juan can use or occupy the farm for the rest of Juan’s life. Upon Juan’s death, the property will either revert back to John, or will be passed to a “remainderman” (depending on how John set up the life estate.)
I’ve done all that and the collection agency is still harrassing me. What can I do?
Posted by: David Leon in Consumer & Credit on June 30th, 2009
It is imperative that you document everything you can about the communications–the date and time the collectors called, with whom they spoke, what they said, etc. Keep a dairy or log by the phone. Save any messages that they leave on your machine. Their conduct may violate the Texas Debt Collection Practices Act or the Federal Fair Debt Collection Practices Act. You should seek counsel to prosecute such offenses. You can also file a complaint with the Texas Office of Consumer Credit Commissioner (OCCC).
I was contacted about a debt that I don’t owe. What can I do?
Posted by: David Leon in Consumer & Credit on June 30th, 2009
A collector on a consumer (nonbusiness) debt must give you infomraiton about the debt, and a chance to dispute it. You may dispute the debt within thirty days. The dispute must be in writing, and should be mailed certified, return receipt requested. Make sure you keep a copy. If the collector has proof of the debt, they may contact you about it again.
Can I stop a debt collector from contacting me?
Posted by: David Leon in Consumer & Credit on June 30th, 2009
You can stop a debt collector from contacting you by writing a certified letter to the collector telling them to stop. Also, if you hire a lawyer, the collector will instead contact your lawyer. This only stops the phone calls. The collection agency can still sue you.
Can a debt collection agency contact my work?
Posted by: David Leon in Consumer & Credit on June 30th, 2009
A debt collector may not contact you at work if the collector knows that your employer disapproves of such contacts. You will need to notify the collector that you do not wish to be contacted at work. You should notify them in writing, via certified mail, return receipt requested. Keep a copy of the notice letter you send them. Document each and every phone call that they make to you. Record the time, person’s name and contents of the calls.
I am being sued by a company for credit card debt, but it is not the credit card company. What is going on?
Posted by: David Leon in Consumer & Credit on June 30th, 2009
A credit card company may sell your debt to a collection agency. If done properly, and within a specific time limit, they have “standing” (the legal ability) to sue you for the debt. Under Texas law, as a defendant, you are entitled to know that the collection agency suing you has standing to sue you over the debt. If the collector is different from the original credit card company, you are entitled to see the chain of ownership that establishes whether the debt collector owns the right to sue on the debt. Further, the collection agency may not have followed the appropriate procedures to obtain the debt in the first place. If they fail to follow these procedures then they may not be able to sue you and you may have a valid defense to the claim. Furhter, you need to be sure that you are obligated on the debt. Just because they say you owe the debt doesn’t mean that they necessarily have the legal right to collect the debt.
The amount the credit card is suing for is different from the amount I think I owe. What can I do?
Posted by: David Leon in Consumer & Credit on June 30th, 2009
Most defendants think that they owe the credit card company somthing, and attempt to make montly payments. The problem is that the credit card company (or the collection agency) may not have accurate information, may have included additional fees or costs which you may or may not owe, or may include amounts barred by the statute of limitations. You should have an attorney review the most recent statement you have, copies of the demand letters and any other correspondence or written instruments before attempting to settle the debt.
I received notice of a lawsuit. What happens next?
Posted by: David Leon in Consumer & Credit, Litigation and judgments on June 30th, 2009
If you fail to answer the suit within the appropriate time period, you lose the case (this is called a default.) You cannot go back in time, and you may lose valid defenses against the debt. This is a VERY bad idea. You should answer the lawsuit and provide a defense.
A credit card company has put my account into collections. Can they sue me wihtout my knowing it?
Posted by: David Leon in Consumer & Credit, Litigation and judgments on June 30th, 2009
Not exactly. If you are sued, then by law you have to be given notice. You have the right to tell your side of the story, either to a judge or a jury. Credit card companies win many cases against individuals simply because the individuals fail to protect themselves. However, if you avoid service, the credit card company may be able to notify you by leaving a copy of the notice on your door.
A credit card company has put my account into collections. Can they sue me wihtout my knowing it?
Posted by: David Leon in Consumer & Credit, Litigation and judgments on June 30th, 2009
Not exactly. If you are sued, then by law you have to be given notice. You have the right to tell your side of the story, either to a judge or a jury. Credit card companies win many cases against individuals simply because the individuals fail to protect themselves. However, if you avoid service, the credit card company may be able to notify you by leaving a copy of the notice on your door.
What are the penalties for making false statement on a mortgage application?
Posted by: David Leon in Criminal Defense, Real Estate Law on June 29th, 2009
The penalties under 32.32(c) are as follows:
(1) a Class C misdemeanor if the value of the property or the amount of credit is less than $50;
(2) a Class B misdemeanor if the value of the property or the amount of credit is $50 or more but less than $500;
(3) a Class A misdemeanor if the value of the property or the amount of credit is $500 or more but less than $1,500;
(4) a state jail felony if the value of the property or the amount of credit is $1,500 or more but less than $20,000;
(5) a felony of the third degree if the value of the property or the amount of credit is $20,000 or more but less than $100,000;
(6) a felony of the second degree if the value of the property or the amount of credit is $100,000 or more but less than $200,000; or
(7) a felony of the first degree if the value of the property or the amount of credit is $200,000 or more.
What is a fiduciary duty?
Posted by: David Leon in Business law, Estate planning and probate, Insurance Law, Litigation and judgments on June 28th, 2009
A fiduciary duty is the highest standard of care one can owe to another. The fiduciary relationship is one of trust and confidence. The person or institution who owes the fiduciary duty must put the person’s interests above his or her own interests. Common examples of fiduciary duty include power of attorney holders, executors in wills, and trustees of trusts.
I have a child support lien. Is the exempt personal property protected from attachment?
Posted by: David Leon in Family Law, Litigation and judgments on June 28th, 2009
The Chapter 42 exempt personal property protections do not apply to child support liens, per Sec. 42.005.
CHILD SUPPORT LIENS. Sections 42.001, 42.002, and 42.0021 of this code do not apply to a child support lien established under Subchapter G, Chapter 157, Family Code.
I have a judgment against me. Can I use non-exempt property to pay off debts secured by exempt property?
Posted by: David Leon in Litigation and judgments, Real Estate Law on June 28th, 2009
Section 42.004 of the Texas Property Code attempts to prevent this practice (which is also commonly referred to as a fraudulent transfer to avoid creditors.) The statute provides:
If a person uses the property not exempt under this chapter to acquire, obtain an interest in, make improvement to, or pay an indebtedness on personal property which would be exempt under this chapter with the intent to defraud, delay, or hinder an interested person from obtaining that to which the interested person is or may be entitled, the property, interest, or improvement acquired is not exempt from seizure for the satisfaction of liabilities. If the property, interest, or improvement is acquired by discharging an encumbrance held by a third person, a person defrauded, delayed, or hindered is subrogated to the rights of the third person.
Where can I find a list of exempt personal property?
Posted by: David Leon in Estate planning and probate, Litigation and judgments on June 28th, 2009
Section 42.002 of the Texas Property Code has a list of exempt personal property. Please note that this list is subject to conditions. The property’s status as exempt does not preclude attachment if the property is secured by a lien. For example, a person purchasing a car on credit can still have the car repossessed by the credit grantor. Sec. 42.0021 also provides protections for individual retirement accounts (IRA) and certain savings accounts.
Section 42.002 provides the following list of personal exempt property:
The following personal property is exempt under Section 42.001(a):
(1) home furnishings, including family heirlooms;
(2) provisions for consumption;
(3) farming or ranching vehicles and implements;
(4) tools, equipment, books, and apparatus, including boats and motor vehicles used in a trade or profession;
(5) wearing apparel;
(6) jewelry not to exceed 25 percent of the aggregate limitations prescribed by Section 42.001(a);
(7) two firearms;
(8) athletic and sporting equipment, including bicycles;
(9) a two-wheeled, three-wheeled, or four-wheeled motor vehicle for each member of a family or single adult who holds a driver’s license or who does not hold a driver’s license but who relies on another person to operate the vehicle for the benefit of the nonlicensed person;
(10) the following animals and forage on hand for their consumption:
(A) two horses, mules, or donkeys and a saddle, blanket, and bridle for each;
(B) 12 head of cattle;
(C) 60 head of other types of livestock; and
(D) 120 fowl; and
(11) household pets.
(b) Personal property, unless precluded from being encumbered by other law, may be encumbered by a security interest under Subchapter B, Chapter 9, Business & Commerce Code, or Subchapter F, Chapter 501, Transportation Code, or by a lien fixed by other law, and the security interest or lien may not be avoided on the ground that the property is exempt under this chapter.
What is exempt personal property?
Posted by: David Leon in Estate planning and probate, Litigation and judgments on June 28th, 2009
Exempt personal property means that the property is (under most circumstances) unavailable for attachment by creditors.
Exempt personal property is covered by chapter 42 of the Texas Property Code. Section 42.001 provides that :
(a) Personal property, as described in Section 42.002, is exempt from garnishment, attachment, execution, or other seizure if:
(1) the property is provided for a family and has an aggregate fair market value of not more than $60,000, exclusive of the amount of any liens, security interests, or other charges encumbering the property; or
(2) the property is owned by a single adult, who is not a member of a family, and has an aggregate fair market value of not more than $30,000, exclusive of the amount of any liens, security interests, or other charges encumbering the property.
(b) The following personal property is exempt from seizure and is not included in the aggregate limitations prescribed by Subsection (a):
(1) current wages for personal services, except for the enforcement of court-ordered child support payments;
(2) professionally prescribed health aids of a debtor or a dependent of a debtor;
(3) alimony, support, or separate maintenance received or to be received by the debtor for the support of the debtor or a dependent of the debtor; and
(4) a religious bible or other book containing sacred writings of a religion that is seized by a creditor other than a lessor of real property who is exercising the lessor’s contractual or statutory right to seize personal property after a tenant breaches a lease agreement for or abandons the real property.
(c) Except as provided by Subsection (b)(4), this section does not prevent seizure by a secured creditor with a contractual landlord’s lien or other security in the property to be seized.
(d) Unpaid commissions for personal services not to exceed 25 percent of the aggregate limitations prescribed by Subsection (a) are exempt from seizure and are included in the aggregate.
(e) A religious bible or other book described by Subsection (b)(4) that is seized by a lessor of real property in the exercise of the lessor’s contractual or statutory right to seize personal property after a tenant breaches a lease agreement for the real property or abandons the real property may not be included in the aggregate limitations prescribed by Subsection (a).
What should I watch out for when buying a foreclosure?
Posted by: David Leon in Foreclosure, Real Estate Law on June 27th, 2009
Foreclosures can offer buyers and investors an opportunity to purchase a house at slightly less than the appraised value. However, just because a house is being foreclosed does not mean that there is clean title. Some of the more common missteps in a foreclosure:
1. The person buying the foreclosure doesn’t realize that s/he is buying a second lien. This means that there is another mortgage on the property that must be paid (and may be ‘called’ or ‘due’) immediately following the foreclosure. These first liens can be in the hundreds of thousands of dollars.
2. The person buying the foreclosure doesn’t realize that there are tax liens on the house. A buyer will not obtain clear title if the debtor has tax liens that attached to the property. Typically, these will be property and income tax liens.
3. A foreclosed property typically carries NO warranties of any kind. The house may be uninhabitable, or property may have serious environmental problems. There may also be superior easements on the land which may need to be addressed.
What is an assumable loan? Should I allow someone to assume my loan?
Posted by: David Leon in Foreclosure, Real Estate Law on June 27th, 2009
An assumable loan is a loan in which the borrower is allowed to transfer the loan (and collateral) to another. Assumable mortgages are not as common in Texas any more. In a typical assumption, a person wants to sell their house, but there are no buyers. A buyer finally comes in, but can’t qualify for a full mortgage. The buyer and seller agree to allow the buyer to “assume” the loan. This means that the buyer now pays the mortgage directly, and the seller (usually) transfers title, subject to the mortgage lien. These deals usually break down when the buyer fails to pay as promised. The seller then discovers (usually to his or her horror) that the seller’s credit rating is severely impacted by the buyer’s failure to pay. Things typically worsen for the seller when the then discover that the buyer has further ’sold’ (on an assumption loan) the house to a person with even worse credit, who is also not paying. The house is typically abandoned, or in a state of disrepair by the time the original borrower (who is always ‘on the hook’ for the house payments) finds out.
What is a pyramid scheme?
Posted by: David Leon in Business law, Criminal Defense, Franchise Law on June 27th, 2009
A pyramid scheme (a/k/a franchise fraud) is an investment fraud scheme in which someone is offered a distributorship or franchise to market a particular product. This involves a fee to become part of the business. The real profit is earned by the sale of new distributorships and not by the sale of the products. Typically, the scheme is sold by telling new subscribers that they can remake their original investment by selling distributorships to two or more people, and so on. Soon, the lower levels of the pyramid are unable to find more people to buy into the scheme, and the scheme collapses. (Source: FBI )
What is a Ponzi scheme?
Posted by: David Leon in Criminal Defense on June 27th, 2009
A Ponzi scheme is an investment scam in which a company claims to be paying investors “profits.” However, the business is only bringing in money from getting other investors. For example, Company Z solicits investors A, B, C, who each pay in $1. The company then solicits investors D, E, and F who each pay $1. Company uses D, E, and F’s investments to note on A, B and C’s accounts that they have earned a “profit.” Company then solicits G, H and I, taking their money, and using it to show a “profit” for the accounts on D, E, and F. The cycle continues until people try to withdraw their investments, or until the company can no longer obtain fresh victims. Typically, no real investments are ever made. Another variation is that investments are made, but losses are ‘covered’ by fraudulently making income statements and covering the losses with the new investor’s money.
What is a ‘liar loan’?
Posted by: David Leon in Criminal Defense, Foreclosure, Real Estate Law on June 27th, 2009
A ‘liar loan’ is a nickname for a ’stated income’ loan. These loans were popular from 2000-2007. They were also called ‘no-doc’ and ‘non-verfied’ or ’streamlined’ loans. Basically, with these loans, a bank or mortgage company would simply ask a borrower what his or her income was, and offer loan products based on the person’s statement of income. The banks usually did not verify the person’s ’stated’ income. In some cases, people were overstating their income to qualify for houses they couldn’t afford. The typical hope was that the person could use a short term ARM loan or teaser loan to keep the house (and mortgage) afloat for a year or so, and then sell the house for a profit due to the rising house values. Once home values stopped rising, people’s ARMs adjusted upward, or the teaser rates ended, and the people wound up with homes they couldn’t afford. The practice of overstating income on a ‘liar loan’ is a criminal offense, per Texas Penal Code Sec. 32.32.
I verified employment for a friend who doesn’t work for me, so he could buy his house. Should I be worried?
Posted by: David Leon in Criminal Defense, Real Estate Law on June 27th, 2009
Yes. This is a violation of Texas Penal Code Sec. 32.32, among other offenses. These can carry with them significant criminal responsibility. Even though you may not have signed the credit application yourself, you may have “acted in concert” with the person committing fraud. You should obtain legal counsel immediately.
What is a wrap around mortgage?
Posted by: David Leon in Real Estate Law on June 27th, 2009
A wrap around mortgage is a mortgage in which a seller owes money to the bank, secured by a property. The seller resells the property to a buyer, usually for an amount higher than the original mortgage. The buyer pays the seller, the seller then pays the bank on a monthly basis. This transaction violates most bank backed mortgages, and gives the bank the right to “call” the entire note due.
What is a teaser rate loan?
Posted by: David Leon in Foreclosure, Real Estate Law, loan modifications on June 27th, 2009
A teaser rate loan is a nickname for ARM loans and interest only loans. A typical teaser rate is a loan in which the borrower pays only interest on the loan for the first few years. After that, the “teaser” is over, and the regular rate (interest plus principal) kick in, usually with a high interest rate. These loans were widely used by speculating investors and credit investors. The thinking was that one could buy a house, pay interest on it for a year or two (while the land appreciated in value) and then “flip” the house at a profit. When housing prices failed to keep rising as expected, the teaser rates ended, leaving borrowers with very large house payments that they could not afford.
What is an ARM loan?
Posted by: David Leon in Real Estate Law on June 27th, 2009
ARM stands for adjustable rate mortgage. This means that the mortgage is at a fixed rate of interest for several months. After the initial time is over, the interest rate is allowed to adjust or “float”. This typically means that the interest rate (and therefore monthly payments) will increase. ARM loans were originally meant to be very short term loans and were created for situations in which someone either planned to be in a house for a very short period, or planned to refinance. Many people, however, were not told this when they applied for ARM loans and found out, to their horror, that their homes were no longer affordable.
I was in an auto accident, but not at fault. The other driver didn’t have insurance. What can I do?
Posted by: David Leon in Personal injury, auto accident, slip and fall law on June 27th, 2009
You have a few different options, depending on the type of insurance you carry. Your insurance may cover you, even though you weren’t at fault. Our office would have to review your policy to be sure. Even if the person does not have insurance, you may still be able to pursue a claim against the uninsured driver. Also, Texas law provides that if a person fails to maintain financial responsibility for an accident, in some cases, the state can revoke a person’s driver’s license until they pay for the damages they caused.
What is FSBO?
Posted by: David Leon in Real Estate Law on June 21st, 2009
FSBO means “For sale by owner”. This means that the owner is not using a real estate agent. You can use your own agent, if you wish. Any time you are buying a house, it is a good idea to have your documents reviewed by a lawyer familiar with real estate transactions. You should also obtain title insurance.
I want to buy a house, but have bad credit. Someone told me that I could buy a house in someone else’s name. Is this possible?
Posted by: David Leon in Real Estate Law on June 21st, 2009
Yes, you can buy a house “in someone else’s name.” However, that person will OWN your house. There are many people out there who believe they own a house that they bought “in someone else’s name.” However, when there is a problem, they quickly learn that “someone else’s name” means “someone else’s name.” Unfortunately, in many cases, they just paid for someone else’s house.
Yo no vivo en Las Estados Unidos. ¿Me puedo comprar una casa en las Estados Unidos?
Posted by: David Leon in Real Estate Law on June 21st, 2009
Sí, pero es muy importante que usted revise el título de los documentos para asegurarse de que la venta no es una estafa. Hay mucha gente que se aproveche de su situación, por lo que debería haber examinado los documentos antes de firman.
How does a short sale work?
Posted by: David Leon in Foreclosure, loan modifications on June 17th, 2009
Let’s assume Linus takes out a $50,000 mortgage to buy a house. After moving in, Linus realizes that he no longer afford the mortgage. Linus’s friend, Lola, would like to buy the house but she can only afford to pay $45,000.
The bank, not wishing to acquire another property via foreclosure, may agree to allow Linus to “sell short”. This means that Lola could pay the bank $45,000 purchase the home.
In this case, the bank would suffer a $5,000 loss. In most cases, Linus would have an income tax consequence of $5,000 for the bank’s forgiveness of debt.
What is a short sale?
Posted by: David Leon in Foreclosure, Real Estate Law, loan modifications on June 17th, 2009
A short sale is a sale of real property, in which the sales price is less than the mortgage on the property. For example, let’s suppose Dave has a house, but owes the mortgage company $100. The house is worth $60. In order to avoid a foreclosure, Dave can ask the bank to allow him to sell “short”, thereby allowing him to sell the house for $60 (or less), and walk away from the sale. The bank will forgive the remaining $40 balance of the note. In most instances, Dave will have a taxable income of $40 for the amount of the forgiven balance (called a 1099).
I want to give the property back to the bank and walk away from my mortgage. How do I do this?
Posted by: David Leon in Foreclosure, loan modifications on June 17th, 2009
If you do not wish to keep your property, then you can request a deed in lieu of foreclosure. Each mortgage company has its own unique guidelines for deed in lieu transactions. Typically, the mortgage company will want some documentation of inability to pay, and will require a lengthy approval process. An attorney’s office or reputable loan modification company may be able to assist. As a borrower, you should confirm that the mortgage company or lender will release you from any further liability in exchange for the deed.
I want to abandon my property and walk away from the loan. What should I do?
Posted by: David Leon in Foreclosure, Real Estate Law, loan modifications on June 17th, 2009
You have a few common options.
1. You can do nothing. The bank will proceed with its foreclosure action and reclaim the property.
2. You can ask the bank to accept the property, and dispense with the foreclosure.
3. You can attempt to sell the property.
What is a “deed in lieu”?
Posted by: David Leon in Foreclosure on June 17th, 2009
A deed in lieu of foreclosure is when a borrower transfers a property to the lender. In exchange, the lender does not pursue a foreclosure. In many cases, the lender will accept a deed in lieu as a settlement of the total amount due. A popular term for this is “cash for keys.”
A deed in lieu is typically employed when a borrower (or mortgagee) can no longer afford to keep the property, and cannot find a buyer. The property should be vacant at the time, and the lender (or mortgage company) will have to approve the deed in lieu prior to the borrower relinquishing ownership rights.
I’d like to sue a spammer who used my equipment. Can I do this while still protecting my trade secrets?
Posted by: David Leon in Business law, Intellectual Property, Litigation and judgments on June 14th, 2009
A party can request that a court provide protection for a trade secret or a vulnerability under Texas Business and Commerce Code Sec. 321.110.
PROTECTION OF SECRECY OR SECURITY. At the request of a party to an action brought under this chapter, the court, in the court’s discretion, may conduct a legal proceeding in a manner that protects:
(1) the secrecy and security of the computer, computer network, computer data, computer program, and computer software involved so as to prevent a possible recurrence of the same or a similar act by another person; or
(2) any trade secret of a party to the action.
What parts of my loan can be changed with a mortgage modification?
Posted by: David Leon in loan modifications on May 31st, 2009
There are a few different terms of the mortgage that can be changed:
1. You can request that the interest rate be lowered during the term. This can reduce the amount of interest that you pay for your loan and lower your monthly payment. This is helpful if you have a high interest or adjustable rate mortgage (ARM) loan.
2. You can request that the principal of the loan be reduced. This is usually requested where the value of the home has decreased such that a borrower owes more than the home is worth.
There are other modifications, including changing the loan’s length.
What is a loan modification?
Posted by: David Leon in loan modifications on May 31st, 2009
Typically, a loan modification is the alteration of a mortgage so that a borrower may have a chance to keep his or her home. The most common example is a person who has an “Adjustable Rate Mortgage” (ARM) loan, or an interest only “teaser rate” loan, and can no longer afford their house. A borrower may contact the lender and ask for help in modifying the loan so that s/he can keep the house.
I have purchased a property at a recent foreclosure sale and there are either occupants and/or personal property within the dwelling. What can I do legally to secure this property?
Posted by: David Leon in Foreclosure on May 26th, 2009
In Texas, landowners and landlords have a legal remedy known as “forcible detainer” (also commonly known as Eviction). The landowner files a forcible detainer lawsuit and asks the judge for possession of the property. Should the landowner prove that he/she/it is more entitled to possession of the property than the occupant(s), the judge will award possession of the property to the landlord. The occupant is given 5 days to appeal the judge’s decision. Should the occupant fail to appeal the judge’s decision within 5 days, the landowner can obtain a writ of possession in which the constable will assist with the removal of the occupant and/or the occupant’s property.
My spouse died, owing a lot of debts. Can the creditors take my homestead?
Posted by: David Leon in Estate planning and probate, Real Estate Law on May 26th, 2009
Not necessarily. Sec. 271 of the Texas Probate Code offers protection for the surviving spouse regarding the homestead (and other exempt property as set forth in the Texas Constitution.) This applies whether or not the homestead is separate or community property (Sec. 282 of the Texas Probate Code.)
I want to sell a used watch. Do I have to disclose that the watch is used to the customer?
Posted by: David Leon in Business law, Contract law, Criminal Defense on May 25th, 2009