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Preview: Roberts & Roberts, LLP - Killeen, TX Attorneys - Legal News

Roberts & Roberts, LLP - Killeen, TX Attorneys - Legal News

Breaking legal news, and summaries of interesting recent cases and statutes from the lawyers of Roberts & Roberts, LLP, a Killeen, Texas law firm focusing on real estate, business, probate and estate planning law.

Published: Fri, 08 May 2015 14:07:27 -0500

Last Build Date: Fri, 08 May 2015 14:07:30 -0500


Specific Property Description Controls Over General

Wed, 08 Apr 2015 14:17:52 -0500

McGregor v. Millican DPC Partners, LP. Neighboring landowners got into a dispute about ownership of a particular 34 acre tract, with Millican claiming record title even though the tract lies on McGregors' side of the fence. Millican's deed describes the land two ways: by a general reference to an earlier deed that included the 34 acre tract, and also by field notes that did not. On appeal the Supreme Court holds that, unless the grantor's intention clearly appears otherwise, the metes-and-bounds description is more specific than the general reference to the prior deed, and in case of a conflict the more specific provisions will control over general expressions applicable to the same land.

Mechanic's Liens Against New Subdivisions Should Be Prorated

Mon, 06 Apr 2015 14:44:54 -0500

Moore v. Brenham Ready Mix, Inc. A supplier filed a materialman's lien against a 25-acre tract to secure payment of invoices for concrete and fill dirt used in the development of a new subdivision. The supplier then sued two individual lot owners to foreclose its lien for the full amount owed, rather than their pro rata share. The court holds that generally a materialman's lien attaches to the entire contiguous property on which the owner contracted to have the materials used. However, when the whole tract is then subdivided the claimant may not enforce the full value of its lien against any individually-owned lot, but may instead only enforce its lien to the proportion the individual improved lot bears to the entire tract.

Understanding the Role of the Title Company and Escrow Agent

Tue, 31 Mar 2015 14:00:49 -0500

IQ Holdings, Inc. v. Stewart Title Company. After becoming involved in litigation with the condo association, a condo buyer sued the title company for breach of fiduciary duty and negligence. The court finds no liability. In the first place, a title insurance policy is an indemnity contract; the only duty it imposes is the duty to indemnify the insured against losses caused by defects in title which are not excepted by the policy. Although the insurer must examine the title (or have someone do so in its behalf), this investigation is done for the insurer's own information in order to determine whether or not it will commit itself to issue a policy. The investigation is not done for the benefit of the buyer. A title insurance company is not a title abstractor and owes no duty to examine a title or point out any outstanding encumbrances. Accordingly, the title company did not assume an obligation beyond its contractual duty as indemnitor, and in this case the policy expressly excepted coverage for the matters of which the buyer now complains. Second, although a title insurance company assumes a fiduciary duty to both parties when it acts as an escrow agent, that duty is limited to properly handling the funds and closing of the transaction; it does not extend to an investigation of title. Finally, the title company cannot be held liable for negligence because it had no legal duty to provide title coverage beyond the scope of the written policy, or to disclose risks that the policy did not cover.

Improper Property Description Invalidates Mechanic's Liens

Fri, 27 Mar 2015 13:44:43 -0500

Denco CS Corporation v. Body Bar, LLC. Body Bar rented space in a building and hired Denco to perform the finish-out. A dispute arose over Denco's invoices and Denco asserted statutory and constitutional mechanic's liens to obtain payment. On review the court finds that Denco's lien purported to cover the entire lot owned by the landlord. The court holds that where the contract for labor, materials or construction is not made with the owner or his duly-authorized agent, a lien may not be fixed on his property. Rather, if a lessee contracts for construction, the mechanic's lien attaches only to the leasehold interest, not to the fee interest of the lessor. Because Denco did not properly perfect its liens they are invalid.

Implied Easements Clarified

Thu, 26 Mar 2015 13:32:46 -0500

Hamrick v. Ward. The Texas Supreme Court recognizes two types of implied easements: necessity easements and prior use easements. Necessity easements may be implied in cases involving roadway access to previously unified, landlocked parcels. Because roadways are often substantial encumbrances on property, the Court requires "strict, continuing necessity" to maintain necessity easements. By contrast, some prior use easements may be proved by mere "reasonable necessity" because the improvements at issue (such as utility lines) generally impose a lesser encumbrance on the adjoining tract. Although both doctrines have been applied to roadways in the past, from now on one claiming an implied easement for roadway access to a landlocked, previously unified parcel must pursue a necessity easement rather than a prior use easement.

Contracts for Deed Remain More Trouble Than They're Worth

Wed, 25 Mar 2015 13:30:10 -0500

Smith v. Davis. Smith sold Davis a lot using a contract for deed, under the terms of which the seller retains title until the buyer has paid the full purchase price. Smith missed many of the technical traps applicable to this sort of transaction, including a requirement to provide an annual accounting to the buyer of the payments, taxes and insurance. The buyers sued for rescission of the contract, liquidated damages and attorney's fees. On appeal, the court holds that the buyers failed to prove any actual damages resulting from the seller's violations, so the buyers are not entitled to liquidated damages or attorney's fees. However, they are entitled to cancel the contract and receive a full refund.

No Attorney's Fees In General Warranty Deed Claim

Tue, 24 Mar 2015 14:17:37 -0500

Stumhoffer v. Perales. Perales purchased land from Stumhoffer and received a general warranty deed. Perales was then sued by a neighbor who claimed ownership of a seven-foot strip of land by adverse possession. Perales won that suit, and then sued Stumhoffer to recover nearly $70,000 in attorney's fees spent defending against the neighbor's suit. The court holds that a general warranty deed creates no duty to reimburse attorney's fees incurred by the buyer in defending a third party's unsuccessful adverse possession claim. The purpose of a general warranty clause is to indemnify the purchaser against a loss or injury he may sustain by a defect in the seller's title, and where title has not failed the purchaser is not entitled to indemnity.

80% Cap for Home Equity Loan Calculated After Payment of Debt

Tue, 24 Mar 2015 14:00:32 -0500

The Bank of New York Mellon v. Daryapayma. Homeowners owed $735,000 on a home appraised for $1.5 million. They then took out a $937,500 home equity loan to pay off the existing mortgage. When they later defaulted, the homeowners claimed that the bank violated the 80% cap by loaning more than $465,000 ($1.5M x .8 - $735,000). The court disagrees. Because the parties agreed the home equity loan was made to pay off the existing mortgages, the loan documents reflect this agreement, and the existing mortgages were paid off, the balances of those existing mortgages should not be included when determining whether the amount of the home equity loan exceeds eighty percent of the fair market value of the homestead.

Words Rule; Numbers Drool. Read Your Documents Carefully.

Tue, 24 Mar 2015 13:45:40 -0500

Charles R. Tips Family Trust et al v. PB Commercial, LLC. The bank made a loan to the trust, and all the loan documents described the debt both in numerals ($1,700,000.00) and words (one million seven thousand dollars). The Court holds that if an instrument contains contradictory terms, typewritten terms prevail over printed terms, handwritten terms prevail over both, and words prevail over numbers. Since the bank did not request equitable reformation it does not matter that the borrower actually received $1,700,000; the note only obligated repayment of $1,007,000.

4-Year Statute of Limitations Bars Challenge to Home Equity Loan

Thu, 16 Oct 2014 13:15:45 -0500

Wood v. HSBC Bank. The Wood family obtained a home equity loan in 2004. In 2012 they wrote to their lender claiming that their loan fees illegally exceeded three percent of the loan amount. A few months later they filed suit for forfeiture of the loan. The Court finds that if the borrower was overcharged the error made the loan voidable rather than void, and that this suit is barred by a four-year statute of limitations that began to run at closing.

20 Year Delay Prevents Probate of Will

Tue, 19 Aug 2014 15:32:39 -0500

Orr v. Walker. In 2012 Orr attempted to probate the will of her grandmother, who had died in 1992. Walker challenged the application on the basis that normally a will must be probated within four years after the date of death. Orr claimed that she was not aware of the will until she found it among her mother's belongings after her mother died in 2006. At that time another person was named as executor so she sent the will to him. Orr claimed that the four-year deadline did not start until after the death of that executor in 2009. The court assumes without deciding that Orr's mother was not already in default for failing to probate the will during her lifetime. Regardless, under the Estates Code any interested person may apply for probate, so Orr did not use reasonable diligence in filing her application.

Lender Loans Too Much; Loses It All

Fri, 31 Jan 2014 14:29:57 -0600

Wells Fargo Bank, N.A. v. Leath. Borrower took out a $340,000 home equity loan in part to pay off a prior lien on the home. When Lender later initiated foreclosure proceedings Borrower notified Lender that the amount of the loan exceeded 80% of the value of the homestead at the time the loan was made. Lender did not take corrective action and the case went to a jury, which determined that the home was only worth $421,400 at the time of the loan. The trial court accordingly voided the deed of trust lien, ordered forfeiture of the principal and interest on the loan, and granted Borrower judgment for attorney's fees. The appellate court finds no error, and holds that Lender failed to timely raise a claim for equitable subrogation as to the prior lien, so the judgment stands.

Deed Challenge Fails

Thu, 21 Nov 2013 14:10:44 -0600

Kellner v. Kellner. Mother placed her property in a living trust and named her sons, Oscar and Lloyd, as co-trustees. The trust provided that it would terminate upon her death and any assets would be distributed to her estate to be disposed of in accordance with her Last Will and Testament. After her death the mother's Will was admitted to probate as a Muniment of Title, and Oscar signed deeds conveying land from the trust to her estate. Oscar then died. Years later Lloyd sued Oscars wife and children to set aside the deeds in the hopes the land would pass to him under the laws of intestate succession. The court holds it does not matter whether Oscar's deeds were valid or not because in either event: (1) the trust beneficiary (i.e.: the mother's estate) was automatically vested with the land upon termination of the trust; and (2) when a person dies with a valid Will, all of his or her estate devised or bequeathed by such Will automatically in the devisees or legatees of the estate. Accordingly even if the deeds were invalid the land passed according to the Will rather than the laws of descent and distribution.

Buyer Default Leaves Seller Holding the Bag

Thu, 31 Oct 2013 14:12:53 -0500

Goldman v. Olmstead. When Buyer was unable to obtain financing Buyer backed out of a contract to purchase Seller's home. Seller sued. By trial Seller had dropped its claim for specific performance and sought recovery of over $56,000 in additional mortgage interest, utilities, property taxes, insurance, and yard maintenance expenses incurred pending the eventual sale of the home to a third party. On appeal the Court holds that when a real estate contract is breached by the purchaser, the measure of damages is the difference between the price the seller was to receive and the market value of the property at the date of the breach. In this case the Seller admitted that the market value of the house on the date of breach was equal to the contract sales price, so they are not entitled to any recovery.

Shareholders Don't Necessarily Need Stock Certificates

Thu, 24 Oct 2013 13:41:45 -0500

Bakke v. Harvison. Defendant challenged plaintiff’s right to bring suit because plaintiff could not produce original stock certificates previously issued by the corporation. The Court holds that in order to create a stockholder relationship, a party must show an agreement giving the shareholder the ability to exercise a shareholder's rights. Courts often imply such agreements or contracts from the parties' acts and the surrounding circumstances. While a stock certificate is some evidence of ownership in a Texas corporation, the absence of a stock certificate does not necessarily invalidate a party's stock ownership. This is because a certificate of stock is not the stock in a corporation itself, but rather a muniment of title which is evidence of the ownership of the stock. Accordingly, it is possible under some circumstances for one to own stock in a corporation though no certificate has been issued to him or endorsed or delivered to him, and likewise it is possible under some circumstances for title to the stock to pass without delivery of the certificate of stock or without written assignment of it.

A Few Violations Do Not a Waiver Make

Thu, 15 Aug 2013 13:28:40 -0500

Moran v. Memorial Point Property Owners Association, Inc. Property owners association sued homeowner to enforce a subdivision restriction prohibiting fences within a 25-foot setback. The Court holds that the restriction will not be enforced if the homeowner can prove that violations are so great as to lead the mind of the average man to reasonably conclude that the restriction in question has been abandoned and its enforcement waived. The Court will consider the number, nature, and severity of the existing violations, any prior enforcements of the restriction, and whether it is still possible to realize to a substantial degree of the benefits of the restriction despite the violations. In this case the homeowner presented evidence of violations on 2.78% to 4.55% of the remaining properties, depending on how the lots are counted. The Court holds that such a rate does not prove abandonment or waiver, so the homeowner must comply with the restriction. 

Neighbors Had No Standing to Enforce Restrictive Covenants

Mon, 22 Jul 2013 14:50:55 -0500

Wasson Interests, Ltd. v. Adams. In 1962, the City leased property to Canino for 99 years. Adams eventually became an assignee of that lease. In 1983, the City sold a tract across the street from the Adams lot and included a provision in the deed restricting the property to "residential development only." Wasson eventually purchased that tract. Wasson began putting hogs, goats, livestock, and old vehicles on his land. The result was, in the Court's words, "not only unsightly but evil smelling." Adams sued to enforce the residential restriction. However, the tenant under the lease was never a party to the grant under the deed so there was no "privity of estate" between Adams and Wasson. In addition, the two tracts are not in the same subdivision. As a result Adams has no legal right to enforce the deed restriction.

Provision of TREC Contracts Invalidated

Mon, 22 Jul 2013 14:34:28 -0500

Magill v. Watson. The seller sued after buyer terminated an earnest money contract. In accordance with the contract terms the trial court awarded the seller the earnest money, plus liquidated damages in an amount equal to three times the earnest money, and attorney's fees, interest, and costs. The appellate court states that the contract "makes no attempt to quantify the actual damages that would be caused by a failure to release the earnest money." Accordingly the treble earnest money is not a valid liquidated damages provision but rather an illegal and unenforceable penalty.

Home Equity Loans May Not Be Closed Using Power of Attorney

Wed, 03 Jul 2013 13:59:03 -0500

Finance Commission of Texas v. Norwood. Plaintiffs sued state agencies to invalidate certain regulations relating to home equity loans. The Texas Supreme Court holds that the state agencies exceeded their authority in the way they defined the term "interest" because the Constitution does not define the term. The Court also holds the agencies erred in allowing home equity loans to be closed using a power of attorney because a loan may be “closed only at the office of the lender, an attorney at law, or a title company," and a rule allowing the borrower to be somewhere else while his agent closes under the power of attorney is inconsistent with this requirement.

Wife Did Not Wait Too Long to Probate Husband's Will

Fri, 17 May 2013 13:36:23 -0500

In the Matter of the Estate Willard O. Allen, Deceased. Husband died in 2005 and wife met with an attorney to discuss probating the will. Believing that an affidavit of heirship would cause everything to pass to her faster and with less expense than a probate, and knowing that her husband had successfully used an affidavit of heirship to resolve his own father's estate, wife chose not to probate the will. In 2010 wife had a dispute with one of her sons regarding some ranch land, and learned for the first time that (unlike the will) the affidavit of heirship caused the son to inherit an interest in that land. She then filed the will for probate and the son contested the probate, pointing out that under Texas law a will generally cannot be admitted to probate after four years from the death of the testator. The Court finds that wife was not in default in failing to timely file the will, given that she acted on the advice of an attorney, believed in good faith that she had done everything required of her, had no prior experience in such matters, and acted promptly once she learned of the problem.

Lender Lucks Out Because Borrower Waited Too Long to Sue

Fri, 22 Feb 2013 13:40:49 -0600

Priester v. JP Morgan Chase Bank N.A. In 2005 the Priesters obtained a home equity loan and signed the mortgage agreement in their living room. Almost five years later they sued to invalidate the lien and wipe out the debt. The Court agrees that under the Texas Constitution a lien on homestead is valid only if closed at the office of the lender, an attorney, or a title company. However, a four-year statue of limitations applies to home equity lending violations, calculated from the date of closing. Because the Priesters waited too long to sue their claims are dismissed.

Free Legal Forms Screw Things Up Again

Tue, 05 Feb 2013 13:40:54 -0600

In re the Estate Olen F. Cunningham. Olen owned about 84 acres of land in various tracts. It appears from the opinion that all tracts were either owned before his marriage to his wife, Helena, or inherited from his parents, so all the land would have been his separate property. During his marriage he conveyed partial interests to Helena. Shortly before he died, Olen and Helena filled out and signed a fill-in-the-blank form entitled “Agreement to Establish Right of Survivorship to Community Property between Spouses.” The form described the land as community property and specified that it would pass to Helena on Olen's death. After Olen died one of his children from a former marriage sued to challenge the Agreement. On appeal, the Court holds that a mere transfer of a spouse's separate property to the name of the other spouse is insufficient to convert separate property to community property. Because the land was separate property rather than community property, the do-it-yourself form did not create any survivorship rights in Helena. The case is sent back to the trial court for further proceedings. (The opinion doesn't say so, but in Texas when someone dies without a will leaving behind a spouse and children, the spouse acquires only a ⅓ life estate in the separate property land. So to avoid spending a couple hundred dollars for a pair of good wills Olen and Helena tried to do their own legal work, and as a result Helena has had to spend two years of her life and untold thousands of dollars in legal fees fighting to hang onto land that she will probably lose.)

Self-Help Legal Sites Not Much Help

Fri, 14 Sep 2012 14:04:29 -0500

Consumer reports recently evaluated several self-help legal sites to see how well they fared at generating simple legal forms. Their verdict: the product is probably better than something you would draft on your own, but most-consumers are better off consulting a lawyer.

Suit Claims Ghosts in Rental Home Justify Return of Security Deposit

Fri, 20 Apr 2012 13:46:41 -0500

A couple in Toms River, N.J., claim in a lawsuit that they are entitled to a refund of their security deposit because their rental home is haunted.

Proceeds From Sale of Homestead are Exempt From Most Creditor Claims for 6 Months

Tue, 24 May 2011 13:33:10 -0500

London v. London. Jeffrey obtained a money judgment against his ex-wife, Leticia. When he learned that she was attempting to sell her Texas homestead, he asked the court to appoint a receiver, and order Leticia to deliver the sales proceeds to the receiver so the receiver could pay the sums owed to Jeffrey. The court holds that a judgment creditor generally cannot foreclose on a homestead to satisfy a debt unrelated to the home, and if a homestead claimant sells the residence, the proceeds are exempt from attachment and execution for six months as a matter of state law. The sales proceeds are to be returned to Leticia.

Fraudulent Lien Suit Falls Short

Tue, 24 May 2011 13:32:30 -0500

Gray v. Entis Mechanical Services L.L.C. Hospital sued electrical subcontractor after the subcontractor refused to cash the hospital's check and release a mechanic's lien the subcontractor had filed on the hospital's property. On appeal, the court holds that in order to establish a fraudulent lien claim under section 12.002 of the Texas Civil Practices and Remedies Code, the hospital had to conclusively prove that the subcontractor (1) made, presented, or used a document with knowledge that it was a fraudulent lien; (2) intended the document be given legal effect; and (3) intended to cause appellee financial injury. In this case, the hospital failed to prove that the subcontractor intended to cause financial harm when he filed the lien affidavit, so the case is sent back to the trial court for further proceedings.

Is It OK to Lie About Your Homestead in Texas?

Tue, 30 Nov 2010 14:26:13 -0600

In re: Villarreal. After their home was foreclosed in 2005, the Villarreals secretly moved into their place of business. Two years later, the Villarreals settled a lawsuit by signing a promissory note and granting a deed of trust lien on the business property. The deed of trust stated that no part of the property was used as a residence. The Villarreals subsequently defaulted on the note and the lien was foreclosed. The Villarreals then sued for wrongful foreclosure, alleging that the property was their exempt homestead. The 5th Circuit asks the Texas Supreme Court to determine whether the Villarreals are estopped from claiming the homestead exemption when their use of the property as a homestead was surreptitious, and they publicly declared at the time that the lien was placed on the property that no such use of the property was being made. The Texas Supreme Court has set the case for oral argument on March 1, 2011.

Homeowner Claims Sticker Shock, But Lender May Foreclose

Thu, 05 Aug 2010 12:58:46 -0500

Cerda v. 2004-EQR1 LLC. Homeowners made a verbal application to refinance their home equity loan for $344,000 in order to obtain a lower fixed interest rate, to pay property taxes, and to obtain $10,000 in cash. By the time the loan closed over a month later, the loan amount had increased to $367,500, the interest rate was variable, and the owners received only $768 in cash. The owners never made a payment, and eight years of litigation ensued. On appeal, the Court holds first that the verbal loan application triggered the waiting period for closing the loan, so the waiting period was not violated even though the written application was not signed until closing. Second, the Court holds that the variable interest rate does not violate the requirement that payments be "substantially equal" because the loan is fully amortized over the life of the note without requiring a balloon payment. Finally, the Court holds that a $3,675 yield spread premium and $11,025 in discount points did not cause the loan to exceed the 3% cap on fees. In so holding, the Court observes that the yield spread premium (a bonus paid to the loan broker for selling a loan above market rates) did not count towards the cap because technically the fee is paid by the lender rather than the homeowner. The Court characterizes the discount points as a form of interest rather than fees (expressly disagreeing with the Texas Bankers Association v. Association of Community Organizations for Reform Now case that we discussed on January 15, 2010.) The trial court order dismissing the homeowners' claims and permitting the foreclosure to proceed is affirmed.

Even Judge Posner Doesn't Read His Home Equity Loan Documents

Fri, 25 Jun 2010 13:49:43 -0500

Ok, this isn't actually news, but it's still amusing. Widely recognized as one of the most respected legal minds in the nation, Judge Posner recently admitted that rather than read hundreds of pages of documentation for his home equity loan, he simply signed where he was told.