Articles Posted in Real Estate Law

Under Texas law, the Statute of Frauds requires that contracts regarding the sale of lands be in writing. There are some exceptions to this “in writing” requirement, particularly if the buyer has partially performed under the contract. The case of Zaragoza v. Jessen  provides a good reminder of the principles underlying the Statute of Frauds and the partial performance exception.

Statute of Frauds

The Statute of Frauds is codified at Tex. Bus. & Comm. Code § 26.01(a) & (b) which states, in pertinent part:

In a recent case, FP Stores Inc. v. Tramontina US, Inc., the Houston Court of Appeals provided guidance, for the first time, on what constitutes “bad faith” by a commercial landlord that fails or refuses to return a security deposit.

Facts of the Case

The FP Stores case involved a sublease for commercial premises located in Sugar Land, Texas. The original lease was signed in 2010 for the entire premises. Thereafter, several subleases were signed for various portions of the premises. In this case, the relevant sublessor was FP Stores, the sublessee was Tramontina US, Inc. and the master lessor was ProLogis Texas II, LLC.

A recent Texas Supreme Court case, Allen-Pieroni v. Pieroni, teaches that the proper measure of damages for a slander of title suit is the difference between the lost contract price on the property and the fair market value when the slanderous cloud on title is removed.

Texas Slander of Title: Facts of Case

Marc Pieroni was married for 10 years to Bonnie Pieroni. When they divorced, Mr. Pieroni (“Marc”) agreed to pay a total lump sum to the former Mrs. Pieroni (“Bonnie”) of $500,000 in $10,000 increments. Marc never failed to pay and was never in default of his obligations under the divorce decree. Ultimately, Marc paid Bonnie the entire $500,000 by August of 2013.

Nuisance claims are a bit of a muddled area of Texas law. As Justice Boyd stated in the opinion: “This is a nuisance case, but that does not tell you much. As a legal concept, the word nuisance ‘has meant all things to all people.’ ” Because of the confusion, in a recent case the Texas Supreme Court articulated the standard for a landowner who wants to assert a noise-nuisance claim in Texas. The case is Crosstex North Texas Pipeline L.P. v. Andrew and Shannon Gardiner. In its opinion, the Texas Supreme Court noted that a nuisance is a particular legal injury that occurs where a landowner’s use or enjoyment of their land is interfered with by another party. The party could be a neighbor or an easement holder using the land. Nuisances often take the form of noise, vibrations, overpowering smells and other conditions that impede or inhibit a person from enjoying their property.

In this case, Crosstex North Texas Pipeline obtained an easement from the Gardiners and then built and operated a gas compressor station on the easement on a neighboring property. The compressor station included four diesel engines that were each “bigger than mobile homes.” Witnesses described the sound as similar to a jet engine. At least one of the engines runs continuously all day and night. Crosstex implemented a variety of other sound reduction and mitigation measures to stop the travel of sound, such as building walls around the compressor and planting vegetation around the compressor. However, the Gardiners claimed that the sound level was still unacceptable and that it interfered with the use and enjoyment of their property. The Gardiners sued on a noise nuisance claim. The jury awarded them $2,000,000 for dimunition in value of their ranch because of the compressor station.

The Court confirmed that Texas precedent characterizes a nuisance, not as an invasion of an interest but as a condition that substantially interferes with the use and enjoyment of land by causing

On November 7, 2017, Texas voters approved SJR 60. You can review the text of the new law here. This law includes several amendments to Article XIV, Section 50 of the Texas Constitution that concern home equity loans. Highlights of the amendments include but are not limited to:

1. changing the percentage limitation on fees charged to the borrower from 3% to 2%;
2. removing the prohibition against encumbering homestead property which is being taxed at agricultural valuation;

The Texas Supreme Court recently addressed whether a lender is required to forfeit payment and interest payments made by a borrower when the lender has violated the terms of a home equity loan, and whether this a remedy is a matter of right available under the Texas Constitution or through a breach of contract action.

In the case of Garofolo v. Ocwen Loan Servicing LLC, Ms. Garofolo took out a home equity loan, and repaid the amount she borrowed plus interest in less than five years. Upon repayment, her loan holder, Ocwen Loan Servicing, recorded a release of the lien with Travis County, but failed to provide her with a copy of this release in recordable form, which was required of the lender under the home equity loan agreement.

After Ms. Garofolo notified her lender that they had not provided her with a copy of the lien release, and the lender failed to provide the document for sixty days, Ms. Garofolo sued the lender  seeking forfeiture of all the principal and interest she paid on her home equity loan, claiming this was a constitutional right afforded to her either under the Texas Constitution or because the lender had violated the loan agreement.

What happens when a Texas family discovers that the home equity loan on their home did not satisfy the constitutional requirements for homestead liens in the Texas Constitution? In the case of Wood v. HSBC Bank, the Wood family took out a home equity loan on their home in 2004. Their loan changed hands a number of times and ended up with HSBC Bank NA. In 2012, the Woods’ notified HSBC that there were defects in the loan that did not comply with the Texas Constitution. HSBC failed to cure the defects. Although it was eight years after closing when the issue was raised, the Woods’ sued HSBC to invalidate the lien on their property securing their loan and for quiet title to the property and forfeiture of all principal and interests payments made on the loan.

The Question For the Texas Supreme Court

The question before the Texas Supreme Court was whether, once the lender declined to cure the defect, was the lien void, or merely voidable. If the lien was void, then the lien was invalid and no statute of limitations applies. On the other hand, if the lien was voidable, then the four-year statute of limitations under Texas Civil Practice and Remedies Code §16.051 applies to the Woods’ case. In other words, because they did not bring suit within four years from the date the loan closed, their claim for quite title and forfeiture of all principal and interests payments made on the loan would be time barred.

The Texas Supreme Court recently decided an important real estate case in Town of Lakewood Village v. Bizios. Bizios was lived outside of Lakewood Village, Texas. Bizios was sued by Lakewood Village for not applying for or obtaining building permits when he began building his home. Lakewood Village, which is a general law municipality, asserted that it has the authority to extend its rules and ordinances to its extraterritorial jurisdiction. The extra-territorial jurisdiction (“ETJ”) of any particular city is based on the city’s population. Extra-territorial jurisdiction is the unincorporated area around the city’s corporate boundaries over which a city can exert control for certain activities.

In this case, the Texas Supreme Court determined that home rule cities are permitted to enforce their building codes in their extraterritorial jurisdiction, but general law cities, such as Lakewood Village, cannot.

What is a General Law City?