Chapter 30

In Texas, the debtor must have at least ____ days to cure the default before notice of sale can be given.

20

What is the maximum size of a rural homestead?

200 acres

Within how many days should the landlord return a security deposit on a residential unit when the tenant surrenders the property?

30 days

Mortgage Credit Certificate Program

A Mortgage Credit Certificate (MCC) allows the home buyer to claim a tax credit for some portion of the mortgage interest paid per year. It is a dollar-for-dollar reduction against federal tax liability. The certificate program is open to individuals and families who meet income and home purchase requirements have not owned a home as a primary residence in the past 3 years meet the qualifying requirements of the mortgage loan will use the home as their principal residence

A tenant may use domestic violence as a reason for terminating a lease if

A copy of an injunction issued by a judge is given to the landlord.

Age 65 tax exemption

A homeowner qualifies for an age-65 exemption automatically as of January 1 of the year in which age 65 is reached. Once this exemption is in place, senior homeowners qualify for other benefits: tax ceiling freeze - the homeowner's property cannot increase in value for school taxes portability of tax freezes - the tax freeze is transportable to a new residence installment payments - tax payments on the primary residence may be made in four equal installments tax deferral - the homeowner may defer delinquent taxes until the home is sold surviving spouse - will receive the same benefits if 55 years of age or older

Protections

A homestead protects against judgments and debts arising from personal loans and credit cards. The rights to occupy the homestead and protect it from forced sale continue for the life of the spouses and for minor children. Generally, proceeds from the sale of a homestead may be protected for up to six months so that the family has time to find another homestead. Personal property may be protected under homestead laws with certain restrictions. Cooperatives do not have homestead protection.

Land

A land specialist may be dealing with buyers and sellers interested in buying and holding raw land as an investment or for the purpose of subdividing and developing it. Occasionally, they may be dealing with someone who wants to place land into a conservation trust. There are also users who are interested only in certain mineral rights attaching to the land. Land specialists may therefore be called on to possess expertise in subdivision law, rights law, valuation, zoning, environmental law, and possibly even soil science, topography, and geology. As land and rights can be leased, leasing expertise may be called for.

Judicial

A lawsuit is filed to obtain the power to sell from a court. A court confirms the amount owed to the lender. Lis pendens is filed with the county recorder. If the borrower cannot pay the mortgage, the lender hires an attorney to file the proper documents with the court. If the borrower fails to respond to the notices within the statutory time limit, the attorney submits a report to the court. The judge then issues a Judgment of Foreclosure and Sale in favor of the lender. The judicial auction is advertised and the property is sold at the auction to the highest bidder.

Which of the following best describes a homestead tax exemption?

A property tax exemption is applied to portions of the property's assessed value

Broker's Price Opinion

A real estate license holder may not perform an appraisal of, or provide an opinion of value for, real property unless the license holder is licensed or certified as an appraiser under Texas Occupations Code, Chapter 1103. An appraisal is required for all federally related loans. A Competitive/Comparative Market Analysis (CMA) and a Broker's Price Opinion (BPO) assist a seller and a buyer to determine a listing price, but neither is an appraisal. A broker may charge a fee for a CMA. The Texas Real Estate License Act (TRELA) requires the following disclaimer to be reproduced verbatim and included in any written Broker's Price Opinion or market analysis report:: "THIS IS A BROKER PRICE OPINION OR COMPARATIVE MARKET ANALYSIS AND SHOULD NOT BE CONSIDERED AN APPRAISAL OR OPINION OF VALUE. In making any decision that relies upon my work, you should know that I have not followed the guidelines for development of an appraisal or analysis contained in the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation."

Personal property

A residential landlord has a lien for unpaid rent that attaches to non-exempt (per the homestead laws) property in the residence or in storage. A landlord may only collect a charge for removing or storing property if authorized to do so in the written lease. A landlord must take an effort to notify a tenant 30 days before selling or disposing of the tenant's property (60 days in a commercial lease).

Security deposits

A security deposit is an advance of money intended to secure performance. The landlord must return a security deposit on a residential unit within 30 days of the tenant surrendering the property. The landlord has the right to deduct amounts for tenant-caused damage other than normal wear and tear. The landlord is required to mitigate (lessen) the damages if the tenant abandons the lease early. The tenant must provide a forwarding address so the landlord can send the deposit and a written description of damages. The tenant may not withhold the last month's rent and demand that the deposit be used for the rent. The landlord is required to give any security deposit and all the tenant's personal property to whoever is designated in the lease if the tenant dies.

Property (Home) Owners' Associations

A seller of residential real estate property that is subject to membership in a property owners' association (POA) or homeowners' association (HOA) is required to give a prospective purchaser a written notice stating that the purchaser will be obligated to join the association, and that failure to pay the association assessment may result in a lien and foreclosure of the property. The notice must be delivered to the purchaser before the signing of the purchase contract. If it is delivered later, the purchaser may terminate the contract for any reason within seven days after the notice is delivered. If not delivered at all, the purchaser may cancel the contract at any time before closing.

Short sales

A short sale occurs when a borrower needs to sell a property for less than the loan balance. The lender may or may not agree to accept the deficient price as satisfaction and may require the seller to pay the deficiency by way of a deficiency judgment. There may also be tax consequences for the seller. The parties to a short sale are the buyer and seller. The lender is a third party contingency—must approve the sale. The process is generally as follows.

Leases

A specialist in leasing may be concerned with any of the property types, but with each type, the agent must be familiar with the appropriate property features, uses, rights, limitations, legal concerns, and lease clauses. A leasing agent working for a landlord must be an expert in the real estate market for the specific property type, especially in the areas of market demand and market pricing. A landlord's agent is generally required to attract potential tenants, set and negotiate rents, and perhaps work with prospective renters to modify the rental space to suit their needs. A leasing specialist may also work for a tenant to locate suitable rental properties and negotiate a lease with the landlord's agent. The intricacies of leases are explored in the chapter on "Real Estate Leases."

Resorts

A specialist in resort and vacation properties may be dealing with a variety of property types, including single residences, multiple dwellings, condominiums, apartments, hotels, cooperatives, and ranches, and must be knowledgeable in each property type. Resort properties are bought and sold, leased, and transferred by timeshare arrangements. Thus, the resort specialist must have leasing expertise as well as timeshare and sale transfer expertise.

Surveying

A survey creates or confirms legal descriptions. It is an onsite measurement of property lines and the location of houses, easements and encroachments to establish property boundaries. An improvement location certificate (ILC) or mortgage survey locates improvements on the property but is not used to legally set the property boundaries. Both will reveal encroachments and zoning violations, such as a setback requirement. The fact that Texas was once a sovereign nation that owned the public land makes it unlike every other state in the country in its surveys. Rather than using the Public (Government) Land Survey System, Texas has its own Texas Land Survey based on Spanish land grants and land transferred to private ownership by the state of Texas. Subdivision in Texas begins with the state boundaries and proceeds to Railroad Districts (12), which cover the state, surveyed with the metes and bounds system. Railroad Districts include counties. Southern Texas has townships and numbered sections, but no ranges. Western Texas has blocks (groups of subdivided land), which contain tracts. These are irregular metes and bounds surveys. A block may extend across county boundaries. Northern and eastern Texas have leagues (4,428.4 acres, or 25 million square varas) which may be subdivided into 25 labors (177.1 acres, or one million square varas). A vara in Texas is 33 and1/3 inches or about 2.8 feet. Labors can be subdivided into lots. The Texas General Land Office has abstracts showing the history of the land grants in each county.

Which of the following is legal for a landlord or tenant?

A tenant has a right to vacate a monthly rental with at least one month's notice

Lease terminations

Abandonment is the relinquishment of possession with the intent of terminating the agreement without assigning it to anyone. The relinquishment must be intentional, voluntary and absolute. Mere nonuse of the property alone may be insufficient to establish abandonment. Monthly leases may be terminated with one month's notice. A landlord may terminate a lease if a tenant uses the property in a way that leads to a conviction for public indecency by giving written notice within six months after the conviction. Tenants may terminate a lease for family violence by vacating the premises. A copy of a temporary injunction from a judge must be delivered to the landlord. Persons entering the military or being redeployed are allowed to terminate a lease if they provide documentation to the landlord.

Single Family Housing Guaranteed Loan Program

Administered by the United States Department of Agriculture (USDA), this program assists approved lenders in providing low and moderate income households the opportunity to own adequate, modest, decent, safe and sanitary dwellings as their primary residence in eligible rural areas. The program provides a 90% loan note guarantee to approved lenders who make loans to eligible rural homebuyers. Eligibility requirements: meet income eligibility agree to personally occupy the property be a US citizen or lawfully admitted alien have legal competency have good credit history meet certain property conditions

Separate property

All property, both real and personal, of a spouse owned or claimed before marriage is the separate property of that spouse. The spouses may partition between themselves all or part of their property by written agreement. Spouses can also agree (in writing) that the income from a spouse's separate property is the separate property of that spouse. Separate property consists of property owned by either spouse at the time of the marriage property acquired by either spouse through inheritance during the marriage property acquired by either spouse through gifts during the marriage property acquired by either spouse with separate-property funds settlement or judgment proceeds for personal injury property owned by one underwritten contract with the other (contractual separate property) income from separate property (generally considered community property without a written agreement) A spouse may gain an equitable interest in separate property if the value of the separate property increases during the marriage enhancement in the value of the property is enhanced by way of community property funds part of the mortgage or any debt is discharged using community property funds The equitable interest created is proportionate to the amount of payments made from community funds. If a marriage terminates, a court imposes an equitable lien on the separate property to secure the claim for reimbursement. A spouse who owns separate property free and clear of claims by the spouse can transfer it without the other spouse's signature.

Property management

As described in the chapter on "Property Management," the potential range of services provided by a property manager includes financial reporting, budgeting, marketing, rent setting, tenant selection, rent collection, tenant relations, enforcement of lease conditions, compliance with fair housing laws, and property maintenance. If the property manager's duties including leasing, the manager must be a leasing expert as well as a property expert. Skillful handling of trust accounts and accounting practices are also essential for most property managers.

How do the community property laws in Texas view a husband and wife?

As equal partners

Rights of redemption 2

As mentioned, the borrower has the right to stop foreclosure before the sale by curing the default -- paying missed payments (the entire remaining balance may be required) plus interest, fees and penalties. The sale starts a statutory redemption period. Only tax lien foreclosures have a statutory redemption period in Texas. The statutory redemption period lasts for two years for a homestead and six months for non-homestead properties. There is a 180-day statutory redemption period for foreclosures on a homeowner's association lien. During the statutory period the borrower has the right to "buy back" or redeem the property. The rules are as follows: pay full price purchaser paid at auction pay purchaser a premium of 25% of the total if redeemed during the first year and 50% during year two compensate the purchaser for any repairs made pay fees (such as deed recording fee, penalties, interest and other costs)

Short sales 2

As stated earlier, short sales occur when borrowers need to sell property for less than the loan balance. The lender may or may not agree to accept the deficient price as satisfaction and may require the seller to pay the deficiency by way of a deficiency judgment. There may also be tax consequences for the seller. A short sale specialist working for the borrower will propose short sale options to the lender, provide a Broker's Price Opinion, and work out the terms of sale with the lender. The agent then lists the property for sale at a price that would cover the loan balance while indicating the lender's willingness to consider a short sale. When an offer to buy is submitted, the lender, as well as the seller, must approve the offer. The special skills and knowledge needed by the short sale specialist include knowledge of market conditions and trends that lead to short sales, understanding of lending markets and lenders' motivations to agree to a short sale, and understanding of how deficiency judgments and tax consequences will affect the seller-client.

Auction

Auction sales is a highly specialized niche. Not all auctioneers require a real estate license, but those who conduct any real estate brokerage activities do. A person conducting a real estate auction will most likely be advertising property for sale, assisting someone to locate a property for sale, assisting in procuring prospects to purchase a property, working for an owner to sell a property, and performing many other activities that require a real estate license in Texas. Auction sales may require a broker to have knowledge of special marketing techniques, including unusual advertising methods and the siting of the physical sale, if there is one (many auctions are held online); use of the internet; ecommerce; auction rules; premiums and reserves; qualifying and bidding; and many other details peculiar to auction sales.

Commercial

Brokerage of commercial properties, essentially retail, office, and industrial, properties, generally requires extensive knowledge of the needs of the various kinds of users of those property types. In most brokerages, each type is a specialty unto itself, since the demands for specific market and user knowledge are so great. Since many commercial properties are bought and sold as investments, the commercial specialist also needs the expertise of the investment specialist and the leasing specialist.

Investment

Brokerage of investment properties is an activity requiring a high level of financial and investment knowledge. Property types can include residential, office, retail, industrial, ranch and farm, and raw land. The broker needs a good understanding of investment objectives concerning each property type as well as the technical aspects of measuring investment value. Intimate knowledge of the financial operations of the property user may be required to evaluate and price the property. Leasing knowledge is usually critical. Investment properties exist within a nexus of competing investments and competing properties, so a successful broker will understand not only the requirements of investors but those of property users.

Building permits and building codes

Building permits ensure that properties are in compliance with building codes. Texas sets minimum construction and safety requirements in its building codes. City and county codes may be more restrictive than the Texas codes. In case of differences, the most stringent code applies. A Certificate of Occupancy (CO's) indicates the fulfillment of all the requirements of the building permit.

Community property

Community property consists of all other property earned or acquired by either party during the marriage. Community property (and homesteads) may be mortgaged or conveyed only with the signed consent of both spouses.

Farm/Ranch

Farm and ranch land is land zoned for agricultural use, including the raising of crops and animals. There is typically a lot of acreage involved, in comparison with other property types, and while there may be residential and other structures on the property, these are incidental to the agricultural use. A farm and ranch broker will be knowledgeable about farming and ranching activities and requirements, about the suitability of the land for the intended use, and about the presence of critical resources, such as water, on or accessible to the property. As climate, weather, soil and water will be among a user's primary concerns, so these must be among the broker's areas of expertise.

Floodplains

Floodplains, coastal preservation and other special use classifications may be regulated at a local, county, state or federal level. A floodplain is generally a flat area of land near a river or stream. An owner who builds on a floodplain is frequently required to obtain flood insurance. Flood insurance is typically purchased separately from a standard homeowner's policy. The main channel of a river is called the floodway, and owners may not in any way interfere with floodways ( by building buildings or fences or by changing the course). Floodways in Texas are often seasonal.

Causes and options

Foreclosure is a procedure whereby title to a property used as security for a debt is taken by a creditor or lender and sold to satisfy the debt. The foreclosure procedure removes all liens from the property. The foreclosure process can take several months, if not years, and does long-term damage to the debtor's credit.

Foreclosures

Foreclosure specialists may seek out seller clients or buyer clients. In working with sellers, the agent will help the client to understand the alternatives to going into foreclosure, such as working out a revised payment schedule or a short sale with the lender, looking for another lender, or offering a deed in lieu of foreclosure. If the property goes to foreclosure, there is not likely to be any commission for an agent, so compensation may be in the form of a fee for consulting services. If working for the lender, the agent may attempt to market the property in an accelerated fashion to forestall the actual foreclosure sale. If working for a buyer, the agent will seek out likely properties being foreclosed and advise the buyer on bidding at the foreclosure sale. Foreclosed properties are often like short sale properties and REO properties in that there is a strong likelihood that they will be distressed and in need of repair, and also that any purchase alternative will probably take longer and be more complicated than an ordinary transaction.

Predatory lending

HUD has defined predatory lending as the actions of lenders, appraisers, mortgage brokers and home improvement contractors who knowingly lend more money than a borrower can afford to repay charge high interest rates to borrowers based on a HUD-protected class and not on their credit history "strip" homeowners' equity from their homes by multiple refinancings charge fees for unnecessary services use high pressure tactics to sell home improvements and finance them at high rates pressure borrowers to accept high-risk loans use cash-out refinance offerings People with lower incomes, senior citizens and credit-challenged borrowers are most often the targets. The consumer credit protections in the Texas Finance Code (TFC) and in the Truth in Lending Act (TILA) afford some protection against unscrupulous and predatory lending practices. Creditors engaged in the business of extending credit for personal, family or household use are prohibited from advertising false, misleading or deceptive statements relating to a rate, term or condition of a credit transaction credit terms that the creditor does not intend to offer to consumers that apply for them. TILA stipulates that loan originators who take an application, assist in obtaining a loan or negotiate the terms of a loan may not be compensated on the terms of the loan receive compensation from both the borrower and the lender steer borrowers toward loans that are not in the best interest of the borrower

Homeowner's insurance

If a property is used to secure a loan, the lender usually requires the homeowner to obtain insurance. A lender cannot require a borrower to purchase homeowner's or other residential property insurance coverage in an amount that exceeds the replacement value of the dwelling and its contents. There are five kinds of policy: liability - provides coverage if the owner is sued and loses in a lawsuit involving injury caused by the members of the household to other people (includes pets) dwelling - pays for damage to the house and outbuildings contents/personal property - pays for personal belongings loss of use - pays for additional costs of living away from the home medical payments - covers the homeowner in case someone is injured in the home It is possible to obtain separate policies for these coverages, but most homeowners buy a package that includes them.

Which of the following is true?

If a wife uses separate property during the marriage to acquire property, the acquired property will be separate property.

Deficiency judgments

Insufficient sale proceeds may result in a deficiency or personal judgment against the debtor and in favor of the lender. Action for such a judgment must be taken within two years of the sale. The borrower may also have to file a Cancellation of Debt form with the Internal Revenue Service (IRS).

Recording a real property transfer has which of the following legal effects?

It provides constructive notice of the transfer.

One disadvantage of a deed in lieu of foreclosure as an alternative to foreclosure is

It will not extinguish secondary liens.

Emergencies

Landlords who have on-site management must provide a 24-hour telephone number for reporting emergencies.

Mechanic's liens

Mechanics (laborers) and materialmen (those who provide materials and supplies) have the right to set a lien against the buildings and articles they make or repair for the value of the labor material furnished. A mechanic's and materialman's lien (frequently shortened to mechanic's lien) is a specific, involuntary, statutory lien, and is foreclosable. A contractor, subcontractor, supplier, repairman, architect, engineer, surveyor, or landscaper working under contract may file the lien. A Texas mechanic's lien requires the following conditions. Lien rights attach when first labor and/or material is furnished. The contractor provider must file an affidavit with the county clerk within 75 days of the last day of the month in which the contract was completed. Contractors must have worked under a written contract with the owner. If the property is a homestead, both spouses must sign the contract. Contractors must furnish a final "bills paid" affidavit to the property owners upon receipt of the final payment. A lien waiver releases an unrecorded lien and a lien satisfaction letter releases a recorded lien. For validity, a mechanic's and materialmen's claim must be based on a written contract which owners may rescind for 3 days after signing consented to by both spouses signed by both spouses at an attorney's or lender's office signed no earlier than 5 days after loan application

My First Texas Home

My First Texas Home is a Taxable Mortgage Program (TMP) offering mortgage loans at more competitive, fixed, low interest rates with down payment and closing cost assistance of 5% for first home buyers. Home buyers who have not owned a home within the past three years, who meet program income guidelines, and who do not exceed the program's purchase price limits are eligible to apply for a loan under the program.

Homestead termination

Property that has been designated as a homestead will only lose that protection through abandonment, alienation, death or transfer. A temporary absence from the homestead will not end the homestead protection, provided the owner does not establish another homestead. Evidence establishing the abandonment of a homestead must make it clear that there has been a total abandonment with no intention to return.

REO

REO, or Real Estate Owned, generally refers to property taken by a lender in a foreclosure. Hence, it is a problem property. The purchaser defaulted for some reason, and the bank got the collateral, which it doesn't want. The problem may have been in the defaulter, but it may also have been in the property or the market. The property may have been vacant and neglected for a long time, vandalized, or possibly even illegally occupied. The REO agent's job is to unload it in the shortest time possible with as little loss as possible. The scope of the agent's work may include overseeing repairs to improve marketability, and coming up with creative ways of selling the property.

Default remedies

Remedies for default are defined in the lease and usually consist of return or surrender of the full amount of the security deposit payment of actual damages, including moving costs, utility connection fees, storage fees and lost wages a pro rata return of any prepaid rent court costs attorney fees If the tenant terminates a lease because the landlord refused to make required repairs, the tenant is entitled to a refund of rent refund of the security deposit

Which of the following would be a violation of the Deceptive Trade Practice Act?

Representing that a septic tank was drained last year when in fact it was drained 6 years ago.

Setback restrictions

Setback restrictions specify the location of improvements in relation to boundaries. Setback is the distance between an improvement and a public street. Building sites have minimum frontage requirements to allow the government to provide services. Fences, mailboxes, landscaping, septic tanks and other improvements, as well as buildings, may have setback restrictions.

Smoke alarms

Smoke alarms are required in each single room (bedroom, dining, living, but not the kitchen), and hallway. The smoke alarms must be checked each lease term and extension period. A landlord is not required to install fire extinguishers but any installed must be inspected.

Recording

State laws set policies and procedures for recording. These laws establish who is responsible for organizing and maintaining recorded documents, the amount of any fees required (such as deed tax, documentary fees or tax stamp), and who pays them. Recording does not prove the validity of a document, and a deed does not have to be recorded to be valid. However, a grantee who does not record a deed risks having another party claim title to the property. The recording system provides constructive notice of a document's contents and establishes priority of interests - "first in time, first in right". Priority of documents is based on the date and time of recording. Before recording, documents should be executed (signed) and acknowledged (notarized) to confirm that the act being recorded is voluntary and not occurring under duress.

What law requires all leases for more than a year to be in writing to be enforceable?

Statute of Frauds

Texas lien theory vs title theory

Texas is a title theory state. The borrower (mortgagor) gives legal title to the lender (mortgagee or some other designated individual) and retains equitable title. Legal title is returned to the borrower when the debt is paid in full (or some other obligation is performed). In theory, the lender actually owns the property until the debt is paid. In lien theory states, the borrower retains both legal and equitable title. The lender simply has a lien on the property as security for the mortgage debt. The mortgage or deed of trust is nothing more than collateral for the loan.

Acquisition of property

Texas is an "inception of title" state, meaning that the character of property as community property or separate property is determined at the time of its acquisition and by the character of the assets used to acquire the property. If, on the day before the marriage, one of the spouses acquires property, that property is and always will be separate property. If a spouse uses separate property during the marriage to acquire property, the acquired property will be separate property. Property acquired by debt before marriage generally remains separate property even though the debt is paid after marriage using separate funds. If property is acquired by debt after marriage, the debt is presumed to be community debt even if signed by only one spouse, unless the signing spouse can show that there was an agreement by the creditor to pursue only that spouse's separate property for repayment. In Texas, most property acquired by either spouse during their marriage is considered community property. Title companies will require both signatures on a conveyance.

Landlord and tenant laws

Texas landlord and tenant laws originate from the Texas Property Code. Property managers must know the Texas Property Code extremely well to avoid violations and lawsuits. The following are some common issues covered by the code.

Homestead tax exemption

Texas law grants homeowners a homestead tax exemption for school district taxes. No corporation or other business entity can apply. Other taxing districts may also allow for optional homestead tax exemptions of varying amounts. If a county collects a special tax for farm-to-market roads or flood control, a residential homestead owner is may receive an exemption for this tax. Here is how the school tax exemption works: a home is appraised at $100,000, and the owner qualifies for the $25,000 exemption (this is the amount mandated for school districts). The owner will pay school taxes on the home as if it was worth only $75,000. Taxing units have the option to offer a separate exemption of up to 20% of the total value.

Veteran's Land Board programs

Texas provides another alternative for property loans in the form of special assistance programs for Texas veterans. The Texas Veterans Land Board (VLB) is a division of the General Land Office of Texas. The VLB administers three programs to assist Texas veterans in purchasing a principal residence with a low-interest loan and little or no money down. A veteran may participate in all loan programs simultaneously but may have only one loan in each of the three programs at one time. To qualify as a Texas veteran, a loan applicant must have listed Texas as the home of record at the time of entry into the military have served no fewer than 90 cumulative days of active duty service or training not been dishonorably discharged be a resident of Texas day of application have repaid previous VLB loans The un-remarried, surviving spouse of a qualifying Texas veteran may also qualify.

Rights of redemption

Texas recognizes the equitable right of redemption before a foreclosure of a mortgaged homestead. After default but before the foreclosure sale, the borrower may pay the lender the amount in default and reinstate the loan (with exceptions; see more on this topic in the section on "Foreclosure" in this chapter). In the case of a foreclosure to satisfy a tax lien on a homestead, Texas has a two year statutory period of redemption (6 months on non-homestead property). In a foreclosure to satisfy a Property Owners Association (POA) lien, the homeowner has 90-day statutory redemption period.

Community Reinvestment Act (CRA)

The Community Reinvestment Act requires lenders to serve their local communities by meeting the deposit and credit needs of their low-income and moderate-income housing communities, participating and investing in local community development and rehabilitation projects, and participating in loan programs for housing, small businesses and small farms. Each affected lending institution is required to post a CRA Notice in a public place in its facilities. The notice discloses the lending policies of the institution and also informs customers of their rights. The CRA further requires any federally-supervised financial institution to prepare an annual statement containing a definition of the geographical boundaries of its community an identification of the types of community reinvestment credit offered comments from the public about the institution's performance in meeting the community's needs

Consumer Financial Protection Bureau

The Consumer Financial Protection Bureau (CFPB) enforces two laws important for real estate practitioners: the Truth in Lending Act and the Real Estate Settlement Procedures Act. The Truth in Lending Act (TILA) covers all consumer lending (not just real estate) and requires disclosure of the annual percentage rate (APR), the true cost of credit, and all lender costs. The CFPB has issued a rule to simplify and improve disclosure forms for mortgage transactions. The Real Estate Settlement Procedures Act (RESPA) requires disclosure of all closing costs. RESPA covers real estate professionals, including lenders and title companies. The combination of the two laws is referred as TILA and RESPA Integrated Disclosures (TRID). TRID's purposes are to create easier to use mortgage disclosure forms improve consumer understanding aid in comparison shopping prevent surprises at the closing table Under TRID, most of the liability for closing a transaction lies with the creditor, not the borrower. The daily penalties for failure to follow the CFPB regulations: $5,000 for failure to follow laws/rules $25,000 for gross negligence $1,000,000 for intentional violations

LGBT regulations

The Department of Housing and Urban Development (HUD) has a policy that provides LGBT individuals and families with assistance when facing housing discrimination. Although the Fair Housing Act does not explicitly prohibit housing discrimination based on sexual orientation or gender identity, according to HUD, the "guidance treats gender identity discrimination as gender discrimination under the Fair Housing Act.

Home Sweet Texas Home Loan Program

The Home Sweet Texas Home Loan Program is for Texas home buyers with low and moderate incomes. It has the same benefits as those found in the Homes for Texas Heroes Home Loan Program.

Homes for Texas Heroes Home Loan Program

The Homes for Texas Heroes Home Loan Program is for teachers, fire fighters, emergency medical service personnel, police, correctional officers and veterans. This program's benefits include a 30-year fixed interest rate mortgage loan with several rates and loan options available down payment assistance from 3%-5% not required to live in the home for a period of time the down payment assistance never needs to be repaid available statewide

Interstate Land Sales Disclosure Act

The Interstate Land Sales Disclosure Act authorizes a nationwide program of registration of subdivisions marketed in interstate commerce. The program is intended to protect consumers by making relevant information available to them when they are considering purchasing land. The act generally applies to subdivisions of undeveloped land sold through interstate commerce. Penalties are imposed on developers who fail to maintain a current registration statement with the Office of Interstate Land Sales Registration or fail to furnish each purchaser with a copy of an effective Property Report before the purchaser signs a purchase contract. The Property Report must describe a proposed subdivision in detail, with maps, contract documents, distance over paved roads to nearby communities, number of homes currently occupied, soil conditions affecting foundations, septic systems, type of title given, liens, and other certifications of relevant information about the subdivision. Buyers who receive the report within 48 hours of signing have the right to cancel the contract within 3 days and have their deposit returned. Buyers who do not receive the report within the designated time frame can cancel the contract at any time. Exempted from the act are subdivisions with lots of 5 or more acres subdivisions with fewer than 25 lots lots offered exclusively to building contractors lots on which there is an existing building lots that have a contract requiring the lot seller to erect a building within 2 years The act provides for harsh penalties for violation developers and real estate license holders who helps in marketing the property.

Deceptive Trade Practices Act

The Texas Deceptive Trade Practices Act (DTPA) applies to all business transactions, not just those involving real estate transactions. Its purpose is to protect consumers from false, misleading and deceptive business practices The Act declares that "false, misleading or deceptive acts or practices" in the advertising, offering for sale, selling or leasing of any real or personal property are unlawful. Claims that involve the providing of advice, judgment, opinion and similar professional skills, such as preparing a comparative market analysis, are not covered by the Act, unless there is an express misrepresentation of a material fact an unconscionable action (defined as taking advantage of the lack of knowledge, ability, experience or capacity of a person to a grossly unfair degree or when there is a gross disparity between the value received and the consideration paid) failure to disclose information breach of an express warranty The DTPA protects consumers against the effects of misrepresentation by license holders, but sometimes it holds license holders responsible for things not under their control. For example, a license holder may be in violation of the DTPA by failing to disclose property defects the licensee knew about or should have known about. A license holder cannot use a waiver, "as-is" disclaimer, or caveat emptor (let the buyer beware) argument to defend against an accusation of having violated the DTPA. Most waivers and disclaimers are unenforceable under the DTPA, and caveat emptor does not apply: the buyer does not have to show due diligence ; the seller should have disclosed. Licensees may achieve some protection from DPTA violation claims if they can make any of the following arguments: A licensed inspector made a mistake. Inspectors are liable once they report their opinions of the presence or absence of defects. The government provided mistaken information. A license holder cannot be held responsible for the government's misinformation. The seller, not the licensee, provided the misinformation in The Seller's Disclosure Notice . This is why the licensee should not help the seller fill out this disclosure form. The DTPA provides a laundry list of deceptive practices that the real estate broker should be keenly aware of. Here are a few of them with real estate examples. passing off goods or services as those of another A real estate broker states that "Hamilton Inspectors" inspected a particular home when the broker knows it was inspected by a different inspector. causing confusion or misunderstanding as to the source, sponsorship, approval, or certification of goods or services A real estate broker states that a building has FHA approval status when the broker knows it does not have the approval status. causing confusion or misunderstanding as to affiliation, connection, or association with, or certification by, another A broker claims that she is affiliated with a national real estate franchise when the broker is not. using deceptive representatives or designations of geographic origin in connection with goods or services A broker states that a house has Spanish tile when the broker knows the tile came from New Braunfels, Texas. representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities when they do not A broker states that the buyer of a house will have membership in an exclusive country club when the broker knows the purchase does not include club membership. representing that goods are original or new when they are deteriorated, reconditioned, reclaimed, used, or secondhand A broker claims that windows are new when the broker knows that the windows are the original windows from 20 years ago. representing that goods or services are of a particular standard, quality, or grade, or that goods are of a particular style or model, when they are of another A broker assures that the air conditioning unit is a "Hamilton Top Line" brand when the broker knows it is actually some generic knockoff. disparaging the goods, services, or business of another by false or misleading representations of facts A broker claims that a competing broker is abusive and should be arrested when, in fact, there is no basis. advertising goods or services with intent not to sell them as advertised A broker advertises that he pays all seller closing costs for those who list with him, when the broker has no intention of paying them. advertising goods or services with intent not to supply a reasonable, expectable public demand, unless the advertisement disclosed a limitation of quantity A landlord's broker advertises that a three-bedroom, two-bath apartment can be rented for $380 per month, one-third of market rent, when the broker is making only one of the 60 units available at that price. making false or misleading statements of fact concerning price reductions A broker tells a buyer that the price of a house is low because the owners have to move for their jobs when the real reason is foundation issues. The statute of limitations on DTPA lawsuits is two years from the date of discovery. If it takes a consumer years to discover a DTPA violation, the time frame begins with the discovery.

TDHC and TSAHC programs

The Texas Department of Housing and Community Affairs (TDHCA) and the Texas State Affordable Housing Corporation (TSAHC) offer mortgage loan funds and down payment assistance to eligible first-time home buyers, low income borrowers and others. These programs are limited to residents of the state of Texas.

Texas fair housing laws

The Texas Fair Housing Act is located in Chapter 301 of the Texas Property Code. The fair housing laws allow any aggrieved party to file a complaint against discriminatory practices and to pursue enforcement through administrative proceedings, attorney general litigation or private litigation. Texas has a HUD-approved "substantially equivalent" fair housing program that allows complaints to be heard at the state level rather than at the federal level. An aggrieved person may file a complaint within one year after the alleged act to the Texas Workforce Commission Civil Rights Division (TWCCRD). The TWCCRD has 100 days to investigate the complaint, to begin a process of conciliation (attempting to obtain an agreement ending the dispute) and to file a report of its findings. When charges are filed it is assigned to an Administrative Law Judge (ALJ). An ALJ has the authority to award actual damages up to $10,000 for the first offense, $25,000 for a second and $50,000 for further violations.

Statute of Frauds

The Texas Statute of Frauds requires all contracts for real property to be written except leases for one year or less. They must be signed by the principal parties. Emails are accepted as constituting compliance with the Statute of Frauds and held to be binding. The Statute of Frauds concerns the enforceability of a contract, not its validity. Oral leases for year or less are usually enforceable. Once the parties to a valid oral contract have executed and performed, the parties cannot then use the Statute of Frauds to rescind the contract.

Qualifications

The Texas homestead right is constitutional and therefore cannot be waived through any contractual agreement or change of state law. The homestead law includes the following requirements: every head of a family and every single person may hold a homestead the family or person must occupy or intend to occupy the premises as a home the head of the family must own or lease the property The courts define a family as a group of people having the social status of a family. The head of the family must be legally obligated to support at least one other family member. A homestead generally consists of the home, fixtures and land that a person or family occupies as a residence. Either separate or community property may constitute a homestead. A Texas homestead may be urban or rural, but not both. A rural homestead for a family consists of no more than 200 acres of land, which may be in one or more parcels, with improvements. For a single adult, the land may not exceed 100 acres with improvements. There is no consideration as to the value of the land and improvements. An urban homestead consists of no more than 10 acres of land together with any improvements. An urban homestead may be used for business purposes provided it is also used as an urban home. A homestead is considered to be urban if the property is located within the physical limits of a municipality served by police and/or fire protection provided with at least three of the following utilities services by the municipality: electricity, natural gas, sewer, storm sewer, water

Uniform Commercial Code

The Universal Commercial Code (UCC) is a body of law that aims to make laws relating to commercial transactions uniform throughout the country. The relevant part of the Texas version of the UCC is Section 9 of the Texas Business and Commercial Code concerning the pledging of personal property or fixtures to secure a loan or credit purchase. To create a security interest in personal property, including personal property that will become a fixture, the Texas code requires the use of a security agreement containing a complete description of the items against which the lien applies. A short notice of this agreement, called a financing statement, must be filed in the county clerk's office in the county in which the property is located. The recorded statement allows the creditor to take possession of the personal property if the borrower defaults.

Veterans Home Improvement Program

The Veterans Home Improvement Program (VHIP) will lend eligible Texas veterans up to $25,000 for 20-years or up to $10,000 for a 10-year loan to make improvements to their current residence. A General Contractor (GC) must complete all work. A VHIP loan can only be used for alterations, repairs and improvements that are eligible for financing under the HUD FHA Title I Program. The FHA-insured loan is originated through the VLB and requires no down payment. No prepayment penalty is allowed. All work and/or construction must be in compliance with all applicable building codes and standards. The VHIP loan can be used for work on a veteran's current residence if the work will substantially protect or improve the basic livability or energy sufficiency of the property correct damage resulting from a natural disaster correct conditions that are hazardous to health or safety

Veterans Housing Assistance Program

The Veterans Housing Assistance Program (VHAP) provides funds to purchase a primary residence in Texas if the home meets the following requirements: will be the veteran's primary residence is located in Texas is a single-family home, townhome, condo or PUD constructed at least five years earlier if multifamily can be manufactured or modular ENERGY STAR certified if new There is no set limit on the amount of acreage. The loan requires the veteran to occupy the property within 60 days of closing live in the property for 3 years The VLB works with participating lenders to originate, process, close and service the loans. There is no maximum sales price restriction, but the maximum loan is $417,000. The interest rate is determined by the VLB. No discount points are allowed. The down payment is based on the loan type and can be a gift. The lender may charge a 1% participation.

Veterans Land Program

The Veterans Land Program (VLP) offers eligible Texas veterans the opportunity to buy land and finance the purchase up to $125,000 over a 30-year term with 5% down. The land must be entirely in Texas be non - commercial not have been owned by the purchaser within the last 3 years have access to a public road The bonds used to fund the land program are retired from loan repayments. The cost of administering the program is financed through a fee charged on each loan. The VLB originates all land loans without the aid of private lenders. The VLP is the only one of its kind in the country, giving Texas veterans the opportunity to borrow money to purchase land at below-market interest rates.

Short sale procedure.

The borrower or borrower's agent agents contact the lender to discuss the short sale option. If willing, the lender sets the required terms of the short sale. The real estate agent provides the lender a Broker's Price Opinion (BPO). The agent lists the property for sale at the price that will cover the mortgage. The agent places a note in the Multiple Listing Service (MLS) stating that the lender will consider a short sale. A buyer submits an offer. The owner agrees to the contract The lender approves the short sale. The transaction closes. Lender's action to recover deficiency may ensue.

Residential

The buying, selling, and renting of residential properties is the primary occupation of the great majority of real estate license holders. Knowledge of housing styles, neighborhood qualities, locational features, financing requirements, and client needs and motivations is essential. Residential brokerage includes single-family, multi-family, townhome, condo, apartment, and cooperative property types.

specializations

The chapter on "The Real Estate Business" described a wide range of real estate activities and specialties available to real estate license holders. These included creating, managing, maintaining, destroying, holding, regulating, and transferring real estate of all types in addition to the mere brokering of real estate transactions. Brokerage, of course, is not a "mere" activity. It is a legally complicated, skill-, knowledge- and experience-driven profession that provides important services to the public. A few brokerage specializations are reviewed below.

Community vs. separate property

The community property system prevails in Texas. Texas law regards spouses as equal partners. The basic rule is that property acquired during marriage is considered to be acquired by the marital community and not by either member. The rule applies whether or not the couple were married in Texas. The law distinguishes real and personal property into categories of separate and community property. Separate property belongs to one spouse; community property belongs to both spouses equally.

Homestead

The first homestead exemption in Texas was created by the Texas legislature and later incorporated in the Texas Constitution. A homestead is a legal life estate in land that is owned and occupied as a family home. It is protected from a forced sale for debt under certain circumstances.

Landlord and tenant relations

The following are a few facts a landlord and tenant should be aware of to help maintain good landlord-tenant relations. The landlord cannot charge a tenant for a government fine imposed on the landlord unless the fine was caused by the tenant. A landlord or tenant who files a lawsuit just to harass the other may be held liable to the other for up to one month's rent plus $100.00, court costs and attorney's fees. A landlord may not remove or lock a door or window except for a bona fide repair. A landlord may not remove furniture or appliances furnished by the landlord except for a bona fide repair. A landlord may not intentionally prevent a tenant from entering the leased premises except by judicial process or unless the exclusion results from bona fide repairs, abandonment, or changing of locks

Exceptions

The homestead of a family is protected against a forced sale for the payment of all debts except a purchase money mortgage taxes past due on the property a court partition a refinancing loan a mechanic's or materialman's lien a Property Owner's Association (POA) assessment lien an owelty lien (an equity-dividing device used in divorce settlements) refinancing of a lien a home equity loan a reverse mortgage A Texas homestead is not secure from seizure for a debt owed to the federal government or from an encumbrance existing on the land prior to its dedication as a homestead.

Rent payments

The landlord can only refuse a cash rental payment if it is written in the lease. A landlord may charge late fees for failing to pay rent on time only if the following three conditions are met. the notice of the charge for the late fee is included in the written lease the fee is a reasonable estimate of uncertain damages from the late payment the rent remains unpaid for one full day after the due date

Which of the following circumstances does NOT constitute grounds for keeping all or a portion of a tenant's security deposit?

The landlord discovers "wear and tear" to the premises.

Under which of the following circumstances may a landlord lock a tenant out of the leased premises?

The landlord is making repairs.

Security devices

The landlord must equip the dwelling with specified security devices. The landlord must re-key locks at each tenant turnover within seven days after the new tenant moves in. Tenants must have the permission of the landlord to install new locks and must give a copy of the key to the landlord.

Lease

The landlord must provide a copy of the lease to the tenant within 3 business days of signing. Unless otherwise stated in the lease, a tenant may not assign, sublease, or novate the lease without the landlord's written consent. When a property is sold with a valid lease, the lease remains binding on the new owner. If the dwelling is sold, the new owner gets all security deposits.

Repairs

The landlord must repair anything that affects health and safety (including hot water heaters) no matter what the lease may provide. A reasonable time for making repairs is considered 7 days.

Sale procedure

The lender sends the demand to foreclose (Notice of Default) to the debtor, who must have at least 20 days to cure the default before notice of sale can be given. Written notice of the sale must be given at least 21 days before the sale date. Then the property is sold to the highest bidder at a public auction (Trustee's Sale) the sale is held between 10:00 AM and 4:00 PM on the first Tuesday of the month at the county courthouse in the county in which the land is located or at a specified location in close proximity to the courthouse the highest bidder receives a sheriff's deed or sheriff's certificate of sale if no one bids at the public auction, the property reverts to the foreclosing beneficiary (lender) proceeds from a foreclosure sale in excess of the mortgage indebtedness belong to the mortgagor

American with Disabilities Act (ADA)

The purpose of the ADA is to eliminate discrimination directed toward individuals with disabilities and allow them to enter the social and economic mainstream of society. This is accomplished by providing equal opportunities in employment, transportation, access to goods and services offered to both the public and private sector and communications. The ADA was not intended to cover housing and it specifically exempts "facilities that are covered under the Fair Housing Act". However, the ADA could be applied to facilities that operate a "place of public accommodation" such as the rental office in an apartment complex. The ADA mandates that public facilities must be accessible to persons with disabilities. Public accommodations must remove architectural barriers whenever readily achievable; make reasonable changes in policies, practices and procedures and provide auxiliary aids or services unless to do so would result in an undue burden.

Causes

The reasons for a loan acceleration and foreclosure include non-payment of principal and interest non-payment of taxes removal of improvements without lender's approval insurance coverage lapse waste (would include deferred maintenance that lowers value below what is owed) alienation without consent (if there is a due-on-sale clause)

Qualifications 3

There is no requirement to file anything of record to establish a homestead. There is a requirement to file an Application for Residential Homestead Exemption to take advantage of the potential reduction in property taxes. A person can still have homestead rights in land without filing for the homestead tax exemption. When a homestead tax exemption is filed with the appraisal district, the named property is automatically designated as the homestead unless a voluntary designation of another property is recorded in the county records.

Qualifications 2

To qualify for a general homestead tax exemption, the homeowner must own and live in the property as a principal residence on January 1 of the tax year. submit a homestead exemption application form to the appraisal district submit a copy of the homeowner's driver's license and vehicle registration receipt showing the same address as the property for which the exemption is requested.

Non-judicial

Trustees and mortgagees may be given the authority to hold a foreclosure auction without going to court. The loan document authorizes the lender to sell the property to recover the loan balance. The mortgage or deed of trust must have a power of sale clause. The power of sale clause pre-authorizes the sale of the property in the event of the borrowers default.

Descent

Upon the death of a spouse, the decedent's separate real and personal property passes to heirs by will or laws of descent. If there is no will (intestate), the community property estate of the deceased spouse normally passes to the surviving spouse if no child or other descendant of the deceased spouse survives, or all surviving children and descendants of the deceased spouse are also children or descendants of the surviving spouse If there is a child or other descendant of the deceased spouse who is not also the child or descendant of the surviving spouse, the surviving spouse and the child or descendant split the community estate 50/50.

Divorce

When a couple divorces, Texas law requires that their property be divided in a manner that is "just and right". This means that the division of property must be equitable. A court may be take into account many circumstances in determining what is equitable, including disparity of earning power, health, custody of children, education, and future employability. The court has no power to divide the separate property of the parties. For purposes of just and right division upon divorce, separate property of one spouse is treated as community property if it was not acquired in Texas during the marriage but would have been community property if it had been. This is called "quasi community property".

Zoning laws

Zoning laws and ordinances are set at a local (city or county) level. They classify land types and determine what kind of use and what kinds of improvements are allowed on them. Amendments are zoning changes for an entire area. They may cause a non-conforming use, which is a continuation of a present use that no longer complies with zoning. Variances allow owners to deviate from compliance with zoning in order to relieve economic hardship. Conditional use or special use permits allow a particular property to be used for a special purpose that is in the public's best interest.

Recording procedure.

note the date and time of filing assign a recording number copy the document into the public record (digital image) list the document in grantor and grantee indexes return the original document to the indicated party Buyers should always be advised to inspect a property for visible claims and actual notice, such as parties in possession or encroachments. They should likewise be advised to inspect public records for constructive notice of such things as liens and the current person on the title.

Deed in lieu of foreclosure

orrower from the indebtedness avoidance of the public notoriety of a foreclosure less damage to the borrower's credit reduction of time for the lender to take back the property reduction of cost for the lender lower risk that the borrower will damage the property for spite The disadvantage is that it does not wipe out secondary liens. The lender may not be willing to accept. If the property has junior liens, the lender takes title subject to these liens.

The primary purpose of the Deceptive Trade Practices Act is to

outlaw misleading statements made by parties to further personal interests

Which of the following would be considered separate property?

property acquired by either spouse from gifts during the marriage.