Archives for posts with tag: Texas Property Code

It should be noted that Texas history is filled with citizens from other states and countries moving to Texas to escape debt and not so friendly debt collection laws, including in some instances, debtor’s prison.  For example, William B. Travis avoided arrest in Alabama for unpaid debts by moving to Texas.

As a result, the early Texans were not so fond of government interference in their private matters, including debt-collection.  That legacy still exists in Texas today.  Obtaining a judgment against a citizen of Texas may be one thing.  But collecting it is certainly another.

Chapters 41 and 42 of the Texas Property Code set forth certain property classifications which are “exempt” from execution by a judgment creditor.  Execution is the process of forcefully taking the property of a debtor, selling it, and paying the proceeds to a judgment creditor.  If the property is exempt, it may not be taken to satisfy a judgment debt.

Chapter 41 of the Texas Property Code deals with exempt real property.  Real property includes any permanent improvements and fixtures located on land.  Except for certain permitted types of liens and removables, a “homestead” and one or more lots used for a place of burial are exempt from seizure for the claims of a judgment creditor.

In order to qualify as a homestead, the real property (and improvements) must be categorized as either “urban” or “rural”.  If a property is “urban”, then the homestead exemption is limited to 10 acres.  If a property is “rural”, then for a single adult person the  homestead exemption is limited to 100 acres, and for a family the exemption is  limited to 200 acres.

A property is considered “rural” if it is not “urban”.  A property is considered “urban” if the property is located within the limits of a municipality or the extraterritorial jurisdiction of a municipality or a platted subdivision; and is served by policy protection, paid or volunteer fire protection, and at least 3 of the following services provided by a municipality or under contract to a municipality: (a) electric, (b) natural gas, (c) sewer, (d) storm sewer, and (e) water.

The proceeds from the sale of a homestead continue to be exempt for a period of 6 months following the date of sale.

Chapter 42 of the Texas Property Code addresses exempt personal property.  Personal property includes moveable property which is not real property.  Certain amounts and types of personal property are exempt from garnishment, attachment, execution, or other seizure.  The amount is limited to $100,000.00 of the combined fair market value of the personal property of a family.  For a single adult, the exemption amount is limited to $50,000.00.

The following are types of personal property that are exempt so long as the combined value does not exceed the limitations set forth above:

  1.  home furnishings, including family heirlooms;
  2.  provisions for consumption;
  3. farming or ranching vehicles and implements;
  4. tools, equipment, books, and apparatus, including boats and motor           vehicles  used in a trade or profession;
  5. wearing apparel;
  6. jewelry not exceeding 25% of the aggregate limits set forth above;
  7. two firearms;
  8. athletic and sporting equipment, including bicycles;
  9. a two-wheeled, three-wheeled, or four-wheeled motor vehicle for each     member of a family or single adult who holds a driver’s license or who     does not hold a driver’s license but who relies on another person to           operate the vehicle for the benefit of the nonlicensed person;
  10. the following animals and forage on hand for their consumption:
    1.  horses, mules, or donkeys and a saddle, blanket, and bridle for                  each;
    2. 12 head of cattle;
    3. 60 head of other types of livestock; and
    4. 120 fowl; and

k. household pets.

Unpaid commission for personal services not exceeding 25% of the limitations set forth above are also exempt from seizure.

The following are the types of personal property that are exempt and their combined value is not included in the limitations discussed above:

  1. current wages for personal services (except for court-ordered child support payments);
  2. professionally  prescribed health aids of a debtor or a dependent of a debtor.
  3. alimony, support, or separate maintenance received or to be received by the debtor for the support of the debtor or a dependent of a debtor; and
  4. bible or other religious book containing sacred writings (excludes a landlord exercising a contractual or statutory right to seize property after a tenant’s breach of a lease or abandonment of the leased premises).

Additionally, certain savings and retirement plans and college savings plans are also exempted from seizure.

Image With the economy beginning to pick up, new housing starts and sales of existing homes seem to be on the upswing as well.  It is important to know what duties the seller has in disclosing the physical condition of a home, and to what extent a buyer may rely upon such disclosures in purchasing real property.  Depending on the type of property being sold, commercial, residential, farm & ranch, unimproved, etc…., the required disclosures vary to some extent.  This article will solely focus on the required disclosures involved in the sale of residential real estate.

“Residential real estate” is defined as a single dwelling unit of residential real property located in Texas.  Section 5.008 of the Texas Property Code governs a seller’s duty to disclose the condition of residential real estate.  You may review the promulgated disclosure form on the Contract Forms tab of the Texas Real Estate Commissioner’s website found at http://www.trec.state.tx.us.

The disclosures required by Section 5.008, include (1) the presence and condition of equipment, fixtures and improvements; (2) the presence or absence of working smoke detectors; (3) defects in walls, foundations, plumbing, electrical, or other major components of the property, including “structural” components; (4) potential problems with termite damage, flooding, aluminum wiring, asbestos, or lead-based paint; (5) whether any item, equipment, or system is in need of repair; and (6) other items affecting the property such as alterations or repairs made without permits or non-compliance with codes, deed restrictions, common areas, and lawsuits.

For “lawsuits”, Section 5.008 only requires the disclosure of “pending” lawsuits at the time the disclosure is made, and does not require disclosure of previous suits which have been dismissed, settled, or completed through final judgment.

Disclosure of “structural” repairs includes any repairs performed to the load-bearing portion of a residence, and includes the foundation, walls, and roof. Repairs to cabinets, sinks, bathroom fixtures, and drywall not caused by a failure in the structural portion of the residence are not required to be disclosed as “structural” repairs.  Other areas of Section 5.008 may require the disclosure of repairs for those items.

A seller is not required to disclose to a potential buyer any deaths on the property that are unrelated to a physical condition associated with the property, or AIDS or HIV-related health problems of previous occupants.

The seller’s disclosure notice must be completed to the best of the seller’s knowledge and belief as of the date of completion and signature.  If there are items, components, or repairs which are not known by the seller on that date and time, the seller must indicate that fact.  There is no legal obligation of a seller to conduct an investigation into matters of which the seller has no knowledge nor any continuing obligation to disclose matters that are later discovered.  Also, a seller’s disclosure notice is not a warranty or guarantee by the seller of the physical condition of the property or dwelling.

However, particular attention should be paid to the form of the disclosure notice being used.  Some residential real estate sales contracts promulgated by real estate trade associations may include disclosures which go beyond those required by Section 5.008.  It is important to read each form of disclosure closely and make sure that each response is true and correct at the time and date such is being made.  Although not required by law, supporting documentation of any disclosed defect or repair may assist the seller in later defending against allegations of misrepresentation or deceptive trade practices.

Also, unless the real estate agent or broker has actual knowledge of a misrepresentation contained in the seller’s disclosure notice and fails to bring such to the attention of the buyer or the buyer’s agent, a seller’s real estate agent or broker is not legally responsible for any misrepresentations made by the seller in its disclosure notice.

Certain types of residential real estate sales transactions are exempted from providing a disclosure notice.  These include (1) court ordered sales; (2) transfers by a bankruptcy trustee; (3) deeds in lieu of foreclosure; (4) judicial and non-judicial foreclosure sales; (5) sales by a fiduciary or administrator of a decedent’s estate, guardianship, conservatorship, or trust; (6) transfers between co-owners; (7) transfers to a spouse or heir; (8) transfers incident to a divorce; (9) transfers to or from a governmental entity; (10) new residences which have not been previously occupied; and (11) where the value of the dwelling does not exceed five percent of the value of the property.

Finally, where a seller fails to provide a disclosure notice to a buyer, the buyer’s sole remedy is to terminate the contract for any reason within seven days from buyer’s receipt of the notice.

R. Scott Alagood is board certified by the Texas Board of Legal Specialization in both Commercial and Residential Real Estate Law and may be reached at alagood@dentonlaw.com or www.dentonlaw.com.

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