Month: May 2014

Foreclosing a “House of God”

The Star-Telegram recently reported that High Point Church, a non-denominational Christian church in Arlington, Texas, may be losing its property — 423,000 square feet of building space and acres of undeveloped land — to its lender. The article states that the church has defaulted on $31.5 million in loans and that its property has been posted for a June 3 foreclosure auction on the steps of the Tarrant County Courthouse. The pastor is quoted as saying that the church was “shocked” about the foreclosure proceedings; he says the church was expecting a rollover loan instead.

texas foreclosureLoans are often secured by collateral. Basically, foreclosure is a legal procedure in which the lender terminates the borrower’s interest in the collateral so that the lender may gain title to it and/or force a sale to satisfy the debt secured by the collateral. Texas recognizes both judicial and non-judicial foreclosures. A judicial foreclosure requires a lawsuit, the presentation of formal evidence, and a judgment from the court. A non-judicial foreclosure, in contrast, does not require a court’s involvement. In Texas, non-judicial foreclosures are also sometimes called “strict foreclosures,” although these terms may not actually be synonymous here or in other states.

Lenders dislike the negative publicity that may result from foreclosing property of religious institutions. However, if a borrower doesn’t pay as agreed, then a lender may have little choice but to foreclose in order to be made whole or cut its losses. Sometimes there are alternative arrangements that can be made that appease both the lender and the borrower. Let’s hope in this particular case that wisdom and prudence guide the actions of everyone involved.

In our In the News series, we use an article or topic that has been featured recently in the news as a potential learning opportunity.

Bye Bye Beach House?

Coastal Property Loss DisclosureIn a past life, I’m convinced, I was a sailor. There’s something extraordinarily enticing about the sea: the brisk wind, the smell of salt, the moist air, the screeches of the sea gulls, and, of course, the sense of adventure. For the past few years I’ve toyed with the idea of buying a modest beach house.

Purchasing beach property has risks not associated with inland property. Obvious ones include flooding, storm damage, and increased routine maintenance costs due to the weathering environment. There may also be less obvious risks.

Coastal real estate near a Texas Gulf Coast beach may become located on a public beach because of coastal erosion and storm events. That’s right. Coastal erosion or storms may render some private beach property public. In that case, the State of Texas may also sue you to remove your structure on that property. And you may have to pay for the removal.

With some exceptions, a person selling Texas coastal real estate must disclose these facts to a prospective purchaser. Prospective purchasers are admonished to determine the rate of shoreline erosion in the vicinity of the real estate, and seek the advice of appropriate professionals before consummating the purchase to determine the application of this law and the potential impact on the value of the property under consideration.

Would you buy real estate that you knew had a higher risk of economic loss? Would you pay a premium for that property? Living by the sea may seem ideal, but it may not always be a day at the beach. Do your homework.

In our Just for Fun posts, we underscore certain construction and real estate topics just for the fun of it.

Is a Building Permit Necessary? It’s Elementary, My Dear Watson

According to Sherlock Holmes, “There is nothing new under the sun. It has all been done before.”

In a prior post, we defined building permits. We also said that a person who wants to build or alter an improvement should consult the ordinances of the particular municipality in which the improvement is located to determine whether a building permit is required. But in some cases, Texas counties — not just cities and towns — may require building permits. Texas Building Permit

To determine if property is within an area in which a building permit is required, a contractor may interview the property owner, consult the appropriate appraisal district to verify the owner’s name and address, look up the property on an official governmental map, and communicate with the city’s and county’s permitting offices. Of course, this isn’t the only way. A contractor could, for example, consult with a real estate attorney, too, or instead.

Whether you’re an owner, designer, or a contractor trying to determine if a building permit is necessary, keep in mind that this question has been asked many times before by other people. It’s not a new question under the sun.

What happens if you were supposed to get a building permit before you began the work, but you didn’t? Stay tuned.

In our “Law 101″ posts, we define terms, phrases, or concepts with the goal of conveying core information in order to set the stage for more complex discussions.

Refusal to Refund My Security Deposit?!

The first time I met with a lawyer was while I was in college in Austin. I lived in an apartment with two of my cousins. Our receiptlease was ending. We told the property management company our forwarding address and asked when we might expect back our security deposit. “Never,” was the response. One benefit of attending UT at the time was that we had occasional, free access (yeah right, we paid for it in tuition costs) to a lawyer on staff at the university.

A security deposit is any advance of money that’s primarily intended to secure performance under a residential lease. It is not a rental application deposit or an advance payment of rent. A landlord generally can’t withhold any of part of a residential security deposit for normal wear and tear, but the landlord may deduct charges for which the tenant is otherwise responsible under the lease.

We scheduled a meeting with the property manager. We courteously told her that we believed that she was wrong. The reason she wanted to withhold our deposit was to cover items of normal wear and tear. We explained what the lawyer had told us. And we negotiated a refund of our security deposit.

Sometimes disagreements arise simply because parties don’t know or completely understand their legal obligations. Visiting with someone who knows the law can sometimes help.

In our “Law 101″ posts, we define terms, phrases, or concepts with the goal of conveying core information in order to set the stage for more complex discussions.