Our Facebook posts contain generic discussions that are not intended as legal advice. Each situation is different. You should hire an attorney to discuss your specific situation.
Few things are more difficult and emotionally draining than picking up the pieces and resolving the legal issues left behind after a loved one has passed. We often hear from individuals who are simply trying to make sure that they and their siblings maintain and take ownership of “Mom and Dad’s” old home, and who are understandably overwhelmed in dealing with this process.
There are several options for how to handle the estate of a decedent, depending on the family situation (natural heirs), the property situation, and whether or not there was a Will. As you are likely aware—a full probate can be expensive! You should speak with a probate lawyer to determine your options so that you do not overpay for unnecessary legal services and court costs, while ensuring the path you choose will accomplish all of your probate-related goals.
For example, if the only asset of the estate is Texas real estate (no bank accounts, etc.), then a full probate of the Will may often be unnecessary. In such a scenario, a limited probate process called “Probate as Muniment of Title” can be used to transfer title of the Texas real estate to the beneficiaries named in the Will. This process is much quicker and less costly than a full probate, as it does not involve the appointment of an executor and an administration process after the Will has been admitted to probate by the court. In some situations when the beneficiaries named in the Will are the same as the decedent’s natural and statutory heirs (or in certain scenarios where there is no Will), it may be possible to bypass the probate process in the courts entirely with an even quicker and less costly process.
If however, there is any estate property other than Texas real estate (or if there is any non-mortgage debt of the Decedent, including Medicaid-related debt), a full probate of the Will—or an administration if there is no Will—may be required to properly pay estate debt to the creditors and transfer title of the remaining property to the beneficiaries. Even if a full probate would otherwise be required, in certain cases where the value of the estate falls below a certain threshold, a small estate proceeding may be available to transfer title to the natural and statutory heirs.
The costs for these options and services can vary dramatically from a couple hundred to several thousand depending on your specific needs and which type of probate-related process is necessary for your specific situation. If you find yourself in the unenviable position of responsibility for handling the affairs of a loved one after they have passed, then you would be doing yourself a favor by speaking with a probate lawyer to bring clarity to an otherwise convoluted process to the uninitiated. ... See MoreSee Less
The Mortgage “Due on Sale” Clause.
If you took out a mortgage loan to purchase your home, that mortgage almost certainly includes what is called a "due on sale clause". That provision likely says that your FULL loan amount becomes IMMEDIATELY due if you transfer any part of your home to someone else.
I often receive calls from clients asking to add a child, parent, fiancee, etc. to their home title. I also receive requests to sell a home "subject to" the existing mortgage. These are all likely technical violations of the due on sale clause.
So, before you change title to your mortgaged home, please discuss any unintended consequences with an attorney.
*The above is a generic discussion and is not intended as legal advice. Each situation is different. You should hire an attorney to discuss your specific situation. ... See MoreSee Less
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Meet Scott Hively, with our firm. Scott is involved in all of our practice areas, but he generally focuses on probates and estate planning, Please call Scott at 713-952-0104 to address your probate and/or estate planning needs. ... See MoreSee Less
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Beautiful day to be out at the St. Jude’s Golf Classic. Thanks again, players Adam, JT, Walt, and Casey. ... See MoreSee Less
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Corporate FormalitiesWhen you organized your business, you likely chose to do so using a corporate, limited liability company, or limited partnership structure. You did this in an effort to insulate your personal assets from the liabilities of your company. Simply forming your company may not be enough to protect your assets. It is imperative that you undertake certain “corporate formalities” in order to ensure that your company is indeed treated “separately”. Some of those formalities include:Holding an annual meeting; Keeping records of those meetings (e.g. company minutes); and Maintaining a “company book”.You can focus on operating your business, and let our office host your annual meeting, record your annual minutes, and maintain your “company book”. Please contact us to schedule your annual meeting. If you are a lender or title company, please suggest that your clients contact us to discuss maintaining their company records. ... See MoreSee Less
The Importance of Filing Your Texas Franchise Tax ReturnWhen you organized your business, you likely chose to do so using a corporate, limited liability company, or limited partnership form. You did this in an effort to insulate your personal assets from the assets of your company. Let’s say an employee of your company is involved in an accident in which the employee is deemed “negligent” (ideally, your company would have insurance covering such an accident). A lawsuit by any injured parties would be against your company, rather than you individually. As I have mentioned in prior newsletters, it is imperative that you undertake certain “corporate formalities” in order to ensure that your company is indeed treated “separately”.One such formality is the filing of your annual Texas franchise tax return (even when no tax is due). A failure to file that return on an annual basis will cause the State of Texas to revoke your corporate privileges, resulting in your company being synonymous with you individually. ... See MoreSee Less
Rights of Third Parties to Assets Purchased by Your CompanyWhen your business purchases assets, or when you purchase a business, you likely assume that the assets are being purchased "free and clear", but that is not always the case. A search of UCC filings with the Secretary of State and the applicable county real property records can likely rule out bank liens. However, litigation claimants, governmental agencies (e.g. the State Comptroller with regard to unpaid Sales Taxes) and other potential third parties make up a secondary pool of parties with potential rights in purchased assets. You can often have your seller provide warranties and representations relating to any such claims and hire companies in the business of performing detailed searches to rule out such claims. We always recommend using competent legal counsel in order to draft such warranties and representations and to review such search results. ... See MoreSee Less
Ground LeasesWhat is a ground lease? Under a typical ground lease, a landlord owns a parcel of raw land, which it leases to a tenant for an extended period of time (e.g. 30 years, 99 years, etc.). The tenant generally obtains its own financing (either from a third party or the landlord) to construct improvements (e.g. a building) on the property, and the title to those improvements remain with the tenant, rather than becoming part of the real estate. At the end of the term, the improvements become part of the real estate and belong to the landlord.Why would a property owner choose a ground lease? In an economic environment where land prices have fallen, a ground lease could allow a landowner to delay the sale of the land until a profit (or a larger profit) can be realized from a sale. In other words, the property owner could lease the property now, and sell it later. Why would a tenant choose a ground lease? Under a ground lease, the tenant does not incur property acquisition costs. In other words, a loan obtained in constructing its building would not need to include the cost of acquiring the property. Also, a tenant in a manufacturing business may only need the use of the property for a finite period of time and may have no desire to make an investment in real estate.Whether you are a property owner, prospective tenant or lender, a ground lease can be a complicated endeavor, requiring the advice and drafting skill of sophisticated business attorneys in order to address your specific needs. ... See MoreSee Less
Operating Expense Caps in Commercial LeasesIf your business leases space as a tenant in a shopping center, office building or industrial warehouse, the landlord's costs of operating the center, building or warehouse are likely passed through to your company. In other words, you probably pay both base rent and operating expenses. The operating expenses include costs that cannot be controlled by the landlord, such as taxes and insurance, and costs that can be controlled by the landlord, such as the cost of the landlord's employees. Oftentimes tenants, especially tenants that are represented by an attorney, negotiate an operating expense cap, in which case, the increases in operating expenses under the lease would be capped at, for example, 10% per year. Whether you are a landlord or a tenant, the negotiation of an operating expense cap can be extremely complex, and we highly recommend the use of sophisticated counsel in connection therewith. There are many working parts in a well-drafted expense cap equation. For example,1. The landlord cannot practically agree to place a cap on expenses that are wholly outside of its control, such as taxes and insurance. This often results in application of the agreed cap to "controllable" expenses only. It is imperative that the scope of the term "controllable" is clearly established in the lease.2. Without well-thought-out language, the mathematics underlying the cap is often unclear. For example, assuming operating expenses of $1,000 in year 1, what result does a cap of 10% per year have in year 3 - $1,200 (a $100 increase each year) or $1,210 (the $1,100 cap of year 2 times 10%)? This will matter more in years 5, 6, etc.3. The amount of the cap can typically range from 3% to 15%, depending on the landlord, the local market, the type of lease, etc. Place your trust in counsel having experience with those factors.4. The lease often contains a "gross-up" provision, which allows the landlord to increase the operating expenses to a hypothetical amount that would have been incurred by the landlord assuming full occupancy. While this is a legitimate requirement by the landlord, there are pitfalls to the tenant if such a provision is not drafted properly.These issues are very important, but they are complex. Focus your energy on your particular line of business and let us handle these details, as this is our line of business. ... See MoreSee Less
The Series Limited Liability CompanyAs an entrepreneur, multiple business owner or real estate investor, you probably own several investments, each through a different limited liability company (LLC), in an attempt to limit your liability with respect to each business or property. For each LLC, you likely file a separate form 1065 with the IRS in April and business tax return with the State of Texas in May, and you have likely spent significant funds toward formation costs for each LLC. With numerous LLC's, this can be a paperwork nightmare and quite expensive.A series LLC is a new creation of the Texas legislature (as well as the legislatures of a handful of other states), that is designed to address these issues. A series LLC is designed as a single umbrella entity, which is organized in units that each are separately accountable, housing their own level of liability protection, financial structure, managers and members. For example, if you own a shopping center, a storage rental property, a construction company, and a cleaning service company, the series LLC is designed so that you can own all of those businesses through the same LLC, with the shopping center being categorized as Series A, the storage rental property being categorized as Series B, etc. If someone is injured on the job in connection with your construction company (Series C), in theory, that injured party would not be able to pursue the assets or cash flow of the cleaning service business (Series D), for example.On the other hand, if you are doing business with a series LLC, it is imperative that you understand that only the specific applicable series (e.g. series B) is on the hook for the obligations under your respective contract. A potential solution is to require the LLC as a whole (or some other specific series) guaranty those obligations in order to improve your likelihood of having sufficient recourse in the event the business with whom you are under contract defaults.The series LLC is a new legal creation, and the law surrounding it is somewhat unsettled and fluid, but it may soon become a very popular way of organizing businesses in Texas. If you wish to form a series LLC or have concerns in doing business with one, please retain competent legal counsel to assist you with your legal concerns. ... See MoreSee Less
The SNDAA Subordination, Non-Disturbance and Attornment Agreement (commonly referred to as an SNDA) is a somewhat infrequently used, but highly recommended, arrangement among a tenant, a landlord and a lender. It is intended to provide some protection to both the tenant and the landlord’s lender. The provisions of an SNDA usually take effect upon a default by the landlord under its loan and mortgage and generally provides that (i) the tenant will subordinate its lease to the mortgage, (ii) the lender will not disturb the tenant if it does foreclose on the landlord’s property, and (iii) the tenant will attorn to the lender (ie. acknowledge its relationship with the lender as its new landlord). <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /><o:p> </o:p>As a tenant, whether you lease commercial, industrial or retail space, an SNDA could be a great way for you to hedge any risk relating to your landlord’s financial failure. Without the protection of an SNDA, after any foreclosure by your landlord’s mortgage holder, you may find yourself looking for new space, as the landlord’s mortgage holder is probably not obligated to uphold your lease. A properly drafted SNDA will require the landlord’s mortgage holder to become the landlord under your lease.<o:p></o:p> <o:p> </o:p>As a landlord, a properly drafted SNDA will have little or no consequence to you. The concern for the landlord with respect to an SNDA is over-estimating its ability to have its lender actually agree to give an SNDA to any given tenant. It is likely that your loan documents do not require your lender to provide an SNDA, so a landlord should be careful in making a promise to provide an SNDA to its tenant – perhaps better options are obtaining the SNDA prior to lease execution or promising only to make an attempt to obtain an SNDA from the lender.<o:p></o:p> <o:p> </o:p>As a lender, agreeing to an SNDA necessitates an understanding and degree of comfort with the lease itself (as the lender may inherit the obligations of the landlord upon a foreclosure).<o:p></o:p> <o:p> </o:p>With the recent increase in foreclosures, the SNDA could be an important document for your business, whether you are a tenant, a landlord or a lender. We strongly suggest that you engage competent legal counsel to negotiate and/or prepare that document. ... See MoreSee Less