How to Fix Real Estate Problems with a Real Estate Attorney

By on February 2, 2022   /   Blog   /   Leave a comment
How to Fix Real Estate Problems with a Real Estate Attorney

Knowing how to fix real estate problems with the help of a real estate attorney is one of the most valuable assets to have today in commercial business. Commercial real estate is a multibillion-dollar industry, with hundreds of property deals going through every single day. While a good deal can be worth every penny, it is still prudent to enlist an experienced and reputable real estate attorney to assist with purchase contracts, lease agreements, disputes, titles, and more.

The Top 4 Most Common Real Estate Issues

Commercial real estate can combine multiple areas of complex law such as real estate, business, and finance law, making it necessary to posses a wide breadth of knowledge to navigate the top 4 most common real estate issues that generally require the assistance of a real estate attorney:

  1. Commercial lease agreements and disputes
  2. Construction agreements
  3. Eminent domain
  4. Title insurance or title exams

Do not let the fact that these issues are common underestimate their seriousness. Without proper legal counsel to advise in these situations, one or more parties could be at risk of having their rights unprotected and losing money.

Commercial Lease Agreements and Disputes

A commercial lease is typically entered into by two different parties, and how well a lease is crafted can significantly impact the lease dispute process. It is best to have an experienced attorney review a lease agreement prior to signing it to address any financial liabilities or potential loopholes before they become a problem.

Some of the most common commercial real estate issues for lease agreements and disputes include:

  • Expansion
  • Land use
  • Remodeling
  • Rentals
  • Rent increases
  • Subletting
  • Zoning

On average, a single commercial lease can be worth millions, making the need for solid lease agreements or well executed disputes a necessity in protecting a client’s investment.

Construction Agreements

Most construction agreements affect far more than a single construction company. Construction law generally affects multiple parties such as building owners, contractors, developers, and material suppliers. A reputable real estate attorney can help draw up or decipher construction agreements for clients as well as represent them should a dispute arise.

Additional areas in which an attorney can assist with construction agreements can include:

  • Abandonment claims
  • Construction litigation
  • Contracts
  • Delay claims
  • Defect litigation
  • Lien claims
  • Payment disputes

Having a real estate attorney’s expertise can help keep a landowner from absorbing exorbitant costs from commercial construction contracts.

Eminent Domain

As cities across the nation continue to rapidly expand power lines, roadways, and sewer lines, eminent domain (or the government’s ability to take private land for its own use if compensating the property owner) is alive and well.

Real estate attorneys can be invaluable in ensuring fairness of eminent domain issues such as:

  • Defining characteristics of the property including size, current use, accessibility, etc.
  • Establishing a fair market value for the property
  • Obtaining proper compensation for the property
  • Debating and determining if the property will indeed be used for public use
  • Challenging eminent domain if necessary

Title Insurance and Title Exams

It is important to note that title insurance and title exams are separate terms with different meanings within commercial real estate.

Title insurance is designed to help protect a buyer regarding purchasing issues and chain of title. Titles for commercial real estate properties are typically much more complex than those for residential, and most require the legal knowledge and expertise of a real estate attorney. Title insurance is an important part of the due diligence and closing processes of commercial real estate.

The purpose of a title exam is to search for any encumbrances on a property and to ensure it is truly ready for sale. Some examples of encumbrances against commercial real estate include:

  • Deed restrictions
  • Easements
  • Encroachments
  • Licenses
  • Liens

How to Fix Real Estate Problems with a Real Estate Attorney

Do not wonder how to fix real estate problems with a real estate attorney when you are already knee deep in negotiations for buying or selling a property. It is highly recommended to enlist legal counsel before ever beginning to negotiate the terms of a sale. Doing so can provide critical benefits to clients, such as:

Legal knowledge of commercial real estate.

Everything from contracts to zoning laws to due diligence can be infinitely more complicated for commercial real estate. It is crucial that an attorney be able to decipher the language and concepts in a legal document to ensure the client understands the verbiage more clearly, minus complicated legal speak.

Familiarity with local and federal commercial real estate law.

In order to close any open loopholes that could be damaging in the future, it is key to have legal counsel with an intimate understanding of both local and federal law as it relates to commercial real estate issues.

Negotiation experience.

Just because something is presented to a client in an unsigned contract does not mean it cannot be negotiated. It is recommended to have a qualified attorney review contracts or purchase agreements in full before signing so they can ensure that the document is in the client’s best interest.

Protection of your rights.

No matter the size of the company or the dollar signs on the price tag, commercial real estate deals can see a number of unexpected challenges in the form of structural concerns, environmental issues, and deals that fall through. An attorney knows how to best protect a client’s interest from contract negotiation all the way through post-closing situations.

Time savings.

Whether you are a Fortune 500 company or one that is slightly smaller, buying and selling property takes far more time than most realize. Finding the right property or buyer is only half of the equation when it comes to commercial real estate. The other half deals with research and due diligence that can ultimately yield more clarity and confidence about purchase agreements.

With the possible issues facing commercial properties, understanding how to fix real estate problems with the help of a real estate attorney ensures every important aspect has been considered, adding some valuable peace of mind to the process.

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Episode 201: Suicide and Fraudulent Conveyance

By on January 26, 2022   /   Blog   /   Leave a comment
Suicide and Fraudulent Conveyance

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Suicide is never an easy topic to discuss, especially as it relates to legal matters such as fraudulent conveyance. The taking of one’s own life is a decidedly tragic event that adversely impacts the deceased’s family, friends, and even community. In addition to the heartache of losing someone to suicide, those survived by the individual often do not realize that the legal consequences related to the act can go on long after.

Learning more about what a fraudulent transfer is and how it relates to the Uniform Fraudulent Transfer Act may help survivors better understand the legal processes that can follow a suicide.

Understanding Fraudulent Transfers

A fraudulent transfer happens when an individual that has money or property and is about to lose that property due to some sort of judgement or creditor then transfers said property to another party. This may be done so that if a judgment or creditor tries to collect from the transferor, there is no property left to collect on.

The law recognizes this act as unjust and generally allows a creditor to proceed against the recipient of a fraudulent transfer to recover one of two things:

  1. The property that was transferred
  2. Judgement for the value of the property

Uniform Fraudulent Transfer Act

As many other states do, the state of Texas follows the Uniform Fraudulent Transfer Act. This act sets forth the circumstances and establishes the rules to be followed when analyzing if a transfer of money or property is subject to it.

There are two prongs to the Uniform Fraudulent Transfer Act including:

  1. Actual Intent
  2. Constructive Fraud

Breaking Down Actual Intent as It Relates to the Uniform Fraudulent Transfer Act

For the actual intent prong of the act, if a transferor transfers property to another individual with the express intent to hinder, delay, or defraud the transferor’s creditors it is typically considered to be a fraudulent transfer.

Actual intent may be hard for a creditor to prove as the circumstances might or might not permit a jury or judge to determine that the transferor had such intent. Factors that can be taken into consideration in determining intent are:

  • A transfer was made to an insider or related party
  • The debtor or transferor retains possession or control of the property after the transfer
  • A transfer or obligation was concealed in what is viewed as a secret manner
  • An obligation by the transferor was incurred or the transferor had been sued or threatened with a lawsuit before a transfer was made
  • The transfer was substantially all of the debtor or transferor’s assets
  • The debtor or transferor removed or concealed assets
  • The amount of consideration received by the transferor was not of reasonable equivalent value
  • The transferor was insolvent or became insolvent as a result of the transfer

Constructive Fraud and the Uniform Fraudulent Transfer Act

In the event that a creditor cannot establish the actual intent prong of the act, the constructive fraud prong of the act comes into play. Of the two prongs, constructive fraud is usually easier to prove as all that is necessary is to show the following:

  • There was a transfer
  • The transfer was made at the time that the debtor or transferor was insolvent
  • The transfer was for less than an equivalent value in exchange for the transfer

Fraudulent Transfer Act and Suicide Case Study #1

With the knowledge of what a fraudulent transfer is and how the Fraudulent Transfer Act would come into play, it may be easier to understand how the unfortunate incident of a suicide might invoke the act.

The following case study may help the reader to make better sense of this connection, however, please be forewarned that the following is tragic and somewhat gruesome and may not be appropriate for all audiences.

In this example, a husband and wife are going through an intensely contentious divorce. Amidst the divorce, the husband returns to his marital home to gather some of his belongings. In doing so, he gets into a confrontation with the wife and violence ensues, ending with the husband shooting and killing his wife before turning the gun on himself in an act of suicide.

The husband had a long-standing relationship with a girlfriend. After the separation from his wife, he and his girlfriend opened a joint bank account that had a balance of approximately half of a million dollars at the time of his death. The husband did have some credit card debt and other small creditors and essentially his entire fortune consisted of the half a million dollars in the joint bank account with his girlfriend. That bank account was considered to be a joint tenancy with right of survivorship meaning that if the man died, his girlfriend and co-bank account holder would receive the money.

However, when the husband took his wife’s life, he became indebted to the wife’s estate for a wrongful death. Now, at that time, there had been no transfer yet as the money was still in the account the husband and girlfriend jointly controlled.

Yet, when the husband decided to take his own life, his interests in that bank account would have transferred to the girlfriend due to the survivorship nature of the account.

In this case, a lawsuit was quickly filed and the court froze the bank account with an injunction against the distribution of the money. At a later date, a compromise was eventually reached by splitting the money between the estate of the wife and the girlfriend.

In this specific example, it is fairly clear that the suicide was in fact a fraudulent conveyance.

Fraudulent Transfer Act and Suicide Case Study #2

As with the above, the following case study may not be appropriate for all readers. It should however help the reader to better understand the connection of the Fraudulent Transfer Act to suicide.

In this second case study, a man who admittedly had many mental problems transferred the entire contents of his bank account, which was one million dollars, to his sister on Wednesday. On Thursday, the sister discovers the funds and is confused, so she tries to get in touch with her brother. She is unable to reach him and since she lives in a different city than the brother, she cannot go immediately to check on him.

In the meantime, a neighbor goes to check on the brother. At the moment the neighbor knocks on the door, the brother had just completed writing his suicide note. After hearing the knocking, the brother shoots three bullets through the door injuring the neighbor. The brother then takes his own life with suicide.

The neighbor eventually sues the sister alleging she is the recipient of a fraudulent conveyance or transfer. The brother had no debts and still owned some property even after he transferred the money to his sister, making him decidedly not insolvent. Therefore, this lack of insolvency does not satisfy the constructive fraud prong of the Fraudulent Conveyance Act.

At the time the brother transferred the money, it preceded the actual injury to the neighbor. The transfer happened before the liability or intentional and negligent act which injured the neighbor occurred. Therefore, the neighbor tried to invoke the actual intent prong of the act to force the sister to return the one million dollars.

The invocation of the prong was not successful because the neighbor needed to prove the brother had the actual intent to occur debt. While there was sufficient evidence the brother planned to commit suicide when he made the monetary transfer to his sister, there was little evidence to suggest he intended to incur any other debt including the injury to the neighbor, which seemed to be more of a consequence of unfortunate timing.

In the end, the neighbor accepted a settlement for a relatively token amount of money, the case was resolved, and the sister managed to keep most of the money her brother transferred to her.

Suicide is a delicate subject that is seldom easy to discuss, but it does create real legal issues that can cause conflict between the recipient of a transfer and those who might try to collect a judgement or claim against the deceased party who made the transfer.

 

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Ep 103: When Should You Hire A Real Estate Attorney?

By on January 13, 2022   /   Uncategorized   /   Leave a comment

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When it comes to commercial or residential real estate, most people readily understand that a real estate agent’s services will be required, but in many cases it may also require those of a lawyer. When it comes to the basic building blocks of buying or selling a property as set forth by the Texas Real Estate Commission, agents are well positioned to care for clients. However, in the event that a unique circumstance should arise such as a dispute, title issue or easement, a real estate attorney can be an individual’s best bet.

Why People Need a Real Estate Attorney?

In many cases, a real estate agent will help a party look for property and communicate and negotiate an offer on that property. From there, on the buyer’s behalf, a title company will examine real property records to ensure the seller indeed does own the property and that there are no liens, judgments, or clouds to the title on the property lasting after the close of the transaction. A lender also normally becomes involved and will draft the appropriate documents.

With a realtor, title company and bank lined up, a real estate deal has most of the right players in place. Still, when what was thought to be a small, standard purchase develops a complication with the transaction or the base use of the property, a lawyer’s knowledge is needed to provide guidance for that real estate deal.

There are three main considerations of real estate that can account for a rather large percentage of real estate deals, including:

  1. Who is the owner? Who has title to the property? What rights do they have and what type of restrictions are there on those rights?
  2. Property use. Who uses the property? Is a tenant? Is it somebody who is in possession? Is it someone who has an easement in the property? Is it someone that has no authority to use it but is using it anyway and may have been using it for a long time and have acquired some rights by doing so?
  3. Are there mortgage liens? Are there tax liens? Are there judgment liens? What is it that would cloud the title and ultimately give someone else the right to foreclose upon the property by having a foreclosure sale?

 

The 7 Most Common Situations in Which a Real Estate Attorney Is Needed

The real estate industry is vast, and with it can come many issues that require the assistance of a knowledgeable attorney in the industry. The seven most common situations in which a real estate attorney is needed include:

  1. Title to real estate
  2. Borrowing of money
  3. Possession of property
  4. Border disputes
  5. Oil and gas issues
  6. Title/possession/ownership dispute
  7. Earnest money contract cases

Title to Real Estate

This area of real estate involves who owns the property. A title company can be instrumental in ensuring a buyer, lender, or borrower that is pledging a piece of property as collateral is indeed the right person signing the deed of trust and the note. It is critical to guarantee that the seller is the person who owns the property and has the ability to sell it. Unfortunately, this is not always as clear cut as one would think.

When a title company issues a title commitment or title report, it ensures that the title is claimed to the property in question and that the buyer is getting a good title and the lender is getting a good lien on the property. This is then generally followed by a list of exceptions that may concern city ordinances that could restrict the use of property. It may also include deed restrictions from homeowners’ associations. Sometimes it may be possible to find a lien or someone who has rights to a property because they had a lien on it or a fractional interest.

Without a lawyer to look at easement issues, there may be someone who buys a property who discovers an easement that keeps them from using the property the way they intended. In cases like these, navigating real estate title issues can be a challenge that requires a successful real estate attorney.

Borrowing Money

Real estate is pricey and is generally one of the most expensive things an individual will ever buy. Most people do not have enough money to buy real estate upfront, so then the property can be used as collateral to borrow money to purchase, improve upon, or build on the property.

As long as the property value is solid, the property can also be used to finance other things. This typically happens by a lender such as a bank or a mortgage company working together to determine a property’s value and then using a formula to establish what percentage of the value will be lent. From here, legal documents will be drafted, such as loan agreement, promissory note, deed of trust, etc.

In these documents, it is common for borrowers to make  promises about what they will do with the property and how they will make payments. This also typically includes an understanding about maintaining insurance and taxes as well as that the property can be foreclosed upon if payments are not made. Businesses may have additional requirements for loans.

A real estate attorney can be instrumental in reviewing and drafting paperwork as much of this will go well beyond the realm of general real estate but is still part of the transaction.

Possession of Property

Although tenants are expected to pay rent, sometimes they do not, and then demands are generally made of the tenant. If those demands are not met, they may eventually be evicted.

In many ways, the coronavirus pandemic put a spotlight on landlord and tenant issues related to possession of property issues. For example, even if a tenant is not forced to be evicted during an unprecedented event like a pandemic, landlords are still usually on the hook to pay the mortgage. This in turn strained families with rental houses or properties who had to then pay the mortgage without any help from their tenants.

While it may be possible in some standard cases to evict someone without the help of a lawyer, many find legal counsel necessary when it comes to the related court proceedings, filings, and notices.

Border Disputes

Border disputes are another area of real estate where an attorney’s help is welcome. The main issues in this particular area can be a dispute over something like determining who owns a fence or how to navigate properties with zero lot lines.

While most attorneys will advise against purchasing a property with a zero lot line because it can create a bevy of problems, if a party should find themselves in this exact situation, they will likely need a lawyer to help them successfully navigate it.

Oil and Gas Issues

Texas is an oil and gas state, so it is not uncommon to have issues with old pipeline easements that may or may not still be good. This can be an especially sensitive issue when it comes to properties as it is possible that a party that owns the surface of the ground is different from the party that owns the minerals below the surface.

In other words, if an individual owns several acres of land and has surface rights, they may have to allow people owning the mineral rights to be able to drill down and get oil or minerals.

Some good advice can be not to buy a property that someone can put a rig on and then drill for oil in your backyard. However, if this is a situation you are already currently in, finding help from a lawyer with real estate knowledge is essential.

Title, Possession, or Ownership Dispute

This type of dispute can be straightforward, but in other cases, it can be much more complex, such as situations with a trust or a recently passed property owner, an incapacitated owner, or heirs that are dealing (or not) with a will and probate.

These situations take quite a bit of legal work to definitively determine ownership, administrators, and work with lenders who want to foreclose upon the property. An experienced lawyer will know how to best streamline the process and have a title company to get the proper sign-offs on family agreements and court rulings.

Earnest Money Contract Cases

An earnest money contract is generally between a seller and a buyer for a property. The buyer will put down some earnest money and open up a title. The problem can come if both parties do not show up to closing because something has happened that caused one of them to change their mind.

Many people mistakenly consider an earnest money contract is a cocktail napkin type of agreement in that it is not serious. In reality, earnest money contracts are enforceable and can require an attorney to step in.

If one or more parties tries to break free of an earnest money contract, some in the industry may advise to simply release the property and sell it, allowing the buyer to move on to something else. However, in the case that a buyer wants the property and wants to enforce that earnest money contract, a lawyer’s assistance is needed. Although an agent or broker can assist with certain aspects of real estate, a dispute like this typically requires legal action and therefore the expertise of an attorney.

For more information about real estate law issues, consider going beyond the resources of a realtor to also include the proficiency of a high-quality real estate attorney.

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