TBE--Prop (Property) Flashcards Preview

Texas Bar Exam > TBE--Prop (Property) > Flashcards

Flashcards in TBE--Prop (Property) Deck (34)
Loading flashcards...
1
Q

02/14 #9:
Tom is a single man and currently rents an apartment in Dallas. Texas. Tom’s grandmother, Halah, recently died. Halah’s will left three different parcels of improved property to Tom:

Parcel One:
Halah’s former home, which is located within the City of Dallas and has been in Halah’s family for over I 00 years. This home is comprised of two acres of improved land.

Parcel Two:
Halah’s former ranch retreat consisting of 200 acres of improved land in rural Wise County. Halah won this ranch retreat in a card game in 2010. It was conveyed to Halah by a quitclaim deed.

Parcel Three: Halah’s rural rental property, consisting of 90 acres of land and a farm house, rented to Farmer Brown on a month-to-month lease. This parcel was deeded to
Halah, in the form of a special warranty deed, by her father in 1968, who had received it by quitclaim deed in settlement of a debt in 1945. No title claim has since been made on this parcel.

Assume that the highest quality deed that may be given is a general warranty deed and that the lowest quality deed that may be given is a quitclaim deed.

A

First and foremost, under Texas Law, you can only claim one Homestead Exemption, so if Tom has an option, he can only claim one. Tom could claim a homestead exemption for the house located in
the city of Dallas. Under Texas law, an urban homestead can comprise of 10 acres and can be used as a residence or a place of business for the individual claiming the homestead exemption. Here the home is
only 2 acres and is within the city of Dallas so it fits under the urban homestead exemption, and Tom can use it as a residence or place of business. The issue that arises is we don’t know how Halah’s family got the house. The facts indicate that it has been in the family for over 100 years, so the title probably doesn’t suffer from any defects or there would’ve been a challenge by now. Also, is so, the family has been in possession for 100 so an argument for adverse possession would come into play.

Under Texas law, for rural homestead exemptions, the home can be used for residential purposes and is 200 acres for family/100 acres for single person. Here the ranch retreat wouldn’t really qualify without
some changes. It is rural because it is in the country but Tom could only claim 100 acres. Also it couldn’t be considered a “ranch retreat” it would have to be for his personal use. Here the Rural Rental property could fall under the rural exemption 90 acres, but Tom couldn’t rent it out to Farmer Brown. Tom would have to end that lease and use the property as his residence.

In conclusion, Tom could opt to claim the urban exemption for the house in Dallas or the Rural Exemption for the rural rental house, if he gave Farmer Brown 30 day notice that he needed to move out. His best
option appears to be Dallas because he won’t have to make any changes to the property or remove any tenants.

2
Q

02/14 #9:
Tom is a single man and currently rents an apartment in Dallas. Texas. Tom’s grandmother, Halah, recently died. Halah’s will left three different parcels of improved property to Tom:

Parcel One:
Halah’s former home, which is located within the City of Dallas and has been in Halah’s family for over I 00 years. This home is comprised of two acres of improved land.

Parcel Two:
Halah’s former ranch retreat consisting of 200 acres of improved land in rural Wise County. Halah won this ranch retreat in a card game in 2010. It was conveyed to Halah by a quitclaim deed.

Parcel Three: Halah’s rural rental property, consisting of 90 acres of land and a farm house, rented to Farmer Brown on a month-to-month lease. This parcel was deeded to
Halah, in the form of a special warranty deed, by her father in 1968, who had received it by quitclaim deed in settlement of a debt in 1945. No title claim has since been made on this parcel.

Taking into account the brief descriptions given, what is the highest quality of deed that the Executor of Halah ‘s Estate may use to convey:

a. Parcel One to Tom? Explain fully.
b. Parcel Two to Tom? Explain fully.
c. Parcel Three to Tom’? Explain fully.

A

(a) Parcel appears that it could be conveyed as a general warranty deed because, as mentioned above, it has been in the family for 100 years. The facts do not indicate anyone has contested it and if anyone did contest it, tom would have an adverse possession claim that he would then get adjudicated and he would have a general warranty deed.

(b) Parcel B can only be conveyed as a quit claim deed at this time. Halah won it at a card game as a quit claim deed and she would only be able to convey what she owns, by Texas Law, which is a quit claim deed, it has only been 4 years so it is probably not ripe for and verse possession claim for anything further. Though the Executor or Tom could try to do a title search to see if the grantor to Halah had a
superior interest to convey.

(c) Parcel three could be conveyed as a General warranty deed if after research was done it was found that the encumbrances that once made it a special warranty deed were no gone as previously mentioned usually a grantor can only convey the interest they have, however if encumbrances or conditions on a
special warranty deed are removed, it could become a general warranty deed.

3
Q

07/13 #5:
Jack planned to attend law school in Texas. Without seeing it, Jack leased an apartment in Texas from Landlord. Jack signed a one (I) year lease with Landlord and wired a security deposit to Landlord.

When Jack arrived in Texas to begin law school, he briefly met with Landlord to take possession of the apartment. Jack found the apartment to be in a great location but not habitable due to a leaky ceiling, two (2)
broken windows (both lacking safety latches as well), a broken entry door, a family of rats living in the apartment and a roach infested kitchen. Jack refused to move in and sent Landlord a detailed written notice of termination, listing the foregoing conditions and demanding an immediate return of his security deposit.

Jack found a new apartment and quickly moved in. Jack promptly went to see Landlord to again request a refund of the security deposit. Jack gave Landlord his forwarding address. Landlord agreed to release Jack from the lease, but refused to return the security deposit.

One of Jack’s law school classmates convinced Jack that he should sue Landlord to recover the security deposit. Jack then learned that Landlord had completely repaired, changed the lock and relet the apartment.

Did Landlord have a duty to Jack to repair the apartment? Explain fully.

A

Landlord did not have a duty to repair the apartment.

The issue is whether Landlord had a duty to repair, even though Jack assented to the lease without seeing it first.

Generally, a tenant is responsible for making repairs to the leased property, but the Landlord has the duty to provide tenant with a habitable premises. The leaky ceiling, broken windows, broken door, rats, and roaches made the apartment uninhabitable. In Texas, a tenant has the right to breach a lease under conditions that make living unsafe, or are a danger to the tenant’s health.

Here, Landlord breached the implied covenant of habitability which provided Jack with two alternatives. Upon realizing that the apartment was uninhabitable, Jack had the right to either fix the problems himself and deduct the costs of remedying the problems from the rent, or terminate the lease. Jack chose to terminate the lease, which relieved Landlord of the duty to repair. Because Jack terminated the lease immediately upon seeing the apartment was uninhabitable; Landlord no longer had a duty to repair the premises.

4
Q

07/13 #5:
Jack planned to attend law school in Texas. Without seeing it, Jack leased an apartment in Texas from Landlord. Jack signed a one (I) year lease with Landlord and wired a security deposit to Landlord.

When Jack arrived in Texas to begin law school, he briefly met with Landlord to take possession of the apartment. Jack found the apartment to be in a great location but not habitable due to a leaky ceiling, two (2)
broken windows (both lacking safety latches as well), a broken entry door, a family of rats living in the apartment and a roach infested kitchen. Jack refused to move in and sent Landlord a detailed written notice of termination, listing the foregoing conditions and demanding an immediate return of his security deposit.

Jack found a new apartment and quickly moved in. Jack promptly went to see Landlord to again request a refund of the security deposit. Jack gave Landlord his forwarding address. Landlord agreed to release Jack from the lease, but refused to return the security deposit.

One of Jack’s law school classmates convinced Jack that he should sue Landlord to recover the security deposit. Jack then learned that Landlord had completely repaired, changed the lock and relet the apartment.

Was Landlord required to return Jack’s security deposit, and, if so, under what time frame and conditions? Explain fully.

A

Yes, landlord was required to return Jack’s security deposit immediately upon the termination of the lease by Jack.

The issue is whether Jack’s termination of the lease operated as a forfeiture of the security
deposit.

In Texas, a security deposit on a leased premises acts as a reservation of the lease and as security for any damages caused to the property by the tenant.

Because Jack terminated the lease immediately, Landlord had no further right to the deposit as there was no purpose for the security.

5
Q

07/13 #5:
Jack planned to attend law school in Texas. Without seeing it, Jack leased an apartment in Texas from Landlord. Jack signed a one (I) year lease with Landlord and wired a security deposit to Landlord.

When Jack arrived in Texas to begin law school, he briefly met with Landlord to take possession of the apartment. Jack found the apartment to be in a great location but not habitable due to a leaky ceiling, two (2)
broken windows (both lacking safety latches as well), a broken entry door, a family of rats living in the apartment and a roach infested kitchen. Jack refused to move in and sent Landlord a detailed written notice of termination, listing the foregoing conditions and demanding an immediate return of his security deposit.

Jack found a new apartment and quickly moved in. Jack promptly went to see Landlord to again request a refund of the security deposit. Jack gave Landlord his forwarding address. Landlord agreed to release Jack from the lease, but refused to return the security deposit.

One of Jack’s law school classmates convinced Jack that he should sue Landlord to recover the security deposit. Jack then learned that Landlord had completely repaired, changed the lock and relet the apartment.

Did Landlord have the right to change the lock on the apartment? Explain fully.

A

Yes, Landlord had the right to change the lock on the apartment.

The issue is whether Jack had any interest in the apartment that was violated by the change of the locks.

Under the Texas Property Code, a Landlord accepts surrender of a property when he releases a tenant from a lease and takes back possession of the property and relets it to a subsequent tenant.

Because Jack terminated the lease, he no longer had an interest in the apartment, and had given up his rights to the apartment. Therefore, the act of changing the locks did not violate any rights Jack had.

6
Q

02/13 #2:
Ranger Inc. obtained a loan from Bank to purchase 500 acres of land located partially in Bexar County, Texas, and partially in Coma! County, Texas (collectively, the “ Property”). Ranger Inc. executed, and Bank properly recorded, a first lien deed of trust on the Property in both counties. The loan terms provided for monthly repayment of principal plus interest, along with other standard commercial loan terms.

Ranger Inc. subsequently defaulted on its loan to Bank and stopped making its monthly payments. Bank informed Ranger Inc. that it was accelerating the maturity of Ranger Inc.’s loan and opting to sell the Property under the power of sale conferred by the deed of trust. On December 23rd, Bank sent Ranger Inc., via certified mail, a “Notice of Trustee’s Sale” with the following information:

A public sale at auction of the Property will be held on Monday, January 1Oth, at 8:00a.m. at the Bank’s home office in Travis County, Texas.

The Bank posted its “Notice of Trustee’s Sale” solely at

(i) a fire station in Bexar County nearest the Property and
(ii) the courthouse door of the Bexar County Courthouse.

The Bexar County Commissioner’s
Court had previously designated the south steps of the Bexar County Courthouse as the place where the trustee’s sales are to take place. The Comal County Commissioner’s Court had previously designated the south steps of the Comal County Courthouse as the place where the trustee’s sales are to take place.

On January lOth at 8:00a.m., the Bank held a public sale of the Property at the Bank’s home office in Travis County, Texas and sold the Property to Jack for an amount that was $500,000 less than what was owed to the Bank by Ranger Inc. The Trustee gave to Jack a “Trustee’s Deed” conveying the Property to Jack.

Was the “Notice of Trustee’s Sale” the Bank sent to Ranger Inc. valid? Explain fully.

A

A notice of foreclosure must follow statutory guidelines. Specifically, the notice must reflect the appropriate time, place, and manner of sale with specificity in order to comply with due process. Under the applicable statute, foreclosure sales must take place on the first Tuesday of every month between 10:00 a.m. and 4:00 p.m. at a place designated by the local commissioners in the county. A foreclosure is proper in the county where the real property is located.

7
Q

02/13 #2:
Ranger Inc. obtained a loan from Bank to purchase 500 acres of land located partially in Bexar County, Texas, and partially in Coma! County, Texas (collectively, the “ Property”). Ranger Inc. executed, and Bank properly recorded, a first lien deed of trust on the Property in both counties. The loan terms provided for monthly repayment of principal plus interest, along with other standard commercial loan terms.

Ranger Inc. subsequently defaulted on its loan to Bank and stopped making its monthly payments. Bank informed Ranger Inc. that it was accelerating the maturity of Ranger Inc.’s loan and opting to sell the Property under the power of sale conferred by the deed of trust. On December 23rd, Bank sent Ranger Inc., via certified mail, a “Notice of Trustee’s Sale” with the following information:

A public sale at auction of the Property will be held on Monday, January 1Oth, at 8:00a.m. at the Bank’s home office in Travis County, Texas.

The Bank posted its “Notice of Trustee’s Sale” solely at

(i) a fire station in Bexar County nearest the Property and
(ii) the courthouse door of the Bexar County Courthouse.

The Bexar County Commissioner’s
Court had previously designated the south steps of the Bexar County Courthouse as the place where the trustee’s sales are to take place. The Comal County Commissioner’s Court had previously designated the south steps of the Comal County Courthouse as the place where the trustee’s sales are to take place.

On January lOth at 8:00a.m., the Bank held a public sale of the Property at the Bank’s home office in Travis County, Texas and sold the Property to Jack for an amount that was $500,000 less than what was owed to the Bank by Ranger Inc. The Trustee gave to Jack a “Trustee’s Deed” conveying the Property to Jack.

Did the Bank properly post its “Notice of Trustee’s Sale”? Explain fully.

A

Notice of Trustee’s Sale was not properly posted. The posting of the notice was invalid for several reasons. At issue here is what is required to constitute properly posted notice in a foreclosure sale in Texas. Texas property law requires that the foreclosing party give notice publicly by posting the properly written notice (as described above) at the county courthouse in the county in which the property is located (if it is located in more than one county, then notice must be posted at each county court house in which part of the property is situated). Additionally, notice is to be given to each creditor who has an interest in the property (such as lien holders, etc.).

8
Q

02/13 #2:
Ranger Inc. obtained a loan from Bank to purchase 500 acres of land located partially in Bexar County, Texas, and partially in Coma! County, Texas (collectively, the “ Property”). Ranger Inc. executed, and Bank properly recorded, a first lien deed of trust on the Property in both counties. The loan terms provided for monthly repayment of principal plus interest, along with other standard commercial loan terms.

Ranger Inc. subsequently defaulted on its loan to Bank and stopped making its monthly payments. Bank informed Ranger Inc. that it was accelerating the maturity of Ranger Inc.’s loan and opting to sell the Property under the power of sale conferred by the deed of trust. On December 23rd, Bank sent Ranger Inc., via certified mail, a “Notice of Trustee’s Sale” with the following information:

A public sale at auction of the Property will be held on Monday, January 1Oth, at 8:00a.m. at the Bank’s home office in Travis County, Texas.

The Bank posted its “Notice of Trustee’s Sale” solely at

(i) a fire station in Bexar County nearest the Property and
(ii) the courthouse door of the Bexar County Courthouse.

The Bexar County Commissioner’s
Court had previously designated the south steps of the Bexar County Courthouse as the place where the trustee’s sales are to take place. The Comal County Commissioner’s Court had previously designated the south steps of the Comal County Courthouse as the place where the trustee’s sales are to take place.

On January lOth at 8:00a.m., the Bank held a public sale of the Property at the Bank’s home office in Travis County, Texas and sold the Property to Jack for an amount that was $500,000 less than what was owed to the Bank by Ranger Inc. The Trustee gave to Jack a “Trustee’s Deed” conveying the Property to Jack.

Would a lawsuit filed by Ranger Inc. to invalidate the sale to Jack likely be successful? Explain fully.

A

Under the Texas Property Code, strict compliance with the rules and requirements of foreclosure are required. If the Notice of the Trustee’s sale that the Bank sent Ranger had just one thing wrong with it that was otherwise required under the Texas Property Code, the sale could be invalidated by Ranger. In Texas, if creditors want to do a non-judicial foreclosure, they absolutely must follow all of the rules under the Texas Property Code regarding notice and other requirements before the sale or else the sale is going to be set aside.

9
Q

02/13 #2:
Ranger Inc. obtained a loan from Bank to purchase 500 acres of land located partially in Bexar County, Texas, and partially in Coma! County, Texas (collectively, the “ Property”). Ranger Inc. executed, and Bank properly recorded, a first lien deed of trust on the Property in both counties. The loan terms provided for monthly repayment of principal plus interest, along with other standard commercial loan terms.

Ranger Inc. subsequently defaulted on its loan to Bank and stopped making its monthly payments. Bank informed Ranger Inc. that it was accelerating the maturity of Ranger Inc.’s loan and opting to sell the Property under the power of sale conferred by the deed of trust. On December 23rd, Bank sent Ranger Inc., via certified mail, a “Notice of Trustee’s Sale” with the following information:

A public sale at auction of the Property will be held on Monday, January 1Oth, at 8:00a.m. at the Bank’s home office in Travis County, Texas.

The Bank posted its “Notice of Trustee’s Sale” solely at

(i) a fire station in Bexar County nearest the Property and
(ii) the courthouse door of the Bexar County Courthouse.

The Bexar County Commissioner’s
Court had previously designated the south steps of the Bexar County Courthouse as the place where the trustee’s sales are to take place. The Comal County Commissioner’s Court had previously designated the south steps of the Comal County Courthouse as the place where the trustee’s sales are to take place.

On January lOth at 8:00a.m., the Bank held a public sale of the Property at the Bank’s home office in Travis County, Texas and sold the Property to Jack for an amount that was $500,000 less than what was owed to the Bank by Ranger Inc. The Trustee gave to Jack a “Trustee’s Deed” conveying the Property to Jack.

Does Jack take title to the Property with any express or implied warranties? Explain fully.

A

a trustee deed does not carry with it any implied or express warranties. At issue is what warranties are included when a purchaser takes title under a Trustee’s Deed. Warranties arise under a warranty deed, not a trustees’ deed. A warranty deed will convey 6 covenants:

1) the right to seisin,
2) the right to convey,
3) the right to quiet enjoyment,
4) the right to further assurances,
5) the right against encumbrances, and
6) warranty.

Unless the court deems this trustee deed to be a warranty deed, Jack will not gain any implied warranties and there are no express warranties that seems to arise in these facts.

10
Q

07/12 #9:
Rob, a 36-year-old single man, owned in fee simple an unencumbered 500-acre tract of land in Texas that had been owned by his family since before Texas became part of the United States of America. The 500- acre tract was within the extraterritorial jurisdiction of City (a recognized municipality), was served by a volunteer fire department, and had access to City’s electric services, but no other utilities.

Allyson agreed to purchase 300 acres out of the 500-acre tract. She demanded that Rob convey the 300 acres to her by a valid deed of the highest quality. Immediately after the sale to Allyson, Rob claimed a homestead exemption for the remaining 200 acres.

After recording the deed from Rob, Allyson sold 50 acres out of her 300 acres to her sister, Emily. The deed from Allyson to Emily was signed by Allyson and adequately described the 50 acres, but it was not
acknowledged by a notary public or otherwise witnessed.

Shortly after Allyson’s sale of the 50-acre tract to Emily, Emily validly established her homestead on the 50-acre tract. She then applied to ABC Bank for a line-of-credit loan to finance daily operations of her business and pledged the 50-acre tract as collateral for the loan. She later defaulted on the loan, and ABC Bank sought to enforce its lien on the 50-acre tract.

What is the highest quality of deed Rob could use under the circumstances to convey the
300-acre tract to Allyson? Explain fully.

A

The highest quality of deed Rob could use under the circumstances to convey the tract to Allyson is a general warranty deed.

At issue is the interest a property owner has in property when he is not able to trace title back to its origination.

Under Texas law, a property owner may only convey the property interest he owns. If the property owner does not have a fee simple absolute in the property, meaning total ownership of the tract in fee simple absolute, then he cannot convey full interest in the property to another person. Because property owners might have different levels of interest in property, Texas law allows the property owner to convey his interest in the property by different instruments.

A property owner may execute a quitclaim deed, the least desirable type of deed, a special warranty deed or a general warranty deed, the most desirable type.

A quitclaim deed is a deed that purports to convey whatever interest the property owner has in the property because he does not know what interest he owns. This is the least quality of deed because an property owner may have a minuscule interest in the property and the deed is only conveying that minuscule interest.

A special warranty deed purports to convey the entire interest in the property but the property owner does not make any assurances as to what interests property owners who owned the tract before his inception of title might have.

The highest quality of deed is a general warranty deed where the owner purports to convey his entire interest in the land, which is 100% of the interest, and makes a warranty that not others have an interest in the property unless specifically stated (i.e. someone might have a mineral interest in the property). Because a general warranty deed purports to convey the entire tract of land with no encumbrances, certain warranties are also included in the deed (i.e. warranty of seisin, warranty against encumbrances, warranty of further assurances, etc.).

11
Q

07/12 #9:
Rob, a 36-year-old single man, owned in fee simple an unencumbered 500-acre tract of land in Texas that had been owned by his family since before Texas became part of the United States of America. The 500- acre tract was within the extraterritorial jurisdiction of City (a recognized municipality), was served by a volunteer fire department, and had access to City’s electric services, but no other utilities.

Allyson agreed to purchase 300 acres out of the 500-acre tract. She demanded that Rob convey the 300 acres to her by a valid deed of the highest quality. Immediately after the sale to Allyson, Rob claimed a homestead exemption for the remaining 200 acres.

After recording the deed from Rob, Allyson sold 50 acres out of her 300 acres to her sister, Emily. The deed from Allyson to Emily was signed by Allyson and adequately described the 50 acres, but it was not
acknowledged by a notary public or otherwise witnessed.

Shortly after Allyson’s sale of the 50-acre tract to Emily, Emily validly established her homestead on the 50-acre tract. She then applied to ABC Bank for a line-of-credit loan to finance daily operations of her business and pledged the 50-acre tract as collateral for the loan. She later defaulted on the loan, and ABC Bank sought to enforce its lien on the 50-acre tract.

Is the homestead exemption Rob claimed in the remaining 200 acres valid? Explain fully.

A

In Texas, a couple is able to claim 10 acres of urban property for a homestead exemption and 200 acres of rural property for the exemption. A single person may only claim 100 acres of rural property for the homestead exemption. In addition, under Texas law, a person may only have one property as a homestead. In Texas, a property is considered rural if it is significantly detached from the city limits and is an urban property as apparent on its face.

12
Q

07/12 #9:
Rob, a 36-year-old single man, owned in fee simple an unencumbered 500-acre tract of land in Texas that had been owned by his family since before Texas became part of the United States of America. The 500- acre tract was within the extraterritorial jurisdiction of City (a recognized municipality), was served by a volunteer fire department, and had access to City’s electric services, but no other utilities.

Allyson agreed to purchase 300 acres out of the 500-acre tract. She demanded that Rob convey the 300 acres to her by a valid deed of the highest quality. Immediately after the sale to Allyson, Rob claimed a homestead exemption for the remaining 200 acres.

After recording the deed from Rob, Allyson sold 50 acres out of her 300 acres to her sister, Emily. The deed from Allyson to Emily was signed by Allyson and adequately described the 50 acres, but it was not
acknowledged by a notary public or otherwise witnessed.

Shortly after Allyson’s sale of the 50-acre tract to Emily, Emily validly established her homestead on the 50-acre tract. She then applied to ABC Bank for a line-of-credit loan to finance daily operations of her business and pledged the 50-acre tract as collateral for the loan. She later defaulted on the loan, and ABC Bank sought to enforce its lien on the 50-acre tract.

Was the deed Emily received from Allyson valid to convey the 50 acres to Emily and was
it recordable? Explain fully.

A

In Texas, a deed must be signed by the party against whom enforcement is sought and also must state that price for the property and give a reasonable description of the tract to be conveyed. In addition, the deed must either be notarized or signed by two witnesses. In order to be recordable, the deed must meet the latter requirements.

13
Q

07/12 #9:
Rob, a 36-year-old single man, owned in fee simple an unencumbered 500-acre tract of land in Texas that had been owned by his family since before Texas became part of the United States of America. The 500- acre tract was within the extraterritorial jurisdiction of City (a recognized municipality), was served by a volunteer fire department, and had access to City’s electric services, but no other utilities.

Allyson agreed to purchase 300 acres out of the 500-acre tract. She demanded that Rob convey the 300 acres to her by a valid deed of the highest quality. Immediately after the sale to Allyson, Rob claimed a homestead exemption for the remaining 200 acres.

After recording the deed from Rob, Allyson sold 50 acres out of her 300 acres to her sister, Emily. The deed from Allyson to Emily was signed by Allyson and adequately described the 50 acres, but it was not
acknowledged by a notary public or otherwise witnessed.

Shortly after Allyson’s sale of the 50-acre tract to Emily, Emily validly established her homestead on the 50-acre tract. She then applied to ABC Bank for a line-of-credit loan to finance daily operations of her business and pledged the 50-acre tract as collateral for the loan. She later defaulted on the loan, and ABC Bank sought to enforce its lien on the 50-acre tract.

Did ABC Bank have an enforceable lien on Emily’s 50-acre homestead tract? Explain
fully.

A

In Texas, in order to have a valid lien on property, the lien holder must file the lien in the county where property is held to give others notice of the lien. If the deed of the conveyance to the person who is mortgaging the property has not been recorded and the lien holder then records their security interest, the lien is considered “wild” because a person searching the county’s grantee-grantor index would not be able to tell what property to which the lien attached by performing a regular title search. Furthermore, a bank is not able to foreclose a security interest on property which is a person’s homestead when the lien is not a purchase money mortgage used to finance purchase of the property.

14
Q

02/12 #6:
Tenant lives in a house in Waco, Texas leased from Landlord for a period of five years ending December 2013. The lease, which is in writing and signed by both Landlord and Tenant, is not witnessed,
notarized, or recorded. The lease is silent regarding events that might justify early termination and regarding who is responsible for repairs and maintenance. Tenant is current on all rent obligations to Landlord.

Tenant hired a contractor to remodel the bathroom and install a new shower. Tenant was displeased with the placement of the shower, refused to pay the contractor and relocated the shower on his own. In the
process, Tenant disrupted the plumbing so that there is now improper drainage. He gave notice to Landlord of the improper drainage and requested that Landlord remedy it at Landlord’s expense.

In addition, Tenant has given Landlord notice of the following matters and demands that Landlord remedy them at Landlord’s expense:

(a) the roof recently developed leaks and needs to be repaired;
(b) the kitchen walls have become smoke-stained over the last three years and need to be repainted;
(c) the smoke detectors installed by Landlord at the commencement of the lease no longer work and need to be replaced; and
(d) the window latches on two of the exterior windows, which were broken by Tenant’s carelessness, need to be replaced.

The City of Waco is taking an easement for a sewer line across the front lawn of the property under its power of eminent domain and will pay a condemnation award for such taking.

Landlord recently received an offer from Buyer to purchase the house. Buyer is concerned about the presence of the lease, and Tenant has said he will not voluntarily vacate the property.

Is the lease valid? Explain fully.

A

(1) Yes, the lease is valid.

The question that arises is whether the facts that the lease was not witnessed, notarized, or recorded affect the validity of the lease.

A landlord-tenant relationship arises from an agreement in which a property owner gives another person exclusive possession of certain property during an agreed term. In consideration for the right of possession, the tenant agrees to pay rent and comply with other conditions and covenants of the agreement. To be enforceable, lease agreements for a term longer than one year must comply with the Statute of Frauds, which requires the lease to be memorialized in writing and signed by the person to be charged with the promise or agreement. There is no requirement that a lease be filed of record to be a valid or enforceable contract.

Since the lease has been signed by both Landlord and Tenant, the lease agreement is valid and enforceable.

15
Q

02/12 #6:
Tenant lives in a house in Waco, Texas leased from Landlord for a period of five years ending December 2013. The lease, which is in writing and signed by both Landlord and Tenant, is not witnessed,
notarized, or recorded. The lease is silent regarding events that might justify early termination and regarding who is responsible for repairs and maintenance. Tenant is current on all rent obligations to Landlord.

Tenant hired a contractor to remodel the bathroom and install a new shower. Tenant was displeased with the placement of the shower, refused to pay the contractor and relocated the shower on his own. In the
process, Tenant disrupted the plumbing so that there is now improper drainage. He gave notice to Landlord of the improper drainage and requested that Landlord remedy it at Landlord’s expense.

In addition, Tenant has given Landlord notice of the following matters and demands that Landlord remedy them at Landlord’s expense:

(a) the roof recently developed leaks and needs to be repaired;
(b) the kitchen walls have become smoke-stained over the last three years and need to be repainted;
(c) the smoke detectors installed by Landlord at the commencement of the lease no longer work and need to be replaced; and
(d) the window latches on two of the exterior windows, which were broken by Tenant’s carelessness, need to be replaced.

The City of Waco is taking an easement for a sewer line across the front lawn of the property under its power of eminent domain and will pay a condemnation award for such taking.

Landlord recently received an offer from Buyer to purchase the house. Buyer is concerned about the presence of the lease, and Tenant has said he will not voluntarily vacate the property.

What are Landlord’s statutory responsibilities, if any, with regard to the drainage problem, roof leaks, kitchen painting, smoke detectors, and broken window latches? Explain fully.

A

(2) Landlord has statutory responsibilities to repair the roof leaks, smoke detectors, and broken window latches, but has no statutory responsibility to repair the drainage problem or to paint the kitchen.

The issue of statutory duty requires an examination of the statutes to determine why Landlord does or does not have a duty to make repairs in each case.

Landlords must comply with detailed statutory provisions concerning security devices in residential housing. Window latches on exterior windows of the dwelling are considered “security devices” under the statute. During the term of the lease, a landlord must repair or replace a security device on request or notification by the tenant that the device is inoperable or in need of repair or replacement. A landlord may require payment by the tenant for such repairs or replacement if it is necessitated by misuse or damage by the tenant.

Therefore, Landlord is required by statute to repair or replace the window latches because they are security devices and Tenant has requested their repair or replacement. However, since the window latches were damaged by Tenant’s carelessness, Landlord can require Tenant to pay for such repairs or replacement.

On receipt of proper notice, a landlord has a duty to inspect and repair a smoke detector during the term of a lease. This is at the expense of the landlord unless the need for repair or replacement is caused by the tenant.

Therefore, Landlord is required by statute to repair or replace the smoke detector since Tenant has properly notified Landlord.

The landlord in a residential rental agreement has a statutory duty to make a diligent effort to repair certain conditions that materially affect the physical health or safety of an ordinary tenant unless the condition is caused by the tenant. The notice is not required to be in writing unless the lease is in writing and requires written notice.

The leaky roof could be considered a circumstance which can materially affect the physical health or safety of Tenant inasmuch as the continued introduction of moisture from the leaky roof could cause the ceiling in the residence to collapse as well as encourage the development of mold in the residence. The drainage problem also could be considered a condition that could affect the physical health or safety of Tenant. However, the drainage problem was not caused by wear and tear but rather by Tenant’s unauthorized disruption of the plumbing and, therefore, is not covered by the statute and does not create a duty on the part of Landlord to repair. Finally, the need for repainting in the kitchen would not be considered such a condition and would not be covered by the statute.

16
Q

02/12 #6:
Tenant lives in a house in Waco, Texas leased from Landlord for a period of five years ending December 2013. The lease, which is in writing and signed by both Landlord and Tenant, is not witnessed,
notarized, or recorded. The lease is silent regarding events that might justify early termination and regarding who is responsible for repairs and maintenance. Tenant is current on all rent obligations to Landlord.

Tenant hired a contractor to remodel the bathroom and install a new shower. Tenant was displeased with the placement of the shower, refused to pay the contractor and relocated the shower on his own. In the
process, Tenant disrupted the plumbing so that there is now improper drainage. He gave notice to Landlord of the improper drainage and requested that Landlord remedy it at Landlord’s expense.

In addition, Tenant has given Landlord notice of the following matters and demands that Landlord remedy them at Landlord’s expense:

(a) the roof recently developed leaks and needs to be repaired;
(b) the kitchen walls have become smoke-stained over the last three years and need to be repainted;
(c) the smoke detectors installed by Landlord at the commencement of the lease no longer work and need to be replaced; and
(d) the window latches on two of the exterior windows, which were broken by Tenant’s carelessness, need to be replaced.

The City of Waco is taking an easement for a sewer line across the front lawn of the property under its power of eminent domain and will pay a condemnation award for such taking.

Landlord recently received an offer from Buyer to purchase the house. Buyer is concerned about the presence of the lease, and Tenant has said he will not voluntarily vacate the property.

Would Tenant have any right to recover all or any portion of the condemnation award paid by the City for the sewer line easement? Explain fully.

A

(3) Yes, Tenant would have a right to recover a portion of the condemnation award.

Since there is no mention of a lease provision addressing the issue of condemnation, the issue becomes whether or not the condemnation would terminate the tenancy.

A lease does not terminate on condemnation of the leased premises as this would operate as a forfeiture of the leasehold. If the lease does not terminate on condemnation, the tenant must continue to pay rent and must seek a portion of the condemnation award for compensation. The tenant is entitled to share in the award to the extent that he has been damaged by such condemnation.

In this case, the taking of the easement across the front lawn of the house by the city of Waco would most likely not damage Tenant to a great degree, but to the extent that Tenant could show that he had been damaged, he would have a right to recover a portion of the award.

17
Q

02/12 #6:
Tenant lives in a house in Waco, Texas leased from Landlord for a period of five years ending December 2013. The lease, which is in writing and signed by both Landlord and Tenant, is not witnessed,
notarized, or recorded. The lease is silent regarding events that might justify early termination and regarding who is responsible for repairs and maintenance. Tenant is current on all rent obligations to Landlord.

Tenant hired a contractor to remodel the bathroom and install a new shower. Tenant was displeased with the placement of the shower, refused to pay the contractor and relocated the shower on his own. In the
process, Tenant disrupted the plumbing so that there is now improper drainage. He gave notice to Landlord of the improper drainage and requested that Landlord remedy it at Landlord’s expense.

In addition, Tenant has given Landlord notice of the following matters and demands that Landlord remedy them at Landlord’s expense:

(a) the roof recently developed leaks and needs to be repaired;
(b) the kitchen walls have become smoke-stained over the last three years and need to be repainted;
(c) the smoke detectors installed by Landlord at the commencement of the lease no longer work and need to be replaced; and
(d) the window latches on two of the exterior windows, which were broken by Tenant’s carelessness, need to be replaced.

The City of Waco is taking an easement for a sewer line across the front lawn of the property under its power of eminent domain and will pay a condemnation award for such taking.

Landlord recently received an offer from Buyer to purchase the house. Buyer is concerned about the presence of the lease, and Tenant has said he will not voluntarily vacate the property.

What causes of action, legal or equitable, are available to Buyer in an attempt to terminate
Tenant’s lease? Explain fully.

A

(4) There are no causes of action, legal or equitable, available to Buyer to attempt to terminate Tenant’s lease prior to the lease expiration date in December 2013.

Buyer is not in privity of contract with Tenant unless Landlord assigns the lease to him as his grantee. A sale of the property to Buyer before the expiration of the original lease term would effectively assign the existing lease to Buyer and place him in the shoes of Landlord in regards to both the obligations and rights of Landlord under the lease.

The facts state that the lease is silent as to any grounds for early termination of the lease so that Buyer would not have any contractual cause of action to terminate the lease prior to the expiration of the lease term. Additionally, the facts state that Tenant is current on his rent obligations so that the lease is not in default, which would preclude a termination for that reason.
The facts do raise the issue that Tenant committed waste on the property by making the unauthorized alterations to the property, which damaged the plumbing. Recovery for waste does not depend upon the presence of contractual language in the lease because the doctrine is designed to protect the value of the real estate from harm due to the tenant’s acts or failures to act. In this respect, waste constitutes an injury to the reversionary interest of the landlord. Buyer, therefore, would be entitled to bring a cause of action for waste against Tenant. However, the remedy available to Buyer, as landlord, for a cause of action for waste that already has been committed on the property would be a judgment for the amount of damages caused to the property, not the forfeiture of possession of the property by termination of the lease.

18
Q

02/12 #6:
Tenant lives in a house in Waco, Texas leased from Landlord for a period of five years ending December 2013. The lease, which is in writing and signed by both Landlord and Tenant, is not witnessed,
notarized, or recorded. The lease is silent regarding events that might justify early termination and regarding who is responsible for repairs and maintenance. Tenant is current on all rent obligations to Landlord.

Tenant hired a contractor to remodel the bathroom and install a new shower. Tenant was displeased with the placement of the shower, refused to pay the contractor and relocated the shower on his own. In the
process, Tenant disrupted the plumbing so that there is now improper drainage. He gave notice to Landlord of the improper drainage and requested that Landlord remedy it at Landlord’s expense.

In addition, Tenant has given Landlord notice of the following matters and demands that Landlord remedy them at Landlord’s expense:

(a) the roof recently developed leaks and needs to be repaired;
(b) the kitchen walls have become smoke-stained over the last three years and need to be repainted;
(c) the smoke detectors installed by Landlord at the commencement of the lease no longer work and need to be replaced; and
(d) the window latches on two of the exterior windows, which were broken by Tenant’s carelessness, need to be replaced.

The City of Waco is taking an easement for a sewer line across the front lawn of the property under its power of eminent domain and will pay a condemnation award for such taking.

Landlord recently received an offer from Buyer to purchase the house. Buyer is concerned about the presence of the lease, and Tenant has said he will not voluntarily vacate the property.

Would Buyer be likely to succeed in terminating the lease and evicting Tenant? Explain fully.

A

(5) No, Buyer would not be successful in terminating the lease and evicting Tenant.

The discussion in the answer to (4) above demonstrates the preclusion of any possibility, under these facts, of a cause of action for early termination of the lease that could lead to an eventual eviction of Tenant.

A tenancy for years is one that is to continue for a fixed period of time. The termination of a tenancy for years usually is certain and created by a written lease. A tenancy for years ends automatically on its termination date.

The facts in this case establish that the lease was a tenancy for years and that the termination date is expressly stated in the lease. With no factual basis for early termination, Buyer would be limited to taking the property subject to the outstanding lease with Tenant and waiting for the lease to expire in December 2013.

19
Q

07/11 #9:
In 2006, Developer sold Lot 6 in a subdivision in Frio County, Texas, to Bea. Bea immediately recorded the warranty deed for Lot 6 in the Frio County Real Property Records. In 2007, Developer sold the adjoining Lot 7 in the same subdivision to Bea. Bea neglected at the time to record the Lot 7 warranty deed, and Developer inadvertently failed to enter the sale in Developer’s records.

Bea built a house on Lot 6, but she did not enclose the lots with a fence. Her only activities on Lot 7 were planting a tree and mowing the grass.

In 2008, believing Lot 7 was still unsold, Developer sold it to Terry and gave Terry a warranty deed that purported to convey to Terry the same Lot 7. Terry borrowed the money to purchase Lot 7 from Lender. Payment of the debt to Lender was secured by a deed of trust covering Lot 7. The debt to Lender was evidenced by a promissory note to be repaid by a single payment at its maturity on March 31,2010. Lender had no knowledge of the earlier conveyance of Lot 7 to Bea. The Lot 7 warranty deed to Terry and the deed of trust were both properly recorded in the Frio County Real Property Records.

In 2009, after following all required procedures, the Internal Revenue Service filed a notice of federal tax lien in the Frio County Real Property Records giving notice of liens due to Terry’s failure to pay income tax obligations.

In January 2010, Bea recorded her warranty deed for Lot 7 in the Frio County Real Property Records.

Terry failed to pay Lender when the note matured on March 31,2010. Lender instructed the Trustee under the deed of trust to proceed with a non-judicial foreclosure sale of Lot 7. Trustee complied with all requirements of Texas law for a proper non-judicial foreclosure sale, and Phil purchased Lot 7 at the sale on June 2, 2010. The Trustee’s deed to Phil stated, “Trustee binds Terry and Terry’s successor’s and assigns
forever to warrant and defend Lot 7 against all persons claiming Lot 7.”

After purchasing Lot 7 at the foreclosure sale, Phil searched the Real Property Records and found the federal tax lien notice and the deed to Bea. Phil paid the federal tax lien to protect his interest in Lot 7. Phil, asserting that Lender breached its warranty of title, now seeks reimbursement from Lender for the amount of the federal tax lien. Bea has told Phil that she is the true owner of Lot 7.

Who owns Lot 7? Explain fully.

A

(1) Phil owns Lot 7.

The issue here is whether Bea’s failure to record her deed to Lot 7 prior to the time that Developer subsequently conveyed the property to Terry fails to give constructive notice to Terry.

Although recording a deed is not essential to the conveyance of title to real property, the failure to record may result in the loss or impairment of the interest conveyed because a subsequent purchaser will not have notice of the prior conveyance pursuant to Texas Property code section 13.001(a). A person who pays valuable consideration without notice and in good faith is known as bona fide purchaser. To be a bona fide purchaser, the party must show that, before he or she had actual or constructive notice of the recording of the prior instrument, there was a delivery of a deed and payment of the purchase price. A party can also be a bona fide mortgagee.

Terry purchased and received his deed from Developer in 2008. Part of the consideration for the purchase money was furnished by Lender, to whom Terry gave a deed of trust lien on Lot 7 to secure the loan. Since these events took place in 2008, a search of the real property records in Frio County would not have disclosed Bea’s 2007 deed to Lot 7 from Developer because she had not yet recorded her deed. Therefore, there was no constructive notice of Bea’s interest in the property. The only activity on Lot 7 was the planting of a tree and mowing of grass, and it is doubtful that these activities provided enough information to cause Terry to investigate possible possession of the property by another person such as Bea. Therefore, Terry would become a bona fide purchaser of the property on the date of his deed and would take Lot 7 free and clear of Bea’s interest. These same facts would apply to Lender, making such a bona fide mortgagee.

Phil’s purchase of Lot 7 is valid even though Phil would not be a bona fide purchaser himself. This is based upon the rule that a purchaser from a bona fide purchaser will take good title even though he is not an innocent purchaser. The foreclosure sale by Trustee was to convey the title of Terry in the property to Phil in order to pay the balance owed on Terry s note to Lender.

20
Q

07/11 #9:
In 2006, Developer sold Lot 6 in a subdivision in Frio County, Texas, to Bea. Bea immediately recorded the warranty deed for Lot 6 in the Frio County Real Property Records. In 2007, Developer sold the adjoining Lot 7 in the same subdivision to Bea. Bea neglected at the time to record the Lot 7 warranty deed, and Developer inadvertently failed to enter the sale in Developer’s records.

Bea built a house on Lot 6, but she did not enclose the lots with a fence. Her only activities on Lot 7 were planting a tree and mowing the grass.

In 2008, believing Lot 7 was still unsold, Developer sold it to Terry and gave Terry a warranty deed that purported to convey to Terry the same Lot 7. Terry borrowed the money to purchase Lot 7 from Lender. Payment of the debt to Lender was secured by a deed of trust covering Lot 7. The debt to Lender was evidenced by a promissory note to be repaid by a single payment at its maturity on March 31,2010. Lender had no knowledge of the earlier conveyance of Lot 7 to Bea. The Lot 7 warranty deed to Terry and the deed of trust were both properly recorded in the Frio County Real Property Records.

In 2009, after following all required procedures, the Internal Revenue Service filed a notice of federal tax lien in the Frio County Real Property Records giving notice of liens due to Terry’s failure to pay income tax obligations.

In January 2010, Bea recorded her warranty deed for Lot 7 in the Frio County Real Property Records.

Terry failed to pay Lender when the note matured on March 31,2010. Lender instructed the Trustee under the deed of trust to proceed with a non-judicial foreclosure sale of Lot 7. Trustee complied with all requirements of Texas law for a proper non-judicial foreclosure sale, and Phil purchased Lot 7 at the sale on June 2, 2010. The Trustee’s deed to Phil stated, “Trustee binds Terry and Terry’s successor’s and assigns
forever to warrant and defend Lot 7 against all persons claiming Lot 7.”

After purchasing Lot 7 at the foreclosure sale, Phil searched the Real Property Records and found the federal tax lien notice and the deed to Bea. Phil paid the federal tax lien to protect his interest in Lot 7. Phil, asserting that Lender breached its warranty of title, now seeks reimbursement from Lender for the amount of the federal tax lien. Bea has told Phil that she is the true owner of Lot 7.

Is Lender obligated to reimburse Phil for the payment Phil made to discharge the federal tax lien? Explain fully.

A

(2) Lender is not obligated to reimburse Phil for the payment to discharge the lien. Internal Revenue Service (“IRS”) federal tax liens have priority over other liens, including consensual deed of trust liens, on a taxpayer’s property only if the IRS lien was recorded prior in time to the deed of trust lien on the property involved in the nonjudicial foreclosure proceeding.

Since the federal tax lien was filed for record after the deed of trust was filed in 2008, the federal tax lien is subordinate to the deed of trust lien. A purchaser at a foreclosure sale succeeds to the position of the mortgagee in relation to the federal tax lien.

The issue involved here is whether proper notice of the foreclosure was given to the IRS holding the federal tax lien.

Since the facts state that Trustee complied with all requirements of Texas law for a proper nonjudicial foreclosure sale, it is likely that proper notice was given to the IRS. This would mean that the IRS has 120 days after the foreclosure sale to redeem the property from Phil or it will lose the right to enforce the lien against the property. By examining the real property records prior to the foreclosure sale of the property, Phil could have obtained notice of the federal tax lien and taken steps to address the problem or elected not to have purchased at the foreclosure sale. This was a choice made by Phil, and Lender had no liability for payment of this lien without making representations to him that it would do so.

21
Q

02/11 #3:
Fast Food Co. owned Whiteacre, a parcel located in Coleman County, Texas. Whiteacre was improved with a small commercial building surrounded by a parking lot. In 2007, Fast Food Co. conveyed Whiteacre to Irma and Jan, as tenants in common. The deed of conveyance included a restriction prohibiting
the use of Whiteacre for restaurant purposes for a period of 25 years.

In 2009, Irma and Jan leased Whiteacre to Ting under a written lease for a five-year term. The lease provided that Ting would have exclusive use of Whiteacre for office purposes, that Irma and Jan would repair
the roof, which was showing signs of wear, and that Ting would pay Irma and Jan each one-half of the $1,500 monthly rent. A few months later, Ting notified Irma and Jan that the roof was leaking, so Irma spent $2,000
of her own money to repair the roof. At Irma’s request, and without Jan’s consent, Ting sent the entire $1,500 for the following month’s rent payment to Irma.

Sid, Jan’s son, owned Greenacre, a small tract of land adjoining the east side of Whiteacre. He planned to open a Taco Hut restaurant on Greenacre, but Greenacre was not large enough to accommodate a drive-through lane next to the restaurant. In January 20 II, without seeking the consent of Irma or Ting, and as a gift to Sid, Jan signed a written Easement Agreement purporting to grant Sid a perpetual easement across a
twenty-foot-wide strip along the east side of Whiteacre “for the purpose of providing car and light truck vehicular ingress and egress to and from the restaurant on Greenacre.” The easement strip included some of
the parking spaces on the east side of Whiteacre.

In February 2011, Irma sold an undivided one-fourth interest in Whiteacre to Ned.

Irma claims that Jan had no right to grant Sid the easement described in the Easement Agreement. Irma also claims that Jan owes her $1 ,000 as Jan’s share of the cost of the roof repairs that Irma paid out of her own pocket.

Jan claims that she is entitled to receive from Irma, one-half of the month’s rent that Ting paid Irma after the repair of the roof, and that she is entitled to one-half of the money Irma received for the one-fourth interest in Whiteacre that Irma conveyed to Ned.

Did Jan have the right to grant the easement to Sid? Explain fully.

A

(1) Jan did not have the right to grant the easement to Sid.

At issue is whether one co-tenant, acting alone, may convey an easement on co-tenancy property.

A co-tenant cannot convey or encumber any portion of, or interest in, the common property owned by the co-tenants without the express authority or subsequent ratification of the other co-tenants. Such action would permit the co-tenant to create a partition of the property without the involvement of the other co-tenants.

Here, Jan and Irma owned Whiteacre as tenants in common. Jan then granted a 20-foot easement along Whiteacre to her son Sid, as a gift. Since Jan did not obtain the consent of Irma and there is no indication in the fact pattern that Irma ratified the easement, Jan was not legally entitled to grant the easement to Sid.

22
Q

02/11 #3:
Fast Food Co. owned Whiteacre, a parcel located in Coleman County, Texas. Whiteacre was improved with a small commercial building surrounded by a parking lot. In 2007, Fast Food Co. conveyed Whiteacre to Irma and Jan, as tenants in common. The deed of conveyance included a restriction prohibiting
the use of Whiteacre for restaurant purposes for a period of 25 years.

In 2009, Irma and Jan leased Whiteacre to Ting under a written lease for a five-year term. The lease provided that Ting would have exclusive use of Whiteacre for office purposes, that Irma and Jan would repair
the roof, which was showing signs of wear, and that Ting would pay Irma and Jan each one-half of the $1,500 monthly rent. A few months later, Ting notified Irma and Jan that the roof was leaking, so Irma spent $2,000
of her own money to repair the roof. At Irma’s request, and without Jan’s consent, Ting sent the entire $1,500 for the following month’s rent payment to Irma.

Sid, Jan’s son, owned Greenacre, a small tract of land adjoining the east side of Whiteacre. He planned to open a Taco Hut restaurant on Greenacre, but Greenacre was not large enough to accommodate a drive-through lane next to the restaurant. In January 20 II, without seeking the consent of Irma or Ting, and as a gift to Sid, Jan signed a written Easement Agreement purporting to grant Sid a perpetual easement across a
twenty-foot-wide strip along the east side of Whiteacre “for the purpose of providing car and light truck vehicular ingress and egress to and from the restaurant on Greenacre.” The easement strip included some of
the parking spaces on the east side of Whiteacre.

In February 2011, Irma sold an undivided one-fourth interest in Whiteacre to Ned.

Irma claims that Jan had no right to grant Sid the easement described in the Easement Agreement. Irma also claims that Jan owes her $1 ,000 as Jan’s share of the cost of the roof repairs that Irma paid out of her own pocket.

Jan claims that she is entitled to receive from Irma, one-half of the month’s rent that Ting paid Irma after the repair of the roof, and that she is entitled to one-half of the money Irma received for the one-fourth interest in Whiteacre that Irma conveyed to Ned.

Is Irma entitled to reimbursement from Jan of roof repair costs, and, if so, is Jan entitled to an offset on account of the month’s rent that Ting paid solely to Irma? Explain fully.

A

(2) Irma is entitled to reimbursement from Jan for roof repair costs.

At issue is whether one co-tenant must reimburse another for repairs to the property.

A co-tenant who incurs necessary expenses to preserve the property is entitled to reimbursement from other co-tenants. Repairs to the common property, such as the roof on the building occupied by the tenant Ting, are generally considered necessary or proper expenses.

Jan is entitled to one-half of the $1,500 in rent paid by Ting to Jan after the repair of the roof.

At issue is whether one co-tenant must reimburse another for rents from third parties.

Rent received from third parties is in the nature of profit to which each co-tenant is entitled in her proportionate interest. The co-tenant receiving such rent must account to the other co-tenants. A co-tenant receiving rents and profits holds them in trust for the other co-tenants. If Jan consents to the application of her share of the rents to Irma for her share of the costs of the roof repair, then Irma would be allowed to “offset” Jan’s share of the rents to pay Jan’s share of the roof repairs.

23
Q

02/11 #3:
Fast Food Co. owned Whiteacre, a parcel located in Coleman County, Texas. Whiteacre was improved with a small commercial building surrounded by a parking lot. In 2007, Fast Food Co. conveyed Whiteacre to Irma and Jan, as tenants in common. The deed of conveyance included a restriction prohibiting
the use of Whiteacre for restaurant purposes for a period of 25 years.

In 2009, Irma and Jan leased Whiteacre to Ting under a written lease for a five-year term. The lease provided that Ting would have exclusive use of Whiteacre for office purposes, that Irma and Jan would repair
the roof, which was showing signs of wear, and that Ting would pay Irma and Jan each one-half of the $1,500 monthly rent. A few months later, Ting notified Irma and Jan that the roof was leaking, so Irma spent $2,000
of her own money to repair the roof. At Irma’s request, and without Jan’s consent, Ting sent the entire $1,500 for the following month’s rent payment to Irma.

Sid, Jan’s son, owned Greenacre, a small tract of land adjoining the east side of Whiteacre. He planned to open a Taco Hut restaurant on Greenacre, but Greenacre was not large enough to accommodate a drive-through lane next to the restaurant. In January 20 II, without seeking the consent of Irma or Ting, and as a gift to Sid, Jan signed a written Easement Agreement purporting to grant Sid a perpetual easement across a
twenty-foot-wide strip along the east side of Whiteacre “for the purpose of providing car and light truck vehicular ingress and egress to and from the restaurant on Greenacre.” The easement strip included some of
the parking spaces on the east side of Whiteacre.

In February 2011, Irma sold an undivided one-fourth interest in Whiteacre to Ned.

Irma claims that Jan had no right to grant Sid the easement described in the Easement Agreement. Irma also claims that Jan owes her $1 ,000 as Jan’s share of the cost of the roof repairs that Irma paid out of her own pocket.

Jan claims that she is entitled to receive from Irma, one-half of the month’s rent that Ting paid Irma after the repair of the roof, and that she is entitled to one-half of the money Irma received for the one-fourth interest in Whiteacre that Irma conveyed to Ned.

Is Jan entitled to receive any part of the money Irma received from Ned? Explain fully

A

(3) No, Jan is not entitled to any part of the money Irma received from Ned.

At issue is whether one co-tenant must reimburse another for selling a portion of her own interest in the property.

Irma owned an undivided one-half interest in Whiteacre, while Jan owned the remaining one-half undivided interest. A co-tenant may freely convey her undivided interest, or a part thereof, in the common property without the consent of other co-tenants, as long as the rights of the other co-tenants in the property are not prejudiced.

Since Irma was conveying one-half of her one-half undivided interest to Ned, it did not prejudice Jan, as she will retain her one-half undivided interest as before. Therefore, Jan is not entitled to any of the money Ned paid to Irma.

24
Q

07/10 #11:
Mona owned Whiteacre, a five-acre tract in rural Coma! County, Texas. Gail owned Greenacre, a ten acre riverfront tract adjoining Whiteacre. Greenacre was improved with a vacation cabin.

In September 2009, Gail hired Workman to build a large addition to Gail’s vacation cabin located on Greenacre. In November 2009, with knowledge that Workman had not yet finished the addition, Mona offered to purchase and Gail agreed to sell Greenacre. On December 1, 2009, Mona made full payment to Gail of the agreed sale price. Gail then signed and acknowledged a Warranty Deed conveying Greenacre to Mona that met all requirements for a valid deed, including a complete legal description ofGreenacre. The Warranty Deed was immediately and properly filed in the Coma! County Real Property Records. Gail had not paid Workman, and Mona did not ask if Workman had been paid.

On December 4, 2009, Workman timely filed with the Comal County Clerk a proper affidavit claiming a mechanic’s lien on Greenacre. Because Gail had always purported to own Greenacre, Workman
immediately sent a copy of the affidavit to Gail by certified mail.

Gail, knowing that Ben was interested in purchasing Whiteacre and some river frontage on Greenacre, dratted a Warranty Deed, which purported to convey Whiteacre from Mona to Gail. On December 7, 2009,
pretending to be Mona, Gail forged Mona’s signature to the Warranty Deed before a notary, who required no proof of identity. The forged Warranty Deed appeared complete and correct, and Gail immediately recorded it
in the Coma! County Real Property Records.

On December 14, 2009, Gail told Ben that she had purchased Whiteacre, and showed him the recorded forged Warranty Deed. Ben did not know that Gail had sold Greenacre to Mona. Ben offered to buy Whiteacre and two riverfront acres of Greenacre from Gail. In exchange for payment of a fair price by Ben,
Gail signed, acknowledged, and delivered to Ben a Warranty Deed, which purported to convey both Whiteacre (with a full description of that five-acre tract), and a portion of Greenacre, which she described as “two acres on the river side out of Greenacre.” Ben duly recorded this Warranty Deed in the Coma! County Real Property Records.

Mona, Ben, and Workman are now fully aware of the all the foregoing facts.

What rights, if any, does Workman have in Greenacre, and what must he do to enforce those rights? Explain fully.

A

(1) Workman has both a constitutional mechanic’s and materialman’s lien and a statutory mechanic’s and materialman’s lien on Greenacre for the work done for which he has not been paid. This conclusion requires a determination of (a) whether Workman has perfected his liens on Green- acre, and (b) whether they survive the transfer of Gail’s interest to Mona.
(a) The constitutional lien arises if there is privity of contract between the contractor and the owner. A constitutional mechanic’s and materialman’s lien comes into existence regardless of whether the claimant has complied with the procedures required for perfection of a statutory lien.

In order to obtain a perfected statutory mechanic’s and materialman’s lien on Greenacre, an original contractor must file a proper lien affidavit with the county clerk of the county where the property is located no later than the 15th day of the fourth calendar month after the day on which the indebtedness accrues. If the claim arises from a residential construction project, the affidavit must be filed not later than the 15th day of the third calendar month after the day on which the indebtedness accrues. A copy of the affidavit must also be sent by registered or certified mail to the owner or reputed owner of the property at her last known business or residence address within five days after the date the affidavit is filed with the county clerk. The contractor is entitled to rely on representations of ownership made by the parties with whom the contractor deals, and need not search title records to establish actual ownership. These are the only steps necessary to perfect an original contractor’s statutory mechanic’s and materialman’s lien.

In this fact situation, Workman contracted (either orally or expressly) with Gail to construct the improvements to the cabin which would supply the privity needed for a constitutional lien. It did not appear to be a homestead insofar as it was designated as a vacation cabin and, therefore, a signed contract would not have been necessary. Since the constitutional lien is self-executing and automatic, Workman was not required to do any further acts to perfect the constitutional lien.

In regards to the statutory mechanic’s and materialman’s lien, Workman perfected his lien by timely filing the lien affidavit (the problem states that the affidavit was a “proper” affidavit) with the Comal County Clerk and by sending a copy of same to Gail by certified mail within five days after filing. Since Gail had dealt with Workman as the owner of the property and Workman was not required to search title records to establish actual ownership, he was entitled to rely upon these facts in sending the affidavit to Gail.

(b) A constitutional mechanic’s lien is enforceable against a subsequent purchaser of the property with notice of the lien.

Personal knowledge of improvements being made on the property at or shortly before the time the purchaser took possession of the property provides sufficient notice of the contractor’s right to assert a lien claim. A perfected statutory mechanic’s lien is effective as of the date when visible construction or delivery of materials begins. This relation-back provision fixes the protections and obligations of the lien statutes in general as having arisen on the inception date and takes priority over any subsequent transfer of interest by the owner.

In this fact situation, Mona had knowledge of the work that Workman was doing on Greenacre as early as November and that it had not been completed by the time of her purchase. Mona’s personal knowledge of improvements being made provides the requisite notice of Workman’s right to assert a mechanic’s lien claim so that the constitutional lien would be enforceable against Mona. Additionally, since the perfected statutory mechanic’s lien relates back to the date when visible construction began on Greenacre, the statutory lien takes priority over the subsequent transfer of title to Greenacre to Mona, and Mona would take title to Greenacre subject to the statutory mechanic’s lien in favor of Workman.

Finally, mechanic’s and materialman’s liens, whether constitutional or statutory, are ultimately enforced by a foreclosure of the lien and sale of the property. The foreclosure must be a judicial foreclosure as self-help or foreclosure by power of sale is not authorized in these situations. The relief of foreclosure must be specifically requested in the pleadings, and provided in the final court order, or the issue is waived on appeal. The suit must be filed in the district court because it has exclusive jurisdiction in suits of this type. Any lawsuit to foreclose a mechanic’s lien should always be combined with a suit on the underlying debt owed as well, since it has been held that the lien is abandoned if it is not raised simultaneously with the suit to recover the debt.

25
Q

07/10 #11:
Mona owned Whiteacre, a five-acre tract in rural Coma! County, Texas. Gail owned Greenacre, a ten acre riverfront tract adjoining Whiteacre. Greenacre was improved with a vacation cabin.

In September 2009, Gail hired Workman to build a large addition to Gail’s vacation cabin located on Greenacre. In November 2009, with knowledge that Workman had not yet finished the addition, Mona offered to purchase and Gail agreed to sell Greenacre. On December 1, 2009, Mona made full payment to Gail of the agreed sale price. Gail then signed and acknowledged a Warranty Deed conveying Greenacre to Mona that met all requirements for a valid deed, including a complete legal description ofGreenacre. The Warranty Deed was immediately and properly filed in the Coma! County Real Property Records. Gail had not paid Workman, and Mona did not ask if Workman had been paid.

On December 4, 2009, Workman timely filed with the Comal County Clerk a proper affidavit claiming a mechanic’s lien on Greenacre. Because Gail had always purported to own Greenacre, Workman
immediately sent a copy of the affidavit to Gail by certified mail.

Gail, knowing that Ben was interested in purchasing Whiteacre and some river frontage on Greenacre, dratted a Warranty Deed, which purported to convey Whiteacre from Mona to Gail. On December 7, 2009,
pretending to be Mona, Gail forged Mona’s signature to the Warranty Deed before a notary, who required no proof of identity. The forged Warranty Deed appeared complete and correct, and Gail immediately recorded it
in the Coma! County Real Property Records.

On December 14, 2009, Gail told Ben that she had purchased Whiteacre, and showed him the recorded forged Warranty Deed. Ben did not know that Gail had sold Greenacre to Mona. Ben offered to buy Whiteacre and two riverfront acres of Greenacre from Gail. In exchange for payment of a fair price by Ben,
Gail signed, acknowledged, and delivered to Ben a Warranty Deed, which purported to convey both Whiteacre (with a full description of that five-acre tract), and a portion of Greenacre, which she described as “two acres on the river side out of Greenacre.” Ben duly recorded this Warranty Deed in the Coma! County Real Property Records.

Mona, Ben, and Workman are now fully aware of the all the foregoing facts.

What rights, if any, does Ben have in Greenacre? Explain fully.

A

(2) Ben has no rights in Greenacre.
Of course, all of Gail’s dealings with Ben in regards to Greenacre were fraudulent. However, this was not known until after the misrepresentations were made and the fraudulent documents had been prepared, forged, and filed for record. These actions create independent causes of action against Gail, which are not relevant to the question asked.

In regard to the purported conveyance of the two acres out of Greenacre to Ben, two issues arise from the facts as presented.

First is whether the description of the property in the deed from Gail to Ben of the two acres out of Greenacre was sufficient to satisfy the Texas Statute of Frauds.

The second issue involves whether Ben had constructive notice of the deed from Gail to Mona, which included all of Greenacre.

The Statute of Frauds requires that all conveyances of land be in writing and signed by the party to be charged. The courts have imposed the additional requirement that the description of the property conveyed must be sufficiently certain so as to enable a party familiar with the locality to identify the premises to be conveyed to the exclusion of others because such a description is an essential element of the conveyance.

In Gail’s deed to Ben, the property is described as “two acres on the river side out of Greenacre.” Obviously, Greenacre can be identified by someone familiar with the locality as a 10-acre tract. In fact, this 10-acre tract had been previously described with a complete legal description in the deed from Gail to Mona. Additionally, the property is described in the deed from Gail to Ben as being on the “river side” of the Greenacre tract so that at least the property would have the river as one of its boundaries. However, the deed describes only the acreage (two acres) that is being conveyed out of the 10 acres that comprise the whole of Greenacre. A call for acreage in a deed is the least reliable of all calls in a deed. The mention of the quantity of land may aid in defining the premises, but it does not assist in locating the premises. Without the designation of where the two acres of land out of Greenacre are located within the 10-acre tract, the premises to be conveyed cannot be identified with sufficient certainty to the exclusion of the remainder of the 10 acres. Therefore, the deed violates the Statute of Frauds and is unenforceable.

Generally, a purchaser is charged with constructive notice of every duly recorded instrument in the purchaser’s chain of title. If the facts recited in the instruments are sufficient to put a reasonably prudent person on inquiry as to the rights or claim of another person to the property, the purchaser is also charged with notice of those facts that would be obtained by a reasonably diligent inquiry.

Since the deed from Gail to Mona conveying all of Greenacre was proper and it was properly filed with the Comal County Clerk on December 1, 2009, Ben would have constructive notice of the deed to Mona from Gail. The facts recited in that deed would be sufficient to put Ben on notice to make inquiry as to the rights or claim of rights of Mona in Greenacre out of which he was planning to purchase the two acres. If Ben would have made a diligent inquiry about Mona’s purported interest in Greenacre, he would have discovered that Gail did not have title to Greenacre and could not convey any title to him. Gail’s deed did not convey any title to Ben because she had no title to convey having previously conveyed all of her title to Mona.

26
Q

07/10 #11:
Mona owned Whiteacre, a five-acre tract in rural Coma! County, Texas. Gail owned Greenacre, a ten acre riverfront tract adjoining Whiteacre. Greenacre was improved with a vacation cabin.

In September 2009, Gail hired Workman to build a large addition to Gail’s vacation cabin located on Greenacre. In November 2009, with knowledge that Workman had not yet finished the addition, Mona offered to purchase and Gail agreed to sell Greenacre. On December 1, 2009, Mona made full payment to Gail of the agreed sale price. Gail then signed and acknowledged a Warranty Deed conveying Greenacre to Mona that met all requirements for a valid deed, including a complete legal description ofGreenacre. The Warranty Deed was immediately and properly filed in the Coma! County Real Property Records. Gail had not paid Workman, and Mona did not ask if Workman had been paid.

On December 4, 2009, Workman timely filed with the Comal County Clerk a proper affidavit claiming a mechanic’s lien on Greenacre. Because Gail had always purported to own Greenacre, Workman
immediately sent a copy of the affidavit to Gail by certified mail.

Gail, knowing that Ben was interested in purchasing Whiteacre and some river frontage on Greenacre, dratted a Warranty Deed, which purported to convey Whiteacre from Mona to Gail. On December 7, 2009,
pretending to be Mona, Gail forged Mona’s signature to the Warranty Deed before a notary, who required no proof of identity. The forged Warranty Deed appeared complete and correct, and Gail immediately recorded it
in the Coma! County Real Property Records.

On December 14, 2009, Gail told Ben that she had purchased Whiteacre, and showed him the recorded forged Warranty Deed. Ben did not know that Gail had sold Greenacre to Mona. Ben offered to buy Whiteacre and two riverfront acres of Greenacre from Gail. In exchange for payment of a fair price by Ben,
Gail signed, acknowledged, and delivered to Ben a Warranty Deed, which purported to convey both Whiteacre (with a full description of that five-acre tract), and a portion of Greenacre, which she described as “two acres on the river side out of Greenacre.” Ben duly recorded this Warranty Deed in the Coma! County Real Property Records.

Mona, Ben, and Workman are now fully aware of the all the foregoing facts.

Who owns Whiteacre? Explain fully.

A

(3) Mona owns Whiteacre.
A forged deed is void from the outset to those not signing it. Therefore, title to land cannot pass under it. The fact that the grantee and her assigns are innocent purchasers makes no difference; no person can be an innocent purchaser of land where there is forgery in the chain of title. Legal effect cannot be given to such an instrument by consent, waiver, estoppel, implication, delivery, or recording.

Clearly, the facts of this problem establish that the deed from Mona to Gail of Whiteacre was a forgery by Gail. As such, it is void ab initio and cannot pass title to Whiteacre from Mona to Gail, regardless of its being recorded. Therefore, the conveyance to Ben is also of no effect and passes no title to him although he would otherwise be considered an innocent purchaser.

27
Q

02/10 #4:
Martha, a single person, owned Whiteacre, a ranch located in Hill County, Texas, in fee simple. In April 2006, Martha conveyed Whiteacre to her son, Stan, by a properly signed and acknowledged gift deed. The deed recited that, “Martha gives and grants Whiteacre to Stan, for as long as Stan maintains the family chapel on Whiteacre. If Stan ever destroys the family chapel, Whiteacre shall automatically revert to Martha, without any further act by Martha.” The deed was properly recorded in the Hill County Real Property Records in April 2006.

In June 2007, to expand the ranch operations, Stan purchased Redacre, a tract adjacent to Whiteacre, and he demolished the family chapel. Although Stan paid for Redacre with cash that was community property belonging to him and his wife, Eve, the warranty deed that conveyed Redacre to him named only Stan as the grantee. This deed to Redacre showing Stan as the sole owner was properly recorded in the Hill County Real Property Records.

In December 2008, Stan and Eve divorced in Falls County, Texas. In dividing the marital property, the court awarded Redacre entirely to Eve. Nothing was recorded in the Hill County land records concerning the divorce or Eve’s ownership of Redacre.

In January 2009, Martha learned of the destruction of the family chapel, took possession of Whiteacre, and leased it to Pete. At the same time, Pete, unaware of the divorce proceedings in Falls County, offered to buy Redacre from Stan. Stan agreed to sell Redacre to Pete but told Pete that he would only give him a quitclaim deed. Pete paid a discounted price for Redacre and received the quitclaim deed, which recited that Stan “releases, remises and quitclaims to Pete all of Stan’s right, title and interest in and to Redacre.”

Eve, who wanted to conduct ranching operations on Redacre, demanded that Pete vacate Redacre. Pete refused, asserting that he owns Redacre.

Was Martha entitled to lease Whiteacre to Pete? Explain fully.

A

(1) Yes, Martha was entitled to lease Whiteacre to Pete.

At issue is whether Whiteacre reverted to Martha.

Although Martha conveyed Whiteacre to Stan, his estate terminated and title revested in Martha. Martha’s conveyance to Stan created both a fee simple determinable and a fee simple subject to a condition subsequent. The grant to Stan “for so long as Stan maintains the family chapel on White- acre,” creates a fee simple determinable with a possibility of reverter in Martha.

A fee simple determinable is typically created by use of the words “for so long as,”“until,” or “while.” It automatically terminates on the happening of the stated event and reverts to the grantor.

Thus, as soon as Stan failed to maintain the chapel, Whiteacre reverted to Martha. Therefore, she has title to Whiteacre and the right to lease it to Pete.

If for any reason the preceding argument is not accepted, Martha may argue that she also created a fee simple subject to a condition subsequent with the language that “if Stan ever destroys the family chapel, Whiteacre shall automatically revert to Martha without any further act by Martha.”

In a fee simple subject to a condition subsequent, the grantor retains the power to terminate the estate of the grantee upon the happening of the specified event. The grantor must expressly reserve the right to terminate.

Martha will argue that she has done so here, although the automatic reversion language may be a problem. When Stan demolished the chapel, Martha had the power to terminate Stan’s estate. While the reversion language is insufficient to work an automatic reversion in the case of a condition subsequent, it may be sufficient to reserve Martha’s power to terminate. Martha exercised that power by leasing Whiteacre to Pete.

Under either provision, Stan’s estate is terminated and reverted to Martha. Thus, Martha was entitled to lease Whiteacre to Pete.

28
Q

02/10 #4:
Martha, a single person, owned Whiteacre, a ranch located in Hill County, Texas, in fee simple. In April 2006, Martha conveyed Whiteacre to her son, Stan, by a properly signed and acknowledged gift deed. The deed recited that, “Martha gives and grants Whiteacre to Stan, for as long as Stan maintains the family chapel on Whiteacre. If Stan ever destroys the family chapel, Whiteacre shall automatically revert to Martha, without any further act by Martha.” The deed was properly recorded in the Hill County Real Property Records in April 2006.

In June 2007, to expand the ranch operations, Stan purchased Redacre, a tract adjacent to Whiteacre, and he demolished the family chapel. Although Stan paid for Redacre with cash that was community property belonging to him and his wife, Eve, the warranty deed that conveyed Redacre to him named only Stan as the grantee. This deed to Redacre showing Stan as the sole owner was properly recorded in the Hill County Real Property Records.

In December 2008, Stan and Eve divorced in Falls County, Texas. In dividing the marital property, the court awarded Redacre entirely to Eve. Nothing was recorded in the Hill County land records concerning the divorce or Eve’s ownership of Redacre.

In January 2009, Martha learned of the destruction of the family chapel, took possession of Whiteacre, and leased it to Pete. At the same time, Pete, unaware of the divorce proceedings in Falls County, offered to buy Redacre from Stan. Stan agreed to sell Redacre to Pete but told Pete that he would only give him a quitclaim deed. Pete paid a discounted price for Redacre and received the quitclaim deed, which recited that Stan “releases, remises and quitclaims to Pete all of Stan’s right, title and interest in and to Redacre.”

Eve, who wanted to conduct ranching operations on Redacre, demanded that Pete vacate Redacre. Pete refused, asserting that he owns Redacre.

What are Eve and Pete’s arguments in support of their respective claims of superior title to Redacre, and who will likely prevail? Explain fully.

A

(2) Eve will probably prevail.

The key issues here are whether Martha could have any interest in Redacre absent a recording of her interest and whether Pete is protected by the recording statute.

Eve is the owner of all of Redacre.

Redacre was community property. Property purchased with community property during a marriage is considered community property, regardless of how title is taken.

Here, the facts provide that Redacre was purchased with community funds during the marriage.

Upon divorce, a court has the power to distribute community property in any manner that is just and reasonable.

Here, the court awarded all of Redacre to Eve, and presumably that award was just and reasonable.

As between Eve and Stan, the award by the court was valid despite the fact that it was not recorded in any way.

A conveyance of property is effective between the parties whether or not it is recorded.

Stan was a party to the divorce and so was bound by the transfer of Redacre to Eve. Thus, Eve would argue that she owns all of Redacre and Stan had nothing to convey to Pete.

Pete would probably argue that he was protected by the recording statute.

Under the Texas recording statute, an unrecorded deed or conveyance is void as to a subsequent purchaser for a valuable consideration without notice of the deed or conveyance. Such a person is referred to as an “innocent purchaser” or a “bona fide purchaser.”

Pete paid value for Redacre. He would also argue that because the award of Redacre to Eve by the court was not recorded—by either a filing of the court’s judgment or a deed from Stan to Eve pursuant to the judgment—Pete did not have notice of the “conveyance” to Eve in the divorce proceeding. Therefore, Pete would argue that he took title to the property from Stan free and clear of the interest of Eve conveyed by the divorce judgment.

Eve will likely prevail in this matter. Stan purported to convey Redacre to Pete by quitclaim deed.

A quitclaim is merely a release of any interest that the grantee may have. While quitclaims are valid in Texas, they put the grantee on inquiry notice of any doubts as to the grantor’s interest. Since the grantee is on inquiry notice of defects, the grantee cannot qualify as an innocent or bona fide purchaser without notice and, therefore, is not protected by the recording statute.

29
Q

07/09 #9:
In 2000, Van, a resident of Harris County, Texas, purchased Whiteacre in Washington County, Texas from Sal. In payment for the purchase, Van gave Sal a promissory note in the amountof$1 00,000 (the “Note”) payable in monthly installments of principal and interest on the first of each month. Payment of the Note was secured by a deed of trust covering Whiteacre, which included a power of sale. The deed of trust was properly recorded with the Washington County Clerk.

Van was a member of the board of directors of ArtCorp, a Texas non-profit corporation. Van wanted to help ArtCorp achieve its goal of opening an art museum on Whiteacre. In 2002, Van obtained Sal’s consent to transfer Whiteacre to ArtCorp, with the understanding that Van would conti nue to make the payments on the Note. Van properly executed, acknowledged, and delivered a warranty deed conveying Whiteacre to
ArtCorp. ArtCorp neglected to record the warranty deed at that time.

In 2003, after following all required procedures, Creditor recorded an abstract of judgment in the Washington County Real Property Records giving notice of its lien arising from a $50,000 judgment against
Van.

In 2004, ArtCorp recorded its warranty deed from Van in the Washington County Real Property Records.

In late 2008, ArtCorp made an oral agreement to sell Whiteacre to Bob for $120,000. ArtCorp intended to use part of the purchase money to pay off the Note. Bob discovered Creditor’s judgment lien on
Whiteacre while making a search of the real property records and notified ArtCorp of its existence. ArtCorp told Bob the lien based on a judgment against Van was ineffective because Whiteacre no longer belonged to
Van and not to worry about it.

Van failed to make the January 2009 payment due on the Note. On January 12, 2009, acting on Sal’s instructions, Trudy, the trustee under the deed of trust, sent a written notice by certified mail to Van stating that Van’s failure to pay was a deed of trust default and giving Van until January 22, 2009, to cure the default and avoid commencement of foreclosure proceedings. Trudy sent a copy of the notice of the default to ArtCorp.

ArtCorp asked Sal to postpone the foreclosure to give ArtCorp time to consummate the deal with Bob and pay off the Note. Sal refused and directed Trudy to proceed with the foreclosure. The loan documents properly waived all notices other than those required by law. Sal has also suggested to Bob that, by buying Whiteacre at the foreclosure sale, he would be better off.

What statutory requirements must Trudy fulfill as trustee in order to effect a proper foreclosure on Whiteacre? Explain fully.

Base answers to all parts of Question 9 on the law in effect on July 30, 2009. Any statutory changes approved in the 2009 legislative session, but not yet in effect, need not be discussed.

A

(1) Trudy, the trustee, may effect a proper foreclosure on Whiteacre, provided she complies with the Texas Property Code.

At issue is what statutory requirements Trudy must fulfill as trustee in order to effect a proper foreclosure on Whiteacre.

Where a deed of trust contains a power of sale provision, the trustee has the right to sell the property without resorting to court action if the debtor fails to remedy a default. A trustee has no affirmative duties beyond those required by law or the deed of trust. The Texas Property Code sets out the duties of the trustee with regard to a nonjudicial foreclosure sale. The primary requirement of the statute is the giving of notice of the proposed foreclosure sale at least 21 days before the date of sale by
(i) posting written notice, designating the county in which the property will be sold, at the courthouse door of each county in which the property is located;
(ii) filing a copy of the posted notice in the office of the county clerk of each county in which the property is located; and
(iii) sending written notice by certified mail to each debtor who, according to the records of the mortgage servicer of the debt, is obligated to pay the debt.
The notice must contain the name and street address of the trustee and must also indicate the earliest time at which the sale will begin. The notice must indicate the area where the sale will occur at the courthouse if the commissioners court has not designated an area at the courthouse for foreclosure sales to take place. If the commissioners court has designated such a place, then that area must be indicated in the notice.
The foreclosure sale must be a public sale at the county courthouse in the county where the real estate is located between the hours of 10:00 a.m. and 4:00 p.m. of the first Tuesday of any month following the giving of the 21-day notice. The sale must begin at the time stated in the notice of sale or no later than three hours after that time. The sale must occur in the area designated by the commissioner’s court, unless the commissioner’s court has not designated such an area, in which case the sale must occur in the area designated in the notice of sale.

Here, Van gave Sal a promissory note in the amount of $100,000 payable in monthly installments of principal and interest on the first of each month. Payment of the note was secured by a deed of trust covering Whiteacre, which included a power of sale. Van failed to make the January 2009 payment due on the note. Assuming Van does not cure the default before January 22, 2009, because the deed of trust contains a power of sale, the foreclosure may proceed as a nonjudicial foreclosure by means of a public auction—provided Trudy complies with the procedures above.

30
Q

07/09 #9:
In 2000, Van, a resident of Harris County, Texas, purchased Whiteacre in Washington County, Texas from Sal. In payment for the purchase, Van gave Sal a promissory note in the amountof$1 00,000 (the “Note”) payable in monthly installments of principal and interest on the first of each month. Payment of the Note was secured by a deed of trust covering Whiteacre, which included a power of sale. The deed of trust was properly recorded with the Washington County Clerk.

Van was a member of the board of directors of ArtCorp, a Texas non-profit corporation. Van wanted to help ArtCorp achieve its goal of opening an art museum on Whiteacre. In 2002, Van obtained Sal’s consent to transfer Whiteacre to ArtCorp, with the understanding that Van would conti nue to make the payments on the Note. Van properly executed, acknowledged, and delivered a warranty deed conveying Whiteacre to
ArtCorp. ArtCorp neglected to record the warranty deed at that time.

In 2003, after following all required procedures, Creditor recorded an abstract of judgment in the Washington County Real Property Records giving notice of its lien arising from a $50,000 judgment against
Van.

In 2004, ArtCorp recorded its warranty deed from Van in the Washington County Real Property Records.

In late 2008, ArtCorp made an oral agreement to sell Whiteacre to Bob for $120,000. ArtCorp intended to use part of the purchase money to pay off the Note. Bob discovered Creditor’s judgment lien on
Whiteacre while making a search of the real property records and notified ArtCorp of its existence. ArtCorp told Bob the lien based on a judgment against Van was ineffective because Whiteacre no longer belonged to
Van and not to worry about it.

Van failed to make the January 2009 payment due on the Note. On January 12, 2009, acting on Sal’s instructions, Trudy, the trustee under the deed of trust, sent a written notice by certified mail to Van stating that Van’s failure to pay was a deed of trust default and giving Van until January 22, 2009, to cure the default and avoid commencement of foreclosure proceedings. Trudy sent a copy of the notice of the default to ArtCorp.

ArtCorp asked Sal to postpone the foreclosure to give ArtCorp time to consummate the deal with Bob and pay off the Note. Sal refused and directed Trudy to proceed with the foreclosure. The loan documents properly waived all notices other than those required by law. Sal has also suggested to Bob that, by buying Whiteacre at the foreclosure sale, he would be better off.

Is ArtCorp correct in its assertion that the judgment lien was ineffective? Explain fully.

Base answers to all parts of Question 9 on the law in effect on July 30, 2009. Any statutory changes approved in the 2009 legislative session, but not yet in effect, need not be discussed.

A

(2) ArtCorp is not correct in its assertion that the judgment lien was ineffective.

At issue is whether a judgment lien is effective against a previous but unrecorded conveyance.

Texas’s recording act scheme is a pure notice system. Therefore, a perfected judgment lien has priority over any previous but unrecorded conveyance, mortgage, or deed of trust, absent actual notice to the judgment creditor. An exception to this might be recognized where possession and control of the property by a person other than the judgment debtor may be so openly and unequivocally at odds with unfettered ownership by the judgment debtor as to impute notice to the creditor of some outstanding interest or equitable claim. This is sometimes referred to as “inquiry notice’ meaning that these conditions create a duty on the creditor to “inquire” about the interest of the possessor and subsequently obtain actual notice of the facts.

Here, even though Van transferred Whiteacre to ArtCorp, ArtCorp neglected to record the warranty deed at the time of the conveyance. Creditor subsequently recorded an abstract of judgment in the Washington County real property records, giving notice of its lien against Whiteacre. Because Creditor perfected its judgment lien before ArtCorp recorded its warranty deed and because there is no evidence that Creditor should have been on inquiry notice of the conveyance, the lien is effective against Whiteacre.

31
Q

07/09 #9:
In 2000, Van, a resident of Harris County, Texas, purchased Whiteacre in Washington County, Texas from Sal. In payment for the purchase, Van gave Sal a promissory note in the amountof$1 00,000 (the “Note”) payable in monthly installments of principal and interest on the first of each month. Payment of the Note was secured by a deed of trust covering Whiteacre, which included a power of sale. The deed of trust was properly recorded with the Washington County Clerk.

Van was a member of the board of directors of ArtCorp, a Texas non-profit corporation. Van wanted to help ArtCorp achieve its goal of opening an art museum on Whiteacre. In 2002, Van obtained Sal’s consent to transfer Whiteacre to ArtCorp, with the understanding that Van would conti nue to make the payments on the Note. Van properly executed, acknowledged, and delivered a warranty deed conveying Whiteacre to
ArtCorp. ArtCorp neglected to record the warranty deed at that time.

In 2003, after following all required procedures, Creditor recorded an abstract of judgment in the Washington County Real Property Records giving notice of its lien arising from a $50,000 judgment against
Van.

In 2004, ArtCorp recorded its warranty deed from Van in the Washington County Real Property Records.

In late 2008, ArtCorp made an oral agreement to sell Whiteacre to Bob for $120,000. ArtCorp intended to use part of the purchase money to pay off the Note. Bob discovered Creditor’s judgment lien on
Whiteacre while making a search of the real property records and notified ArtCorp of its existence. ArtCorp told Bob the lien based on a judgment against Van was ineffective because Whiteacre no longer belonged to
Van and not to worry about it.

Van failed to make the January 2009 payment due on the Note. On January 12, 2009, acting on Sal’s instructions, Trudy, the trustee under the deed of trust, sent a written notice by certified mail to Van stating that Van’s failure to pay was a deed of trust default and giving Van until January 22, 2009, to cure the default and avoid commencement of foreclosure proceedings. Trudy sent a copy of the notice of the default to ArtCorp.

ArtCorp asked Sal to postpone the foreclosure to give ArtCorp time to consummate the deal with Bob and pay off the Note. Sal refused and directed Trudy to proceed with the foreclosure. The loan documents properly waived all notices other than those required by law. Sal has also suggested to Bob that, by buying Whiteacre at the foreclosure sale, he would be better off.

Assuming that Trudy effects a proper foreclosure, discuss whether Bob would be better off if he bought Whiteacre at the foreclosure sale rather than by buying it from ArtCorp. Explain fully.

Base answers to all parts of Question 9 on the law in effect on July 30, 2009. Any statutory changes approved in the 2009 legislative session, but not yet in effect, need not be discussed.

A

(3) Bob would be better off buying Whiteacre at the foreclosure sale rather than by buying it from ArtCorp.

At issue is whether a buyer would be in a better position purchasing property subject to encumbrances directly from the seller or at a foreclosure sale.

When a buyer purchases realty, he takes the realty subject to all prior recorded encumbrances, such as a lien or deed of trust, which remain on the land. If the property is subject to a mortgage, unless the buyer assumes the mortgage, the buyer is not personally liable on it. The mortgage, however, still has to be paid or the mortgagee will foreclose. When a mortgage is foreclosed, the buyer at the sale takes title as it existed when the mortgage was placed on the property. Thus, foreclosure will terminate interests junior to the mortgage being foreclosed but will not affect senior interests.

If Bob purchased the property from ArtCorp, he would be taking the property subject to two prior recorded encumbrances: the first priority deed of trust lien held by Sal, as well as the perfected judgment lien held by Creditor. While ArtCorp may intend to pay off Sal’s note with the proceeds, Bob would have no guarantee that ArtCorp would do so. Although Bob would not be personally liable for such debts, the real property owned by Bob would be subject to foreclosure by these lien holders. In contrast, if Bob purchased Whiteacre at the foreclosure sale, Sal’s deed of trust lien would be removed by the sale, and the judgment lien of Creditor would be extinguished. Therefore, Bob would purchase the property free and clear of these outstanding liens and any claim of title by ArtCorp. The result of the foreclosure sale would be to place Bob in the same position of title as Van held immediately prior to the time that Van executed the deed of trust to Sal. Therefore, Bob would be better off if he bought Whiteacre at the foreclosure sale.

32
Q

02/09 #1:
In 2001, Brad and his wife, Cora, purchased Greenacre, a 100-acre tract of land in Collin County, Texas. They immediately began to live in the home on Greenacre. Upon her uncle’s death in 2004, Cora inherited Whiteacre, a 50-acre tract of land also located in Collin County, Texas. Greenacre and Whiteacre were within a few miles of each other and were not within the city limits or extraterritorial jurisdiction of any town. Brad and Cora farmed both Greenacre and Whiteacre as their primary source of income.

In 2005, Ace Oil proposed favorable terms to Cora, and without consulting Brad, Cora signed an oil and gas lease with a three-year primary term describing both Greenacre and Whiteacre.

In 2006, Cora inherited her parents’ home (the “Denton Property”) located in the city of Denton in Denton County, Texas. In 2007, Cora borrowed $10,000 from First Bank to pay gambling debts. To secure the loan, Cora granted First Bank a Deed of Trust lien on the Denton Property. The Denton Property was rented to a series of tenants.

On November 1, 2008, Cora leased the Denton Property to Toby. Toby and Cora signed a one-year lease, and Toby paid the $800 November rent and a $700 security deposit. On November 6, 2008, a lightning
strike in the yard at the Denton Property damaged a water line so that no water could flow from the water main to the home. The damage was a casualty loss covered by Cora’s insurance. On November 7, Toby gave
immediate written notice of the damage to Cora. On November 15, Toby gave written notice to Cora that he was terminating the lease, and he moved out, leaving the home in excellent condition. Cora did not begin
repairs until she received insurance proceeds on November 30. Toby demanded that Cora pay him $500 in damages because of her delay in making the repairs. In addition, Toby demanded a full refund of the
November rent and security deposit.

After Cora repaired the water line, Brad and Cora moved to the Denton Property. After moving to the Denton Property, Cora defaulted in payment of the loan from First Bank. First Bank notified Cora that it
intended to begin foreclosure proceedings. Cora told First Bank that it did not have a valid lien because the Denton Property was her homestead.

In 2007, did Ace Oil obtain a valid oil and gas lease as to Greenacre and Whiteacre? Explain fully.

A

(1) Ace Oil did not obtain a valid oil and gas lease as to either Greenacre or Whiteacre.

At issue is whether a spouse can enter into an oil and gas lease to homestead without consulting the other spouse.

In Texas every co-tenant can drill and produce or lease her undivided share without the consent of the other co-tenants, but must account to the others for their rightful share of the profits from production. However, under the Texas Family Code, neither spouse alone can convey or encumber the homestead without the other’s consent. As an oil and gas lease creates a fee simple determinable in the mineral estate and severs the mineral estate from the surface estate, the lease is considered an encumbrance on the property. Property will be considered homestead property if it is used as the claimant’s home. In rural areas, families may claim up to 200 acres as their homestead. The acreage need not be contiguous, as long as it is used in connection with the home or in support of the family. Texas does not require a formal designation of property as a homestead.

Here, in 2005 Brad and Cora were living on Greenacre. Because Greenacre is less than 200 acres and is located in a rural area, it qualifies for homestead status. The facts also state that Greenacre and Whiteacre are located within a few miles of each other, and Brad and Cora farmed both properties as their primary source of income. Because Brad and Cora also used Whiteacre in support of their family and both properties combined are less than 200 acres and in rural areas the acreage need not be contiguous, it would appear that both Greenacre and White- acre qualify as homestead property.

Therefore, Ace Oil did not obtain a valid oil and gas lease as to Greenacre and Whiteacre because Brad did not consent to the lease.

33
Q

02/09 #1:
In 2001, Brad and his wife, Cora, purchased Greenacre, a 100-acre tract of land in Collin County, Texas. They immediately began to live in the home on Greenacre. Upon her uncle’s death in 2004, Cora inherited Whiteacre, a 50-acre tract of land also located in Collin County, Texas. Greenacre and Whiteacre were within a few miles of each other and were not within the city limits or extraterritorial jurisdiction of any town. Brad and Cora farmed both Greenacre and Whiteacre as their primary source of income.

In 2005, Ace Oil proposed favorable terms to Cora, and without consulting Brad, Cora signed an oil and gas lease with a three-year primary term describing both Greenacre and Whiteacre.

In 2006, Cora inherited her parents’ home (the “Denton Property”) located in the city of Denton in Denton County, Texas. In 2007, Cora borrowed $10,000 from First Bank to pay gambling debts. To secure the loan, Cora granted First Bank a Deed of Trust lien on the Denton Property. The Denton Property was rented to a series of tenants.

On November 1, 2008, Cora leased the Denton Property to Toby. Toby and Cora signed a one-year lease, and Toby paid the $800 November rent and a $700 security deposit. On November 6, 2008, a lightning
strike in the yard at the Denton Property damaged a water line so that no water could flow from the water main to the home. The damage was a casualty loss covered by Cora’s insurance. On November 7, Toby gave
immediate written notice of the damage to Cora. On November 15, Toby gave written notice to Cora that he was terminating the lease, and he moved out, leaving the home in excellent condition. Cora did not begin
repairs until she received insurance proceeds on November 30. Toby demanded that Cora pay him $500 in damages because of her delay in making the repairs. In addition, Toby demanded a full refund of the
November rent and security deposit.

After Cora repaired the water line, Brad and Cora moved to the Denton Property. After moving to the Denton Property, Cora defaulted in payment of the loan from First Bank. First Bank notified Cora that it
intended to begin foreclosure proceedings. Cora told First Bank that it did not have a valid lien because the Denton Property was her homestead.

Did Toby properly terminate the Denton Property lease, and is he entitled to recover the damages, rent and security deposit that he has demanded? Explain fully as to each.

A

(2) Toby properly terminated the Denton property lease and is entitled to a pro rata refund of rent from the date he vacated the premises as well as a refund of the security deposit. Toby, however, is not entitled to recover damages.

At issue is whether a tenant is entitled to terminate the lease where the property is damaged as a result of a casualty loss that left the property unusable. Also at issue is whether the tenant is entitled to recover damages, rent, and his security deposit.

Under the Texas Property Code, landlords have a statutory duty to repair certain conditions that materially affect the physical health or safety of an ordinary tenant. Where a condition results from an insured casualty loss, however, a landlord’s duty to repair does not begin until the landlord receives the insurance proceeds. If the rental premises are totally unusable for residential purposes and the casualty did not result from the tenant’s negligence, either the landlord or the tenant may terminate the rental agreement at any time prior to completion of repairs by giving written notice to the other.

Here, lightning damaged a water line on the Denton property so that no water could flow from the water main to the home. The damage was a casualty loss covered by Cora’s insurance. Therefore, Cora’s duty to repair did not begin until November 30, when Cora received the insurance proceeds. However, since there was no water available to the residence because of the lightning strike, the premises was unusable for residential purposes. Thus, Toby was allowed to terminate the lease at any time prior to completion of the repairs by giving written notice. Since Toby gave written notice to Cora on November 15, Toby properly terminated the Denton property lease.

Toby is entitled to a pro rata refund of rent from the date he vacated the premises, as well as a refund of the security deposit. Toby, however, is not entitled to recover damages.

Under the Texas Property Code, if a lease is terminated as a result of a casualty loss situation, the tenant is entitled only to a pro rata refund of rent from the date the tenant moves out and to a refund of any security deposit otherwise required by law.

Therefore, Toby is entitled to only a pro rata refund of the rent from the date he vacated the premises, not the entire rent for the month of November.

Generally, a security deposit must be refunded by a residential landlord to the tenant within 30 days after the tenant surrenders the premises. A landlord, however, may deduct from the deposit damages and charges for which the tenant is legally liable under the lease or as a result of breaching the lease. The landlord need not return the deposit until the tenant gives the landlord a written statement of the tenant’s forwarding address.

Here, as discussed above, Toby validly terminated the Denton property lease. In addition, the facts state that Toby left the home in excellent condition when he moved out. Therefore, there are no damages or charges that Cora can deduct from the deposit. Assuming Toby provided Cora with his forwarding address, Cora is required to refund Toby’s security deposit by December 15.

A tenant’s damages are limited to situations where

(i) the tenant chooses to have the condition repaired or remedied, or
(ii) an unsafe condition is not repaired or remedied within seven days of the tenant’s notice of intent to repair or remedy.

Since Toby elected to terminate the lease as opposed to repairing or remedying the condition, he is not entitled to the “repair and deduct” remedies or the judicial remedies described above.

34
Q

02/09 #1:
In 2001, Brad and his wife, Cora, purchased Greenacre, a 100-acre tract of land in Collin County, Texas. They immediately began to live in the home on Greenacre. Upon her uncle’s death in 2004, Cora inherited Whiteacre, a 50-acre tract of land also located in Collin County, Texas. Greenacre and Whiteacre were within a few miles of each other and were not within the city limits or extraterritorial jurisdiction of any town. Brad and Cora farmed both Greenacre and Whiteacre as their primary source of income.

In 2005, Ace Oil proposed favorable terms to Cora, and without consulting Brad, Cora signed an oil and gas lease with a three-year primary term describing both Greenacre and Whiteacre.

In 2006, Cora inherited her parents’ home (the “Denton Property”) located in the city of Denton in Denton County, Texas. In 2007, Cora borrowed $10,000 from First Bank to pay gambling debts. To secure the loan, Cora granted First Bank a Deed of Trust lien on the Denton Property. The Denton Property was rented to a series of tenants.

On November 1, 2008, Cora leased the Denton Property to Toby. Toby and Cora signed a one-year lease, and Toby paid the $800 November rent and a $700 security deposit. On November 6, 2008, a lightning
strike in the yard at the Denton Property damaged a water line so that no water could flow from the water main to the home. The damage was a casualty loss covered by Cora’s insurance. On November 7, Toby gave
immediate written notice of the damage to Cora. On November 15, Toby gave written notice to Cora that he was terminating the lease, and he moved out, leaving the home in excellent condition. Cora did not begin
repairs until she received insurance proceeds on November 30. Toby demanded that Cora pay him $500 in damages because of her delay in making the repairs. In addition, Toby demanded a full refund of the
November rent and security deposit.

After Cora repaired the water line, Brad and Cora moved to the Denton Property. After moving to the Denton Property, Cora defaulted in payment of the loan from First Bank. First Bank notified Cora that it
intended to begin foreclosure proceedings. Cora told First Bank that it did not have a valid lien because the Denton Property was her homestead.

Will Cora prevail in her assertion of the invalidity of First Bank’s lien? Explain fully.

A

(3) Cora will not be able to prevail in her assertion of the invalidity of First Bank’s lien.

At issue is whether the Denton property that Cora inherited would be considered Cora’s homestead at the time that the deed of trust lien was placed upon the property such that First Bank’s lien would be invalid and unenforceable.

A homestead in Texas is a place of residence or business that is normally secured against the rights of creditors. Therefore, a Texas homestead generally is not subject to forced sale for the payment of debts. The Texas Constitution, however, allows creditors to force a sale of a homestead for the following debts:
(i) purchase money;
(ii) taxes due on the homestead;
(iii) improvements to the homestead;
(iv) owelty of partition;
(v) refinance of previously permitted debts;
(vi) home equity loan; and
(vii) reverse mortgage.
A deed of trust executed on homestead land for purposes other than those listed above is void. A previously acquired lien cannot be defeated by a debtor’s subsequent voluntary act in making the property a homestead.

Borrowing money to pay gambling debts is not a type of debt for which a lien can be placed on a Texas homestead. Therefore, if Cora granted First Bank a deed of trust lien on the Denton property when the Denton property was their homestead, the lien would be void. However, liens predating the establishment of the homestead are valid. Thus, if the Denton property was not Cora and Brad’s homestead at the time Cora granted First Bank a deed of trust on the Denton property, the lien would predate the establishment of the homestead and would be a valid, enforceable lien against the property.

The Denton property was not Cora and Brad’s homestead at the time Cora granted First Bank a deed of trust lien on the Denton property.

Establishment of a homestead in Texas requires the claimant to show a combination of both overt acts of usage and an intent to claim the land as a permanent residence. While actual occupancy and use of a tract will not alone make it a homestead, such use and occupancy is the most satisfactory and convincing evidence of an intention to establish a permanent residence.

Here, Cora inherited the Denton property from her parents in 2006. She borrowed the $10,000 and executed a deed of trust on the property to secure the loan in 2007. However, Cora did not occupy or use the Denton property as a home until 2008. Rather, she rented the property to a series of tenants of which Toby was the last. This would seem to indicate that Cora had no intention of claiming the property as a homestead in 2007, the year she granted First Bank a deed of trust lien on the property. Furthermore, her right to possess the property in 2008 came about only because of Toby’s termination of the one-year lease after the lightning strike. Cora otherwise would not have been entitled to possession of the property until December 2009. Additionally, Cora and Brad were occupying Greenacre at the time Cora granted First Bank a deed of trust lien on the Denton property and had occupied that property since 2001. The evidence of use seems to indicate that in 2007 Cora claimed Greenacre as her homestead, not the Denton property.

Therefore, the lien to secure the repayment of the gambling debt is valid and enforceable against the Denton property, even though it later became Cora and Brad’s homestead, because it predated the establishment of the homestead character of the property.