Implied Covenants in TX:
No covenants implied by CL
TX statute = the words “grants and conveys” implies
- Covenant Against Encumberance
- Covenant of No Prior Conveyances
Present Covenants
- Breach occurs at time the deed is executed
- (TX view) These run with the person, not the land. No action allowed by remote grantee
- Cov of Seisin - promise that seller owns what he is conveying
- Cov of Right to Convey - promise that seller has the right to convey the land/interest he is conveying
- Cov Against Encumberances - promise that there are no encumberances on the land (liens, easements, covenants)
- Cov of No Prior Conveyances - promise that seller has not conveyed all or part of the interest to anyone but the buyer
Future Covenants
Breach occurs sometime in the future. SOL begins when the buyer/grantee is actually disturbed by one with paramount title of eviction (eviction -constructive or actual)
Runs with the land. Remote grantees may sue if within the SOL
- General or Special Warranty/Quiet Enjoyment - promise to defend title against lawful claims and promsie to pay for any losses suffered (incl attorney’s fees to defend the title) NOTE: Even if there is another party with an interest, breach of CQE does not occur until there is an eviction
- Further assurances - promise to execute any documents to make you secure in your title
NOTE: A lien is actually a future covenant because it does not affect the title until it is foreclosed on
The 9 Qs to Analyze a Title Covenant Problem
- Any express covenants in the deed? Any implied?
- What is the defect in title to be addressed?
- Does the defect breach a covenant contained in the deed?
- Did the defect exist at the time the covenant was given?
- Are the covenants present or future?
- What is required to breach that covenant?
- When does the breach occur? When does SOL begin to run?
- Who can be sued?
- What are the available remedies?
What are the damages for breach of covenants: seisin, right to convey, no prior conveyances, warranty & quiet enjoyment?
In TX, purchase price plus interest
NOTE: The grantee can recover the purchase price plus interest BUT the grantOR is only liable in actual damages for the purchase price the grantor received when he made the warranty/covenant
EX: B –> M (GWD)(rec) $100,000, then B –> T (GWD) $50k, then T –> L (QC) $100k, then L –> R (SWD) $80k
B gave GWD to T and that runs with the land. R can sue B for purchase price, but can only recover $50k since that is what B sold property to T for. Also, note, that R can recover from B the atty’s fees for suit against M, but cannot recover atty’s fees in her suit for warr/cov against B
Damages for breach of
Cov of Encumberances
- The amount of time it takes to eliminate the encumberance OR
- If Encumberance cannot be removed, the dimished FMV as a result of the encumberance
Other Recoverable Damages:
Interest & Taxes paid
Grantee in possession of property –> can only recover the amount in excess of reasonable rental value ( because he was getting some value from the property, kind of treated like he was a tenant)
Grantee NOT in possession –> can recover full amount of interest plus any taxes paid on property
Other Recoverable Damages:
Improvements to the Property
- If improvements were made in good faith, recovery for the enhanced value of the land as a result of the improvements
- The amount recovered from the person awarded possession of the land (not necessarily the original grantor)
3 elements of a valid deed
- Execution –> Grantor signature
- Acceptance –> presumed unless grantee says otherwise
- Delivery –> Grantor by words or actions manifests an intent that the deed be immediately effective to transfer an interest in land to the grantee
- conditional delivery ok IF grantor had the intent to convey now and it is not revocable. if revocable in some way = VOID
Financing the Real Estate Transaction
In Texas we use ______.
Deed of Trust
- 3 person transfer involving mortgagor, mortgagee and a trustee
- Foreclosure uses non-judicial process
- Trustee is person responsible for selling collateral
- Mortgagor is a BFP because exchanges collateral (purcahse price) in exchange for property
Non-Judicial Foreclosure process
Step 1: Notice of default and accelration of debt with at least 20 days to cure. Notice not required to be certified and no requirement that debtor actually receives the notice
Step 2: If the default is not cured by the date indicated, then the mortgagee must give at least 21 days notice of the foreclosure sale.
- The notice must state: the earliest time the sale will begin plus the location and date of the sale
- Must be: posted at the courthouse of each county in which the property is located; AND filed in the office of the county clerk in each country in which the property is located; AND sent by certified mail to each mortgagor who is obligated to pay the debt
STEP 3: Sale conducted by trustee on First Tues of the month between 10am and 4pm, usually on county courthouse steps
Deficiency Judgments (TX)
- if foreclosure price was less than unpaid balance, a deficiency judgment can be used to recover the difference
- person whom DJ is brought against can request determination of FMV and if was higher than foreclosure sale price, may offset against DJ
- Lender must bring DJ w/in 2 years of foreclosure
What has to be recorded in TX?
9 things:
- Deeds
- DOT
- Mortgages
- Express Easement Agreements
- Leases over a year
- Contract for Deed
- Abstract of Judgment
- Gov Liens
- Homestead liens, mechanics liens, Release of Vendor’s lien
