Real estate law in brief

• Real estate is defined as land including the buildings and permanent fixtures on it, as well as resources on and within the land. It is distinct from personal property, which is any property that is movable.
• Real estate law is a broad field governed by each state and deals with legal aspects of land including right to own, occupy, and use the land and any constructed additions to it.
• With the exception of residential leases, real estate transactions usually involve large sums of money that range from the infrequent sale of an individual resident’s major asset to the recurring revenue stream for commercial real estate corporations.
• Residential and commercial transactions are typically complicated, involving contracts, property titles, zoning laws, financing, taxes and other issues.

The following information is provided by Michael Ballases, a Texas attorney and expert in real estate law, awarded best lawyer designation in 2023 and 2024.

Ownership interest in property

Real estate law is about who holds an interest in a property, responsibilities accompanying the interests, and how interests can be enjoyed by the owners and conveyed to others.

There are several ownership categories:

• Sole ownership – As the name suggests, a single individual is the only property owner. A sole owner does not need anyone’s consent to lease, sell, or otherwise transfer his or her property interest to another.
• Joint tenancy with right of survivorship – Two or more people own equal interests in the property. If one dies, the surviving owners take ownership of the deceased’s share. Each has the same legal rights and obligations as the other owners.
• Tenancy in common – Two or more owners share their interests in either equal or unequal percentages – generally, the most common form of ownership. When a tenant-in-common owner dies, his or her portion of ownership passes to the estate for distribution to heirs. Each owner is responsible for his or her share of property taxes and maintenance.
• Tenancy by the entirety – This classification applies to couples who are treated as sole legal entities in their property ownership. Tenancy by the entirety applies when the couple is married at the time take ownership. Each spouse has the same rights and obligations, and neither can transfer or divide his/her interest without the other’s consent. Texas law is not among the 25 states that recognize tenancy by the entirety and presumes that unmarried couples are tenants in common.
• Community property – Married couples in Texas and eight other states who acquire property during the marriage hold their interests as community property without rights of survivorship, making them tenants in common. In Texas this includes couples in common-law marriages. Each spouse owns the property equally regardless of individual contribution to its purchase. In the event of divorce or death, each spouse gets an equal share of the property.
• Owning partnerships – Sometimes partnerships are formed in part or specifically to share property ownership. The owners can be individuals, governments, nonprofit organizations, or businesses. In contrast to a corporation, which is a distinct legal entity, a general partnership is a formal agreement in which all partners individually share liabilities and profits equally. On the other hand, limited partnerships and limited liability partnerships limits the partners’ personal liability to one extent or another.
• Corporate ownership – Incorporated businesses (those that register with the secretary of state in their home states) may own property as a business asset held ultimately by shareholders in the business. Generally, the shareholders have no personal obligations or liabilities regarding the property.
• Real estate trust – A trust is not the same as a will but operates similarly. A real estate trust establishes the means and circumstances for transferring property to a new owner(s) outside of a will. In the event of an owner’s death, putting property in a trust avoids a court’s probate process. The conveyance can also occur upon another condition, such as the recipient (beneficiary) turning a certain age. In a real estate trust, the beneficiary (or beneficiaries) holds a future interest in the property, which eventually becomes a present interest.

Real estate lawyers and law in Texas and other states

While many people are familiar with the role of real estate agents and brokers in the sale and purchase of property, the skills of a real estate attorney are often important in use and transaction issues.

An array of problems can arise due to miscommunication and can lead to serious financial harm – if not properly managed via careful application of real estate law. Some of the common areas a real estate lawyer works in:

• Buying and selling transactions.
• Homeowners’ association disputes.
• Easements and rights of way.
• Boundary disputes.
• Title examination and deed recording.
• Landlord and tenant disputes.
• Zoning or land use issues.
• Mortgages and financing.
• Property development.
• Environmental law.
• Liens.
• Due diligence in all of the above.

Commercial real estate clients have more complicated issues and legal needs than residential property owners including land development issues, local laws and regulations, different zoning issues, and landlord/tenant disputes.

Texas real estate law from HOAs & POAs to liens to zoning

Homeowners’ associations (HOAs) & Texas property owners’ associations

In Texas law, homeowner associations (HOAs) are generally known as property owners’ associations (POAs). These are defined by the Texas State Law Library as an association owned by or whose members primarily consist of property owners covered by a dedicatory instrument that manages or regulates “the residential subdivision, planned unit development, condominium or townhouse regime, or similar planned development.”

POAs and HOAs function largely as non-governmental zoning boards overseeing property development and use, including restrictive covenants (enforceable by monetary awards for proven damages), equitable servitudes (enforceable by court-ordered injunctions or specific performance requiring a particular action), and easements. Restrictive covenants limit the use of property (home size and aesthetics, typically) and are included in the property deed, meaning the obligations transfer to subsequent owners.

Easements allow the use of a property by a nonowner for a particular person, such as to preserve open public space in a development – an area of real estate that can be complex.

Texas real estate transactions

Any residential or commercial real estate transaction can include legal risks that go beyond the expertise of a real estate agent or broker. The higher the value of the transaction, the more concern about legal risks.

In general, those involved in buying or selling commercial property are aware of the need for a competent real estate lawyer to identify, evaluate, and ameliorate the risk in a transaction. Unfortunately, residential buyers and sellers are often more tempted to go it alone at their own risk.

Basic legal considerations in a transaction include professional review of contract terms, which can become quite complicated and costly if misinterpreted. Other frequent legal considerations relate to title integrity, closing negotiations, liens, financing, and litigation.

Deed recording & title for property

Title and deed are not the same but are related. A title is not a document but the right of property ownership. A property purchaser is wide to seek legal assistance to ensure clear title, meaning no else can make a valid claim to the property due errors in recording the title at the appropriate county office.

A deed is the legal instrument that transfers ownership of property to a new buyer, heir, or gift recipient. The deed proves the chain of transfers from owner to owner that results in a clear title. To protect the ownership interest, the property deed must be filed. In Texas the deed is filed with the clerk in the county where the property is located.

There are several types of deeds and requirements for each:

• A general warranty deed offers the most protection for the grantee of the deed (the buyer). This type of deed obligates the seller (the grantor) to defend against any claim of liens, unpaid taxes, easements, and conflicting ownership during or prior the grantor’s ownership.
• A special warranty deed offers less protection in that the seller makes no claims about the property title before owning it.
• A quitclaim deed transfers the grantor’s rights to the grantee without any protection against third-party claims.

Boundary disputes

A boundary dispute arises when adjacent property owners do not agree on their respective property lines. Boundary disputes most often occur when one neighbor wants to put an addition onto his property or remove a tree that the adjacent neighbor believes infringes on his or her property.

It is not uncommon for real estate owners to be mistaken about long-held understandings about property lines. This kind of disputes can become exceptionally contentious, sometimes resulting in neighbors not speaking for years.

Liens, mortgages & foreclosure in Texas

When a property owner owes a creditor, the creditor can place a lien on property, giving the creditor an interest in the property to secure the debt due. Liens can result in foreclosure, a legal proceeding which grants a lender property ownership and the right to sell it to settle the debt.

Typically, liens are recorded when an owner falls behind (defaults) on mortgage or deed of trust payments. Other liens may cover debts for delinquent property taxes and homeowners’ association assessments or dues.

In Texas, a contractor or professional who contracts directly with a property owner does not have to provide the owner with advance notice before filing the lien. However, subcontractors are required to provide advance notice on a monthly basis. Missing a deadline for the notice could result in loss of the option of obtaining a court-ordered lien, called a judicial lien.

The requirements differ for filing real estate liens against commercial and residential properties. Nevertheless, for both, thorough documentation of a contract and failure to pay along with a property description and description of labor and materials provided is essential, as are other details.

A lien claimant must complete a Texas Affidavit of Lien or hire a lien service to complete and file the form. In either case, the affidavit must be notarized and then submitted to the county clerk in the jurisdiction in which the work was performed.

Lastly, the claimant must officially give notice of the lien application on the property owner within five days of the filing. This is called service of process, a requirement by the U.S. Constitution’s Due Process clauses. In a service of process, a third-party unrelated to the claim must deliver the notice to the recipient or leave it with a suitable person at the recipient’s home or place of business.

Once a court grants a lien and the debtor refuses to pay, the lien holder may file for foreclosure on the property.  In a foreclosure claim for a lien, the creditor can recover the debt by taking ownership of the property that has been mortgaged or otherwise imposed with a lien and selling it.

However, a creditor usually tries to negotiate a settlement with the borrower before going through the costly, time consuming and process intensive process of foreclosure.

Zoning regulations, disputes & lawsuits

Zoning laws regulate real estate use and development within the local governmental zoning authority’s jurisdiction. Zoning divides property areas into residential, commercial, or industrial districts and restricts the use accordingly. This can involve regulations on type and size of structures, access means, setbacks, and restrictions on single-family homes and multiple-family units like condominiums.

Municipalities generally tailor zoning laws for subdivision developments to enforce a master plan for land use and development. Zoning restrictions on the use of property often leads to disagreements and conflicts between residential and commercial property owners and municipalities.

A zoning appeal may seek either a zoning variance granting an exception to a particular restriction or requirement or must qualify for a nonconforming use, often referred to a grandfathered use. Sometimes zoning can involve the taking of a property protected by the U.S. Constitution’s Fifth Amendment, which stipulates that a government must compensate a property owner for the property’s fair market value if taken for a public use such as a roadway or public park.

About T. Michael Ballases, Texas trial attorney

Anyone entering a construction contract can benefit understanding the difference between direct liability and vicarious liability. Let a legal expert help. With more than two decades of legal experience, T. Michael Ballases has a 90% courtroom win rate and a practical, common sense approach. His philosophy is simple: Determine what the client seeks and focus on attaining it by utilizing a big-picture methodology and avoiding meaningless clutter.

Learn more about Michael Ballases.

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