real estate law

winter 2009-2010

Denmon v. Atlas Leasing, 285 S.W.3d 591 (Tex. App.—Dallas 2009)

Homestead Protection – Wrongful foreclosure: The homeowner brought an action against the lender for fraud and wrongful foreclosure of her homestead. Sarah Denmon bought the property in her name in July of 2003 using money from the sale of her and her husband’s prior homestead. Although her husband visited the property on several occasions, he bought a trailer home in his sole name in Giddings, Texas in July 2003. He did not, however, file a homestead exemption for his property until after he and Sarah divorced in 2004. The loan for improvements to the property was made in November 2003 when the couple was still married and the property qualified as the family homestead.

To fix a lien on a homestead, the person who is to furnish material or perform labor and the owner must execute a written contract setting forth the terms of the agreement. If the owner is married, the contract must be signed by both spouses. It is not necessary for a spouse to be listed on real property documents in order for homestead status to attach. Texas law is clear that possession of a homestead interest is not dependent upon ownership; a person is permitted to hold homestead rights in his or her spouse's separate property. Likewise, it has been held that no specific writing is needed to claim a homestead; therefore, the fact that Sarah did not file a homestead exemption is not proof that she did not intend it as such. To assert that the homestead protection of the Texas Constitution could be voided by mere failure to designate the property as a homestead for tax purposes would render the constitutional protection meaningless.

Held: Once a property has been dedicated as a homestead, it can only lose such designation by abandonment, alienation, or death. Here, it is undisputed the Shenandoah property was Sarah's homestead, despite her failure to file an exemption. By reaching the conclusions that Sarah had the ability to place a valid lien on the home and the lien was not in violation of the homestead protections of the Texas Constitution, the trial court essentially determined that either (1) the property was her single person homestead, or (2) despite being married, the property was not Carnell's homestead. As the court of appeals explained in the opinion, neither conclusion could be correct; therefore, the lien on the property was void.

Grant v. Clouser, 287 S.W.3d 914 (Tex. App.—Houston [14^th Dist.] 2009)

Homestead – Partition: Real property was owned by Shawna Clouser (25%), Mark Jamison (25%) and Ernest Clouser (50%). Shawna Clouser occupied the property as her homestead up until the time of this case. At the time of the dispute, a judgment creditor of Ernest Clouser had taken the property through a constable sale. Dr. Grant took title to the 50% interest at the sale and then filed an application for partition and an order of sale since the real property was not capable of partition in kind. Shawna Clouser objected to the application for partition arguing such action was barred since she had been using the property as her urban homestead since 1989.

Held: The trial court denied the partition by sale, but on appeal the court of appeals determined that the partition was proper. While homestead rights enjoy strong protection and are liberally construed in favor of the property owner, partition rights are also well-established. A homestead right must accommodate the right to partition in some circumstances. Courts have already held that in the context of divorce, the family homestead may be sold with the proceeds distributed and protected. Additionally, after the death of a surviving spouse, the heirs may partition the property even if the property is the homestead of another heir. In reaching its decision, the court of appeals stated that homestead rights can attach to property interests held by tenancy in common; however, such homestead rights cannot prejudice the rights of a cotenant. The general rule is that homestead rights attaching to property interests held by cotenants are subordinate to another cotenant’s right to partition. It was irrelevant how Dr. Grant obtained the 50% interest. What was relevant was that he became a co-tenant and opted for partition. Shawna’s homestead right was subordinate to Dr. Grant’s right to partition by sale.

State of Texas v. Bristol Hotel Asset Co., 293 S.W.3d 170; LEXIS 294 (Tex. 2009) (per curiam)

Eminent Domain: When the State of Texas widened part of Loop 410 in San Antonio, the State used its eminent domain power to condemn a part of the property owned by the Bristol near the airport. Before the road project, there were three entrances to the hotel. After the road project, only two entrances remained available and only after significant renovation. During the renovation of the entrances, parking spots were unavailable in different numbers. In the testimony regarding damages, in addition to the diminished fair market value of the land as a result of the taking, the expert also testified as to temporary damages to be awarded. The temporary damages were based on the unusable parking spaces during the renovation of the hotel entrances. Held: The Texas Supreme Court pointed out that in fixing damages in a condemnation proceeding, one should “consider the effect of the condemnation on the value of the property owner’s remaining property.” The Court also stated that all damages associated with a taking were not necessarily compensable. Remainder property damages were calculated by the difference between the fair market value of the remaining property immediately before and after the condemnation. The Court finally stated that “it is well settled that damages to a condemnee’s business which results merely from traffic being required to travel a more circuitous route to reach the condemnee’s property are not compensable.” The case was remanded for a new trial on the damages question.

Kazmir v. Benavides, 288 S.W.3d 557 (Tex. App—Houston [14^th Dist.] 2009)

Adverse Possession: Mr. and Mrs. Benavides entered lot 13 under a contract for deed. Upon entering the land and occupying the home thereon, they believed they were purchasing everything within the fences that were already erected. However, the fence that had been erected by the prior owner of lot 13 was actually four feet onto lot 12 owned by the Kazmirs. Additionally, right next to the fence line was a sidewalk, patio and several trees, all of which encroached onto lot 12. The Kazmirs, the owners of lot 12, both testified that they knew the fence and other improvements were on their property. They also both testified that they never requested that any of the improvements be moved. The fence and improvements were in place since 1967 and the Kazmirs did not take steps to remove the fence and improvements until there were efforts to sell the neighboring properties in late 2004 and early 2005.

Held: However, as the court ultimately determined, the owners of lot 13 had acquired the 4 foot area of lot 12 using the ten year adverse possession statute. Even though the Benavides no longer resided in the home on lot 13 after 1978, they continually rented the property and the tenants used the property in the same manner that the landlords had. Additionally, as to the dispute regarding the potential impact of the Benavides purchase via contract for deed, the court determined that situation was not comparable to a landlord-tenant relationship because in the contract for deed setting the purchasers were not tenants of the sellers. They achieved exclusive possession of lot 13 by virtue of the contract for deed in 1973. Finally, there was no problem with the Benavides’ intent to claim and visibly appropriate the disputed area. The Benavides testified that they believed everything within the fences around 13 to be theirs. They used the entire yard up to the fences, including the improvements. They also installed additional improvements in the disputed area, planted trees and bushes and maintained the yard up to the fences. The court determined that was legally sufficient evidence of their hostile intent to possess and was visible appropriation of the disputed area.