Those darned Restrictions!

Ready for the Summer selling season?  Here is a frequently asked question that has risen to the top:  How do you get rid of restrictive covenants or to make changes to existing restrictions against property which are detrimental to a sale?  Like all good lawyer answers, it depends!  Without any statement in the restrictions themselves about how to terminate or change them, it takes the consent of all those covered by the restrictions to change or terminate them.  Occasionally, a title company will agree that the restrictions have become invalid, if they are ignored by a substantial number of property owners over a significant amount time.  That is a case by case determination, however.  Also, the Legislature has made some provisions as to termination/amendment.  If there is a method for amending the restrictions in the restrictions themselves, that method must be followed.  Courts have ruled that if there is a method to amend restrictions, then they can also be completely terminated by that same procedure (unless that power is negated in the original restrictions).  Under current law, residential subdivisions in subdivisions in cities with a population over 100,000, the ETJ of such Cities and unincorporated areas in counties with population over 30,000 can form a petition committee, which can solicit votes to change restrictions by 75% majority.  There are some special situations (laws relating only to historic areas or to “amenity” properties (resort property), for example) the Legislature has provided a method for making changes where the restrictions contain no express provision to do so. So you have to know a number of factors before a definite answer can be given—but it can be done!

Home Abstract endeavors to be your Title Company of choice—we want your business!  Any way we can help you, please let us know.

David Carpenter

Vice President and General Counsel

HOME ABSTRACT AND TITLE COMPANY

Never ending Homestead issues!

We are frequently asked questions about homestead issues, and here are a couple which have risen to the top.  The twin issues of “overburdening” the homestead and “spreading” liens on homestead property seem to remain in question.

For many years, lawyers and title companies took the position that a giving a partial release of a portion of a homestead property created an “overburdening” of the remaining tract.  That is, the “per acre” or “proportion of value” allocation of the loan would be greater than at the inception of the loan and therefore impermissible, since the Texas Constitution only allows liens on the homestead for a strict list of reasons.  The fact is, there was little case law and no “black letter” law for that concept.  Article 16, Section 51 of the Texas Constitution was amended a number of years ago now to “fix” the problem, initiated by Stewart Title’s legislative group.  Per that provision, there is expressly now no  prohibition to partially releasing a portion of the homestead or refinancing the remaining debt after such a release.

Similarly, title companies took the position that a lien could not be “spread” to include new property added to the homestead (that is, another lot adjoining the current homestead or additional acreage being purchased for a rural homestead).  Section 5.042 of the Property Code was amended several years ago to allow an existing lien on the original tract to be extended to cover and include a newly purchased tract, so long as that tract does, in fact, qualify as homestead.  Thus, the value of the original homestead can be “mixed in” with the value of the newly acquired tract and a lien taken on both tracts.  So, that amendment made it possible to use homestead property already owned as collateral to buy more homestead property.

Home Abstract endeavors to be your Title Company of choice—we want your business!  Any way we can help you, please let us know.

David Carpenter

Vice President and General Counsel

HOME ABSTRACT AND TITLE COMPANY

The Survey Exception and its Deletion from a Title Insurance Policy

Some buyers and many lenders require the deletion of the “survey exception.”  Schedule B-2 of a title policy excepts to any “discrepancies, conflicts, or shortages in area or boundary lines, or any encroachments or protrusions, or any overlapping of improvements.”  While the Texas Department of Insurance does not allow the insurer to guarantee the area of property (that is, the amount of acreage), the balance of the clause other than “shortages in area” can be deleted from the exception, giving coverage to the other issues.  So what exactly is covered?

First, there are errors and conflicts in the original Land Patents which were granted to landowners in years past, due in part to primitive surveying methods.  These errors can lead to a “conflict” where two tracts overlap; or to a “vacancy” where there is a strip of unpatented land between two tracts.  Also, other deeds may contain descriptions which conflict with the stated boundary line of a tract.  So deleting the “Survey Exception” guarantees that the boundaries of the tract and the surrounding tracts are not in conflict.

Next, if a survey is provided, the survey is required to show any encroachments, that is, anything over the boundary line from adjoining property onto the subject tract.  Likewise, if an existing improvement on the subject tract is partly over the property line, it will be noted by the surveyor as a “protrusion” or if off the property, “overlapping of improvements.”  The same is true for encroachments and protrusions onto existing easements and recorded building set-back lines. These will be noted on the policy as exceptions, even if the survey exception is deleted, but if none appear, the boundary lines are guaranteed to be accurate, and the improvements are properly situated on the tract.

Questions?  Feel free to call or email for additional information on this or any other issue.

Prepared by J. David Carpenter, Vice-President and General Counsel, Home Abstract and Title Company.   DavidC@homeabstract.com; 254.715.8461.

Next Blog Post:  What is required to delete the survey exception and what does it cost for either an owner’s title policy or a mortgagee title policy

Home Abstract & Title Blog

Home Abstract and Title Company wants to provide you the highest level of service.  I have been with Home Abstract for about 6 months now, but I have been in the title industry for many years.  You will receive a brief blog from us from time to time, with the intention of passing along information which may be helpful to you. If you have questions or have always wondered about some aspect of title insurance, we are happy to address those issues.

Home Abstract endeavors to be your Title Company of choice—we want your business!  Any way we can help you, please let us know.

David Carpenter

Vice President and General Counsel

HOME ABSTRACT AND TITLE COMPANY

Waco’s oldest continuous business—since 1867.