Integrity Law Group PLLC

Texas Closing Checklist for Every New Homeowner

Whether you are purchasing your first home or the next real estate deal, closings can be a nerve racking process. There are a lot of factors that come into play in order to successfully close on a property. We have created a checklist for you to ensure your closing goes as smoothly as possible. 

We broke down the closing process into three stages: pre-closing, closing and post-closing. 

Pre-Closing 

  1. The Contract 

If you are the buyer and your offer was accepted by the seller, you will enter into a contract. Generally, your real estate agent will prepare the contract. If it is a residential property, agents typically use the TREC one to four residential contract. Your agent will also prepare the appropriate addendums. Be sure to thoroughly review the contract to ensure you understand all the terms. If there is something you do not understand, ask your agent for clarification, or, have a real estate attorney review the contract for you. 

  1. The Inspection 

Follow the terms of your contract and calendar your deadline for due diligence. Generally, the contract will outline your time frame for your option period. An option period is a specific timeframe that both parties agree to in which the buyer can terminate the contract for any reason without risking their earnest money. This time frame is crucial because it allows for you to perform your due diligence on the property before fully committing to the contract. You can order a property inspection report which will show you any concerns or issues with the property. 

  1. Lending 

Provide a copy of the contract to your lender so they have the material terms of the agreement. After the inspection is completed, you may discuss negotiation tactics with your real estate agent if there are concerns with the property. Make sure that your lender has copies of all amendments to the agreement if you agree to a different sales price or concessions/reductions are made. Then, contact your lender to ensure an appraisal for the property is ordered and scheduled. 

  1. Insurance and Title 

Shop around for home insurance companies that best suit your needs and select the insurance company that provides the amount of coverage for your home owner’s insurance policy. You may also need to send a copy of this information to your lender. Additionally, you will most likely need title insurance. The title company that was designated in your contract will provide you with a title commitment to start. Be sure to review the commitment, survey and abstract within the timeframe as stated in the contract. If you have questions about title be sure to contact a real estate attorney to review the commitment on your behalf. The attorney may spot issues and recommend an objection letter. To learn more about objection letters, read our article here. 

  1. Financing

To calculate how much you can afford for a property, the general rule of thumb is 30% of your gross monthly income on home related expenses. Take into consideration the mortgage, taxes, insurance, HOA fees, and cash reserves for home repairs or replacements. Also take into consideration other expenses unrelated to the property to understand your debt to income ratio. Financing should generally be done before purchasing a home, however, sometimes your finances or sale transactions change, then you should reevaluate your budget.

  1. Final Walk Through 

The day before or day of closing, go to the property. The final walk through gives you the opportunity to inspect the property before the official sale. During this time, inspect any agreed repairs, inspect all appliances, check whether all doors and windows are secured, working properly, or to your satisfaction, belongings of the seller are completely removed, check for signs of mold, check electricity and outlets, and inspect the exterior & backyard. 

Closing 

  1. The Parties 

First, know who all the important parties are. At closing, you will likely meet at your title company’s office and a title agent will be present. Prior to your closing make sure to ask your title agent what you need to bring on the day of closing and what needs to be completed prior to closing. For example, most title agents will request that you bring a valid form of identification such as your driver’s license. 

  1. Funding

You will also be required to bring your down payment at closing. Make sure to confirm

with the title agent if you need to bring certified funds or wire the funds beforehand and how far in advance the funds must be wired. Wire fraud is serious so be sure to double check the wiring information before you send the money. If you are uncertain if the instructions are legitimate, contact your escrow officer. 

Consider whether you want your real estate agent or an attorney present with you at closing to review the documents with you. If you are bringing additional parties, be sure to account for additional time for discussions amongst everyone. 

  1. Important Closing Documents 

Prior to your closing, you should set aside time to review all your documents to ensure the information is correct. Double check the names, address, loan amount, other contact information, etc A few important documents include: 

  1. The closing disclosure, 
  2. The deed of trust, 
  3. The note, and 
  4. The warranty deed. 

Post-Closing 

  1. Access 

After closing you should receive all keys, access codes, garage openers, etc. to your new property. If feasible, we recommend that you change all the locks on the property (if this was not previously completed). This ensures that you are the only people with access to the property. 

  1. Utilities 

If you haven’t already set up utilities, then connect your water, gas, electricity, and Wi-Fi. Typically, we suggest that you complete this prior to closing to ensure you have service by the time you close to avoid any periods of no service. 

  1. Homestead Exemptions 

If this is your primary residence, then apply for the homestead property tax exemption and any other exemptions that you qualify for. You can usually find the forms on the county website where the property is located. Confirm that all change of ownership documents with the county appraisal districts are  updated to reflect your information. 

  1. Important Documents 

Lastly, make an electronic copy of your closing documents and store the copy you  receive from closing in a safe place. 

Series Limited Liability Company (LLC)

What is a series LLC?

Historically, members had to file, manage, record, and report each LLC separately which meant more paperwork, more cataloging, more expense, and more reporting. That process created more unnecessary work and several issues for not only the members of the LLC but also for the states’ regulatory agencies. Some states have resolved this issue by enacting the series LLC. When done properly, a series LLC gives members protection from personal liabilities arising from multiple properties or operations without having the  extra expenses of multiple LLCs.

Series LLC also known as master LLC provides liability protection across multiple LLC entities. Business owners and investors (“Members”) create LLCs to protect their personal assets from legal liability. Members can add additional protection by forming series LLCs to hold each real property or business entity.

A series LLC is a designated “series” or “child” LLCs from the original LLC aka parent LLC. Each child can hold a specific property or properties, investments, assets, borrow money, or have a specific business purpose. In other words, each series can have its separate rights, powers, duties for specific assets or liabilities and can have a separate business purpose. Liabilities, debts, and obligations are only held against each child LLC and not against the parent LLC or other child(ren) LLCs. Each designated LLC has its own governing documents establishing its members, managers, and membership interests. It can also file lawsuits, be sued separately from the parent LLC, enter into contracts, hold title and secure interest in assets. 

According to the Texas Business Commerce Code (TBCC) Section 1.201(b)(27), Legislators defined Texas series LLC as a legal “person.” Under the Texas Uniform Commerce Code (TUCC) Section 9.102(3) a debtor is a person obligated on an account, chattel paper, or general intangible. This new law allows series LLCs to acquire assets through debt.

Series LLC are commonly used for business ventures, multiple investments or rental properties, or businesses that operate multiple channels of revenues. One of the benefits of a series setup is that Members can avoid filing separate tax returns for each series. 

How does someone form a  Texas series LLC?

According to Texas Business Organizations Code (TBOC) Section 101.602(a)(1)-(2), specific languages must be included in the certificate of formation, operating agreement, and maintain separate books and records for each series. In order to receive series LLC benefits, the series must be filed with the Texas Secretary of State, have a unique name from its siblings and parent LLC, conduct business, and be in compliance with the Texas Business Commerce Code and Texas Business Organizations Code. 

There are three  types of series LLC: (i) registered LLC, (ii) protected LLC, and (iii) series LLC that doesn’t fall into registered or protected LLC class. 

The minimum requirements to get the benefits of a series LLC is under TBOC Section 101.602(a)(1)-(2) which states that the series LLC must be included in the certificate of formation and company agreement, and the company must maintain separate records for the assets of each series. See TBOC section 101.601 through 101.621. Generally, under the certificate of formation, under the supplemental text section of the form, you add the series information. 

Protected series requires that the LLC certificate of formation must provide notice of the series structure and the LLC agreement must permit the formation of different series. The series LLC must be properly recorded and maintain accounts for separate assets and liabilities for each series. Essentially, to file for a protected series, you must file an assumed name certificate in compliance with Chapter 71 of TBOC. 

Registered series requirements are the same as protected service with additional documentation that a certificate of registered series is filed with the Texas Secretary of State by the parent LLC. When done properly, this is particularly beneficial when  a third party vendor or purchaser of the company requires a certificate of status which shows the registered series in use and in good standing with the State. Additionally, registered series can file other documents with the Texas Secretary of State in relation to that series and provide certified copies to third party vendors or purchasers. 

To form a name for a registered series, it must state the name of the parent company, followed by R.S or RS, then name of the series. For instance, if the parent is Texas Real Estate Group LLC, the following are acceptable: 1. Texas Real Estate Group LLC – RS Harvest Blue Houston or 2. Harvest Blue Houston, a registered series of Texas Real Estate Group LLC.

Texas is one of the few states that offer series LLC. Not all states will recognize Texas series LLC, however, Texas is unique in that it will allow you to register out of state series LLCs also known as foreign series LLC. 

The laws of a series LLC are ever changing and ever growing. It is a relatively new law and solution provided by some states. Although this article provides some basic information on the series LLC, we always recommend that you do additional research through credible sources and keep up with the law. We will always make good faith efforts to continue to update our articles and resources. 

To learn more about series LLC, contact us to schedule a consultation.

8 Layers of Asset Protection for Texas Residential Landlords

Investing in rental properties has tax and wealth building advantages. Like any other  business, mitigating risk is necessary to protect your assets. Oftentimes, individuals believe that forming an entity is enough to protect oneself from legal liability. This is far from the truth. Landlords get sued for various reasons such as poorly maintained property, unpaid mortgages, liens against the property, dispute of landlord responsibilities,  the list goes on and on.  

To increase asset protection, consider using a multi layer barrier approach that impedes possible claimants from future lawsuits. While this may not be 100% legal liability proof, you’ll greatly reduce your chances. Additionally, insurance companies and entities may not protect landlords who are proven negligent, grossly negligent by acts or omissions, or determined to violate the law. 

Below are 8 layers of asset protection.

1. Have the Property Under an Entity

  • When an entity is created, it becomes separate from its owner which reduces liability for the landlord. 
  • Landlords can form a corporation or a limited liability company (LLC). LLCs are more common for their flexibility. Learn more about LLC formations here. 
  • Be wary of the corporate veil. Piercing the corporate veil is an equitable remedy under Texas Business Code Section 101 when owners/landlords commingle funds (personal funds are mixed with company funds), do not treat the company as a separate business entity, use the company to commit illegal acts such as actual fraud, personal guarantees, diversion of company profits for individual personal use, inadequate capital, failure of proper legal documents. 
  • Under Texas Business Code Section 101.114, exceptions to piercing the corporate veil states: “Except as and to the extent the company agreement specifically provides otherwise, a member or manager is not liable for a debt, obligation, or liability of a limited liability company, including a debt, obligation, or liability under a judgment, decree, or order of a court.”
  • According to Castleberry v. Branscum Texas Supreme Court established the veil piercing doctrine stating that entities usually protect shareholders, officers, and directors from company liabilities, however if those individuals abuse this privilege, that individual is held liable.  Castleberry v. Branscum, 721 S.W.2d 270 (1986). The court specifically lists reasons for disregarding privilege:
  • When the fiction is used as a means of perpetrating fraud;
    1. Where a corporation is organized and operated as a mere tool or business conduit of another corporation;
    2. Where the corporate fiction is resorted to as a means of evading an existing legal obligation;
    3. Where the corporate fiction is employed to achieve or perpetuate monopoly;
    4. Where the corporate fiction is used to circumvent a statute; and
    5. Where the corporate fiction is relied upon as a protection of crime or to justify wrong.

2. Create the Entity with Anonymity 

  • If people think you’re judgment proof, they’re less likely to sue you because they think that there are no assets to collect on. In other words, you’re less of a target for lawsuits.
  • Anonymity reduces the risk of harm or dangers to you.
  • Anonymity limits access and knowledge to your financial information.

3. Implement Terms in the Lease that Protect the Landlord

  • The Texas Realtors Residential Lease Agreement is commonly used among landlords, however it’s not a catch all agreement for terms that protect the landlord. If there are specific terms, not already in the lease agreement that offer additional protection and that are permitted by the Texas Property Code, add them.While this sounds like common sense, common sense is not always common. At Walter & Truong PLLC, we draft, review and implement terms to increase protection for landlords. 
  • Read the entire lease agreement to make sure you understand yours and the tenant’s rights and responsibilities.
  • Put your expectations in the lease agreement so in the event that issues arise, those issues are addressed. 

4. Purchase an Umbrella Insurance Policy

  • Umbrella Insurance Policies are used as  additional coverage after landlord liability insurance is reached.
  • It’s also used for claims from a tenant, guest, or adverse possessors on vacant property injured on the property. Arguably, adverse possessors have a higher burden to prove the owner’s responsibility of injury. 
  • Unlike property-specific insurance policies, an umbrella policy can provide coverage for multiple rental properties in different cities and states. It may even cover the landlord’s residence. 

5. Require Tenants to Buy Renter’s Insurance 

  • The benefits of renter’s insurance is that it covers loss of personal property due to theft and negligent destruction from tenant to landlord’s property among other things. This is especially important when tenants are judgment proof and recovery from tenants are unlikely. 
  • This may reduce landlords from legal liabilities, help reduce insurance premiums for landlords, and help with tenant screening.  

6. Understand Landlord Responsibilities & Rights and Tenants Responsibilities & Rights. 

  • Part of protecting yourself from liabilities requires educating yourself. When leasing space to tenants, you must understand what you can and cannot do as well as what tenants can and cannot do. Landlords that do not know their responsibilities and rights are susceptible to breaking the rules. Ignorance is not a winning defense in court. 
  • A few of landlord requirements include refunding security deposits when tenants have completed their obligations, respect Tenants’ right to use and enjoyment of the property, and follow the Federal Fair Housing Act.
  • For more details of Residential Landlord Rights and Responsibilities click the link here to read our article.

7. Maintain the Property in Safe Condition. 

  • Keep the property habitable for tenants. This means landlords should maintain their rental property in a livable condition. It’s generally in the landlord’s best interest to mitigate health and safety issues.  
  • Keep the property in a reasonably safe condition to minimize personal injuries. Landlords are not required to fix every potential hazard. If the tenant created an unsafe condition, the tenant is likely to be liable. The landlord is not liable for the tenant’s injury to himself/herself. There are limits that protect the landlord from the property’s condition.

8. Follow Proper Eviction Procedure

  • Texas Property Code Section 24 and Texas Rules of Civil Procedure 500 lays out rules for tenants to abide by. Courts frown upon landlords that do not follow these rules. Additionally, landlords may be penalized for improper evictions.
  • Insurance coverages do not protect landlords from improper evictions.
  • Tenants may have viable claims against landlords who do not follow the proper procedure such as locking the tenant from the property, providing the wrong content or incorrect delivery of  written notice to vacate.

To learn more about asset protection, contact the real estate attorneys at Integrity Law Group PLLC.

Texas LLC Formation

A limited liability company (LLC) is a business structure that is permitted by individual state statutes. In Texas, the Business Organizations Code allows for the creation of LLCs. An LLC is formed by filing a certificate of formation with the Texas Secretary of State. Generally, an LLC is owned by its members. The LLC is a separate legal entity from its members, therefore providing liability to its members (except in the case of piercing the corporate veil, etc.). An LLC can serve many purposes, such as for your small business, or if you are a real estate investor, it can hold your rental properties. There are advantages and disadvantages to forming an LLC: 

To name a few advantages: 

  • Offers some asset protection, 
  • Tax advantages,  
  • Succession planning opportunities, 
  • Separation between yourself and your business, 
  • Anonymity, and 
  • Credibility as an established business.

However, there are also disadvantages: 

  • Requires maintenance/upkeep,  
  • Costs, 
  • Individuals are responsible for paying self-employment taxes,
  • LLC does not fit all business criteria (ex. LLC are not eligible for Section 1202 Gain Exclusions, pass through investment, complex capital raising etc), and
  • If the LLC is formed for rental properties, you may run into lending issues, etc. 

Within the LLC formation there is also the series LLC. To learn more about series LLCs click here. Additionally, there are other types of businesses that you can form in Texas, including partnerships, sole proprietorships, corporations, etc. To learn more about other business entities, be sure to check out our articles and resources tab. After you have done your research and you decide that an LLC is the best choice to suit your needs, the steps are: 

  1. File a certificate of formation with the Texas Secretary of State,
    1. Be sure to check the name availability of your LLC first. If a name is already in use, you have to come up with another name, 
    2. Also, consider whom you want to name as your registered agent (typically you can name yourself. There are also registered agent services you can find online. The advantage of using a registered agent is that you can use their physical address instead of your own. This is especially important if you do not have an office address and plan to use your home address. Additionally, Walter & Truong PLLC offers this service. Reach out to a Walter & Truong LLC attorney to find out more),  
  2. This step is optional, but recommended, file for an employment identification number (EIN) with the Internal Revenue Services (IRS),
  3. Create an operating agreement (and other necessary documents such as resolutions if needed),  and 
  4. If you have more than one member, plan your initial meeting with all the members. 

Although the steps are fairly straightforward, if it is your first time creating a business entity, you may have additional questions about proper procedure, forms, documents, and other concerns. For a flat rate Walter & Truong PLLC can take care of the whole process for you. Contact us to schedule consultation here to get started.

Why do you need a Texas Prenuptial Agreement?

There’s a social stigma attached to prenuptial agreements. Sometimes happy couples think that they don’t need one because they trust one another and would never plan on getting a divorce. However, a prenuptial agreement is similar to an insurance policy, we all have one, and we hope not to have to use it, but in any event, if something bad happens, we have it to take care of us. Similarly, we get married in hopes of staying with our partners forever, but things change, people change and we want to be prepared for those situations. 

In fact, a prenuptial agreement can make a relationship stronger because it requires couples to talk about hard issues like their finances and estates.

A prenuptial agreement is a contract entered into by partners before they become spouses. Although we know them as prenuptial agreements, Texas recognizes them under the Texas Uniform Premarital Agreement Act or the Texas Family Code as a premarital agreement. In Texas a premarital agreement can include terms regarding rights and obligations regarding property and disposition of property in the event of divorce. In addition to that a prenuptial agreement can lay out other terms between you and your partner such as: 

  1. Creation and utilization of a joint bank account, 
  2. Dispute resolution methods (such as marriage counseling or mediation), and 
  3. Confirmation and characterization of separate property. 

There are a few requirements to ensure that a prenuptial agreement is enforceable in Texas. For instance, the agreements must be in writing and signed by the parties. Generally, both partners will have an attorney represent them and review the agreement to ensure that they are each signing the agreement knowingly and voluntarily. Additionally, the agreement may have the parties exchange inventories or understand the assets and liabilities each are bringing with them into the marriage. Lastly, the agreement must not violate public policy, implicate criminal culpability or be unconscionable. 
If you already have an agreement and would like it reviewed by an experienced family law and real estate attorney, contact our office. A married couple may jointly amend or terminate their current agreement and enter into a new agreement. Or, if you do not have anything in place but are interested in inquiring more about premarital agreement, schedule a free consultation here.

The Difference between Community Property vs. Separate Property in Texas

Most individuals don’t consider the difference between community property and separate property until they are facing a divorce. At Walter & Truong PLLC we educate our clients on the importance of how property is characterized in the state of Texas because Texas is one of a few  community property states. Upon divorce in Texas all community property is subject to division by a just and right manner. However, a court may not divide a person’s separate property. Therefore, understanding the definition and how property is characterized in Texas is important. 

The Texas Family Code Chapter 3 defines separate property as: 

SEPARATE PROPERTY.  A spouse’s separate property consists of:

(1)  the property owned or claimed by the spouse before marriage;

(2)  the property acquired by the spouse during marriage by gift, devise, or descent;  and

(3)  the recovery for personal injuries sustained by the spouse during marriage, except any recovery for loss of earning capacity during marriage.

On the other hand, community property is defined as: 

COMMUNITY PROPERTY.  Community property consists of the property, other than separate property, acquired by either spouse during marriage.

In Texas, there is a presumption under the Texas Family Code that all property acquired during the marriage is presumed to be community property unless proven otherwise by clear and convincing evidence. 

PRESUMPTION OF COMMUNITY PROPERTY.  

(a)  Property possessed by either spouse during or on dissolution of marriage is presumed to be community property.

(b)  The degree of proof necessary to establish that property is separate property is clear and convincing evidence.

Some examples of community property assets include: 

  • Money, 
  • Stocks, 
  • Retirement accounts (such as 401(k)s, IRAs, etc.) 
  • Real estate, and 
  • Cars. 

During a divorce if one spouse is claiming that a particular asset should be characterized as separate property, they have the burden of proof. This can typically be proven by showing when the property was received by them through a recorded title (before marriage), or that the asset was a gift or inheritance (through a properly probated will). 

One of the many common mistakes that are made is that if an asset is titled in your name separately that it belongs solely to you. This is oftentimes incorrectly assumed because the Texas Family Code presumes that any property possessed by the parties during or on the dissolution of marriage is community property. As such, a court may conduct its due diligence and determine that an asset titled in one party’s name is in fact characterized as community property. It is not the end of the world and an experienced attorney with a background in real estate and family law can assist you. However, we believe that it is best to take precautions and be proactive rather than reactive. So, the best plan of action is to discuss a prenuptial agreement with your significant other before tying the knot. Read more about prenuptial agreements.

Regardless of where you are in the process of your divorce, contact an attorney at our office to seek legal advice in your matter. We have experienced attorneys in real estate and family law who can help guide you through your case. 

Investor’s Guide on Becoming a Texas Residential Landlord

A key component to the buy-and-hold strategy for Texas real estate residential investors is property management. While collecting rent may seem like easy passive income, there are several Texas residential landlord tenant laws and regulations in place for landlords. As a first time landlord, investors may face uncertainty and make mistakes along the way. This guide is designed to point out key issues and considerations for a newly anointed landlord.

First, consider whether you plan on making your property a long term rental (typically 12 months) or short term rental. If you plan on the short term rental route, be sure to review your local homeowner’s association rules also known as declaration, and covenants regarding single family home dwellings. Once you have confirmed it’s acceptable, plan your rental listing platforms, tenant screening process and management process.

For long term rentals you may consider using platforms such as Zillow.com or Apartments.com for online listings. Both long term and short term rentals may be posted on social media market platforms such as Facebook. Additionally, there are short term rental platforms like VRBO or Airbnb. You may also consider listing it on your local newsletter or newspaper. Few residential landlords will also have a physical sign indicating the property is for rent. Lastly, you can go a more traditional route and find a realtor to post the listing on HAR.com for you, but they typically require a fee. On average the fee will be the same amount as the first month’s rent, but be sure to check with your local realtor or broker as each office operates differently.

Once you have a successful listing, consider your tenant screening process. We have a short and handy checklist here under our resources tab. Depending on what platforms you list on, you may be receiving calls and emails daily with potential residential tenants requesting showing or additional information and sending applications. A tip is to create a short and simple script that you can use over and over throughout the process, making it seamless each time you handle another call or email.

The screening process should include some form of credit check, background check, and identity confirmation through the application. A common application form is the Texas Realtors Residential Lease Application (TXR-2003). You should also set an income requirement (typically 3x the monthly rent) and verify the potential tenant’s ability to pay. Additionally, it is important to confirm the tenant is employed and received good referrals from previous landlords. Come up with an outline of requirements for the potential tenant to meet that ensures they have good credit history and are a responsible tenant. In the event you decline an application, you should inform the potential tenant in writing through an adverse action letter.

Once you have determined who your new tenant will be, send them a deposit to hold letter and welcome letter outlining their lease agreement start date, security deposit amount, first month’s rent and any other requirements before move in. To see a sample of a deposit to hold letter and welcome letter, subscribe to our mailing list.

Prepare the necessary documents to execute prior to the tenant moving in. These documents may include a lease, pet addendum, inspection report, community/house rules and disclosures. You may need additional documents or addendums depending on your situation.

Finally, once the documents are executed and the tenant receives the keys to the property, set up your management procedure. Consider how the tenant will pay monthly rent, such as through mailing certified funds, online payments or personal pickup/delivery of payments. Be sure to explain to your tenant how to submit a maintenance request or how to contact you in an emergency.

From there do your best to maintain a stable and productive relationship with the tenant. In the event of a lease violation or eviction, see our article on residential evictions for more information.

Landlording can be daunting for a new residential investor, so be sure to check out online resources and seek help from professionals or a mentor.

Our firm handles landlord/tenant issues for our investor clients regularly. We would be happy to help you. To speak to an attorney and learn more about our services, schedule a consultation here.

Residential Texas Evictions

An eviction is the judicial process when a landlord may remove a tenant from the premises. Although many people commonly know the term eviction, some may be unfamiliar with the legal term in the Texas Property Code, a “forcible detainer” action. There are several causes for evictions such as (1) non-payment of rent, (2) holding over after the lease term has expired, (3) violation of the lease agreement or (4) foreclosure of a property. See our foreclosure series for more information on foreclosure eviction proceedings.

Evictions are governed by Chapter 24 of the Texas Property Code and Civil Procedure Rule 500. The process starts with providing the tenant with a proper notice to vacate. Under the Property Code, a landlord is required to give at least three days’ written notice before a landlord can file the forcible detainer suit. However, a written lease may provide for a shorter or longer period of time.

After the required prescribed time is met, the landlord will file an original petition for the forcible detainer action in the justice of the peace court within the precinct where the property is located. Then, the tenant will be served with notice and a trial date will be set by the court’s clerk. At the trial, the judge will make a determination as to which party has the superior right of possession to the property and the amount of damages, such as back rent, attorney’s fees, court costs, etc.

In the event the landlord receives judgment in their favor, the landlord may file a writ of possession with the court to proceed on regaining judicial access to the property. However, a tenant may appeal the eviction decision within a certain timeframe as ordered by the court. If the tenant successfully appeals the case, the case will be appealed de novo (meaning a new case) and will be sent to the county court. Then the whole process starts over. There are certain requirements a tenant must meet if they attempt to appeal the judgment such as paying a cash bond or filing a proper pauper’s affidavit.

Whether you are a seasoned landlord or a first timer, evictions may be stressful and time consuming. Additionally, each county may have their own requirements. Reach out to an experienced Texas residential eviction attorney at Integrity Law Group PLLC to provide you with the legal advice you need to accomplish your goals.

Residential Landlord Rights and Responsibilities

Chapter 92 of the Texas Property Code governs the residential landlord tenant relationship. In addition to the Texas Property Code there are Federal rules and regulations that outline a landlord’s rights and responsibilities. In this article we outline key rights and responsibilities for Texas landlords. This is not an extensive list and landlords should always do research in their local markets to ensure that they are in compliance with all county and city regulations in addition to the items listed below.

Texas Landlord’s Duty to Repair

Subchapter B of Section 92 explains that a landlord must make a diligent effort to repair or remedy a condition when:

  • The tenant has specified the condition in a notice to the person who normally collects rent or to the place where rent is normally paid,
  • The tenant is current on rent payments when the notice is given, and
  • The condition:
  • Materially affects the health and safety of an ordinary tenant, or
  • Arises from the landlord’s failure to provide and maintain in good operating condition a device to provide hot water of a minimum of 120 degrees Fahrenheit.

The lease agreement may require that the notice be in writing and delivered in a certain manner by the tenant. However, as a practical matter, any notices between the parties should be in writing and delivered in a trackable manner or with a witness to verify delivery.

Unless a problem is caused by normal wear and tear, the landlord has no duty to repair conditions caused by:

  • The tenant,
  • A lawful occupant of the premises,
  • A member of the tenant’s family,
  • A tenant’s guest or invitee.

Texas Landlord’s Duty to Return Security Deposit

Subchapter C of Chapter 92 dictates the rules regarding security deposits. As most landlords are familiar with, a tenant may be required to pay a security deposit prior to moving into the premises. A security deposit is typically used to repair damages to the premises after a tenant moves out. A landlord may not recover changes from a security deposit for normal wear and tear, which is defined as “deterioration that results from the intended use of the dwelling.” However, normal wear and tear does not include the “deterioration that results from negligence, carelessness, accident or abuse of the premises.” Texas Property Code, Section 92.001[4]. In order to make deductions for repairs a landlord is required to give the tenant a written, itemized list of all the deductions.

According to Section 92 a landlord is required to return the security deposit 30 days after the tenant surrenders the premises. Additionally, if the landlord has made deductions from the security deposit, an accounting must also be provided. However, a tenant is required to give the landlord a written statement of the tenant’s forwarding address for purposes of refunding the security deposit. Until the forwarding address is received, the landlord has no duty to return the tenant’s security deposit or give the tenant a written description of damages and charges.

A landlord who wrongly withholds a security deposit or fails to provide a written description of the accounting may be liable to the tenant for damages.

Quiet Enjoyment

A covenant is a promise under the law. A covenant for quiet enjoyment is a promise by the landlord to the tenant that the landlord will not disturb the tenant’s quiet use and enjoyment of the property. This breach can occur when a landlord prevents a tenant from entering the property. However, landlords have the right to exclude tenants under certain circumstances, such as for bona fide repairs, construction or emergencies as long as it is in compliance with the Texas Property Code. Additionally, the landlord does not breach this covenant if the exclusion occurs due to the tenant abandoning the property.

In some instances, a landlord may be liable for constructive eviction. Constructive eviction occurs when (1)  the landlord’s contact materially and permanently interferes with the tenant’s use of the premises and (2) the tenant leaves the property because of the interference. Essentially, the landlord’s actions force the tenant to vacate the property.

However, landlords have the right to evict tenants judicially under Chapter 24 of the Texas Property Code. Or, a landlord may force tenants to leave non-judicially according to the lease. See our article on evictions.

Fair Housing Act

The Texas Department of Housing and Community Affairs (TDHCA) in conjunction with the Texas Workforce Commission regulates the Texas Fair Housing Act. The Fair Housing Act is a federal regulation. Additionally, Texas has its own fair housing policies. The Fair Housing Act prohibits a landlord from discriminating a tenant based on the seven protected classes. These classes include color, religion, race, national origin, sex, disability and familial status. Generally, the Fair Housing Act covers most housing, except (1) owner-occupied buildings with no more than four units, (2) a landlord that only has a few single-family homes that were sold or rented without the use of a broker and (3) housing operated by organizations and private clubs that limit occupancy to members.

Landlords are prohibited from the following:

  • Refusing to rent or negotiate,
  • Make housing unavailable,
  • Deny a property,
  • Set different terms, conditions or privileges,
  • Provide different housing services of facilities,
  • Deny anyone access to or membership in a facility, and
  • Advertise or make any statement that indicates a limitation or preference.

This is not an exhaustive list but is meant to give landlords an idea of what is protected under the Fair Housing Act. In the event a landlord discriminates against a tenant a tenant may file a Fair Housing Complaint, which may subject the landlord to investigations. Additionally these  violations are subject to penalties.


While this article lists key responsibilities of landlords, it is ultimately only intended to be a guide. A landlord’s responsibilities may also be designated in the lease or other local rules, regulations and ordinances. If you have questions about any of the responsibilities we discussed above or would like to know more about a Texas landlord’s rights and duties, schedule a free consultation here.

Texas Foreclosure 101 for Investors

Purchasing properties at foreclosure sales can be an opportunity for investors. Some of these properties are offered at a fraction of the market value which is one of the reasons investors are incentivized to buy. Before purchasing a property, there are several steps to consider. Here is a basic overview of the foreclosure process.  

TOP 5 DUE DILIGENCE STEPS FOR PRE-FORECLOSURE 

There are three types of foreclosures: (1) tax sale, (2) trustee sale, and (3) HOA sale. Tax sales are government lines that usually have superior priority over other liens. Trustee sales are mortgage liens. Usually, these mortgage liens have priority over HOA liens. If the HOA lien is junior to the mortgage lien, it will extinguish at the sale. Mortgage liens are generally junior to government liens, therefore, additional diligence is necessary to ensure that those liens are not on title or that you are accounting for additional costs when purchasing the property. HOA liens are junior to government liens and most mortgage liens. Before purchasing from an HOA sale, you should conduct a title search.

1.      TITLE SEARCH = When conducting a title search look for liens, release of liens, any break in chain of title, Lis Pendens and abstract judgments. If you are not familiar with the title search procedure, you should seek a professional with experience. There are many title search companies available that can help you.

2.      CONTACT TRUSTEE = Reach out to the trustee of the property. Some trustees may provide an inspection report and let you view the interior of the property. Note that trustees are not obligated to provide such reports or allow you on the property.

3.      PHYSICAL CHECK = If you have permission you should physically check the property prior to the sale or have a professional inspector. Account for costs associated with capital expenditures such as the condition of the roof, foundation, and HVAC. Also check to see if the property is in a flood zone and whether there are any environmental contaminants. Be sure to check the neighborhood and surrounding areas. *Be aware that you are not allowed onto the property without permission by an authorized representative or agent.*

4.      TENANTS OR OCCUPANTS = Tenants or occupants may be residing on the property even after you purchase the property at a foreclosure sale. The proper procedure to remove tenants or occupants from the property is an eviction proceeding.  Otherwise, you can make an arrangement to rent the property to them.

5.      FINANCIAL ANALYSIS = Make your own financial analysis for equity. This can be done in several ways. One method is to research the fair market value of the property and surrounding properties to compare that value to the estimated cost of repairs, cost of any liens, and cost of any judicial action needed for eviction.  

6.      BONUS – OTHER DUE DILIGENCE TO CONSIDER = If there is a wrongful foreclosure action related to this property, it may put you in a legal battle. Wrongful foreclosure claims may prevail when the debtor or owner is an active military member, bankruptcy action is pending, or probate is pending. Check bankruptcy twice, during your due diligence and the day of sale because last minute bankruptcies may be filed. 

Other resources: Check for environmental issues: www.tceq.state.tx.us

Every property and transaction is unique, but these tips are the top five that we recommend to you as a guideline for some of the decisions and tasks to be completed before the foreclosure sale. For questions about this or more information about foreclosure sales, please contact us.

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