In a recent case out of a Dallas, the Court found that a credit card agreement may be implied under certain circumstances. In this case, Bank X issued a credit card to the debtor. Bank X then merged with another bank, Bank Y. Bank Y sued the debtor to collect the balance on the credit card. The debtor argued that Bank Y had not produced an agreement between the debtor and Bank Y, that the debtor had not made an agreement with Bank Y, and that the debtor was, therefore, not liable.
Even though there was no written agreement, the Court found that the debtor and Bank Y had an implied agreement. An “implied contract” can arise from the acts and conduct of the parties.
The Court noted conduct of the parties evidencing an implied agreement. The initial interest rate on the account was set forth on the first billing statement, and the financial terms in effect each time the card was issued were set out on each monthly statement. One of the monthly statements informed debtor of merger and stated that words “we, us and our” as used in cardmember agreement now referred to bank Y. Even after debtor was given notice of the merger, new charges were made on account almost every month and late fees and “over the limit” fees were periodically assessed which the debtor did not object to or dispute. The Court determined that based on the series of transactions reflected on the account statements, it was reasonable to infer that the debtor agreed to the full amount shown on the statements and impliedly promised to pay the indebtedness.
Monday, February 16, 2009
Tuesday, February 10, 2009
Texas Foreclosure Procedures
In order to set up a non-judicial foreclosure, the lender must do several things in order to have the ability to foreclosure their security interest, or what we call a Deed of Trust. First, the loan papers (or "documentation") must include an obligation to pay (usually called a Note, Real Estate Lien Note, Promissory Note, or Note with Vendor's Lien) and should also include the security agreement (usually referred to as a Deed of Trust). The Deed of Trust gives the lender the right to "foreclose" its security interest if the Obligor fails to pay. The Deed of Trust should appoint a "trustee" and must contain a "power of sale." The Deed of Trust should also give the lender the right to designate "Substitute Trustee." In Texas, the foreclosure is usually by way of a "non-judicial" foreclosure, or by way of the posting of the property for sale on the first Tuesday of the month.
The following steps contain the basic procedures that the lender must go through in order to get to the point where they may foreclose the lien:
1) Demand for Payment - once the Obligor defaults in the making of one or more payments, the lender must give notice of the default and demand the overdue payment or payments.
2) Notice of Intention to Accelerate - prior to being able to foreclose its lien, the lender must give notice of intention to accelerate. The Notice of Intention to Accelerate is usually combined with a demand for payment. The notice should give at least ten (10) days within which the Obligor can cure the default. If the property is the Obligor's "residence," then the Notice of Intention to Accelerate should give the Obligor at least twenty (20) days notice. After the appropriate time period has expired, then the lender is free to "post" the property for a non-judicial foreclosure.
3) Notice of Foreclosure - assuming that the Lender has a valid Deed of Trust and that the lender has appropriately moved to foreclose through the designated trustee or its "substitute" trustee, then after the expiration of time on the Notice of Intention to Accelerate, the lender can "post" the property for foreclosure. This is done with the giving of Notice of Foreclosure. The Notice must be posted at the Courthouse and must be send via Certified Mail, Return Receipt Requested to the last known address of the debtor. Because only the sending of the certified mail is required, it does no good to attempt to refuse delivery. You are only denying yourself the information contained in the Foreclosure Notice. The Notice must give the debtor at least 21 days notice of the foreclosure, and must inform the debtor of the time, date, and place of the foreclosure sale. Foreclosure sales take place at the location designated by the Commissioner's Court for each County in which the property (or any part of the property if the property is located in more than one County) is located.
4) Posting of the Property - the Notice of Foreclosure should then be "posted" at the designated location where notices are given at the County Courthouse (or other designated location). The Notice should be posted for the full twenty one (21) days prior to the sale and must be filed with the County Clerk's office.
5) Foreclosure Sale - The foreclosure sale should take place on the designated date between the hours of 10:00 a.m. and 4:00 p.m., that date being the first Tuesday of the month of the foreclosure sale. The sale must begin within three (3) hours of the time stated in the notice of foreclosure. At the foreclosure sale, the trustee or substitute trustee must "strike off" or sell the property to the highest bidder. The trustee is not required to sell the property for any particular price. For this reason, if your property is being foreclosed upon you should at least attend the sale.
6) Substitute Trustees / Trustee's Deed - the final step in the process is for the Trustee (or Substitute Trustee if one was appointed) to prepare and file a Trustee's or Substitute Trustee's Deed to reflect that the property was sold. The Deed will then transfer title of the property to the purchaser or back to the lender, as the case may be. You should check the Deed to be sure that it accurately reflects what happened at the foreclosure sale.
Due to the complexity of these proceedings and the possibility of many pitfalls (or loopholes as many call them), if you have questions about the validity of any foreclosure sale, you should seek the advice of an attorney who is experienced in foreclosure litigation and foreclosure sales.
The following steps contain the basic procedures that the lender must go through in order to get to the point where they may foreclose the lien:
1) Demand for Payment - once the Obligor defaults in the making of one or more payments, the lender must give notice of the default and demand the overdue payment or payments.
2) Notice of Intention to Accelerate - prior to being able to foreclose its lien, the lender must give notice of intention to accelerate. The Notice of Intention to Accelerate is usually combined with a demand for payment. The notice should give at least ten (10) days within which the Obligor can cure the default. If the property is the Obligor's "residence," then the Notice of Intention to Accelerate should give the Obligor at least twenty (20) days notice. After the appropriate time period has expired, then the lender is free to "post" the property for a non-judicial foreclosure.
3) Notice of Foreclosure - assuming that the Lender has a valid Deed of Trust and that the lender has appropriately moved to foreclose through the designated trustee or its "substitute" trustee, then after the expiration of time on the Notice of Intention to Accelerate, the lender can "post" the property for foreclosure. This is done with the giving of Notice of Foreclosure. The Notice must be posted at the Courthouse and must be send via Certified Mail, Return Receipt Requested to the last known address of the debtor. Because only the sending of the certified mail is required, it does no good to attempt to refuse delivery. You are only denying yourself the information contained in the Foreclosure Notice. The Notice must give the debtor at least 21 days notice of the foreclosure, and must inform the debtor of the time, date, and place of the foreclosure sale. Foreclosure sales take place at the location designated by the Commissioner's Court for each County in which the property (or any part of the property if the property is located in more than one County) is located.
4) Posting of the Property - the Notice of Foreclosure should then be "posted" at the designated location where notices are given at the County Courthouse (or other designated location). The Notice should be posted for the full twenty one (21) days prior to the sale and must be filed with the County Clerk's office.
5) Foreclosure Sale - The foreclosure sale should take place on the designated date between the hours of 10:00 a.m. and 4:00 p.m., that date being the first Tuesday of the month of the foreclosure sale. The sale must begin within three (3) hours of the time stated in the notice of foreclosure. At the foreclosure sale, the trustee or substitute trustee must "strike off" or sell the property to the highest bidder. The trustee is not required to sell the property for any particular price. For this reason, if your property is being foreclosed upon you should at least attend the sale.
6) Substitute Trustees / Trustee's Deed - the final step in the process is for the Trustee (or Substitute Trustee if one was appointed) to prepare and file a Trustee's or Substitute Trustee's Deed to reflect that the property was sold. The Deed will then transfer title of the property to the purchaser or back to the lender, as the case may be. You should check the Deed to be sure that it accurately reflects what happened at the foreclosure sale.
Due to the complexity of these proceedings and the possibility of many pitfalls (or loopholes as many call them), if you have questions about the validity of any foreclosure sale, you should seek the advice of an attorney who is experienced in foreclosure litigation and foreclosure sales.
Saturday, January 31, 2009
Texas Landlord Remedies for Commercial Rent and Anticipatory Breach and Abandonment
If you are a commercial property owner in Texas and the tenant tells you they are leaving mid lease term, what are the options for the landlord? The Texas Supreme Court set out a Texas landlord's options for abandonment and breach of the lease as follows:
Austin Hill Country, 948 SW2d at 299-300.
It should be remembered that under Texas Property Code Sec. 91.006, a Texas landlord has a duty to mitigate (in other words, try to relet the premises). However, the actual burden of proof is on the tenant to show that the landlord failed to mitigate and also show the amount that could have been saved but for the landlord's failure to mitigate. Id.
Recovery of past rent is a rental "arrearage" while recovery of future rent is considered "future damages". PRC Kentron, Inc. v. First City Center Associates, II, 762 SW2d 279, 281 and 288 (Tex.App.-Dallas 1988, writ denied). A prevaling landlord may also recover reasonable attorneys fees. West Anderson Plaza v. Exxon Mehdi Feyznia, 876 SW2d 528, 537 (Tex. App.-Austin 1994, no writ).
It should also be noted that a Texas statutory landlord's liens in the personal property may be affected by the abandonment of the property. A landlord may need to seek a distress warrant under Texas Property Code Sec. 54.025, since a statutory landlord's lien only lasts for one month after the day the tenant abandons the property under Texas Property Code Section 54.024.
The landlord needs to select a remedy, however, since choosing to terminate a lease may eliminate the ability to recover future damages. It is suggested that a Texas landlord consult with an attorney to evaluate these options.
The Landlord has four causes of action against a tenant for breach of the lease and abandonment. First, the landlord can maintain the lease, suing for rent as it becomes due. Second, the landlord can treat the breach as an anticipatory repudiation, repossess, and sue for the present value of future rentals reduced by the reasonable cash market value of the property for the remainder of the lease term. Third, the landlord can treat the breach as anticipatory, repossess, release the property, and sue the tenant for the difference between the contractual rent and teh amount recived from the new tenant. Fourth, the landlord can declare the lease forfeited (if the lease so provides) and relieve the tenant of liability for future rent.
Austin Hill Country, 948 SW2d at 299-300.
It should be remembered that under Texas Property Code Sec. 91.006, a Texas landlord has a duty to mitigate (in other words, try to relet the premises). However, the actual burden of proof is on the tenant to show that the landlord failed to mitigate and also show the amount that could have been saved but for the landlord's failure to mitigate. Id.
Recovery of past rent is a rental "arrearage" while recovery of future rent is considered "future damages". PRC Kentron, Inc. v. First City Center Associates, II, 762 SW2d 279, 281 and 288 (Tex.App.-Dallas 1988, writ denied). A prevaling landlord may also recover reasonable attorneys fees. West Anderson Plaza v. Exxon Mehdi Feyznia, 876 SW2d 528, 537 (Tex. App.-Austin 1994, no writ).
It should also be noted that a Texas statutory landlord's liens in the personal property may be affected by the abandonment of the property. A landlord may need to seek a distress warrant under Texas Property Code Sec. 54.025, since a statutory landlord's lien only lasts for one month after the day the tenant abandons the property under Texas Property Code Section 54.024.
The landlord needs to select a remedy, however, since choosing to terminate a lease may eliminate the ability to recover future damages. It is suggested that a Texas landlord consult with an attorney to evaluate these options.
Changing Locks on Residential Tenants in Texas: A Dangerous Business
Texas Property Code Section 92.0081 sets out the procedures for the removal of property and lockouts on residential property. Here are some practical tips:
1. A landlord may not remove a door, window, or attic hatchway cover unless it is done pursuant to a prompt repair of the premises. In other words, you can't just take a door off to "encourage" a tenant to leave. See Texas Property Code Sec. 92.0081(a).
2. If a landlord changes the door lock of a tenant that is delinquent in rent, it must be done according to the procedures set out in Texas Property Code Sec. 92.0081(c). Namely, the landlord must place a notice that (1) states an on site location where the tenant can go 24 hours a day to obtain the new key or a telephone number that is answered 24 hours a day that the tenant may call to have a key delivered within two hours after calling the number; (2) states the fact that the landlord must provide the new key to the tenant at any hour, regardless of whether the tenant pays any of the delinquent rent; and (3) the amount of rent and other charges for which the tenant is delinquent. The landlord must also, prior to changing the locks, send a warning, either mailed five days before the lock change, or hand delivered three days before the lock change, that states the date of the anticipated lock change, the amount of rent owed that must be paid to prevent the lock out, and the name and street address of the individual to whom, or the location of the onsite management office, at which the delinquent rent may be paid during the landlord's normal business hours. The lock change may not occur on a day or day before the landlord is not available or the onsite management office is not open for the tenant to pay the delinquency. The key must be provided to the tenant whether or not the tenant pays the rent. If the tenant doesn't show, the landlord must leave a notice of the day/time they showed up, along with the address for the location of the key during normal business hours. See Texas Property Code Sec. 91.0081(d)-(g).
3. If a residential landlord violates Texas Property Code Sec. 91.0081, the tenant may recover possession of the premises or terminate the lease, and a civil penalty of one month's rent plus $500, actual damages, court costs and reasonable attorney fees, less any delinquent rent or other sums owed to landlord. If the landlord does not allow tenant to use the key to enter the property regardless of paying the rent, the tenant is entitled to one month's rent as a civil penalty.
Thus, residential property lockouts are very risky endeavors and should be done with the consultation of an attorney after reviewing sections of the Texas Property Code.
1. A landlord may not remove a door, window, or attic hatchway cover unless it is done pursuant to a prompt repair of the premises. In other words, you can't just take a door off to "encourage" a tenant to leave. See Texas Property Code Sec. 92.0081(a).
2. If a landlord changes the door lock of a tenant that is delinquent in rent, it must be done according to the procedures set out in Texas Property Code Sec. 92.0081(c). Namely, the landlord must place a notice that (1) states an on site location where the tenant can go 24 hours a day to obtain the new key or a telephone number that is answered 24 hours a day that the tenant may call to have a key delivered within two hours after calling the number; (2) states the fact that the landlord must provide the new key to the tenant at any hour, regardless of whether the tenant pays any of the delinquent rent; and (3) the amount of rent and other charges for which the tenant is delinquent. The landlord must also, prior to changing the locks, send a warning, either mailed five days before the lock change, or hand delivered three days before the lock change, that states the date of the anticipated lock change, the amount of rent owed that must be paid to prevent the lock out, and the name and street address of the individual to whom, or the location of the onsite management office, at which the delinquent rent may be paid during the landlord's normal business hours. The lock change may not occur on a day or day before the landlord is not available or the onsite management office is not open for the tenant to pay the delinquency. The key must be provided to the tenant whether or not the tenant pays the rent. If the tenant doesn't show, the landlord must leave a notice of the day/time they showed up, along with the address for the location of the key during normal business hours. See Texas Property Code Sec. 91.0081(d)-(g).
3. If a residential landlord violates Texas Property Code Sec. 91.0081, the tenant may recover possession of the premises or terminate the lease, and a civil penalty of one month's rent plus $500, actual damages, court costs and reasonable attorney fees, less any delinquent rent or other sums owed to landlord. If the landlord does not allow tenant to use the key to enter the property regardless of paying the rent, the tenant is entitled to one month's rent as a civil penalty.
Thus, residential property lockouts are very risky endeavors and should be done with the consultation of an attorney after reviewing sections of the Texas Property Code.
Eviction Tips in Travis County
1. The landlord should review Texas Property Code Sec. 24.005 for the notice requirements before delivering the notice to vacate.
2. An eviction action should be filed in the justice precinct where the rental property is located.
3. The landlord generally will be required to wait three days after the eviction notice is delivered before filing the eviction action, unless the lease shortens the notice requirements.
4. The notice to vacate needs to be in writing and should be unconditional. It should tell the tenant to vacate unconditionally and by a date certain.
5. When filing, an attorney will need 1) a copy of the lease; 2) a copy of the notice to vacate; 3) filing fees; 4) service fees; 5) all contact information known for the tenant.
6. All parties to the lease, even those that are not currently residing in the property, should be named in the suit.
7. A suit for rent may be filed with the eviction suit if the amount due is within the jurisdiction of the justice court, which is currently $10,000. Charges for items other than rent cannot be joined with the suit for eviction.
8. Be prepared. The trial for the suit for eviction will be set on the day the case is filed.
2. An eviction action should be filed in the justice precinct where the rental property is located.
3. The landlord generally will be required to wait three days after the eviction notice is delivered before filing the eviction action, unless the lease shortens the notice requirements.
4. The notice to vacate needs to be in writing and should be unconditional. It should tell the tenant to vacate unconditionally and by a date certain.
5. When filing, an attorney will need 1) a copy of the lease; 2) a copy of the notice to vacate; 3) filing fees; 4) service fees; 5) all contact information known for the tenant.
6. All parties to the lease, even those that are not currently residing in the property, should be named in the suit.
7. A suit for rent may be filed with the eviction suit if the amount due is within the jurisdiction of the justice court, which is currently $10,000. Charges for items other than rent cannot be joined with the suit for eviction.
8. Be prepared. The trial for the suit for eviction will be set on the day the case is filed.
Monday, December 29, 2008
Texas Charging Orders – Collection Devices Available Against Limited Partnerships
Texas Charging orders are an often overlooked collection device. A charging order is a postjudgment collection device, meaning you must have already obtained a judgment in the underlying lawsuit. Charging orders in Texas are discretionary, and the Court does not have to grant one. With a charging order, a creditor can reach a debtor’s interest in a limited partnership. It is basically a lien on the debtor’s partnership interest. Payment to the creditor is ordered out of the debtor’s interest in the partnership. However, the creditor can only receive distributions that the debtor would otherwise receive. For example, if the debtor is a partner in a limited partnership, the creditor can obtain a charging order ordering the partnership to pay any distributions to which the debtor is entitled in the future to the creditor in satisfaction of the Judgment. For judgments obtained prior to September 1, 2007, the Court may, at its discretion, appoint a receiver, foreclose on the interest, and order a sale of the interest. However, due to recent changes in the law, for Judgments obtained after September 1, 2007, the lien against the debtor’s interest is the exclusive remedy. Appointment of a receiver, foreclose on the interest, and ordering the sale of the interest are no longer available.
Note: A charging order in Texas is unavailable against partners of general partnerships but is available against members of limited liability companies.
Note: A charging order in Texas is unavailable against partners of general partnerships but is available against members of limited liability companies.
Monday, December 15, 2008
Filing Time-Barred Lawsuits Violates the Fair Debt Collection Practices Act
Creditors must ensure that they are referring files to their attorneys before the limitations period for filing suit has run. Failure to do so may prevent the attorney from filing suit due to possible liability under the FDCPA. The FDCPA prohibits a debt collector from using any false, deceptive or misleading representation or means in connection with the collection of any debt. The purpose of the Act is to eliminate abusive debt collection practices, and courts view FDCPA claims with an unsophisticated debtor standard. Generally, when a lawsuit is filed beyond the limitations period, it is the Defendant’s burden to raise the affirmative defense that the claim is time-barred, that the Plaintiff waited too long to bring suit. However, in the collections arena, filing a time-barred lawsuit may be construed as a violation of the FDCPA. An Illinois court recently ruled that a debt-collector violates the FDCPA if he files a lawsuit and knew or reasonably should have known that it was time-barred. (Ramirez v. Palisades Collection L.L.C.) If a debt collector does file a time-barred lawsuit, to defend himself against accusation of an FDCPA violation, he must be able to show that it was a bona fide error that occurred even though procedures were in place to avoid such an error.
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