SMU Annual Texas Survey - Article 13, Vol. 6

SMU Annual Texas Survey SMU Annual Texas Survey Volume 6 Article 13 2020 Real Property Real Property J. Richard White Winstead PC, jrwhite@winstead.com Amanda Grainger Winstead PC, agrainger@winstead.com Follow this and additional works at: https://scholar.smu.edu/smuatxs Part of the Property Law and Real Estate Commons, and the State and Local Government Law Commons Recommended Citation Recommended Citation J. Richard White et al., Real Property, 6 SMU ANN. TEX. SURV. 289 (2020) https://scholar.smu.edu/smuatxs/vol6/iss1/13 This Article is brought to you for free and open access by the Law Journals at SMU Scholar. It has been accepted for inclusion in SMU Annual Texas Survey by an authorized administrator of SMU Scholar. For more information, please visit http://digitalrepository.smu.edu. REAL PROPERTYJ. Richard White*Amanda R. Grainger**TABLE OF CONTENTSI.INTRODUCTION........................................290II.MORTGAGES/FORECLOSURE/LIENS.................291A.FORCIBLE DETAINER AFTER FORECLOSURE SALE.....291B.TAX LIEN TRANSFERS.................................293C.PRIORITYOF LIEN– “CONSTRUCTION TERMINATION”AND TAX LIEN SUBROGATION.........................293D.NON-WAIVEROF SECURITY INTEREST.................295E.ABANDONMENTOF ACCELERATION...................297F.STATUTEOF LIMITATIONS.............................300III.DEBTOR/CREDITOR/GUARANTIES/INDEMNITITES.........................................301A.GUARANTY WAIVERS.................................301B.THIRD-PARTY BENEFICIARY; FAILUREOFCONSIDERATION.......................................302C.CO-GUARANTOR CONTRIBUTIONS.....................304D.DEFICIENCY SUIT.....................................305E.THIRD-PARTY BENEFICIARY CLAIMS..................308F.ANTI-DEFICIENCY STATUEOF LIMITATION WAIVER...308G.INDEMNITY– ADVANCEMENT.........................310H.INDEMNITY– FAIR NOTICE REQUIREMENTS...........311I.ACKNOWLEDGMENTOF DEBT.........................312J.OUTSIDER REVERSE VEIL-PIERCING; FRAUDULENTTRANSFERS............................................313K.SATISFACTIONOF DEBT...............................316IV.LANDLORD–TENANT RELATIONSHIP/LEASES.....318A.LANDLORD–TENANT RELATIONSHIP...................318B.OPTIONTO PURCHASE................................318C.TERMINATIONOF LEASE/DAMAGES/ATTORNEY’S FEES/HOLDOVER............................................319D.JURISDICTIONOFTHE JUSTICE COURTS................322V.PURCHASER/SELLER..................................323A.FIDUCIARY DUTY.....................................323B.STATUTEOF FRAUDS..................................325*B.B.A., M.B.A., J.D., LL.M., Southern Methodist University, Attorney at Law,Winstead, PC, Dallas, Texas.**B.S., Cornell University, M.B.A., J.D., Emory University, Attorney at Law, Win-stead, PC, Dallas, Texas.289290SMUANNUALTEXASSURVEY[Vol.6C.STATUTEOF LIMITATIONS.............................327D.DUE DILIGENCE/COMPLIANCEWITH CONTRACTTERMS................................................329VI.CONSTRUCTION MATTERS...........................332A.BREACHOF CONTRACT...............................332B.WAIVEROF CERTIFICATEOF MERIT..................333VII.TITLE/CONVEYANCES/RESTRICTIONS..............333A.CONVEYANCES........................................333B.TRESSPASS-TO-TRY-TITLE.............................339C.EASEMENTS...........................................340D.PRIVATE TRANSFER FEE OBLIGATIONS................346E.RESTRICTIONS.........................................346F.PARTITION............................................348VIII.HOMESTEAD/HOME EQUITY LENDING.............349A.NEW CONSIDERATION; PLACEOF TENDER............349B.RES JUDICATA........................................350IX.MISCELLANEOUS......................................351A.INSURANCE............................................3511.Proof of Liability.................................351B.APPRAISAL AWARDS..................................352C.BUSINESS ORGANIZATIONS............................3541.Conflict Waivers...................................3542.Former Member Review of Records...............354D.INJUNCTIVE RELIEF– IRREPARABLE INJURY..........355E.DUTYTO LICENSEE...................................356F.DUTYTO WARN......................................356G.CONDEMNATION.......................................357X.CONCLUSION...........................................361I.INTRODUCTIONThis article covers cases from Southwestern Reporter (Third) volumes560 through 580 and federal cases during the same period that the au-thors believe are noteworthy to the jurisprudence on the applicablesubject.This Survey period saw a number of cases of first impression, coveringissues involving the waiver of security interest for failure to take remedialactions, the right for outsider reverse veil-piercing, and whether a limitedpartner could waive the attorney–client privilege for the partnership. TheTexas Supreme Court provided jurisprudence on the parol evidence rulein a debt satisfaction matter and the “public use” doctrine in condemna-tion and broke new legal ground by permitting a tenant to terminate alease for breach of express covenants in a lease when the lease expresslyprovided the only remedy to be damages.Other important decisions addressed construction termination formechanics lien filings, abandonment of a prior acceleration of debt, limi-tations based on an acceleration notice, contributions among co-guaran-2020]Real Property291tors, evidence needed for a deficiency judgment, acknowledgment of adebt to avoid limitations, the duty of executive right holders toward non-executive right holders, the rules governing easements by necessity andeasements by implication, the use of forcible detainer action to evict atenant for something other than non-payment of rent, and, in what seemsto be a yearly saga, when a case can be dismissed for failure to complywith the certificate of merit statute.Cases of particular interest to practitioners, due to dissents, split ofopinions, or absence of jurisprudence, involved whether to seek avoid-ance or damages under a contract, details for a demand notice, waivers oflimitations, a termination option in a lease, electronic signatures, explicitmaintenance provisions, and res judicata in foreclosure actions.Perhaps most important was the purported waiver of limitations for adeficiency claim against a guarantor.II.MORTGAGES/FORECLOSURE/LIENSA.FORCIBLE DETAINER AFTER FORECLOSURE SALEIsaac v. CitiMortgage, Inc.1 involved a typical forcible detainer actionafter a non-judicial foreclosure. The deed of trust executed by Isaac con-tained a post foreclosure provision that read: “If possession is not surren-dered, Borrower . . . shall be a tenant at sufferance and may be removedby writ of possession . . . .”2 A notice to vacate was served by CitiMort-gage upon Isaac by certified mail and personal delivery, but Isaac refusedto vacate. In response to the forcible detainer action, Isaac pled to thejurisdiction of the court and alleged: first, there was no continuity be-tween the deed of trust and CitiMortgage’s substitute trustee’s deed,which was a jurisdictional prerequisite; second, the pleadings were im-properly verified; and third, there was no refusal to vacate.As to the first challenge, the First Houston Court of Appeals discussedthe apparent defect in title raised by Isaac in a separate district court suit(which Isaac lost in the trial court and on appeal)3 alleging lack of privityof contract between Isaac and CitiMortgage. It is well-established law inTexas that issues of title do not need to be adjudicated in a suit for posses-sion, unless the right to immediate possession requires the resolution of atitle dispute.4 In fact, the elements for a forcible detainer action requireproof only that: “(1) the substitute trustee conveyed the property by deed. . . ; (2) a landlord-tenant relationship existed and the occupants becametenants at sufferance; (3) [the landlord] gave proper notice . . . to vacate. . . ; and (4) the occupants refused to vacate . . . .”5 None of these ele-ments require proof of title. CitiMortgage proved the existence of thelandlord–tenant relationship by submission of the deed of trust contain-1.563 S.W.3d 305 (Tex. App.—Houston [1st Dist.] 2018, pet. denied).2.Id. at 312.3.Id. at 308.4.TEX. R. CIV. P. 510.3(e).5.Isaac, 563 S.W.3d at 311.292SMUANNUALTEXASSURVEY[Vol.6ing the language quoted above;6 therefore, CitiMortgage had the right toimmediate possession. As to the jurisdictional issue, Isaac presented noevidence to contradict long-standing Texas law that a deed of trust con-taining “tenant at sufferance” language would establish the landlord–tenant relationship7 and the trustee deed established the owner and land-lord of the subject property. Therefore, the court of appeals had subjectmatter jurisdiction over the forcible detainer action.8CitiMortgage’s pleadings were verified by its attorney of record, whichwas challenged by Isaac as not being in strict compliance with the re-quirements of Texas Rule of Civil Procedure 510.3(e).9 However, thecourt of appeals noted numerous cases supporting a petition in an evic-tion case verified by the party’s attorney of record.10 The court foundsuch representative capacity was a necessity for entity parties for whichexecution is required by an individual person, and which has been author-ized by Rule 500.411 in eviction cases in which entities can be representedby non-attorney employees or officers.12 Further, Rule 502.113 also al-lowed execution of pleadings by an attorney of record.14 Therefore, thecourt of appeals held Isaac’s argument was inappropriate due to the ex-pressed language of applicable rules as well as the reality that businessentities operate through agents.Finally, as to Isaacs’ assertion that there was no evidence of their re-fusal to vacate the property, the court of appeals cited numerous exam-ples of evidence Texas courts have accepted to prove refusal to vacate theproperty, including: (1) an appeal bond which listed the property addressof the...