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Frederick J. Biel

Frederick Biel’s Answers

2 total

  • Texas Real Estate & Ownership Question

    There are 4 of us that own a home jointly, (it was inherited). Three of us want to sell, one does not. Since the three that want to sell make up 75% of the ownership can we sell even if the fourth does not want to, as long as we divide the money ...

    Frederick’s Answer

    The information provided in this response is for GENERAL INFORMATION, and it does not substitute for legal advice from an attorney after full disclosure of all the facts relevant to your case. This general summary of Texas law also DOES NOT create an attorney-client relationship with you or any other reader of this summary.

    Based on the facts disclosed in your question, each person appears to own an undivided 25% interest in the home. There are not enough facts in your question to determine how the four of you iinherited your undivided interest in the home. This general response assumes (i) that none of the four of you is the surviving spouse of the deceased from whom the four of you inherited the home, or (ii) that any of you owned an interest in the home before the decedent died leaving each of you an undivided interest in the home, or (iii) that any Texas homestead suvivorship rights exist in any of the four of you in the home.

    Under general Texas law, each of your 25% undivided interests in the home may be separately, or collectively conveyed to a third party. In other words, if three of the four undivided interest owners could find someone willing to buy their 75% undivided interest in the home, they could convey their undivided interests in the home to a third party, and the party acquiring that 75% undivided interest would then own a 75% undivided interest in the home, with the non-selling owner having the other 25% undivided interest. Such a sale, however, might not be attractive to a prospective purchaser (i.e., the prospective purchaser has substituted himself or herself for the other three undvided interest owners, and the home is still owned in undivided interests), or to the three of you as prospective sellers because a sale of an undivided interest in the home might not bring the same price as a sale of the entirety of the home. Undivided interest owners also have equal rights of possession of, and access to, the home.

    A second option ALWAYS available to an undivided interest owner is to ask a court with appropriate jurisdicition over the matter to partition the home. A partition of real property may be in kind (i.e. each person receives a distinct part of the larger tract based on an equalization of value), or by sale of the real property if the real property is not capable of partition in kind. Based on the facts in your question, it appears that a partition by sale, rather than a partition in kind, would be the result in your case.

    While a partition suit does involve expense for the partitioning parties (meaning less money in your pockets after the property is sold, and all closing costs, court costs and attorneys' fees are paid), the threat of a partition action will sometimes bring the party or parties unwilling to sell the property around once they learn that the other unvidived interest owners are entitled to a partition in kind or by sale. Again, the primary issues in a partition suit is valuation and division of the real property into distinct parts if there is a partition in kind, or the setting of a value, and marketing the property for sale, if the property is not capable of a partition in kind.

    The owners interested in selling their undivided interests in the home should consult with an attorney so that the attorney can explain all the pros and cons of proceeding with a partition. Again, the primary "con" is the time and cost of a court supervised partiton in kind or sale of the property if the property cannot be partitioned in kind.

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  • I am taking over a relative’s mortgage payments but the mortgage will stay under his name until I am finished paying it off.

    I am taking over a relative’s mortgage payments but the mortgage will stay under his name until I am finished paying it off. We have written on a piece of paper what type of down payment I will make and the amount of the mortgage payments that I ...

    Frederick’s Answer

    If the paper is signed by you and every one else owns the real estate, and if it includes the essential terms of a real estate sale transaction, then under Texas law you and your seller relative probably have entered into an executory contract for the sale of real property. Executory contracts in Texas are enforceable, but there are risks, as hereinafter discussed, that you and your seller relative need to consider. Also, Sellers under executory real estate contracts for the sale of real property in Texas must meet certain statutory requirements, the contracts are subject to annual reporting and disclosure requirements, and after a certain portion of the purchase price is paid, or the executory contract is in existence for the minimum required time period, the relative seller would not be able simply to terminate the executory contract if you defaulted on your obligation to your seller relative, but rather the seller relative must foreclose on the interest you have in the real property by following the non-judicial foreclosure procedures applicable to traditional loans secured by real estate. Because the existing lender will not know about you, nor would the ad valorem taxing authorities, the relative seller might lose the property in a non-judicial foreclosure, or in an ad valorem tax sale, and you might never know anything about it, wiping out any equity interest you were building up in the real property. If you were to discover the problem before a non-judicial foreclosure, or a tax sale, you might be able to protect your interest in the real property by paying off the existing debt, or the delinquent taxes, but this assumes you have access to the funds necessary to do so. The matter you describe is further complicated if your seller relative were to die, or to become disabled, before the existing debt is paid and the transfer transaction is closed. Judgment creditors, to the extent the real property is not the homestead of your seller relative, may also get ahead of your interest in the real property if a judgment is abstracted and recorded before the transfer transaction is closed. It probably would be better for all concerned to handle the transaction as a traditional sale, subject to the existing mortgage (i.e. a so-called wrap note, where the money you owe your seller relative on your note is used to pay down on the existing debt), or an assumption transaction where the real property is transferred to you subject to the existing lender debt, with the existing lender recognizing the sale and your assumption of your seller relative's debt. In a non-assumption transaction, your seller relative would give a deed to you, and you would give a note and lien back to the seller. If the existing lender were to let you assume your relative seller's existing loan, whether or note the existing lender releases your seller relative from the debt, then your seller relative would take a deed of trust to secure assumption in order to allow the seller relative a right to foreclose on your interest in the real property if you were to default in your payments on the existing loan. There are risks inherent in the transaction you and your relative seller are trying to structure, particularly without the assistance of an attorney. It would be better for all concerned to follow traditional sale and loan principles under Texas law, either in the form of a deed, loan and deed of trust from you to your seller relative, or in the form of an assumption transaction with the existing lender, and a deed of trust to secure assumption. Both you and your seller relative should also consider retaining attorneys. The information provided in this response is for GENERAL INFORMATION, and it does not substitute for legal advice from an attorney after full disclosure of all the facts relevant to your case. This general summary of Texas law also DOES NOT create an attorney-client relationship with you or any other reader of this summary.

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