J. Patrick Sutton Cases & Issues Blog

Don't Count On Leasing (and possibly other) Rights in Subdivisions: Texas Supreme Court declines to take up short-term rental amendment cases

Today, January 26, 2024, the Texas Supreme Court declined to take up decisions from the Austin and Houston courts of appeals which allow majorities in subdivisions to take away leasing rights from existing owners. The cases are:

  • Chu v. Windermere Lakes Homeowners Ass'n, Inc., 652 S.W.3d 899, 902 (Tex. App. – Houston [14th Dist.] 2022)
  • Angelwylde HOA, Inc. v. Fournier, No. 03-21-00269-CV, 2023 WL 2542339 (Tex. App. – Austin Mar. 17, 2023)
  • Cauthorn v. Pirates Prop. Owners' Ass'n, No. 01-22-00401-CV, 2023 WL 5535665 (Tex. App. – Houston [1st Dist.] Aug. 29, 2023)
  • Cottonwood Trail Investments, LLC v. Pirates Prop. Owners' Ass'n, No. 01-22-00400-CV, 2023 WL 5535664 (Tex. App. – Houston [1st Dist.] Aug. 29, 2023)

So thus far, the Beaumont, Austin, and Houston Courts of Appeals allow leasing rights to be taken away by amendments to restrictive covenants.

My clients the Bayliffs have just filed a petition in the Texas Supreme Cout in a case involving the sale of the common-area parkland. The Austin Court of Appeals — yet again — allowed a majority to amend the covenants to permit the common elements to be sold off and converted to a home lot.
BLF LLC v. Landing at Blanco Prop. Owners Ass'n, No. 03-22-00423-CV, 2023 WL 8607028 (Tex. App. – Austin Dec. 13, 2023, pet. filed) (mem. op.).

That leaves 10 other courts of appeals which have not addressed the issue whether amendments can take away important rigths, including Dallas, Fort Worth, Tyler, San Antonio, El Paso, Amarillo, and Corpus Christi.

While it is impossible to predict how this issue will get resolved in those other appeals districts, the existence of decisions in Austin, Beaumont, and Houston is a problem for everyone. Anyone planning to buy a home in a subdivision has got to be advised that rights they
think they are buying may be taken away immediately after purchase.

It is vital that all buyers of subdivision homes in Texas (whether there is an HOA or not) consult an attorney before doing so. Texas law does not allow subdivisions with HOA's to require a 100% vote for amendments, so it becomes difficult for most buyers to escape the problem of amendments which take away rights.

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City of Dickinson Short-Term Rental Ban Declared Unconstitutional

On January 4, 2024, my clients, who own a home in Galveston County which they rent out for short terms, got the City of Dickinson's ban on short-term rentals declared unconstitutional on multiple grounds. After the final hearing on my clients' claim for attorney's fees, the judgment will be final, allowing the City to seek an appeal. Content may continue . . .

Injunction Against Hollywood Park, Texas Short-Term Rental Ban

On December 22, 2023, my clients — homeowners in Hollywood Park, Texas, a small city in the San Antonio metro area — got a preliminary injunction in federal court barring the town from enforcing a ban on short-term rentals. My clients had purchased and improved homes based on the lack of any restrictions, intending to both live in the homes and rent them out at other times. The federal court, determining that the trend in the law is to protect the rights of owners who have historical leasing rights, enjoined enforcement of the town's new ban while the case proceeds to trial. Content may continue . . .

In important win for Austin homeowner, federal court strikes down City of Austin Short-Term Rental Ordinance

On August 1, 2023, the U.S. District Court in Austin, Texas struck down the City of Austin's ban on short-term leasing by non-resident owners.

My clients, the Andings, live in Houston. They bought a second home in Austin in 2014. They sought to rent it out when not using it. The City of Austin in 2016 banned anyone who is not a permanent occupant of their Austin home from renting out that home.

In 2019, the Austin Court of Appeals (state court) struck down this ban on non-resident owners on the basis that it took rights away retroactively in violation of the Texas Constitution, but the City of Austin still refused to allow non-resident owners to rent out their homes for short terms, asserting that the 2019 decision was narrow, applying only to owners who
already had licenses as of 2016. The Andings still couldn't get their STR license.

In late 2022, separately, the 5th Circuit U.S. Court of Appeals struck down a similar ordinance in New Orleans on the basis that it unconstitutionally discriminated against interstate commerce.

Despite all this, the City of Austin
still refused to issue my clients, the Andings, a short-term rental license.

With the 2022 5th Circuit precedent in hand, the Andings filed suit in federal court in Austin. On August 1, their claim was vindicated. The federal court struck down the Austin STR ban
on two separate and independent bases — retroactivity per the 2019 Austin Court of Appeals authority, and interstate commerce per the 2022 5th Circuit U.S. Court of Appeals authority.

As of this writing, with the federal court's decision only a week old, it is unknown what Austin will do. It can appeal, or it can finally throw in the towel now that state and federal courts have invalidated the monopoly on short-term rentals it gave to permanent Austin residents at the expense of everyone else in the United States.
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Emergency - Texas SB 929 May Hurt You

Those relying on the new Texas law — SB 929 — which seems to help short-term rental rights should contact a lawyer immediately. You can lose vital property rights and a great deal of money if you comply with, or pursue remedies under, that new law. I think the law is a calamity for property owners who lease out their homes, including for short terms. Content may continue . . .

City of Fort Worth gets sued in a challenge to its STR ban

On June 16, 2023, my group of 100-odd homeowners sued the City of Fort Worth, challenging its 2018 ban on short-term rentals. Stay tuned for details. Content may continue . . .

5th Circuit U.S. Court of Appeals reverses federal district court, allowing challenges to New Braunfels' STR ban to proceed to trial

On June 16, 2023, my clients' right to challenge the City of New Braunfels' ban on short-term rentals were vindicated by the 5th Circuit U.S. Court of Appeals.

My clients sued in federal district court to overturn New Braunfels' ban on short-term rentals. The federal district court summarily dismissed the case, concluding that my clients could not even state a valid legal claim. My clients were not even allowed to conduct any discovery into whether the City's rationale for banning short-term rentals had any factual basis.

The 5th Circuit, in New Orleans, reversed at lightning speed on June 16 after oral argument on June 7! And while the opinion is very short, it is momentous. For one thing, it is a
published decision, meaning it constitutes legal precedent. For another, it establishes that homeowners (and other litigants) have a right to force the government to demonstrate that it has some rational basis for its laws. Had my clients lost in the 5th Circuit, it would become nearly impossible for anyone to challenge city ordinances which trample on property rights.

For now, the City of New Braunfels apparently intends to ask the 5th Circuit to reconsider its decision. If it declines, then the case goes back to the trial court for discovery into the City's basis for its ordinance and then final trial.

On the same day as the 5th Circuit reversed and allowed the case to go to trial, my clients in Grapevine
similarly won the right to go to final trial when the Texas Supreme Court upheld their win on appeal. Content may continue . . .

Texas Supreme Court lets Grapevine STR owners' win stand

On June 16, 2023, the Texas Supreme Court declined the City of Grapevine's request to ban short-term rentals, upholding my clients' claims and continued temporary injunction barring enforcement of a short-term rental ban.

At the end of 2021, the Fort Worth Court of Appeals held in a case brought by my homeowner clients (
City of Grapevine v. Muns, 651 S.W.3d 317 (Tex. App. - Fort Worth 2021)) that the homeowners fighting the city's ban on short-term rentals stated valid constitutional challenges. The City of Grapevine asked the Texas Supreme Court to step in and reverse, but the Court declined to do so. The Fort Worth Court of Appeals' decision stands.

What happens now is that the case goes to final trial before the Tarrant County District Court. With it having been established that homeowners fighting city bans on STR's state valid claims under the Texas Constitution, all that remains is for the trial court to determine whether such claims should succeed on my clients' facts.

When the Texas Supreme Court declined to reverse the Fort Worth Court of Appeals' decision, two justices on the Supreme Court
went out of their way to invite a cleaner, final case to be presented for review and decision. Content may continue . . .

HOA Boards Cannot Force a Suiting Homeowner to Sue All Other Owners for the Board's Actions

On May 12, 2023, my clients Chris and Roxana Kappmeyer prevailed in the Texas Supreme Court, reversing trial and appellate courts which, in a clear abuse of discretion, sided with an HOA.

The Kappmeyers sued their HOA because the HOA's board, without any vote by the homeowners generally, gave itself vast new powers. The Kappmeyers, when they bought their land, never signed up for an all-powerful HOA with assessment, rule-making, and foreclosure powers, so they sought to have the board's "amendment" to the deed restrictions declared unenforceable against them. However, the HOA, no doubtwishing to avoid having the merits of the dispute addressed, asked the trial court to require the Kappmeyers to sue
all 700 other homeowners before being allowed to proceed. That would cost in the range of $100,000 in administrative costs. Yet the trial court agreed with the HOA and ordered the Kappmeyers to sue 700 people or else have their case dismissed. The court of appeals did too.

The Texas Supreme Court reversed. It held that an HOA has to prove
which other homeowners actually claim an interest in a lawsuit before forcing a plaintiff to sue other owners. It also held that an order requiring that all homeowners be sued is an unfair financial burden on a homeowner seeking to have his or her own rights protected.

Over the years, I've on several occasions had HOA's try this move, seeking, basically, to keep homeowners from ever seeking justice by making it so expensive that it's effectively impossible. In most cases, the HOA has never pressed the issue because it means that every homeowner the HOA represents has to go get a lawyer to defend a lawsuit they never asked to be involved with. The HOA in this case, however, dug in its heels. The Kappmeyers hung in there, though, fighting at every level to prevent HOA's from doing this again when it's clear there are few if any other homeowners who wish to be sued for the actions of their HOA board.
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Texas Supreme Court denies review of amendments to restrictive covenants which take away existing property rights

Today, the Texas Supreme Court declined to review the decisions of the Austin, Beaumont, and Houston 14th Court of Appeals which hold that an amendment to restrictive covenants which takes away pre-existing property rights (in those cases, the right to rent for short terms, among other things) is immediately enforceable against all owners.

The denial of review means that three very harsh decisions stand. Anyone who owns or buys real property in a subdivision thinking they have specific property rights needs to consult an attorney about whether those rights will continue. I don't see how anyone can now price real property since a majority of neighborhood owners can vote to take away preexisting rights. I am at a loss to understand how Texas, historically a property-rights state, can join the small minority of states which all rights to be taken away after closing. It is now up to the Legislature to act.
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I am now licensed to practice law in Washington State

My practice now includes Washington State, where I became licensed in October 2022. I will continue the same work in both Texas and Washington State. Content may continue . . .

Huge win for short-term rental rights

In a huge win for short-term rental rights, on August 22, 2022, the Fifth Circuit U.S. Court of Appeals in New Orleans held that a city cannot ban non-resident owners from renting out their homes for short terms. See Hignell-Stark v. City of New Orleans, 46 F.4th 317 (5th Cir. 2022).

New Orleans, like the City of Austin, forbids homeowners who do not make a home their "primary residence" from renting out their homes for short terms. Which means that, as in a case I'm handling here in Austin, a homeowner who has their homestead in Houston but a second, vacation home in Austin is forbidden from renting out their Austin home for short terms. Sound unfair?

It is. It violates the U.S. Constitution's prohibition on discriminating against interstate commerce. The effect of the ordinance is to limit STR's exclusively to Austin residents, a clear, plain violation of the Commerce Clause of the U.S. Constitution. So the Fifth Circuit ruled the New Orleans ordinance void. If STR's are allowed (with a license, for instance), the court concluded, a city must allow
anyone who owns a home to obtain a license.

This, obviously, spells doom for the City of Austin's STR ban, which expressly denies non-occupying-owners the ability to get an STR license. My clients are now moving forward with injunction requests to prevent the City from enforcing its ordinance against those to whom it has refused to issue licenses.
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Texas Supreme Court to take up issue whether a homeowner must sue all other homeowners in a subdivision when an HOA is sued

If you sue an HOA, do you have to sue all the individual homeowners too? HOA's say you do because they want to create an insurmountable burden to challenging board actions.

Last year, my clients, the Kappmeyers, sued an HOA in Rockport whose board unilaterally amended the restrictive covenants without getting a vote of the owners. The HOA, despite claiming that it now represented all the owners (because it gave itself that power), then demanded that my clients sue
all 700 other owners in order to keep the lawsuit alive. The HOA argues that since every homeowner is "affected" by a lawsuit which challenges a board's authority, every homeowner must be sued. Obviously, an ordinary homeowner suing an HOA for the HOA's own actions cannot reasonably sue 700 people. Nevertheless, both the trial court and the court of appeals held that my clients must.

I've taken an informal poll of lawyers and non-lawyers, and no one I've spoken with (except the lawyers for the HOA in this case) believes it is fair, just, or legally valid to require a homeowner to sue all other subdivision homeowners any time the HOA itself is sued.

The Kappmeyers
took their complaint to the Texas Supreme Court using a procedure called "mandamus," which allows an issue to go up on appeal before a lawsuit is completed. On September 2, 2022, the Texas Supreme Court agreed to take up the case. It is set to be heard on December 1, 2022. Arguments can be viewed live, in real time, by following links on the Texas Supreme Court's website. Content may continue . . .

The deed restriction amendment issue is now before the Texas Supreme Court

Readers of this blog are aware that all over the state, subdivisions are abruptly "amending" restrictive covenants to impose new restrictions on property use. Owners who bought property before the new restrictions were adopted are being told they have lost the rights they purchased! I have been shepherding these cases through trial courts and courts of appeals throughout the state, and now two of the cases have been consolidated in the Texas Supreme Court. The linked petition provides the background and the cases nationwide on this issue. I am hopeful that we will, for the first time, get a statewide answer to this very important question.Content may continue . . .

Homeowner Win in Texas Supreme Court -- HOA Boards Cannot Adopt Rules Which Conflict with Restrictive Covenants

On April 22, 2022, my client Jerry Brice prevailed in the Texas Supreme Court in affirming his right to rent for short terms under restrictive covenants which afforded him a "right to lease with no restrictions." The HOA first argued that "residential use" overrides such a right to lease, but then it switched gears and adopted new rules which banned leasing for short terms. The Texas Supreme Court held that the rules were invalid because they conflicted with the wide-open right to lease contained in the restrictive covenants. Content may continue . . .

Whatever rights you think you bought, you didn't

On March 24, 2022, both the Austin and Beaumont Courts of Appeals held that after someone buys a home, a majority of their neighbors can vote to impose new restrictions or take away fundamental property rights which existed at the time of purchase. These are the first two of many cases I am prosecuting on behalf of clients around the state. Both the new cases involve short-term rentals, but their implications are vast. In effect, it means that no purchaser of real property can assume that the property rights they are buying will exist a month after closing. If a majority of the other owners decide to change the bargain, whatever rights were in effect before are toast. The cases are:

Adlong v. Twin Shores POA, No. 09-21-00166-CV (Tex. App. - Beaumont March 24, 2022)

DeGon v. Poole Pointe Subdiv. HOA, No. 03-20-00618-CV (Tex. App. - Austin March 24, 2022)

Notably, the Austin court said that because the original restrictive covenants promoted "residential use," it was a reasonable extension of those to forbid STR's because they are a commercial use. In my opinion, that directly conflicts with Texas Supreme Court precedent — and Austin Court of Appeals precedent — holding that STR's are a residential use.

It is anticipated that this will next go to the Texas Supreme Court. In the meantime, the jurisprudence is telling buyers of real property that they cannot assume that any of the rights they are buying will continue. It is now, in my view, virtually impossible to value a piece of real property based on the bundle of rights it seems to confer because those rights are, at best, temporary. Content may continue . . .

Disaster for homeowners in the Austin Court of Appeals

In a case I recently argued in the Austin Court of Appeals, Myers v. Tahitian Village POA, No. 03-21-00105-CV (Tex. App. - Austin Jan. 6, 2022), the court held that when restrictive covenants do not authorize assessments, an HOA board can adopt, impose, and collect assessments without any apparent limit. In a conclusion I find chilling, the court said this:

"[T]he Restrictive Covenants, as amended, deleted a provision that required property owners to pay an annual charge to the POA. The Restrictive Covenants, however, are silent as to the POA’s power to make other assessments. Consequently, the Restrictive Covenants do not prohibit all assessments; the amendment simply removed the provision authorizing the POA to impose an annual charge on the subdivision’s property owners."

In that case, after the homeowners voted in the late 1990's to delete every charge which the HOA was authorized to charge originally, in 2016 a new HOA board came in and wrote new "bylaws" for itself which gave the board the power to charge and collect "assessments." Then the board adopted all sorts of new charges, fees, and fines, some running into the thousands of dollars. The Austin Court of Appeals approved this.

It gets worse. Texas law (Ch. 209 of the Property Code) forbids HOA's from denying homeowners the right to vote in HOA affairs. But that is exactly what the new Myers v. Tahitian Village allowed the HOA to do. The HOA's bylaws purport to forbid any entities (LLC's, corporations, trusts, etc.) from voting, and one of the plaintiffs in the Myers case is an LLC. In fact, many of the owners in the subdivision are entities — there are some 6000 homes there, and many lots are undeveloped. The HOA board voted to adopt bylaws which prevent anyone but natural persons from voting in director elections, thereby disenfranchising potentially hundreds of property owners who might vote to oust the board.

My clients, the homeowners, have asked the Texas Supreme Court to take up the case and reverse it. In the meantime, one can reasonably expect HOA boards to begin adopting all sorts of "rules" and "bylaws" which effectively undo or get around any limitations on board power contained in restrictive covenants. It's a three-alarm fire, and yet, as usual, I fully expect the HOA-Industrial Complex to line up behind it because it generates piles of cash and lifetime-membership-boards, while it appears that no one is going to step up to protect buyers of real property from this calamitous result. Content may continue . . .

HOA and ACC abuse is an epidemic

Judging from the volume of calls and new cases in my office, abuse and overreach by homeowners' associations and architectural control committees is now an epidemic. Most Texans now live in subdivisions governed by HOA's. Yet HOA's are, for the time being, immune to the very sorts of lawsuits which keep governments in check because they are not, technically, "government." In fact, they are — they levy taxes, impose penalties, patrol streets, and pass rules intended to govern people's behavior. The various stopgaps the Legislature imposes every few years are not just insufficient, but actually make things worse. The law surrounding HOA's is now so complicated that homeowners who run HOA's cannot understand the law and run afoul of the law constantly, generating lawsuits. There is no way around the fact that the increasing complexity of HOA laws means that lawyers have their fingers in every pie. By trying to salvage privatized local government, the Legislature just keeps making things more convoluted, expensive, and worse.

In no particular order, here are some of the most intractable problems which point up how powerful HOA's are becoming:

1. HOA boards and ACC's, without any vote of all the owners in the subdivision, write and record new documents endowing boards and ACC's with new powers not authorized by the restrictive covenants. Sometimes, these entities just create themselves and declare they are in control because they style themselves as a "homeowners association." These are horrible forms of abuse because small groups of owners are simply giving themselves control and then meting out punishments. And I am finding that trial courts and courts of appeals go along with it for reasons I cannot fathom and in stark contradiction to what the law has long been understood to be. HOA's seem to get a pass just because they declare they are in charge.

2. HOA boards and ACC's summarily impose fines and penalties against owners with the due process rights which Texas law affords owners (Texas Property Code Chapter 209). They create fines, fees, and charges without any authority.

3. HOA boards defy controlling law and sue owners for things that are not, in fact, breaches of restrictive covenant, knowing that few owners can afford to fight. Here again, local judges seem to defer to HOA boards. Why are they not deferring to property rights and individual rights?

4. Majorities of owners are targeting individuals with "amendments" to restrictive covenants which either take away preexisting rights or else impose harsh new burdens. The whole basis of the bargain is being thwarted and undermined.

From my vantage point, HOA's — and groups of owners merely claiming to be HOA's — are out of control. The lawyers who represent them seem happy to argue positions so deeply repugnant to basic liberty that one wonders whether they do not stop to consider how the positions they argue might not come back to haunt them; in the meantime, they're getting rich off the jury-rigged system I call the HOA-Industrial Complex. Content may continue . . .

Texas Supreme Court grants review in STR case

On December 10, 2021, the Texas Supreme Court agreed to hear a case brought by a homeowner client of mine. The case is JBrice Holdings LLC v. Wilcrest Walk Townhomes Ass'n, Inc., No. 14-17-00790-CV, 2020 WL 4759947, at *1 (Tex. App. - Houston [14th Dist.] Aug. 18, 2020, review granted Dec. 10, 2021).

The homeowner bought homes whose restrictive covenants gave owners "the right to lease with no restriction." The trial court determined that "the right to lease with no restriction" means that leases must be for more than 7 days. The Houston 14th Court of Appeals then affirmed the trial court but on somewhat different grounds, holding that an HOA's board can adopt rules barring "transient use" even if renting is unrestricted. My client's petition complained loudly that the lower courts were simply writing new restrictive covenants and justifying it by using different words to refer to restricting leasing. The Texas Supreme Court's grant of review suggests that at least some justices on the Supreme Court are troubled when an owner buys a "right to lease with no restriction" which is then restricted by an HOA board acting alone.

The Texas Supreme Court provides a longer case summary. Oral argument is set for February 3, 2022. The briefs are all available on the Supreme Court's website.Content may continue . . .

Neckties should not be required.

I hate wearing ties. They're outmoded and impractical. To say nothing of expensive for the good ones. A scrap of silk hanging from my neck and almost choking me? Always in my way when I eat or drink? Is that what I need when I'm trying to be dynamic and assertive in the courtroom? The courts don't require women to wear ties, only men. There is inherent bias in this. And women wear all kinds of different outfits — dresses, slacks, skirts, but only rarely jackets, and all but never ties. I've seen judges in the past few years wear only T-shirts under their robes, and no one is chastising them. Neckties are a tradition that needs to be jettisoned.

All that said, you will pry my favorite unstructured, hand-stitched suits and sportcoats out of my cold, dead . . . er, hands? Whatever. I am not sure whether the traditional jacket and pants should be mandatory — I think a nice dress shirt and pants is enough, but I could go either way on this. I think my real issue is parity: that neither sex should be required to wear something the other sex is not, nor forbidden to wear something the other side does. Imagine.

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The reason new restrictions imposed by "amendment" should not be enforceable.

I've filed some 20 cases around the state on behalf of subdivision clients whose rights are being taken away by "amendments" to restrictive covenants, I've continually tried to whittle down the theory of the case to something both "legal" — in a technical sense — and readily comprehensible, even pithy. My current thinking is . . .Content may continue . . .

Sell the horses you were allowed to have? Are you kidding me?

I've filed a new case on behalf of client who bought a 6-acre lot with a home. The deed restrictions specifically allowed "agricultural" uses and one large animal per acre. After my client bought four horses and built expensive outbuildings and fencing, a majority of neighbors got together to "amend" the restrictive covenants to prohibit agricultural uses and horses. I cannot think of a more fundamental kind of property right — except leasing! — which has been effectively confiscated from an owner. More and more, I believe that the bundle of rights that are fundamental to property ownership cannot be taken away without an owner's consent, to the point where they convey with the land despite a purported "amendment" which seeks to take them away. More on that in a later post.Content may continue . . .

A Response To Defenders of Architectural Control Committees

I received a tart email in response to a prior blog post about architectural control committees, and I want to respond to it here. The sender defended architectural control committees on two bases, which I address in turn.

The homeowners who serve on the committees are volunteers. Yes, they are, and with distressing frequency precisely because they wish to exercise control over people. The problem is not, at heart, the volunteers, who are often excellent people trying their best. The problem is the whole premise: that laypersons volunteering from year to year, without construction, design, or architectural backgrounds, are the appropriate way to dictate the development of a subdivision over the course of decades. The system invites incompetence and abuse. Architectural control ought to be a technical exercise carried out by compensated professionals not beholden to any HOA, association manager, HOA lawyer, or subdivision owners.

Some homeowners who serve on ACC's are excellent. Absolutely 100% true. But I am in the unique position of seeing the abusive situations because I get the calls from all over the state. I have no idea what the percentages are, and hopefully it's not more than, say, 10% of the ACC committeemembers who are crummy. But that's in a state of 25 million people, the majority of whom live in subdivisions, and the majority of which subdivisions have some form of architectural control committee. Content may continue . . .

The Onslaught Against Historically-Vital Leasing and Short-Term Rental Rights Continues

My caseload is now overwhelmingly property-rights oriented, particularly as regards leasing and short-term leasing. Property owners' right to lease out their properties, including short-term renting, are under determined assault all over Texas, in cities and subdivisions. I have represented hundreds of property owners defending time-honored leasing rights. I currently represent property owners in constitutional challenges in state and federal courts to municipal bans on short-term rentals, as well as all kinds of challenges to subdivision and HOA bans on STR's. Read on for more info. Content may continue . . .

The cruelty of architectural control committees

In Texas, developers who have a concept or a vision how a subdivision ought to look empower "architectural control committees" (ACC's) to continue reviewing architectural plans after the developer leaves. These committees are, with increasing frequency, deeply hostile and abusive to the very homeowners whom they are supposed to serve.

The problem is that developers make a ton of money doing what they do, while ACC's are just homeowners who volunteer their time. Who is going to volunteer gobs of time to reviewing architectural plans and deciding whether the plans are "harmonious" with the rest of the subdivision? My views on this are well-known: it's an invitation for busy-bodies, control freaks, and people with axes to grind. And as the world changes to connected-homes and different kinds of living arrangements, ACC members become intransigent, standing in the way of innovation and necessary change. To take just one example, before the Legislature intervened a few years ago, ACC's would routinely refuse to allow rainwater storage systems and solar power panels. And boy, did they hate it when they could no longer forbid them, though, it should be said, they still find ways to make it hard for owners to get them approved. Sigh.

Texas law makes the problem worse, actually. The Property Code gives ACC's broad discretion in rejecting building plans, and courts often assume that HOA's and ACC's a pass on almost anything they want to do to other homeowners. It is understandable that a developer had a concept or vision, but what is not understandable is the often gratuitous pettiness and intransigency of volunteers who seize control of ACC's long years after the developer leaves the scene. Yes, the job is thankless, and Yes, there are many perfectly fine and even excellent ACC's. But that's because enough people rise above temptation to make it work. This process should never have been left to unpaid volunteers without credentials. The whole scheme is an invitation to abuse. And it's not as if home buyers have a meaningful choice — most new subdivisions in the state are now architecturally controlled. Developers want to sell a concept, understood; but the whole notion that it will be executed, ultimately, by your neighbors, seems to me fundamentally misguided.

But, as with so many bad things, good for the lawyers. Content may continue . . .

HOA's Are Just 2d Mortgages By Another Name

I've been getting more calls from media lately about HOA problems, and it occurred to me that there are strong parallels between the mortgage industry and the HOA-Industrial-Complex:

1. When you get a purchase-money mortgage to buy a house, the bank takes your house if you don't pay. When you buy into an HOA, the HOA takes your house if you don't pay assessments. In essence, buy agreeing to be a "member" of an HOA, you are buying a club membership to use the pool, amenities center, roads, and common areas, but unlike a normal club membership, if you don't pay, you lose your house. My colleagues on the HOA side of the Bar will be happy to foreclose on you and then charge you many thousands of dollars to extricate yourself from their clutches.

2. The mortgage and HOA industries have consolidated into giant collection entities. Banks and HOA's both hire large, third-party corporations whose job is to collect your money, hit you with late fees and fines if you don't, and then take your home at foreclosure. Rumor has it that investors are ready and willing to learn about these foreclosures and pounce on purchasing such homes at foreclosure. In both cases, too, the would-be party in charge (Bank, HOA) is really just the tail wagging the dog. Banks don't hold mortgages any more; they're sold off and securitized, then held by trusts. Big HOA's can't be run by ordinary people, as a rule, so HOA's have to hire the big association managers, which are rapidly consolidating into big, faceless companies.

So when you think you're buying into a "community," think again. When you think you're getting a mortgage from a "bank," think again. The communities and banks are screens for wealthy, powerful entities whose sole aim is to capture a huge revenue stream from . . . ordinary people. Content may continue . . .

Foreclosures for HOA dues and fines are an immoral scourge

Many years of practicing law relating to homeowners associations teaches me that no one should ever have their primary home (homestead) foreclosed on because of HOA dues, fines, or assessments. While it is, unfortunately, the law, the law in this instance is unfair, immoral, and unconscionable. Lawyers in this state who enable HOA's in taking away people's homesteads and tacking on thousands in attorney foreclosure fees to the bill — dwarfing the actual bill from the HOA — have abandoned conscience, in my opinion. They take part in a monstrous system. I have observed the means, methods, and motives of those who participate in the HOA-Industrial-Complex, and I believe the law has in essence sanctioned oppression and overreach of ordinary people by those with great means. No one should become homeless because of HOA dues, period. No one should be forced to pay lawyers thousands of dollars for the process of collecting HOA dues by any means. There should be strict limits on the interest, penalties, and fees that can be charged by an HOA, just as there are in all sorts of other contexts, and there should never, ever be a foreclosure against a homestead for such sums. Content may continue . . .

Deed restriction amendments that take away preexisting rights may not be enforceable

After Tarr v. Timberwood Park held that short-term rentals are allowed under common deed restrictions, HOA's and subdivision owners began amending deed restrictions to bar leasing and require mandatory, physical occupancy of homes for long terms. I get calls every week now from people who always had broad leasing rights who suddenly find that a majority of their neighbors have voted to take away their leasing rights and, even worse, mandate physical occupancy of homes. Is that allowed? Read on!Content may continue . . .

Unfair Attorney Fee Recovery Statute - Tex. Prop. Code § 5.006

Texas has a special law devoted to the recovery of attorney's fees in deed restriction litigation, and it is deeply flawed, unfair, and in my view, unconstitutional. The law, at Tex. Prop. Code § 5.006, states that the party who brings a lawsuit for breach of restrictive covenant can recover attorney's fees. The courts have interpreted this to mean that the homeowner who gets sued for breach of restrictive covenant (deed restriction) cannot recover attorney's fees even if he or she defeats the lawsuit. Unfair? You bet. What it does, in practice, is force someone who thinks they might get sued for breach of restrictive covenant to race to the courthouse and sue first. In that way, the person who thinks he or she may be a target can preserve an attorney-fee claim by using a special procedure (called "declaratory judgment").

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No, A City Can't Ban STR's says the Austin Court of Appeals

An important new decision from the Austin Court of Appeals agrees: No, a city can't ban STR's outright. On November 27, 2019, the Third Court of Appeals decided Zaatari v. City of Austin, Appeal No. 03-17-00812-CV and invalidated the City of Austin's ban on short-term rentals by owners who do not claim a home as a homestead. The opinion held that a ban is an unconstitutional retroactive law. Why retroactive? This is the critical holding: because the right to rent for all durations is a fundamental property right protected by the Texas Constitution.

This dovetails nicely with a case I handle, Muns et al. v. City of Grapevine, pending in the Tarrant County District Court and Fort Worth's Second Court of Appeals, in which the trial court has temporarily enjoined the City of Grapevine STR ban while the court of appeals decides some gateway jurisdiction questions. Based on Zaatari, one would expect the Grapevine case to go much the same way — invalidating the Grapevine ban because it retroactively takes away a settled property right.

The new Zataari decision was not unanimous — it drew a dissent from one of the new justices on that court. I expect a lot more fireworks on city ordinance cases in the next year!
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In a stunning rebuke to municipal overreach and unfairness, my clients — a group of homeowners in the City of Grapevine — prevailed today (November 7, 2018) in obtaining a temporary injunction halting enforcement of a new City of Grapevine ban on short-term rentals. The order is HERE. My clients brought a lawsuit claiming that the new Grapevine STR ban is unconstitutional in various ways — as a regulatory "taking," as violative of due process, and as preempted by other Texas law. The City defended the new ban in various ways, among them an argument that the Grapevine ordinances already barred STR's by their silence! That is, the familiar argument of STR opponents that if a law or ordinance is silent about STR's but require "residential use," then STR's are by implication forbidden. The Texas Supreme Court rejected that in my Tarr case on May 25, 2018, but the City of Grapevine appears to have missed that point. Content may continue . . .

City Ordiances and STR's

One STR issue that is heating up is whether city ordinances that ban short-term rentals are vulnerable to legal challenge. I believe they are, and on several constitutional grounds. A Texas appeals court in Houston recently allowed such a challenge to proceed based on the theory that imposing such an ordinance on a homeowner who purchased based on STR rights had it taken away — an unfair “taking” of property. See Village of Tiki Island v. Ronquille, 463 S.W.3d 562, 565 (Tex. App. - Houston [1st Dist.] 2015).

The Austin STR ordinance seems to me to be unconstitutional on several grounds. I represent one client in a challenge to the ordinance based on its vagueness in not making clear whether leases of 30 days or more are exempt. The City of Austin is requiring an STR permit even for long-term leases if tenants do not physically occupy a property for the entire term of their lease, in effect making it impossible for any landlord to avoid the STR ordinance. If the City knocks on the door and the tenant says she is only staying for three days, the City issues a citation for renting without an STR license even if the lease is for 30 days or more! Obviously, when someone leases a property, they need not actually stay there if they don't wish to. Any owner who wishes to avoid the STR ordinance necessarily leases for 30 days or more, but that's no safe harbor in Austin.Content may continue . . .

Can A City Ban STR's?

I have been working on short-term rental issues for 9 years, first in the context of deed restrictions, and more recently in the context of city ordinances. Until I saw some recent city ordinances which outright BAN STR's, I had sort of assumed that a City could, if it writes an ordinance carefully, ban STR's.

I've changed my tune. I've wracked my brain trying to see how a city — particularly a Texas city — can pick out one type of interest of land -- residential lease — and prevent an owner from allowing other human beings to stay at that land under just that one kind of possessory interest. Where I land is that it seems unlikely to me that any city will be able to prove that DURATION OF LEASE provides a rational basis for BARRING RESIDENCY. Furthermore, I think that the Legislature has already preempted cities from outright BARRING STR's — after all, Texas raises revenue from them by taxing them expressly. Could a city ban all hotels? Sounds absurd, right? The Legislature already regulates hotels and earns revenue from the Hotel Tax. How, then, can cities ban the very activity which the Legislature wants to allow?

The issues go deeper, actually, impinging upon fundamental liberty interests. People structure real property possessory interests in all sorts of ways, none of which are readily distinguishable from leasing when it comes to minimum duration of stay. The law allows these various ways of structuring possessory rights. Why would a tenant have fewer possessory rights than, say, the co-owner of an LLC?

As this issue heats up, I expect to see — and argue — very direct challenges to the very power of a city to ban STR's. Without action by the Legislature, my current view is that cities cannot do it. They can regulate many other aspects of real property use — nuisance, noise, occupancy (with an asterisk, since, again, the Legislature has already regulated that area) — but I strongly doubt they can bar a class of people from using property in the normal residential manner. Content may continue . . .

Ways In Which Texas Cities Trounce Property Owners' Constitutional Rights

Some anecdotes from real life:

  • The City of Austin issues a bed-and-breakfast license. Neighbors repeatedly call in the property for "renting for short terms." Meanwhile, the B&B is up and running and has bookings extending into the future. The City of Austin, on a Friday, revokes the B&B license, asserting it issued it "in error." On Saturday, Austin Code Enforcement officers descend on the B&B and commence issuing citations for "renting for short terms without a short-term rental license."

  • The City of Grapevine allows STR's for years and collects local short-term occupancy taxes from property owners who rent out their homes for short terms. The City tells owners there are no regulations in place for STR's. Many property owners invest in properties in reliance on their right to rent for short terms. A search reveals no ordinances which regulate STR's. Abruptly, the City of Grapevine announces that it is barring STR's effective in 45 days.

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The Consequences of Tarr v. Timberwood Park

After my client prevailed in the important Tarr v. Timberwood Park case in the Texas Supreme Court, the consequences have been exactly what Ken Tarr (and I) had hoped: the regulation of short-term rentals has moved to the community for a vote. All over the state, subdivisions and HOA's are instituting the amendment process to get restrictive covenants changed. Cities are considering or passing ordinances. So, instead of tricking and surprising people with strained interpretations of old rules, subdivisions and cities are enacting new ones. While there was a lot of grumbling about the Texas Supreme Court's refusal to act as the legislature on the STR issue, I think lawyers all over the state are telling their clients to move the issue to the voting hall instead of trying to harass people with unfair, expensive lawsuits.

Alas, if only that were unalloyed good news. Most of the action statewide is to ban STR's, though in varying degrees depending on bogus rationales — owner-occupied vs. non-owner-occupied, for example, or 25% of homes only. Those kinds of regulations present all sorts of problems and unfairnesses.

In addition, some of the amended restrictions I have seen are not very clear. Some of the city ordinances are not only unclear, but either draconian or outright unconstitutional. While I am heartened that people are exercising the vote, I am concerned that, as has happened in Austin, hastily-written or ill-conceived STR regulations are just going to generate more litigation. Good for lawyers, of course; bad for everyone else.

Also, I continue to believe that where owners already have a vested property right in renting a property for short terms, both constitutional and Texas statutory requirements forbid an abrupt taking of such rights. However, as I have blogged before, Texas law is not clear or settled in this area. That issue, too, is likely to result in litigation.

Perhaps the saddest part of the shift of STR regulation to local voting is that badly-written restrictions and ordinances still put the onus on individual homeowners to fight The Man. I've taken in many calls and had many meetings where I advised that a restriction or ordinance had serious flaws, but the time and expense to litigate the issues is too expensive for most ordinary homeowners to undertake.

Probably the right answer is for the Texas Legislature to regulate this area comprehensively. In that way, local ordinances will not be allowed to conflict with state law, and state law can be more carefully composed based on input from everyone.
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Homeowner Freed From Overreaching HOA!

In a powerful new decision rejecting an overreaching HOA, the Austin Court of Appeals has reversed two lower courts which required a homeowner to submit to an HOA from whose tentacled reach the homeowner was supposed to be exempt. In Vann v. Homeowners Association for Woodland Park of Georgetown, Inc., No. 03-18-00201-CV, 2018 WL 4140443 (Tex. App.-Austin Aug. 30, 2018), a developer goofed and had to exempt over 100 homes from subdivision governing documents. Right after the developer filed that exemption, a homeowner (the Vanns) bought one of the exempt homes. Several years later, after the developer had left the scene, the HOA starting dinging the Vanns for violations of various rules that did not apply to the Vanns (even though the same rules did apply to the Vanns immediate neighbors!). The Vanns sued to declare the HOA powerless over their property and the rules not applicable. Relentlessly, the HOA claimed the power to declare itself the Vanns' HOA and enforce all the HOA's rules. The HOA refused to acknowledge that the developer had expressly exempted the Vanns from the HOA's reach. After disappointing losses in both the justice court and the county court at law, including large attorney fee awards against the Vanns, the Vanns prevailed completely on appeal. Said the court of appeals in reversing the lower courts: "Our review of the documents outlined above reveals a gap in the logical chain that would establish the HOA’s authority over the Vanns’ property." Right on! That was exactly what the Vanns had been arguing for years, but the pleas always fell on deaf ears because, well, you know, HOA's always win, right?

This is not an uncommon fact pattern. I fairly often see cases where some local "HOA" just endows itself with authority despite the lack of any support in the governing documents. It's not always as clear-cut as the Vann case, though it should be noted that even there, the HOA's appeal briefs accused the Vanns of confusing and misleading the court by merely pointing out the obvious discrepancies in the governing documents. That is a common HOA strategy — demonize and belittle the homeowner, bring the resources of a large law firm to bear, seek huge attorney fee awards against the homeowner, etc.

HOA's hoard power. Too often, they simply won't yield once they take a position. They drive around in golf carts hunting for violations. No amount of reasoned argument or evidence gets them to back off or admit error. The Vanns hung in there and shut it all down, finally getting vindication in the courts and complete freedom from an overreaching HOA. This was a sweet win for a brave, tenacious homeowner.Content may continue . . .


My client, Ken Tarr, has now prevailed in a case that protects Texas property owners statewide. On May 25, 2018, the Texas Supreme Court, in a unanimous decision authored by Justice Brown, held that short-term rentals are not barred by the widespread, typical "residential use only" deed restriction. Even more importantly, the case announces a rule that restrictions cannot be interpreted into existence where silence reigns. Wow! We can now say with some confidence that what is not expressly forbidden by deed restrictions is allowed. Seems like a no-brainer, but it's been a long time coming — I've been litigating short-term rental cases for 9 years, pushing them forward across the state in hopes of getting one up to the Supreme Court.

"Residential use only" is the commonest deed restriction and zoning ordinance and goes back over 100 years. Opponents of short-term rentals insist that short-duration leases constitute the operation of a business at a home, a logically untenable position for any number of reasons — not the least of which is that the tenants are not doing anything different on day 31 than they were doing on day 29. The Texas Supreme Court, joining at least 19 other states, rejected the business-use argument in a lengthy, carefully-reasoned, and logically unassailable opinion. The new decision is sufficiently exhaustive that it seems destined to become the leading state supreme court opinion in this area of the law. Content may continue . . .

Sigh. Disclosures in Residential Real Estate Transactions

I've probably blogged about it before, but since the issue comes around again and again, it's worth repeating: When in doubt, disclose!

Because I handle so many different and varied kinds of real estate disputes, it's common for a property that is the subject of contention to be put up for sale in the midst of — or immediately following — litigation. How often have I seen persons aggrieved by a lack of information when they purchased get tempted to hold back on disclosing the litigation warts when they themselves are ready to sell?

Real property (land, houses) has a determinable market value: potential buyers bid and thereby set the market price. But that process breaks down when buyers can't get reliable or correct information. Sellers want to maximize the sale price, and that can lead them to be shy about over-disclosing.

The answer? Easy! The golden rule! ALL SELLERS OF REAL ESTATE: DISCLOSE WHAT YOU WOULD WISH TO HAVE DISCLOSED TO YOU. This will yield the true market price, avoid litigation, and make you, the seller, feel super special about what a good, honest person you are. Content may continue . . .

When Subdivisions are Cities In All But Name

Lately, I've had a number of subdivision governing documents ("declarations," "CCR's," etc.) come across my desk that are just bizarrely lengthy and complicated. As I've said in previous posts, it's not reasonable to expect homeowners without law degrees to read and understand these documents. I realize that's the whole point — that lawyers and association managers have to run the show behind the scenes, generating fees in the process. But then we have the odd situation where homeowners are supposed to be able to control their own communities, but in effect the communities are run by a permanent bureaucracy of unelected, highly-paid technocrats. Can you say "Yes, Minister"? Content may continue . . .

STR Article in Texas Tribune

I was interviewed as part of a new article in the Texas Tribune about short-term rentals. It's an informative summary of legislative and legal battles over the issue in Texas. I commend it to you. Content may continue . . .

Why I Charge for Consults

There's a new expression gaining currency since the Facebook private data scandal: "If the product is free, you are the product." Before it becomes a cliché, I want to use it for its relevance to lawyers in civil practice.

I've gained through hard work knowledge in certain narrow areas of the law over the past 10 years. I get calls from prospective clients related to those areas in which I work. If I'm not paid to render advice, then I'll end up talking to clients in order to land clients. But if I'm paid to render advice, I'm talking to clients to give the best advice I can, not to land that client. They are already my client if they're paying me, if only for a few minutes of time! For the relationship to be fruitful and worth the hourly rate I charge, I have to give disinterested, unvarnished advice. And boy do I try. Things I say all the time in consults after going over a list of all the strategy options:Content may continue . . .

Amendments to Restrictive Covenants That Take Away Property Rights Need to Be Challenged

As the short-term rental battles become ever more pitched, more subdivisions (and HOA's) are wielding the power to amend their restrictions — a majority or supermajority votes to amend the restrictions to bar short-term rentals or even leasing generally. Over the past several years, I have become increasingly concerned about this majority-rules approach. On the one hand, it's a fair vote, right? But on the other hand, clients come to me who purchased property precisely because of the leasing rights granted in the restrictive covenants. They purchase in anticipation of leasing income, whether for short terms or long terms. Is it fair for such fundamental property rights to be taken from owners who relied upon them when purchasing? I believe not.

Texas law is far from clear on the issue of how far amendments to restrictive covenants can go. However, in the context of city ordinances, it's clear that cities cannot take away vested property rights from owners who purchased property under one set of rules guaranteeing those rights. In addition, the Texas condominium laws require a 100% owner vote for fundamental changes in ownership rights. Finally, other states that have squarely addressed the issue of restrictive covenant amendments which take away important property rights have protected owners who purchased under one set of rights.

I believe this is an important issue that needs to be taken all the way up to the Texas Supreme Court. There needs to be clarity as to how far a majority of owners can go in taking away the vested property rights of other owners in a subdivision. Content may continue . . .

KAOS, CONTROL: Declarant Turnover Of HOA

I'm calling this post "KAOS and CONTROL" because of the complexity, confusion, and bumbling in the process of subdivision developers' turnover of power to the HOA's of the subdivisions they create. KAOS is that period after some homes are sold in a new subdivision but before all homes are sold or before the developer has fully relinquished CONTROL. (And of course, KAOS is the arch-nemesis of CONTROL). It's a rickety scaffolding for an in-joke, but hey, I'm not above strained analogies.

There is often a lengthy period of years when owners are in the dark about what is happening as their community gets built, extended, and even radically changed during the many years the original developer still has almost complete control over the subdivision and its HOA. During that time, developers can engage in abuse or shenanigans to the detriment of the owners who previously bought in under a certain set of assumptions — how big the community would be, how expensive the assessments would be, what amenities would get built, what kinds of homes would be built, etc. Owners are surprised to learn that developers have so much power under the governing documents and Texas law that the developers can maintain almost complete control for not just years, but decades. Any idea that the HOA represents the owners is a joke because the developer controls all or most board of directors seats indefinitely, and developers routinely appoint their friends, family, and employees to those HOA Boards. Obviously, those directors are beholden to the developer, not the community at large, despite the fact that they have fiduciary duties to the community. Often, they just ignore those duties and rubber-stamp whatever the developer needs and wants.

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Site Maintenance

I am in currently repairing links in the blogs. Please check back if you require specific documents.Content may continue . . .

Transparency in Appeals

As my law practice becomes more appeals-focused, I have begun looking for ways for clients and prospective clients to see more clearly what I do and my track record in doing it. I have begun the process of keeping a chronological list of every appeal I have handled, along with a brief description. Some of the cases have been important, published cases that established or changed Texas law; others are routine applications of existing law with the outcome not a particular surprise (even if I fought like crazy and lost in trying to get a change in the law or an exception).Content may continue . . .

All the wrong arguments about STR's

Rabid opponents of short-term rentals either seek out positions in which to ban them (elected and appointed local officials, hoa boards) or else bully and sue their neighbors to get their way. That's all fair and good — it's democracy in action, and proponents of property rights ought to get out in force to protect those rights.

The problem, in my experience arguing cases at every level of the court system and before city officials, comes in convincing local officials — judges, politicians, and city staffers alike — to break through the incendiary claims and arguments and analyze the
real issue. The basic problem that opponents hate to acknowledge is that every argument against STR's applies equally to long-term rentals as to short-term ones: landlords make money, landlords advertise, landlords use property managers, too many renters at the house, etc. More importantly, every landlord has an obligation to have decent tenants who respect neighbors — just as every owner should. Bad neighbors are bad neighbors whether they are owners or renters, and there are plenty of both kinds. The problem with everyone's occupancy of residential homes is that people can create nuisances, noise, trash, and other kinds of poor behavior, either sometimes or often. But that has nothing to do with the duration of someone's occupancy. All durations are equally bad and equally good in the sense that whoever is occupying a property can be bad for any duration or good for any duration. The proper target of regulation of leasing is what it has always been: respectful behavior by whoever is occupying a home. But what has happened instead is that opponents — just like the prohibitionists back in the day — demonize every property owner who leases and try to ban leasing — and not just STR's, either. At some point, higher-level elected officials and judges are going to have to step in and say, right, whatever else we do, we don't ditch freedom, whatever its faults. We regulate it and make money on it through taxation. That, of course, is the American way.Content may continue . . .

The Pace of Angry Change Ramps Up

Just my observation over the past couple of years, and quickening substantially since Donald J. Trump won the Republican nomination: Baby boomers with the time and wherewithal are taking over condos and HOA boards, and they are champing at the bit to remake their communities into the narrow slice of humanity that reflects their own demographic. I see it in a hundred little things and with almost every new HOA case I handle or consult I have. The single most persistent theme is the desire to transform ordinary condos and subdivisions into owner-occupied, single-family communities, where renting of any kind is forbidden and where new rules are imposed requiring some form of blood relation and permanent, full-time owner occupancy even to the exclusion of part-time owners. It is a stunning development, and it is generating a lot of courtroom brawls.Content may continue . . .

Getting down to what is really real in STR cases

In an alarming convergence, Donald Trump's incendiary campaign statements appear to be emboldening opponents of leasing and short-term rentals to say what they really mean: they want every subdivision to be gated and patrolled so that "people who don't belong here" can be kept out. Some HOA's have deed restrictions that allow them to build walls and curtail leasing, but many do not, and most non-HOA subdivisions do not. Those that do not increasingly wish they did, however, and they are seizing on the only deed restriction wording available — "residential use only" — to argue that homes that are rented are businesses because landlords earn money, or that people who do not establish "permanent" residency are not entitled to use or lease a home! If opponents of STR's get their way, residential leasing and owner second-home stays will become forbidden; all subdivisions will require mandatory, full-time owner-occupancy.Content may continue . . .

Do amendments to restrictive covenants apply retroactively?

After years of having the issue crop up but not get resolved, I've finally litigated the question whether amendments to deed restrictions can be applied to the detriment of owners who relied on the prior deed restrictions. I am pleased to report that my client prevailed in a state district court, based on the legal theories of estoppel and equity (unclean hands). My client was able to continue renting out a property under leases already in force when the subdivision amended its restrictions to ban short-term rentals.Content may continue . . .

Mortgage lien invalidated on statute of limitations grounds

Today, the Texas Supreme Court refused to disturb a decision by the Tyler Court of Appeals invalidating a mortgage lien. See Landers v. Nationstar Mortgage, LLC, 461 S.W.3d 923 (Tex. App. - Tyler 2015, pet. denied). This was a case I handled at all levels of trial and appeal. The Texas Supreme Court had requested full briefing on the merits, so all the arguments were before the high court. Ultimately, the rule of law prevailed over strong lender protests that applying the statute of limitations was unfair.

The lender and servicer, Nationstar Mortgage LLC, sued the Landers, a family in Athens, Texas, to foreclose. However, the lender's suit was filed more than four years after the lender accelerated the loan. The lender argued that an injunction in a prior lawsuit that had barred a nonjudicial foreclosure sale for a few weeks had also prevented the lender from filing a lawsuit to foreclose. The 3-judge panel of the Texas Court of Appeals in Tyler unanimously rejected that argument and declared the lien void. Nationstar asked the Texas Supreme Court to reverse the Tyler Court of Appeals, but the Texas Supreme Court declined that invitation.
Landers is now good law and stands as one of the very few modern cases in Texas voiding a mortgage lien on limitations grounds. Content may continue . . .
J. Patrick Sutton Cases & Issues Blog