Small Businesses Often Make Crucial Legal Mistakes

Even highly competent employees sometimes make serious legal errors while handling human resource, management, accounting and other business tasks. Since federal, state and local laws are constantly being updated, you must regularly speak with numerous employees to be sure they’re making timely and lawful decisions.

Should the feedback you receive concern you, it’s always best to consult with your Houston business law attorney to be sure you know how to promptly correct any possible errors. Lawsuits are often filed over very basic legal mistakes.

What are some of the most common legal errors that businesses keep making?

Most mistakes are made when employers try to be flexible with their rules. While compassion can go a long way toward helping you get along better with your employees, clarity and consistency are crucial. Always exercise caution when addressing the following issues.

  1. Each employee must be properly classified. You need to look at each position separately, based on all pertinent state and federal laws. If you simply decide to treat everyone as an “exempt” employee, you might be sued if you fail to provide proper overtime pay or adequate rest periods.
  2. Lunch breaks must be provided when required by law. Some employees may be entitled to a meal break after completing a specific number of hours during a shift.
  3. Make sure you’re properly labeling workers as either employees or independent contractors. You may hear from the IRS if you make this type of mistake. Take the time to speak with your lawyer about how you should carefully interact and communicate with independent contractors. Once a worker has strong legal grounds for believing that “employee” status has been conferred, you can be sued for specific benefits.
  4. You must be sure all employees understand what constitutes “sexual harassment.” If you’re sued in this field, one of your strongest defenses will be that you promptly trained all new managers and employees to help create a healthy work atmosphere. You must also develop a secure way for employees to submit complaints before problems escalate.
  5. You cannot punish or fire an employee for simply taking a leave of absence under the Family Medical Leave Act (FMLA). To protect yourself, keep accurate records of all employee evaluations being conducted at routine intervals. If you’re particularly concerned about the behavior of someone taking FMLA leave, ask your attorney when you should sit down with that employee to discuss why you’re carefully monitoring their work performance – before letting them go.
  6. Be sure to issue final paychecks on a timely basis to all employees who are leaving. Find out if you’re required to provide this type of check even before an employee has returned all employer-provided equipment, vehicles or other materials.
  7. You must handle making loans to employees in a very careful manner. While this is often a kind gesture, you must set up a formal repayment schedule. Never simply deduct a portion of what’s owed from each future paycheck.
  8. Be sure to properly handle all employer obligations under the Americans with Disability Act (ADA). You may need to make appropriate work accommodations and should always treat such workers fairly. Most disabled workers take great pride in being highly dependable and productive workers.
  9. COBRA healthcare coverage must be offered and administered properly. Give serious thought to creating a comprehensive package of this medical insurance paperwork so that it’s immediately ready to be given to qualified employees when they leave. Timing is critical so potential coverage won’t lapse.
  10. The Health Insurance Portability and Accountability Act (HIPAA) must be explained and handled appropriately. Employees have a right to privacy regarding their medical data and information – be sure you’re adequately protecting it while processing claims.
  11. Pension concerns must be addressed in a timely and proper manner. The Employee Retirement Income Security Act (ERISA) is a complicated law that requires extreme attention to detail. Always request legal advice when uncertain how to administer it.
  12. You must carefully handle all responsibilities under the Consumer Credit Protection Act (CCPA). You may need expert help calculating all your employees’ paycheck deductions for lawful wage garnishments – including those for child support and student loans. Look for highly respected software that may help your most experienced workers.
  13. Equal Pay Act. This law must be carefully followed since too many businesses keep failing to pay men and women fairly when handling similar work.
  14. Title VII concerns. Your company must avoid discriminatory practices when hiring, laying off and firing employees. Many businesses are learning to use multiple interviewers with highly diverse backgrounds so that fairness can be readily achieved.
  15. OSHA laws. You must make sure to keep adequate records covering all workplace accidents and injuries for an appropriate number of years — if you employ ten or more workers.

Should you have any questions about these topics, please contact your Murray Lobb lawyer to discuss your concerns. We have extensive experience providing legal advice to our clients so they can can readily comply with all federal, state and local laws.

The Basic Steps for Forming a Texas Corporation

Although running a business can be very challenging, it’s often invigorating to reach a point when you may need to incorporate your company. This process is often begun by discussing what can be gained or loss by making this move with your business partners. You should also consider speaking with your Houston business lawyer so you’ll fully understand all the legal implications of making this decision.

The following material reviews the main reasons that many companies choose to incorporate their businesses. It then notes the most common steps that must be taken prior to filing a certificate of incorporation with the Texas Secretary of State’s Office.

Potential advantages that are often acquired by incorporating a business

  • Improved legal liability status. Creating a corporation can provide each individual business partner with added protection against personal liability for the actions of all other executives or employees. It can also offer greater protection for business assets;
  • Critical, everyday activities can be simplified. Upon incorporating, it can become easier to add new owners and investors while still maintaining the same level of control over your company;
  • The company can more easily transact business all around the world. It’s often easier to conduct business in a corporate form in many other countries;
  • It can help you one day take your company public. While your corporate executives and employees may always want to conduct business privately, a time may come when it may be to your financial advantage to take the company public and sell stock.

Those are just a few of the main reasons why many business executives decide to incorporate their current companies or partnerships.

Common steps you must take when you’re ready to incorporate your business

  1. Name the corporation. Try to choose a name that suits your business and helps raise your profile. You and your lawyer will need to conduct a formal search to see if any of the names you’d like to choose are currently available in Texas;
  2. Select a registered agent and office. Be prepared to designate a trustworthy party to serve as your registered agent and name the city where that person will keep his or her office;
  3. Choose which parties will be named as the corporation’s organizers or incorporators. The names and addresses of each of these individuals must be listed within the certificate of formation;
  4. Designate your corporate directors. After the certificate of formation has been filed, the directors take over running your business. These highly knowledgeable executives must also have strong management and interpersonal skills that will help them successfully negotiate all future decisions and transactions;
  5. Draft a brief statement, indicating the corporation’s official business purpose. While this may sound rather straightforward, it’s often wise to run this description by your lawyer to be sure you’ve fully covered all key aspects of your intended business transactions;
  6. Consider obtaining professional help with the completion of your official certificate of incorporation. Like other states, Texas has specific expectations for the precise information that must be included. Since these requirements can change periodically, it’s often wise to ask your lawyer to review the contents of your certificate of incorporation;
  7. Pay the required fees. These should normally be posted on the Texas Secretary of State’s online website. If you prefer, your lawyer can submit your fees and certificate of incorporation for you.

While this list of common steps isn’t intended to be fully comprehensive, it should clearly indicate the basic steps that you and your business partners should take if you decide that it’s time to incorporate your business.

Please feel free to contact the lawyers at Murray Lobb so we can answer any specific questions you may have about this process. We’ve helped many clients incorporate their businesses over the years – and we’re ready to put that experience to work for you.

Six Basic Types of Business Insurance You Might Need

Successful companies of all sizes readily address their insurance needs so they won’t later be caught off guard by either a baseless or valid legal claim. No matter how hard you try to provide flawless products and services to the public, there’s always a chance that a defective product or business transaction may render you liable for legal damages.

Although only certain types of companies must carry workers compensation, disability and unemployment insurance to meet federal guidelines, all businesses can benefit from protecting their company assets by purchasing basic and special types of business insurance.

Fortunately, there are only six basic types of business insurance that you and your business partners must carefully review while trying to protect your company against future legal challenges. All six are set forth below with additional information.

Six common types of business insurance

Before reviewing the following types of insurance, be sure to thoroughly discuss the precise nature of all your business transactions with your insurance agent.

  1. General liability insurance. This will provide you with legal defense support for a variety of alleged wrongs. For example, your company may be sued based on a personal injury claim or the alleged statements of one of your employees. For example, if one of your customers is seriously injured while visiting one of your offices or factories, this policy can help you compensate the injured party for all bodily injuries and medical expenses. In addition, this same type of policy could protect you if a court holds one of your employees liable for business libel or slander — for damages up to the maximum amount of coverage stated in your policy.
  2. Product liability insurance. Even some of the most reliable products on the market will occasionally malfunction and harm a consumer. For this reason, you must secure an ample amount of product liability insurance coverage for this type of claim.
  3. Professional liability insurance. If your company provides any types of services to customers, you must carry this type of policy – often referred to as “E and O” (errors and omissions) coverage. This policy will cover the costs of defending your company in a civil lawsuit that may be based on the alleged grounds of malpractice (often medical or legal). The insurance industry doesn’t view these types of claims as eligible for coverage under either general liability insurance or a homeowner’s insurance policy.
  4. Commercial property insurance. Industrial fires, floods, windy hail storms and other natural disasters can quickly destroy critical manufacturing plants, office buildings and valuable inventory. Always be sure to carry ample coverage under this type of policy — based on recent property value appraisals.
  5. Home-based business insurance. This type of policy is usually offered as a rider to a person’s homeowner’s insurance. It provides limited coverage for such problems as business equipment and inventory damages. This type of policy can also provide funds to cover liability claims brought by injured third parties.
  6. A business owner’s policy. This general type of coverage can let you bundle nearly all (or most) of your insurance needs into one policy. If you pursue this option alone – make sure it adequately protects you regarding all the most unique aspects of your company’s goods and services.

When discussing your insurance needs with your lawyer and insurance agent

Always talk about every reasonable type of harm that your business might suffer. Also, make sure you’ve chosen the best type of partnership or corporate structure to further protect your personal and business assets. Once you fully understand all the risks your company might face, find a highly respected business insurance broker. Always ask trusted business peers for their recommendations for this type of agent.

Finally, speak with your Houston business law attorney about all the specific types of insurance required by the state of Texas for a company like yours. And be sure to address all the federal government’s insurance requirements. Keep in touch with your insurance agent and lawyer throughout each year so they can each readily update you about new legal or policy requirements that may affect your current coverage during the upcoming year.

Please feel free to contact a Murray Lobb lawyer so we can talk with you about the legal aspects of obtaining adequate insurance coverage for all your business needs.

Purchasing a Texas Franchise or Company Already in Business

Since only about twenty percent (20%) of new businesses survive past their first year, many savvy entrepreneurs prefer to buy a company or franchise that’s already up and running. That often proves wise – if the purchaser is willing to complete all the necessary research to make sure the current signs of financial success aren’t threatened by factors that no one is willing to disclose.

To make sure you handle all crucial due diligence inquiries properly, consider asking your experienced Houston business lawyers for the help and insights they can readily offer as you explore all the possible investment risks.

Once you’ve carefully answered the following questions — and analyzed the various concerns mentioned — you should be better prepared to decide whether to purchase a specific business or franchise.

Important business questions to answer – and key concerns to evaluate

  1. Is the product or service a good match for your interests and experience? People are often most successful when they feel passionate about the business they’re running. Should you be entering a field that’s unfamiliar to you, be prepared to hire different consultants as needed. Of course, if you’re buying into a franchise, the corporate headquarters will usually offer valuable training and products to help you;
  2. Why is the business for sale now? Is the current owner truly planning to retire or move closer to family across the country? Ask the current owner very direct questions. If you’re trying to buy a franchise, you’ll need to obtain a copy of the Franchise Disclosure Document. (This was formerly known as the Uniform Franchise Offering Circular or UFOC). It will fully inform you about a franchise’s financial, legal and personnel history;
  3. What business location is best for you? Be sure to ask the current owner to provide you with a breakdown of the business’ most regular customers. Are they residents of nearby neighborhoods — or simply commuters who work in the area? What types of seasonal downturns, if any, should you expect in business profits? Be ready to purchase zip code-based demographic reports that can provide you with information about your current customer base. There are also different types of geographic-information-system software programs that can help you evaluate consumer trends tied to local neighborhoods and the most recent census. (Always be sure your business location can offer adequate parking);
  4. Do you have adequate financial knowledge and good funding sources for your purchase? Be sure to have your Houston attorney review all the general business or franchise contracts tendered to you. Only work with a trustworthy financial consultant who can help you review each company’s current operating expenses. Also, obtain the help of a qualified lender you’ve dealt with in the past – or someone who comes highly recommended by business contacts you’ve known for years;
  5. Determine if you’re personally willing to take a “hands-on” approach to running the franchise or business. Be prepared to pay good wages to any managers you must hire. Good ones can “make or break” a successful franchise – or any other type of business. Be sure to tell any impressive managers and employees you meet that you may keep many current staff members on in the future – once you’ve reviewed all employee files;
  6. Be sure to personally observe the current quality of customer service. Ask about the specific training that helped produce the successful parts of it. Be prepared to provide an employee orientation and training program that honestly promises good wages and job benefits so employees will know how important they are to you;
  7. Network with similar local business owners and managers in the area. If necessary, consider taking one or more of them to lunch or dinner so you can pose insightful questions about their most difficult daily challenges doing business in the area;
  8. Find out what types of marketing plans are currently in place and if you can expect any corporate support in this regard. If you aren’t buying a franchise, contact the nearest small business administration (SBA) office to see what types of marketing and business planning programs they can offer to you;
  9. Plan on developing some type of regular community “presence” that can benefit everyone. This may take the form of financially sponsoring one or two local children’s sports teams. When you pay for the equipment and help secure uniforms – often emblazoned with your company name or logo — everyone will likely benefit;
  10. After you’ve completed all due diligence inquiries, visit pertinent local government offices. Check to see what types of new building permits have been issued – and find out if any new zoning changes will soon be enforced that could negatively affect the business you’re hoping to purchase.

Finally, read all you can about what has helped so many successful businesses and franchises remain profitable over recent decades. The more you learn about each of these companies, the more likely you’ll be to succeed in running your own franchise or new company.

At Murray Lobb, we’re always ready to help clients who may soon buy an operating business or franchise. We can guide you through all the detailed due diligence inquiries – and draft all the contracts and other documents you’ll need.

Key Traits New Business Partners Must Readily Offer

Although only 20% of new businesses fail during their first year, roughly half of them cease operations during their first five years. Frequently, the biggest problems develop because the founders failed to choose the best group of partners available to start the company.

Each potential business partner’s personality traits, ethical values, passion and proven skills must be carefully evaluated. Only then can everyone work hard together to define and establish high performance standards while carefully marketing the company’s goods and services to the public.

Here’s a general overview of the partner skills and traits that some business experts believe can provide a new company with a strong chance to succeed for many years to come.

Top skills and traits your partners must have and be willing to share with each other

  1. Trustworthiness, discretion and moral integrity. In addition to partners whose references say they’re definitely trustworthy– you also need people who have an innate need to treat others fairly and want to act as good role models for ethical business behavior;
  2. Keen intelligence and a proven track record of success. Ask all potential partners about their past business successes and failures. Find out if they have truly learned from all past experiences. The crucible of the workplace often provides the best measure of a potential partner’s ability to succeed in a new business venture. Look for highly intelligent partners who can readily respect other people’s creativity — while still bringing their own fresh, original ideas to the table;
  3. Able to maintain a consistently positive, “can do” attitude. Nothing can bring a business to its knees quicker than one or two partners who keep forecasting doom. Be sure each person will remain actively involved in all key company decisions and “go the extra mile” without being asked to do so on many occasions;
  4. Able to display strong, supportive communication skills. All companies need strong communicators who can create proper standards for respectfully interacting with others. These standards must apply to all in-person meetings, phone conversations, the exchange of emails and the use of social media. Each partner must also clearly communicate his or her support for others within the company;
  5. Can offer unique skills that help balance out those offered by the other partners. In addition to someone who can handle complex accounting matters, you’ll also need partners who are strong planners, innovative geniuses, marketing wizards and product (and service) development experts. You’ll also need at least one partner who maintains strong connections to industry experts who can provide your company with timely advice, crucial consultants and other contacts over the years;
  6. Can remain open-minded and is willing to constructively resolve conflicts with others. Always learn all you can about each potential new partner’s openness to the ideas of others and ability to compromise on matters. Also try to evaluate the person’s mature ability to acknowledge personal mistakes – and learn from them. You don’t need any partners who constantly try and prove themselves “right” about everything;
  7. Has the ability to handle different levels of risk and uncertainty. This may be the hardest trait of all to discern – but it’s well worth finding out if someone can remain fully productive – even when unexpected business challenges arise. Always ask about past business difficulties and how the partner candidate personally responded to them. Resilience in the face of change is a key trait of all successful business partners.

Once you’ve selected all your partners, you’ll need to meet with your Houston business lawyer to draw up a partnership agreement that clearly addresses such matters as each person’s roles and responsibilities, how (and when) everyone will be compensated – and how the company must respond when anyone chooses to leave the partnership.

Please contact our Murray Lobb office so we can provide you with the guidance you’ll need when forming any new business. Our firm’s lengthy experience working with professionals in numerous fields allows us to provide you with the help you’ll need.

Administering the Family Medical Leave Act (FMLA)

Prior to the passage of the FMLA in 1993, American workers had few options when they needed extra time off from work due to their own serious medical conditions and accidents – or those of immediate family members. In fact, workers often had to use up all their vacation and sick leave benefits, if entitled to any, and then worry about their job security if they needed more time off. (However, eligible women could seek the special help offered by the 1978 Pregnancy Discrimination Act). 

Fortunately, the Family Medical Leave Act is still helping many 21st century workers address critical family caregiving duties and remains one of the signature pieces of legislation from the Clinton era.

Here’s a brief overview of specific provisions of the act that can help your qualified workers.

What basic opportunities does the FMLA offer qualified employees?

If a worker meets the minimum qualifications referenced below, it’s possible to take up to twelve (12) weeks of unpaid leave during a calendar year to take care of seriously ill family members, new children or the individual’s own major medical condition.

In 2008, the Family Medical Leave Act was updated so that qualified workers could also take time off work to take care of immediate family members who became very ill (or were seriously injured) while serving in the military.

The FMLA guarantees that qualified workers can take the extended time off work without having to worry about losing their jobs, their seniority or their employer-provided health care insurance.

Which types of employees are qualified to use the FMLA?

  • Those who have employers with 50 or more workers on the payroll for at least 20 workweeks during the preceding or current calendar year. A worker may still qualify even if all the 50 workers aren’t working at the same site – if they work within a 75-mile radius of one another;
  • Those who have worked for their employer for a minimum of 12 months, for a total of at least 1,250 hours. This means that many part-time workers may not qualify for FMLA leave. However, there are special rules that may apply to workers who are teachers, are highly paid – or are flight crew members of airlines;
  • Employees taking time off from jobs to handle their own “serious health conditions” – or those of covered family members. This time may also be used to take care of a new child or a servicemember in the immediate family who has been wounded.

Note:  Now that same-sex marriage is legal in all 50 states, LGBT (lesbian, gay, bisexual and transgender) individuals can also qualify like other workers to take care of their family members.

General questions often raised about the FMLA by employers and employees

Question 1:   Can the leave time requested be intermittent during a calendar year?

Answer 1:     Yes, if all the time that’s taken is counted toward the maximum amount of time off

                     allowed (12 weeks).

Question 2:  What government agency oversees and administers the FMLA for all federal

                     employees – as well as all state and local government workers and private

                     employees?

Answer 2:   The U. S. Department of Labor’s Wage and Hour Division. This is noted in Fact

                   Sheet #77B entitled, “Protection for Individuals Under the FMLA.”

Question 3: Are all workers qualified to take time off from their jobs under the FMLA entitled

                     to receive pay while away from work?

Answer 3:    No. The FMLA doesn’t require employers to pay qualified employees while they’re

                    taking this type of leave. However, it’s up to your employer to let you make a claim

                    for regular vacation time, sick leave or annual time off.

Question 4: Can a qualified worker ever be granted more than 12 weeks of paid or unpaid

                     FMLA leave in one year?

Answer 4:   An exception only exists for qualified family caregivers of wounded

                    servicemembers. They’re allowed to take up to 26 weeks off from their jobs in a

                    given calendar year.

Question 5: Can a qualified worker request more than 12 weeks off under the FMLA to take care

                    of a newborn – or a newly adopted child?

Answer 5:   In general, the answer is “No.” However, individual states can pass their own

                   versions of the FMLA and provide somewhat different benefits. To date, the Texas

                   Workforce Commission says that Texas has not passed such legislation.

Although the Family Medical Leave Act is a straightforward piece of legislation, it’s been updated with new rules and regulations and interpreted by the courts. Therefore, it’s usually wise for employers to ask their Houston employment lawyer for help if they have any specific questions about properly handling FMLA issues.

Please feel free to contact Murray Lobb so we can help explain any specific aspects of the FMLA to you as you provide its benefits to your employees. We’re always available to research any questions you may have.

Most Common Hiring Discrimination Complaints

In a work world where the average tenure with any given employer is declining, many companies must routinely advertise and fill both new and established jobs. Yet as common as this process has become, every employer must periodically stop and re-evaluate how all job applications are being reviewed, skills tests are being administered and interviews are being granted and conducted.

After all, implicit bias (discriminatory hiring) remains a constant threat to maintaining an even playing field for all job applicants. And though most Texas employees are hired on an “at-will” basis, (allowing them to leave when they choose – and be fired without notice or cause), certain federal, state and local laws forbidding hiring discrimination must still be obeyed.

The most critical laws protecting employees against discrimination are set forth below, followed by examples of the types of hiring questions employers should avoid. Finally, the roles played by the TWC (Texas Workforce Commission) and the EEOC (Equal Employment Opportunity Commission) regarding employee complaints are also briefly noted.

Federal, state and local laws provide many anti-discrimination protections to Texas workers

Both federal laws and Texas statutes have been passed providing job applicants and employees with protections against discrimination on the following grounds.

  • Race
  • National origin
  • Color
  • Religion
  • Sex (including various medical conditions directly related to pregnancy)
  • Age (40 and older)
  • Genetic testing information
  • Disability

Federal law also provides specific employment discrimination protection to applicants who may not be actual U. S. citizens.

Federal laws and related regulations designed to protect workers against discrimination

  • Title VII of the Civil Rights Act of 1964 (Title VII). This law was later amended to include The Pregnancy Discrimination Act
  • The Equal Pay Act of 1963 (EPA)
  • The Age Discrimination in Employment Act of 1967
  • Title I of the Americans with Disabilities Act of 1990 (ADA)
  • Sections 102 and 103 of the Civil Rights Act of 1991
  • Sections 501 and 505 of the Rehabilitation Act of 1973
  • GINA – The Genetic Information Nondiscrimination Act of 2008

Many of the legal rights guaranteed to Texas workers under the federal laws referenced above are also protected (and set forth) in Chapter 21 of the Texas Labor Code. Various Texas cities, including both Houston and Austin, have passed additional anti-discrimination laws to protect their residents with unique sexual orientation and gender identity issues. (Additional information about protecting employee rights is set forth on our Texas Governor’s website.)

Here’s some additional, pragmatic information for handling the job application process.

Company interviewers must carefully avoid asking job applicants these types of questions

While the following list is not intended to be comprehensive, it should heighten your awareness of how careful you must be when trying to learn more about applicants who may have certain special needs or limitations that are not directly related to legitimate job requirements.

  • Do you have any disability? (However, if the applicant has a visually obvious disability — or has voluntarily disclosed one – you can normally ask if any special job accommodations are necessary or required);
  • Are you currently taking any medications that might impair your ability to perform the assigned tasks as described?
  • Have you needed to file any workers compensation claims in the past?
  • Are you pregnant – or planning to have a child during the coming year?
  • Have you obtained the results from any genetic tests during the past 10 years that indicate your likelihood of developing cancer (or another debilitating condition)?
  • Have you ever suffered a heart attack or stroke? Do you have any close blood relatives who have suffered from either of these medical problems?
  • Do you currently suffer from depression, bipolar disorder or schizophrenia – or do any immediate family members have these medical conditions?

Under some circumstances, once you’ve hired a new employee, you may be able to inquire about certain disability-related medical conditions. However, you should discuss all the specific conditions that must exist before asking these questions with your employment law attorneys to avoid violating any of the employee’s legal rights.

The TWC and EEOC help current (and prospective) employees with discrimination concerns

When individuals believe that they’ve endured discrimination while applying for work with your company – or while employed by you, they usually contact the Texas Workforce Commission and the EEOC while deciding whether to file a formal complaint.

Should you learn that such a complaint has been filed, be sure to immediately contact our law firm so we can help you prepare a thorough response, detailing all that your company did to fully respect all employee (or job applicant) rights. We can also discuss with you various proactive steps your company can take to try and decrease the chances of having any further complaints filed against you.

The Key Stages of Buying a Home in Texas

Even if you’ve bought a home in the past, it’s always wise to hire an experienced lawyer and real estate agent to help you buy a house in Texas. Contract clauses often change and you’re likely to need special provisions added to your formal offer and purchase agreement to fully protect your interests.

After contacting your Houston real estate lawyer, you’ll need to select a qualified real estate agent. When searching for one, ask close friends for recommendations if they’ve recently bought a home in one of your target areas. You can also search for an agent by visiting the Texas Real Estate Commission website —  and Trulia.com and realtor.com.

What follows is a general overview of the key stages of finding and purchasing a home in Texas when you’ve hired qualified professionals to help you.

Determining if it’s the right time to buy – what your needs are — and what you can afford

Always take time to decide if it’s really the right moment for you to purchase a home. You must be able to afford a monthly mortgage, homeowner’s (and title) insurance and the other expenses that go with buying a home and making repairs. Once you’re sure you want to buy now and know what you can afford to pay, contact several highly recommended real estate agents (who have brokered properties in your preferred area) and interview them over the phone or in person.

After checking each candidate’s references and hiring the most knowledgeable and pleasant one, you’ll be ready to start conducting your search for the right home.

You’ll first need to discuss your preferred price range and the preferred parts of town where you would like to buy a home. Be sure to note the property features that are “must haves” or “deal breakers” for you. Of course, remaining flexible is important so you can avoid missing the chance to buy one of the best homes available.

Where will you and your agent find the listings that you’ll want to see?

In addition to visiting publicly advertised “open house” events in your target areas, you and your agent can also view many available properties online. Savvy sellers often offer online visual tours of their homes to help attract prospective buyers — who can then request showings.

You can also visit the Multiple Listing Service (MLS) online and then discuss the properties that you like most with your agent. If your agent is well established in the area, you may even become privy to some private listings before others learn about them. Websites like trulia.com and realtor.com should also provide lists of many homes still on the market.

What other initial tasks can a realtor help you handle?

After you’ve met with a mortgage broker and located several properties that meet your needs, your realtor can prepare a written offer for the seller. Prior to making an offer, be sure to ask your agent if the seller has any recent home inspection reports to share with you. If none are available and you still want to make an offer on a house, your agent can make obtaining an acceptable home inspection report one of the contingencies in the home purchase agreement that must be met before you’ll purchase the house.

You’re now ready to go over the legally required disclosures that Texas requires property owners to make to parties offering to buy a home. Repairs currently needed must be detailed – along with notes about all recently completed ones. If you haven’t already received a thorough (recent) home inspection report, you really should obtain one now — so you won’t be suddenly surprised by major plumbing or other serious home repairs in the future.

Should certain repairs be needed – and you’re still willing to buy the house – your real estate agent can negotiate these matters with the buyer on your behalf. Also, you must have a title search run on the house. You don’t want to buy property with any troubling liens, easements or other encumbrances that can greatly limit your ability to fully enjoy the use of your new home.

At this point (if not already done), you should purchase title insurance so that if any future claims are made against the property by third parties, you’ll be able to properly protect all your legal interests.

Once all these matters have been fully negotiated between your agent and the seller, you’re ready to move forward into escrow.

What basic, final tasks should be handled right before — or during — escrow?

Your lawyer will make sure that the home purchase agreement contains all the necessary clauses required to protect your interests before escrow closes. If it hasn’t already been done, you should also have the home appraised to make sure your offered purchase price is reasonable and fair.

Next, all new home inspection reports should be carefully analyzed, and all financial arrangements finalized. On closing day, you’ll go to the title agent’s office to sign all the documents and pick up the keys to your new home. As the buyer, you’re not responsible for paying your real estate agent’s fees – they are covered by the seller.

After closing day, your Houston real estate attorney can check to be sure that the title to your new home has been properly recorded in the correct local government offices – and then provide you with official copies of the newly recorded title deed for your records.

Please contact Murray Lobb so we can provide you with the clear advice you’ll need while buying your new home. Since we have the necessary experience to address any problems that may arise, we should be able to minimize any stress for you. Your lawyer will remain available to answer all your questions as you prepare to move into your new home.

Tenants: Beware and Negotiate

In a matter of first impression before the Texas Supreme Court, the Court ruled that a Residential Lease provision that obligated the Tenant to pay for any damages that result from “any cause not due to Landlord’s negligence or fault” was not void and unenforceable.

The background facts:  A young lady, Carmen White, got her first apartment and signed a standard Texas Apartment Association (“TAA”) lease.  Her parents gave her a washer and dryer set as a gift.  While using the dryer, it caught fire and burned her apartment and others nearby.  The damages to the apartment complex exceeded $83,000.00.  The source of the ignition was unknown and no fault was placed on White or the Landlord.  The landlord’s insurance company paid the claim, subrogated, and demanded reimbursement from Ms. White.  When she refused to pay the insurance company brought suit against her. 

The Procedural facts:  The case was tried to a jury.  After trial, the jury answered “no” to a question asking if White’s negligence proximately caused the fire.  However, the jury answered “yes” to the question whether White breached the lease agreement by failing to pay the casualty loss.  The jury awarded the landlord $93,498.00 in damages.  White moved for judgment not withstanding the verdict which was granted and the trial court rendered a take-nothing judgment.  The Court of Appeals affirmed the trial court ruling holding that that the Reimbursement Provision was void as against public policy.  The Appeals Court found a fatal conflict between the Reimbursement Provision’s broad language and Chapter 92 of the Texas Property Code restricting a Landlord’s ability to contractually allocate repair responsibilities.

The Supreme Court ruling:  The Supreme Court was to determine, as a matter of first impression, whether public policy embodied in the Texas Property Code precludes enforcement of a residential lease provision imposing liability on a tenant for property losses resulting from “any other cause not due to the landlord’s negligence or fault”.  In so holding the Supreme Court (in a 5-4 decision) repeatedly stated the well known legal axiom that “Parties in Texas may contract as they wish, so long as the agreement does not violate the law or offend public policy, recognizing the the Legislature has limited the freedom of a landlord and tenant to contractually allocate responsibility for repairs materially affecting health and safety.  Interestingly in footnote 4, the court acknowledged that above the signature block, the lease prominently states that the lease can be modified by agreement of the parties, but neither party requested modifications to the Reimbursement Provision. 

The Lease contained a reimbursement provision standard in the TAA lease which obligated the Tenant to pay for any damages that result from “any cause not due to Landlord’s negligence or fault”.

As we all know it is almost impossible to get a Landlord to revise any provision in a standard form lease, but if you are to avoid the tragedy that happened to Ms. White, you must negotiate a modification of the Lease.

Be aware that the TAA Lease is a legal document and forms a binding contract.  You should consult an attorney for help revising the Lease. 

We would first add a sentence to Section 10, Special Provisions.  We would write in the blanks a sentence to limit my liability.  For instance, “Notwithstanding anything to the contrary, Tenant shall never be responsible for repair, or liable for damages to Landlord’s property, including other units in the complex, unless such damage is proximately caused by the negligence of Tenant, Tenant’s guests, or invitees.”

Secondly, we would strike out certain language contained in Section 12. We would strike out “or any other cause not due to our negligence or fault”, at the end of the first sentence of Section 12.

We firmly believe that no residential Tenant should be held responsible to repair other units damaged or for property losses “resulting from any other cause not due to the landlord’s negligence or fault.”  Do not let this happen to you.

Creative Planning for Your Senior Years Should Begin Now

Creative Planning for Your Senior Years Should Begin Now

Just as most younger people make detailed plans before entering college or starting their careers, older Americans must also carefully plan how they want to live out the last decades of their lives. If you’ll start this process early, you’re much more likely to have many positive options and choices available.

Yet before older Americans or “seniors” start thinking about vacations and other pleasure pursuits – it’s crucial to first address such basic needs as finances, housing and medical care. A good way to start this process is by asking yourself each of the following questions.

  • What family, financial and legal resources do I currently have?
  • When – and in what order — should I begin drawing upon those resources in the most efficient manner?
  • If I’m short on all or most resources – how can I immediately begin creating a supportive community of friends, relatives and others to help me?

Your financial and legal resources require immediate planning and regular oversight

You’ll always need to know more than just how much money you have and how quickly you can liquidate it in case of an emergency. Although it’s important to be able to access large amounts of money should you or your spouse require immediate medical care that isn’t readily covered by insurance, there are other more critical issues you should address first.

Stated simply, everyone needs to secure Medical Power of Attorney documents, a Will and other supporting documents. You can easily acquire this paperwork by meeting with your Houston estate planning lawyer long before you reach your senior years. This will help you obtain the best medical care available – in keeping with your preferences.  You can also inquire about other documents that can grant trusted individuals the right to handle your finances (especially if you’re single without adult children) if you become temporarily incapacitated.

Given how many older Americans now live alone, these matters should never be postponed. As of 2010, about 12% of women between the ages of 80 and 84 were unmarried and childless. By 2018, some experts predict that about 16% of women in that age group will fit that description.

Of course, many men may also have similar needs since the average woman only outlives the average male by a few years.

Once you and your attorney have created all this legal paperwork, be sure to give copies to trusted relatives or friends so that they can make sure you obtain the care you need right when you need it the most.

If you’re age sixty and single (or even if married) – start proactively deciding where you’ll live Afraid to face the reality of eventual death, too many people refuse to move into proper housing before their health seriously deteriorates. When this happens, helpful family members or friends are often greatly inconvenienced by your avoidable tardiness.

Give serious thought to moving into a place now that offers different levels of care. Otherwise, if a sudden emergency develops, you might not wind up where you want to be. Try looking for unique living arrangements where seniors can blend in with others of all ages. Places like Hope Meadows are often a blessing to many.

Think positive if you have little money – consider part-time work – and keep socializing

Stay active pursuing activities that are meaningful, useful and fun. As you get to know others better, you may want to suggest becoming part of each other’s support network. Friendships with others of all ages can prove very beneficial to everyone involved.

If you currently have a tech-savvy friend or family member — and want to live at home as long as possible — be sure to check out the newest “apps” that can help keep you and your financial world safe.

Always be kind to yourself. If current media articles make you feel that you made poor choices in the past regarding marriage and children, keep in mind that married couples (and older singles) with children don’t always “have it made” regarding help while growing older. Many of these people have adult children who: (1) live far away, (2) are estranged from them, (3) are coping with serious addictions – or are (4) barely staying afloat in their own busy family and work lives.

Finally, since so many entrepreneurs are now rushing into the “longevity market,” you must make sure you’re interacting with reputable people and not scam artists. Just because someone is financially “bonded” to do their work, doesn’t mean they’ll do what’s best for you. Stay in touch with your lawyer and always have at least one trusted friend help you make critical decisions.

Please feel free to schedule an appointment with one of our Murray Lobb attorneys so we can help you prepare all the estate planning legal paperwork that you need. We can also review any contracts you’re being asked to sign regarding a continuing care retirement community (CCRC). We look forward to being of service to you.