A Review of Basic Texas Landlord-Tenant Laws & Interests

When Texas leases successfully balance the rights and privileges that landlords and tenants most desire, they often help minimize future disagreements and legal challenges. However, before such leases can be drafted, all contractual parties must try to better understand the primary interests of those countersigning the required documents.

In general, stable and responsible tenants want to extend their leases with landlords who provide quality property, respect tenant privacy rights and make all promised repairs promptly. And good landlords want to attract and retain tenants who pay their rent on time, get along well with other tenants — and keep the rented or leased property in good condition. If respectable landlords will also provide all required legal disclosures to prospective tenants, few problems may arise.

Here’s additional information both Texas landlords and tenants should bear in mind while trying to build and maintain good relationships with one another.

Federal laws forbid discrimination and other wrongful practices

Whether renting commercial or residential properties, landlords must avoid violating all

federal statutes and regulations. Perhaps the most important law is the Fair Housing Act that forbids treating anyone unfairly who’s looking for a place to live.

Stated simply, property owners cannot discriminate against prospective tenants based upon their gender, race, color, national origin, disability, family status (regarding whether they have children under age 18 living with them) or religion. This law extends to all sales, rentals and financing of dwellings. Furthermore, as your Houston real estate attorney can explain to you in greater detail, there are Texas state, county, city and municipal laws that also define and extend these rights and obligations. In addition to forbidding discrimination, all these laws are designed to overcome past efforts to segregate society based on poverty and the seven factors named above.

Other federal laws affecting prospective property tenants include the Fair Credit Reporting Act (FCRA) and specific Environmental Protection Agency laws and regulations. After obtaining an FCRA “background check” on a prospective tenant, landlords must allow people to formally dispute negative material in their credit reports with pertinent legal documents.

While respecting all federal, state, local and municipal laws – Texas landlords must also be prepared to provide tenants with numerous disclosures – including those set forth below.

Property information, equipment & disclosures all Texas landlords must provide

Since these can be quite numerous, the following list is merely representative of the more common ones.

  • Name and address of the property owner or property management company that can be contacted about ongoing needs or concerns;
  • All specific, defining rental lease terms. With renters, this must include information about the monthly “final” due date for rent and the acceptable ways to make all payments;
  • Information about the required security deposit – and when it will be returned after a tenant moves out (unless the tenant is no longer qualified to receive it);
  • Special rights of domestic violence victims. They must be informed about their right to withdraw from a lease when being subjected to abuse. While specific procedures must be followed, they should not further jeopardize these tenants;
  • Adequate security devices including window and door locks must be already installed upon move-in. Many state and local laws may also require the presence of fully functional fire extinguishers, smoke alarms and other safety equipment;
  • A clear and firm commitment to make all crucial repairs in a timely fashion. The most critical repairs are those that directly affect the health and safety of tenants;
  • Tenant parking and pet deposit information;
  • Detailed information on how all move-out matters must be handled.
  • Disclosures regarding the possible presence of lead-based paint or asbestos in the units. Likewise, recent bedbug infestations and other similar problems must be disclosed.

While this list isn’t entirely comprehensive, landlords who meet all these basic legal standards are likely to create harmonious relationships with tenants.

Please contact our law firm so we can answer your questions and prepare any rental contracts that you may require. Our experience in this field should allow us to fully meet your needs.

 

How Wage Garnishment Laws Affect Many Texans

Although wealthier Texans may build up significant savings and retirement accounts by middle age, most residents must keep working far longer to meet their individual and family needs. And if unexpected family or medical crises occur creating new financial emergencies, some people may face wage garnishments. Fortunately, Texas offers strong protection against many types of creditors.

Here’s a brief review of the most common types of wage garnishments pursued in Texas, basic terms you’ll need to know regarding this field – and references to special concerns you may need to discuss with your Houston business law attorney to fully protect your rights.

Important terminology related to attaching employee wages

  • Wage garnishments. In Texas, this term is often used interchangeably with “wage attachments” and refers to court orders directing employers to withhold certain amounts of money from employee paychecks to satisfy certain debts;
  • Administrative garnishments. These usually refer to federal government back taxes or student loans now in default – and they do not require a court order to be activated. Once debtors have student loans in default, they’ll normally be contacted by the U. S. Department of Education and told which collection agencies will be collecting their debts. (Note: Students loans can almost never be discharged by a bankruptcy filing);
  • Disposable earnings. This refers to the amount of money you have left in your paycheck after all mandatory deductions have been made for federal taxes, disability insurance, union dues, unemployment insurance, nondiscretionary retirement deductions, workers compensation and health insurance.

Types of debts often leading to wage garnishment

Texans are very fortunate compared to citizens of other states since Texas only honors a very limited number of garnishable debts.

  1. Unpaid child support and alimony (in arrears)
  2. Current court-ordered child support and alimony
  3. Government debts owed to the IRS (back taxes) — and all related fines and penalties
  4. Unpaid student loans (in arrears)

Note:  In light of Article IV of the U. S. Constitution, Section I (requiring each state to honor the “public acts . . .  and judicial proceedings of every other state,” certain other limited creditor debts referenced in judgments obtained outside of Texas may also be garnishable.

Be sure to speak with your Houston business law attorney whenever you receive any notice of an order to garnish your wages.

Fixed garnishment limitations that benefit Texas debtors

  • Total amount that can be garnished (based on all court orders). This is equal to 50% of your disposable earnings;
  • Percentage allowed for tax debt. This varies, based on your current deduction rate, the number of your dependents and other factors;
  • Student loans. The Department of Education can normally only garnish up to 15% of your disposable income from each paycheck;
  • Spousal support. The most your wages can be attached for this obligation is either $5,000 or 20% of your average monthly gross income – whichever is less.

Priority of wage garnishment orders

Although unusual factors might be able to change the list below, employers must normally prioritize their payment of garnishment orders in the following manner.

  • Unpaid child-support
  • Spousal support
  • Back taxes
  • Student loans

Texas employers are not allowed to discriminate against employees with wage garnishments

This has long been a concern of many employees since handling wage garnishments can take up a considerable amount of an employer’s time. Texas doesn’t allow those with wage attachments to be treated unfairly when it comes to hiring, promoting, demoting, reprimanding and firing (among other actions).

How creditors can still reach your money – apart from using wage garnishment

Even if your wages cannot be reached, regular creditors can still gain access to your money by obtaining court orders to freeze one or more of your financial accounts – and place liens on certain types of real property you own.

Please contact our law firm with any questions you may have about the proper handling of court orders to garnish wages — or any other types of administrate tasks regarding employees.

How the Texas Business Opportunities Act Seeks to Help Consumers

One the main goals of the Texas Business Opportunity Act is to protect consumers interested in starting their own businesses from scam artists eager to defraud them out of their money. When ads appear on TV or via email — promising large profits in exchange for a small, initial investment – it’s never wise to assume a valid offer is being made.

Some of the most common business opportunity ads often claim that you’ll need to do very little work before you’ll start receiving your first profits. That’s rarely an honest offer since running a business is often hard work. Now that so many older Americans (and others) have been laid off from their jobs, it’s critical to carefully review each offer and look for “red flags” warning you of possible fraud.

The following information will help explain some of the different ways that the Texas Business Opportunity Act tries to regulate the way that many programs go about seeking investors and operating in this state.

Types of business offers governed by the Texas Business Opportunity Act

  1. Those that require the buyer to pay at least $500 to begin setting up the business that’s being sold;
  2. Where the seller claims that you’ll earn back your initial investment (or more) in profits; and
  3. The seller promises to do one or more of the following acts to close the deal:

a). Provide you with a location – or help you find one (that’s not currently owned by you or the seller) where you can use or operate the goods or services being leased or sold by the seller;

 b.) Help you create a marketing, sales and production program (unrelated to a formal franchise business governed by separate laws);

 c.) Promises to buy back products, equipment or supplies (or goods made from them) provided to you so you can run the business.

To further protect the public from dishonest business offers, the Attorney General of Texas requires parties making offers that meet the description above to first register with the Secretary of State and provide any applicable bond or trust account required.

Whenever you become interested in investing in any business opportunity that even vaguely appears to be covered by the Texas Business Opportunity Act, it’s always best to review the matter with your Houston business law attorney. Our firm can check to be sure the seller’s company has formally registered with the Texas Secretary of State’s Office and posted all required funds.

As a potential investor, you should also be provided with key information (required by law) about any company – before ever tendering any money.

Legal disclosures companies must provide

When a business offer is made in Texas and is covered by the Texas Business Opportunity Act, the seller must provide specific information to the buyer ten (or more) days before any contract is signed by the parties and before any money is paid to the seller.

Here are some of the disclosures that must be provided.

  • Names and addresses of all parties directly affiliated with the seller in the business being marketed;
  • A specific listing of all services the seller is promising to perform for the buyer (such as setting up a product marketing program);
  • An updated, current financial statement covering the seller’s finances;
  • All details covering any training program being offered by the seller;
  • How all services will be provided by the seller regarding the products and equipment being sold – and all key terms involved with the leasing agreements covering business locations being provided to the buyer;
  • Information pertaining to any of the seller’s bankruptcies (or civil judgments obtained against the seller) during the last seven years.

The importance of distinguishing multi-level marketing offers from pyramid schemes

Make sure the business you’re interested in requires you to do some type of work (such as selling products or services) before paying you any profits. If you are only being urged to solicit additional participants in the business, there’s a strong chance that you’re being “tricked” into building a pyramid scheme that may earn you short-term gains before the entire investment program collapses.

Always obtain legal advice regarding any business that sounds too much like a quick way to earn a lot of money. Attractive shortcuts to huge profits – especially those promoted in many weekend hotel and restaurant seminars – are often sham operations.

Please contact our law firm so we can provide you with the legal advice you’ll need before investing in any new business opportunities.

Buying a New Company:  Conducting Due Diligence

Depending on the nature and size of the business you’re interested in buying, the process of completing due diligence can be straightforward or complex. Fortunately, the basic steps you’ll need to follow are rather standard.

After your lawyer has negotiated a Letter of Intent (LOI) with the seller –  covering each party’s duties and responsibilities involving confidentiality, exclusivity and other matters – you’ll be ready to begin the due diligence phase of possibly buying the company.

The Main Reasons for Performing Financial Due Diligence

This process is partially designed to help determine if the initial evaluation placed on the business is fair and if the company is both stable and viable. Time must also be set aside to review all current contracts and potential legal and regulatory liabilities.

Some of the specific aspects of the business you’ll want your Houston business law attorney and personal accountants to carefully review and examine are set forth below.

  • All accounts receivable and payable
  • At least the last three years of the company’s tax filings
  • All current payroll obligations
  • Most or all the major banking transactions for the past year or more
  • The full nature and extent of any outstanding loans on the books

As this initial list of matters indicates, this process can take many months with some businesses. Normally, the parties negotiate the timetable for completing all due diligence examinations in their Letter of Intent (LOI).

Special Inquiries You Must Include Regarding Other Financial Matters

Hopefully, your review of all the financial accounts won’t turn up any troubling questions that can’t be answered. However, since a small percentage of business sellers may be dishonest, your due diligence team must carefully watch out for certain types of “red flags” or irregularities. These can include some of the following concerns.

  • Missing funds
  • References to non-existing accounts
  • Improperly filed tax returns
  • A varying degree of bad debt that’s regularly written off
  • Unstable profit margins

Your lawyer’s due diligence inquiry must also include carefully reviewing all current contracts with other businesses or corporations.

Key Concerns Involving Executory Contracts

  • When are they each due to expire? (This is important since this information can affect the company’s current valuation and other issues). For example, if current supplier contracts are ending soon, you may soon find yourself having to pay far more for critical supplies;
  • What’s the status of all customer contracts? You need to be sure all funds owed to the company are being collected regularly and all goods and services promised are being delivered in a timely manner. Failure to carefully monitor all contract terms can cost you valuable customers and open you up to major legal liabilities;
  • Are all Service contracts being carefully monitored? Nearly every business is dependent on outside service vendors to keep their manufacturing and other equipment working properly. Likewise, contracts are often in place to secure the professional services of lawyers, accountants, computer repair technicians and others. You must make sure the company is properly honoring all these contracts and renegotiating them in a timely and responsible manner;
  • Are all current leases being properly maintained? Companies can’t afford to accidentally let leases lapse on buildings or other property that are essential to their daily operations.
  • Employee Agreements? Do current employees have employment agreements with non-compete clauses? These must be carefully examined because they cannot be assigned if you are only buying the assets.

Due diligence can also extend beyond merely reviewing key financial documents and contracts. It should also include a detailed review of all actual or threatened litigation and regulatory investigations.

Your Lawyers Must Review All Current or Likely Lawsuits & Regulatory Challenges

Each of the following issues must be examined regarding all current or anticipated litigation. They may prove crucial if you decide to still buy a specific company since you’ll probably need to request contractual indemnity for all future liability (and litigation expenses).

  • How costly might each case eventually prove to be? In other words, what potential liabilities are involved?
  • Has the business received formal notice that any of its operations may be operating in conflict with any state or federal statutes or regulations?

You must be willing to sit down with your lawyer and the target company’s current legal counsel to sort through all these legal and regulatory concerns since they directly bear on the business’ current valuation and the wisdom or folly of buying it.

While the due diligence concerns referenced above are not intended to be fully comprehensive, they should help you understand many of the critical matters that must be examined. Once you make it through this due diligence stage, you can then either decline to buy the company or move forward into the “closing” or final transactions phase.

Please feel free to contact our law office so we can help guide you through the various stages of due diligence as you try to decide whether you should buy a specific company.

Choosing Reputable Charities for Your Texas Estate Plan

Many Americans now name one or more charities in their Wills or other estate planning documents to help these important cultural and humanitarian groups maintain adequate funding. However, others less familiar with charitable giving need to understand that, before arranging these types of gifts, they must carefully evaluate each charity or non-profit group to be sure their funds will be shared properly. 

Fortunately, there are several reputable organizations that will readily help consumers decide which charitable or non-profit groups are properly using all their donations while minimizing administrative costs. These same “watchdog” groups often urge all charitable groups to maintain open donation and expenditure records. In addition, our Texas Attorney General’s Office has put together some useful tips that can help all of us do a better job of deciding which charities will be the most responsible recipients of our testamentary gifts.

Here’s a list of basic tips that can help all of us better evaluate all non-profits and charities. That information is followed by a list of different websites and groups dedicated to providing consumers with current news about charitable activities. Of course, it’s always best to start your search by first visiting with your Houston estate planning attorney who may already know about the reputations of many charitable organizations.

Important Information to Obtain While Choosing Charities to Include in Your Estate Plan

  • First, be sure to obtain the full legal name of each group, its address and telephone number. Next, ask if the IRS has formally recognized it as a public charity that’s tax exempt. Then, ask if your donations will all be fully tax deductible.
  • Find out how long the non-profit or charity (hereinafter just referenced as ‘charity’) has been in existence.  While longevity doesn’t always ensure completely honest and frugal management of funds, it does mean that it should be easier to research the group’s reputation by visiting several of the online sources named below.
  • Request a recent annual report that clearly indicates how much money the group spends on administrative costs and how much of every donated dollar will directly benefit those the charity is seeking to help.
  • Find out if the charity’s main goals are related to education, medical services, scientific and medical research – or perhaps providing scholarships to those pursuing careers in specific vocational fields.
  • Do not give the group any of your private bank account or credit card information during your investigative calls – although it’s best to be honest about your intentions. Also, if you’re not ready to receive numerous emails or letters to your home address, avoid giving that type of information out right now.

Be sure to ask members of your professional or business circles if any of them have had positive experiences with the charities that interest you the most. When any charity has a publicly named board of directors, consider contacting those individuals directly by phone to ask them about their experiences with handling tasks on behalf of the charity.

When you’re ready, start visiting some of the websites set forth below to see what you can find out about each of the charities that seem to be highly reputable.

Online Websites Offering Detailed Information About Various Charities

  • Give.org. This website includes the sub-title, “BBB Wise Giving Alliance.” On its page dedicated to donors, it states that you can look up information about each charity’s effectiveness, governance, finances – and current brochures or other materials available to the public.
  • The American Institute of Philanthropy (Charity Watch). Among its various offerings, this website offers a list of charitable groups involved with some highly specific causes and issues.
  • Guidestar. This online resource offers a wide array of information about many reputable non-profit groups.
  • Charity Navigator. Like the other websites already named above, this one offers timely information about many charities. It also provides a “hot topics” link that will tell you more about charities currently in the news for one reason or another.

All four of the oversight groups listed above are noted on the Texas Attorney General website. You can also find out additional information about specific charities by visiting this Consumer Reports page.

If you haven’t already thought about giving to a charity or non-profit when you pass away, please consider doing so now.  All Texans need to do a bit more to help others so our state can become more compassionate — and improve our current ranking for charitable giving.

Please feel free to contact our firm so we can explain some of the best ways to include charities as beneficiaries in your estate plan. There are specific legal ways of handling this task so that your estate will reap the best tax advantages available.