v.
Josefino Bencomo III
ACCEPTED
03-14-00812-CV 4579155 THIRD COURT OF APPEALS AUSTIN, TEXAS 3/20/2015 12:21:58 PM JEFFREY D. KYLE CLERK CAUSE NO. 03-14-00812-CV IN THE COURT OF APPEALS FILED IN 3rd COURT OF APPEALS FOR THE AUSTIN, TEXAS RD
V. STATEMENT REGARDING ORAL ARGUMENT
Appellant is not specifically requesting oral argument. However, oral argument may aid the Court’s decisional process by providing the Court with an appreciation of the parties’ conflicting interpretations of Subchapter D of the Texas Property Code, and the important policy considerations behind it, as they pertain to this particular set of facts.
VI.
ISSUES PRESENTED
Does a warranty deed with vendor’s lien convey sufficient title to bring an executory contract for conveyance of real property out from under the applicability of Subchapter D of the Texas Property Code?
If not, does Appellee have an obligation to comply with the provisions of Subchapter D of the Texas Property Code in his dealings with Appellant, and is she entitled to damages under Tex. Prop. Code § 5.077 for his past failure to do so?
VII.
STATEMENT OF FACTS1
7.1 Mrs. White and her husband, George White, purchased the residential real property located at 701 Saunders Dr., Round Rock, TX 78664 (the “House”), from Josefino Bencomo III in November 2001. The House was to be used as their permanent residence. The Whites and Bencomo were not related.
7.2 The agreed upon purchase price of the House was $118,000.00. To purchase the House, the Whites took out a mortgage with Long Beach Mortgage Company for $82,600.00, who acquired a primary purchase money mortgage lien on the House. This mortgage and its corresponding lien was subsequently assigned to JPMorgan Chase Bank, N.A. (“Chase”). The Whites also executed a Real Estate Lien Note for $35,400.002 and Deed of Trust3 in favor of Bencomo, who obtained a purchase money mortgage lien on the House secondary to Chase’s lien.
7.3 Bencomo conveyed the House to the Whites via Warranty Deed with Vendor’s Lien4, wherein he retained superior title to the House over that of the Whites until his lien was satisfied. The Whites thereafter began paying the purchase money mortgages as agreed.
These facts are not disputed. See Exhibit G – Reporter’s Official Transcript – Hearing on Motions For Summary Judgment at 9-10; see also Plaintiff’s Motion for Summ. Judg. at 2-3. 2 See Appendix – Exhibit C.
3 See Appendix – Exhibit D.
4 See Appendix – Exhibit B.
7.4 Mrs. White lost her husband unexpectedly in December 2003. Thereafter, she had considerable difficulty paying the mortgages. Chase worked with Mrs. White to modify its mortgage loan so she and her family could afford to stay in the House. Mrs. White reached out to Bencomo to lower his interest rate as well, but he refused.
7.5 Over the years, and despite several requests, Bencomo never provided Mrs. White with any statements showing the status of her account with him, nor did he give her any mortgage interest statements like those she received from Chase, which she could use as a write-off on her federal income tax return.
7.6 When Mrs. White approached Bencomo about these concerns, she found him unwilling to provide her with annual or mortgage interest statements. Given his refusal to account for her payments or give her mortgage interest statements for her taxes, Mrs. White stopped making payments to Bencomo in 2008. By then, she had already made at least 72 monthly payments to Bencomo.
VIII.
SUMMARY OF THE ARGUMENT
Appellant argues that a seller’s granting of a warranty deed with vendor’s lien to a purchaser, which, on its face, is an executory contract for conveyance of real property, does not defeat the applicability of Subchapter D of the Texas Property Code to a real estate transaction described under Tex. Prop. Code § 5.062. Furthermore, to find that it does undermines Subchapter D’s important policy considerations and renders the statute ineffective towards serving its intended purpose by permitting a seller to sidestep the duties and responsibilities thereunder imposed for a purchaser’s protection.
IX.
ARGUMENTS AND AUTHORITIES
A. The Warranty Deed With Vendor’s Lien Keeps the Contract Executory.
The Parties do not dispute that Subchapter D applies to contracts for deed, which are clearly executory contracts for conveyance of real property to which Subchapter D was meant to apply. However, a warranty deed with vendor’s lien, wherein superior title to the property is retained, has the same legal effect as a contract for deed. See Norton v. Norton, No. 07-08-0469-CV, at *4 (Tex.App.— Amarillo 2010, mem. op.). Moreover, a warranty deed with vendor’s lien has for decades been recognized in Texas jurisprudence as an executory sale of real property where title remains in the seller. Cowden v. Bell, 293 S.W.2d 611, 614 (Tex.App.—San Antonio 1956), aff’d 300 S.W.2d 286 (Tex. 1957) (reservation of express vendor’s lien is an executory sale with title still in vendor); Zapata v. Torres, 464 S.W.2d 926, 928 (Tex.App.—Dallas 1971, no writ) (where vendor reserves lien in deed, contract is executory and superior title remains in vendor); Walton v. First Nat’l Bank of Trenton, 956 S.W.2d 647, 651 (Tex.App.— Texarkana 1997, writ denied) (superior title is held by vendor with express lien and vendee has mere equitable right to acquire title by carrying out the agreement). Appellee’s adverse contention that actual title is conveyed by and through a Warranty Deed With Vendor’s Lien is unsupported at law. Rather, as applied to the facts at issue, the law would clearly find that Appellee retained title to the property without the obligation of transference until such time as the note secured by Appellee’s lien was fully repaid in installments over a number of years. This is the very definition of an executory contract for conveyance of real property as used by the legislature in Subchapter D of the Texas Property Code. Shook v. Walden, 368 S.W.3d 604, 624 (Tex.App.—Austin 2012, writ denied) (legislature contemplated “executory contract” to be synonymous with contract for deed, where a purchaser satisfies a series of obligations over an extended period of time before seller is obligated to transfer title). Therefore, the real estate transaction between the Parties was unquestionably executory and Subchapter D should apply, as the requisites for applicability under Tex. Prop. Code § 5.062 were met.
B. The Deed of Trust Did Not Cure the Transaction of Being Executory.
Appellee attempts to make the fact that there exists a Deed of Trust between the Parties somehow establish that they have a conventional mortgage relationship, and not an executory one. This is erroneous for two primary reasons: 1) the Deed of Trust fails to cure the transaction of being executory, since title still has not been conveyed; and 2) almost none of the protections found in a conventional mortgage relationship exist in the relationship between the Parties. “Black’s Law Dictionary defines deed of trust as ‘[a] deed conveying title to real property to a trustee as security until a grantor repays a loan,’ and it goes on to remark, ‘This type of deed resembles a mortgage.’” Riner v. Newman, 353 S.W.3d 312, 318 (Tex.App.— Dallas 2011, no writ). Texas courts have described a deed of trust more simply as “a mortgage with power to sell on default.” Id. A deed of trust empowers the one to whom the property is conveyed in trust to sell and convey the property in a foreclosure sale if the grantor defaults. Id. at 319. Deeds of trust were commonly found in conventional mortgage transactions, where the seller conveyed full title of a subject property to the buyer and the buyer, in turn, conveyed said interest to a trustee, in trust, to secure its loan to the lender. See Flores v. Millenium Interests, Ltd., 185 S.W.3d 427, 435 (Tex. 2005) (Wainwright, J., concurring op.) (observing in traditional mortgage, legal title is conveyed upon closing). Deeds of trust enabled mortgagees to foreclose by nonjudicial means upon mortgaged property and sell such property at auction if the mortgagor defaulted on the underlying loan. Deeds of trust, therefore, contemplate that the buyer is encumbering full title to the subject property, with nothing remaining in the seller. Indeed, the conveyance of full title to the property from a seller to a purchaser, subject to a deed of trust, is a condition precedent of Tex. Prop. Code § 5.081’s provision that an executory contract can be converted in such a way that it is no longer executory. See Tex. Prop. Code § 5.081. However, where a seller retains superior title until the debt is paid and actual title is not conveyed to the purchaser, they contract remains incomplete and executory; and it is incongruous to maintain that such a purchaser can encumber title with the making of a deed of trust.
Secondly, in the conventional mortgage industry, the lender was usually a financial institution, such as a bank. Such institutions typically provide their mortgagors with monthly accounting of the status of their loan and, in some cases, even offer deferments. Mortgage assistance and modification programs are also available through banks. Mortgagors participating in this system are generally always aware of the current status of their contractual relationship with their mortgagees. Conversely, Appellee admits that he never provided Appellant with any accounting of the payments she made to him over the first seven (7) years after she purchased the property, despite her repeated requests for accountings. Moreover, after she stopped paying him because he refused to give her any accounting, she heard nothing from him for another five (5) years before he finally made demand and sought to foreclose on the property. Hence, for the majority of its existence, Appellant has been unaware of the status of her contractual relationship with the Appellee. Yet, Appellee maintains that it is a just result that Appellant be accorded fewer rights than those granted to persons protected under Subchapter D of the Texas Property Code, who are entitled to at least entitled to annual accounting of the status of their account under Tex. Prop. Code § 5.077. Appellant contends that Subchapter D was enacted to institute in owner-financing arrangements some of the protections found in the conventional mortgage industry. Indeed, although Appellee is not expected to mirror the thoroughness and frequency of accountings Appellant receives from Chase, he is expected to meet the minimal accounting requirements under § 5.077.
C. Appellee’s Interpretation of Subchapter D Undermines Its Intended Purpose.
Recognizing the abuses taking place in the owner-financing industry, particularly in Las Colinas, the Texas Legislature, in enacting Subchapter D, determined to hold owner-sellers to something akin to the standards enjoyed by those in the traditional mortgage industry. It granted those buyers in owner- financing situations the right to notice and an opportunity to cure any default (§§ 5.063-65), equity protection (§ 5.066), disclosures from the seller (§ 5.069), and annual statements of account (§ 5.077); items already enjoyed by their conventional mortgage counterparts. If owner-sellers could avoid applicability of Subchapter D by simply having buyers execute a real estate lien note and deed of trust, while still not conveying actual title, the whole purpose of the statute could be easily avoided and Subchapter D rendered meaningless. A court should not adopt a construction of a statutory provision that renders it meaningless. See Epco Holdings, Inc. v. Chicago Bridge & Iron Co., 325 S.W.3d 265, 270[incorrect citation] (Tex.App.— Houston [14th Dist.] 2011, pet. dismissed). By arguing that Subchapter D does not apply to transactions involving real estate lien notes secured by deeds of trust, where title is still withheld pending satisfaction of a series of obligations over an extended period of time, Appellee is espousing a loophole that the statute does not, and this Court should not, recognize.
D. The Trial Court Ordered Relief Not Requested in Appellee’s Motion.
Appellant hereby objects to the trial court’s ruling to the extent that it grants relief to Appellee that was not requested in his Motion for Summary Judgment on Pleadings. A summary judgment on a claim not addressed in the motion is generally reversible error. G&H Towing Co. v. Magee, 347 S.W.3d 293, 297 (Tex. 2011). Specifically, the trial court ordered that the Notice of Lis Pendens that Appellant filed during the pendency of this action is void and of no effect. A finding for this relief was not requested in Appellee’s Motion and should not have been ruled upon by the trial court. Appellant therefore requests that this Court reverse this relief and vacate this portion of trial court’s summary judgment order.
X.
PRAYER
WHEREFORE, Appellant prays that this Court reverse the entirety of the trial court’s grant of summary judgment to Appellee and render judgment in favor of Appellant on her Motion for Summary Judgment, which includes an award of damages under Tex. Prop. Code § 5.077; and order such other and further relief to which Appellant may be justly entitled.
Respectfully submitted, LAW OFFICE OF TONY A. PITTS
/s/ Tony Pitts By: _________________________ Tony Pitts State Bar No. 24060429
P.O. Box 5369 Round Rock, TX 78683 512.825.5545 512.244.4355 [email protected] ATTORNEY FOR APPELLANT, BOBBIE WHITE
XI.
CERTIFICATE OF COMPLIANCE
I hereby certify that there are 1,961 words in this Appellant's Brief, excluding those words exempted by T.R.A.P. 9.4(i)(l).
Isl Tony Pitts Tony Pitts
XII.
VERIFICATION
I swear under oath that the factual allegations in the Appellant's Brief are supported by competent evidence included in the Appendix.
Tony Pitts
.t~tm~~,,~ GRACE ALVAREZ !'~;~~\ Notary Public, State of Texas ;~J.\{..:.. § My Commission E1<pires Notary Public, in and for the St fTexas -.,,,,:t,;:,;f.~;I April 03, 2015 ,
XIII.
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of this Petition for Writ of Mandamus was served in accordance with Rule 9.5 of the Texas Rules of Appellate Procedure on each party, or the attorney for such party, indicated below:
Fred Walker Kimberly Nash Fred E. Walker, P.C.
609 Castle Ridge Road, Ste. 220 Austin, TX 78746 512.330.1686 (Fax) [email protected] [email protected] Attorneys for Appellee
/s/ Tony Pitts ____________________________________ Tony Pitts
XIV. APPENDIX
Exhibit A: Final Summary Judgment – being appealed from. Exhibit B: Warranty Deed with Vendor’s Lien. Exhibit C: Real Estate Lien Note. Exhibit D: Deed of Trust.
Exhibit E: Text of Tex Prop. Code §§ 5.062 – 5.066, 5.069, 5.077, and 5.081. Exhibit F: Plaintiff’s Motion for Summary Judgment. Exhibit G: Recorder’s Official Transcript – Hearing on Motions for Summary Judgment at 4-5, 9-10.
Exhibit H: Plaintiff’s Motion for Reconsideration.
EXHIBIT A atJ-:f~l~k_QM NO. 14-0374-C26 ~ SEP262014 ?f BOBBIE WHITE ~ IN THE DISTRICT co~ ~ Plaintiff, ~ Dlatrlct Clerlc, Wlfffameon Co.. TX v. § 26TH JUDICIAL DISTRICT § JOSEPHINO BENCOMO III § Defendant, § OF WILLIAMSON COUNTY, TEXAS
FINAL SUMMARY JUDGMENT
On August 12, 2014, the Court heard Plaintiff Bobbie White's Motion for Final Summary Jud&ment and Defendant Josephina Bencomo lll's Motion for Summary Judgment on Pleadings. Plaintiff and Defendant both appeared through their respective attorneys of record.
The Colltt has considered the pleadings and official records on file in this cause, the evidence, and the arguments of counsel. The Court finds (1) there is no genuine issue about any material fact; (2) Plaintiffs Motion for Summary Judgment is not meritorious and should be DENIED; (3) Defendant's Motion for Summary Judgment on the Pleadings is meritorious and should be GRANTED; and (4) Defendant is entitled to judgment as a matter oflaw.
I'f lS THEREPORE ORDERED that Plaintiffs Motion for Summary _1,1dgmcnt is DENTED.
IT IS FURTHER ORDERED that Defendant's Motion for Summary Jud!:,>rnent on Pleadings is GRANTED and all claims and causes of action against said Defendant are hereby DENIED.
IT IS FURTHER ORDERED that Plaintiff Bobbie White shall take nothing against Defendant Josephino Bencomo Ill.
IT IS FURTIIER ORDERED the Notice of Lis Pcndcns filed April 16, 2014 pertaining to the real property described below and recorded as Instnunent Number 2014026975 in the Official
Envelope# 2556759 Public Records of Williamson County Texas is of not force and effect and is hereby canceled and revoked:
Lot 7, Block "A", of THE SETTLEMENT - SECTION ONE, an addition in and to the City of Round Rock, in Williamson County, Texas, according to the map or plat recorded in Cabinet F, Slides 78-79, Plat Records, Williamson County,, Texas, with a local address of 701 Saunders Drive, Round Rock, Texas 78664.
All relief requested in this case not expressly granted is denied. This judgment finally disposes of all parties and all claims and is appcalablc. ~ SIGNED on September /2), °2014.
APPROVED AS TO FORM ONLY:
Isl Fred E. Walker Fred E. Walker Attorney for Defendant Josephino Bencomo Email: I'[email protected] 609 Castle Ridge Road, Suite 220 Austin, TX 78746 Tel. (512) 330-9977 Fax. (512) 330-1686
Isl Tony A. Pitts Tony A. Pitts Attorney for Bobbie White PO Box 5369 Round Rock, TX 78683 Email: [email protected] Tel. 512-825-5545 Fax. 512-244-4355 EXHIBIT B Cir:·() , · ,1 ., ; 1:!Ji Georgetown Title Company, Inc. "
0 10 , tf,lt ~to· f F Cfto #- f.Z, CA5lj{)2--~ O I O cf-f} 7;-JV' .. -. WARRANTY DEED WITH VENDOR'S LIEN
Date: November 21, 2001 Grantor: JOSEFINO BENCOMO, Ill, owning, occupying and claiming other property as homestead Grantor's Mailing Address (including county): 4229 Boy Scout Lane, El Paso, El Paso County, Texas 79922 -.:r '.'·4 Grantee: BOBBIE WIDTE and husband, GEORGE WIDTE '1'
:0
Grantee's Mailing Address (including county): 701 Saunders Drive, Round Rock, Williamson County, Texas 78664 :0
:J Fl :J Consideration: TEN AND N0/100 DOLLARS ($10.00) and other valuable consideration, and the further consideration of O (i) the execution and delivery of Grantee's one certain promissory note dated of even date, in the principal ="4 sum of $82,600.00, payable to the order of LONG BEACH MORTGAGE COMPANY, in monthly installments and bearing interest as therein provided, containing the usual clauses providing for acceleration of maturity and for attorney's fees and secured by a first, primary and superior vendor's lien retained in this deed and by a first, primary and superior deed of trust of even date from Grantee to TROY GOTSCHALL, Trustee, and (ii) the execution and delivery of Grantee's one certain promissory note of even date herewith, in the principal sum of $35,400.00, payable to the order of Granter in monthly installments and bearing interest as therein provided, containing the usual clauses providing for acceleration of maturity and for attorney's fees and secured by a second, subordinate and inferior vendor's lien retained in this deed and by a second, subordinate and inferior deed of trust of even date from Grantee to LARRY MOLINARE, Trustee.
Property (including any improvements): Lot 7, Block "A", of THE SETTLEMENT - SECTION ONE, an addition in and to the City of Round Rock, in Williamson County, Texas, according to the map or plat thereof recorded in Cabinet F, Slides 78 79, Plat Records, Williamson County, Texas.
Reservations from and Exceptions to Conveyance and Warranty: This conveyance is expressly made and accepted subject to all valid and subsisting easements, restrictions, reservations, covenants and conditions relating to said Property, to the extent the same are valid and enforceable against said Property, as same are shown by instruments filed of record in the office of the County Clerk of Williamson County, Texas.
Grantor, for the consideration and subject to the reservations from and exceptions to conveyance and warranty, GRANTS, SELLS, and CONVEYS to Grantee the property, together with all and singular the rights and appurtenances thereto in any wise belonging, TO HAVE AND HOLD it to Grantee, Grantee's heirs, executors, administrators, successors, or assigns forever. Granter binds Grantor and Grantor's heirs, executors, administrators, and successors to WARRANT and forever DEFEND all and singular the property to Grantee and Grantee's heirs, executors, administrators, successors, and assigriS against every person whomsoever lawfully claiming or to claim the same or any part thereof, except as to the reservations from and exceptions to conveyance and warranty.
The Vendor's lien against and superior title to the property are retained until each note described is fully paid
'Varranty Deed \Vith Vendor 1s Lien Page 1 of2 GF# 01084646/PF/mmipn
. ,, .·according to its tenns, at which time this deed shall become absolute. To the extent of $82,600.00, LONG BEACH MORTGAGE COMPANY, at Grantee's request, has paid in cash to Grantor that portion of the purchase price of the property that is evidenced by the $82,600.00 note described above, which note is secured by a vendor's lien on the property, which lien is transferred to that party without recourse on Grantor. It is hereby expressly agreed that the said $35,400.00 note and'all liens securing the payment of same are second, subordinate, and inferior to the said $82,600.00 note and all liens securing the payment of same and to any and all renewals and extensions thereof.
By acceptance of this Deed, Grantee assumes payment of all real and personal property taxes on the Property for the year 2001 and subsequent years.
When the context requires, singular nouns and pronouns include ~e plural.
'<::::;;1 ~ - 'fi 0 JL roSEfrnOJ3BNcoMo, rn...._ THESTATEOFTEXAS § § COUNTY OF ELPASO§
'
This instrument was acknowledged before me on the 27TH day of November, 2001, by.IOSEFlNO BENCOMO, rn.
NOTARY PUBLIC Notary Public, State of Texas In and forth! State ofTws My commlislon expires MY COMMISSION EXPIRES: JULY 31, 2004 07·31·2004 DAVID A. ACUNA .. (l?r,inted nam~ of Notary)
~niQ; ·-~_i.~ i
Oieor0n +'E>o bb1c: ltJh"l k FILED AND RECORDED 'Cf \ OFFICIAL PUBLIC RECORDS tOl 5>flU{)ja,rS !Or, ~at '£t;ct, w,, rBtoto ~ 1 ,,J~e~v..tM- 11_30_2001 03:40 PM 20010884'?4 ANDERSON $11.00
NANCY E. RISTER ,COUNTY CLtRK l4ILLIAMSON COUNTY, TEXA"
\Varranty Deed with Vendor 1s Lien Page2 of2 GF# 01084646/PF/mmlpn
CIH Georgetown Title Co., Inc.
EXHIBIT C
I I REAL ESTATE LIEN NOTE
Date: November 21, 2001
Maker: BOBBIE WHITE and husband, GEORGE WHITE ' .
'
Maker's Mailing Address (including County): 701 Saunders Drive, Round Rock, Williamson County, Texas 78664
Payee: JOSEFINO BENCOMO, III Place for payment (including County): 4229 Boy Scout Lane, El Paso, El Paso County, Texas 79922
Principal Amount: THIRTY-FNE THOUSAND FOUR HUNDRED AND N0/100 DOLLARS ($35,400.00) \ Annual Interest Rate on Unpaid Principal from date: Ten percent (10%) Annual Interest Rate on Matured, Unpaid Amounts: Eighteen percent (18%)
Terms of Payment (PrincJpal and Interest): Principal and interest shall be due and payable in monthly installments of Three Hundred Eighty and 41/100 ($380.41) Dollars or more, payable on the 1st day of each and every month, heginning on January 1, 2002, and continuing regularly and monthly thereafter until December l, 2017, when the entire amount hereof, principal and interest then remaining unpaid, shall be then due and payable; interest being calculated on the unpaid principal to the date of each installment paid and the payment made credited first to the Oischarge of the interest accrued and the balance to the reduction of the principal. · · o
Maker reserves the right to prepay this note in any amount at any time prior to maturity without penalty.
Maker shall pay to Note holder a late charge of five percent (5 %) of any monthly installment not received by the Note holder by the eighth (8th) day of each month that an installment is due.
SECURITY FOR PAYMENT: A Vendor's Lien expressly retained in deed of even date herewith executed by JOSEFINO BENCOMO, III to the Makers hereof upon the herein described real property and is additionally secured by a Deed of Trust to LARRY MOLINARE, Trustee, upon the following described real property, to-wit: Lot 7, Block "A", of THE SETTLEMENT - SECTION ONE, an addition in and to the City of Round Rock, in Williamson County, Texas, according to the map or plat thereof recorded in Cabinet F, Slides 78 79, Plat Records, Williamson County, Texas.
The liens securing the payment of this note shall be and remain secondary and inferior to the liens securing that one certain promissory note in the original principal amount of $82,600.00, dated of even date, executed by BOBBIE WHITE and husband, GEORGE WHITE and payable to the order of LONG BEACH MORTGAGE COMPANY.
Maker promises to pay to the order of Payee at the place for payment and according to the terms of payment the principal amount plus interest at the rates stated above. All unpaid amounts shall be due by the final scheduled payment date. If Maker defaults in the payment of this note or in the performance of any ob(igation in any instrument securing or collateral to it, and the default continues after payee gives Maker notice of the default and the time within which it must be cured, as may be required by law or by written agreement, then Payee may declare the unpaid principal balance and earned interest on thls note immediately due. Maker and each surety, endorser, and guarantor waive all demands for payment,
Real Estate Lien Note Page 1 of2 GF# 01084646/PF/mm/pn
('
presentations for payment, notices of intention to accelerate maturity, notices of acceleration of maturity, protests, and notices of protest, to the extent pennitted. by Jaw.
If this note or any instrument securing or collateral to it is given to an attorney for collection or enforcement, or if suit is brought for collection or enforcement, or if it is collected or enforced through probate, bankruptcy, or other judicial proceeding, then Maker shall pay Payee all costs of collection and enforcement, including reasonable attorney's fees and court costs, in addition to other amounts due. Reasonable attorney's fees shall be 10% of all amounts due unless either party pleads otherwise.
Interest on the debt evidenced by this note shall not exceed the maximum amount of nonusurious interest that may be contracted for, taken, reserved, charged, or received under law; any interest in excess of that maximum amount shall be credited on the principal of the debt, or, if that has been paid, refunded. On any acceleration or required or pennitted prepayment, any such excess shall be canceled automatically as of the acceleration or prepayment or, if already paid, credited on the principal of the debt or, if the principal of the debt has been paid, refunded. This provision overrides other provisions in this and all other instruments concerning the debt. r '
Each maker is responsible for all obligations represented by this note.
When the context requires, singular nouns and pronouns include the plural.
~~ fl~#/L
Real Estate Lien Note Page 2 of2 GF# 01084646/PF/mmlpn EXHIBIT D
EXHIBIT"J"
( (I) (JI 0.
Grantot: BOBBJE WHITE al!d husband, GEORGE WffiTE 'l) Gnmto~s Malling Address (inoludlnn county)!701 Saundorn Drive, Round Rook, Wllliamson County, Texas 18664 N '1
()) Tnistee: LARRY MOLlNARE .t ~;
0) ·~·· O Trustee's MaillngAddicss (inch1ding county): 524 N. Lamar Blvd, 11200, Austin, Travis County, Texas 7870( rl 0 1!.~ffi£fioffi'IY!'-"'l'8silF!No;gBNl':<'fM0;11f""' N Benefioincy's Malling Address (inOllidu1g county): 4229 Boy Scout Lane, El Paso, El Paso County, T<xas 79922
Note(s) Effective Date: November 21)2001 Amount:THlRTY-F!Vll THOUSAND FOUR HUNDRED AND NO/fOIHJOLLARBi\~'.li'!OOiOO~ Maket: BOBJJD; WHITE nnd h\l.S\>and, GBORGE WHITE
Pay<": JOSBFINO BENCOMO, ID
FiMI Maturity Date: As stated in said note. "
Tcrnis of Payment (op<ioonl): As provld."<l tho rein.
Properly (inclutling any improvements):
Lot 71 Block 11 A0 , ofTHE SETI'LEMENT SECTION ONE, an addition iil and to the City of Round Roel; in y
Wiiiiamson County, Toms, accordiOg to tho m>p or pint thereof recorded in Cabinet!', Slides 78-79, Plat Records, Williarrison County, Texas.
Prlor Lien(s) (including recording informalion): This inslrumOnt shall be and remain secondary and inferior to tlte liens se<uring the payment of llutt one certain p!Omissory no!< in lhe original priucipal"S\iWAt!ill>~!i.~l§.<l;1')f1~~~~~Ulj;i!J'1>1" B0Bl1Jl!~.]$ifill~1!101>ffil<lb'ey!\§J:il.GE~~Jii)'i!ofi~~qf@l'JitcITONG<'iilli'\<&!'."15RIBAGB'.~<J~. mow fully descrlbcd in a deed of trust filed of record in the Official Public Records of'Travis County1 Texas1 and Gtantors expressly covenant and agree that rhould default be made in 1he pa_yrn¢nt of satd S82 1600.001 or any portion thereof, prfucipal or intertst1 as the same sbal\ bcconle ·iue anQ.~z~_QJ~ 1 or_in ~y_o_t_~ coven.ants of the deed of trust securing \he payment thereof, the u1deb1,dne.ss evidenced by tll'6~3S;foo£(r'jf61flj\!'f~~£:~, al the option af1he holder theieof, shall at once become rluo and payable. lked of1'n.ut l'af.'e.l or 4 GFi Ql~/oun/pn
----------------·--·
EXHIBIT"J"
( Othor Exceptions to Conveyance and Wananty:
This convoyance ls expr<"ly mad• and ae<;<pt«\ 1ubjcet to al\ valid and rub1fatlng casements, r<Slrlcttons, icsmations, covenants and conditions relating to said Property, to the ex!ont the same are valid and onforceable against said Property, as same ate sho1111 by instruments flied of record in the office ofthe County Clerk of\Villiamson Count}', T~xas,
Por value received and to 5'cure payment oftlte note, G:tantor conveys the Property to Trustee in trust. Gtantor warrants and agrees to defend the tille lo the Property. JfGranlor perfomlS all the covenants and pays the Note according to its teJlllS, thls Deed ofTrust shall have no furth-er effect, andDeneficiary shall1¢leaso it at Grantol's expcnsi:.
Grantor's Obligations Granlor 3gtCes to:
I. keep the Property in good repair and conditionj 2. pay all !Jlxcs and assessments on tlie PropertyvJtCn due; ., 3. preserve Ute lien's priority as it is estebtlsbed itt this Deed ofTrus~ 4. maintain, in a fonn accept.'ible t0Denefidary1 an }n.suamce policy that a. coven; al1 improvomcn~ for their full insurable valuo as. determined when the policy is hsued and icnc\ved1 unless Bencfiofa.ry appro\'es a smaller amount in writing; b. contains 2Jl 80% coinsurance clausej c. provides :!ire and extended covcraie, including wind.stonn coverage; d. protects Beneficiary with a standard mong01go clause; e. provide< t1ood lmmrence a< any time the Property is in a flood hazard area; and f. contains such other coverage as Beneficiary may reasonably require; 5. comply at a11 tinm with the requirements o( the 80% <;oinsurance clause; 6. deliver the !nsuiw1ce pu\iey 1o Beneficial)' and deliver renewals to Beneficiary at least 1cn days before expiration 7. keep any buildings occupied as required by the insurance policy; 8. if this ls not a fintlien, pay oll prior lien noteslha! Grantor is personallyliable to pay and abide by all prior lien instruments.
Beneficiary's RJghts 1. Beneficiary may i1ppoint ill writing a substitute Qr su~s.wr mist~. succeeding to all rights and 1esponsibilities ofTrustee.
2, lfthe proceeds of1he Now ate used to pay any debt secured by priot liens, Beneficiory is subrogated lo •It of !he rights Ma liens ofU1e holders of any debt so paid.
1 NO. 03-14-00812-CV
2 REPORTER'S RECORD
3 VOLUME 2 OF 4 VOLUMES TRIAL COURT CAUSE NO. 14-0374-C26 4
5 BOBBIE WHITE ) IN THE DISTRICT COURT ) 6 vs. ) WILLIAMSON COUNTY, TEXAS ) 7 JOSEFINO BENCOMO, III ) 26TH JUDICIAL DISTRICT
8 9 10 _____________________________________________
11 HEARING ON MOTIONS FOR SUMMARY JUDGMENT _____________________________________________ 1 APPEARANCES 3 MR. TONY A. PITTS SBOT NO. 24060429 Law Office of Tony A. Pitts 4 PO Box 5369 Round Rock, Texas 78683 5 Telephone: (512)825-5545 Fax: (512)244-4355 6 Attorney for Plaintiff 7
8 MR. FRED E. WALKER, PC SBOT NO. 20700400 Fred E. Walker, PC 9 609 Castle Ridge Road, Ste. 220 Austin, Texas 78746 10 Telephone: (512)330-9977 Fax: (512)330-1686 Attorney for Defendant 1 I N D E X
2 VOLUME 2
3 HEARING ON MOTIONS FOR SUMMARY JUDGMENT 4 Page Vol
5 AUGUST 12, 2014
6 Announcements 4 2 7 Mr. Walker's Argument 4 4 Mr. Pitt's Argument 10 4 8 Mr. Walker's Response 16 4 Mr. Pitt's Response 20 4 9 Court Reporter's Certificate 29 4
PROCEEDINGS - AUGUST 12, 2014
THE COURT: 14-0374, Bobby White versus Josephino Bencomo, III. And announcements, please. MR. PITTS: Tony Pitts for the Plaintiff, Bobby White.
MR. WALKER: Fred Walker for Josephino Bencomo, Defendant, Your Honor.
THE COURT: And this is Hearing on a Motion for Summary Judgment. Correct?
MR. PITTS: Yes. We each have motions for summary judgment.
THE COURT: Dueling motions for summary judgment. And all prerequisites of law have been met, the necessary time has elapsed?
MR. PITTS: Yes, Your Honor.
MR. WALKER: Yes, Your Honor.
THE COURT: Good. Who filed first?
MR. WALKER: I filed first, Your Honor. But if Mr. Pitts would like to go first because he's Plaintiff, that would be fine with me.
MR. PITTS: There was no response to mine, so -- we can let him go first and I can address the issues he raises.
MR. WALKER: We have no disputes, Your Honor, to the facts that are set forth in Mr. Pitts' Motion for Summary Judgment.
This is a real simple question, Your Honor. The case that needs to be determined is whether a note with a deed of trust is subject to Chapter 5, subchapter D of the Texas Property Code that deals with executory contracts.
Mr. Pitts argues that the deed of trust is an executory contract and, as a basis for that, he relies upon a line of cases that actually do say that. They say that deeds of trust are executory contracts because if you've got a vendor's lien that is retained in the deed, that although the purchaser of the property has the legal title to the property, that equitable ownership doesn't pass until the final payment is made and the deed of trust is released.
So the question for this Court to determine is whether the term "executory contract" in the Property Code, subchapter D, applies to these types of transactions. And I think that the legislative history is clear, the case law is clear, that this does not apply. This particular subchapter of the Property Code was originally implemented by the Legislature because of a problem that they were having along the border with the colonias. Contracts for deed, of course, are different from real estate transactions where you've got the title to the property versions of the provisions that had applied only in certain economically distressed counties. The revised provisions are in subchapter D of Chapter 5 of the Texas Property Code.
So the Attorney General's Office recognizes that the type of contracts -- the type of executory contracts that are intended to be regulated by subchapter D are contracts for deed.
And there are many cases in the response that I filed this morning to the Defendant's -- to the Plaintiff's Response to our Motion for Summary Judgment that kind of goes through that, so I won't take the Court's time because I know that you had a very lengthy hearing. But if subchapter D applies to a note with a deed of trust, how are we to foreclose on this property? Do we foreclose under the deed of trust, or do we foreclose under subchapter D? And what effect would that have on real estate transactions throughout the State?
I have nothing further, Your Honor. THE COURT: Mr. Pitts, if you will pardon me just a moment.
MR. WALKER: Your Honor, if I might add one thing. Mr. Pitts is correct, we didn't file a Response to their Motion for Summary Judgment. I don't contest any of the facts that they've brought up. If, in fact, this Court rules that -- that Chapter 5 of the Texas Property Code applies to this transaction, his calculations are correct and I don't have any objection to the amount of the fees that he's asking for.
THE COURT: I'm sorry.
Go ahead.
MR. PITTS: Thank you, Your Honor.
There is -- there is some terminology, I think, that Mr. Walker's used to describe what we're asking for and what we're seeking. We have to clarify the terms. We're not actually saying that the deed of trust is what makes this an executory conveyance because the deed of trust doesn't do that. Deed of trust is what you find in conventional mortgages where you have a bank who has financed the purchase between a buyer and a seller. The buyer will generally convey the property to the bank by -- in trust or to -- excuse me -- to the trustee that the bank selects in trust, and that's what you have as your deed of trust.
What makes this particular conveyance an executory conveyance is the warranty deed and vendor's lien, because what that does is it sets up obligations from the buyer over a period of time, making installment payments, before actual title is transferred to the buyer. Now, Mr. Walker has said that the transfer, the title EXHIBIT H
Filed: 9/15/2014 9:52:06 PM Lisa David, District Clerk Williamson County, Texas Ellie Saucedo