Oct 6, 2021

Texas 2021 Real Estate Legislative Update 2.0

A little property tax relief is coming for some Texas homeowners. Two minor property tax bills were approved at the Texas Legislature’s August 2021 Special Session. With some of the highest property tax rates in the country, most homeowners welcome any law that provides Texans a tax break.

New Homeowner Homestead Exemption

Under current law, when someone purchases a home, they must wait until January 1 of the following year to receive the benefit of a homestead exemption. This new law allows a homebuyer to receive their homestead exemption in the year that they acquire the property, rather than having to wait for January 1 of the following year.

Starting in January 2022, new Texas homeowners who qualify for a homestead exemption will become immediately eligible to receive a property tax reduction when they purchase their property. Those buyers will receive the exemption allocated proportionally from the time they purchase the property. For example, if the buyer purchases the property in February, they will receive the homestead exemption on that year’s tax bill for February through the end of the year.

Texas homestead exemptions from counties, schools, cities, and special districts reduce the property taxes for the homeowner. The amounts vary from county to county. All Texas homesteads receive a $25,000 exemption on their home’s value from school property taxes. Other local entities, like cities and counties, offer a separate residence homestead exemption. A homestead exemption can typically save a homeowner 10%-20% on their property taxes.

Senior and Disabled Exemptions

The Texas Legislature passed “an Act relating to the reduction of the amount of a limitation on the total amount of ad valorem taxes that may be imposed by a school district on the residence homestead of an individual who is elderly or disabled to reflect any reduction from the preceding tax year in the district’s maximum compressed rate and to the protection of school districts against the resulting loss in local revenue.”

That’s a mouthful of legal jargon. Essentially, this legislation proposes a reduction in school taxes for seniors and disabled Texans. It would extend the school property tax rate cuts approved by the Texas Legislature in 2005, 2007, and 2019.

School property taxes for homeowners who are at 65-plus years old or who are disabled are frozen at the amount owed in the year they qualify. However, when some school districts reduced their tax rates, those homeowners did not see a reduction in their tax bills due to this frozen value. The new law would reduce the frozen value by the same percentage as the reduction in a school district’s tax rate, starting in the 2023 tax year.

Because there are different property tax laws for Texas elderly and disabled property owners, reforms to their tax rates must be made by constitutional amendment. Texas voters will need to approve this on local election ballots in 2022. If approved, the amendment to authorize this tax cut would take effect in January 2023.

Texas Property Taxes

No one likes to pay taxes and Texans don’t like hearing that our property taxes are higher than most other states. However, we do not have state income taxes like many other states. Texas counties set their own property tax rates, and they vary across the state. Counties with smaller populations tend to have lower property taxes. The average property tax rate in Texas is 1.8 percent of the property’s appraised value.

[where: 75230]

Oct 3, 2021

Texas 2021 Real Estate Related Updates

Real estate topics took a back seat to big issues like the pandemic and power grid failures in 2021 with the Texas Legislature. Of the 3,800 bills enacted into law, real estate still got a little attention. Some of the welcome changes coming next week are due to lobbying efforts from the Texas Association of Realtors and the Texas Land and Title Association. New real estate contracts reflecting these laws are now available and are required to be used by Realtors starting September 1, 2021.

Homeowner Associations 

The law from Senate Bill 1588/House Bill 3367 requires more transparency from HOA management companies. It puts a cap on the costs for obtaining subdivision information, resale certificate updates, and HOA transfer fees. The limit for the fee to obtain subdivision information will be $375 and the fee for an updated resale certificate is topped at $75. 

The new law also states that the HOA’s publicly filed management certificate must disclose the amount of any transfer fees charged with the sale. That information will be made available in the Texas Real Estate Commission (TREC) database. This will allow agents to look up the transfer fees on a property prior to listing it for sale or submitting a purchase offer for their buyer. It offers protection to homeowners and buyers against unreasonable fees and surprises. Additional consumer privacy protections for homeowners are included in this new law. 

Effective September 1, 2021, the law is being phased in. TREC will establish a database to accept management certificates from HOAs and make it available to the public by December 1, 2021. HOAs must electronically file their management certificate with TREC no later than June 1, 2022. 

Unfortunately, some HOA management companies (and companies that provide HOA resale certificates and documents) have already found a way around the new law limiting their fees. A resale package from Condocerts.com last week included a transfer fee (normally paid at the time of closing) and a processing fee. Instead of $375 for the resale package, the upfront cost to the seller was $650. Fortunately, we had enough time to avoid their outrageous rush fee.

Public Improvement Districts (PIDs) 

House Bill 1543 is now a law that requires a property owner in a PID to disclose that the property is in a PID and certain details of the PID prior to executing a contract with a buyer. The PID notice must be acknowledged by the buyer and seller and will be recorded in county records at the time of the sale. A PID is a special district created by a city or county. It allows a special assessment tax against properties within the district for improvements or maintenance. The existence of a PID on a property can currently be found in the county appraisal district tax records. More details of a PID must now be filed with the county deed records starting September 1, 2021. 


House Bill 2533 specifies that unless a lender requires a full appraisal for a financial transaction, a licensed appraiser is not required to comply with Uniform Standards of Professional Appraisal Practice (USPAP) when performing an evaluation. If an appraiser performs an evaluation that is not in compliance with USPAP, then it must include a notice stating that the evaluation is not an appraisal performed in compliance with USPAP. This takes effect on June 14, 2021. A new Statute of Limitations law from House Bill 1939 provides for a two-to-five-year limit for lawsuits filed based on an appraisal or appraisal review. This excludes lawsuits based on fraud or breach of contract and is effective September 1, 2021. 

Quitclaim Deeds 

Transferring title in Texas with a Quitclaim Deed should become easier after September 1, 2021. This law will allow a purchaser of a property with a Quitclaim Deed to be considered a bona fide purchaser if at least 4 years have passed since the deed was recorded. Title companies are wary of quitclaim deeds because, unlike a warranty deed, they only convey whatever interest the signer may or may not have in the property. The signer of a quitclaim deed may have limited or no ownership of the property. There is no warranty of full ownership being transferred. This new law may remove quitclaim deed concerns if at least 4 years have passed. It does not affect quitclaim deeds recorded prior to September 1, 2021.

Mechanic’s Liens 

A new law extends the description of lien rights. Subcontractor liens must now be filed within a particular time period and notice requirements are detailed. Limitations for filing suit to foreclose a lien and who must be licensed to file a lien are now updated. 

Judgments on Homestead Properties 

Using a homestead affidavit to remove a judgment on a property just got clarification. Previously, a homeowner seeking to remove a judgment in order to sell or refinance would sign a homestead affidavit, send it to the creditor, wait 30 days and see if the creditor disputes the homestead claim. The new law allows the owner to sign a homestead affidavit and record it with the county at any time. The creditor is still notified of the recording and has 30 days to dispute it, but the homeowner can get the affidavit and issue of homestead resolved ahead of a transaction. 

 Racial Restrictive Covenants 

Some older subdivisions in Texas have original restrictive covenants regarding certain racial or ethnic groups. These have been invalid and unenforceable for decades but they still show up in the county records as legal documents. This new law allows a property owner to request that the County Clerk actually remove the language of the racial restrictions from the public record. The county would remove the document and attach another document stating that a restriction that is void has been removed. While a good concept, this law just changes the county paperwork. 

Freedom of Expression 

House Bill 3343 prohibits insurers (like title insurance or homeowners’ insurance) from discriminating on the basis of political affiliation or expression. 
 And if the rules of real estate are driving you to drink, then you may have notice House Bill 1024. Restaurants may start including alcoholic beverages in delivery and to-go orders. It has no effect on real estate transactions but cheers to that law anyway.
 [where: 75230]

Aug 17, 2021

2021 Real Estate Scams & Fraud

Scams, fraud, breaches, and phishing are everyday concerns for today’s title companies. Financial and privacy threats continue to evolve in 2021 and increased with the pandemic. Not only do these cost the title company time and money, but they also create additional hurdles for buyers, sellers, brokers, agents, and lenders.

Texas and California lead the country in monetary losses reported to the FBI due to scams. Let’s take a look at some of the biggest threats we’re seeing right now and what you can do to protect yourself and your clients.

Data And Information Breach

A data breach can be where so many problems begin. This is when your private information is stolen. Make no mistake- this is a sophisticated multi-billion-dollar business run by smart professionals who are very good at what they do.

The criminals are not usually stealing this information from the title company. They’re getting it from individuals like you. This is typically a clever manipulation of the natural human tendency to trust. Once the criminal has your private information, they may hack into or monitor your computer to get your login and/or passwords to accounts. They may intercept emails and download viruses or ransomware.

Your phone and computer are the biggest risks for a breach. Do you have sensitive or irreplaceable information on your computer or phone? Most people do. Do you back them up regularly? Most people don’t. Most computer users do not have even basic cybersecurity. Scammers know this. You might as well be falling for the Prince of Nigeria scam.

A scammer can use your information to impersonate or manipulate you or your accounts. Their next step is to gain access to your information and/or computer, monitor your activity, and ultimately steal money. In a real estate transaction, they can attempt to divert buyer down payments, earnest money, mortgage payoffs, seller proceeds, etc.

Almost 97% of breaches start with emails. The most powerful way to avoid this is to be wary of every email you receive. Establish strong passwords and change them every three months. It doesn’t matter if you rotate using names of state capitals, vegetables, car models, months, … Just get a system of changing them that works for you. Only use secure Wi-Fi connections and avoid all free Wi-Fi connections in public locations for both your computer and your phone.

Wire Fraud

A 2021 survey by the American Land Title Association reports that one-third of all title company transactions have experienced a wire fraud attempt. Wire fraud is carried out by criminals who impersonate escrow officers, real estate agents, or lenders. They persuade home buyers to wire funds into their accounts during the closing process. These scams are very clever and are often carried out by criminal organizations with untraceable offshore accounts. The FBI estimates that only 12-15% of wire fraud is reported.

Wire transfer crooks hack legitimate emails or send buyer emails posing as someone involved in the transaction. They monitor a pending sale, and when the closing date nears, they send the buyer instructions to wire the closing funds to their fraudulent account. This scam is so lucrative that the fraudsters even set up fake websites that look similar to the title company or lender you’re working with, making them seem legitimate. They may create an email address that appear familiar, but one number or letter is off. It’s easy to miss the small inaccuracy or misspelling.

Always be suspicious of any email or text requesting a change to wiring instructions. Before sending money, go back to the original documents you received from your title company and call the phone number listed there to verify the wiring instructions.  Never click on links or send money without verifying wire instructions with a live person. Pick up the phone and only call the number that you first received from that contact (not the latest email).

Check Fraud

The frequency of fraudulent and counterfeit cashier’s checks is rising. A fake cashier’s check may clear immediately when first deposited. However, when the bank determines that the check is fraudulent, they take the money back.  This can happen days or weeks after the deposit.

Many title companies now treat a cashier’s check similarly to a personal check and require buyers to wire money to them if the amount is substantial.

… And More

There are a lot of real estate scams that we only hear about in title company offices. Rip-offs like roofer scams, fake rental house cons, moving company swindlers, etc. happen every day. The pandemic has led to a rise in cons like foreclosure relief scams that claim they can help homeowners save their homes and reduce their mortgage payments for an upfront fee. They sometimes claim to be affiliated with a government agency or housing assistance program. Remember, these guys are pros at ripping people off, and their methods keep getting more creative.

Unfortunately, buyers and sellers are the targets of scammers, and the losses they suffer keep mounting. In the end, only you can protect yourself.

[where: 75230]