Managing Partner, John A. Hay III, is one of the nominees for Austin Business Journal’s Best CEO Awards program. Winners in each category will be named at the invitation-only ceremony on Thursday, September 22.
“Running a company, no matter the size, requires a delicate balance of accountability and compassion,” said Will Anderson, ABJ Digital Editor. Mr. Hay is nominated in the category of companies under $10,000,000 in revenue.
“I am honored and humbled to be nominated among this distinguished list of local CEO’s,” John Hay said. “The outstanding team of professionals at The Hay Legal Group PLLC all contribute to our success everyday.”
By Colin Newberry, Attorney at Law
This question is one we see often, as sometimes well-intentioned actions can lead to unintentional consequences. Oftentimes a couple will buy a house together without being married. OR, a homeowner will add a boyfriend, girlfriend, partner, or fiancé to a property title.
Unfortunately, once a person is added to the title of a house, it is no longer just your house. You share ownership with that person, and it is, to use Texas legal jargon, Y’alls House. Even if you are the only one responsible the mortgage on the home, this can lead to trouble down the road, if you did not prepare properly from the get go.
Mind you, this isn’t just for people who were in a relationship. I’ve handled partition suits for siblings who inherited property together via probate, investors who are divesting themselves of property or the business relationship, or in one rare case, between a mother and her child who inherited an interest in a property from the child’s deceased father.
What are the things to keep in mind when approaching the division of a jointly owned, and jointly mortgaged, property? A few things to consider:
- -Is it divisible in kind [physical division] or by sale only?
- -Does someone want to stay in the property, or otherwise keep it? Of course, if one person is staying and one person is going, that opens up a whole other bucket of questions.
REMOVAL FROM THE MORTGAGE AND EQUITY REIMBURSEMENT – The two biggest obstacles to partitioning a property
Release from Mortgage: The bank doesn’t care that you don’t own the property anymore; they care that they have two guarantors to go after if the loan falls into default. This is true regardless of whether you are married. Even in an amicable partition, the refinancing or releasing of a party from a mortgage is the most difficult step.
Understandably, anyone who is giving up their interest in a property doesn’t want to have that loan on their credit report, much less be liable for the other owner’s failure to pay the mortgage. When a mortgage cannot be removed as to one property owner – whether because of financial constraints or bank requirements – all that is left for the cautious owner to do is to insist on the sale of the property to satisfy that loan.
Reimbursements of equity: Whether agreed to be sold or forced through a partition sale, the allotment of profits, should there be any, is the most contentious part of any partition. So, who gets money for what? The answer is complicated, but there are certain areas of reimbursement that ring true across all issues:
- -Down Payment: Was the property co-owned at purchase, or was a second owner added to Title after purchase?
- -Mortgage: This obligation is for both owners, regardless of who is on the note. If one owner doesn’t pay, they should owe from the proceeds of the sale.
- -Necessary repairs: If one owner has to make a repair to maintain the condition of the property, then should they get reimbursed for that repair or split the cost?
- -Improvements: Should one owner agree to another owner about improving the property, then it is possible to have the expense of that improvement reimbursed.
With any situation, however, the cost of determining value, reimbursements, and ownership can quickly surpass the value in the home. It is almost universally better to set aside the emotions of whatever relationship existed when the property was purchased, and divide up the property under the relationship as it stands now with a dry, business approach.
THE BEST EXIT STRATEGY HAPPENS AT THE INCEPTION OF THE JOINT INVESTMENT
An even better exit strategy is to have a plan at the inception of the purchase. Called a co-habitation agreement, purchase-sale strategy, or even an Agreement in the Company Agreement should the property be bought by an entity, this document serves as a Pre-Nup for Property Ownership. It states who stays and who goes, how notice is given, how reimbursements are determined, and sets timelines for refinancing or if necessary, pricing, realtors, and timetables for listing and selling the property. This contractual arrangement may seem like an uncomfortable conversation at the time, but is a necessary evil for anyone going into a significant investment with a partner you are not married to.
Back to the Question: How to dissolve this joint ownership? The worst case answer is a Suit for Partition with a judicial determination of reimbursements and equity. The best case scenario is a practical business conversation regarding your investment. The preferred scenario is to have that conversation while things are still in the beginning, optimistic stages of ownership in the form of a co-habitation agreement previously discussed.
No matter what route you take, or are being taken on, one fact remains true. This area of law is complicated and merits the investment of an experienced attorney to guide you through your options to ensure you get the best possible result.
John A. Hay III, Managing Partner
Property values in Central Texas and all across the State continue to rise, so what does this mean for your ad valorem taxes, commonly referred to as property taxes? It means that the appraised value, by which the County derives your tax bill at the end of the year, is likely higher than it was in 2015.
How is this calculated? What can I do about the valuation? Below is a brief summary of the process related to Travis County, which is the same throughout Texas counties.
First, how is the value of your property determined?
The county’s appraisal district calculates the value. In Travis County, the Travis Central Appraisal District (“TCAD”) website is where you can search for values and other information for properties, as well as gather forms and related information from TCAD. Their website is informative and easy to navigate, but be aware many counties are behind the curve.
The appraisal district is charged with valuing property and generally their information comes from a few places. In Travis County:
- -TCAD monitors recorded documents as they are posted with the Travis County Clerk. These include your deed and deed of trust among other things. It is important to not place the sales price in a deed, which sometimes is done in a cash situation.
- -Then TCAD uses its own eyes, through monitoring of building permits and improvements, to set values based on its own observations.
Note: When you buy a property, TCAD will send you an information statement asking you to disclose what you paid for the property. YOU ARE NOT REQUIRED TO COMPLETE THIS FORM and I suggest that you rarely do, as it provides unnecessary information that may be used to your disadvantage down the road.
With all that being said, the values are set by applying blanket factors or codes relating to the property such as lot and structure size, neighborhood, condition, proximity to freeways, and green space – just to name a few, stirring them in a big pot, and out comes your value.
As improvements are made or codes for the neighborhood are changed, so does the method by which your appraised value is calculated. Thus, sometimes you may see a large jump or decrease in your value that on the face may not look to be commensurate with your perception of the value.
Second, how do I fight or correctly termed, PROTEST, the value placed on my home by the appraisal district?
Time is of the essence as most protests need to be filed by May 31st or no later than 30 days after the appraisal district mailed you a notice of appraised value, whichever is later. The filing of the protest is fairly simple.
First, complete the Protest Form and be sure to indicate your correct appraisal district on the top of page one. With this protest you only have to complete the minimum information, as rarely does the County simply change your value based solely off the information completed here without at least an informal hearing.
Once you complete the protest form, next gather all your data and information to present your case. You will be notified of the date for both an informal and formal hearing date.
The informal hearing is just as it sounds – you sit down with a representative of the appraisal district and discuss your value and upon agreement, settle on an agreed value. You are not required to go to or notify the county if you will/will not attend the informal hearing.
The next phase – if you do not settle or attend the informal hearing – is the formal hearing.
- -Here, a panel of three people who serve on the appraisal review board acts as the “judges” to conduct the proceedings, listen and to and weigh your evidence, the evidence and rebuttal of TCAD’s appraiser, their own observations, personal knowledge and other factors to decide on a value, including deciding not to change your value.
- -This value is made up of the value of the land and improvements, both of which combine to be your appraised value.
- -Generally, the county is hesitant to make changes in the land value, so you likely will see a change in the improvements.
Should I hire a professional to handle my affairs as related to a property tax protest?
As different firms operate in different ways, ultimately you need to decide if you think that a professional can get the same or better results, without you spending the hours it takes to complete the protest process.
Some firms provide their services at a flat fee value while others charge a % of your savings. You should weigh your goals and the experience and approach of each organization to decide what is best for you.
Important – each property and matter is different and there is no way to predict results. Should you hire someone to handle your property tax protest, you would complete the Appointment of Agent form and indicate your appraisal district on the top of the form.
For the third year in a row, John A. Hay III, Founder and Managing Partner of The Hay Legal Group PLLC, has been selected to the 2016 Texas Super Lawyers Rising Star list.
Each year, no more than 2.5 percent of the lawyers in the state are selected by the research team at Super Lawyers to receive this honor.
The selection process for the Rising Stars list is the same as the Super Lawyers selection process, with one exception: to be eligible for inclusion in Rising Stars, a candidate must be either 40 years old or younger or in practice for 10 years or less.
All attorneys first go through the Super Lawyers selection process. Those who are not selected to the Super Lawyers list, but who meet either one of the Rising Stars eligibility requirements, then go through the Rising Stars selection process. While up to five percent of the lawyers in the state are named to Super Lawyers, no more than 2.5 percent are named to the Rising Stars list.
Super Lawyers, a Thomson Reuters business, is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high degree of peer recognition and professional achievement. The annual selections are made using a patented multiphase process that includes a statewide survey of lawyers, an independent research evaluation of candidates and peer reviews by practice area. The result is a credible, comprehensive and diverse listing of exceptional attorneys.
by Hay Legal Group
As Austin’s population continues to explode, many developers seeking to maximize lot space have leveled-single family homes and replaced them with two-unit condominium buildings. Additionally, many owners of multi-family buildings, such as apartment complexes and duplexes, are converting the buildings into condominiums, to allow for units to be sold separately and capitalize on the current seller’s market.
The process of establishing a condominium regime for new construction is similar to the process of converting an existing building into condominiums. The Texas Uniform Condominium Act (“TUCA”) governs Texas condominium regimes, and the following documents must be in strict compliance with TUCA.
There are three sets of documents involved for each process:
-documents related to the condominium owners’ association;
-documents related to the Condominium Declaration, including a condominium survey
-documents related to conveyance.
A key distinction with conversions is that conveyances of the newly created condominium units are made subject to existing leases. A key distinction with new construction is that a transfer of the Owners’ Association management is likely to take place at, or soon after, closing, whereas conversions often involve the building owner maintaining control of management until a certain percentage of condominium units are conveyed.
Because of the strict requirements of TUCA, owners and investors seeking to create condominium regimes should consult with a real estate attorney and surveyor experienced with condominiums. Additionally, a commercial insurance agent will need to be involved in the process.
The Hay Legal Group PLLC prepares condominium documents on a flat fee basis, which includes filing fees with the Texas Secretary of State and the county clerk’s office. For more information on our firm and how you can engage us to represent you in your real property matters, please contact our office at 512.467.6060.
John A. Hay III, Managing Partner of The Hay Legal Group PLLC, has been appointed to the City of Austin’s Building & Standards Commission through 2/28/17. The Commission is established to hear cases concerning alleged violations of the City’s regulations relating to property maintenance, housing, and dangerous buildings.
The commission members are appointed by the City Council and serve at monthly meetings the fourth Wednesday of the month at 6:30 pm in the Boards & Commissions Room to conduct their business.
In addition to serving on the Commission, Mr. Hay was recently appointed to the Texas Land Title Association PAC Board of Trustees representing Region 14. As a graduate of the University of Texas School of Law, he was also appointed to the Alumni Association Executive Committee, and is also a very active member of the State Bar or Texas and Austin Bar Association.
And Mr. Hay is very active in several other Civic and Professional organizations in leadership roles such as the Real Estate Council of Austin, Austin Young Lawyers Association, Austin Young Chamber of Commerce, and Urban Land Institute.
His many charitable activities include serving several years as Chairman for the Lone Star’s & Angels Gala and Co-Founder of the Burnt Orange Benefit, Inc. – both of which benefit St. Jude Children’s Research Hospital.
John A. Hay III, Founder and Managing Partner of The Hay Legal Group PLLC, has been selected for the 2015 list of “Nation’s Top Attorneys” by the National Association of Distinguished Counsel (NADC). Each year, lawyers from around the country are selected through an objective, rigorous, multi-stage process to identify the finest lawyers in the country.
Members of NADC represent the Top 1% of lawyers throughout the country, and are dedicated to promoting the highest standards of legal excellence. Hay’s selection is one of only 6 in Austin and 93 throughout the state of Texas.
The NADC is an organization with a mission to objectively recognize the attorneys who elevate the standards of the Bar and provide a benchmark for other lawyers to emulate. By virtue of their extensive research process, only the elite few – who have demonstrated the highest ideals of the legal profession – are named “Nation’s Top Attorneys.”
The post of 2/18/15 dealt with the scenario of buying a ranch from a Seller that wants to reserve her mineral rights. Texas law provides that the mineral estate is dominant to the surface estate, meaning the Seller, or any oil company she leases to, will have broad rights to use the surface of the ranch to develop the mineral estate.
In the event you acquire the ranch subject to Seller’s mineral reservation, and Seller subsequently signs an oil and gas lease, the oil company will have the right to conduct the following activities without compensating you and without obtaining your permission:
•Seismic testing: The oil company may acquire a seismic survey that will be examined to determine optimal drilling locations. A seismic company will likely send a “thumper truck” to the ranch to obtain seismic data, or, alternatively, could use dynamite shots on or around the ranch to obtain the seismic data.
•Surveying: Once drillsite locations are chosen, company employees or contractors will come to the ranch to stake the wells and prepare a plat.
•Padsite preparation: Before the drilling rig arrives, the oil company will prepare a level pad site and an access road to the site. This may require removing trees and vegetation.
• Digging of pits: Reserve pits and disposal pits may be dug to support drilling operations.
•Use of water: The oil company will have the right to use the groundwater under the ranch to support its drilling operations, including the right to drill water wells on the ranch.
•Drilling the well: This process will likely involve a substantial amount of time, people and equipment. The oil company will rent a drilling rig, and will then drill, case, perforate, and complete the well. Sophisticated, horizontal wells can be thousands of feet long and can involve numerous stages of fracing. The fracing process involves the high pressure pumping of water, sand, and chemicals into the well in order to cause fractures in the rock formation that will release the targeted oil or gas. Fracing jobs can use millions of gallons of water, and the oil company may need to construct a frac pond on the ranch.
•Constructing Pipelines and Tank Batteries: An extensive pipeline network may be necessary to serve the wells drilled on the ranch, and tank batteries may be placed on the ranch to store oil production.
•Maintenance: Once the well is completed, you are not done seeing oil field employees and contractors on the ranch, as the wells may require extensive maintenance.
•Injection wells: Once the reservoir begins to lose pressure, the oil company may drill injection wells on the ranch to enhance recovery. Injection wells may also be drilled to dispose of waste water produced during the initial drilling process.
The above list is not exhaustive and is only meant to give a cursory overview of operations that may occur on the ranch without the consent of the surfaced owner.
LIMITING MINERAL OWNERS USE OF THE SURFACE ESTATE
The general rule that the mineral estate is dominant to the surface estate is subject to a legal principle known as the accommodation doctrine. Under the accommodation doctrine, the oil company may be required to modify its drilling operations to accommodate existing surface uses; however, the oil company is only required to accommodate such existing surface uses when there is no other reasonable way that the surface could be used, and where there are reasonable alternatives to access the minerals without disturbing the surface owner’s existing use of the land.
Additionally, the oil company’s use of the ranch for mineral exploration must be in compliance with the regulations of the EPA and the Texas Railroad Commission, and, depending on the location of the ranch, local ordinances that might prohibit drilling activities altogether, or at least restrict them.
NON-EXECUTIVE MINERAL INTEREST
Most rural ranches will not be protected from drilling operations by city regulations or the accommodation doctrine. Therefore, your best protection when buying the ranch is to negotiate for at least a partial mineral interest. In the event the Seller would like to retain a mineral interest, you should negotiate for the Seller’s mineral interest to be a non-executive mineral interest. This would give you the executive right (right to execute leases), while allowing Seller to retain the other benefits of her mineral rights, including bonus, royalty, and delay rental payments.
In summary, beware of the consequences of acquiring only the surface estate of your dream ranch, because the mineral estate owners will have broad rights to use the surface without your consent or compensation.
Written by Patton VanVeckhoven
John A. Hay III, Founder and Managing Partner of The Hay Legal Group PLLC, has been selected to the 2015 Texas Rising Stars List. Each year, no more than 2.5 percent of the lawyers in the state are selected by the research team at Super Lawyers to receive this honor.
The selection process for the Rising Stars list is the same as the Super Lawyers selection process, with one exception: to be eligible for inclusion in Rising Stars, a candidate must be either 40 years old or younger or in practice for 10 years or less.
All attorneys first go through the Super Lawyers selection process. Those who are not selected to the Super Lawyers list, but who meet either one of the Rising Stars eligibility requirements, then go through the Rising Stars selection process. While up to five percent of the lawyers in the state are named to Super Lawyers, no more than 2.5 percent are named to the Rising Stars list.
Super Lawyers, a Thomson Reuters business, is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high degree of peer recognition and professional achievement. The annual selections are made using a patented multiphase process that includes a statewide survey of lawyers, an independent research evaluation of candidates and peer reviews by practice area. The result is a credible, comprehensive and diverse listing of exceptional attorneys.
I recently completed a matter representing a Travis County landowner in an eminent domain proceeding initiated by a local governmental unit (the “Condemnor”). The Condemnor’s initial written settlement offer for the taking of the landowner’s property for right of way expansion was unsatisfactory to the landowner.
So the landowner initially attempted to resolve the matter on his own and increase the damage award by contacting various members of the Condemnor’s governing body, but to no avail. At that point, with a deadline fast approaching to accept the offer or face an administrative hearing, the landowner contacted our firm for assistance.
I reached out to the governmental authority’s attorney and prepared a counter-offer to its initial offer. As a result of several discussions with Condemnor’s counsel following their rejection of our first counter-offer, I gradually realized the basis of the Condemnor’s damage analysis.
After further legal research and interviews with several appraiser contacts, I prepared a damage analysis of the value of the taking and the damage to the remainder and the evidence that I believed would be admissible to establish such value and damages.
Following several additional exchanges with adverse counsel, ultimately my landowner’s damage analysis was accepted by the Condemnor. We were able to achieve the result that the landowner had initially fixed as an acceptable settlement, without the cost of hiring an expert appraiser to prepare a report, and without the cost and delay of an administrative proceeding and trial.
Written by Thomas S. Hoekstra, Senior Counsel