Month: March 2021

Winter Storm Could Provide Property Tax Relief

  • After the Texas winter storm in February, Governor Abbott issued a disaster declaration for the state.

  • As a result, if you had significant property damage, you may be eligible for a temporary property tax exemption.

  • But do not delay – the deadline for filing the request is May 28.

Well its almost everyone’s favorite time of year again – property tax season! Don’t all cheer at once.

As you probably know, property appraisals in Texas should be coming out any day now. And that can be a stressful time for people. We think this year could see a pretty significant increase in values – especially in Travis County where TCAD did no reappraise residential properties last year. As a result, we will probably be property tax focused for the next few weeks in this blog.

There is some potential good news out there, however. Just after the winter storm in February, Governor Abbott declared Texas a disaster area and stated that the disaster exemption in the Texas tax code could apply to residential and commercial properties for 2021. So what does that mean and how might you take advantage? That’s what we talk about in this week’s blog entry.

Texas Tax Code Property Damage Exemption

The property tax exemption is codified in Texas Tax Code Section 11.35. That section allows for certain property that has been physically damaged to get a temporary property tax exemption. There are specific rule for what properties qualify and how an owner can apply for the exemption.

First, to qualify for the exemption, your property must:

  • Consist of a) tangible personal property used for the production of income, b) an improvement to real property, or c) a manufactured home;

  • Be located in an area declared by the governor to be a disaster area following a disaster; and

  • Be at least 15 percent damaged by the disaster.

On February 12, Governor Abbott issued a disaster proclamation as a result of the damage from the winter storm. As a result, if you had property that was significantly damaged during the storm, it is likely a qualified property under the statute.

Once you file a request for exemption (discussed more below), the chief appraiser of your county then assigns your property level 1-4 status. He or she assigns it based on the following:

  • Level 1 – if the property is at least 15% damaged but less than 30%;

  • Level 2 – if the property is at least 30% damaged but less than 60%;

  • Level 3 – if the property is at least 60% damaged but is not a total loss; and

  • Level 4 – if the property is a total loss.

The level the chief appraiser assigns to your property damage is very important because it determines how much of an exemption you will receive. As a result, its very important to provide extensive documentation of the amount of damages at the property. You do not want the chief appraiser to undervalue the amount of loss your property has.

The size of the exemption is equal to the amount of your appraised value multiplied by –

  • 15%, if the property has Level 1 property damage;

  • 30% if Level 2 property damage;

  • 60% if Level 3 property damage; and

  • 100% if Level 4 property damage.

Filing Exemption Form

I mentioned above that you have to file an application form to request the damage exemption. This is a very important step. The burden is on the property owner to make sure you get your request in on time. The application is from the Texas comptroller 50-312.

IT IS VERY IMPORTANT THAT YOU GET YOUR APPLICATION IN ON TIME. The deadline is May 28 for damage from this year’s winter storm.

So if your property incurred significant damage from the winter storm, you may be eligible for a temporary property tax exemption. If you have any questions about how to apply for it, don’t hesitate to call Bukowski Law Firm at 512-614-0335.

Commercial Real Estate Attorney | Bukowski Law Firm | Austin, TX

Why a Title Attorney Makes Sense in a Real Estate Closing (Obviously)

  • Texas law allows a title company and attorney to split title fees if both parties work on the transaction.

  • Hiring an outside title fee attorney can be very beneficial for buyers and lenders.

  • The attorney can often be a one-stop shop to smooth out any details that arise during closing and help make sure the purchase is completed.

At Bukowski Law Firm, we do a lot of commercial closings where we represent the buyer of the property. But that is not the only closing work we do. On some deals we work as a P-22 fee attorney, sharing closing duties with the title company.
 

When I tell people this, it naturally leads to them asking me, “What the [heck] is a P-22 fee attorney? And why do I want that?” It’s a fair question. The answer I usually give is, “Its me. And because I’m nice. And fun.” But I reckon that’s a little unsatisfactory to most folks. So in this week’s article, I’m going to talk about what a P-22 fee attorney is and why it’s a good idea to hire one.

What is a P-22 Attorney

In Texas, a P-22 Attorney refers to Texas Department of Insurance Procedural Rule P-22. Under that rule, a title insurance company cannot make any payment to someone for helping with closing if that person is not an employee of that title company, unless that person or company is:

  • A title company;

  • A title insurance agent; or

  • A lawyer.

The person with whom the title company shares fees must also help perform the closing work. This can include examining title, closing the transaction, etc.

Therefore, a result of this rule, attorneys and title companies will often work together to close transactions and split the fees from that.

Why Hire a P-22 Attorney

Now that we know what a P-22 attorney is … what’s the point? Why hire one?

I’m glad I asked. First, to get it out of the way early – a P-22 attorney does not cost the buyer or seller any additional fees that the title company isn’t already charging. As you probably know, title insurance fees in Texas are set by the State. And having a P-22 attorney involved does not change that. It’s the same cost it would be if you just had a title company.

In addition, a P-22 attorney can be very helpful in getting a deal closed. For example, an attorney can help in the following ways:

  • Talks your language – a P-22 attorney has to follow the rules set up by the TDI and can only make the accommodations she is allowed to make under the law. But often a P-22 attorney also works on deals where she represents the buyer. As a result, if there is a conflict, she may understand the issue the buyer or lender is trying to resolve. And can work with the title company and the underwriter to get that issue resolved.

  • One stop shop – When a P-22 attorney is involved, he or she can be the sole face of the title company/closer. Whenever an issue arises, you will know who to deal with. If there is an issue, the attorney is your contact and can help solve the problem. It often makes for a simpler, smoother transaction.

  • A true closer – A good P-22 attorney understands how important it is to all sides to get a deal closed. Too often, a title company may see a request from a buyer or seller that is not possible under the TDI rules and just say, “No.” A good lawyer – a good closer – needs to be able to say, “Well we can’t do that, but lets figure out what we can do to get this deal closed.”

  • Relationship – And that brings me to the final point – when having a P-22 attorney assist with closings, you can develop a relationship with that attorney. He can understand your needs and work directly with the title company to see if the insurance policy can meet those needs.

Overall, a P-22 attorney can be very helpful to a successful and smooth transaction. He or she can bridge the gap that sometimes arises between an underwriter and a buyer or lender to help ensure a purchase gets closed. And for that, a P-22 attorney can be worth his or her weight in gold.

If you are closing a deal and would like more information about fee attorneys, please call Bukowski Law Firm at 512-614-0335.

Up, Up, and Away

  • American Airlines and Delta Air have recently announced changes that will benefit Central Texans traveling throughout the country.

  • These are welcome additions because our airports have been insufficient to meet our growing demands.

  • With the great expansion and momentum the region is showing, its important for our infrastructure to develop with it.

 It goes without saying (which is why I will write it) that this has been a difficult year for a lot of people in a lot of industries. But few have been hit as hard as the airline industry. In 2020 we all just stopped traveling. For those of us who love to travel, it was just another difficult adjustment in a string of many.
 

But things are getting better. The vaccines are here. Many people have received at least the first dose. And, as a result, travel is returning. 

To that end, both Delta and American Airlines made announcements that will impact travel to and from Austin in the future. In this blog article, I am going to talk about what those announcements are, why they are important, and what the future holds for Central Texas air travel. 

The Announcements 

This past week, American Airlines announced that it was making a bigger commitment to Austin. It announced that it was adding 10 new non-stop routes between Austin and cities around the country. Starting this summer, American will have twice daily non-stop service between Austin and Las Vegas, Nashville, Raleigh-Durham, and the Washington, DC area. It will also add daily non-stops between Austin and New Orleans, Orlando, and Tampa, as well as some seasonal non-stop routes. 

The day before American’s announcement, Delta Airlines announced that it was cutting back on its nationwide “focus cities.” No longer would Nashville, Cincinnati, and San Jose be focus cities. Only Austin and Raleigh-Durham will be going forward. For Delta, a focus city is less than a hub but more than just a spoke on the wheel. Austinites likely already know that being a focus city can bring the benefit of more daily flights and an exclusive lounge. 

Exciting things are happening at Austin-Bergstrom International Airport. And that’s very important for Central Texas. 

Why Expansion Continues to be Needed 

Central Texas is booming. San Antonio is the 7th largest city in the United States and Austin is the 11th. And they are growing extremely fast. By 2030, the Austin-San Antonio metro areas are projected to have more than 9 million people. 

Despite this growth, until recently, Austin’s airport has been woefully inadequate. Prior to the 2018-19 Delta nine gate expansion, ABIA had only 26 gates for a metro area of almost 2.2 million people.* Even now, with those nine additional gates, it is often difficult to get a direct flight to popular destinations throughout the country – not to mention globally. 

This – along with our other transportation and infrastructure issues – is one of the big obstacles that could slow Central Texas’s phenomenal growth. The harder it is to get around the region and around the world from Austin, the less likely global companies are going to bring jobs here. 

As a result, with more companies and more people coming to the area, we must continue to expand our airport. Its great that Delta added nine gates – but its not enough to stop there. We need to keep expanding the number of gates at our airport and the number of non-stop flights to and from it. 

It also may make sense to team with San Antonio’s airport to make sure there is not significant overlap between non-stop routes. The airports are 97 miles apart. That’s obviously not right around the corner but its close enough to potentially spread out the non-stop routes to provide the most coverage to the most Central Texans. 

Central Texas has amazing growth and momentum. Lets not let a lack of insfrastructure slow that down. 

 
 
 

*Austin’s south terminal also has 3 additional gates.

Are You Not Entertained?

  • Some sad news this week as a great Austin entertainment company – Alamo Draft House – filed for Chapter 11 bankruptcy.

  • Its not surprising, though, as so many entertainment venues in Texas are struggling.

  • But its not too late to support the people and venues that provide us so much joy and entertainment.

This week brought some sad news out of Central Texas. Because of hardships caused by the pandemic, an Austin institution – Alamo Drafthouse – declared bankruptcy. Like almost everyone who has ever been to one, I am a big fan of Alamo Drafthouse and was very sad to hear this news.

Thankfully, Alamo filed for Chapter 11 – reorganization. And not for liquidation. As a result, it will continue to operate – though with a new owner and a few less venues. Tim and Kerrie League – the founders of Alamo who grew it to the national chain it is now, apparently will no longer own it. And a few of the theaters are closing – including the Ritz location on 6th Street in Austin.

Reading this sad news, though, made me think about the entertainment industry as a whole and how hard it has been hit during COVID. The commercial property owners, venue operators, and entertainers themselves have all been crushed during this pandemic. This week I hope to shine some light on their issues in this blog entry.

Current Status of Entertainment

The other big piece of Texas news last week could bring some potential relief to the entertainment industry. Governor Abbott announced that he is issuing a new executive order that will rescind most of his earlier orders, including the statewide mask order and restrictions on business occupancy. As a result, it appears that Texas entertainment venues will be allowed to operate at full capacity.

Of course, just because they are allowed to open does not mean that they will. And it does not mean that people will show up.

You probably remember last fall there was a survey found that up to 90% of the music venues in Austin could be permanently closed by October. Its not clear to me how many of those venues did close by then. I do not think it is 90% of them, thankfully. But it is definitely more than anyone would like. And the carnage is not done.

So obviously a return to normal would be greatly appreciated. But Governor Abbott’s order alone is not going to bring normalcy back. Indeed, places like the Saxon Pub and Continental Club will not be reopening right away. Nor is Ester’s Follies. They are going to wait until the vaccine is more widely distributed before they open. And even if they wanted to open, its not even clear that they can get artists who are available to play.

And its not just music venues that are struggling. Foundational events like South by Southwest announced last fall that its 2021 event would be virtual. And who knows what will happen to ACL in the fall?

Struggles Ripple through the Industry

As mentioned above, these closings and struggles have hurt so many people. The focus of this blog is nominally commercial real estate. As a result, I’d be remiss if I did not recognize how crushing this is for the owners of the commercial properties that house these venues. Because when venues are closed, they obviously do not make any money. And then they cannot pay their rent. And when they cannot pay their rent, the property owners cannot pay their mortgage.

And, of course, perhaps most suffering are the artists themselves. For many, there just have not been any outlets for artists to display their art in the last year. And that’s a disaster – not just for the artists but for the people who rely on the artists to bring joy and meaning and entertainment into our lives.

So what’s the point of this blog article? I guess I’m worried. Art is the lifeblood of Austin. We always say that but what does it mean to us? Are we willing to really, truly support it when it needs us the most? I hope I am.

I can’t wait to visit as many galleries, music venues, and live events that I can as soon as they open up. I hope to see many of you there. In the meantime, I want to thank the Austin Creative Alliance for putting together this list of relief organizations that will help artists in need.

 

ACA List

Texas Strictly Regulates Insurance Company Behavior

Texas Strictly Regulates Insurance Company Behavior

  • The Texas Winter Storm of 2021 will likely go down as the costliest winter event in Texas history.
  • As a result, you may have to file an insurance claim to get damage repaired at your commercial property.
  • Texas law strictly governs the behavior of your insurance company. If it does not follow the rules, Bukowski Law Firm can help.

We are now two weeks after the start of the great Texas winter freeze 2021. But it is still very much on the mind of many of us. In this week’s article, therefore, we are following up on what we talked about last week – what to do about damages to your property. Specifically, how to get your insurance company to pay you what they are required to do.

Status of the Storm

I don’t have to tell you this if you are a Texan, but the damage from the Texas winter storm is huge. Many estimates believe this will be the costliest winter event in Texas history.

And, of course, Texas wasn’t the only place to suffer. I have seen estimates that there will be 750,000 claims filed nationwide – with the majority of those being in Texas. The damages could total up to $18 billion – more than six times the normal size of insurance claims filed in a winter in the United States.

As a result, you may notice – as I have – that your insurance company’s adjuster may be slow to get out to your property. As of Friday, I still have not heard from mine. On some level, you may think that this is understandable given all of the claims. But it does not help you get your water back or damage repaired. And it does not release the insurance company from its obligations under the Texas Insurance Code.

Obligations Under the Code

Under the Texas Insurance Code, an insurer may not engage in unfair settlement claim practices. What does this mean? Specifically, any of the following acts constitute unfair practices:

  • Knowingly misrepresenting to a claimant pertinent facts or policy provisions;

  • Failing to acknowledge with reasonable promptness communications relating to a claim;

  • Failing to adopt and implement reasonable standards for the prompt investigation of claims;

  • Not attempting in good faith to effect a prompt, fair, and equitable settlement of a claim;

  • Compelling a policyholder to institute a suit to recover an amount due under a policy by offering substantially less than the amount ultimately recovered in a suit;

  • Failure to keep a record of complaints against it; or

  • Committing another act the commissioner determines by rule constitutes an unfair claim settlement practice.

In addition, insurers in Texas are required to promptly handle and pay claims. This generally means that, within 15 days of notice of a claim, the insurer must:

  • Acknowledge receipt of the claim;

  • Start an investigation; and

  • Request from the client all items, statements, and forms the insurer reasonably believes will be required.

Once the insurer receives the items from a client, it then has 15 days to accept or reject the claim.

So, as you can see, Texas highly regulates how an insurance company treats its clients. Overall, it has to treat you fairly and pay the claims it owes. And it must do that promptly.

Of course, there are many tricks that an insurance company can use to drag out this process. We have seen insurance companies repeatedly offer to underpay a claim in hopes that you will settle. In addition, it will continue to ask for more and more unnecessary information as a way to continue to try to delay its 15 day trigger discussed above.

Obviously not all insurance companies perform these nefarious tricks. And I hope your’s does not. But its something you should be aware of. And if your insurance company engages in these shenanigans, please do not hesitate to call us at 512-614-0335 and let us help you deal with it.