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Santa might be causing roof damage

Up on the Rooftop Click Click Click…

  • Roof damage can be caused by a variety of different weather issues – including wind, hail, and other storms.
  • If you think you have roof damage, you should file an insurance claim as soon as possible.
  • And you should also get a trusted advisor (like a lawyer) involved to help you resolve the claim.

Its hard to believe but the holiday season is here. For those who celebrate Christmas, I hope you have a Merry Christmas week. As I prepare to visit my family in Michigan, I have been thinking a lot about Santa. Maybe I need to stop watching those Hallmark Christmas movies.

Anyway, when I was a kid, I first doubted in Santa because I thought there was no way he could reach all of those households all over the world in one night. It seemed impossible. Then I learned about time zones. So obviously it could be done.

Now that I am older, and a homeowner, when I think of Santa, I too often think about him landing on my roof. And all the potential damage that nine reindeer, a huge sleigh, and a large man can do. It could be significant. So that’s what we are going to talk about in today’s blog entry – roof damage.

 

What Can Happen to Your Roof

As most property owners know, Texas roofs are subject to a lot of punishment. There are a lot of ways that a roof can be damaged – beyond just a large, bearded man drunk on cookies and milk with his nine reindeer.

In the summers, the heat from the sun can cause shingles to decay, warp, curl, and crack. And, of course, we have big storms that can bring strong wind and hail that can severely damage roofs. And finally, in some parts of the state, a hurricane can bring excessive wind and rain that damage a roof.

For our friends up north, they have different issues that winter storms can cause – including excess snow and ice buildup. Obviously we never have things like that in Texas. So no need to plan for it at all – right, Texas legislature?

Some of this damage is pretty visible. Large hail sometimes makes a big mark right on the shingles that is easy to recognize. But that is not always the case. Wind and hail damage can often go unnoticed until its too late. Wind, for example, can cause shingles to lift and break the seal. As a result, water could seep into the building under the lifted shingles. And this damage can occur at lower wind speeds that you may think.

As a property owner, therefore, its important to pay attention to the weather and the effect that can have on your roof.

What to do if Potential Roof Damage

So if we do have a storm and you think your commercial or residential roof may be damaged, what should you do?

The first thing you should do is file an insurance claim. Call your insurance broker and get the process started. And make sure to include all of the potential reasons the roof may be damaged – including wind, hail, rain – whatever the cause of the damage is.

As a property owner, you want to file the claim as soon as you know about the potential damage. Your insurance policy likely has a claim that basically says if you do not inform the insurance company immediately, it may be prejudiced and that can reduce the amount of your recovery. As a result, you want to let it know as soon as you think there may be potential roof damage.

We also recommend that you get someone to help you with the claim as soon as possible. There are good insurance companies out there and some of them will treat you fine. But insurance companies do not make money by fully paying out claims. As a result, you want to get a lawyer or an appraiser on your side to help you make sure the insurance company is treating your fairly.

Your lawyer can also help you decide what is the best approach to take from there. Once your insurance company makes its offer, your lawyer can help you decide whether to:

  • Accept the offer;
  • Go to appraisal; or
  • File a lawsuit.

So if you think you may have roof damage to your commercial or residential building, contact your broker and get that insurance claim filed asap. And if it was Santa that caused it, well you will probably have to find a different law firm to sue him.

Article References

Housing Affordability Week in Austin Came and Went

  • The Austin City Council met last week to discuss potential solutions to Austin’s housing affordability crisis.
  • Its previous solution – an overhaul of the Land Development Code – has been blocked by a court order.
  • The City Council sent a number of potential solutions to the City Manager for further study.

Last week, the Austin City Council took up an old topic it had mostly been avoiding since COVID began. It declared last week the Austin Housing Affordability and Supply Week. And the highlight of the week was a meeting of the City Council on Wednesday to discuss possible solutions to Austin’s affordability issues.

As I am sure you know, this is a very big topic in Austin and around the country. Many cities around the country have an affordability crisis and few greater than Austin – where the median housing prices have increased tremendously over the last 18 months.

On Wednesday, the City Council floated a lot of proposals. But what was discussed? And are they on the way to solving Austin’s affordability issues? Well that’s why you have to read below.

Also – as you read – I want to give a special thank you to Jack Craver for his comprehensive coverage of the City Council meetings – and all other things Austin politics. If you do not subscribe to his daily email, I encourage you to do so.

Recap of Austin Issues

As you probably recall, the Austin City Council has tried to help housing affordability in the past. Back in 2019 and 2020, City Council was in the process of passing a comprehensive overhaul of the land development code. The changes were aimed at allowing more dense housing to be built – especially along specially designated transit corridors.

But some local residents filed a lawsuit challenging the changes. And they won. The District Court ruled that the land development code overhaul violated Texas law by not giving individual property owners the right to protest it. Austin has appealed that ruling but, for the time being, the LDC overhaul is on ice.

Since then, there has been some talk from the City Council that it could try to do a piecemeal change of the Code for certain neighborhoods that could definitely use higher density housing. Unfortunately, as you can imagine, this would be very difficult and be very time consuming.

So under that backdrop, the City Council met last week to discuss possible solutions.

Possible Solutions Discussed

Prior to the meeting, Mayor Adler had made it clear that he wanted the discussion to focus on areas the Council could find agreement. As a result, it seemed likely that the Council was going to avoid many of the difficult solutions that could potentially provide the most benefit to resolving the affordability crisis.

But the Council did discuss the following potential solutions:

  • More housing in commercial areas – From a high level, this appeared to be a pretty popular topic. Most of the councilmembers appeared to support the premise. Of course, the devil is always in the details and so when there is an actual vote on ways to achieve this goal, we will see if there is actual consensus. But for now, the Council seems to want to do this. And doing so could provide up to 46,324 residential units, according to a 2018 Planning Commission report.
  • Accessory Dwelling Units – There was discussion on two ADU proposals: a) allowing some of them to be converted into houses; and b) allowing the current single family houses that are not zoned for ADUs to build one. There was pushback by at least one councilmember on the latter proposal.
  • Compatibility – In many areas of Austin, regardless of what the zoning rules allow for the property, the property owner cannot build higher than the surrounding neighborhood. So many commercial properties that back up to residential properties are limited to two story growth. There was talk about changing this rule but it, predictably, got pushback from some Councilmembers.
  • Incentives for companies to build housing for employees – A couple of months ago, I wrote an article on whether we would see the return of the company town. Well, the Austin City Council may help its return. It discussed providing incentives for companies to build housing for their employees.

Where Do We Go Now?

As you can see there were lots of potential proposals discussed. Unfortunately, nothing was put to a vote and enacted. As a result, while there was lots of talk about potential solutions, nothing was decided. The Council asked City Manager Spencer Cronk to study these proposals.

In addition, the best solution was not discussed. And that is the overhaul of the land development code to allow more dense building throughout the City. Obviously this is tied up in the Courts right now, but the City Council should be preparing for both the eventual resolution of the lawsuit and contingency plans for if its appeal fails.

The bottom line is that to solve Austin’s affordability problem, we need more housing. And the best way to provide that housing is to increase the density. Hopefully in the near future, the City Council will figure out a way to allow for that needed increase.

 

To boost housing supply, Council to allow residential use in commercial zones

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

Prepare in Advance for Your Partnership Breakup

  • Regardless of the type of entity you are forming, you should always have an operating/partnership agreement.

  • The agreement will help dictate the rights and responsibilities of all the partners/members of the entity.

  • And when setting up the agreement, its essential to have some specific clauses that govern important parts of the entity.

A few weeks ago in this blog, I wrote about the importance of having written vendor agreements. And I wrote that there is so much important information to include in the agreements that I would have to re-visit the details in a later article. Well guess what? Is today that day? No. No it is not.

But I am writing about a similar topic. Once again I’m going to stress the importance of having a written agreement. But this time, instead of a vendor agreement, it’s the importance of having a written partnership agreement to govern the details of your relationship with your partners.

I don’t currently have any partners at Bukowski Law, but even without any partners, I still have a written operating agreement. Because when setting up a company or partnership*, we always think that that entity is going to last forever along with the good times. But unfortunately, that is not always reality. Things happen and partnerships break up. And when they do, you definitely want to know what everyone’s rights and responsibilities are. So its vital to have a written partnership agreement to spell those out.

Why is a Partnership Agreement Important

I have had lots of conversations with real estate investors about what is required in a partnership agreement and why it is important. Typically the most push back happens when the investor is just investing with one or two other people – especially when they are close friends or family. But this is often when it is most important to have a written partnership agreement.

When a client is investing in real estate, for slight tax benefits, we generally recommend setting up a limited partnership as the single purpose entity (SPE) to own the property. In a typical structure, we often then recommend a limited liability company as the general partner and/or investment entity for our client. And with all of those entities, we of course strongly recommend having an operating agreement.

The partnership/operating agreement is vital because if anything does go wrong, the terms of the agreement will dictate the rights and responsibilities of all of the partners. It will help resolve disputes, divide up the ownership, and hopefully avoid costly litigation. And while there are some rules under Texas statutes, owners generally have the flexibility to dictate the partnership terms when drafting the agreements.

Important Partnership Agreement Clauses

While you can generally include any clauses in a partnership agreement that you want, there are some important categories of clauses that all agreements should contain. Some of those are:

  • Rights and powers of the general partner – Its important to dictate what controls the GP has on a daily basis, what it needs approval to do, when the limited partners can step in and remove the GP if necessary, etc.

  • Limitations on the limited partners – Limited partners have limited liability precisely because they do not control the day to day activities of the partnership. But that should be spelled out clearly in the partnership agreement – along with any authority they have to vote for special powers, remove the GP, etc.

  • Tax issues – Its important to set out the tax implications of the cash flows from the deal. We often consult with a tax accountant on these issues.

  • Contribution/ownership – The agreement must contain the contributions from each partner and the resulting ownership of the entity that each partner has.

  • Distribution of proceeds – This may be the most important part of the partnership agreement – how does everyone get paid? When the deal is sold, what are the waterfall payments? That should be included in the agreement.

As you can see, the partnership agreement is essential to keeping an orderly and functioning entity. Even with just a couple of partners, its extremely important to have an agreement that dictates the rights and responsibilities of all parties. So if you are putting together an entity and need help with the operating agreement, give us a call and let us help.

*In this article, I’m writing about partnership agreements because that is the usual entity form we use when setting up a single purpose entity for investment purposes. But the same principles work for any other type of entity – LLC, corporation, etc. In these instances, you can just substitute operating agreement or company agreement for partnership agreement.

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

Is Urban Farming Right for Your Property?

  • Urban farms have repurposed some urban areas to grow and sell produce locally.

  • In Detroit, there are at least 21 urban farms that have helped revitalize and transform the City.

  • While urban farms may not be for everyone, it does help show how land can be used creatively to benefit local residents.

Well it is Thanksgiving week. As I get older, the years seem to fly by faster and faster. Anyway, as I was thinking about Thanksgiving and what I should write about, I thought about what Thanksgiving is all about. And, of course, its about being with family and being thankful – but mostly its about food.

But this is nominally a commercial real estate blog. So writing about my favorite deep fried turkey recipe probably isn’t what y’all are looking for. Then I remembered what I saw on a recent trip to Detroit – a marriage between real estate and food. Detroit has a number of urban agriculture spots throughout the city that I thought were incredibly fascinating. So that’s what I am writing about this week – urban farms.

What is Urban Farming?

Urban farming is exactly what it sounds like. It is using space in the middle of an urban area to produce agricultural products. The size can vary but generally the farms grow a variety of fruits and vegetables. Some people often confuse this with a community garden – but urban farming is different. The people who run urban farms do it for commercial means – they are generally growing the produce to sell it. As opposed to community gardens, where the residents grow for their own use.

Urban areas can sometimes become food deserts where local residents do not have access to high quality, fresh produce. Urban farms, therefore, are often used as a way to increase access to locally grown food as well as reintroduce the public to a food culture that may have been lost. And as technology advances, urban farmers have been able to move beyond traditional urban methods and expand their operations and growing seasons. These innovations include vertical farms, hydroponic greenhouses (e.g., soilless systems), and aquaponic facilities (e.g., growing fish and plants together in an integrated system).

As a result, some urban areas are experiencing a food renaissance with locally grown food being reintroduced into the community.

Detroit’s Urban Farming Culture

I have written previously in this blog that in 1950, Detroit had about 1.85 million residents. And, as of the last census, it has approximately 640,000 residents. While that is obviously not good for any city, one unintended benefit is that there is a lot of vacant land in Detroit that creative people can develop. And some of those creative people have used that land for urban farming.

One such farm on Detroit’s north side is run by the Michigan Urban Farming Initiative. It has a 3 acre tract that it founded in 2012 to reintroduce agriculture to help eliminate food insecurity in the area. According to the Initiative, this space is heavily themed by “adaptive reuse of the built-environment” in which it is hoping to demonstrate everything from best practices for sustainable urban agriculture, effective strategies for increasing food security, cost-competitive and scalable models for blight deconstruction, and innovation in blue and green infrastructure.

But that is not the only urban farming spot in Detroit. There are at least 21 such farms throughout the City. As mentioned above, these urban farms are reintroducing fresh, locally grown produce to areas that may have lacked access to that. That has an obvious health benefit for local residents. And the farms have become an attraction and a selling point for local property owners. Studies also suggest that urban farms may bring a community together, help improve local property values, as well as help residents eat healthier. The benefits, therefore, can be terrific for a community.

Look, I’m not saying that urban farms are appropriate for all cities. As I wrote above, Detroit is unique in that it has a lot of open space. But it does show what can be done when creative people think creatively. And maybe it will help give you a new idea with your next development.

Hire Those Maya Contractors

  • Last week, I was in Merida, Mexico and was lucky enough to visit the ruins of Uxmal.
  • That these buildings were built 1200 years ago is a great credit to Maya architecture and construction.
  • If you have the chance to visit them in the future, I recommend doing so.

In this blog, I usually write about either a topic of public interest in Texas or a real estate legal issue that I think is important. I try to mix up those two types of topics to provide some variety. And increase my millions of readers.

This week’s entry is going to be completely different from either of those traditional categories. But I hope you will enjoy reading about it.

Last week I went to a wedding in Mexico. And while there, I had the great opportunity to visit some Maya ruins. And I can tell you, if you have never done so, you should. Its quite an experience to see. So that’s what I am writing about this week – the amazing construction of buildings by the Maya that I was fortunate to visit.

The Uxmal Ruins

The wedding was in Merida, Yucatan. If you are not familiar, Merida is the capital and largest city in Yucatan. It has a population of about 1.16 million people. It’s a nice city with very good food and a solid nightlife. It is inland, but not too far from the Gulf.

While there is much to do in and around Merida, perhaps the best part of the trip was our time spent at the Uxmal Ruins.* Other than the wedding, of course. Which was terrific.

When you first get to the ruins, a giant pyramid is the first building to greet you. Its extremely impressive and makes you wonder how it was built. While the city was likely founded around 500 A.D., most of the construction likely took place between 850-925 A.D. And, again, looking at the pyramid, its hard to believe it was built 1200 years ago.**

Uxmal had Great Contractors

While the pyramid dominates the skyline, that is only the beginning of the Uxmal ruins. There is the Nunnery Quadrangle, the Governor’s Palace, and the House of Turtles. These are all huge buildings covering a total of about 150 acres.

 

The buildings represent the height of Puuc architecture and are generally made of limestone with smooth wall surfaces. These ruins are still apparently studied by modern archaeologists to discover how the Maya people adapted to changing threats from enemies and the natural environment.

It is estimated that the Governor’s Palace, for example, took 33 years to build with 1200 workers. 

As far as I know, its not quite known what happened to Uxmal, why it died out, and why there was nothing else built after about year 1000. Or, at least, its not agreed upon by historians. But that is about the time when the city stopped being a central hub in the Maya empire.

The bottom line is the ruins are just very cool. Its amazing to think that the Maya built them 1200-1300 years ago. And that they have withstood the test of time and continue to stand. Its difficult to imagine we have buildings now that will still be standing in 120 years, much less 1200. And to think they built them with rudimentary tools – well its just amazing.

So the next time you are in the Yucatan, I highly recommend checking out the Uxmal ruins. It will be worth your time. And maybe you can pick up some pointers for your next commercial real estate development.

* The Chichen itza ruins are also close to Merida and probably more famous. But we did not have time to visit those also.

** And I realize that the pyramids in Egypt are older. But I wasn’t in Egypt last week. I was in Mexico.

contractors negotiations - Commercial Real Estate Attorney | Bukowski Law Firm | Austin, TX

Get Those Contract(ors) in Writing

  • With the rapid growth of Texas, we have seen a lot more property owner/contractor disputes lately.

  • It is EXTREMELY important, therefore, to make sure your contractor agreements are in writing.

  • The definition of a written agreement can be very broad and encompass a lot of different types of writings.

Lately, we have been seeing a lot more disputes between property owners and contractors than we normally do. I have some theories about why this is true. Texas is basically a tinderbox for contractor/property owner disputes because –

  • Texas is growing at a rapid pace and, as a result, developers and property owners are working hard to try to meet the increasing demand for housing, office space, retail, etc.;

  • That increased demand has allowed unqualified general contractors to get hired for bigger jobs; and

  • The overall labor shortage has hurt contractors looking for subs.

As a result, people are calling our office on a weekly basis to ask us to help resolve their contractor disputes. Now don’t get me wrong – I always appreciate the work. Its why we are here, after all. (On a work basis – not an existential one).

But if we can help you avoid some of the frustration of fighting with contractors, we certainly would like to do so. And then you can get back to hiring us to help you buy more properties.

So that’s what this week’s blog entry is about – contractor agreements and what is important to help avoid disputes. Now, we are not going to cover everything – there’s just too much. So we will have to circle back to this issue in a few weeks to finish our discussion.

Write that Stuff Down

I have lived in Texas all but two years since 2001. So I get it. I understand how a lot of people like to do business here. A handshake was good enough for your grandfather and its good enough for you. Except its not.

I cannot stress this enough – please make sure all of your agreements are in writing. PLEASE MAKE SURE ALL OF YOUR AGREEMENTS IN WRITING.

First, its quite possible that your contractor agreements are not enforceable unless they are in writing. If you are not familiar, most states (including Texas) have a Statute of Frauds (“SoF”). Under the SoF, certain agreements HAVE to be in writing and signed by the person against whom they are to be enforced. There are two specific contracts that are covered that may affect property owners –

  • Contracts that will not be completed within one year; and

  • Sales of real estate (though not contracts that are just incidental to real estate).

So its entirely possible that your vendor agreement is not even enforceable unless it is in writing.

But, of course, even if a verbal agreement is enforceable, its still a terrible idea. Its way too easy for two sides to disagree on what is required from the contractor if the agreement is verbal. And there is no very difficult to determine a) if there was a breach of the agreement and b) if there was a breach, what is the remedy?

So once again, please make sure your contractor agreements are in writing.

But What is a Writing?

If you do not have a ten page explicit agreement with your contractor, do not panic. You may have more of a contract that you think.

Texas has adopted the Uniform Electronic Transactions Act. That means that electronic signatures are valid and enforceable. I’m sure you already knew that – you probably use something like Docusign all the time.

But it also means that there are other electronic documents that can constitute a written agreement. For example, Texas Courts have interpreted the UETA to mean that emails are sufficient to constitute an agreement. And it is certainly possible that text messages could form the basis of a written agreement. And for both emails and text messages, they do not have to be in a single place. Multiple emails or texts could theoretically make up a written agreement.

A contract only needs three things –

  • Offer by one party;

  • Acceptance by the other; and

  • Consideration (which is an entire separate topic that I will cover at some point).

And because electronic signatures are accepted in Texas, we can look to a lot of different areas to determine whether there was an offer, acceptance, and consideration.

Well we didn’t get very far into the details of what is important in a contractor agreement. But I hope its clear now that – at the least – they should be in writing.

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

Can 3D Printing Solve Homelessness?

  • ICON announced this week that it will be building an entire community made up of 3D printed homes.

  • While the technology is not there yet to provide fast, inexpensive housing, the hope is it someday will be.

  • With all new technology – including 3D printing – a new host of legal issues always arise.

This week ICON, an Austin based company, announced a new round of printing 3D houses. According to the release, they plan to build a 3D printed house community somewhere in Austin.

I have heard a lot about 3D printing and it always sounded cool. But I really do not understand how it works or what the future of 3D printing holds for builders. So when I saw the announcement, I decided to try to dig in a little and find out what is going on.

Well, after that research I still do not really understand how you can build a house from a 3D printer. But it still seems cool. And the future possibilities do seem promising. So that is what we will talk about in this week’s blog entry.

What was the Announcement This Week?

As I wrote above, the announcement that once again got me interested in 3-D printing for housing came from ICON. If you are not familiar, it is an Austin based building technology company. It has been at the forefront of using 3D printing for building. Indeed, it is the first company to sell a 3D printed home.

Last week it announced that it will team with Lennar to build a 100 home community consisting solely of 3D printed homes. ICON currently has the capability to print up to 3000 square foot residences. It did not yet announce where in Central Texas it will put the community but it hopes to break ground in 2022. When completed, it will be the largest 3D printer home community in the country.

I wrote above that I still don’t quite understand how it works to 3D print a home. That’s true. But apparently ICON sets up a large 3D printer that effectively places a giant frame around the home’s footprint and supports the printing head as it completes the setup. The concrete is apparently squeezed out like soft-serve ice cream and the resulting walls have lots of thin layers. I have yet to see a demonstration, but I sure would like to. Because it sounds pretty cool.

What Will this Mean for the Future of Housing?

The claim by the 3D printing companies like ICON is that 3D is the future of housing. It should lower costs and the time required for building houses. Currently, however, we are not there yet.

As of yet, 3D printing does not help with either the construction or labor costs. Part of this is because not everything can be 3D printed. Windows, for example, still have to be bought and installed. And thus, ICON has to pay the same price as any homebuilder for that.

But Lennar believes that the future technology will greatly reduce both of these costs. It believes as the technology improves, it will be much faster and much cheaper to complete a 3D house.

This has led some people to believe that 3D printing could help greatly alleviate affordable housing problems that exist throughout the country. Indeed, one official even claims this could “cure homelessness” because the houses will eventually be so repeatable and inexpensive to build. That is certainly a noble goal and we hope it gets there one day.

Legal Issues Surrounding 3D Printing Housing

Of course, with all new technology comes a host of legal issues to solve also. It seems like the most important will be the intellectual property issues. Now we are not IP lawyers, so I can only give a rudimentary overview of these issues. But IP issues dominate all of 3D printing – not just housing. 3D printing technology makes it easy to copy and reproduce products – even if they are protected by a patent, trademark, or copyright.

In addition, a common problem with new technology is determining who is liable when things go wrong. In this situation, you have the designer, the printer, the builder, etc. All could potentially have liability.

And finally, because there is potential liability, insurance must follow. As a result, insurance companies are going to have to figure out new products to provide as the technology develops.

All of these issues are, of course, solvable. And if 3D printing is as promising as some people claim, then it will all be worth it. Lets hope it is.

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

The Importance of Being Covered

  • When getting title insurance with a real estate purchase, its very important to read the Schedule B exceptions to that coverage.

  • We always recommend our clients purchase the T-19.1 endorsement to expand the coverage provided in the policy.

  • T-19.1 provides REM coverage – restrictions, encroachments, and minerals.

Its been a crazy couple of weeks in the blog here. The last few weeks have been all about who is moving to Texas and Detroit, and how the Austin City Council is trying to screw all of that up. So much drama and excitement.

Well this week we are going to get back to learnin’. That does not mean it will not be as exciting. Title insurance talk is ALWAYS super exciting. But truly, it is an important issue for property owners to know about.

So we are going to talk about Texas title insurance – specifically the T-19.1 title endorsement.* We always recommend our clients buy this endorsement. But what is it? And why is it so important? Well for that … you need to read below.

Title Insurance Recap

Before we talk about the T-19.1 endorsement, its important to do a quick recap of title insurance generally. Many property owners probably know this already, but title insurance insures the property buyer from a loss sustained from a defect in title to a property. So if a claim on title does arise after the buyer purchases the property, the title company will defend against that claim and cover a loss to the property owner if one does result.

It is important to note, however, there can be significant exceptions to that title coverage. In a Texas title policy, Schedule B lists out all of the specific exceptions from the coverage. It is extremely important, therefore, that you or your lawyer pay close attention to those exceptions.

And, like any insurance policy, you can purchase endorsements to the policy. There are several that we recommend (and have briefly discussed previously). But perhaps none is more important for a buyer than T-19.1.

What is T-19.1

T.19.1 is the REM endorsement. While it will not be the end of the world as you know it if you do not buy it, you will feel fine if you do. It expands coverage in three specific areas –

  • R – Restrictions. The endorsement generally provides coverage for enforcement of the existing covenants (restrictions) – unless there is a specific exception highlighted in Schedule B. In other words, it provides coverage for violations of any restrictions that were unknown at the time of the policy.

  • E – Encroachments. The endorsement expands coverage to insure against loss or damage sustained by reason of an encroachment of an improvement on the land onto adjoining land or an improvement on adjoining land encroaching on the buyer’s property. Again, this must not have been known at the time of the policy and, therefore, included in Schedule B.

  • M – Minerals. The endorsement also expands the policy to provide coverage for damage resulting from the future exercise of a right to use the surface of the property to extract or develop minerals from the land.

As you can see, this endorsement greatly expands the coverage you have from the initial policy. That is why it is such an important endorsement and why we recommend it to all of our clients.

But you can also see that the endorsement is limited by what is known as of the date of the policy. That is why it is SO important to review all of the exceptions listed in Schedule B. And that means going through all of the documents listed there and reading them to make sure they do not hinder your coverage.

And that is what we do for our clients at Bukowski Law Firm. We take the time to thoroughly review those documents and make sure your real estate investment is protected.

*T-19.1 is specifically for the property owner. For the lenders reading this blog entry, T-19 provides similar coverage for your entities.

Oops – Austin Did it Again

  • The City of Austin once again extended its eviction moratorium.
  • This extension has a monthly step down in requirements that will expire entirely on December 31, 2021.
  • But given the behavior of the City Council thus far, it would not surprise at all if the Council tries to make some aspects permanent.

I cannot believe I have to keep writing this same blog article. But maybe I should just get used to it at this point. Its just very frustrating.

You may have missed the news, but last Thursday, the Austin City Council once again voted to extend its eviction moratorium rules. This despite the fact that most other local areas in Texas have ended their COVID eviction rules.

So why does Austin think it still needs these rules? And what does it mean for property owners? That’s what we are talking about this week.

What Does it Mean For Now?

As I wrote above, the Austin City Council extended its moratorium on evictions for non-payment of rent through the end of this year. The current rules are that a landlord may not evict a tenant for non-payment of rent unless:

  • The rent is for more than $2,475 per month or

  • The tenant is at least three months behind in rent. This requirement decreases to more than one month in November and is entirely removed in December.

There are many other technical rules in the moratorium that a landlord must follow before issuing a notice to vacate. This blog entry is not meant to be an extensive look at all of the requirements. For that, please give us a call and we can discuss.

This all remains in effect despite Governor Abbott’s declaration he made a couple of months ago that seemed to nullify all COVID restrictions and rules. As you may recall, in his order, Governor Abbott rescinded all local COVID rules that were put into place during the last year. It seemed like this order would nullify all of the local Austin and Travis County eviction rules. But despite that, the JP Courts have so far treated the local orders as still in existence. So … I don’t know.

What Does it Mean for the Future?

I don’t know about this, either. Austin’s economy is doing very well overall. Unemployment rate is down to about 3.8% as of August. Restaurants and bars are at full capacity. If anything, businesses are having trouble finding people to work.

In addition to its extension last Thursday, the Council also set up another $6.6 million for residential rent assistance for people have difficulty paying their rent. As a result, if you are a tenant who has difficulty paying rent because of COVID, you and your landlord can apply to the City for assistance. Indeed, under these rules, the landlord is required to apply.

Because if this, it sure seems like the justification for the moratorium is no longer valid. The City Council first enacted the justification because people were out of work and could not afford to pay their rent. We, of course, did not want lots of people to be evicted during a global pandemic so the moratorium made some sense.

But that time has passed. If you want a job that will help you pay your rent – there are plenty of jobs available in Austin. Unemployment is low and the economy is booming. And, if you need rental assistance, the City has made it available. So why are we still forcing property owners to continue to house people who do not pay rent?

My only conclusion is that this is what the City Council wants going forward. From the way the restrictions are reduced each month, it does appear that this may be the last formal extension. But I would not be surprised if the Council tries to make some of the restrictions permanent. And, as you can imagine, that may have a tremendously negative effect on the housing market. But I do not know how else you can read the council’s continued extensions of the moratorium any other way.

Assuming that they do try to make some aspects permanent, what is the solution? I guess there are three:

  • Voting the current councilmembers off the dais;

  • Hoping the state steps in again to knock this down; and/or

  • Sue the City.

If the Council continues to act this way, I do not know what other choices property owners in the area will have.

Another Win for Central Texas

  • Last Thursday, Elon Musk announced that Tesla was moving its headquarters from California to Austin.
  • While we do not know many details yet, this is undoubtedly good news for Central Texas.
  • But it further highlights that our city council needs to support building more dense housing.

Last Thursday was RECA’s Knockout Night in Austin. If you are not familiar, Knockout Night is one of the biggest events of the year for the Austin real estate industry. If you have never been, I recommend trying to go next year. It’s a fun night and there is a lot of great networking done. And you get to see some real estate industry professionals punch each other in the face.

So why am I talking about Knockout Night? Am I going to go into details about the networking and socializing that happens there? I am not.

I bring it up to explain why it took me until Friday to catch the really big news that happened on Thursday. And that’s what I really want to talk about in this week’s blog.

On Thursday, as I was finishing work and finding my cufflinks and tuxedo shirt, Elon Musk announced that Tesla was moving its headquarters to Austin. This is, obviously, very big news. But what does it mean for Austin? And when will it happen? That’s what I write about below.

Who? What? Where? When?

There is certainly a lot of buzz in Central Texas about Musk’s announcement. But while he dropped this news bomb last Thursday, he really did not go into many details. So many of the questions that we have are not answered yet. For example –

  • When will Tesla move its headquarters to Central Texas? We do not know.

  • Where will Tesla build its headquarters? We do not know. But it is building the large Gigafactory out east along 130. So it is reasonable to wonder if Tesla’s headquarters would be in the same area.

  • How many employees will be at the headquarters? Again, we do not know. But Tesla’s California headquarters currently has about 650 employees.

I know we are all excited about the news, but I reckon we will just have to wait a little longer to get the details.

What Does it Mean for Central Texas?

Even without knowing all the details, though, this is unquestionably great news for Central Texas. Whenever a Fortune 500 company moves its headquarters to the state, it is good news. It brings people and jobs. Not only will Tesla (presumably) bring its employees and/or hire new ones here. But also the vendors and support companies that work with a huge company like Tesla will also employee people and bring more money to the region. And frankly, when a company like Tesla wants to be in Austin, it continues to raise Austin’s profile. Which may help convince other companies to move here – bringing even more jobs and money into the region.

As a result, I do not think this can be seen as anything other than a huge win for Central Texas. But that does not mean there are not also potential pitfalls.

I have written about this so many times before, but Austin has an affordable housing problem. Tesla bringing its headquarters to Austin is almost certainly going to increase the population of the area. We need more housing. That’s the bottom line. And we need it in close in urban areas.

That means we have to have higher density. Unfortunately, developers who try to build dense housing far too often run into obstacles form our city council and neighborhood groups. This has to change. This city is going to continue to grow. For Austin to have any chance of having even somewhat reasonably priced housing, we have to increase density. And our elected officials have to support this plan. And stop being an obstacle in the way.

Tesla’s move to Central Texas is going to continue to grow Austin’s population and status. But we need to meet that growth with continued expansion of dense housing. And for that, we need to have the support of Austin officials.