Sean Bukowski

Hourglass

You do not Want to Miss Your Deadline

  • Monday, January 31 is the hard deadline to pay your 2021 property taxes.
  • If you do not pay them by January 31, you will be subject to a penalty equal to six percent of the total tax bill.
  • Once you pay your 2021 taxes, the next property tax deadline is not until May 15 when your Notice of Appeal is due.

Do you know what a Texan’s favorite past-time is? Complaining about property taxes. You cannot talk to a Texan about their house, real estate, changes to the city … almost anything without property taxes coming up. And, as real estate investors, developers, etc. – you know that nothing can derail a great investment quicker than runaway property taxes.

Well believe it or not, we are already at the first property tax deadline of 2022. So it’s time to start complaining about property taxes all over again. And to make sure you do not miss this week’s important deadline, read more below.

When are 2021 Property Taxes Due?

Enough with the suspense, eh? Most of you reading probably already know what the deadline is anyway.  But in Texas, property taxes payments are due on January 31 every year. So 2021 taxes are due next Monday, January 31.

Obviously that means that we pay our taxes in arrears. Last summer when someone (hopefully Bukowski Law Firm) protested your property taxes, what they were really doing is protesting the appraised values set by the local appraisal districts.

Once all of the appraised values are set throughout the county, the county taxing authorities release the tax rates. This was done last fall. Then the appraised value multiplied by the different tax rates sets the total amount of property taxes owed. And that total amount is what is due next Monday.

Two important points to remember –

  • First, if you have a mortgage, there is a good chance that your lender has escrowed the amount of your property taxes. Thus, you have been paying your property taxes a little each month. And the lender either has already paid your annual bill or will do so by next Monday.
  • Second, if you miss the January 31 deadline, you will be subject to an immediate six percent penalty on the total amount of the tax bill. You will also then be charged a one percent interest rate for each month you are late. I am sure you can see how quickly that could add up.

So the bottom line is you need to make sure that you or your lender is paying your tax bill by next Monday.

What are the Other Important Dates on the Texas Property Tax Calendar?

Assuming you do not have an active lawsuit against the appraisal district, once you pay your property tax bill, we can close the door on 2021 and look forward to 2022.

But before you take too much of a deep breath, know that the 2022 calendar is right around the corner. The first step is your local appraisal district will send out the Notice of Appraised Value for your property. This usually happens in March or early April but (almost) always by April 15.

You then have until May 15 to file your protest of the appraised value.* This is an extremely strict deadline. You absolutely do not want to miss it and file your Notice of Appeal late. If you do, the odds are you will not be able to protest your property taxes that year.

But do not worry about that yet. I’m sure we will write about that deadline again come May.

 

 

 

 

 

 

*In the rare circumstance where the appraisal district does not get the Notice of Appraised Value to you by April 15, then you may have later than May 15 to file your Notice of Appeal.

Signing Contract

Good Escrow is Hard to Find

  • In Texas, attorneys can work with title companies as fee attorneys to help the parties to a transaction get it closed.
  • This includes providing escrow services to the parties.
  • A good, honest escrow agent is essential to make sure that a transaction is closed according to the terms of the purchase agreement.

I want to start this week’s article by hoping everyone was able to celebrate Martin Luther King, Jr.’s legacy on Monday. He was truly an American hero and I was thankful to be able to take some time to reflect on what he did for our country. Its humbling to think of the sacrifices he and others made to make this country a better place for all of its citizens. Thank you, Dr. King.

Ok back to the far less important world of commercial real estate. If you are like me, you have probably noticed there have been a lot of closings lately in Texas. If you read the business journals or some other real estate site, you cannot go a day without seeing an article on a new closing.

And that, of course, got me thinking about the closing process. And how vital different parts of it are. For example, sometimes I think people can just take escrow for granted. But you should not. Its very important.

I’ve written before how Bukowski Law Firm is a title fee attorney. That means we are intimately involved in the closing and escrow process. This week, therefore, we are going to discuss the importance of escrow in more detail.

A Title Fee Attorney can Work with a Title Company to Provide Escrow Services

As a quick recap, a title fee attorney is a statutory position under Texas law that allows attorneys and title companies to work together to close a transaction. As a result, at Bukowski Law Firm, we work with Stewart Title to help commercial buyers and sellers get a transaction closed.

When you hire us as the fee attorney, we act as the primary contact on the transaction. We will help communicate with title and the underwriter to make sure the deal is moving forward to completion and gets closed.

The real benefit to the buyer and seller is that – on other transactions – we also work on the side of the buyer or seller. We know, therefore, how important it is to take a transaction to completion. As a result, we are going to do everything in our power – everything that is allowed under the Texas Department of Insurance rules – to get your deal closed. We will push the title company and underwriter to work within the confines of the rules to close the deal.

In Addition to Closing Services, We can Provide Escrow Services

As a title fee attorney, we are also responsible – with the title company – to provide escrow services. Often the lender requires the title company to actually hold the escrow deposit and then we or the title company holds the signed documents in escrow.

I have found in a commercial transaction escrow services are often taken for granted – just an additional piece of title services that the parties do not usually consider. But I think its more than that. When we are entrusted with escrow duties, that is a huge responsibility. Its our obligation to make sure we protect the money and documents and strictly adhere to the rules that everyone has agreed on prior to the relationship being set up.

That is why it is so important to make sure you choose the right escrow officer. You need to pick someone you can trust. Someone who has the utmost integrity and can be absolutely counted on to follow the escrow rules as the parties agreed. As an escrow agent, you are truly a neutral party – just holding money and documents until the parties tell you what to do with them. That’s a big responsibility and one that should not be taken lightly.

As a buyer or seller, you again also want someone who understands that everyone’s goal is to get the transaction closed. The escrow officer, therefore, should be available to go above and beyond to help achieve that goal.

At Bukowski Law Firm, we pride ourselves on both our integrity and our business understanding. We know the goal of the parties – and we want to do everything in our power to help them achieve that goal. So next time you are closing a deal, give us a call.

Did Meta Save the Austin Office Market?

  • Since COVID began, we have been concerned about the future of the Texas office market.
  • Meta announced last week that it has leased the entire office portion of what will be the tallest tower in Austin.
  • This hopefully signals a good sign that companies will still continue to lease office space.

Since COVID began, in this blog I’ve talked a lot about the fate of the office market. It really concerns me because I have a lot of clients who own and/or are developing a lot of office space. And so much uncertainty in that market is not a good thing.

I am feeling a little better and more confident this week because there was a huge office space announcement. And, as a result, I think the Central Texas office market is a little brighter – at least in my eyes.

So that’s what we are talking about this week – the state of the Texas office market and how the huge Austin announcement affects it.

How much Uncertainty has COVID Brought to the Texas Office Market

As I wrote above, we have talked about this before, but I just want to quickly rehash my thoughts on the post-COVID Texas office market. Here’s my opinion – I have no idea what is going to happen.

I do want to start by saying all of this is anecdotal based on discussions with people in the industry and just my own thoughts. But it seems like companies have learned a lot during COVID. Having people work at home may not be the disaster we once thought. Just speaking from my own experience, I was pleasantly surprised at how effectively we have worked from home when it was necessary. And, as a result, we have a much more flexible work schedule now.

Its easy to see, therefore, that companies could work a) entirely remotely or b) partially remotely with office sharing/hoteling. And this could potentially put the office market in danger. Indeed, a very large law firm – Quinn Emmanuel – recently announced that it will not be hiring new associates for any particular office. People will work where they are.

And on top of this, there is a lot of office space in the pipeline in Texas. I’m sure you can see how this would make me nervous about the future of office.

Meta Leases Entire Office Space of Largest High Rise in Austin

That’s why this week’s news about Meta (Facebook’s parent) was so welcomed. According to the ABJ, on December 31 Meta signed a lease for the all the office space in what will become the tallest tower in Austin.

At the corner of Sixth and Guadalupe, a 66 story tower is being built. Half of those floors will be office space. Meta has agreed to lease all of them – 589,000 square feet. The tower is scheduled to be complete some time in 2023.

Meta currently has about 2000 employees in Austin. And with this lease, it expects to add another 400 or so.

Meta’s Large Lease Brings Renewed Life to Texas Office Market

Obviously one lease – regardless of how big it is – does not solve all of the future concerns for Texas office space. But to me, what it does is signal where the employers’ mindset is at. Lets face it, Meta is a cutting edge, Silicon Valley tech company. And if it is showing that having office space is important to it, then I would think other companies will not be far behind.

Obviously that is no guarantee that the Texas office market is going to continue/return to a boom. But it certainly is a lot more optimistic than it was two weeks ago.

A New Year’s Vice – Checking Out Miami

  • I was in Miami over New Years and was fortunate enough to view some of the new developments going up there.
  • There is apparently a huge demand for high-rise living in the Miami area.
  • And, as a result, developers keep adding to the Miami skyline with residential housing.

Its here. A new year. 2022. I hope everyone had a safe and fun holiday. And is looking forward to a great and profitable 2022.

I was lucky enough over the break to travel to Miami. My main purpose was to watch my Michigan Wolverines play the Georgia Bulldogs in the National Semifinals. Unfortunately, that did not go as planned.

But while I was there, I took the opportunity to see what was going on in Miami. It had been a while since I have been there and I wanted to see what the housing and real estate landscape looked like. So that’s what we will talk about in this week’s blog – Miami developments.

Commercial Real Estate Landscape has Changed Since I Last Visited

I do not remember the exact last time I was in Miami, but I can definitively say it was during the great crash of the late 2000s. So I would estimate it was in the 2008 timeframe.

I know it was during this time because it was one of the most remarkable scenes I have ever seen. Downtown Miami was filled with high-rise condos – and almost all of them were empty. At least it appeared that almost all of them were empty. It was eery and sad. But the locals assured me that it was only temporary and they would all soon be filled. And its my understanding that they were correct.

Current Miami Residential Landscape is Beset with High-Rise Apartments and Condos

It was interesting, therefore, to be able to drive around the Miami area and see what the residential market looks like now. As I remembered, it is dominated by high-rise condos and apartments.

 

 

It is amazing how many high-rises are all throughout the Miami area. Its hard to believe there are that many people to fill all of them. This is, obviously, purely anecdotal but I spoke with a friend who is familiar with the market. He told me that not only are there enough people to fill them, but it is actually difficult to find a place to live. Indeed, current occupancy rates for apartments appear to be approximately 95% – even with a 25% increase in rents over the last year.

It would seem, therefore, that we will probably see more high-rises going up in the next couple of years in the area. At least twelve new projects were announced in 2021. And I reckon there will be many more this year.

Some Condos have Very Cool Designs

Many condos that go up in Miami, however, are not just normal looking buildings. Its Miami. They have cool designs and painting on them. I especially found this in an area called Wynwood – which is an art district.

 

 

No doubt these cool buildings help attract residents. And it adds to the developing Miami skyline.

It was fun to get to drive around Miami and see all the high-rise developments. If you have not been there, its clear that the demand for high-rise living is huge in Miami. And developers continue to build to meet that demand.

Year End Property Tax Housecleaning

  • This is a busy time of year for finalizing real estate acquisition before the end of the year.
  • Because property tax appraised values are determined as of December 31, it is best to get the property in good position.
  • Its also important, when purchasing property, to keep the purchase amount out of the news.

Well, there is good news and bad news. The good news is you made it through another year and we are headed into 2022 with excitement of a robust economy and the potential for a great year. The bad news is – we still haven’t conquered this damn COVID. But lets hope that by this time next year we have it all figured out.

Anyway, lately I have been reading several articles about new commercial real estate purchases in Central Texas and they always get me thinking about property taxes. Especially at this time– as we approach one of the most important property tax days of the year.

So that’s what we are going to talk about this week – what to do before the end of the year to put yourself in the best position to keep your property taxes in check for 2022.

So why is the end of the year one of the most important days of the year for property taxes?

Because appraisal districts set the appraised property values as of December 31.

So, for example, your local appraisal district will value your property on December 31, 2021 for the 2022 tax year. Your value is assessed as a snapshot on that date. As a result, you want to make sure you have everything prepared this week to put your property in the best position for a reduced tax appraisal.

That property’s document preparation should include the following:

  • Make sure the ownership is in the property entity’s name;
  • Take photos of any outstanding problems or work that needs to be done at the property;
  • Get estimates for repairs that need to be completed;
  • Have an up to date rent roll as of December 31; and
  • Get your financials prepared for the entire 2021 year.

By having this information ready to go this week, you will be in much better position when it comes time to protest this spring.

Keep that Purchase Price and Deal Information Confidential

There is one more issue that has jumped out at me as I read the purchase articles this week. And that is – too often – someone is quoted in the article saying how much the property was purchased for. This is infuriating to me every time I read it.

As you probably know, Texas is a non-disclosure state. That means that, as a property owner, you are not required to disclose how much a property cost you to purchase. Yet, somehow, the purchase prices are getting out into the public domain. Often CoStar is quoted but they, of course, need to get that information from somewhere. So someone familiar with the deal has to disclose that information.

This is why we STRONGLY recommend having non-disclosure agreements with everyone who works on an acquisition.

Its important to stress to them that any discussion of the purchase price can literally cost you money. Because there is no doubt that the local appraisal district will be aware of what online sites are saying about how much the property cost.

In addition, appraisal districts often search the county property records for deeds of trust to estimate the purchase price. We recommend, therefore, asking your lender to leave the amount of the mortgage off the deed of trust. There is no requirement that it be included. And as long as the amount is listed in the Note, there should be no problems with collection.

This is always a busy week for real estate folks who are trying to get that final deal closed before the new year. But remember – if you take some steps now, you can also help yourself with property taxes come May.