Contract Review: Proper Form to Prevent Future Breach
Before signing a contract, read through it carefully. Have an attorney review the contract. Make certain that you know what obligations are stated and/or implied. If you are uncertain as to your duties and you sign the contract, you may be liable for a future unintentional breach of the contract.
Contract negotiations, especially in the context of important financial contracts, can be taxing and difficult at best. An attorney can assist you with negotiations to ensure your needs and requirements are met. Additionally, your attorney can properly draft and/or review the contract, explain to you your rights and duties under the contract, and make suggestions as to provisions which may be necessary to protect your best interest.
The following is a good guideline for contract review. It is not an all-inclusive list, but may be used as a tool to assist with contract drafting and review:
- Make sure the language contained in the contract is clear and understandable. In most cases, limit the use of highly technical terms when possible. Unnecessary legal wording may make the contract confusing, thus use regular wording to make sure the parties understand what the contract says and means.
- Give a clear and concise description of the goods and/or services to be received.
- Give a clear description of the amount of money or other consideration for the contract.
- If any payments are payable outside the U.S., make sure the payments are in U.S. dollars.
- Make sure the contract contains a specific time and place for performance.
- The contract should contain a method of providing notice of default and opportunity to cure default.
- Rights, obligations, and duties of every party should be clearly listed. Each party’s responsibilities should be identified in understandable wording.
- Use clear and concise names when listing parties to the contract, including address, telephone number, fax number, and email addresses.
- Be sure you have a contact person for each party to the contract, including address, telephone number, fax number, and email addresses.
- Establish a date the contract is to begin and end.
- Make sure the contract contains all other important dates to the contract (milestones, deadlines, reports, etc.). Use full dates. Such dates should be clearly identified.
- The procedure for renewal of the contract should be clearly identified.
- If an employment contract, the procedure for termination of the contract should be clearly identified (termination for cause and/or termination at will).
- Indemnification, liquidated damages, attorney’s fees, waiver of contractor’s liability, waiver of statutes of limitation clauses should be incorporated if necessary or applicable.
- Establish the contract is governed by the laws of the State of Texas.
- Establish the venue for suit is in the county where the Company’s main office or parties signing are located or agree otherwise.
- If insurance is required, define the types and levels of coverage.
- Confidentiality provisions, if applicable, should be incorporated.
- Ensure Act of God or force majeure clauses are incorporated if necessary.
- Assignment by either party should be approved in advance in writing.
- Incorporate an Alternative Dispute Resolution clause, if required or desired.
- All appendices, exhibits, attachments, and schedules should be attached.
- Title and authority of person signing the contract should be properly stated and warranted.
- Spelling, formatting, grammar, punctuation and general appearance of the contract should be professional and accurate.
Preprinted form contracts should only be viewed as a starting point, not a final expression of the parties’ agreement. Protection for all parties is usually minimal to non-existent in such pre-printed forms. No pre-printed form can be expected to cover the particulars of all agreements between two or more specific parties. Having an attorney review and negotiate pre-printed forms may prove prudent and smart.
It is imperative that the terms of a contract are fairly negotiated, properly drafted, and reviewed to ensure the contract meets the intentions of the parties.
Defining Real Estate Documents (Property Deeds, Deeds of Trust, and Real Estate Lien Note (Promissory Note)
A deed is a legal instrument that transfers a property right in real estate. The most common types of property deeds are as follows:
- Quitclaim Deed
- Warranty Deed
-Special Warranty Deed – with or without retained Vendor’s Lien
-General Warranty Deed - Deed Without Warranty
Other real estate documents discussed herein include:
- Deed of Trust
- Real Estate Lien Note (Promissory Note)
- Deed of Trust to Secure Assumption
Quitclaim Deed
Quitclaim deed conveys any title, interest, or claim of the grantor in the real property, but it does not profess that the title is valid nor does it contain any warranty or covenants of title. Thus, a quitclaim deed does not establish title in the person holding the deed, but merely passes whatever interest the grantor has in the property.” Diversified, Inc. v. Hall, 23 S.W.3d 403 (Tex. App.–Houston [1st Dist.] 2000, pet. denied).
There seems to be some misconception that a Quitclaim Deed is a simple and inexpensive means of selling land or solving real estate problems. People are shocked to learn that Quitclaim Deeds are sometimes worthless in Texas.
Does this mean that a Quitclaim Deed should never be used? No.
Quitclaim Deeds can be useful in clearing title in some limited circumstances, such as when there is a question about whether a particular heir might have a claim to the property of an estate, or whether a person may have acquired title by adverse possession (“squatter’s rights”). However, in most cases it is preferred to use another kind of deed.
Warranty Deeds
The Warranty Deed is a legal document where the seller, or grantor, guarantees to the buyer, or grantee, that the real property being purchased is free from any mortgages, liens, or other encumbrances. If it is a general warranty deed, the guarantee extends back to the property’s origin. In contrast, if it is a special warranty deed, the seller only guarantees that there are no mortgages, liens, or other encumbrances while he or she has owned the property.
A warranty deed thus provides a method of transferring ownership or title in real estate that offers protection to the buyer. This is the case because the seller warrants, or guarantees, that he or she legally owns the property. An individual purchasing property or a bank lending money for the seller to purchase the property typically does not want to discover that the property has tax or mechanical liens or outstanding mortgages after the transaction is complete. If a seller provides a warranty deed and then the buyer later discovers an unpaid lien or other financial encumbrance, the buyer can seek legal action against the seller. Because sellers could die, have limited financial resources, or declare bankruptcy, real estate transactions involving warranty deeds often are accompanied by title searches and title insurance.
A Special Warranty Deed covenants to the buyer that the seller has not personally done anything to adversely affect the title being conveyed since inception of Seller’s title to the date of conveyance.
A General Warranty Deed covenants with the buyer that not only has the seller not personally done anything to adversely affect the title being conveyed, but neither has anyone else who has ever owned the property ostensibly as far back as the original Spanish land grants.
Deed Without Warranty
Another form of deed, which is neither a Quitclaim Deed nor a Warranty Deed, but rather something in between is a Deed Without Warranty. Like the Warranty Deed, a Deed Without Warranty uses the “grant, sell and convey” language to establish title in the buyer. Like a Quitclaim Deed, though, a Deed Without Warranty makes no warranties or covenants of title, so the seller has no liability for title defects. A Deed Without Warranty is rarely appropriate in a sale transaction; however, because it offers much greater protection to the buyer without any additional risk to the seller it should be considered as an alternative whenever a Quitclaim Deed might otherwise be used.
Other Real Estate Documents
Deed of Trust
A Deed of Trust is a deed wherein legal title in real property is transferred to a trustee, which holds the deed as security for a loan (debt) between a borrower and lender, e.g. home mortgage documents.
Transactions involving trust deeds are normally structured so that the lender gives the borrower the money to buy the property, the seller executes a Special Warranty Deed conveying the property to the Purchasor/Borrower, and the borrower immediately executes a trust deed conveying the property to the trustee to be held in trust for the lender. Trust deeds differ from mortgages in that trust deeds always involve at least three parties, where the third party holds the legal title, while in a mortgage, the mortgagor gives legal title directly to the mortgagee. In either case, equitable title remains with the borrower.
Real Estate Lien Note (Promissory Note)
A Promissory Note is a written promise to repay a loan or debt under specific terms – usually at a stated time, through a specified series of payments, or upon demand.
A promissory note will identify the parties, the amount of the obligation, some form of recitation of the consideration for the obligation (that is, what the debtor received in return for signing the note) and will usually include the terms of repayment, the interest rate which will apply, if any. It may also include an “acceleration clause” which will make the entire amount of the note due if a payment is missed.
Deed of Trust to Secure Assumption
A Deed of Trust to Secure Assumption is a second security trust document (or third or fourth, depending on how many prior liens are already in place at the time of a divorce or other assumption conveyance), which gives a party the right to take a home back if an ex-spouse or other party does not timely pay the mortgage. In this way, the Deed of Trust to Secure Assumption secures the ex’s obligation to assume the unpaid debt on the home
No Will: Now What?
When your loved one dies without a will, the Texas probate process can be expensive and frustrating. Absent a will, an individual must have his or her estate distributed per the laws of Intestate Succession. Intestacy is the process by which the Texas probate code will determine which assets go to whom.
If your mother or father dies without a will, here is the normal estate disbursement under the following conditions:
- Mother and father are still married;
- All siblings are born from mother and father, no out of wedlock or children of another marriage.
This is a common fact pattern for intestacy probate. If an individual die but their spouse is still alive then the assets will be distributed in the following manner:
- Community Property: The spouse will receive 100% of the community property.
- Separate Personal Property: The spouse is entitled to 1/3rd of descendants separate personal property. The descendants are entitled to the other 2/3rds of separate personal property.
- Separate Real Property/Land: The spouse is entitled to a life estate in 1/3rd of the separate real property. The descendants are entitled to the remainder interest in that 1/3rd, plus a present possessory interest in the remaining 2/3rd of the separate real property.
If your wife or husband dies with no children, then the estate will be distributed in the following manner:
- Community Property: The spouse will receive 100% of the community property.
- Separate Personal Property: The spouse will receive 100% of the Separate Personal Property
- Separate Real Property: The spouse will receive ½ of the separate real property if the intestate is survived by a parent, sibling, or sibling’s descendant. The remaining ½ of the separate real property passes to the parent, sibling, or sibling’s descendant as if the intestate had no surviving spouse. If the intestate is not survived by a parent, sibling, or sibling’s descendant, the surviving spouse is entitled to all the .
This is a quick overview of the most common forms of statutory asset distribution when a loved one dies intestate. Though the above scenarios look simplistic, if your love one died without a will, it is imperative that you find a qualified Texas probate attorney that can guide you through the specific provisions within the Probate Court. The Dallas Texas probate attorneys at the Nacol Law Firm can help you navigate this unfamiliar terrain.
Planning for your 2024 Texas Holiday Visitation Schedule with your Children!
Now is the time to review your 2024 Holiday Visitation Schedule with your children.
Here is a reminder of the current Texas Family Law Code’s Standard Possession Order for the 2024 Holidays.
Texas 2023 Family Law Code’s Standard Visitation Guidelines for Thanksgiving:
The possessory conservator or non-primary conservator shall have possession of the child in odd-numbered years, beginning at 6 p.m. on the day the child is dismissed from school before Thanksgiving and ending at 6 p.m. on the following Sunday, and the managing conservator shall have possession for the same period in even-numbered years; The Holiday schedule will always override the Thursday or Weekend schedules.
Texas Family Law Code’s Standard Visitation Guidelines for Christmas Break:
The possessory conservator or non-primary conservator shall have possession of the child in even numbered years beginning at 6 p.m. on the day the child is dismissed from school for the Christmas school vacation and ending at noon on December 28, and the managing conservator shall have possession for the same period in odd-numbered years.
The possessory conservator or non-primary conservator shall have possession of the child in even-numbered years beginning at noon on December 28 and ending at 6 p.m. on the day before school resumes after that vacation, and the managing conservator shall have possession for the same period in odd-numbered years; The Holiday schedule will always override the Thursday or Weekend schedules.
The Holiday Season should be a happy family time. Many times, emotional issues from the result of the break-up affects a family which causes the joy of the season to be overshadowed by unhappiness and despair! Children need to have structure in their Holiday Visitation Schedule to ensure that they will be able to see both parents and share the joy of the season with their entire family. The children are often the ones who suffer when the Holiday Visitation arrangement goes awry.
Unfortunately, many parents may wait too long to confirm visitation plans for this upcoming holiday season. If you cannot reach an agreement regarding visitation or believe you may be deprived of holiday visitation by the other parent, now is the time to contact an attorney. Time is short and Courts are already starting to overload with future visitation problems for the 2023 Holiday Season.
The best gift a child can experience for the Holiday Season is an early proactive arrangement of all holiday plans between both parents. Everyone needs to know dates and times for visitation with both Mom and Dad. This Holiday Season vow to keep your child out of the middle of any family conflict and start to develop new holiday traditions with your child and family. Many parents have new relationships/marriages and other children in the family group. The new holiday traditions should include everyone and be a bonding experience for years to come.
Call Us. We Can Help!
Nacol Law Firm P.C.
Dallas Family Law Attorneys
(972) 690-3333
A Director’s Fiduciary Duty to His Corporation
A Director of a Corporation has specific fiduciary duties that precludes activities that might endanger the Corporation. The certificate of formation may limit or eliminate personal liability of Directors in certain respects such as money damages but there are some concrete fiduciary duties that cannot be dispensed with such as:
- Breach the duty of loyalty;
- An act or omission not in good faith that constitutes a breach of a duty or involves intentional misconduct or a knowing violation of law;
- A transaction in which the director received an improper benefit; or
- An act or omission for which liability of a director is expressly provided by Texas Statute.
Of all the mandatory fiduciary duties listed above, the duty of loyalty is the most sacred. The policy in Texas is that a Director’s loyalty is to the Corporation first and to himself second. A Director is generally precluded from entering into any transaction that may personally benefit him. A Director has a personal interest in a transaction if he is a party to the transaction, has a material financial stake in the transaction, or is an immediate family member to the transaction.
A Director may enter into a transaction with the corporation that personally benefits him with these three exceptions:
- The material facts of the relationship governing the transaction are known to the board of directors, and the board in good faith authorizes the transaction by a vote of a majority of the disinterested directors;
- The material facts of the relationship governing the transaction are disclosed to the shareholders who then by vote approve the transaction in good faith; or
- The transaction is fair to the Corporation at the time it is authorized or ratified by the board of directors or shareholders.
If one of these three exceptions apply to a Director that stands to personally benefit from a transaction with the Corporation, then his fiduciary duty of loyalty will likely not be breached. The duty of loyalty is the most important fiduciary duty because many Corporations have Directors which serve concurrently as Directors for other independent Corporations. It is common to have a Director for a Corporation that is also a Director for another Corporation. With one individual sitting as a Director on multiple Corporations it is important that his duty of loyalty remains consistent with each Corporation that he represents.
Julian Nacol, Attorney The Nacol Law Firm P.C. (972) 690-3333
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Attorney Mark A. Nacol is board certified in Civil Trial Law by the Texas Board of Legal Specialization