After several months of telling family and friends that his wedding venue business on Big Bux Ranch was for sale, Jeff Bux is contacted by his biggest competitor Hustler Plentee who also owns a wedding venue in the next town south of Buxboro. Hustler asks if Jeff will tote-the-note because his credit is maxed out at Buxboro State Bank, which is owned by Ernest “Big Daddy” Bux. Wanting to avoid a broker’s fee and an attorney’s time, and hoping that he might be able to get a job at the Bank, Jeff – uncharacteristically – asks his father for advice to help him sell it himself. Can Jeff sell his own business? If you were Big Daddy what would you say? Continue Reading Should an Owner Finance the Buyer of Their Business?
Just before her 80th birthday, Ernest (“Big Daddy”) Bux’s octogenarian Auntie Delusional (Auntie Del) died without a will or any other estate plan in place to give guidance to her husband (Uncle Tom) and their two adult children. “Who needs one?” was her retort for decades. And, “Wills are so over-rated.” Was Auntie Del right? Is a will or other estate planning really necessary?
Mark Eting is one of Duncey’s Caps top outside sales agents. Because the company is based in Texas, but Mark lives in Cleveland and sells for the company in the northeast, Mark purchased a personal computer and a laptop to use for work purposes, but did not get reimbursed by the company. He did, however, provide the computer to Duncey’s IT department to install the company’s sales tracking program. Unbeknownst to Mark, the IT department also installed software that allowed the company to determine when Mark accessed the sales tracking program and what information he accessed. Duncey’s employee handbook – which Mark acknowledged – stated the company could monitor his use and access of company data on personal devices. For the laptop, Mark purchased software called “LogMeIn” which allowed him to remotely access the home personal computer while he was on the road. Thus, Mark could use his laptop while traveling, access the home computer, and enter the sales data. At a team sales retreat, Mark casually mentioned to his boss, Tom Prior, how he logged his sales data on the road by using LogMeIn.
When Mark quit, Duncey’s IT department investigated his use of the sales program, and found he had been logged in more than usual. Suspicious of this activity, Tom went into LogMeIn and successfully guessed his username and password. While perusing Mark’s personal computer, Tom found Mark had set up a Google Mail account and was emailing Duncey’s customer information to one of its competitors. Duncey filed suit against Mark for various claims. When Mark read the lawsuit’s allegations, he realized the only way Duncey’s learned that information would have been by accessing his personal computer or laptop. Mark fired off a counterclaim for computer hacking. Does Mark’s claim stand a chance?
As summer ends and the cooler weather of fall arrives, Tripp Freeley yearned for the days of sun, sand and surf. So Tripp began planning his family’s vacation for next summer. A hotel would not work for Tripp, his wife and three young kids – they needed a house with multiple bedrooms. So Tripp went to an online short-term rental by owner website and reserved a house near the beach.
The next summer the family drove 7 hours from Dallas to the house. Shortly after they began getting situated there was a knock on the door. Tripp opened the door to find a local code compliance officer. The compliance officer told Tripp that the city made it illegal to rent the house, and they had 24 hours to vacate. Tripp is floored and mortified that his “perfect” family vacation is now ruined. Does the city have the right to ban property owners from renting their homes out on a short-term basis? Continue Reading Think You Can Rent Out Your House While You’re On Vacation? Think Again.
Bill Deron bought a 100-acre tract next to a creek outside the City of Houston. Deron planned to build a subdivision where some of the homes abut a creek. The other homes would sit about 15 feet higher than the creekside homes. Deron disclosed to the creekside buyers that they needed flood insurance. But he did not tell any other home buyers to purchase flood insurance. Hurricane Harvey dumped so much rain on the neighborhood that all of the homes in Deron’s neighborhood flooded. Homeowners soon learned that the entire neighborhood sat in a floodplain. Did Deron have a duty to disclose whether the development or any part thereof is in a floodplain or even do something more? What about the government entity who approves the development? Continue Reading Washed Away: What Rights Do You Have When Your Home is Flooded?
Vlad “Dracula” Smith was looking for some new digs big enough to accommodate his growing family. While searching the MLS listings, Dracula stumbled across a castle belonging to Victor “Frankenstein” Jones. Little did Dracula know, but the castle was widely reported to be haunted. “Frankenstein” had even made the front page of the local paper when he reported the haunting to the local paper and Reader’s Digest last Halloween. However, in negotiations for the sale of his castle, Frankenstein, and his broker, failed to tell Dracula about the newspaper and magazine articles. When Dracula later learned of the stories, he sued Frankenstein for rescission and damages. Did Frankenstein have a duty to disclose the haunting to Dracula? Continue Reading Duty to Disclose that a House for Sale is Haunted?
Because of Hurricane Harvey, oil and gas production company Gonzales Energy and its owner Paunscho are treading water. Rising hurricane flood waters destroyed his files, water-logged his computers and ruined office equipment in their downtown leased offices preventing Gonzales Energy from servicing its wells, pipelines and royalty owners. As flood waters recede, Paunscho wants to know what rent relief he gets for premises so severely damaged he can’t use them. Landlord Lester “Les” Orr is trying to figure out if he can collect rent anyway and, if not, how he will make his mortgage payments. Who has the upper hand?
For over a decade On the Skware Toy Soldiers and its owners, Boo & Woo, the Skware brothers, have enjoyed the shopping traffic brought to their retail store that’s located in the same shopping center as Athletics Authoritiez, a popular sporting goods retailer. However, over the last couple of years the Skware brothers have seen their overall numbers of shoppers go down and, with slowing traffic, their gross sales revenue has dropped by over 15% – straight off the bottom line. Now, blaming E-Commerce woes, the news media (supported by local scuttlebutt) is suggesting that Authoritiez is on the ropes and may close its store. Can Boo & Woo do anything to save On the Skware? Continue Reading E-Commerce Disruption – Tenant’s Tizzy
A huge fan of the Hill Country, Skare D. Katz buys a large piece of undeveloped land from the Solable Family outside of Austin. Skare D. plans to build a ranch for retirement. One Saturday while Skare D. is visiting the property to visualize his plans, a woman shows up and stands underneath a large oak tree, staring at the ground. Skare D. approaches the woman and asks her for her name. The woman responds, “Inka Solable.” When Scare D. asks Inka what she’s doing there, Inka responds, “This is where my great-grandfather is buried. I come pay my respects every Saturday.” Dumbfounded, Skare D. responds, “Ma’am, I appreciate that, but I own this property now. I don’t want you coming by every Saturday.” Inka replies, “I have a right under the law to access this property when I want. I’ll see you in Court!” Is Inka right? Continue Reading The Grave Reality of a Cemetery on Your Property
Following his transfer to Houston, Ruel Benda decided to keep his posh gated neighborhood Rodeo Drive house and started advertising it on AirBNB. His profits were so good that he began renting for 7 days or less. Insisting that Benda’s home use was commercial and not residential, a violation of his property owners association’s (POA) recorded Covenants, Conditions and Restrictions, the POA fined him. Benda sued. Did he win? Can Benda continue to rent his house?
It depends. No, if Ruel Benda lived in San Antonio. Under these facts a San Antonio appellate court concluded that the POA deed restrictions prevented such rentals and granted the POA’s injunction denying further rentals.
Yes, if Benda lived in Austin where, under very similar facts, the Austin Court of Appeals found no violation of a restrictive covenant under similar circumstances, determining that the covenant restricting homes to be used “for single family residential purposes” was ambiguous. The Austin court “resolve[d] the ambiguity against the Association and in favor of the [homeowner’s] free and unrestricted use of their property.” The San Antonio Court respectfully disagreed with the Austin Court of Appeals and did not find its reasoning persuasive.
Like Uber, the AirBNB kerfluffle has landed in the news in Chicago, Spokane, (requires a license) and even Arlington County near Washington, D.C. – just in time for Inauguration Day. Even San Antonio is considering municipal regulations that would affect properties not otherwise subject to a property owner’s association.
Tilting the Scales in Your Favor. Avoid being surprised. If you are in a property owner’s association, read your documents. While many POAs have more detailed restrictions against short term rentals (STR) of POA homes, some enforce their rules and others don’t. Likewise, while smaller counties and cities are not actively enforcing requirements to report and pay hotel occupancy taxes upon home rentals, many cities like Austin, San Antonio and Houston are.
Under Texas law, an STR is rental of a property for less than 30 days and the guest is charged $15 or more per day. Texas hotel occupancy tax due to the Texas Comptroller is six percent of the room cost. Counties are authorized to impose a hotel occupancy tax also.
And, by the way, your income from the STR may well be taxable. As my colleague Drew York wrote a couple of months ago, whether the income is taxable depends upon a “Master Exception” to the Internal Revenue Code. Check out our September article Do I Owe Income Taxes When I Rent Out My Home?