Green Legal 101-

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BUILDERS’ RADIO BLOG

11/18/2013

by Matthew L. Motes

“Sticks and stones may break your bones, but words will never hurt you”.  True, unless you sell homes then “words” become misrepresentations and deceptive acts in court.  Nowhere is this more dangerous than in green building.  Based upon an hour on the internet, buyers believe they are armed with expert knowledge in green building and they will immediately quiz you about it. This blog provides a few tips about when and how to protect you from potential liability. 

            The first five minutes with a potential buyer is the most dangerous.  It is during this introductory time the buyer will ask:  “Are you green builder?”, “Is this home certified?”, “Do you have an Energy Star rating?”   Give a wrong or incomplete answer to any of these typical questions may result in a lawsuit.  A buyer will later swear under oath that they only relied upon your initial answers to these simple questions and none other to buy a half-a-million dollar home. 

Green liability lawsuits have increased rapidly over the past few years.   They started with multi-million dollar commercial projects; however, are now common place against consumer products such as:  appliances, light bulbs, and memory foam mattresses. Unfortunately, all too often home builders get caught in the middle of the consumer product case.   One example is the current class action against Whirlpool where the consumers complained that the refrigerators they bought were represented as “Energy Star” when a check of the model numbers revealed they had been removed from the “Energy Star” program.  A second example involves the CFB light bulbs.  There are current articles warning of the cancer risk from these bulbs because they contain mercury.  The moral of the story is to keep up with as much information as you can about green materials.  In the past, home builders have been caught in the middle between consumers and manufacturers of Chinese dry wall, polybutylene pipe, EIFS (synthetic stucco) to name a few.   It is not unreasonable to expect consumers to make claims against builders for green building materials and process. 

            To protect yourself and your builder, verify even the most basic of claims.  For instance, confirm the appliances do all have an “Energy Star” rating, and if not all of them find out which ones do and do not.  Collect, then handout written materials about green attributes to potential buyers when they ask the green questions.  Instead of representing the air conditioning system will save them money, give them a brochure from the manufacturer explaining the benefits of their technology.  Do not ever state something is “Free of”, or “100%” because it is rarely true.   As a final tip, when the buyer asks the green questions, answer them with asking for additional information from the buyer to make sure you have as much detail as you can before providing an answer- or more preferably providing them written information. 

            Additional ways to protect the builder is to include no oral representation disclaimers in all contracts in the form and manner required by each state.   Many builders and builders’ association contracts now also include a green building disclosure addendum which limits liability to some extent.  Another way to provide protection is to know the local ordinances.  Cities like Dallas, Texas have recently enacted green building ordinances that establish the type of testing and requirements necessary to qualify for and meet green standards.   The more specific the testing and scoring used to establish certain standards the less reliance can be placed on your representations, whether they are ultimately found to be true or not.

            Green is the most popular phrase going.  However, if you make a false representation “green” could be the dollars collected by the buyer and their attorney making the “green” claim. 

 
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Matthew L. Motes is a Shareholder with DECKER, JONES, MCMACKIN, MCCLANE, HALL & BATES, P.C. in Fort Worth, and focuses his practice on residential and commercial construction matters.  He can be reached by calling 817.336.2400 or by emailing mmotes@deckerjones.com

This article is provided for informational purposes only and is not a substitute for specific legal advice, and is not intended to create an attorney-client relationship between Mr. Motes, his firm, and the readers of this publication

 

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The Subpoena Power

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November 16, 2012
By Kelly Decker
Texas Family Law and Divorce Blog

There are two types of subpoenas that can command two types of actions. Trial subpoenas command appearance at a trial or hearing and discovery subpoenas command appearance to give testimony for the purpose of discovery of evidence. Either way, the subpoena can also ask for production of documents or tangible items for trial, a hearing or discovery.

The subpoena power can reach beyond the parties in a lawsuit. It can also compel non-parties or entities to comply. Although there are some limits, generally speaking, someone can be compelled to testify or produce documents in a case that they are not directly involved in. For example, Denise Richards could have been subpoenaed in Charlie Sheen’s criminal assault case for his alleged attack on Brooke Mueller. In his suit against Kim Kardashian, Chris Humphries (her 72 day husband) subpoenaed Kanye West (her boyfriend) to appear and give testimony at a deposition, purportedly to show she didn’t intend to marry Chris for legitimate reasons.

Oftentimes, the only way to obtain admissible evidence in a case and prepare for trial is to seek information from third parties using a subpoena. Bank records, computer files, corporate books and records, report cards, medical records, phone records and so forth are good examples. Note: Facebook and other social media sites are protected by federal law from the subpoena power.

Failing to comply with a subpoena could result in contempt charges. The statute allows for a court to assess fines or require the non-appearing party to be confined. Texas Rule of Civil Procedure 176.8.

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Kelly Decker practices family law and civil litigation. Ms. Decker specializes in complex divorce cases that require experience and knowledge in real estate, business and probate law. Her background is distinguished by years of trial and appellate experience in real estate, oil & gas, contract and fiduciary duty litigation.

Disclaimer: The content of this article is provided for informational purposes only and does not constitute legal advice.

Social Media used in Litigation

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Many people don’t realize that emails, tweets, texts or Facebook post could be used in litigation. While you may think your Facebook page is private, it usually is not and can easily be obtained by third parties. So when you post photos on Facebook about partying the night before, how you cheated your business partner, how you cleaned the gutters but supposedly have back problems, etc. this information can and will be used against you in litigation. When you use Facebook, when you use Twitter, when you go out there and make comments on news articles . . . the things you are saying can and will be used against you. A Texas teen found out just how real the consequences of online public discussion can be when he was charged with making a terrorist threat. Read Justin Carter’s Story Here.

Check Out this Article on Social Media and Divorce
That’s What She Said by Audrey Blair

The content of this article is provided for informational purposes only and does not constitute legal advice.

Does a Transfer on Death deed interfere with spouse’s homestead right?

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I was recently asked a specific question as to how the Transfer on Death deed affects the spouses homestead rights.

Example: A party is married and they execute a transfer on death deed to their children on their separate property which is their homestead.

The deed would not displace the spouse at death because the homestead right is attached to the separate property and community property. Therefore, while the children might own the property upon their parent’s death, the spouse has the right to live in the house.

 

Estate Planning advise from Warren Buffett!

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Marvin Blum (pictured on the far left) generated quite a bit of media coverage this past weekend when he posed a question to Warren Buffett at the Berkshire Hathaway annual meeting, where an estimated 35,000 shareholders gather each year in Omaha. Marvin’s question and a summary of Warren Buffett’s comments are below.

“I’m an estate planning lawyer, and it’s interesting as we wrap up today to ponder that the baby boomer generation is about to pass along the greatest transfer of wealth in history. I can design plans that eliminate estate tax and pass down great amounts of wealth to the next generation, but many of my clients come to me and say they want a plan like Warren Buffett’s, leaving their kids enough so they can do anything, but not so much that they can do nothing. Now they ask me, and I am asking you, ‘How much is that, and how do you keep from ruining your kids?'”

The following is a brief summary of Mr. Buffett’s insightful response:

• I think that more of our kids are ruined by the behavior of their parents than by the amount of the inheritance.
• I rewrite my will every five or six years.
• When your children are old enough (mid-thirties or thereabouts), you should explain your estate plan to them – It’s crazy for them to read the will for the first time after you’re dead.
• If your child is named as executor, your child should understand how to carry out his or her obligations that are embodied in the will before I sign that will, and we should talk it over.
• Rather than creating a dynasty of sorts, if you’re very wealthy, the money can have far more utility to society than to create a situation where your kids don’t have to do anything in life except call a trust officer once a year and tell him how much money they want.
• If you’re going to leave each of your children different mixes of assets, you want to make sure your definition of equality is understood by the children.

Marvin’s question drew immediate attention in the news media with coverage in The Wall Street Journal, The New York Times, The Washington Post, Bloomberg Business Week, The World-Herald, and commentary from these sources was syndicated and reprinted globally by many other outlets.

Article was provided by the Blum Firm, P.C.

Why you need a directive to physican!

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Many of you know I am very adamant that all my clients have a Physician’s Directive (Living Will), so I never charge for the document.  Why is it so important you ask?  Well, there are various reasons and scenarios that come into play that many people just do not think about.  Here is a wonderful article by attorney Harvey Cox that does a great job of illistrating why end of life decisions are so important, regardless of your age!

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The Difficulty of Life
or Death Decisions
By: Harvey Cox

Understanding the Oil & Gas world – Part II

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PART II OF OIL & GAS OUTLINE

DEFINITIONS

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Here is Part II of the Oil & Gas Outline provided by the author Derek Fletcher a Managing Director and Wealth Strategist at U.S. Trust, Bank of America Private Wealth Management. I have not altered the context of Mr. Fletcher’s work, however, I have reduced it down to include only the basic information and broken the outline into two separate blogs.

As is the case with many industries, the oil and gas business has adopted a specialized, unique and, in some instances, humorous vocabulary. Below are some of common terms utilized in the oil and gas business:

1. The Players.

a. Landman. A person in the oil and gas industry whose responsibilities include acquiring oil and gas leases, examining and curing titles and managing an oil company’s leases. This term applies to both men and women and it is not advisable to use the terms ‘Landwoman” or “Landperson” !

b. Lessee. The person entitled under a lease to drill and operate oil and gas wells. The lessee will pay the lessor a royalty and retain the balance of the production. The lessee is commonly referred to as the “operator” or “working interest owner.”

c. Mineral interest Owner. The owner of the minerals under a tract of land. The mineral interest owner has the right to extract the minerals or lease that right to another party. The mineral interest owner has a right to bonus payments, delay rentals and royalties.

d. Operator. The working interest owner who is responsible for the daily operations after production has commenced.

e. Purchaser. The company that remits payment to the various interest owners, including the royalty owners and working interest owners.

f. Surface Owner. The owner of the surface estate. While a party can own both the surface and the minerals, the term “surface owner” generally means a person who owns only the surface and none of the minerals.

2. The Economics.

a. Bonus. The consideration paid by the lessee for the execution of an oil and gas lease by a landowner. If the bonus is to be paid out in installments over a number of years, it is referred to as a “deferred bonus.”

b. Carried interest. A fractional interest in oil and gas (usually in the form of a lease) where the owner of such interest has no obligation for the operating costs. Instead, the owners of the remaining fractional interest in the property bear the costs and reimburse themselves out of the production proceeds, if any.

c. Carved Out Interest. An interest created out of a greater interest (e.g., the creation of an overriding royalty interest out of a working interest).

d. Delay Rental. Consideration paid by the lessee to the lessor for the right to delay drilling operations or production during the primary term of the lease.

e. Depletion. The exhaustion of a reservoir (or the reduction in value of the reservoir) caused by the extraction of minerals.

f. Nonparticipating Royalty Interest. A royalty interest which does not “participate” in (i) bonus or rental payments, (ii) the right to execute leases or (iii) the exploration and development. Instead, it entitles the owner to an expense-free interest in any oil and gas if and when produced.

g. Overriding Royalty Interest. This is an interest that is similar to a royalty interest but which is carved out of the working interest of an existing lease. It is commonly expressed as a fraction of production from the lease but is free of exploration and development costs.

h. Production Payment. A production payment is a right to minerals in place that entitles its owner to a specified fraction of production for a limited period of time, or until a specified sum of money or a specific number of units of mineral has been received.

i. Royalty Interest. The interest in production reserved by a mineral interest owner upon entering an oil and gas lease. The royalty is commonly referred to as a fraction of the total production of oil and gas (or the proceeds) and is free of exploration and development costs. Historically, a standard oil and gas royalty was 1/8 – although it now has a range of 1/8 to 1/4.

j. Shut-in Royalty. A payment made when a well that is capable of producing in paying quantities is shut-in due to the lack of an available market. The payments are generally expressed as a particular amount per acre. These payments enable the lessee to keep the lease alive without actual production for a reasonable period of time.

k. Working Interest. Interest under a lease which gives the lessee the exclusive right to explore and develop the property. In exchange for this exclusive right, the lessee must bear all costs associated with such exploration and development.

3. Miscellaneous Terms.

a. Barrel of Oil. 42 U.S. gallons of oil at 60 degrees Fahrenheit weighing approximately 306 pounds. A barrel is the most common unit used for measuring crude oil.

b. Casing. Round steel tubes of varying sizes, weights and grades that can be interconnected into a string. Casing is run into an open borehole and cemented into place. It is the outermost tube in a wellbore and prevents the borehole from caving in.

c. Casinghead Gas. Is basically the gas produced from an oil well. It is a gaseous hydrocarbon which is found in liquid form prior to production but which converts to a gaseous form upon production.

d. Condensate. Liquid hydrocarbon which is found in gaseous form in the formation prior to production but which converts to liquid form upon production. Generally speaking, this is the oil produced from a gas well.

e. Crude Oil. Hydrocarbons found in liquid form in the formation prior to production and remaining in liquid form upon production.

f. Directional Drilling. The drilling of a well that materially departs from vertical drilling (e.g., horizontal drilling).

g. Division Order. A contractual agreement between the party distributing production proceeds and the various interest owners setting out the proportions of production that each owner is entitled to receive. The division order generally requires the payee to stipulate as to the size of the interest involved, warrant title to the same, agree to prove title to the payor’s satisfaction if a dispute arises, indemnify the payor for payments made in accordance with the terms of the division order and other related matters.

h. Dry Hole. A well determined to be incapable of producing in paying quantities.

i. Farmout. An agreement between operators whereby the owner of a lease transfers the development rights (or some portion of it) to another operator in exchange for consideration (often a payment per acre, an overriding royalty interest or a reversionary working interest).

j. Executive Right. The power to make executive decisions regarding the mineral estate, including the power to lease. The executive right can be severed from other incidents of mineral ownership.

k. MCF. Abbreviation for 1,000 cubic feet of gas. MCF is the most common unit used for measuring natural gas.

l. Mud. Drilling fluid which is pumped down the drill pipe through the drill bit and circulated back to the surface. The purpose of this process includes maintaining hydrostatic pressure, lubricating the drill bit, carrying rock cuttings to the surface and preventing the pipe from getting stuck in the borehole.

m. Natural Gas. Hydrocarbon found in gaseous form in the formation prior to production and remaining in gaseous form upon production.

n. Permeability. A measure of the ease (or difficulty) with which a fluid can move through a porous formation (such as shale, sandstone or limestone).

o. Pooling. The joinder of several small tracts for purposes of securing a drilling permit.

p. Porosity. The ratio between the volume of pores within a formation to its total volume. In general terms this is the space in a formation where oil can be held.

q. Primary Term. The period of time during which a lease can be kept alive even though there is no production in paying quantities.

r. Secondary Recovery. Application of various liquids, gasses, heat, etc. at a time in which a reservoir has reached the exhaustion of the natural energy needed to extract the oil.

s. Secondary Term. The period of time during which a lease can be kept alive by virtue of production in paying quantities.

t. Section. An area of one square mile – which equals 640 acres. Sections are divided into quarters – each representing 160 acres.

u. Tertiary Recovery. Use of chemicals or energy to enhance recovery methods for the production of oil or natural gas.

v. Transfer Order. If an interest subject to a division order is transferred, the party distributing production proceeds will require a transfer order to be executed by the transferor and transferee. The transfer order will describe the interest being transferred, the date of the transfer as well as making the transfer subject to the original division order.

w. Tubing. Like casing, tubing is round steel tubes of varying sizes, weights and grades that can be interconnected into a string. Tubing runs inside the casing and is the path through which oil and gas is brought to the surface.

x. Unitization. The joint operation of all or a portion of a producing reservoir often to make secondary recovery operations more economically feasible.

y. Wildcat. An exploratory well that is drilled in an unproven area.