What are a potential defenses or arguments used in a Texas real estate case to challenge titled real estate? A party can assert the following theories:
Under the doctrine of unclean hands, a court may refuse to grant equitable relief to a plaintiff who has been guilty of unlawful or inequitable conduct regarding the issue in dispute. See Paciwest, Inc. v. Warner Alan Properties, LLC, 266 S.W.3d 559, 571 (Tex. App. – Forth Worth 2008, pet. denied). The defendant must show it was injured by the plaintiff’s unlawful or inequitable conduct. See In re Jim Walter Homes, Inc., 207 S.W.3d 888, 889 (Tex. App. – Houston [14th Dist.] 2006, orig. proceeding). Unclean hands does not apply when the conduct is unrelated to the transaction in dispute. See Lazy M Ranch, Ltd. v. TXI Opers., LP, 978 S.W.2d 678, 683 (Tex, App. – Austin 1998, pet. denied).
Laches is an equitable doctrine preventing a plaintiff from asserting a claim because of a lapse of time. See Bluebonnet Sav. Bank v. Grayridge Apt. Homes, Inc., 907 S.W.2d 904, 912 (Tex. App. – Houston [1st Dist.] 1995, writ denied). There are two essential elements of laches: (1) unreasonable delay by one having legal or equitable rights in asserting them; and (2) a good faith change of position by another to her detriment because of the delay. See Willis v. Donnelly, 118 S.W.3d 10, 39 (Tex. App. – Houston [14th Dist.] 2003), rev’d on other grounds, 199 S.W.3d 262 (Tex. 2006). Laches will only bar an action on which limitations has not run to prevent a “grave injustice.” See Caldwell v. Barnes, 975 S.W.2d 535, 538 (Tex. 1998).
FAILURE OF CONDITION PRECEDENT
A “condition precedent” to a contract is an act or event that must occur before the defendant is required to perform its own obligation. See Solar Applications Eng’g v. T.A. Oper. Corp., 327 S.W.3d 104, 108 (Tex. 2010). If the plaintiff is required to perform before the defendant is obligated to perform, the plaintiff must establish it satisfied every condition precedent under the contract before it can sue on the contract. See id. Do you have questions about preparing or interpreting real estate contracts?
To prove fraud by nondisclosure, a party asserting the claim must establish that:
(1) The other party concealed or failed to disclose material information related to the transaction in question. See Bradford v. Vento, 48 S.W.3d 749, 754-55 (Tex. 2001);
(2) The other party was deliberately silent when it had a duty to speak. See id.; see also Solutioneers Consulting, Ltd. v. Gulf Greyhound Partners, 237 S.W.3d 379, 385 (Tex. App. – Houston [14th Dist.] 2007, no pet.).
(3) The other party knew the party asserting the claim was ignorant of the facts and did not have an equal opportunity to discover the truth. See Bradford, 48 S.W.3d at 754;
(4) The other party intended that the party asserting the claim rely on the omission or concealment. See Sears, Roebuck & Co. v. Meadows, 877 S.W.2d 281, 282 (Tex. 1994);
(5) The party asserting the claim did, in fact, rely on the omission or concealment. See Schlumberger Tech. v. Swanson, 959 S.W.2d 171, 181 (Tex. 1997); and
(6) The omission or concealment caused injury to the party asserting the claim. See Bradford, 48 S.W.3d at 754-55.
FAILURE OF CONSIDERATION
Failure of consideration occurs when, because of a supervening cause, the plaintiff does not perform a condition precedent to the defendant’s duty to perform. See Burges v. Mosley, 304 S.W.3d 623, 628 (Tex. App. – Tyler 2010, no pet.). Only a substantial failure of consideration will discharge the defendant’s duty to perform. See Carter v. PeopleAnswers, Inc., 312 S.W.3d 308, 312 (Tex, App. – Dallas 2010, no pet.).
NON EST FACTUM
Latin for “it is not my deed,” a plea of non est factum is the archaic pleading form denying the execution of an instrument sued on. Black’s Law Dictionary (9th ed. 2009).
An affirmative defense denying the authenticity of a signature. See Gold’s Gym Franchising LLC v. Brewer, 400 S.W.3d 156, 161 (Tex. App. – Dallas 2013, no pet.).
INCOMPETENCE / LACK OF CAPACITY
It is a longstanding rule of law that a contract made with a person who lacks mental capacity is voidable. See Missouri Pac. R.R. v. Brazzil, 10 S.W. 403, 406 (Tex. 1888). A person executing a contract lacks mental capacity when she does not have sufficient mind or memory to understand the nature or effect of her act at the time the contract is executed. See Anderton v. Green, 555 S.W.3d 361, 371 (Tex. App. – Dallas 2018, no pet.). Expert testimony is usually not required to establish mental incapacity. See id.
WANT OF DELIVERY / ALELGED GIFT DEED
Section 5.021 of the Texas Property Code requires that a conveyance of land be in writing and delivered by the conveyor. See TEX. PROP. CODE § 5.021. Delivery occurs when the grantor places the deed within the control of the grantee with the intention that the instrument become operative as a conveyance. See Chambers v. Equity Bank, 319 S.W.3d 892, 900 (Tex. App. – Texarkana 2010, no pet.).
ESTOPPEL / EQUITABLE ESTOPPEL
Estoppel prevents a party from asserting or denying rights, claims, or matters of fact contrary to or inconsistent with previous allegations, admissions, denials, or acts of the party. See Kramer v. Kastleman, 508 S.W.3d 211, 217 (Tex. 2017). The elements of a defense of equitable estoppel are:
(1) The plaintiff made a false representation to, or concealed a material fact from, the defendant;
(2) The plaintiff intended that its representation or concealment be acted on;
(3) The plaintiff knew or had the means of knowing the real facts;
(4) The defendant neither knew nor had the means of knowing the real facts; and
(5) The defendant relied on the representation or concealment to its detriment.
See Shields L.P. v. Bradberry, 526 S.W.3d 471, 486 (Tex. 2017). To have detrimentally relied on the plaintiff’s representation, the defendant must have shifted from a better position to a worse position based on the representation. See Vessels v. Anschutz Corp., 823 S.W.2d 762, 765 (Tex. App. – Texarkana 1992, writ denied).
Waiver is an intentional relinquishment of a known right and is either made expressly or indicated by conduct that is inconsistent with an intent to claim the right. See Shields L.P. v. Bradberry, 526 S.W.3d 471, 485 (Tex. 2017). The plaintiff’s intent is the primary factor in determining wavier, and in the absence of a clear intent expressed in words, acts, or conduct, waiver will be implied only to prevent fraud or inequitable consequences. See Stowers v. Harper, 376 S.W.2d 34, 40 (Tex. App. – Tyler 1964, writ ref’d n.r.e.); see also Yazdani-Beioky v. Sharifan, 550 S.W.3d 808, 837 (Tex. App. – Houston [14th Dist.] 2018, pet. denied).
ADVERSE DOMINATION DOCTRINE
The adverse domination doctrine is a common law doctrine used to toll limitations on a corporate action while the corporation is controlled by those culpably involved in the wrongful conduct on which the action is based. See FDIC v. Henderson, 61 F.3d 421, 425-26 (5th Cir. 1995). The only Texas case applying the doctrine confirms its application only to the context of corporate action. See Allen v. Wilkerson, 396 S.W.2d 493 (Tex. Civ. App. – Austin 1965, writ ref’d n.r.e.).
If you need any assistance on settling a fraudulent or forged deed, call a board-certified attorney at The Weaver Law Firm. Our business and real estate lawyers work to keep our clients informed. You are invited to reach us if you have any questions at 713-572-4900.