Bobbie White v. Josefino Bencomo III

• Court: Court of Appeals of Texas
• Decided: March 20, 2015
• Docket: 03-14-00812-CV
• Status: Published

Opinion

ACCEPTED 03-14-00812-CV 4579155 THIRD COURT OF APPEALS AUSTIN, TEXAS 3/20/2015 12:21:58 PM JEFFREY D. KYLE CLERK CAUSE NO. 03-14-00812-CV

IN THE COURT OF APPEALS FILED IN 3rd COURT OF APPEALS FOR THE AUSTIN, TEXAS RD 3 JUDICIAL DISTRICT OF TEXAS 3/20/2015 12:21:58 PM AUSTIN, TEXAS JEFFREY D. KYLE Clerk __________________________________________________________________

BOBBIE WHITE, Appellant,

VS.

JOSEFINO BENCOMO III, Appellee __________________________________________________________________

APPELLANT’S BRIEF

From the District Court, 26th Judicial District of Williamson County, Texas Trial Court Cause No. 14-0374-C26, The Honorable Donna King, Judge __________________________________________________________________

/s/ Tony Pitts ______________________________ Tony Pitts State Bar No. 24060429

Law Office of Tony A. Pitts P.O. Box 5369 Round Rock, TX 78683 512.825.5545 512.244.4355 (Fax) tapitts@taplawfirm.com

ATTORNEY FOR APPELLANT I.

IDENTITY OF PARTIES AND COUNSEL

The following is a list of all parties and all counsel in this matter:

Appellant in this matter is Bobbie White. The attorney representing

Appellant is:

Tony A. Pitts, Esq. Law Office of Tony A. Pitts P.O. Box 5369 Round Rock, TX 78683 512.825.5545 512.244.4355 (Fax) tapitts@taplawfirm.com

Appellee in this matter is Josefino Bencomo III. The attorneys representing

Appellee are:

Fred Walker Kimberly Nash Fred E. Walker, P.C. 609 Castle Ridge Road, Ste. 220 Austin, TX 78746 512.330.9977 512.330.1686 (Fax) fred@fredwalker.com knash@fredwalker.com

ii

II.

TABLE OF CONTENTS

I. IDENTITY OF PARTIES AND COUNSEL ………...………….. ii

II. TABLE OF CONTENTS ………………….…………iii

III. INDEX OF AUTHORITIES …………………………… iv

IV. STATEMENT OF THE CASE …………………………..… 1

V. STATEMENT REGARDING ORAL ARGUMENT .……………… 2

VI. ISSUES PRESENTED ……………………… 2

VII. STATEMENT OF THE FACTS ……………………… 3

VIII. SUMMARY OF THE ARGUMENT ………………………. 5

VIII. ARGUMENT AND AUTHORITIES ………………………. 5

A. The Warranty Deed with Vendor’s Lien Keeps the Contract Executory. ...………………………5 B. The Deed of Trust Did Not Cure the Contract of Being Executory… 7 C. Appellee’s Interpretation of Subchapter D Undermines Its Intended Purpose. ………………………………… 9 D. The Trial Court Ordered Relief Not Requested in Appellee’s Motion …………………………...…10

IX. PRAYER ……………………………...11

X. CERTIFICATE OF COMPLIANCE ……………………………...12

XI. VERIFICATION ……………………………...12

XII. CERTIFICATE OF SERVICE ………………..…………… 13

XIII. APPENDIX ……..……………………... 14

iii

III.

INDEX OF AUTHORITIES

A. TEXAS STATUTES

Tex. Prop. Code § 5.062 ………….…………………………. 1

Tex. Prop. Code § 5.063 – 5.066 …………………………………….. 9

Tex. Prop. Code § 5.069 …………………………………….10

Tex. Prop. Code § 5.077 …………………………………….. 1

Tex. Prop. Code § 5.081 …………………………………….. 8

B. TEXAS CASE LAW

Norton v. Norton, No. 07-08-0469-CV, at *4 (Tex.App.—Amarillo 2010, mem. op.). ….…………………… 5

Cowden v. Bell, 293 S.W.2d 611, 614 (Tex.App.—San Antonio 1956), aff’d 300 S.W.2d 286 (Tex. 1957). ………………..……… 6

Zapata v. Torres, 464 S.W.2d 926, 928 (Tex.App.—Dallas 1971, no pet.)………. 6

Walton v. First Nat’l Bank of Trenton, 956 S.W.2d 647, 651 (Tex.App.— Texarkana 1997, writ denied). ……..………………… 6

Shook v. Walden, 368 S.W.3d 604, 624 (Tex.App.—Austin 2012, writ denied)…. 6

Riner v. Newman, 353 S.W.3d 312, 318 (Tex.App.—Dallas 2011, no pet.) ……... 7

Flores v. Millenium Interests, Ltd., 185 S.W.3d 427, 435 (Tex. 2005) ……………7

Epco Holdings, Inc. v. Chicago Bridge & Iron Co., 325 S.W.3d 265, 270 (Tex.App.—Houston [14th Dist.] 2011, pet. dismissed). ……...……..… 10

G&H Towing Co. v. Magee, 347 S.W.3d 293, 297 (Tex. 2011)………………… 10

iv

IV.

STATEMENT OF THE CASE

This case involves a pure question of law concerning Subchapter D of the

Texas Property Code. There are no material facts in dispute between the parties,

not even as to damages claimed.

It is uncontested that Appellant and Appellee were parties to a real estate

transaction that had all the characteristics of an executory contract for conveyance

of real property as defined under Tex. Prop. Code § 5.062. The parties, however,

disagreed as to whether a Warranty Deed with Vendor’s Lien wherein superior title

to the subject property was retained, coupled with a Deed of Trust, caused the

executory contract for conveyance to no longer be executory.

After hearing competing motions for summary judgment, the trial court

ruled in favor of Appellee, finding that a Warranty Deed with Vendor’s Lien and

Deed of Trust did operate to make the executory contract no longer executory.

Appellant contends that the Court’s ruling in this regard is erroneous, unsupported

by the law, and threatening of the important policy considerations underlying

Subchapter D.

Appellant respectfully requests that this Court reverse the trial court ruling,

and render judgment in favor of Appellant for the relief requested in her summary

judgment motion, including an award of damages under Tex. Prop. Code § 5.077.

V.

STATEMENT REGARDING ORAL ARGUMENT

Appellant is not specifically requesting oral argument. However, oral

argument may aid the Court’s decisional process by providing the Court with an

appreciation of the parties’ conflicting interpretations of Subchapter D of the Texas

Property Code, and the important policy considerations behind it, as they pertain to

this particular set of facts.

VI.

ISSUES PRESENTED

Does a warranty deed with vendor’s lien convey sufficient title to bring an

executory contract for conveyance of real property out from under the applicability

of Subchapter D of the Texas Property Code?

If not, does Appellee have an obligation to comply with the provisions of

Subchapter D of the Texas Property Code in his dealings with Appellant, and is she

entitled to damages under Tex. Prop. Code § 5.077 for his past failure to do so?

VII.

STATEMENT OF FACTS1

7.1 Mrs. White and her husband, George White, purchased the residential

real property located at 701 Saunders Dr., Round Rock, TX 78664 (the “House”),

from Josefino Bencomo III in November 2001. The House was to be used as their

permanent residence. The Whites and Bencomo were not related.

7.2 The agreed upon purchase price of the House was $118,000.00. To

purchase the House, the Whites took out a mortgage with Long Beach Mortgage

Company for $82,600.00, who acquired a primary purchase money mortgage lien

on the House. This mortgage and its corresponding lien was subsequently assigned

to JPMorgan Chase Bank, N.A. (“Chase”). The Whites also executed a Real Estate

Lien Note for $35,400.002 and Deed of Trust3 in favor of Bencomo, who obtained

a purchase money mortgage lien on the House secondary to Chase’s lien.

7.3 Bencomo conveyed the House to the Whites via Warranty Deed with

Vendor’s Lien4, wherein he retained superior title to the House over that of the

Whites until his lien was satisfied. The Whites thereafter began paying the

purchase money mortgages as agreed.

These facts are not disputed. See Exhibit G – Reporter’s Official Transcript – Hearing on Motions For Summary Judgment at 9-10; see also Plaintiff’s Motion for Summ. Judg. at 2-3. 2

See Appendix – Exhibit C.

See Appendix – Exhibit D.

See Appendix – Exhibit B.

7.4 Mrs. White lost her husband unexpectedly in December 2003.

Thereafter, she had considerable difficulty paying the mortgages. Chase worked

with Mrs. White to modify its mortgage loan so she and her family could afford to

stay in the House. Mrs. White reached out to Bencomo to lower his interest rate as

well, but he refused.

7.5 Over the years, and despite several requests, Bencomo never provided

Mrs. White with any statements showing the status of her account with him, nor

did he give her any mortgage interest statements like those she received from

Chase, which she could use as a write-off on her federal income tax return.

7.6 When Mrs. White approached Bencomo about these concerns, she

found him unwilling to provide her with annual or mortgage interest statements.

Given his refusal to account for her payments or give her mortgage interest

statements for her taxes, Mrs. White stopped making payments to Bencomo in

2008. By then, she had already made at least 72 monthly payments to Bencomo.

VIII.

SUMMARY OF THE ARGUMENT

Appellant argues that a seller’s granting of a warranty deed with vendor’s

lien to a purchaser, which, on its face, is an executory contract for conveyance of

real property, does not defeat the applicability of Subchapter D of the Texas

Property Code to a real estate transaction described under Tex. Prop. Code § 5.062.

Furthermore, to find that it does undermines Subchapter D’s important policy

considerations and renders the statute ineffective towards serving its intended

purpose by permitting a seller to sidestep the duties and responsibilities thereunder

imposed for a purchaser’s protection.

IX.

ARGUMENTS AND AUTHORITIES

A. The Warranty Deed With Vendor’s Lien Keeps the Contract Executory.

The Parties do not dispute that Subchapter D applies to contracts for deed,

which are clearly executory contracts for conveyance of real property to which

Subchapter D was meant to apply. However, a warranty deed with vendor’s lien,

wherein superior title to the property is retained, has the same legal effect as a

contract for deed. See Norton v. Norton, No. 07-08-0469-CV, at *4 (Tex.App.—

Amarillo 2010, mem. op.). Moreover, a warranty deed with vendor’s lien has for

decades been recognized in Texas jurisprudence as an executory sale of real

property where title remains in the seller. Cowden v. Bell, 293 S.W.2d 611, 614

(Tex.App.—San Antonio 1956), aff’d 300 S.W.2d 286 (Tex. 1957) (reservation of

express vendor’s lien is an executory sale with title still in vendor); Zapata v.

Torres, 464 S.W.2d 926, 928 (Tex.App.—Dallas 1971, no writ) (where vendor

reserves lien in deed, contract is executory and superior title remains in vendor);

Walton v. First Nat’l Bank of Trenton, 956 S.W.2d 647, 651 (Tex.App.—

Texarkana 1997, writ denied) (superior title is held by vendor with express lien and

vendee has mere equitable right to acquire title by carrying out the agreement).

Appellee’s adverse contention that actual title is conveyed by and through a

Warranty Deed With Vendor’s Lien is unsupported at law. Rather, as applied to

the facts at issue, the law would clearly find that Appellee retained title to the

property without the obligation of transference until such time as the note secured

by Appellee’s lien was fully repaid in installments over a number of years. This is

the very definition of an executory contract for conveyance of real property as used

by the legislature in Subchapter D of the Texas Property Code. Shook v. Walden,

368 S.W.3d 604, 624 (Tex.App.—Austin 2012, writ denied) (legislature

contemplated “executory contract” to be synonymous with contract for deed,

where a purchaser satisfies a series of obligations over an extended period of time

before seller is obligated to transfer title). Therefore, the real estate transaction

between the Parties was unquestionably executory and Subchapter D should apply,

as the requisites for applicability under Tex. Prop. Code § 5.062 were met.

B. The Deed of Trust Did Not Cure the Transaction of Being Executory.

Appellee attempts to make the fact that there exists a Deed of Trust between

the Parties somehow establish that they have a conventional mortgage relationship,

and not an executory one. This is erroneous for two primary reasons: 1) the Deed

of Trust fails to cure the transaction of being executory, since title still has not been

conveyed; and 2) almost none of the protections found in a conventional mortgage

relationship exist in the relationship between the Parties. “Black’s Law Dictionary

defines deed of trust as ‘[a] deed conveying title to real property to a trustee as

security until a grantor repays a loan,’ and it goes on to remark, ‘This type of deed

resembles a mortgage.’” Riner v. Newman, 353 S.W.3d 312, 318 (Tex.App.—

Dallas 2011, no writ). Texas courts have described a deed of trust more simply as

“a mortgage with power to sell on default.” Id. A deed of trust empowers the one

to whom the property is conveyed in trust to sell and convey the property in a

foreclosure sale if the grantor defaults. Id. at 319. Deeds of trust were commonly

found in conventional mortgage transactions, where the seller conveyed full title of

a subject property to the buyer and the buyer, in turn, conveyed said interest to a

trustee, in trust, to secure its loan to the lender. See Flores v. Millenium Interests,

Ltd., 185 S.W.3d 427, 435 (Tex. 2005) (Wainwright, J., concurring op.) (observing

in traditional mortgage, legal title is conveyed upon closing). Deeds of trust

enabled mortgagees to foreclose by nonjudicial means upon mortgaged property

and sell such property at auction if the mortgagor defaulted on the underlying loan.

Deeds of trust, therefore, contemplate that the buyer is encumbering full title to the

subject property, with nothing remaining in the seller. Indeed, the conveyance of

full title to the property from a seller to a purchaser, subject to a deed of trust, is a

condition precedent of Tex. Prop. Code § 5.081’s provision that an executory

contract can be converted in such a way that it is no longer executory. See Tex.

Prop. Code § 5.081. However, where a seller retains superior title until the debt is

paid and actual title is not conveyed to the purchaser, they contract remains

incomplete and executory; and it is incongruous to maintain that such a purchaser

can encumber title with the making of a deed of trust.

Secondly, in the conventional mortgage industry, the lender was usually a

financial institution, such as a bank. Such institutions typically provide their

mortgagors with monthly accounting of the status of their loan and, in some cases,

even offer deferments. Mortgage assistance and modification programs are also

available through banks. Mortgagors participating in this system are generally

always aware of the current status of their contractual relationship with their

mortgagees. Conversely, Appellee admits that he never provided Appellant with

any accounting of the payments she made to him over the first seven (7) years after

she purchased the property, despite her repeated requests for accountings.

Moreover, after she stopped paying him because he refused to give her any

accounting, she heard nothing from him for another five (5) years before he finally

made demand and sought to foreclose on the property. Hence, for the majority of

its existence, Appellant has been unaware of the status of her contractual

relationship with the Appellee. Yet, Appellee maintains that it is a just result that

Appellant be accorded fewer rights than those granted to persons protected under

Subchapter D of the Texas Property Code, who are entitled to at least entitled to

annual accounting of the status of their account under Tex. Prop. Code § 5.077.

Appellant contends that Subchapter D was enacted to institute in owner-financing

arrangements some of the protections found in the conventional mortgage industry.

Indeed, although Appellee is not expected to mirror the thoroughness and

frequency of accountings Appellant receives from Chase, he is expected to meet

the minimal accounting requirements under § 5.077.

C. Appellee’s Interpretation of Subchapter D Undermines Its Intended Purpose.

Recognizing the abuses taking place in the owner-financing industry,

particularly in Las Colinas, the Texas Legislature, in enacting Subchapter D,

determined to hold owner-sellers to something akin to the standards enjoyed by

those in the traditional mortgage industry. It granted those buyers in owner-

financing situations the right to notice and an opportunity to cure any default (§§

5.063-65), equity protection (§ 5.066), disclosures from the seller (§ 5.069), and

annual statements of account (§ 5.077); items already enjoyed by their

conventional mortgage counterparts. If owner-sellers could avoid applicability of

Subchapter D by simply having buyers execute a real estate lien note and deed of

trust, while still not conveying actual title, the whole purpose of the statute could

be easily avoided and Subchapter D rendered meaningless. A court should not

adopt a construction of a statutory provision that renders it meaningless. See Epco

Holdings, Inc. v. Chicago Bridge & Iron Co., 325 S.W.3d 265, 270 (Tex.App.—

Houston [14th Dist.] 2011, pet. dismissed). By arguing that Subchapter D does not

apply to transactions involving real estate lien notes secured by deeds of trust,

where title is still withheld pending satisfaction of a series of obligations over an

extended period of time, Appellee is espousing a loophole that the statute does not,

and this Court should not, recognize.

D. The Trial Court Ordered Relief Not Requested in Appellee’s Motion.

Appellant hereby objects to the trial court’s ruling to the extent that it grants

relief to Appellee that was not requested in his Motion for Summary Judgment on

Pleadings. A summary judgment on a claim not addressed in the motion is

generally reversible error. G&H Towing Co. v. Magee, 347 S.W.3d 293, 297 (Tex.

2011). Specifically, the trial court ordered that the Notice of Lis Pendens that

Appellant filed during the pendency of this action is void and of no effect. A

finding for this relief was not requested in Appellee’s Motion and should not have

been ruled upon by the trial court. Appellant therefore requests that this Court

reverse this relief and vacate this portion of trial court’s summary judgment order.

X.

PRAYER

WHEREFORE, Appellant prays that this Court reverse the entirety of the

trial court’s grant of summary judgment to Appellee and render judgment in favor

of Appellant on her Motion for Summary Judgment, which includes an award of

damages under Tex. Prop. Code § 5.077; and order such other and further relief to

which Appellant may be justly entitled.

Respectfully submitted,

LAW OFFICE OF TONY A. PITTS

/s/ Tony Pitts By: _________________________ Tony Pitts State Bar No. 24060429

P.O. Box 5369 Round Rock, TX 78683 512.825.5545 512.244.4355 tapitts@taplawfirm.com

ATTORNEY FOR APPELLANT, BOBBIE WHITE

XI.

CERTIFICATE OF COMPLIANCE

I hereby certify that there are 1,961 words in this Appellant's Brief, excluding those words exempted by T.R.A.P. 9.4(i)(l).

Isl Tony Pitts

Tony Pitts

XII.

VERIFICATION

I swear under oath that the factual allegations in the Appellant's Brief are

supported by competent evidence included in the Appendix.

.t~tm~~,,~ GRACE ALVAREZ !'~;~~\ Notary Public, State of Texas ;~J.\{..:.. § My Commission E1

XIII.

CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of this Petition for Writ of Mandamus was served in accordance with Rule 9.5 of the Texas Rules of Appellate Procedure on each party, or the attorney for such party, indicated below:

Fred Walker Kimberly Nash Fred E. Walker, P.C. 609 Castle Ridge Road, Ste. 220 Austin, TX 78746 512.330.1686 (Fax) fred@fredwalker.com knash@fredwalker.com Attorneys for Appellee

/s/ Tony Pitts ____________________________________ Tony Pitts

XIV.

APPENDIX

Exhibit A: Final Summary Judgment – being appealed from.

Exhibit B: Warranty Deed with Vendor’s Lien.

Exhibit C: Real Estate Lien Note.

Exhibit D: Deed of Trust.

Exhibit E: Text of Tex Prop. Code §§ 5.062 – 5.066, 5.069, 5.077, and 5.081.

Exhibit F: Plaintiff’s Motion for Summary Judgment.

Exhibit G: Recorder’s Official Transcript – Hearing on Motions for Summary Judgment at 4-5, 9-10.

Exhibit H: Plaintiff’s Motion for Reconsideration.

EXHIBIT A atJ-:f~l~k_QM NO. 14-0374-C26 ~ SEP262014 ?f BOBBIE WHITE ~ IN THE DISTRICT co~ ~ Plaintiff, ~ Dlatrlct Clerlc, Wlfffameon Co.. TX v. § 26TH JUDICIAL DISTRICT § JOSEPHINO BENCOMO III § Defendant, § OF WILLIAMSON COUNTY, TEXAS

FINAL SUMMARY JUDGMENT

On August 12, 2014, the Court heard Plaintiff Bobbie White's Motion for Final Summary

Jud&ment and Defendant Josephina Bencomo lll's Motion for Summary Judgment on Pleadings.

Plaintiff and Defendant both appeared through their respective attorneys of record.

The Colltt has considered the pleadings and official records on file in this cause, the

evidence, and the arguments of counsel. The Court finds (1) there is no genuine issue about any

material fact; (2) Plaintiffs Motion for Summary Judgment is not meritorious and should be

DENIED; (3) Defendant's Motion for Summary Judgment on the Pleadings is meritorious and

should be GRANTED; and (4) Defendant is entitled to judgment as a matter oflaw.

I'f lS THEREPORE ORDERED that Plaintiffs Motion for Summary _1,1dgmcnt is

DENTED.

IT IS FURTHER ORDERED that Defendant's Motion for Summary Jud!:,>rnent on

Pleadings is GRANTED and all claims and causes of action against said Defendant are hereby

DENIED.

IT IS FURTHER ORDERED that Plaintiff Bobbie White shall take nothing against

Defendant Josephino Bencomo Ill.

IT IS FURTIIER ORDERED the Notice of Lis Pcndcns filed April 16, 2014 pertaining to

the real property described below and recorded as Instnunent Number 2014026975 in the Official

Envelope# 2556759 Public Records of Williamson County Texas is of not force and effect and is hereby canceled and

revoked:

Lot 7, Block "A", of THE SETTLEMENT - SECTION ONE, an addition in and to the

City of Round Rock, in Williamson County, Texas, according to the map or plat recorded in Cabinet

F, Slides 78-79, Plat Records, Williamson County,, Texas, with a local address of 701 Saunders

Drive, Round Rock, Texas 78664.

All relief requested in this case not expressly granted is denied. This judgment finally

disposes of all parties and all claims and is appcalablc. ~ SIGNED on September /2), °2014.

APPROVED AS TO FORM ONLY:

Isl Fred E. Walker Fred E. Walker Attorney for Defendant Josephino Bencomo Email: I'red@fredwalkerlaw.com 609 Castle Ridge Road, Suite 220 Austin, TX 78746 Tel. (512) 330-9977 Fax. (512) 330-1686

Isl Tony A. Pitts Tony A. Pitts Attorney for Bobbie White PO Box 5369 Round Rock, TX 78683 Email: tapitts@taplawfirm.com Tel. 512-825-5545 Fax. 512-244-4355 EXHIBIT B Cir:·() , · ,1 ., ; 1:!Ji Georgetown Title Company, Inc. " 0 10 , tf,lt ~to· f F Cfto #- f.Z, CA5lj{)2--~ O I O cf-f} 7;-JV' .. -. WARRANTY DEED WITH VENDOR'S LIEN

Date: November 21, 2001

Grantor: JOSEFINO BENCOMO, Ill, owning, occupying and claiming other property as homestead

Grantor's Mailing Address (including county): 4229 Boy Scout Lane, El Paso, El Paso County, Texas 79922 -.:r '.'·4 Grantee: BOBBIE WIDTE and husband, GEORGE WIDTE '1' :0 Grantee's Mailing Address (including county): 701 Saunders Drive, Round Rock, Williamson County, Texas 78664 :0 :J Fl :J Consideration: TEN AND N0/100 DOLLARS ($10.00) and other valuable consideration, and the further consideration of O (i) the execution and delivery of Grantee's one certain promissory note dated of even date, in the principal ="4 sum of $82,600.00, payable to the order of LONG BEACH MORTGAGE COMPANY, in monthly installments and bearing interest as therein provided, containing the usual clauses providing for acceleration of maturity and for attorney's fees and secured by a first, primary and superior vendor's lien retained in this deed and by a first, primary and superior deed of trust of even date from Grantee to TROY GOTSCHALL, Trustee, and (ii) the execution and delivery of Grantee's one certain promissory note of even date herewith, in the principal sum of $35,400.00, payable to the order of Granter in monthly installments and bearing interest as therein provided, containing the usual clauses providing for acceleration of maturity and for attorney's fees and secured by a second, subordinate and inferior vendor's lien retained in this deed and by a second, subordinate and inferior deed of trust of even date from Grantee to LARRY MOLINARE, Trustee.

Property (including any improvements): Lot 7, Block "A", of THE SETTLEMENT - SECTION ONE, an addition in and to the City of Round Rock, in Williamson County, Texas, according to the map or plat thereof recorded in Cabinet F, Slides 78­ 79, Plat Records, Williamson County, Texas.

Reservations from and Exceptions to Conveyance and Warranty: This conveyance is expressly made and accepted subject to all valid and subsisting easements, restrictions, reservations, covenants and conditions relating to said Property, to the extent the same are valid and enforceable against said Property, as same are shown by instruments filed of record in the office of the County Clerk of Williamson County, Texas.

Grantor, for the consideration and subject to the reservations from and exceptions to conveyance and warranty, GRANTS, SELLS, and CONVEYS to Grantee the property, together with all and singular the rights and appurtenances thereto in any wise belonging, TO HAVE AND HOLD it to Grantee, Grantee's heirs, executors, administrators, successors, or assigns forever. Granter binds Grantor and Grantor's heirs, executors, administrators, and successors to WARRANT and forever DEFEND all and singular the property to Grantee and Grantee's heirs, executors, administrators, successors, and assigriS against every person whomsoever lawfully claiming or to claim the same or any part thereof, except as to the reservations from and exceptions to conveyance and warranty.

The Vendor's lien against and superior title to the property are retained until each note described is fully paid

'Varranty Deed \Vith Vendor 1s Lien Page 1 of2 GF# 01084646/PF/mmipn . ,,

.·according to its tenns, at which time this deed shall become absolute. To the extent of $82,600.00, LONG BEACH MORTGAGE COMPANY, at Grantee's request, has paid in cash to Grantor that portion of the purchase price of the property that is evidenced by the $82,600.00 note described above, which note is secured by a vendor's lien on the property, which lien is transferred to that party without recourse on Grantor. It is hereby expressly agreed that the said $35,400.00 note and'all liens securing the payment of same are second, subordinate, and inferior to the said $82,600.00 note and all liens securing the payment of same and to any and all renewals and extensions thereof.

By acceptance of this Deed, Grantee assumes payment of all real and personal property taxes on the Property for the year 2001 and subsequent years.

When the context requires, singular nouns and pronouns include ~e plural.

'<::::;;1 ~ - 'fi 0 JL roSEfrnOJ3BNcoMo, rn...._ THESTATEOFTEXAS § § COUNTY OF ELPASO§

' This instrument was acknowledged before me on the 27TH day of November, 2001, by.IOSEFlNO BENCOMO, rn.

NOTARY PUBLIC Notary Public, State of Texas In and forth! State ofTws My commlislon expires MY COMMISSION EXPIRES: JULY 31, 2004 07·31·2004 DAVID A. ACUNA .. (l?r,inted nam~ of Notary)

~niQ; ·-~_i.~ i

Oieor0n +'E>o bb1c: ltJh"l k FILED AND RECORDED 'Cf \ OFFICIAL PUBLIC RECORDS tOl 5>flU{)ja,rS !Or, ~at '£t;ct, w,, rBtoto ~ 1 ,,J~e~v..tM- 11_30_2001 03:40 PM 20010884'?4 ANDERSON $11.00 NANCY E. RISTER ,COUNTY CLtRK l4ILLIAMSON COUNTY, TEXA"

\Varranty Deed with Vendor 1s Lien Page2 of2 GF# 01084646/PF/mmlpn

CIH Georgetown Title Co., Inc. EXHIBIT C I I REAL ESTATE LIEN NOTE

Maker: BOBBIE WHITE and husband, GEORGE WHITE ' . ' Maker's Mailing Address (including County): 701 Saunders Drive, Round Rock, Williamson County, Texas 78664

Payee: JOSEFINO BENCOMO, III

Place for payment (including County): 4229 Boy Scout Lane, El Paso, El Paso County, Texas 79922

Principal Amount: THIRTY-FNE THOUSAND FOUR HUNDRED AND N0/100 DOLLARS ($35,400.00) \ Annual Interest Rate on Unpaid Principal from date: Ten percent (10%)

Annual Interest Rate on Matured, Unpaid Amounts: Eighteen percent (18%)

Terms of Payment (PrincJpal and Interest): Principal and interest shall be due and payable in monthly installments of Three Hundred Eighty and 41/100 ($380.41) Dollars or more, payable on the 1st day of each and every month, heginning on January 1, 2002, and continuing regularly and monthly thereafter until December l, 2017, when the entire amount hereof, principal and interest then remaining unpaid, shall be then due and payable; interest being calculated on the unpaid principal to the date of each installment paid and the payment made credited first to the Oischarge of the interest accrued and the balance to the reduction of the principal. · · o

Maker reserves the right to prepay this note in any amount at any time prior to maturity without penalty.

Maker shall pay to Note holder a late charge of five percent (5 %) of any monthly installment not received by the Note holder by the eighth (8th) day of each month that an installment is due.

SECURITY FOR PAYMENT: A Vendor's Lien expressly retained in deed of even date herewith executed by JOSEFINO BENCOMO, III to the Makers hereof upon the herein described real property and is additionally secured by a Deed of Trust to LARRY MOLINARE, Trustee, upon the following described real property, to-wit: Lot 7, Block "A", of THE SETTLEMENT - SECTION ONE, an addition in and to the City of Round Rock, in Williamson County, Texas, according to the map or plat thereof recorded in Cabinet F, Slides 78­ 79, Plat Records, Williamson County, Texas.

The liens securing the payment of this note shall be and remain secondary and inferior to the liens securing that one certain promissory note in the original principal amount of $82,600.00, dated of even date, executed by BOBBIE WHITE and husband, GEORGE WHITE and payable to the order of LONG BEACH MORTGAGE COMPANY.

Maker promises to pay to the order of Payee at the place for payment and according to the terms of payment the principal amount plus interest at the rates stated above. All unpaid amounts shall be due by the final scheduled payment date. If Maker defaults in the payment of this note or in the performance of any ob(igation in any instrument securing or collateral to it, and the default continues after payee gives Maker notice of the default and the time within which it must be cured, as may be required by law or by written agreement, then Payee may declare the unpaid principal balance and earned interest on thls note immediately due. Maker and each surety, endorser, and guarantor waive all demands for payment,

Real Estate Lien Note

Page 1 of2

GF# 01084646/PF/mm/pn ('

presentations for payment, notices of intention to accelerate maturity, notices of acceleration of maturity, protests, and notices of protest, to the extent pennitted. by Jaw.

If this note or any instrument securing or collateral to it is given to an attorney for collection or enforcement, or if suit is brought for collection or enforcement, or if it is collected or enforced through probate, bankruptcy, or other judicial proceeding, then Maker shall pay Payee all costs of collection and enforcement, including reasonable attorney's fees and court costs, in addition to other amounts due. Reasonable attorney's fees shall be 10% of all amounts due unless either party pleads otherwise.

Interest on the debt evidenced by this note shall not exceed the maximum amount of nonusurious interest that may be contracted for, taken, reserved, charged, or received under law; any interest in excess of that maximum amount shall be credited on the principal of the debt, or, if that has been paid, refunded. On any acceleration or required or pennitted prepayment, any such excess shall be canceled automatically as of the acceleration or prepayment or, if already paid, credited on the principal of the debt or, if the principal of the debt has been paid, refunded. This provision overrides other provisions in this and all other instruments concerning the debt. r '

Each maker is responsible for all obligations represented by this note.

When the context requires, singular nouns and pronouns include the plural.

~~

fl~#/L

Real Estate Lien Note Page 2 of2 GF# 01084646/PF/mmlpn EXHIBIT D EXHIBIT"J"

(

(I) (JI 0. Grantot: BOBBJE WHITE al!d husband, GEORGE WffiTE

'l) Gnmto~s Malling Address (inoludlnn county)!701 Saundorn Drive, Round Rook, Wllliamson County, Texas 18664 N '1 ()) Tnistee: LARRY MOLlNARE .t ~; 0) ·~·· O Trustee's MaillngAddicss (inch1ding county): 524 N. Lamar Blvd, 11200, Austin, Travis County, Texas 7870(

rl

0 1!.~ffi£fioffi'IY!'-"'l'8silF!No;gBNl':<'fM0;11f""'

N Benefioincy's Malling Address (inOllidu1g county): 4229 Boy Scout Lane, El Paso, El Paso County, T

Note(s) Effective Date: November 21)2001

Amount:THlRTY-F!Vll THOUSAND FOUR HUNDRED AND NO/fOIHJOLLARBi\~'.li'!OOiOO~

Maket: BOBJJD; WHITE nnd h\l.S\>and, GBORGE WHITE

Pay<": JOSBFINO BENCOMO, ID

FiMI Maturity Date: As stated in said note. " Tcrnis of Payment (op

Properly (inclutling any improvements):

Lot 71 Block 11 A0 , ofTHE SETI'LEMENT SECTION ONE, an addition iil and to the City of Round Roel; in y

Wiiiiamson County, Toms, accordiOg to tho m>p or pint thereof recorded in Cabinet!', Slides 78-79, Plat Records, Williarrison County, Texas.

Prlor Lien(s) (including recording informalion): This inslrumOnt shall be and remain secondary and inferior to tlte liens se~!i.~l§.1" B0Bl1Jl!~.]$ifill~1!101>ffil

lked of1'n.ut

l'af.'e.l or 4

GFi Ql~/oun/pn

----------------·--·

EXHIBIT"J"

Othor Exceptions to Conveyance and Wananty:

This convoyance ls expr<"ly mad• and ae<;

Por value received and to 5'cure payment oftlte note, G:tantor conveys the Property to Trustee in trust. Gtantor warrants and agrees to defend the tille lo the Property. JfGranlor perfomlS all the covenants and pays the Note according to its teJlllS, thls Deed ofTrust shall have no furth-er effect, andDeneficiary shall1¢leaso it at Grantol's expcnsi:.

Grantor's Obligations Granlor 3gtCes to: I. keep the Property in good repair and conditionj 2. pay all !Jlxcs and assessments on tlie PropertyvJtCn due; ., 3. preserve Ute lien's priority as it is estebtlsbed itt this Deed ofTrus~ 4. maintain, in a fonn accept.'ible t0Denefidary1 an }n.suamce policy that a. coven; al1 improvomcn~ for their full insurable valuo as. determined when the policy is hsued and icnc\ved1 unless Bencfiofa.ry appro\'es a smaller amount in writing; b. contains 2Jl 80% coinsurance clausej c. provides :!ire and extended covcraie, including wind.stonn coverage; d. protects Beneficiary with a standard mong01go clause; e. provide< t1ood lmmrence a< any time the Property is in a flood hazard area; and f. contains such other coverage as Beneficiary may reasonably require; 5. comply at a11 tinm with the requirements o( the 80% <;oinsurance clause; 6. deliver the !nsuiw1ce pu\iey 1o Beneficial)' and deliver renewals to Beneficiary at least 1cn days before expiration 7. keep any buildings occupied as required by the insurance policy; 8. if this ls not a fintlien, pay oll prior lien noteslha! Grantor is personallyliable to pay and abide by all prior lien instruments.

Beneficiary's RJghts 1. Beneficiary may i1ppoint ill writing a substitute Qr su~s.wr mist~. succeeding to all rights and 1esponsibilities ofTrustee.

2, lfthe proceeds of1he Now ate used to pay any debt secured by priot liens, Beneficiory is subrogated lo •It of

!he rights Ma liens ofU1e holders of any debt so paid.

3. Beneficiary lriay apply any proceeds n~wrved under the insurance policy either to reduce the Note or to repair

orreplae? damaged or destroyed irnprovemcnls ¢ov~red by th~ policy.

4. If Graotor fails to perfonn any of G1antor's Qbligations, Beneficiruy may perform those obligations and be

reimbursed by Granter on demand llf the place \vhere the Note is payable for any sums so paid, inc[uding attomoy's fees, plus

Interest on thoso sums from the dates of payment at the rn1e slated in the Nole for matuml, unpaid amounts. The sum to be reimbursed shall be secured by this Deed of Trust. 5. If Granto; defaults on the Note or fails to perfonn any of Granto~s obllgations or if default oocurs on a prior

Uen note O'C other IDstrume~ and th6 @fault continues after Beneficiary gives Grant.or notfoo of tM default aud the time within

which it must be cured, as lllllY be required by law or !>y writwn Mmmcn~ then Benefic!acy may:

a, declaretlte unpaid principal balance and camed interest on the Note lmmedia!oly due; b. toques! Trustco to foreclose lhfa lien, in which case llene!\ctacy or llenel!e!roys agent sh2U give

Dttd9i'I'nm P2.ge1of 4 GF1 ~1Wl6Wl'F/mmlpn EXHIBIT "J"

notice oftbe foreclosure wle as ptovided by the Texas Property Code as thetl amended; and c. purchase the Propmy al any foreclosure sale by offering the highest bid and then have the bid credited

Trustee's Duties Jf requested by Beneficiary to foreclose µ.is lien, Trustee shall: l. either personally C•r by agent give notice of the foreclosure sale as required by the Texas PropertyO>dc as then armnded; 2. sell and convey all or part of the Propet1y to the highost bidder for cash with a general warranty binding G

General Provisions l. If any of the Proferty is sold under !his Deed ofTrust, Grantor shall immediately surrender possession to the purchaser. Jf Grantor fails to do soJ Grantor {lhalt becotnc a tenant at sufferance of the purchaser, subject to an action for forcible detainer. z. Recitals in any TvJStec's deed conveying the Prnpcrty wiU be presumee lawfully seoured by this Deed ofTrmt, payments shall be applied first to discharge that portion. 6. Orantor assigns lo Beneficiary ail swm payable to or reoeived by Gm1tor from condemnation of all or part of the Prop

Deed. of'I'rust Pa~3o!4 GFJ l).1W464i$1I'i!trrunfpu EXHIBIT "J"

pcnnltted prep•)'llWnt, any such exc<'ss shall be canceled automatically as of tl~ acceleration or prq>a)'lllent or, lf akcady paid, credited on l11e principal of the deb·~ or, if thi; principal of the debt has been pai~ refunded. This provision overrides other provisions in this and all o!ber ins!nWoenls concerning the debt. 9. \Vhen tl1e context requires, sin~ar nouns and pronouns indude the plural. I0. The lerm note lnd11d" a\\ sums secured by Uris Deed ofTrust. 11. This Deed ofTrust shall bind, inure to the benefit of, and be exercised by successors in Interest ofall parties, 12. !fGrantor and Mal:er ue not the same pmon, the lettn Grantorshall include Maker.

l3. Grantorroprcsents that this Deed ofl'rost and the Note are given for the following p\llj)oses:

The indebtedness, the payt0

lf aU or any part of lho l'!opcrty is sold1 conve.yed1 leased for a period longer than three (3) years, leased \vith an option lo purclmse1 or otherwise soJd {including contract for deed), \vithout the prior written consent of Beneficiary, then the Beneficiary may, at his opti.on1 declare the outstandlng principal balance of the Note, pluS accrued futcre-st, to be immedfotl3-ly due and payable. The creation ofa subordinate lien. any sale thorem1der1 any deed under threat or order ofcondemnation. any conveyance so!e!y between Grantors, tlie passage of1itle by reason of the death of a Maker or by operation oflaw sball not be conslnled as a sale or conveyanco of tl1e Property. ·

Grantors shall furnish to Beneficiary, before the taxes become delinq_uent, copies of tax re-;eipts showing that all ta:.:es on lhe- Property have been paid. Graritors shall furnish to Beneficiary annually evidence- of currt:nt paid-up insurance naming

Benefie!aryas!ns11ted. ~-~~----------- B~IE WHITE~

~¥E TIUlSTJ\TEOFTEXAS § § COUNTY OF TRAVIS §

Tilis instrunwnt was acknowlecged before me on Novembor ~ 200! by BOBBIE WHITB and husband, GEORGE WHITE. {")

_\nl2'~tUYl-trk__Ll.!Utffl.~~~~-

(!J!i!1te~ '*rn; ofNolary)

l fIlrn ~NO REffi~~rn OFFICIAL PUBLIC RECORDS

~rt To· ,y.j~e~~.

Jo0e.,.ft f\O 'b~t\como JIL 11-30·'200'r"°'03:40 ANDERSON $15.00 p)\ 2001088<\26 Nf>IDY E. RISTER ,COUNTY CLERK 4'22. CJ 'f;ol.j Scout. lri · WILLIAllSOH COlltlTYo 1EXAS ~;:~ el fo,so { JY, 1<1'12..c GFI Qltl2#W!'Flrom!pn EXHIBIT E SUBCHAPTER D. EXECUTORY CONTRACT FOR CONVEYANCE

Sec. 5.062. APPLICABILITY. (a) This subchapter applies only to a transaction involving an executory contract for conveyance of real property used or to be used as the purchaser's residence or as the residence of a person related to the purchaser within the second degree by consanguinity or affinity, as determined under Chapter 573, Government Code. For purposes of this subchapter, and only for the purposes of this subchapter: (1) a lot measuring one acre or less is presumed to be residential property; and (2) an option to purchase real property that includes or is combined or executed concurrently with a residential lease agreement, together with the lease, is considered an executory contract for conveyance of real property. (b) This subchapter does not apply to the following transactions under an executory contract: (1) the sale of state land; or (2) a sale of land by: (A) the Veterans' Land Board; (B) this state or a political subdivision of this state; or (C) an instrumentality, public corporation, or other entity created to act on behalf of this state or a political subdivision of this state, including an entity created under Chapter 303, 392, or 394, Local Government Code. (c) This subchapter does not apply to an executory contract that provides for the delivery of a deed from the seller to the purchaser within 180 days of the date of the final execution of the executory contract. (d) Section 5.066 and Sections 5.068-5.080 do not apply to a transaction involving an executory contract for conveyance if the purchaser of the property: (1) is related to the seller of the property within the second degree by consanguinity or affinity, as determined under Chapter 573, Government Code; and (2) has waived the applicability of those sections in a written agreement. (e) Sections 5.066, 5.067, 5.071, 5.075, 5.081, and 5.082 do not apply to an executory contract described by Subsection (a)(2). (f) Notwithstanding any other provision of this subchapter, only the following sections apply to an executory contract described by Subsection (a)(2) if the term of the contract is three years or less and the purchaser and seller, or the purchaser's or seller's assignee, agent, or affiliate, have not been parties to an executory contract to purchase the property covered by the executory contract for longer than three years: (1) Sections 5.063-5.065; (2) Section 5.073, except for Section 5.073(a)(2); and (3) Sections 5.083 and 5.085. (g) Except as provided by Subsection (b), if Subsection (f) conflicts with another provision of this subchapter, Subsection (f) prevails.

Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.091 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001. Amended by: Acts 2005, 79th Leg., Ch. 978 (H.B. 1823), Sec. 2, eff. September 1, 2005.

Sec. 5.063. NOTICE. (a) Notice under Section 5.064 must be in writing and must be delivered by registered or certified mail, return receipt requested. The notice must be conspicuous and printed in 14-point boldface type or 14-point uppercase typewritten letters, and must include on a separate page the statement: NOTICE

YOU ARE NOT COMPLYING WITH THE TERMS OF THE CONTRACT TO BUY YOUR PROPERTY. UNLESS YOU TAKE THE ACTION SPECIFIED IN THIS NOTICE BY (date) THE SELLER HAS THE RIGHT TO TAKE POSSESSION OF YOUR PROPERTY. (b) The notice must also: (1) identify and explain the remedy the seller intends to enforce; (2) if the purchaser has failed to make a timely payment, specify: (A) the delinquent amount, itemized into principal and interest; (B) any additional charges claimed, such as late charges or attorney's fees; and (C) the period to which the delinquency and additional charges relate; and (3) if the purchaser has failed to comply with a term of the contract, identify the term violated and the action required to cure the violation. (c) Notice by mail is given when it is mailed to the purchaser's residence or place of business. The affidavit of a person knowledgeable of the facts to the effect that notice was given is prima facie evidence of notice in an action involving a subsequent bona fide purchaser for value if the purchaser is not in possession of the real property and if the stated time to avoid the forfeiture has expired. A bona fide subsequent purchaser for value who relies upon the affidavit under this subsection shall take title free and clear of the contract.

Acts 1983, 68th Leg., p. 3485, ch. 576, Sec. 1, eff. Jan. 1, 1984. Amended by Acts 1993, 73rd Leg., ch. 444, Sec. 1, eff. Sept. 1, 1993; Acts 1995, 74th Leg., ch. 994, Sec. 2, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.062 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.

Sec. 5.064. SELLER'S REMEDIES ON DEFAULT. A seller may enforce the remedy of rescission or of forfeiture and acceleration against a purchaser in default under an executory contract for conveyance of real property only if: (1) the seller notifies the purchaser of: (A) the seller's intent to enforce a remedy under this section; and (B) the purchaser's right to cure the default within the 30-day period described by Section 5.065; (2) the purchaser fails to cure the default within the 30-day period described by Section 5.065; and (3) Section 5.066 does not apply.

Acts 1983, 68th Leg., p. 3484, ch. 576, Sec. 1, eff. Jan. 1, 1984. Amended by Acts 1995, 74th Leg., ch. 994, Sec. 2, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.061 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001. Amended by Acts 2003, 78th Leg., ch. 959, Sec. 1, eff. Sept. 1, 2003.

Sec. 5.065. RIGHT TO CURE DEFAULT. Notwithstanding an agreement to the contrary, a purchaser in default under an executory contract for the conveyance of real property may avoid the enforcement of a remedy described by Section 5.064 by complying with the terms of the contract on or before the 30th day after the date notice is given under that section.

Acts 1983, 68th Leg., p. 3485, ch. 576, Sec. 1, eff. Jan. 1, 1984. Amended by Acts 1995, 74th Leg., ch. 994, Sec. 2, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.063 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001. Amended by Acts 2003, 78th Leg., ch. 959, Sec. 2, eff. Sept. 1, 2003.

Sec. 5.066. EQUITY PROTECTION; SALE OF PROPERTY. (a) If a purchaser defaults after the purchaser has paid 40 percent or more of the amount due or the equivalent of 48 monthly payments under the executory contract, the seller is granted the power to sell, through a trustee designated by the seller, the purchaser's interest in the property as provided by this section. The seller may not enforce the remedy of rescission or of forfeiture and acceleration. (b) The seller shall notify a purchaser of a default under the contract and allow the purchaser at least 60 days after the date notice is given to cure the default. The notice must be provided as prescribed by Section 5.063 except that the notice must substitute the following statement: NOTICE

YOU ARE NOT COMPLYING WITH THE TERMS OF THE CONTRACT TO BUY YOUR PROPERTY. UNLESS YOU TAKE THE ACTION SPECIFIED IN THIS NOTICE BY (date) A TRUSTEE DESIGNATED BY THE SELLER HAS THE RIGHT TO SELL YOUR PROPERTY AT A PUBLIC AUCTION. (c) The trustee or a substitute trustee designated by the seller must post, file, and serve a notice of sale and the county clerk shall record and maintain the notice of sale as prescribed by Section 51.002. A notice of sale is not valid unless it is given after the period to cure has expired. (d) The trustee or a substitute trustee designated by the seller must conduct the sale as prescribed by Section 51.002. The seller must: (1) convey to a purchaser at a sale conducted under this section fee simple title to the real property; and (2) warrant that the property is free from any encumbrance. (e) The remaining balance of the amount due under the executory contract is the debt for purposes of a sale under this section. If the proceeds of the sale exceed the debt amount, the seller shall disburse the excess funds to the purchaser under the executory contract. If the proceeds of the sale are insufficient to extinguish the debt amount, the seller's right to recover the resulting deficiency is subject to Sections 51.003, 51.004, and 51.005 unless a provision of the executory contract releases the purchaser under the contract from liability. (f) The affidavit of a person knowledgeable of the facts that states that the notice was given and the sale was conducted as provided by this section is prima facie evidence of those facts. A purchaser for value who relies on an affidavit under this subsection acquires title to the property free and clear of the executory contract. (g) If a purchaser defaults before the purchaser has paid 40 percent of the amount due or the equivalent of 48 monthly payments under the executory contract, the seller may enforce the remedy of rescission or of forfeiture and acceleration of the indebtedness if the seller complies with the notice requirements of Sections 5.063 and 5.064.

Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.101 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.

Sec. 5.069. SELLER'S DISCLOSURE OF PROPERTY CONDITION. (a) Before an executory contract is signed by the purchaser, the seller shall provide the purchaser with: (1) a survey, which was completed within the past year, or plat of a current survey of the real property; (2) a legible copy of any document that describes an encumbrance or other claim, including a restrictive covenant or easement, that affects title to the real property; and (3) a written notice, which must be attached to the contract, informing the purchaser of the condition of the property that must, at a minimum, be executed by the seller and purchaser and read substantially similar to the following: WARNING

IF ANY OF THE ITEMS BELOW HAVE NOT BEEN CHECKED, YOU MAY NOT BE ABLE TO LIVE ON THE PROPERTY. SELLER'S DISCLOSURE NOTICE

CONCERNING THE PROPERTY AT (street address or legal description and city) THIS DOCUMENT STATES CERTAIN APPLICABLE FACTS ABOUT THE PROPERTY YOU ARE CONSIDERING PURCHASING. CHECK ALL THE ITEMS THAT ARE APPLICABLE OR TRUE: _____ The property is in a recorded subdivision. _____ The property has water service that provides potable water. _____ The property has sewer service. _____ The property has been approved by the appropriate municipal, county, or state agency for installation of a septic system. _____ The property has electric service. _____ The property is not in a floodplain. _____ The roads to the boundaries of the property are paved and maintained by: _____ the seller; _____ the owner of the property on which the road exists; _____ the municipality; _____ the county; or _____ the state. _____ No individual or entity other than the seller: (1) owns the property; (2) has a claim of ownership to the property; or (3) has an interest in the property. _____ No individual or entity has a lien filed against the property. _____ There are no restrictive covenants, easements, or other title exceptions or encumbrances that prohibit construction of a house on the property. NOTICE: SELLER ADVISES PURCHASER TO: (1) OBTAIN A TITLE ABSTRACT OR TITLE COMMITMENT COVERING THE PROPERTY AND HAVE THE ABSTRACT OR COMMITMENT REVIEWED BY AN ATTORNEY BEFORE SIGNING A CONTRACT OF THIS TYPE; AND (2) PURCHASE AN OWNER'S POLICY OF TITLE INSURANCE COVERING THE PROPERTY. _____________________________ ______________________________

(Date) (Signature of Seller)

_____________________________ ______________________________

(Date) (Signature of Purchaser) (b) If the property is not located in a recorded subdivision, the seller shall provide the purchaser with a separate disclosure form stating that utilities may not be available to the property until the subdivision is recorded as required by law. (c) If the seller advertises property for sale under an executory contract, the advertisement must disclose information regarding the availability of water, sewer, and electric service. (d) The seller's failure to provide information required by this section: (1) is a false, misleading, or deceptive act or practice within the meaning of Section 17.46, Business & Commerce Code, and is actionable in a public or private suit brought under Subchapter E, Chapter 17, Business & Commerce Code; and (2) entitles the purchaser to cancel and rescind the executory contract and receive a full refund of all payments made to the seller. (e) Subsection (d) does not limit the purchaser's remedy against the seller for other false, misleading, or deceptive acts or practices actionable in a suit brought under Subchapter E, Chapter 17, Business & Commerce Code.

Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.094 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.

Sec. 5.070. SELLER'S DISCLOSURE OF TAX PAYMENTS AND INSURANCE COVERAGE. (a) Before an executory contract is signed by the purchaser, the seller shall provide the purchaser with: (1) a tax certificate from the collector for each taxing unit that collects taxes due on the property as provided by Section 31.08, Tax Code; and (2) a legible copy of any insurance policy, binder, or other evidence relating to the property that indicates: (A) the name of the insurer and the insured; (B) a description of the property insured; and (C) the amount for which the property is insured. (b) The seller's failure to provide information required by this section: (1) is a false, misleading, or deceptive act or practice within the meaning of Section 17.46, Business & Commerce Code, and is actionable in a public or private suit brought under Subchapter E, Chapter 17, Business & Commerce Code; and (2) entitles the purchaser to cancel and rescind the executory contract and receive a full refund of all payments made to the seller. (c) Subsection (b) does not limit the purchaser's remedy against the seller for other false, misleading, or deceptive acts or practices actionable in a suit brought under Subchapter E, Chapter 17, Business & Commerce Code.

Added by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.

Sec. 5.077. ANNUAL ACCOUNTING STATEMENT. (a) The seller shall provide the purchaser with an annual statement in January of each year for the term of the executory contract. If the seller mails the statement to the purchaser, the statement must be postmarked not later than January 31. (b) The statement must include the following information: (1) the amount paid under the contract; (2) the remaining amount owed under the contract; (3) the number of payments remaining under the contract; (4) the amounts paid to taxing authorities on the purchaser's behalf if collected by the seller; (5) the amounts paid to insure the property on the purchaser's behalf if collected by the seller; (6) if the property has been damaged and the seller has received insurance proceeds, an accounting of the proceeds applied to the property; and (7) if the seller has changed insurance coverage, a legible copy of the current policy, binder, or other evidence that satisfies the requirements of Section 5.070(a)(2). (c) A seller who conducts less than two transactions in a 12-month period under this section who fails to comply with Subsection (a) is liable to the purchaser for: (1) liquidated damages in the amount of $100 for each annual statement the seller fails to provide to the purchaser within the time required by Subsection (a); and (2) reasonable attorney's fees. (d) A seller who conducts two or more transactions in a 12-month period under this section who fails to comply with Subsection (a) is liable to the purchaser for: (1) liquidated damages in the amount of $250 a day for each day after January 31 that the seller fails to provide the purchaser with the statement, but not to exceed the fair market value of the property; and (2) reasonable attorney's fees.

Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1, 1995. Renumbered from Property Code Sec. 5.100 and amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001. Amended by: Acts 2005, 79th Leg., Ch. 978 (H.B. 1823), Sec. 5, eff. September 1, 2005.

Sec. 5.081. RIGHT TO CONVERT CONTRACT. (a) A purchaser, at any time and without paying penalties or charges of any kind, is entitled to convert the purchaser's interest in property under an executory contract into recorded, legal title in accordance with this section. (b) If the purchaser tenders to the seller an amount of money equal to the balance of the total amount owed by the purchaser to the seller under the executory contract, the seller shall transfer to the purchaser recorded, legal title of the property covered by the contract. (c) Subject to Subsection (d), if the purchaser delivers to the seller of property covered by an executory contract a promissory note that is equal in amount to the balance of the total amount owed by the purchaser to the seller under the contract and that contains the same interest rate, due dates, and late fees as the contract: (1) the seller shall execute a deed containing any warranties required by the contract and conveying to the purchaser recorded, legal title of the property; and (2) the purchaser shall simultaneously execute a deed of trust that: (A) contains the same terms as the contract regarding the purchaser's and seller's duties concerning the property; (B) secures the purchaser's payment and performance under the promissory note and deed of trust; and (C) conveys the property to the trustee, in trust, and confers on the trustee the power to sell the property if the purchaser defaults on the promissory note or the terms of the deed of trust. (d) On or before the 10th day after the date the seller receives a promissory note under Subsection (c) that substantially complies with that subsection, the seller shall: (1) deliver to the purchaser a written explanation that legally justifies why the seller refuses to convert the purchaser's interest into recorded, legal title under Subsection (c); or (2) communicate with the purchaser to schedule a mutually agreeable day and time to execute the deed and deed of trust under Subsection (c). (e) A seller who violates this section is liable to the purchaser in the same manner and amount as a seller who violates Section 5.079 is liable to a purchaser. This subsection does not limit or affect any other rights or remedies a purchaser has under other law. (f) On the last date that all of the conveyances described by Subsections (b) and (c) are executed, the executory contract: (1) is considered completed; and (2) has no further effect. (g) The appropriate use of forms published by the Texas Real Estate Commission for transactions described by this section constitutes compliance with this section.

Added by Acts 2005, 79th Leg., Ch. 978 (H.B. 1823), Sec. 6, eff. September 1, 2005. EXHIBIT F Filed: 7/18/2014 1:19:17 PM Lisa David, District Clerk Williamson County, Texas Sharee Allison

CAUSE NO. 14-0374-C26

BOBBIE WHITE, § IN THE DISTRICT COURT § Plaintiff, § § VS. § 26TH JUDICIAL DISTRICT § JOSEFINO BENCOMO III, § § Defendant. § WILLIAMSON COUNTY, TEXAS

PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT

TO THE HONORABLE JUDGE OF SAID COURT:

NOW COMES, in the above-captioned cause, Bobbie White, Plaintiff herein, who files

this Motion for Summary Judgment, and would respectfully show the Court as follows:

I.

INTRODUCTION AND SUMMARY OF MOTION

Plaintiff brought suit against the Defendant seeking to set aside Defendant’s foreclosure

sale of her home, as well as liquidated damages for Defendant’s failure to comply with Tex. Prop.

Code § 5.077. Because Defendant voluntarily rescinded the foreclosure sale of Plaintiff’s home

after the temporary injunction hearing in this cause, Plaintiff’s suit to quiet title cause of action has

been rendered moot. As for Plaintiff’s claim that Defendant failed to comply with § 5.077,

Defendant does not deny his noncompliance, but rather challenges this statute’s applicability to

him. Therefore, because there is no genuine issue of material fact in dispute concerning

Defendant’s failure to comply with § 5.077, and this statute does apply to Defendant, Plaintiff is

entitled to summary judgment against Defendant awarding her liquidated damages and attorney’s

fees thereunder as a matter of law.

PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT – PAGE 1 OF 7 II.

EVIDENCE

A. Defendant’s Response to Plaintiff’s First Requests for Admissions.

B. Affidavit of Bobbie White.

C. Affidavit of Tony A. Pitts.

FACTUAL BACKGROUND

3.1 Mrs. White and her husband, George White, purchased a house from Defendant

Josefino Bencomo III, located at 701 Saunders Dr., Round Rock, TX 78664 (the “House”), in

November 2001. The House was to be used as their permanent residence. The Whites and

Bencomo are not related.

3.2 The agreed upon purchase price of the House was $118,000.00. To purchase the

House, the Whites took out a mortgage with Long Beach Mortgage Company for $82,600.00, who

acquired a primary purchase money mortgage lien on the House. This mortgage and its

corresponding lien was subsequently assigned to JPMorgan Chase Bank, N.A. (“Chase”). The

Whites also executed a Real Estate Lien Note for $35,400.00 in favor of Bencomo, who obtained a

purchase money mortgage lien on the House secondary to Chase’s lien.

3.3 Bencomo conveyed the House to the Whites via Warranty Deed with Vendor’s

Lien, wherein he retained superior title to the House over that of the Whites until his lien was

satisfied. The Whites thereafter began paying the purchase money mortgages as agreed.

3.4 Mrs. White lost her husband unexpectedly in December 2003. Thereafter, she had

considerable difficulty paying the mortgages and decided to sell the House. Chase, however,

PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT – PAGE 2 OF 7 worked with Mrs. White to modify its mortgage loan so she and her family could afford to stay in

the House. Mrs. White reached out to Bencomo to lower his interest rate as well, but he refused.

3.5 Over the years, it bothered Mrs. White that Bencomo never gave her any statements

showing what she had paid on his mortgage and what she had left to pay, nor did he give her any

tax statements by January 31 of each year, like those she received from Chase, showing the

mortgage interest she had paid for the previous year, which she very much wanted to write off

when she filed her federal income tax returns.

3.6 When Mrs. White approached Bencomo about these concerns, she found him

unwilling to remedy his failure to provide her with annual statements. And in the course of her

dealings with Bencomo on this issue, it appeared to Mrs. White that Bencomo was using the

House on his own taxes for improper purposes. At this point, Mrs. White had made at least 72

monthly payments to Bencomo. But, given his refusal to account for her payments and seemingly

shady accounting with respect to the House, she stopped making payments to him in 2008.

A. Standard of Proof.

Summary judgment may be obtained under Rule 166a of the Texas Rules of Civil

Procedure if the movant shows that there is no genuine issue of material fact and it is entitled to

summary judgment as a matter of law. National Cas. Co. v. Lane Exp., Inc., 998 S.W.2d 256, 259

(Tex. App.—Dallas 1999). After the movant produces evidence entitling it to summary judgment,

the burden then shifts to the nonmovant to produce evidence that would preclude summary

judgment or raise a fact issue. Coats v. Ruiz, 198 S.W.3d 863, 878 (Tex.App.—Dallas 2006, no

writ). The summary judgment rule is intended to dispose of a matter that involves only a question

PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT – PAGE 3 OF 7 of law, not to deprive a litigant of the right to a hearing on any real fact issue. Jones, Day, Reavis

& Pogue v. Aetna Life Ins. Co., No. 05-96-01565-CV, 1998 WL 401714, at *1, *2 (Tex. App.—

Dallas July 20, 1998).

B. Defendant Has Admitted Noncompliance with Tex. Prop. Code § 5.077.

4.1 Plaintiff served upon the Defendant requests for admission pursuant to T.R.C.P.

198. Defendant’s responses to these Requests for Admission are attached hereto as Exhibit “A.”

In his responses, Defendant admits that he did not provide Plaintiff with an annual statement of

her account with him from 2002 – 2012. And, in fact, Defendant has never provided Plaintiff with

an annual statement of her account (See Exhibit “B,” attached hereto). Therefore, there is no

genuine issue of material fact in dispute concerning Defendant’s failure to comply with § 5.077.

C. Tex. Prop. Code § 5.077 Does Apply to Defendant’s Transaction with the Plaintiff.

4.2 Tex. Prop. Code § 5.077 is contained within Subchapter D of the Texas Property

Code, which applies to situations where an owner enters into an executory contract to finance, in

whole or in part, a buyer’s purchase of real property to be used as the buyer’s residence. See Tex.

Prop. Code § 5.061(a). Subsections (b)-(f) of § 5.061 exempt or limit the applicability of the

Subchapter D for certain executory contracts. See Tex. Prop. Code § 5.061(b)-(f).

4.3 There is no dispute amongst the parties that the House is real property and that

Defendant, who was the owner of the House, sold it to Plaintiff for use as her residence, and that

they are not related. There is also no dispute amongst the parties that Defendant obtained from

Plaintiff a Real Estate Lien Note that was to be paid in installments over a 15-year period (the

“Note”) and a Deed of Trust to secure the Note against the House. Furthermore, there is no

dispute amongst the parties that Defendant conveyed the House to Plaintiff via a Warranty Deed

with Vendor’s Lien wherein he retained superior title to the House until the Note was satisfied.

PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT – PAGE 4 OF 7 4.4 None of the situations or circumstances exempted, or for which applicability of

Subchapter D is limited, under §5.061 pertain to the arrangement between the parties in this cause

as enunciated above. In fact, their transaction falls squarely within that contemplated by Tex.

Prop. Code § 5.061(a). See Shook v. Walden, 368 S.W.3d 604 (Tex.App.—Austin 2012, writ

denied) (legislature contemplated “executory contract” to be where a purchaser satisfies a serious

of obligations over an extended period of time before seller is obligated to transfer title); see also

Zapata v. Torres, 464 S.W.2d 926, 928 (Tex.App.—Dallas 1971, no writ) (long been established

that seller’s reservation of a vendor’s lien retaining superior title in his deed renders the contract

executory). Therefore, the entirety of Subchapter D applies to their transaction.

D. Plaintiff is Entitled to Liquidated Damages Under Tex. Prop. Code § 5.077.

4.5 Tex. Prop. Code § 5.077 mandates that a seller provide a purchaser with an annual

statement by January 31st of each year of the executory contract that details: 1) the amount paid

under the contract; 2) the remaining amount owed under the contract; 3) the number of payments

remaining under the contract; 4) the amounts paid to taxing authorities on the purchaser’s behalf if

collected by the seller; 5) the amount paid to insure the property on purchaser’s behalf if collected

by the seller; 6) if the property has been damaged and the seller has received insurance proceeds,

an accounting of the proceeds applied to the property; and 7) if the seller has changed insurance

coverage, a legible copy of the current policy. Tex. Prop. Code § 5.077(a)&(b). Courts have

traditionally held that a seller need not strictly comply with § 5.077, so long as they make a “good

faith attempt” to do so. See Flores v. Millenium Interests, Ltd., 185 S.W.3d 427, 434 (Tex. 2005)

(liquidated damages under § 5.077 not triggered “unless statement is so deficient as to be

something other than a good faith attempt by seller to inform purchaser of the current status of

their contractual relationship”). In the instant matter, however, Defendant has admittedly made no

PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT – PAGE 5 OF 7 attempt whatsoever to comply with § 5.077. He has never sent Plaintiff a single annual statement

of her account, not even a deficient one, informing her of the status of their contractual

relationship. Incidentally, Chase regularly sent Plaintiff such statements. The intended effect of §

5.077 is to hold Defendant to that same standard.

4.6 A seller who conducts less than two sales transactions in a 12-month period and

who fails to provide the purchaser with annual statements as required by § 5.077(a) is liable to the

purchaser for: 1) liquidated damages in the amount of $100 for each annual statement the seller

failed to provide; and 2) reasonable attorney’s fees. Tex. Prop. Code § 5.077(c). Defendant

denies conducting more than two sales transactions in the 12-month period before or after he sold

the House to Plaintiff, and Plaintiff has adduced no evidence indicating that Defendant engaged in

two or more sales transactions. Therefore, because Defendant has not provided Plaintiff with a

single annual statement for the last 13 years of their executory contract, he is liable to her for

$1,300.00, plus reasonable attorney’s fees.

WHEREFORE, PREMISES CONSIDERED, Plaintiff Bobbie White respectfully requests

that the Court grant her the following relief:

a. liquidated damages as provided by Tex. Prop. Code § 5.077;

b. costs of court and reasonable and necessary attorney’s fees; and

c. such other and further relief, both at law and in equity, to which she may show

herself to be justly entitled.

PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT – PAGE 6 OF 7 Respectfully submitted,

/s/ Tony Pitts By: ______________________________ Tony Pitts State Bar No. 24060429

P.O. Box 5369 Round Rock, TX 78683 512.825.5545 512.244.4355 (Fax)

ATTORNEY FOR PLAINTIFF, BOBBIE WHITE

NOTICE OF HEARING

Please take note that this motion has been set for hearing on August 12, 2014, at 1:30 p.m., before the 26th Judicial District Court of Williamson County, Texas.

/s/ Tony Pitts _____________________________________ Tony Pitts

I hereby certify that on this the 18th day of July 2014, a true and correct copy of the foregoing document was delivered via facsimile to the following counsel of record:

Fred Walker Kimberly Nash Fred E. Walker, P.C. 609 Castle Ridge Road, Ste. 220 Austin, TX 78746 512.330.1686 (Fax) Attorneys for Defendant /s/ Tony Pitts ___________________________________________ Tony Pitts

PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT – PAGE 7 OF 7 From: Fred Walker Fax: (512) 649-3030 To: Tony Pitts Fax: +1 (512) 244.4355 Page 2 of 1208/09/2014 4:14

NO. 14·0374·C26

BOBBIE WHITE § IN THE DISTRICT COURT Plaintiff, § § v. § 26TH JUDICIAL DISTRICT § JOSEFINO BENCOMO III § Defendant. § OF WILLIAMSON COUNTY, TEXAS

DEFENDANT'S RESPONSE TO PLAINTIFF'S FIRST REQUESTS FOR ADMISSIONS

TO: Bobbie White, Plaintiff, by and through Plaintiff's attorney of record, Tony A. Pitts

NOW COMES Josefino Bencomo Ill, Defendant, and responds to the Requests fo1• Admissions propounded l>y Bobbi~ White pursuant to Rule 198 of the Texas Rules

of Civil Procedure.

FREDE. WALKER, P.C.

By:r;;;_~

Fred E. Walker Texas Dar No. 20700400 609 Castle Ridge Road, Suite 220 · Austin, TX 78746 Tel. (512) 330-9977 Fax. (512) 330-1686 Attorney for Defendant Josefino Bencomo llI

\ EXHIBIT jj_ r I~~

'', From: Fred Walker Fax: (512) 649-3030 To: Tony Pitts Fax: +1 (612) 244-4355 Page 3 of 1206/0912014 4:14

CERTIFICATE OF SERVICE ~ '..)J('){ 9 I certlfy UtUt on ,M1ty ( 2014 a true and correct copy of Defendant's Re$ponse to .Requests for Admissions wiis served by fax on Tony A. Pills at 512-244-4355.

Fred R. Walker

\

cXHIBIT k -i ~~ To: Tony Pitts Fax: +1 (512) 244-4355 Page 4 of 1206/09/2014 4:14 From: Fred Walker Fax: (512) 649-3030

RESPONSES TO REQUESTS FOR ADMISSIONS

1. Admit or deny that YOU are in the business of flipping residential properties for profit.

RESPONSE: DENIED

2. Admit or deny that the PROPERTY was sold to my client in the course of YOUR business of FLIPPING residential properties for profit.

RESPONSE: DEN!EIJ

3, Admit 01· deny that YOU FLIPPED 2 or more properties and 2000.

4. Admit or deny that YOU FLIPPED 2 or more properties and 2001.

RESPONS!l: DENIED

5. Admit or deny !hot YOU FLIPPED 2 01· more properties and 2002.

RESPONSE: DENlED

6. Admit or deny that YOU have not provided Plaintiff with a statement showing what she has paid YOU thus far and what she has left to pay on her mortgage with YOU since January 2002.

7. Admit or deny that YOU did not provide Plaintiff with an atmual sh1temenl of her account with YOU in 2002, 2003, 2004, 2005, 2006, 20071 2008, 2009, 2010, 2011, or 2012.

RESPONSE: ADMJ'ITED

8. Admit or deny !hut YOU refused one or more of Plaintiffs' i·equest for a From: Fred Walker Fax: (512) 649-3030 To: Tony Pitts Fax: +1 (512) 244-4355 Page 5 of 1206/0912014 4:14

statement of her accotmt with YOU.

STATE OF TEXAS §

§

COUNTY OF EL PASO §

BEFORE ME, the undersigned authority, personally appeared Josefina Bencomo

Ill, who stated, upon oath, that the statements made in the foregoing instrument are

trne and correct.

Josefina Bencomo Ill

.

' EXHIBIT J:L.. '-( ·f CAUSE NO. 14-0374-C26

BOBBIE WHITE, § IN THE DISTRICT COURT § Plaintiff, § § vs. § 26rn JUDICIAL DISTRICT § JOSEFINO BENCOMO III, § § Defendant. § WILLIAMSON COUNTY, TEXAS

AFFIDAVIT OF BOBBIE WHITE

STATE OF TEXAS § § COUNTY OF WILLIAMSON §

Before me, the undersigned authority, this day appeared Bobbie White, affiant herein, and on her oath stated as follows:

"My name is Bobbie White. I am over eighteen (18) years of age and am of sound mind. I am in all ways competent to make this affidavit, which is based upon my personal knowledge. I hereby affirm that all of the facts stated herein are true and correct.

1. I am the Plaintiff in the above-captioned cause. I have read Plaintiffs Motion for Summmy Judgment and hereby verify that the factual allegations contained therein are true and correct to the best of my knowledge.

2. I further state and depose that Defendant Josefino Bencomo III has never provided to me an annual statement of my account with him to show me how much I have paid to him, how much I had left to pay, and how many payments I had remaining under our contractual agreement. Mr. Bencomo has also never given me a tax statement that I could use to write off the mortgage interest that I have paid to him, despite many requests that I have made to him for one."

Further affiant saith not.

Signed: ~1Y . ; · . ·. /)'JU 'BOblJie White SUSCRIBED AND SWORN TO BEFORE ME by Bobbie White on this the 19oe day of July 2014, to certify which witness my hand and seal of office. TONY PITTS

lk/ eommlsS\on expires

June 09, 201B

Notaty Public, in and for the State of Texas AFFIDAVIT OF BOBBIE WHITE - PAGE 1OF1

EXHIBIT :b­ CAUSE NO. 14-0374-C26

BOBBIE WHITE, § IN THE DISTRICT COURT § Plaintiff, § § vs. § 26rn JUDICIAL DISTRICT § JOSEFINO BENCOMO III, § § Defendant. § WILLIAMSON COUNTY, TEXAS

AFFIDAVIT OF TONY A. PITTS

COUNTY OF WILLIAMSON §

Before me, the undersigned authority, this day appeared Tony Pitts, affiant herein, and on his oath stated as follows:

"My name is Tony Pitts. I am over eighteen (18) years of age and am of sound mind. I have never been convicted of a felony or a crime involving moral turpitude. I am in all ways competent to make this affidavit, which is based upon my personal knowledge. I hereby affirm that all of the facts contained herein are true.

1. I am an attorney, licensed by the State of Texas, where I maintain an office in Round Rock, Texas, as a solo practitioner in the areas of civil litigation and probate law. I typically charge $200.00 per hour for my services, which is commensurate with the fees customarily charged by an attorney in the community with my time, talent, and experience. Bobbie White retained me at this rate to pursue her claims against Josefino Bencomo III.

2. Bobbie White has incurred $2,600.00 in attorney's fees and expenses to have me: 1) file suit against Josefino Bencomo III for liquidated damages under Tex. Prop. Code § 5.077; 2) research and file her motion for summary judgment concerning the same; and 3) undertake other legal tasks related to enforcement of this claim. Said fees and expenses were reasonably and necessarily incurred given the complexity of the issues and Defendant's resistance to being found liable for these damages. My client is expected to incur another $1,000.00 in attorney's fees for my time spent to prepare for and attend the hearing on her Motion for Summary Judgment and respond to and argue against Defendant's opposing summary judgment motion.

3. I have reviewed Plaintiff's Motion for Summary Judgment and hereby certify that attached to Plaintiff's Motion as Exhibit "A" is a true and correct copy of Defendant's Response to Plaintiff's Requests for Admission as served upon the Plaintiff on June 9, 2014, via facsimile."

Further affiant saith not. AFFIDAVIT OF TONY A. PITTS - PAGE 1 OF 2 EXHIBIT G SUSCRIBED AND SWORN TO BEFORE ME by Tony Pitts on this the 18111 day of July, 2014, to certify which witness my hand and seal of office.

[1~\C\=Q lQ_, \JU!L\,U\_. \l~ Notary Public, in and for the State of Texas

AFFIDAVIT OF TONY A. PITTS - PAGE 2 OF 2 EXHIBIT G 1 1 NO. 03-14-00812-CV

2 REPORTER'S RECORD

3 VOLUME 2 OF 4 VOLUMES TRIAL COURT CAUSE NO. 14-0374-C26 4

5 BOBBIE WHITE ) IN THE DISTRICT COURT ) 6 vs. ) WILLIAMSON COUNTY, TEXAS ) 7 JOSEFINO BENCOMO, III ) 26TH JUDICIAL DISTRICT

8 9

10 _____________________________________________

11 HEARING ON MOTIONS FOR SUMMARY JUDGMENT _____________________________________________ 12

14 15

16 17

19 On the 12th day of August, 2014, the following 20 proceedings came on to be held in the above-titled and

21 numbered cause before the Honorable Billy Ray

22 Stubblefield, Judge Presiding, held in Georgetown, 23 Williamson County, Texas.

24 Proceedings reported by computerized stenotype

25 machine. 2 1 APPEARANCES

3 MR. TONY A. PITTS SBOT NO. 24060429 Law Office of Tony A. Pitts 4 PO Box 5369 Round Rock, Texas 78683 5 Telephone: (512)825-5545 Fax: (512)244-4355 6 Attorney for Plaintiff 7

8 MR. FRED E. WALKER, PC SBOT NO. 20700400 Fred E. Walker, PC 9 609 Castle Ridge Road, Ste. 220 Austin, Texas 78746 10 Telephone: (512)330-9977 Fax: (512)330-1686 11 Attorney for Defendant 12

19 20

22 23

25 3 1 I N D E X

2 VOLUME 2

3 HEARING ON MOTIONS FOR SUMMARY JUDGMENT 4 Page Vol

5 AUGUST 12, 2014

6 Announcements 4 2 7 Mr. Walker's Argument 4 4 Mr. Pitt's Argument 10 4 8 Mr. Walker's Response 16 4 Mr. Pitt's Response 20 4 9 Court Reporter's Certificate 29 4 10

11 12

25 4 1 PROCEEDINGS - AUGUST 12, 2014

2 THE COURT: 14-0374, Bobby White versus

3 Josephino Bencomo, III. And announcements, please. 4 MR. PITTS: Tony Pitts for the Plaintiff,

5 Bobby White.

6 MR. WALKER: Fred Walker for Josephino 7 Bencomo, Defendant, Your Honor.

8 THE COURT: And this is Hearing on a Motion 9 for Summary Judgment. Correct?

10 MR. PITTS: Yes. We each have motions for

11 summary judgment. 12 THE COURT: Dueling motions for summary

13 judgment. And all prerequisites of law have been met, the

14 necessary time has elapsed? 15 MR. PITTS: Yes, Your Honor.

16 MR. WALKER: Yes, Your Honor. 17 THE COURT: Good. Who filed first?

18 MR. WALKER: I filed first, Your Honor. But

19 if Mr. Pitts would like to go first because he's Plaintiff, 20 that would be fine with me.

21 MR. PITTS: There was no response to mine,

22 so -- we can let him go first and I can address the issues 23 he raises.

24 MR. WALKER: We have no disputes, Your

25 Honor, to the facts that are set forth in Mr. Pitts' Motion 5 1 for Summary Judgment.

2 This is a real simple question, Your Honor.

3 The case that needs to be determined is whether a note with 4 a deed of trust is subject to Chapter 5, subchapter D of

5 the Texas Property Code that deals with executory

6 contracts. 7 Mr. Pitts argues that the deed of trust is

8 an executory contract and, as a basis for that, he relies 9 upon a line of cases that actually do say that. They say

10 that deeds of trust are executory contracts because if

11 you've got a vendor's lien that is retained in the deed, 12 that although the purchaser of the property has the legal

13 title to the property, that equitable ownership doesn't

14 pass until the final payment is made and the deed of trust 15 is released.

16 So the question for this Court to determine 17 is whether the term "executory contract" in the Property

18 Code, subchapter D, applies to these types of transactions.

19 And I think that the legislative history is clear, the case 20 law is clear, that this does not apply. This particular

21 subchapter of the Property Code was originally implemented

22 by the Legislature because of a problem that they were 23 having along the border with the colonias. Contracts for

24 deed, of course, are different from real estate

25 transactions where you've got the title to the property 9 1 versions of the provisions that had applied only in certain

2 economically distressed counties. The revised provisions

3 are in subchapter D of Chapter 5 of the Texas Property 4 Code.

5 So the Attorney General's Office recognizes

6 that the type of contracts -- the type of executory 7 contracts that are intended to be regulated by subchapter D

8 are contracts for deed. 9 And there are many cases in the response

10 that I filed this morning to the Defendant's -- to the

11 Plaintiff's Response to our Motion for Summary Judgment 12 that kind of goes through that, so I won't take the Court's

13 time because I know that you had a very lengthy hearing.

14 But if subchapter D applies to a note with a deed of trust, 15 how are we to foreclose on this property? Do we foreclose

16 under the deed of trust, or do we foreclose under 17 subchapter D? And what effect would that have on real

18 estate transactions throughout the State?

19 I have nothing further, Your Honor. 20 THE COURT: Mr. Pitts, if you will pardon me

21 just a moment.

22 MR. WALKER: Your Honor, if I might add one 23 thing. Mr. Pitts is correct, we didn't file a Response to

24 their Motion for Summary Judgment. I don't contest any of

25 the facts that they've brought up. If, in fact, this Court 10 1 rules that -- that Chapter 5 of the Texas Property Code

2 applies to this transaction, his calculations are correct

3 and I don't have any objection to the amount of the fees 4 that he's asking for.

5 THE COURT: I'm sorry.

6 Go ahead. 7 MR. PITTS: Thank you, Your Honor.

8 There is -- there is some terminology, I 9 think, that Mr. Walker's used to describe what we're asking

10 for and what we're seeking. We have to clarify the terms.

11 We're not actually saying that the deed of trust is what 12 makes this an executory conveyance because the deed of

13 trust doesn't do that. Deed of trust is what you find in

14 conventional mortgages where you have a bank who has 15 financed the purchase between a buyer and a seller. The

16 buyer will generally convey the property to the bank by -- 17 in trust or to -- excuse me -- to the trustee that the bank

18 selects in trust, and that's what you have as your deed of

19 trust. 20 What makes this particular conveyance an

21 executory conveyance is the warranty deed and vendor's

22 lien, because what that does is it sets up obligations from 23 the buyer over a period of time, making installment

24 payments, before actual title is transferred to the buyer.

25 Now, Mr. Walker has said that the transfer, the title EXHIBIT H Filed: 9/15/2014 9:52:06 PM Lisa David, District Clerk Williamson County, Texas Ellie Saucedo

BOBBIE WHITE, § IN THE DISTRICT COURT § Plaintiff, § § VS. § 26TH JUDICIAL DISTRICT § JOSEFINO BENCOMO III, § § Defendant. § WILLIAMSON COUNTY, TEXAS

MOTION FOR RECONSIDERATION

NOW COMES, in the above-captioned cause, Bobbie White, Plaintiff herein, who files

this Motion for Reconsideration, and would respectfully show the Court as follows:

PROCEDURAL HISTORY

1.1 The Court heard argument from both parties on their respective motions for

summary judgment on August 12, 2014.

1.2 The Court advised the parties of its ruling in favor of Defendant via teleconference

on August 15, 2014.

1.3 An order for Final Summary Judgment has not yet been entered by the Court.

SUMMARY

During the hearing on their respective summary judgment motions, the Parties mutually

agreed that there were no material facts in dispute that would preclude summary judgment in this

cause and that their respective arguments against one another were purely legal. Plaintiff

established that the real estate transaction that took place between the Parties had all the

MOTION FOR RECONSIDERATION – PAGE 1 OF 8 Envelope# 2500689 characteristics of an executory contract for conveyance of real property as defined under

Subchapter D of the Texas Property Code, and Defendant conceded as much. Defendant,

however, argued that because a Warranty Deed with Vendor’s Lien in favor of the Plaintiff had

been executed, which gave Plaintiff actual title to the subject property subject to a Deed of Trust,

the transaction was no longer executory and Subchapter D did not apply. Therefore, the operative

question to be answered by the Court was whether or not a Warranty Deed with Vendor’s Lien

wherein superior title to the subject property has been retained, coupled with a Deed of Trust,

caused an executory contract for conveyance of real property to no longer be executory.

Ultimately, the Court ruled that a Warranty Deed with Vendor’s Lien and Deed of Trust did

operate to make the contract no longer executory. Plaintiff contends that the Court’s ruling in this

regard is erroneous, unsupported by the law, and threatening of the important policy

considerations underlying Subchapter D. Plaintiff respectfully requests that the Court reconsider

and reverse its ruling, and find favor of Plaintiff.

A. The Warranty Deed With Vendor’s Lien Renders the Contract Executory.

The Parties do not dispute that Subchapter D applies to contracts for deed, which are

clearly executory contracts for conveyance of real property to which Subchapter D was meant to

apply. However, a warranty deed with vendor’s lien, wherein superior title to the property is

retained, has the same legal effect as a contract for deed. See Norton v. Norton, No. 07-08-0469-

CV, at *4 (Tex.App.—Amarillo 2010, mem. op.). Moreover, a warranty deed with vendor’s lien

has for decades been recognized in Texas jurisprudence as an executory sale of real property

where title remains in the seller. Cowden v. Bell, 293 S.W.2d 611, 614 (Tex.App.—San Antonio

MOTION FOR RECONSIDERATION – PAGE 2 OF 8 1956), aff’d 300 S.W.2d 286 (Tex. 1957) (reservation of express vendor’s lien is an executory sale

with title still in vendor); Zapata v. Torres, 464 S.W.2d 926, 928 (Tex.App.—Dallas 1971, no

writ) (where vendor reserves lien in deed, contract is executory and superior title remains in

vendor); Walton v. First Nat’l Bank of Trenton, 956 S.W.2d 647, 651 (Tex.App.—Texarkana

1997, writ denied) (superior title is held by vendor with express lien and vendee has mere

equitable right to acquire title by carrying out the agreement). Therefore, Defendant’s argument

that actual title was conveyed to Plaintiff by and through his Warranty Deed With Vendor’s Lien

is unsupported at law. Rather, the law would clearly find that Defendant retained title to the

property without obligation of transference until such time as the note secured by Defendant’s lien

was fully repaid in installments over a number of years. This is the very definition of an executory

contract for conveyance of real property as used by the legislature in Subchapter D of the Texas

Property Code. Shook v. Walden, 368 S.W.3d 604, 624 (Tex.App.—Austin 2012, writ denied)

(legislature contemplated “executory contract” to be synonymous with contract for deed, where a

purchaser satisfies a series of obligations over an extended period of time before seller is obligated

to transfer title). Therefore, the real estate transaction between the Parties was unquestionably

executory and Subchapter D should apply, as the requisites for applicability under Tex. Prop.

Code § 5.061 are all met.

B. The Deed of Trust In This Cause Does Not Cure the Transaction of Being Executory.

Defendant attempts to make the fact that there exists a Deed of Trust between the Parties

somehow establish that they have conventional mortgage relationship, not an executory one. This

is erroneous for two primary reasons: 1) the Deed of Trust fails to make the transaction not

executory, because title has still not been conveyed; and 2) almost none of the protections found in

a conventional mortgage relationship exist in the relationship between the Parties. “Black’s Law

MOTION FOR RECONSIDERATION – PAGE 3 OF 8 Dictionary defines deed of trust as ‘[a] deed conveying title to real property to a trustee as security

until a grantor repays a loan,’ and it goes on to remark, ‘This type of deed resembles a mortgage.’”

Riner v. Newman, 353 S.W.3d 312, 318 (Tex.App.—Dallas 2011, no writ). Texas courts have

described a deed of trust more simply as “a mortgage with power to sell on default.” Id. A deed

of trust empowers the one to whom the property is conveyed in trust to sell and convey the

property in a foreclosure sale if the grantor defaults. Id. at 319. Deeds of trust were commonly

found in conventional mortgage transactions, where the seller conveyed full title of a subject

property to the buyer and the buyer, in turn, conveyed said interest to a trustee, in trust, to secure

its loan to the lender. Deeds of trust enabled mortgagees to foreclose by nonjudicial means upon

mortgaged property and sell it at auction if the mortgagor defaulted on the underlying loan. Deeds

of trust, therefore, contemplate that the buyer is encumbering full title to the subject property, with

nothing remaining in the seller. Indeed, the conveyance of full title to the property from a seller to

a purchaser, subject to a deed of trust, is a condition precedent of Tex. Prop. Code § 5.081’s

provision that an executory contract can be converted in such a way that it is no longer executory.

However, where a vendor retains superior title until the debt is paid and actual title is not

conveyed to the purchaser, whom cannot therefore encumber the same in a deed of trust, the

contract remains incomplete and executory. See Tex. Prop. Code § 5.081.

Secondly, in the conventional mortgage industry, the lender was usually a financial

institution, such as a bank. Such institutions typically provide their mortgagors with monthly

accounting of the status of their loan and, in some cases, even offer deferments. Mortgage

assistance and modification programs are also available through banks. Mortgagors participating

in this system are generally always aware of the current status of their contractual relationship

with their lending institution. Conversely, Defendant admits that he never provided Plaintiff with

MOTION FOR RECONSIDERATION – PAGE 4 OF 8 any accounting of the payments she made to him over the first seven (7) years after she purchased

the property, despite her repeated requests for accountings. Moreover, after she stopped paying

him because he refused to give her any accounting, she heard nothing from him for another five

(5) years before he finally made demand and sought to foreclose on the property. Hence, for the

majority of its existence, Plaintiff has been unaware of the status of her contractual relationship

with the Defendant. And Defendant is essentially arguing that it is a just result that Plaintiff have

fewer rights than those accorded to persons protected under Subchapter D of the Texas Property

Code, who are entitled to annual accounting of the status of their account, when that statute was

enacted to institute in owner-financing arrangements some of the protections found in the

conventional mortgage industry. Indeed, the only thing conventional about the transaction

between Plaintiff and Defendant is that it reflects the type of executory contract for conveyance

Subchapter D was designed to cover.

C. Defendant’s Interpretation of Subchapter D Undermines Its Purpose.

The legislative intent of Subchapter D is to provide the similar protections and disclosures

in owner-financing scenarios as those found in the conventional mortgage industry. Defendant

does well in exploring what gave rise to Subchapter D, while missing entirely its purpose.

Recognizing the abuses taking place in the owner-financing industry, particularly in Las Colinas,

the Texas Legislature, in enacting Subchapter D, determined to hold owner-sellers to something

akin to the standards enjoyed by those in the traditional mortgage industry. It granted those buyers

in owner-financing situations the right to notice and an opportunity to cure any default (§§ 5.063-

65), equity protection (§ 5.066), disclosures from the seller (§ 5.069), and annual statements of

account (§ 5.077); items already enjoyed by their convential mortgage counterparts. If owner-

sellers could avoid applicability of Subchapter D by simply having buyers execute a real estate

MOTION FOR RECONSIDERATION – PAGE 5 OF 8 lien note and deed of trust, while still not conveying actual title, the whole purpose of the statute

could be easily avoided and Subchapter D rendered meaningless. A court should not adopt a

construction of a statutory provision that renders it meaningless. See Epco Holdings, Inc. v.

Chicago Bridge & Iron Co., 325 S.W.3d 265, 270 (Tex.App.—Houston [14th Dist.] 2011, pet.

dismissed). Therefore, by espousing that Subchapter D does not apply to transactions involving

real estate lien notes secured by deeds of trust, where title is still withheld pending satisfaction of a

series of obligations over an extended period of time, Defendant is arguing for a loophole that the

statute does not, and this Court should not, recognize.

D. The Court Ordered Relief Not Requested in Defendant’s Motion.

Plaintiff hereby objects to the Court’s ruling to the extent that it grants relief to Defendant

that was not requested in his Motion for Summary Judgment on Pleadings. A summary judgment

on a claim not addressed in the motion is generally reversible error. G&H Towing Co. v. Magee,

347 S.W.3d 293, 297 (Tex. 2011). Specifically, the Court ordered that the Notice of Lis Pendens

that Plaintiff filed during the pendency of this action is void and of no effect. A finding for this

relief was not requested in Defendant’s Motion and should not have been issued by the Court.

Plaintiff therefore requests that the Court vacate this portion of its order.

CONCLUSION

Subchapter D of the Texas Property Code clearly applies to Defendant’s real property

transaction with Plaintiff, because it was executory, since title to the property was withheld

pending fulfillment of the installment payments due on the note. Defendant must therefore

comply with Subchapter D as it pertains to the giving of notice and an opportunity to cure found

under §§ 5.063-5.066, as well as the giving of annual statements found under § 5.077.

MOTION FOR RECONSIDERATION – PAGE 6 OF 8 Defendant’s failure to comply with these statutory provisions entitles Plaintiff to the relief

requested in Plaintiff’s Original Petition and Plaintiff’s Motion for Summary Judgment. It was

error for the Court to grant Defendant’s Motion for Summary Judgment on Pleadings, which

should have been denied. Instead, Plaintiff’s Motion for Summary Judgment should have been

granted. Plaintiff respectfully requests that the Court reconsider and amend its ruling as requested.

WHEREFORE, PREMISES CONSIDERED, Plaintiff Bobbie White respectfully requests

a. reconsideration of its ruling of August 15, 2014;

b. denial of Defendant’s Motion for Summary Judgment on Pleadings, in its entirety;

c. granting of Plaintiff’s Motion for Summary Judgment, in its entirety; and

d. such other and further relief, both at law and in equity, to which she may show

/s/ Tony Pitts By: ______________________________ Tony Pitts State Bar No. 24060429

P.O. Box 5369 Round Rock, TX 78683 512.825.5545 512.244.4355 (Fax) tapitts@taplawfirm.com

MOTION FOR RECONSIDERATION – PAGE 7 OF 8

I hereby certify that on this the 15th day of September 2014, a true and correct copy of the foregoing document was delivered via facsimile to the following counsel of record:

Fred Walker Kimberly Nash Fred E. Walker, P.C. 609 Castle Ridge Road, Ste. 220 Austin, TX 78746 512.330.1686 (Fax) Attorneys for Defendant /s/ Tony Pitts ___________________________________________ Tony Pitts

MOTION FOR RECONSIDERATION – PAGE 8 OF 8