The Copp Law Firm, PC - A Dallas Business & Real Estate Law Firm

Is the buyer of a business liable for the seller's sales tax obligations?

2011-11-23T15:58:00.002-06:00

A purchaser of any business or stock of goods is liable for payment of any amount owed the state by the seller under the Title 2 (Chapters 101 through 211) of the Tax Code up to the amount of the purchase price.

As such, the purchaser must, at the time of purchase, withhold a sufficient amount from the purchase price to pay any amounts due including penalties and interest or any other amounts assessed or to be assessed against the seller.

A purchaser's duty to withhold the amount owed by the seller will continue until the seller presents to the purchaser a certificate from the comptroller stating that no tax is due.

When determining if a "business" has been or will be sold, the comptroller will examine the transaction to determine what the parties to the transaction intended to buy and sell. The answer in each situation will depend on the type of business involved. A seller may have sold a "business" even when few assets were transferred. Depending on the type of business involved, a "business" may be sold if an owner sells:
(1) a building, land, furniture, fixtures, inventory, and the right to use the seller's trade name; or
(2) all the capital assets of a business; or
(3) the name and goodwill of a business; or
(4) all the inventory of a business; or
(5) fixed assets and realty necessary to operate a similar business as the seller at the same location.

A certificate stating the amount due or that no tax is due may be obtained in the following manner: The seller, the seller's assignee, or purchaser must make a written request for the certificate before the sale of the business is completed. The comptroller must then issue a certificate to the seller within 60 days after the records are made available by the seller for audit or within 60 days after receiving the written request for the certificate, whichever period expires later, but in any event not later than 90 days after receiving the written request. If any amount is found to be due, it must be paid before the certificate will be issued. Failure of the comptroller to timely issue the certificate to the seller will release the purchaser from any further obligation to withhold an amount from the purchase price.

If you are buying or selling a business, feel free to contact our Dallas office to discuss at (214) 206-1999 or via email at info@copplaw.com.

What happens if your spouse forgets to remove his/her ex as a life insurance beneficiary?

2011-11-23T15:43:00.000-06:00

Under the Texas Redesignation Statutes, a pre-divorce decree designation of an ex-spouse as the beneficiary of a life insurance policy is void. For example, John Doe was married to Jane Doe and designated her as the beneficiary of his life insurance policy in 2000. In 2005, John and Jane get a divorce. In 2009, John passes away. Jane would NOT be entitled to receive the proceeds of the life insurance policy.

Understandably, there are a few exceptions to this general rule: (1) if the divorce decree ratifies the pre-decree designation; (2) if the insured redesignates the former spouse as the beneficiary after the date of the divorce; or (3) the Texas Redesignation Statutes to not apply to ERISA death benefits.

If a designation is void as a result of the redesignation statutes described above, the proceeds of the policy should be paid to the named alternative beneficiary or, if there is not a named alternative beneficiary, to the estate of the insured.

If you believe that you are entitled to the proceeds of a life insurance policy as a result of the redesignation statutes, we highly recommend that you contact an attorney as soon as possible to make a claim on your behalf. Please note that as long as the life insurance company pays the death benefit to the original beneficiary before receiving proper notice from an alternate beneficiary, they are off the hook and will not be liable to the alternate beneficiary!

Texas Series LLC

2011-02-02T10:18:00.002-06:00

There are two main advantages of a series LLC over a traditional LLC. The first advantage is the cost. Although it will initially cost about the same as a traditional LLC, you can create as many subsidiary LLCs or "series" as you want. Each series can be created without paying an additional filing fee to the secretary of state. In effect, you are able to form subsidiary LLCs without paying $300 to the secretary of state for each formation.

The second main advantage is the ability to compartmentalize liabilities. The debts, obligations and liabilities of a particular series will be enforceable only against that series’ assets, and will not be enforceable against the other series in the LLC or against the LLC generally, and vice versa.

For more information see our Texas Series LLCs webpage.

Do I have to prepare a new will to replace my executor?

2010-07-23T08:11:00.001-05:00

Under the Texas Probate Code, in order to modify the clause designating the executor, you would need to add a codicil to the will revoking the original clause which designated the executor in favor of the new clause designating a different executor. The codicil would need to be signed by the testator and witnessed in the same manner as the will. The relevant section of the Texas Probate Code is: § 63. REVOCATION OF WILLS. "No will in writing, and no clause thereof or devise therein, shall be revoked, except by a subsequent will, codicil, or declaration in writing, executed with like formalities…"

The End of Seller Financing?

2010-06-21T13:14:00.001-05:00

In the past, Seller financing of up to 5 transactions in a rolling 12 month period was permitted without licensure under the Texas Mortgage Broker Act (Chapter 156 of the Texas Finance Code). This exemption was recently eliminated by the implementation of the Texas SAFE Mortgage Licensing Act of 2009 (Chapter 180 of the Texas Finance Code).** The Texas SAFE law was mandated by the federal SAFE Mortgage Licensing Act of 2008 which was signed into law in July 2008. In short, Texas, like most states, is simply following the federal mandate.

Several factors should be considered when determining if a seller financer is required to be licensed under the Texas SAFE Act.

The Texas SAFE Act exempts an individual who offers or negotiates terms of a residential mortgage loan secured by a dwelling that serves as the individual’s residence. Thus, a homeowner may sell his or her personal residence and offer financing without triggering the licensure requirements under the Texas SAFE Act.

An exemption is also granted for a person who offers or negotiates terms of a residential mortgage loan on behalf of a person of direct familial relationship.

Additionally, the Texas SAFE Act defines a residential mortgage loan as a loan primarily for personal, family, or household use. Generally speaking, a loan is for personal, family, or household use if the buyer intends to occupy the property as a primary, secondary, or vacation residence. If the buyer is purchasing the property as an investment, the transaction is not for personal, family, or household use and is not subject to licensure requirements under the Texas SAFE Act.

In most cases, if the transaction does not meet one of the above descriptions, then the individual who acts in the capacity of a residential mortgage loan originator (takes an application or offers or negotiates terms) must be licensed for even just one occurrence. This does not necessarily mean that the seller financer must be licensed. The seller financer may engage a licensed residential mortgage loan originator to conduct all the activities that require a license. In this scenario, the seller financer should make sure to avoid conducting any activities that would require licensure.

**UPDATE - On August 17, 2010 the Commissioner of the Texas Department of Savings and Mortgage Lending signed a written notice that the Department will continue to allow the exemption found in § 156.202(a)(3) [up to 5 seller financed transactions in a rolling 12-month period], until or unless there is a subsequent statutory amendment or a rule adopted under this chapter, in which case said amendment or rule will supersede.

Is Your Landlord Facing a Foreclosure?

2010-04-20T09:23:00.006-05:00

You are paying the rent, but your landlord is not paying the mortgage. Unfortunately, this scenario is happening across America all too often. In 2009, the federal government decided to take action to help renters in your situation. The Protecting Tenants at Foreclosure Act of 2009 (the “Act”) modified the landscape of the foreclosure process.

Before the Act, the investor who purchased the foreclosed property did not have to give effect to an existing lease. As such, the tenant or renter would be evicted in a matter of weeks.

After the Act, the foreclosure sale purchaser must give the “bona fide tenant” at least 90 days notice to vacate (not the normal 3 day notice to vacate). In addition, the tenant may be entitled to remain in the property for the remainder of the lease if the foreclosure sale purchaser does NOT intend to live in the foreclosed property.

As a result of the Protecting Tenants at Foreclosure Act of 2009, tenants have a new bundle of rights that may be asserted. Strategically, these rights should be asserted at the proper time and forum. If these new rights are asserted properly, they can be powerful tools in your favor.

The Act is extremely unfavorable to mortgage companies and foreclosure sale investors. As such, they are currently looking at ways to combat its detrimental effect. If your landlord is facing a foreclosure, call my office as soon as possible to discuss your legal options.

For more on this topic go to: Protecting Tenants at Foreclosure Act

What Do You Do After You Receive a Money Judgment in Your Favor?

2010-04-19T19:12:00.004-05:00

Part One: Abstracting the Judgment

Once you receive a judgment awarding monetary damages, you are able to start post-judgment collection activities. Post-judgment collection activities include, without limitation, (1) recording an abstract of judgment, (2) execution on the judgment, (3) garnishment, (4) turnover, (5) charging order and (6) receivership.

Today, we will focus on abstracting the judgment. Once you have a money judgment, you or your attorney would have the judgment reduced to one page (this is called the “abstract” or “abstract of judgment”) and recorded in each county in which you wish to perfect the judgment lien. A judgment itself does not create a lien.

Recording the abstract of judgment is usually the most simple collection activity as it entails clerical efforts to simply record the abstract in one or more Texas counties. Once the abstract is properly recorded and indexed, the judgment creditor will have a judgment lien on all nonexempt real property (real estate) of the judgment debtor in each Texas county in which the abstract is recorded.

The lien continues for ten years from the date of recording and indexing, as long as the judgment does not become dormant.

For more on Debt Collection in Texas: Debt Collection Law Firm

When Your Landlord Fails to Return the Security Deposit

2010-04-12T09:53:00.010-05:00

Generally speaking, Texas law requires landlords to refund security deposits within 30 days from the day the leased premises is surrendered by the tenant. However, the landlord is allowed to retain all or a portion of the security deposit (not including normal wear and tear) if the lease so allows. If the landlord deducts any amount from the security deposit or does not return any portion the security deposit, the landlord is required by law to provide the tenant with a written description and itemized list of all deductions provided that (1) the tenant does not owe rent (2) there is no controversy concerning the amount of rent owed and (3) tenant provides landlord with a forwarding address.

A landlord who in bad faith** retains a security deposit in violation of the law is liable for an amount equal to the sum of $100, three times the portion of the deposit wrongfully withheld, and the tenant's reasonable attorney's fees in a suit to recover the deposit.

Furthermore, a landlord who in bad faith does not provide a written description and itemized list of damages and charges in violation of the law: (1) forfeits the right to withhold any portion of the security deposit or to bring suit against the tenant for damages to the premises; and (2) is liable for the tenant's reasonable attorney's fees in a suit to recover the deposit.

**A landlord who fails either to return a security deposit or to provide a written description and itemization of deductions on or before the 30th day after the date the tenant surrenders possession is presumed to have acted in bad faith.

For more information, contact our Dallas law office today.