Now that Ethics Jeopardy has been presented at the State Bar of Texas Property Tax Legal Seminar, it is available online. You should be able to access the jeopardy game from the beginning at www.rongray.com/ethics. To jump straight to the first board, go to www.rongray.com/ethics/jeopardy.html and miss the exciting preliminaries.

To enhance your viewing pleasure, there are a few things that you need to be aware of:

1.    The game was created for use with the Firefox browser. It has not been tested with other browsers. It is possible some portions of the game will not work properly with other browsers or that the screens (especially the boards) might not fit entirely in the browser window and thus require scrolling.

2.    The boards were set up for an approximate screen size of 1024x768 pixels. That approximate width should work best, but I have not tested many other resolutions. If your screen is set to a much larger pixel width common to larger screens, then the board will appear smaller rather than filling up most of the screen. If you use a smaller pixel setting, then you will likely have to scroll vertically to see all of the board and the categories might appear scrunched (that is a word, right?).

3.    For any slide but the boards themselves, move to the next slide by clicking on the words in the center. So if you are on an answer and click on the center words, you will be taken to the question. If you are at the question, then clicking will take you back to the board. You should not have to use the back button in your browser.

4.    For the boards themselves:
            A.    Clicking on a category title will take you to a brief explanation of the topic covered in that category. Clicking on that explanation will take you back to the board. The game is a mixture of legal ethics, recent property tax amendments, and other "related" matters.
            B.    Clicking on a dollar amount will take you to the answer for that category amount. Clicking on the answer will take you to the question. Clicking on the question will take you back to the board.
            C.    The dollar amounts for answers that have already been clicked should disappear on the board to show that they have already been used so as to prevent repeats. However, if you mouseover a blank tile, you will see the dollar amount. If for some reason you wish to return to an answer and question, you can do so by clicking on the dollar amount that shows up on the mouseover.
            D.    Once you have clicked on an amount and it is blanked out on the board, clearing your browser history should restore the board to show all dollar amounts. This should restore the entire board. An advantage to viewing online is that, if you do not clear you browser history, you can return to the board later and the answers you have already viewed shuld be blank, as though you have bookmarked your place.
            E.    Once a board is complete or as you wish, you can click on the bottom row to move to the next board. For example, at the bottom of the first board, it says Double Jeopardy and will take you to the next board. There are three boards in all: regular, double, and triple,

DISCLAIMER: No brain cells were harmed in the presentation of this program.
 

So, in the particular problem presented thsi week, I sent the consultant on a quest to get information from his client.

If it is determined that a real tax certificate was obtained at closing, then the owner might be able to tell the tax assessor "not my problem." Because the taxes relate to a period of time before the current owner's title, there would be no personal liability. And because of the true tax certificate, there would be no tax lien on the property to worry about clearing.

Unfortunately, based on past experience with similar situations, I suspect that a resolution is not going to be that easy. More than likely, instead of paying $10 for a real and useful tax certificate, the title company likely paid a multiple of that amount for a useless document. (I am makiing the assumption that the charge on the closing statement for a tax certificate is truly the cost paid by a title company with no markup. Not having ever worked for a title company, I have no idea what their policies and procedures are in this regard.)

So, assuming the owner has lost the protection that would have been obtained with a real tax certificate, what are the options?

Of course, he or she could try to sue the previous owner on a breach of warranty claim based on the real estate transaction. That will depend though on such things as the warranty terms of the deed, the terms of the real estate contract, and whether the owner even still exists. This last point is not as much a given as you might think as many commercial properties are owned by single-asset entities, set up for the sole purpose of owning that particular real estate, and having their existence forfeited soon after the asset is sold.

Another potential option is the title insurance company if a title insurance policy was obtained. That's where the third question comes in. Title insurance is supposed to protect a purchaser against any potential title flaws, including liens, that might be found to impair the title.

In many cases, the title company will do everything it can to try to include an exception in the policy and avoid any liability that might arise due to tax issues. They, of course, exclude any taxes for future years; and unless taxes are paid or escrowed at closing, also for the current year. And if they are aware of the potential for rollback taxes, they will exclude those as well.

The question becomes how broad the wording of the exclusions are. (And also, in my opinion, perhaps whether the title company induced the purchaser to buy a title policy and accept a tax exclusion in reliance on a tax certificate that turned out to be worthless for the problem that has arisen. But as that is not my area of law, I will leave that fight to others.)

Also, regardless of the exclusion's wording, one can expect the title company to try to argue its way out of any liability, especially if the taxes at issue are a significant amount. In the specific case this week, I understand we were talking in excess of $200,000.

I would anticipate a title company's first lines of defense might be claims that the taxes were not assessed until after closing and thus there was no lien on the property for those taxes at the time of closing.

However, Section 32.01(a) of the Tax Code provides: "On January 1 of each year, a tax lien attaches to property to secure the payment of all taxes, penalties, and interest ultimately imposed for the year on the property, whether or not the taxes are imposed in the year the lien attaches."

Based on this language, it would appear that the omitted property tax lien actually relates back to January 1 of the year of omission. Therefore, the lien existed prior to the date of closing. A real tax certificate could have wiped out that lien, avoiding the problem.

An interesting legal fight perhaps. But as said previously, a fight for others.

As a property tax attorney, I get calls and emails from property owners and tax consultants inquiring about property tax issues. Most often the inquiry recites a certain set of facts, a problem that has arisen regarding those facts, and "how can I fix it?" Of course, not every problem can be fixed.

Often, multiple inquires will involve a similar set of facts and a similar problem. I handled such an inquiry this week; handled not in the sense of resolving the problem but instead sending the consultant on a quest for more information.

The set of facts was one repeated many times over the years: a client purchased a piece of property and assumed everything was okay with the taxes. And the problem now existing has also been repeated several times over the years: a year or so after the purchase the appraisal district has given notice of omitted property and the intent to increase the tax assessment for years prior to the current owner's acquisition of title.

When such facts and problem presents itself, I might not know if the problem can be resolved (the truth is that, if there really was omitted property, it probably cannot be fully resolved); but I do know what three questions need to be asked immediately of the owner:

1. Did you get a tax certificate when you purchased the property?
2. Is it a real tax certificate?
3. Did you obtain a title insurance policy?

Much too often, the answer to the first question is "yes" and the answer to the second question ends up being "no." I'll address the third question later.

At closing, the purchaser of real estate will likely receive among the many pieces of paper being passed by him or her a document described as and perhaps even entitled "Tax Certificate." This document will indicate what if any property taxes are shown as being delinquent on the property, how much the taxes for the current year are (or perhaps an estimation if closing is prior to the current year assessment), and that there has or has not been any special appraisal valuations that might result in rollback taxes being issued (most commonly, open space or agricultural use valuation).

The seller or purchaser will also be assessed a charge for this document, a fee on the closing statement that will vary depending on the title company. A quick search online revealed title company fee estimates of as little as $20 to as much as $55 for a tax certificate, but it could potentially be higher.

And what is the value of this certificate? In many cases, zero.

The fact is that a purchaser of real estate can go to the local tax assessor and receive a true tax certificate for a charge of $10. And that real tax certificate could provide at least some protection for the purchaser.

Specifically, Section 31.08(b) of the Texas Tax Code provides that when the transfer of property is accompanied by a real honest to gosh tax certificate from the tax assessor and that certificate "erroneously indicates that no delinquent taxes, penalties, or interest are due a taxing unit . . . or . . . fails to include property because of its omission from an appraisal roll," then the tax lien on the property is extinguished and the purchaser is absolved of liability for the back taxes including the taxes subsequently assessed for omitted property.

In other words, the seller will have personal liability for those taxes because he or she owned the property on January 1 of the omitted property year; but the purchaser will have no personal liability for the omitted property tax and also will not face the risk of having to pay off the taxes in order to clear a lien on the property.

To be continued

As I noted in my prior post, I recently received this year's edition of Super Lawyers Rising Stars, a magazine identifying the Rising Stars in the Texas legal profession. Though I questioned the purpose of such ratings as Super Lawyer and Rising Star when such ratings appear to be primarily by lawyers of lawyers for lawyers supported by lawyer advertising, I also pointed out that I did not really question the qualification of those lawyers named.

I perhaps have a greater question as to why other attorneys are not also included, as I find it difficult to discern why one lawyer I know is considered a Super Lawyer while another lawyer that I consider just as if not more competent in his or her practice area falls short.

And lest you think this is sour grapes, I will tell you that I have my own resume padder. Martindale-Hubbell, another rating service by lawyers of lawyers for lawyers which describes itself as "the gold standard in attorney ratings" (again a direct quote from its website), has granted me an AV-Preeminent rating, for whatever that is worth.

I will tell you that Super Lawyers is owned by Thomson Reuters while Martindale-Hubbell at one time was owned by the same company that owns LexisNexis, though it is somewhat difficult to determine if there is a remaining link between Martindale-Hubbell and LexisNexis. Thomson Reuters and LexisNexis are both major suppliers of legal materials and services to lawyers, so there is perhaps some incentive to pump up some lawyers with ratings that they can use on their resumes.

Both Super Lawyers and Martindale-Hubbell maintain websites by which any member of the public who might stumble upon them can search for a lawyer in a particular geographic region or type of practice. Interestingly, Martindale-Hubbell appears to include all lawyers in its searchable data, whether a particular lawyer has a good rating, a bad rating, or no rating at all through their service. It appears that Super Lawyers only includes those lawyers that it has given a rating of Super Lawyer or Rising Star; however, it does not appear to matter if such rating is current or not as a search of various lawyers turned up lawyers who have received no rating since a decade ago. I suppose once you are super or rising you are considered good enough to be included in their search data forever, but if you never make the grade you are forever excluded.

Super Lawyers and Martindale-Hubbell are certainly not the only lawyer ratings services or attempts. There are other rating services. I know my own firm's website indicates the firm has a designation of "best" from U.S. News & World Report.

At various times in the past, there have been other more localized ratings, either statewide or even more local. I think perhaps Texas Monthly magazine may have done this in the past and perhaps still does. I believe so has and perhaps does D Magazine. I recall even the Dallas Morning News and other local newpapers or magazines having provided some type of rating in the past if not continuing to do so.

Instead of some type of designation such as Super Lawyer, Rising Star, or AV-Preeminent, these ratings appear to just use such superlatives as best, outstanding, or top lawyers.

And it is one such localized rating that explains why I am not upset for not being super. A few years ago, I was glancing through the names of the best or top lawyers in Dallas, I believe in the Dallas Morning News. Among those lawyers I noticed a name of a well-known and well-respected lawyer who unquestionably based on reputation would be considered to qualify for such a designation. The only problem was that he had died several months before.

I figured if I was not by that time a better lawyer than one who was presumably no longer practicing and not even alive, then what difference did it really make anyway.

Last week I received in the mail the annual Super Lawyers Rising Stars edition. For those of you who might not be familiar, Super Lawyers "is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high-degree of peer recognition and professional achievement." That is a direct quote of how they describe themselves on their website. They claim to operate in all 50 of the United States plus the District of Columbia as well as in the United Kingdom and publish a magazine on a "monthly or more" basis (a direct quote from their magazine).

I assume that the "monthly or more" relates to when they decide to publish their magazines identifying either the Super Lawyers or the Rising Stars of various states. I have only seen the magazines listing Texas attorneys. Perhaps there is a separate magazine for each state, though I suspect more sparsely populated states could be lumped together. In any event, the Texas magazines appear to come out twice a year; one for Super Lawyers and one for Rising Stars.

As stated, there are Super Lawyers and there are Rising Stars. Though I am not absolutely certain of the difference, it appears that Rising Stars are either younger lawyers or those who have only practiced a certain number of years. I assume, with age or more years in practice, lawyers move from the Rising Star category and become eligible for Super Lawyer status, though over the years I have noticed that Rising Star status (even achieved over a number of years) does not necessarily translate to Super Lawyer status.

I assume the Texas version of the magazine is mailed gratis to all attorneys in Texas. I know I have never paid for a subscription. I also know that about the same time that I receive my annual magazine other lawyers in my firm also receive the magazine. I do not know if the magazine is sent to anyone else in the state beyond lawyers, though I suppose it might make its way to public libraries or law schools.

With no subscription fees and "monthly or more" publication of magazines mailed to lawyers across the country, as well as a website to maintain, it seems pretty clear that Super Lawyerrs is advertising supported. And the magazine is filled with numerous advertisements touting law firms with individuals who have achieved either Super Lawyer or Rising Star status. A glance through the website reveals some attorneys with pictures and enhanced details in comparison to others, which one would assume is the result of an advertising fee as well.

But Super Lawyers points out that "lawyers do not pay to be included" in the publication, a statement I believe to be true since I know various lawyers named as Super Lawyers or Rising Stars who have paid nothing even in advertising to achieve such designations. Instead the lawyers selected for the honors go through some type of vetting process, according to the magazine. Attorneys are nominated by other lawyers and then are "validated" through research before receiving their designations.

I have little criticism of the designations granted to the listed attorneys. As stated previously, I have worked or do work with some attorneys named as Super Lawyers and Rising Stars, and know them to be fine lawyers. Also, in perusing the names of the many attorneys included, I come across attorneys who I have run into during my years in practice and see no particular reason to fault their designations. Of course, I have never even heard of the vast number of lawyers named and thus have no reason to question their inclusion.

I do wonder about the purpose of a rating by lawyers essentially to be used by other lawyers with that rating system supported by lawyers advertising to other lawyers. But I assume it is a nice way to pad a resume.

To be continued . . .