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Know your Texas consumer protection codes, Part two of series

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Texas has some surprising (and very agreeable) consumer protection codes on the books that you as a consumer should be aware of. Most of these codes are “tie-in statutes,” which means that they can be brought under the Texas Deceptive Trade Practices Act (DTPA). Since the DTPA allows very favorable remedies, this is a definite advantage to the consumer. Scutt Law, PLLC will be presenting and explaining a few of the tie-in statutes at a time in installments, so that you the consumer are aware of the protections afforded to you under these Acts. This installment covers the removal of unauthorized vehicles from parking facilities, rent-to-own agreements and self-storage facility liens.

Removal of Unauthorized Vehicles from Parking Facility or Public Roadway Act [Tex. Trans. Code Ann. Section 684.086]: This Act protects consumers against the wrongful towing of a motor vehicle, or the charging of unreasonable fees for such towing. The Act applies to any public or private property that is used for restricted or paid parking of motor vehicles.

Under the Act, a parking facility owner may remove a vehicle from a facility only if the owner provides actual notice to the consumer. Notice requires that signs be posted on the property, and must comply with the requirement of the Act regarding size, location and content. For example, the sign must state “unauthorized vehicles will be towed at owner’s expense,” and contain the international symbol for towing and a telephone number that is answered 24 hours a day. Additionally, a parking facility owner may not accept anything of value from a towing company in connection with the removal of a vehicle from a parking facility, and he or she may not have a monetary interest in that towing company.

The Rental-Purchase Agreements Law [Tex. Bus. & Com. Code Chapter 92, Sections 92.001-92.202]: This law is designed to regulate rent-to-own agreements and the advertising of such agreements. The main goal of this law is to make sure that consumers are fully informed of the true nature of the transaction and the real costs involved. Think of an agreement with a rental outlet that allows a consumer to rent a television set. That agreement would be subject to this law if, for instance, the agreement provides that after a period of 24 consecutive monthly payments, the consumer will become the owner of the television set.

The law protects consumers by requiring that rent-to-own agreements be written in plain English (without legal jargon) and in any other language used by the merchant in an advertisement related to the agreement. The agreement must make full disclosure to the consumer of the terms of the agreement, and limits certain unconscionable clauses that may be inserted into the agreement by the merchant. The agreement also must disclose whether the merchandise is new or used, the amount and total of payments, the cash price of the merchandise, and the amount the consumer may be responsible for if the merchandise is damaged or destroyed.

Self-Storage Facility Liens Act [Tex. Prop. Code Ann. Sections 59.001-.046]: This Act is designed to protect consumers by regulating the process by which a consumer’s property is sold to satisfy unpaid rent at a self-storage facility. The Act provides that a lien (an official claim or charge against property or funds for payment of a debt or an amount owed for services rendered) attaches to stored property from the date the tenant places the property in the self-storage facility. This lien takes priority over all other liens on the same property, so even if the consumer still owes money for the purchase price of that property (for instance, for a bedroom set), the self-storage facility may seize the property, anyway. The consumer may redeem the property that has been seized prior to its sale by the storage facility by paying the amount owed the facility plus any reasonable expenses incurred by the seizure.

However, the storage facility may not seize the consumer’s property without a court judgment unless the original contract between the consumer and the facility includes a provision authorizing the seizure and sale in conspicuous bold or underlined print. If the provision is present in the original contract, the storage facility must deliver a notice to the consumer prior to seizing the consumer’s property. It is important to note that the requirements under this Act may not be waived by the consumer.

Texas has some very beneficial consumer protection laws, and it is to your advantage as a consumer to know your rights and to act on them. Therefore, you should contact an attorney if you feel you have a claim under the DTPA or any of the tie-in statutes.

*Disclaimer: The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.

Know your Texas consumer protection codes, Part one of series

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Texas has some surprising (and very agreeable) consumer protection codes on the books that you as a consumer should be aware of. Most of these codes are “tie-in statutes,” which means that they can be brought under the Texas Deceptive Trade Practices Act (DTPA). Since the DTPA allows very favorable remedies, this is a definite advantage to the consumer. Scutt Law, PLLC will be presenting and explaining a few of the tie-in statutes at a time in installments, so that you the consumer are aware of the protections afforded to you under these Acts. This installment covers business opportunities, door-to-door sales, motor vehicle lemon laws and credit repair services.

Business Opportunity Act [Tex. Bus. & Com. Code Ann Sections 41.001-.303]: This Act protects people who purchase or lease products, equipment, supplies or services that will be used to begin a business in which the seller will continue to participate. Think of the advertisements you see around town or in your e-mail inbox that talk about starting your own business, working from home and making lots and lots of money per week doing next to nothing (usually for some sort of start-up fee). Since many (not all) of these offers are scams, the Business Opportunity Act was designed to protect Texas consumers from these enticing albeit illegitimate “opportunities.”

Under the Act, a business opportunity is regulated by the law if all three of the following elements are present: (1) it requires you, the buyer, to pay $500 or more to start the business, AND (2) the seller promises you will earn or are likely to earn a profit exceeding the initial investment, AND (3) the seller promises any one of the following: (i) the seller will provide locations or help you find locations on property not owned by either you or the seller for the use of or operation of the products, equipment, supplies, or services the seller is leasing or selling; (ii) the seller will provide a sales, production, or marketing program; this does not apply if the arrangement is defined as a “franchise” under federal regulation and certain requirements are met; or (iii) the seller will buy back any products, supplies, or equipment purchased, or any product made, fabricated, grown or bred by the purchaser using equipment or products sold or leased by the seller.

If a business opportunity meets these criteria, under the law the business must be registered with the Secretary of State before the seller advertises it or offers it for sale. Among other things, the business also may not: (1) employ a representation, device, scheme or artifice to deceive a purchaser; (2) make an untrue statement of material fact or omit a material fact; (3) represent that the business opportunity provides or will provide income or earning potential unless the seller has documented data to support the claims and the data is disclosed to the purchaser; or (4) make a claim or representation in advertising or promotional material or in an oral sales presentation that is inconsistent with the information required to be disclosed by the Act.

Home Solicitation Act [Tex. Bus. & Com. Code Ann. Sections 39.001-.009]: This Act protects consumers from the pressure that often accompanies a sale at their residence (think door-to-door sales). The law applies to the sale of goods or services that exceeds $25 and real property that exceeds $100, and gives the consumer a three day right to cancel the transaction.

Motor Vehicle Commission Code [Tex. Motor Vehicle Comm’n Code Ann. art. 4413(36)]: This Act contains the Texas “Lemon Law,” and it protects consumers by regulating the distribution and sale of new (not used) motor vehicles. The law requires a manufacturer or distributor to make any repairs necessary to make the vehicle conform to the express warranties. If the vehicle cannot be conformed to the warranty within a reasonable number of attempts, the manufacturer or dealer must either: (1) replace the vehicle with a comparable vehicle; or (2) accept a return of the vehicle and refund the owner the full purchase price less a reasonable allowance for the owner’s use of the vehicle. The owner must also be reimbursed for reasonable incidental costs resulting from the loss .

When has the manufacturer or dealer reached a “reasonable number” of attempts to repair the vehicle? Generally, whenever: (1) the same nonconformity has been subject to repair four or more times within the first 24 months or 24,000 miles, and two of the attempts were within a period of 12 months or 12,000 miles after the date of sale (if it is a safety defect, only half as many repair attempts are required); or (2) if the vehicle is out of service for repair for 30 or more cumulative total days in 24 months or 24, 000 miles.

Credit Service Organizations [Tex. Fin. Code Ann. Sections 393.001 et seq.]: This act protects consumers who purchase the services of a credit service organization (also called a “credit repair service”). Think of the organizations that advertise that they can improve a person’s credit history or rating, or obtain an extension of credit. It should be noted that the Act does not apply to licensed lenders, licensed real estate brokers, licensed attorneys, consumer reporting agencies or nonprofit organizations.

The Act requires that the organization register with the state and post a surety bond, and, among other things, also gives the consumer the right to cancel a contract with the organization at any time before midnight of the third day after the date of the transaction.

Texas has some very beneficial consumer protection laws, and it is to your advantage as a consumer to know your rights and to act on them. Therefore, you should contact an attorney if you feel you have a claim under the DTPA or any of the tie-in statutes.

*Disclaimer: The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.

Texas consumers: Know your rights

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Consumers in Texas are protected by the Texas Deceptive Trade Practices and Consumer Protection Act (hereinafter “DTPA”). The purpose of the DTPA is to “protect consumers against false, misleading, and deceptive trade practices, unconscionable actions, and breaches of warranty and to provide efficient and economical procedures to secure such protection.” [DTPA §17.44] This means that Texas consumers are not limited to recourse under contract law or common law fraud, which often lead to insignificant remedies.

Are you a consumer? Yes, if you are “an individual, partnership, corporation, this state, or a subdivision of this state who seeks or acquires by purchase or lease any goods or services.” [DTPA §17.45(5)] However, you are not a consumer for purposes of the DTPA if you are a business consumer with assets of $25 million or more. It is important to be aware that the consumer does not have to be the one who actually pays for the the goods or services. Therefore, a child can be a consumer with respect to goods and/or services paid for by the parent, and an employee can be a consumer with respect to goods and/or services paid for by the employer.

“Goods” includes tangible property, inventory and real estate. “Services” excludes merely lending money as well as the rendering of a professional service, the essence of which is the providing of advice, judgment or opinion. However, the professional service exemption does not apply to express misrepresentations, breaches of express warranties, failures to disclose, or unconscionable actions or courses of action. Therefore, a plastic surgeon who tells his patient that his face will look exactly like George Clooney’s face after the operation can be sued under the DTPA for breach of an express warranty, if after the surgery the patient does not look exactly like Mr. Clooney.

It should be noted that the DTPA does not apply to a cause of action arisng out of a transaction, a project, or a set of transactions relating to the same project that involves a total consideration provided by the consumer of more than $500,000. However, this does not apply to a residence, so the DTPA can apply to a home worth more than $500,000.

Keep in mind that there are some prerequisites to a DTPA claim. The consumer must give the defendant 60 days written notice before filing a claim, and the defendant must be given 60 days from receipt or 90 days after answering to propose a settlement offer to the consumer. Also, an action under the DTPA must be brought within two years after the date on which the false, misleading, or deceptive act or practice occurred or within two years after the consumer discovered or should have discovered the occurrence. Therefore, it is important that consumers know their rights and act quickly.

There are many more nuances to the DTPA, too many to mention here. However, the most important point is that consumers need to be mindful that the Texas legislature has a very effective consumer protection act on the books, and legal counsel can assist consumers in protecting their rights under the DTPA. Keep in mind when deciding whether or not to contact an attorney that in addition to damages and equitable relief, the DTPA mandates the award of attorney’s fees if the consumer prevails. So, if you are a consumer and you feel that you have a claim under the DTPA, you should contact an attorney to explore your options.

*Disclaimer: The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.

LEGISLATIVE PROTECTIONS FOR RESIDENTIAL PURCHASERS OF REAL ESTATE IN TEXAS

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THE POSITIVE AND NEGATIVE ASPECTS OF INSTALLMENT LAND CONTRACTS

In tough economic times such as these, buyers and sellers of real property often look to alternatives to conventional financing. The installment land contract is one such alternative. In Texas, installment land contracts are also known as “contracts for deed.” A contract for deed is a contract for the sale of real estate in which the buyer makes periodic payments to the seller and receives title to the property only after all, or a substantial part, of the purchase price has been paid, or regular payments have been made for one year or longer.

Once the requirements of the contract have been met by the buyer, the seller of the property will pass the title by recording the deed in the buyer’s name. In a nutshell, the seller retains legal title as well as the deed, and the buyer retains only equitable title until all of the buyer’s contractual requirements are satisfied.

The contract for deed is attractive to buyers who cannot obtain conventional financing, and who have a steady stream of income but not a lot of money to put down. Down payments under a contract for deed are usually small. However, the interest rates are often high, and the contract can contain an acceleration clause. An acceleration clause allows the seller to declare the entire amount of the principal and accrued interest due and payable immediately in the event of a default. Such a clause would surely lead to the loss of the property for the buyer, as well as the loss of any equity in the property that the buyer has accumulated up to that point.

The seller reaps many benefits under a contract for deed. Sellers who would have otherwise been unable to sell certain types of property are able to do so by using a contract for deed. Additionally, there are tax benefits, since the capital gains taxes can be distributed over the period of the contract instead of reported all at once. This results in substantial tax savings for the seller. However, if the seller is looking for a chunk of cash up-front at closing, the contract for deed would not be an attractive option. The most valuable benefit for the seller is that upon default by the buyer, the seller does not have to resort to foreclosure, which can be costly and time-consuming. Instead, since the seller already retains legal title as well as the deed, the seller may enforce a forfeiture of the purchaser’s interest.

Historically, contracts for deed have been ripe for abuse by predatory lenders. Therefore, the Texas legislature has added some statutory protections for buyers under the contract for deed (installment land contract), which aim to protect buyers of real property to be used as a residence from deceptive practices on the part of sellers. The protections include:

1. The seller may enforce the remedy of forfeiture and acceleration against a purchaser in default only if the seller gives the purchaser notice.

2. The purchaser has a right to cure the default within 30 days.

3. If the purchaser defaults after payment of 40% or more of the amount due or the equivalent of 48 monthly payments, the seller must proceed under a statutory power of sale through a trustee designated by the seller and may not enforce the remedy of possession or forfeiture and acceleration.

[see Tex. Prop. Code Ann. Sections 5.064, .065, .066]

Remember, regardless of whether you are using conventional financing or an alternative, purchasing a home may be the biggest investment you will ever make. Therefore, it is essential that you obtain the advice of an attorney-you will be happy that you did!

*Disclaimer: The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.

The Myth of The Poor Man’s Copyright

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One of the common myths in the music industry among struggling musicians without two nickels to rub together is that a copyright can be established by mailing a copy of the sheet music or a recording to oneself. The crux is that the United States Postal Service effectively notarizes and dates the envelope. The myth further suggests that when the envelope is received by the musician, it can be placed in safekeeping to establish the date of an original work of authorship.

Unfortunately, this is not really how copyright works. Article I, Section 8 of the United States Constitution empowers the United States Congress to promote the progress of science and the useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries. This clause is often referred to as the copyright and patent clause. Here, science refers to artistic endeavors and useful arts refers to endeavors of utility covered by patent law.

Congress laid down the backbone of Copyright Law in the seventeenth chapter of the United States Service Code (“17 U.S.C.” ). Specifically, 17 U.S.C. § 102 defines the subject matter of copyright:

(a) Copyright protection subsists, in accordance with this title, in original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. Works of authorship include the following categories:

(1) literary works;
(2) musical works, including any accompanying words;
(3) dramatic works, including any accompanying music;
(4) pantomimes and choreographic works;
(5) pictorial, graphic, and sculptural works;
(6) motion pictures and other audiovisual works;
(7) sound recordings; and
(8) architectural works.

Quick Shot: So, a copyright comes into existence for an artistic work when three criteria are met:

(1) It is ORIGINAL;
(2) It is a WORK OF AUTHORSHIP; and
(3) It is FIXED IN A TANGIBLE MEDIUM OF EXPRESSION.

*we’ll dig into these three areas more in depth in later posts

TAKE HOME:
A copyright arises the very moment in time when a original work of authorship is fixed in a tangible medium of expression–like when an original song is laid down on disk in Garage Band. No publication, registration or other action in the Copyright Office is required to secure a copyright.

So, why then register a work? Copyright registration before the United States Library of Congress serves to put the public on notice that authorship is being claimed and it has several advantages:

  • Registration establishes a public record of the copyright claim
  • Before an infringement suit may be filed, registration is necessary for works of U.S. origin
  • If made before or within five years of publication, registration will establish prima facie evidence in court of the validity of the copyright and the facts stated in the certificate
  • If registration is made within three months after publication of the work or prior to an infringement of the work, statutory damages and attorney’s fees will be available to the copyright owner in court actions. Otherwise, only an award of actual damages is available to the copyright owner
  • Registration allows the owner of the copyright to record registration with the U.S. Customs Service for protection against importation of infringing copies
*prima facie denotes evidence sufficient to prove a particular proposition or fact unless rebutted.

Although a “Poor Man’s Copyright” sounds reasonable, it is really just an evidentiary measure that might possibly be used to prove that a work was created within a certain time period. However, this is still a stretch because one could forge this type of evidence with little effort. So, registration is really the way to go–and it may be made anytime within the life of the copyright.

Effective August 1, 2009, online registration of a basic claim in an original work of authorship by electronic filing is $35.00. Beg, borrow or busk on the streets and register.

*Disclaimer: The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.

Quick Shot Case Study#1: SXSW 2010 Music and Law Section

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SXSW had some excellent Continuing Legal Education topics during the last few days of the festival in March of 2010. One of the topics included information about artists trying to break into the industry and the effort that it takes in time and money.

In the present state of the music industry, success is where an artist finds it.  The affordability and advancements made in recording technology have taken million dollar studios that were only available to big label artists of the past and placed them firmly in the hands of musicians. What used to be three to five thousand dollar demos in Nashville are now cranked out on Garage Band or Boss portable recording units. As quick shot case study, just take a moment and look at Owl City.

Ken Abdo (whose law firm was generous enough to sponsor the CLE section) spoke briefly about Owl City. Adam Young is the 24 year old musician behind Owl City–he started the project out of the basement of his parents house in Owatonna, Minnesota. Like the lyrics in Owl City’s music point out, insomnia can be a very effective way to get more hours out of the day and record late into the night.

Young utilized (the now shunned) MySpace to generate interest in his music. After two independent albums, his 2009 major label “Ocean Eyes” release blew up with the track “Fireflies.” But take note, the album was released in digital format on iTunes before a physical release. A very nice strategic move–Owl City’s “Fireflies” had the distinction of being the most downloaded song iTunes in the U.S.

Quick Shot Take Away: Owatana, Minnesota is not Hollywood, Nashville, NYC, Chicago or Austin. Creativity and sweat-equity matter. Don’t think that you have to be in a major city as an artist to “make it.” Don’t get stuck with a garage full of physical product worth $1000.00 (roughly the price of a MacBook with Garage Band). Test the waters with a digital distribution. Then, see if it makes sense to release physical CD’s.

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