The Rick Perry-ACORN connection explained: A primer for non-Texans
By Linda Prussen-Razzano
On March 28, 2000, residents of Fort Worth, Texas, were stunned when a low-level F3 tornado ravaged the downtown area. When the quarter-mile swath of destruction subsided, 74 people were injured, 6 were seriously injured, two were dead, and many buildings were damaged. It spawned a second tornado that traveled southeast along Interstate 20, through residential areas in Arlington and Grand Prairie, tearing apart windows, buildings, and houses. In all, 80 people were left homeless, the empty slabs evidence of where a home used to be.
Texans are well acquainted with loss, suffering, and having their priorities immediately adjusted by God. Living in Tornado Alley comes with inherent risks. We know that. We understand it. We soldier on.
But for too many of those left with tattered but standing homes, or left homeless by the tornado, a far more unpleasant surprise awaited them.
When most homeowners buy their home, they receive the title to it. In Texas, this is a Deed of Trust. You own the land, the home, and, in some cases, the minerals underneath it.
For a smaller portion of homeowners, when they buy a home, they receive a Contract for Deed instead. A Contract for Deed does not convey title until the final payment is made. A homeowner may believe that they have purchased a home, but what they are doing is merely making payments until the full amount is paid. The title of the home remains in the possession of the seller – not the buyer. A Contract for Deed can have a number of conditions attached to it; failure to adhere to those conditions breaks the contract.
For lower-income first-time homebuyers who did not understand the difference, for those picking through the shattered mess of their lives, they were about to find out the hard way.
If they bought their home under a "Contract for Deed" instead of a "Deed of Trust," being late with just one mortgage payment or failing to adhere to the "terms" of the contract could mean that they forfeited their home. In some cases, the statute required only 15 days to cure any issues. An expedited foreclosure process revoked any claim to the property. Since the title was never transferred to them, the title holder was required to maintain insurance. If the title-holder did not do so (even if the homeowner was paying towards it), there were no funds available to rebuild the homeowner's life. Any money the homeowners put towards building equity in the home was also forfeit.
Their situation caused such outrage that the Texas Legislature took it up during the next session and passed Senate Bill 198, which Governor Perry signed into law on June 13, 2001. It gave homeowners a 60 day window to cure any defaults, required greater transparency prior to purchase, required insurance for the home, and required a check list of assurances that the home had no outstanding liens and was in working order.
In 2005, the Texas State Legislature passed HB 1823, which allowed people with a Contract for Deed to refinance their mortgage and convert the Contract for Deed to a Deed of Trust. They were then able to get out from under the terms of the contract, transfer title to their name, and assume full responsibility for their property and their lives. There were a number of steps homeowners had to take to comply with the law, and they were obviously responsible to pay the mortgage, but it gave homeowners greater power over their property.
ACORN, which supported HB 1823, praised the Legislature and Governor Perry for passing it.
Another thing most non-Texans don't understand is how holding title to the property impacts a homeowner.
In Texas, when you buy a home, you buy two separate estates: the surface estate (the home, the yard, any sheds, garages, etc.) and the mineral estate. The mineral estate is separate from the surface estate, and can be reserved (not transferred with the surface estate). The mineral estate can be divided, like any other real property, and bequeathed to heirs. Most important of all, in Texas the mineral estate is superior to the surface estate. Whoever controls the minerals has the right to come onto the surface and do what they need to (within reason) to access the minerals.
In 2006 through 2008, a substantial wave of mineral rights leasing occurred in the Dallas/Fort Worth area. Residents discovered that they were sitting on top of the Barnett Shale, one of the largest deposits of natural gas in the country. Advances in horizontal drilling now made this gas accessible, even in heavily populated suburban areas.
For those homeowners under a Contract for Deed, they had no rights when it came to negotiating the minerals under their own home. The landman would simply contact the title holder, not the homeowner (even if they were only 5 payments away from paying off the contract). Homeowners who purchased under a Deed of Trust, or converted to a Deed of Trust, and had the minerals transferred to them were able to protect their entire bundle of rights as well as their surface estate. If they leased their minerals, they got the signing bonus and any royalty checks.
So when folks go around bashing Governor Perry for signing these bills just because ACORN supported one of them, it tells me they are all hat, no cattle, and a person to be pitied. They are obviously not a Texan.
Linda Prussen-Razzano is a long-time contributor to Enter Stage Right and a number of other online magazines.