Wraparound Templates

Explanation and Engagement Letter

Explanation of Wraps. In a wraparound transaction, the buyer takes title “subject to” the existing indebtedness on the Property (the “Wrapped Indebtedness”), meaning that the buyer gets a deed but makes no promise to pay the original loan. Under a wraparound arrangement the buyer instead makes payments to the seller on a separate Wraparound Note; the seller in turn makes payments to the existing lender. The buyer does not formally assume the Wrapped Indebtedness. The seller continues to be obligated to pay the Wrapped Indebtedness every month and promises to continue to do so. This wraparound arrangement continues until the maturity date of the Wraparound Note.

Major Legal Changes in 2022. The statutes governing wraparounds (the Finance Code and Property Code) were significantly amended in 2022. There are now more requirements than existed previously. These extensive new requirements make the process much more challenging. A consequence of this increased governmental regulation is that legal fees for wrap transactions have increased.

Single-Wrap Templates. Our Wraparound templates contemplate the wrap of a single note. We do not offer templates for double wraps or mirror wraps.

Wraparound Templates in Word. The list of wrap-related templates we offer (excluding the basic TREC 1-4 contract) is as follows:

1. Wrap Letter of Intent (LOI). Beginning with a letter of intent is an excellent idea for wraparounds. It is an easy way to make sure you actually have an agreement on the main terms of the wrap.

2. Custom Wrap Addendum to TREC 1-4 Contract. This addendum is important because neither TREC nor TR promulgate a standard contract addendum that is sufficient to do a wrap properly.

3. General Wrap Notices and Disclosures to All Parties

4. 7 Day Notice to Lienholder of proposed sale of security property pursuant to Prop. Code Sec. 5.016

5. 7 Day Notice to Buyer/Borrower of the Existence of Prior Liens pursuant to Prop. Code Sec. 5.016 (not applicable if there is title insurance issued to the Buyer)

6. 7 Day Notice to Buyer/Borrower (before closing) pursuant to Finance Code Sec. 159.101 as to potential property insurance coverage issues that are involved in a wraparound

7. General Warranty Deed with Vendor’s Lien designed for wraparounds

8. Wraparound Agreement covering miscellaneous details of the wrap

9. Wraparound Note (new note payable to the seller which is subordinate to the existing wrapped note)

10. Wrap Deed of Trust securing payment of the Wraparound Note

11. Special Power of Attorney enabling Buyer/Borrower to Contact Wrapped Lender

12. Dodd-Frank Compliance Sheet (indicating Seller/Lender’s compliance with the Dodd-Frank Ability-to-Pay Rule for the Seller’s file)
Fees for Templates. Wrap templates may be purchased for $175 each or $950 for all.

TEMPLATE POLICIES

Online Process. Templates are delivered in Word by email. Office visits are not included in our online fees.

Initial Consultation Recommended. A template purchase does not include a consultation in how to use it. In a flat-fee system, a document order is a separate item from a consultation. Our initial consultations are $250 for up to one hour. Proceeding without an initial consultation is at your own risk.

Template Customization is Required. Although our templates are in plain English and largely self-guiding, with choices offered between different provisions depending (for example) on whether the client is the buyer or seller, all of our templates require a certain measure of customization to the specific circumstances.

Minimum Expertise and Experience is Required. These templates are lawyer-level documents, not simplistic fill-in-the-blank forms. If you do not have at least a basic level of expertise and experience in real estate, business, and word processing, these templates are not for you. Request custom documents prepared by an attorney instead.

No Assurances. No assurance is made that any of our templates will be suitable for any particular transaction unless this office is consulted in advance on that transaction.

Liability Limitation on Templates. Our firm has no liability whatsoever for how a purchaser of our templates uses them without our active and continuing guidance through the process.

Template Purchase is Not a Retainer. A template purchase is a one-time event. It does not include ongoing Q&A or engage our firm as your attorney for any particular purpose or transaction.

Negotiations and Modifications Not Included. Purchase of templates is a one-time event that concludes upon sale and delivery to the client. It does not include any follow-up work, ongoing Q&A, negotiation of transaction terms, or back-and-forth modifications of documents in a transaction. Purchasing templates from us does not make us your attorney in the transaction.

Intellectual Property. Purchase of template(s) involves acquisition of unique and valuable intellectual property. Once it has been transmitted to the client, there is no return and refund. All templates we offer are licensed to the purchaser (only) for unlimited personal use but not for publication or dissemination to others, which is absolutely prohibited.

CONSULTATIONS GENERALLY

Online Process. Consultations are handled online by email (supplemented by phone) not in the office. Office visits are not included in the consult fees quoted below.

Consultation May Be Required. In complex, creative, or document-heavy cases and at our option, we may require that the process begin with a paid consultation in order to gather facts and discuss details. Determination of an exact fee quote may be deferred until the case can be discussed at the consultation.

Initial Consultation for Document Preparation. An initial consultation is not normally needed in the preparation of individual documents, at least so long as we are given clear and concise instructions.

No Conditional Consultations. Beyond stating that a particular matter is within our expertise, we do not accept any client-imposed conditions on the consultation (e.g., “only if your advice is helpful”).

No Bundling of Consultation Topics. Bundling multiple diverse legal topics or questions about multiple properties or transactions into a one-hour consultation is not permitted. This never works because it is too scattered. If multiple properties or topics need to be discussed, an hourly arrangement will apply instead.

No Shoehorning. Shoehorning (slipping in additional items and topics on top of an agreed flat-fee service) is not permitted. Additional topics and tasks incur additional fees.

No Tax Advice. We are not tax advisors and do not give tax, accounting, or bookkeeping advice. We make no assurances as to any particular tax outcome. Please consult your CPA in conjunction with our legal advice.

No Coaching. We are a law firm that provides advice and prepares real estate and business documents. We are not a real estate school or an investment advisor and do not offer mentoring on real estate investing.

No Total Re-Write During a Consult. The fee for a consultation or review/comment on a document is not a flat fee for the total re-write of an existing legal document. Re-writing a legal document inevitably takes longer than a one-hour consultation, so either our posted flat fee for doc prep or the hourly rate applies.

No Assurance of Future Services. A consultation or document preparation task is not an advance commitment on our part to handle the matter going forward. We may, at our discretion, decline to be further involved after initial services are rendered.

LEGAL FEES GENERALLY

Legal Fees – Initial Consultation. An initial consultation for new clients is always recommended. The fee for an introductory consult is $250 for matters up to $750,000 and $350 (our usual hourly rate) for matters exceeding that amount. The consultation is conducted online and lasts for up to one hour or three days, whichever occurs earlier, when it automatically concludes.

Legal Fees – Ongoing. Beyond the initial consultation, either our extensive flat-fee schedule will apply or our $350 hourly rate would apply (one-hour minimum, billed in quarter-hour increments). If in doubt, inquire. We strive for total transparency as to legal fees.

Legal Fees – Deeds, Notes, and Deeds of Trust. Simpler residential documents in this category are usually $350 each excluding recording. More specialized, customized, or complex documents (including commercial documents) are higher, usually beginning at $450.

Closing Packages. Two or more simpler residential documents ordered at the same time involving the same transaction (e.g., a closing package) begin at $250 each excluding recording.

Keying in Metes and Bounds. If there is a metes and bounds legal description that needs to be re-keyed by us(rather than the usual brief lot and block) add $75.

Custom Special Provisions. Inclusion of custom, creative, or complex provisions increases legal fees. Also, we may, at our discretion, require an initial paid consultation to discuss the transaction before proceeding. Determination of an exact fee quote may be deferred until the consultation.

Costs and Recording Fees Excluded. Legal fees quoted always exclude any costs and recording fees that may be associated with or arise. These are separate and additional and must be paid by the client.

Fees Quoted are for Services Online. Office visits are not included in posted flat fees.

FLAT-FEE SYSTEM

Flat Fees are Guidelines. Posted fees are subject to change without notice. Fees quoted are guidelines only and may be adjusted if a matter or transaction is unusually complex, creative, or document heavy. We reserve the flexibility to vary our usual fees based on specific circumstances.

Flat Fees Stand Alone. In a flat-fee system, all fees stand alone. Payment of one flat fee (including a consultation fee) does not include any other services or result in a credit toward future legal services. Multiple diverse tasks incur separate flat fees. The alternative is our hourly rate.

Flat Fees Earned When Paid. There is no requirement that flat fees or flat-fee retainers be held in trust or in escrow or deposited in a separate account. There is no requirement that interest be paid on such funds.

Switching to Hourly Billing. As a case develops, it may become apparent that hourly billing is more appropriate than a flat fee. We reserve the right to switch the case to $350 hourly billing if work substantially or unexpectedly exceeds what was reasonably anticipated or what is ordinary and customary for the task.

Expiration of Flat Fees Paid. We do not carry long-term positive balances. All payments, retainers, overpayments, or credits to a client´s account must be used within six months or they automatically expire in their entirety. No exceptions.

Flat Fees Distinguished from Retainers. Consultations and document preparation tasks are designed to be short-term. They begin and end. By contrast, retainers are intended to be a longer-term commitment to your case. Retainers may be flat-fee (for a specific period) or hourly. Inquire.

No Carry-Over of Fees. Documents and fees relating to one transaction or property do not “carry over” to other transactions or properties. Our fees are per transaction and per property. Each transaction bears its own stand-alone legal fees and costs.

PAYMENT POLICIES

Advance Payment is Required. We do not send bills after the fact for online services. We do not offer free consultations or any free attorney time. Payment options are as listed on the payment page of the website. Checks are not accepted.

No Conditional or Contingent Fees. Payment of fees is never conditional or contingent upon a successful closing, loan approval, appraisal, title policy, or any other event. There is no refund if such events do not occur as anticipated.

Itemized Statement. We customarily provide statements in larger matters. If you require an itemized statement of fees and costs before proceeding with a smaller matter, please let us know.

No Hourly Accounting for Flat Fees. Flat fees quoted above are not held in trust or escrow. They are earned when paid. No hourly accounting is ever kept or made in flat-fee matters and the client has no right to demand one.

Refunds. If it is determined very early in the process to terminate engagement (before substantial attorney time is expended) we will promptly provide a full refund by means of: (1) an immediate PayPal refund or (2) a law firm check sent by U.S. Mail. However, there is no refund once the attorney expends time and effort examining a file and discussing it with the client. Reading client documents and answering questions consumes attorney time and is a service to the client. Once this happens, legal services have occurred and the client’s payment becomes entirely non-refundable. Also, there are no refunds if legal advice provided is not what the client expected or wanted to hear.

Client Default. If a client defaults on payment of legal fees then we may immediately terminate the attorney-client relationship and cease providing services.

DOCUMENT PREPARATION POLICIES

Document Preparation Fees are Not a Long-Term Retainer. Legal advice over time is called a retainer. That is an extra level of service which is available but is not included in a document preparation fee.

Document Preparation is Not Full Representation. Document preparation is a limited, closed-end service that does not include ongoing legal advice and counsel. Engaging us to prepare a document is not the same as retaining us to represent you in a transaction.

Document Preparation Excludes Negotiations. A flat fee for document preparation is a one-time stand-alone item that begins and ends. It does not include negotiations, future or later revisions of the document, or any other ongoing services. Additional attorney time is handled on an hourly basis.

Extensive Customization of Documents. Our flat fees contemplate our usual and established professional format. If the client wants significant special provisions or customization beyond what we typically provide then fees will increase. In such cases, an initial consultation will be required and specific fees will be determined at that time. Alternatively, our hourly rate may apply.

Finality of Documents We Prepare. The document process is not indefinite or open-ended. Documents we prepare or review are considered final 3 business days after delivery to you. Please get back to us with any needed corrections or changes before then. Afterwards, a revision fee will apply.

Documents are Proprietary and Supplied in PDF Format. Except for templates, documents are supplied in pdf format only. All our documents are proprietary, subject to copyright, and licensed (not sold) to the client. Our documents may not be copied or disseminated to third parties.

Document Preparation – Additional Fees. Add $75 if metes and bounds (rather than the usual lot and block) must be keyed in by us. Add $25 if we are named as trustee in the Deed of Trust.

TRANSACTIONAL REPRESENTATION

Representation in the Full Transaction. Preparation of documents or providing a consultation is a limited, closed-end service that begins and ends in a specific timeframe. These services do not include or encompass ongoing legal advice or representation in the broader transaction. We have no obligations to the client beyond the consultation or document preparation. Engaging our firm for a limited purpose does not mean that we become your attorney for the whole transaction unless we expressly agree to do so in writing.

No Representation of Both Sides. We only ever advise and represent one side of a case or transaction. We never attempt to “represent both sides.” Absent instructions to the contrary, we strive to give legal counsel and prepare documents that are aggressively in the best interests of our client.

RECORDING OF DOCUMENTS AND FinCEN REPORTING

Recording with County Clerk Excluded from Legal Fees. Our legal fees exclude both recording fees and the act of recording a document with the county clerk unless there is a prior express (not assumed) agreement otherwise. Online clients generally record their own documents since they have the original in hand (we do not) and only executed and notarized originals can be recorded in the county clerk’s real property records. We do not collect for recording fees, only document preparation.

Recording of Executed Originals with County Clerk. Recording of the executed and notarized original warranty deed or deed of trust is easily done by the client by U.S. Mail. All 254 Texas counties post their per-page recording fees on their websites. Recording fees for deeds average $30. The longer the document, the larger the fee. Upon request, we can provide a blank cover letter to the clerk for you to use.

If We Do County Clerk Recording. If we agree to this (express agreement required in advance) add $50 handling per document plus the applicable filing fee if we are asked to perform the task of recording documents with the county clerk. Note that only original notarized documents can be filed, so the executed original will have to be mailed to us. We then have to write a check and send it on to the county clerk.

Federal FinCEN Reporting Suspended. The FinCEN Residential Rule requiring reporting of cash or no-consideration deed transfers into LLCs and trusts has been invalidated by a U.S. District Court pending potential appeal by the government. Flowers Title Companies, LLC v. Bessent.

LIMITATIONS ON LEGAL SERVICES

No Escrow Available. We do not offer escrow or trust account services. We do not receive, hold, or disburse client funds, ever. We suggest a title company for this purpose.

No In-Office Closings. We do not offer free in-office closings. This firm gives advice and prepares documents only. We recommend a title company for closing and funding.

No Guarantees. Lawyers never make guarantees as to the outcome of any transaction, case, or other matter. This includes real estate closings.

No DIYers. We do not assist DIYers in handling legal projects on their own.

No Amateur, Internet, or Seminar Document Review. We do not advise upon or get involved with homegrown or amateur documents, forms from the Internet, documents prepared by non-attorneys or non-brokers, or guru forms from real estate investment seminars. These do not meet our professional standards and must be replaced with correct Texas documentation prepared by an attorney.

No Liability Beyond Specific Task. Our firm has no liability whatsoever for any part of any case or transaction that we do not directly handle, directly advise upon, or directly prepare documents for. The client’s DIY activities are entirely at the client’s own risk.

No Client Fraud or Illegality. If it is determined that a client is engaging in unlawful activities, representation will be immediately terminated without refund.

No Litigation or Disputed Matters at this Time. Our legal services are limited to real estate representation, business transactions, and asset protection including LLC formation. Our schedule for litigation and disputed matters is currently full.

TITLE COMPANIES AND APPRAISAL DISTRICTS

Title Policy or Title Report. If our client is the buyer or lender, you are advised to obtain a title policy or at least a title report on the property prior to closing in order to determine if the seller has good title and/or if there are existing liens, judgments, easements, or restrictions affecting the property. This is not our responsibility. We are not a title company and do not check title, nor do we offer in-office closings.

Title Company Policies or Actions. Our documents are always legally effective, but we make no guarantees concerning any particular title company´s preferences, demands, or underwriting criteria, since these can vary. Negotiating with title companies, addressing their objections or requirements, and dealing with title company attorneys is not included in flat fees. The hourly rate applies.

Appraisal Districts. There are around 254 appraisal districts in Texas, all with their own independent policies and procedures. We make no guarantees or assurances that an appraisal district will (for example) grant a homestead exemption or take any other action in any particular case or circumstance. Negotiating with appraisal districts or addressing their objections or requirements incurs our hourly rate.

LEGAL VERSUS BROKERAGE SERVICES

Our Attorney Also has a Real Estate Broker’s License. Our attorney is a licensed Texas real estate broker. However, this office is primarily a law firm and the services we provide are primarily legal in nature. Engaging this firm in a legal capacity does not also engage us in a brokerage capacity. Any brokerage representation by us requires a signed written brokerage agreement, not just a legal services agreement. We are not currently offering full brokerage services.

A Lawyer Does NOT Replace a Realtor. Although this law firm offers consultations, document preparation, contract review, and other legal services, it is important to understand that a lawyer does not substitute for an agent or broker and all the various services and ongoing support that Realtors provide. Requesting advice from a lawyer does not substitute for the broader services of a real estate agent or broker.

Information on Brokerage Services (IABS). TREC rules require us to direct you to TREC’s Information about Brokerage Services at https://lonestarlandlaw.com/wp-content/uploads/2020/04/IABS-1-0.pdf.

Possible Commission Rebate. Because our attorney has a broker’s license, a partial commission rebate (net after taxes) may be available to buyers at closing but only if you use our firm for the entire transaction and you are not already represented by an agent or broker. Inquire.

ATTORNEY-CLIENT COMMUNICATIONS

Business Hours, Weekends, and Holidays. We take business hours seriously. Traditional business hours apply (Monday through Friday, 8-5 CST) subject to our posted vacation schedule. After-hours communications are viewed as being received on the next regular traditional business day. We are not available on weekends or traditional holidays.

Sending Us Supporting Documents. Please provide us with legible copies of relevant supporting documents (if any) in easily downloadable form. Email attachments should be in pdf, Word, WordPerfect, Excel, or other common software. Do not send original documents in the physical mail. We do not handle originals.

No Encryption or Passwords. Please do NOT apply any form of encryption to emails or attachments. Avoid Dropbox or any method that requires us to get a password and enter a third-party site in order to view your documents. If you require that level of security, please consult another law firm.

Data Dumps. Please send us only the information or documentation that we request. Dozens or hundreds of extra and unnecessary pages make your file much more cumbersome and time-consuming for us to download, read, and manage. We rely on you to omit irrelevant material. The time it takes to sort through large data dumps is part of paid attorney time and will be charged accordingly.

No Texting Please. We do not offer consultations or any other legal services by text. While texting may be suitable for casual communications, texting of sentence fragments and one-liners is not suitable for a nuanced legal case. Please use a keyboard device and take your time.

MISCELLANEOUS

The Client’s File. Clients receive copies of relevant documents as the legal matter progresses. This is the client´s file. Keeping these copies and maintaining them in an orderly manner is the client´s responsibility. We have no obligation to provide any additional documents or information.

Client ID. The requirement of government-issued photo ID is now common at law firms, medical offices, and other professional firms everywhere. Fraud is rampant. We do not work with anyone who declines to provide ID and any identifying information that we may (at our discretion) request.

AI Agents. If your intention is to do business with us through an AI agent, please contact another law firm. We interact with humans only, no exceptions.

Terms of Service. All of our firm’s general terms of service (found at the “Fees & Policies” tab on the website) apply without exception to all persons receiving legal services in addition tothe specific terms of service set forth in this engagement letter. No exceptions.

Engagement Letter. This document is our engagement letter setting out the terms and conditions of this particular engagement for legal services. If you wish to proceed, please sign and date below.

Agree: 

___________________________________________ _______________
SIGNATURE                                                             DATE