Very few folks have an estate worth more than $15,000,000 (or $30,000,000 for a couple).  Texas does not have a separate estate tax or income tax.  Thus, most estates in Texas can be handled through a well written Last Will and Testament.

If you own a business, real estate, farm,  or ranch, this increase to the Federal estate tax exemption amount is important to your estate.  When you consider the value of businesses, real estate, houses, equipment, investment or savings accounts, vehicles, and cattle, an exemption amount lower than $10,000,000 could be a problem.

Before the estate exemption amount was raised, the use of marital deduction trust clause or family limited partnership were the norm for estate planning in those families with substantial assets.  These marital deduction trusts  were commonly used prior to 2001 when the Federal estate tax exemption limit was $600,000.00.

Another beneficial planning tool is to gift a portion of your cash into a trust that purchases a life insurance policy on you, a parent, or a grandparent. That policy is then owned by the trust, and at death the policy pays into the trust—at a rate of two to ten times the size of the original gift. TAX-FREE. Zero tax. Yes, not one penny to Uncle Sam. In fact, that could leave your family with enough to pay the estate tax and give generously to charities and foundations that you love, as well as provide additional resources for your loved ones.

Along with an increase to the estate tax exemption amount, the annual exclusion for gifts was raised to $19,000, per individual in 2025 and into future years.  Parents and grandparents may prefund children’s education through 529 accounts, or paying tutition on behalf of another directly to the school or other educational provider.  If you only are paying tuition, the exemption is limited to just tuition fees and no other educational expenses.  Other options include paying medical expenses, leveraging lifetime gifts, and charitable giving.

In addition to the Federal estate tax exemption, you should pay close attention to the Federal capital gains tax.  This is a tax placed on the appreciated value of real property and investment accounts.  To ensure that your family does not have to pay any capital gains tax, transferring property subsequently after your death is important.  When property is transferred during your life, the gift tax amount is not the only consideration.  By gifting property during your lifetime, you could cause your beneficiary to be in a situation that results in the payment of capital gains taxes of up to 20% of the gain.

Many people are enticed into creating living trusts or revocable trusts.  However, you should meet with an attorney experienced in estate planning to see what is the best vehicle for your estate planning needs in your state.  They should also discuss with you the importance of powers of attorney (financial and medical), advanced directives (aka living wills) and the other associated documents to make sure those you trust are empowered to assist you without putting your assets at risk (i.e., Do NOT list them on your accounts).

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Using your residential property for a business reminds me of the importance of knowing the coverage your homeowners policy provides and the importance of business premises insurance.  Reading and understanding all of the language in a homeowner’s or business liability  insurance policy are not formalities to be skipped over while searching for the signature line.  As with any contract, the fine print can have real and lasting consequences, and its contents will control over any contradictory verbal assurances.  Taking the time to understand the terms of their policies might have headed off bad outcomes for homeowners in two recent cases.

Joan bought property consisting of a home, two barns, and other outbuildings.  She also purchased a homeowners’ insurance policy that excluded coverage for any nondwelling structure that was rented out “unless used solely as a private garage.”  Joan rented the barns to a commercial marina, which used them for storage of customers’ boats.  When one of the barns collapsed due to a storm, Joan submitted a claim for loss of the barn.

The insurer denied coverage, prompting Joan to point out that the rental exclusion should not apply because the marina was using the barn as a “private garage.”  Her point made sense as far as it went, but the insurer won because of a separate exclusion from coverage for any nondwelling “used in whole or in part for business purposes.”  Joan’s main occupation was a financial analyst, and she brought in only a few thousand dollars by renting out the barn.  But all that was necessary for the business purposes exclusion to apply was that the insured regularly engage in the conduct with an intent to profit.

It was significant for the court that, by failing to disclose her conduct, Joan had prevented the insurer from knowing the risks it was insuring.  The purpose of a business pursuits exclusion, after all, is to rule out coverage for a whole set of risks and liabilities flowing from business activity.  It did not matter that the damage to the barn was not caused by the boats that were stored there for profit.

Many of you may have seen or received advertisements for identity theft coverage.  However, if you review your homeowners insurance policy, you may find that it contains coverage for identity fraud expense coverage.  Depending on your specific policy, this could cover credit card and identtity fraud related to the title to your property.  Before signing up for identity theft, sit down and read your current homeowners policy.

You may be surprised to find that you have coverage for loss of refriderated products as well.  With some of our weather events, we lose power.  When this loss of power is extended, then you may lose that deer meat you harvested or that calf you had butchered.  If you have the right kind of coverage in your homeowners policy, you will be covered for these losses.

Before a storm effects you, sit down with your insurance agent to discuss and make sure you have the coverage you want.  When entering a contract, particularly one prepared or furnished by another, it is a good idea to review the document carefully.  A better practice would be to have your attorney review the document for you.  Do not put yourself in the position of reviewing your contract after a problem or claim has arisen.  It may be too late.

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Senate Bill 17

SB 17 is one of several measures introduced this session aimed at restricting certain types of foreign ownership of land in Texas. In its most recent version, which passed the House earlier this month, SB 17 would add a new Subchapter H to Chapter 5 of the Texas Property Code, titled “Purchase or Acquisition of Real Property by Certain Foreign Individuals or Entities.” The bill initially passed the Senate in March and has since been amended by the House. Notably, the House version expands the scope of the bill by granting the Governor authority to designate additional countries and transnational criminal organizations whose nationals or entities would be prohibited from acquiring real property in Texas.

Senate Bill 647

SB 647 is one of two bills introduced this session aimed at combating deed fraud. It proposes amendments to Section 51.901 of the Texas Government Code to enhance protections against the fraudulent filing of property-related documents. Specifically, the bill authorizes county clerks to send written notice to the last known property owner when a recorded instrument purports to create a lien or transfer an interest in real property—particularly when the owner’ s address differs from that of the grantor, obligor, or debtor named in the document. Additionally, SB 647 empowers clerks, upon consultation with the district or county attorney, to refuse to file or record a document if there is probable cause to believe it is fraudulent or if the filer fails to provide required supporting documentation as specified in the statute. The bill passed the Senate and was recently reported favorably out of a House committee.

Senate Bill 648

SB 648 is the second of two bills this session aimed at addressing deed fraud. The bill introduces enhanced recording requirements for certain real property instruments, particularly when such documents are filed by individuals or entities other than attorneys, title agents, title companies, or escrow companies that provide closing, settlement, or comparable transaction services. Under SB 648, if an instrument is submitted for recording by someone outside of these professional categories, the following additional requirements must be met: the instrument must be signed by both the grantor and the grantee in the presence of two subscribing witnesses, and all signatures—including those of the witnesses—must be acknowledged. The bill also imposes stricter requirements for filing affidavits of heirship. Specifically, if the affidavit is filed by someone other than an attorney or title-related professional, it must be signed by the affiant and acknowledged by each person named as an heir, again in the presence of two subscribing witnesses. SB 648 would take effect immediately upon receiving a two-thirds vote in both chambers. It has already met that threshold in the Senate and is currently under consideration in the House.

Senate Bill 2550

SB 2550 addresses five statutes that require sellers of real property to provide specific notices to buyers pertaining to the surface estate, which do not extend to the mineral estate or associated water rights. While current law exempts transactions involving the sale of mineral rights from these notice requirements, it does not provide a similar exemption for the sale of groundwater or surface water rights. SB 2550 corrects this inconsistency by extending the exemption to include transactions involving only groundwater or surface water rights. The bill has passed both chambers of the Legislature and was sent to the Governor for signature on May 13.

Once the 89^th Regular Session of the Texas Legislature ends, a comprehensive report will be prepared for all the changes made in this session.  To view the full text of these and other bills, please visit the Texas Legislature Online (TLO) website.

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In Texas, water rights depend on whether the water is groundwater or surface water.

Generally, Texas law has held that groundwater belongs to the landowner. Groundwater is governed by the rule of capture, which grants landowners the right to capture the water beneath their property. The landowners do not own the water but have a right only to pump and capture whatever water is available, regardless of the effects of that pumping on neighboring wells.

Surface water, on the other hand, belongs to the state of Texas. It can be used by a landowner only with the state’s permission.

Groundwater

Water found below the earth’s surface in the crevices of soil and rocks is called percolating water or, more commonly, groundwater. Texas groundwater law is judge-made law, derived from the English common law rule of “absolute ownership.” Groundwater belongs to the owners of the land above it and may be used or sold as private property. Texas courts have adopted, and the legislature has not modified, the common law rule that a landowner has a right to take for use or sale all the water that he can capture from below his land.

Because of the seemingly absolute nature of this right, Texas water law has often been called the “law of the biggest pump.” Texas courts have consistently ruled that a landowner has a right to pump all the water that he can from beneath his land regardless of the effect on the wells of adjacent owners. The legal presumption in Texas is that all sources of groundwater are percolating waters as opposed to subterranean rivers. Consequently, the landowner is presumed to own underground water until it is conclusively shown that the source of supply is a subterranean river.

The law with respect to ownership of subterranean rivers is not settled in Texas. Both stream underflow and subterranean rivers have been expressly excluded from the definition of underground water in Section 52.001 of the Texas Water Code.

The practical effect of Texas groundwater law is that one landowner can dry up an adjoining landowner’s well and the landowner with the dry well is without a legal remedy. Texas courts have refused to adopt the American rule of “reasonable use” with respect to groundwater.

Winds of change are blowing with regard to groundwater.  The case of Cactus Water Services LLC v COG Operating LLC is now before the Texas Supreme Court.  At the root of the case is who owns produced water.  This case will determine whether or not produced water from oil and gas drilling belongs to the landowner.

Produced water is the water that is comes back up out of the well bore as the well is completed.  Produced water is highly concentrated with salt and chemicals from the fracking process, thus making it harmful to fresh groundwater supplies as well as fields and pastures used for agricultral production.

Produced water must be handled carefully to make sure it does not spread out on the surface and leach or migrate back into the ground.  That much salt on property will kill the grass for a long period of time.  Thus, produced water has been a 100% waste product and almost all of it has been traditionally, injected back into deep formations through injection wells.

Technological advances have transformed  produced water from a waste product into a potentially valuable resource.  Therefore, now we have disputes over ownership of this water.

The importance of Cactus Water Services LLC v COG Operating LLC is that the Texas Supreme Court (TSC) will now decide whether this produced water belongs to the landowner or the oil and gas company.  Over 14 briefs have been filed with the TSC from different entities.  Some on behalf of the oil and gas companies and some on behalf of the landowners.

You don’t have to wait and see how the TSC answers this issue.  You should be thinking ahead, particularly if you enter new oil and gas leases.  These leases should have provisions clearly addressing the ownership of produced water and any associated royalties.  Even if the TSC determines the oil and gas companies own the produced water, there is a way to contract in your oil and gas lease to ensure that you, the landowner, get a royalty and a revenue back.

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While the monetary compensation is certainly an important factor for a landowner to consider, the nonmonetary  terms of the easement may be more important and more valuable.  Therefore, it is imperative to document any statement or promise made by the company seeking the pipeline into a written agreement.

Each property is unique, and the following considerations may not apply the same way to different properties because of their specific use and characteristics.  While this list is based on a pipeline easement, these terms may also be helpful in negotiating other easements, such as those for electric or transmission lines   (Entergy Reedy Creek project), water, wastewater, drainage, or related infrastructure easements.

I will start with a money saving tip.  Because most attorneys bill by the hour, a client can save considerable fees by doing as much legwork as possible before going to the attorney’s office.  For example, a landowner could collect necessary documents such as the legal description or plat of the property, saving the attorney the time of locating that information.  Another time saver would be for the landowner to prepare a draft of the easement agreement or a list of terms they desire.  This will save time when sitting down with the attorney.

Check on Eminent Domain Authority:

Often the company seeking the pipeline will tell the landowner they have the ability to obtain what they want through eminent domain.  However, you should check to see if the company is validly registered with the State Comproller’s office as having eminent domain power.  Ask the company representative for a copy of the statute that grants them eminent domain power and evidence supporting their claim as a common carrier.  If it is a transmission line, obtain a copy of the company’s Certificate of Convenience and Necessity from the Public Utility Commission.  This will explain what condemnation power the company has and may provide additional information about the proposed project.

Determine Compensation:

Generally, payment is based per foot, per acre or per rod (a rod is 16.5 feet) of the pipeline.  Consider seeking payment per square foot rather than per foot or per rod  to be adequately compensated for the entire area the company will use.  It is common for the company to seek a temporary work area, as well, and you should seek compensation for this temporary work area.

It is important to know that Texas courts recognize remainder damages for the decreased value of the remainder of the property outside of the easement strip.  For instance, if a pipeline splits a 10 acre tract, the acreage remaining outside the easement will likely be worth less per acre than if the 10 acres were sold as a whole.

You should also discuss the payment’s tax implications with your CPA or financial advisor.  How the payment is described or structured will make a difference.

The following list of key points may be helpful:

• Seek a Specific Easement
• Seek a Nonexclusive Easement
• Limit Easement to One pipeline
• Determine Pipeline Diameter
• Require a Specific Pipeline Depth
• Request Payment for Damages
• Have a Timber Management Company or Agricultural Consultant evaluate the property
• Have Property Appraised
• Specify Fencing Requirements
• Include Repairs to existing roads
• Determine Maintenance requirements
• Define when the easement will terminate
• State Requirements for Removing Pipe and Facilities
• State Remedies for Violating Agreement
• Include Liability and Indemnification Provisions
• List Landowner as “Additional Insured”
• Do Not be responsible for Warranty of Title
• Limit Terms of Transferability
• Request a Most-Favored-Nations Clause
• Use Choice of Law provision
• Include a Forum Clause

Finally, a licensed attorney familiar with easement negotiation issues should review all pipeline easement agreements BEFORE signing.  Although hiring an attorney who specializes in representing landowners in these type of transactions may be an additional cost, it could save money in the long run by preventing a dispute from arising due to an unclear or inadequate easement agreement.  Additionally, the fee arrangement with attorneys in these matters is usually a contingency fee agreement.  This means the attorney is paid based on the increased amount of compensation they produce for the landowner who’s property is being taken.  So, no cost up front.

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Issued on February 7, 2024, with a stated purpose of “combat[ing] and deter[ing] money laundering in the U.S. residential real estate sector by increasing transparency, the Residential Rule requires certain professionals, including attorneys in certain transactions, to file a report with FinCEN that provides a wealth of information about certain real estate transactions and the parties to those transactions.

FinCEN, as part of the rulemaking process, invited public comments on the proposed rule until April 16, 2024.  Only 624 comments were submitted and are currently under review.  The Residential Rule will become effective one year after the final rule is published.  As of today, I am not aware of the final rule being published.

While some of the information required under the Corporate Transparency Act (CTA) overlaps with the Residential Rule, there are some key differences between the two.  First, the CTA applies to a broad range of transactions whereas Residential Rule transactions focus specifically on non-financed residential real estate transactions to certain legal entities and trusts.  I interpret this to mean cash deals.  Second, the Suspicious Activity Report (SAR) required by the CTA is replaced with a Real Estate Report, which is reported to be a streamlined version of the SAR.  Third, the CTA beneficial ownership information focuses on broad money laundering trends and reports on the beneficial owners of certain legal entities (i.e., corporations, limited liability companies, etc); but the Real Estate Report provides both beneficial ownership information and real estate transactional information in a single report.  Fourth, reports filed under CTA will be electronically stored in a separate database with separate access privileges from Real Estate Reports.

It has been widely accepted for quite sometime that one of the benefits of trust is that they are private.  However, the Residential Rule will require disclosure of the settlor/grantee of the trust, trustee, and beneficiary of the trust.

Furthermore, the Residential Rule will apply to “residential real estate.”  This is defined as (I) real property located in the United States containing a structure designed principally for occupancy by one to four families; (ii) vacant or unimproved land located in the United States zoned, or for which a permit has been issued, for the construction of a structure designed principally for occupancy by one ot four families; or (iii) shares in a cooperative housing corporation.

Many communities, Huntsville included, are pushing to create Zoning.  This makes one ponder “why?”  We have long valued our privacy and property ownership.  However, little by little it is being chipped away or worse, given up by posting our lives on social media.  But I digress.

The American Bar Association has opposed this proposed Residential Rule and many other real estate affiliated organizations.  Additionally, the Texas Disciplinary Rules of Professional Conduct Rule 1.05 and the American Bar Association Disciplinary Rule 106 prohibit decimation of confidential information.  The rules already allow attorneys to reveal unprivileged information and require attorneys to reveal confidential information if a client is likely to commit a criminal or fraudulent act likely.  So any argument the Residential Rule is required to prevent these transactions is bunk.

The proposed Residential Rule, if adopted, will become a final rule that could take effect as soon as next year if the Secretary is able to draft a final rule.  Based on the number of comments received, it is likely that the rule may not be finalized until next year with a 2026 effective date.  Either way, all comments have been received so it is now in FinCEN’s hands.  This is yet another reason to VOTE!  If the majority sits by and does nothing, then we will put folks in power that care nothing about our rights and freedoms.  The elected will continue to infringe on our privacy and tax Americans into poverty.  Our only hope is to elect representatives that want to cut government regulation and taxation.

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A landlord and tenant relation exists between a landowner as landlord and another party occupying the landowner’s real property as tenant.  With this relationship come certain duties and responsibilities.

The relationship is always created by contract, but the contract may be either verbal or written.  Additionally, the term of the lease can vary from month to month, semester to semester or school year to school year.

Most lease agreements involve a security deposit.  A security deposit is any advance of money, other than an advance payment of rent, that is primarily intended to secure performance under a lease of a dwelling.  A landlord has the duty to refund the security deposit to the tenant on or before the 30^th day after the date the tenant surrenders the premises.  A landlord may be liable for withholding  the security deposit in bad faith in certain situations.  This could subject the landlord to monetary damages amounting to three times the amount of the deposit  and the tenant’s reasonable attorney’s fees.   Additionally, a landlord is prohibited from retaining any portion of a security deposit to cover normal wear and tear.  Finally, for those landlords who may use written leases stating that the return of the security deposit is contingent upon advance notice of surrender of the premises, then be aware that such language must be underlined or printed in conspicuous bold print in the lease.  So landlords should be very careful when dealing with the return of a tenant’s security deposit.

Landlords should also inspect their security devices.  Texas law requires certain security devices be installed on leased premises.  Leased premises includes rooms in a dormitory or rooming house, mobile home, single family house, duplex, triplex, apartment or condominium.  Windows and doors have certain requirements depending on their design and year of construction.  For example, conventional, sliding and French doors all have different requirements.

Another little known fact is that landlords must disclose the name and address of the holder of record title, according to the deed records in the county clerk’s office, of the dwelling rented by the tenant.  Failure to comply  with this could result in the landlord being liable for one month’s rent plus a monetary penalty, court cost and attorney’s fees and termination of the lease.

In Texas a landlord has no duty to make repairs in the absence of a covenant or agreement to do so.  A tenant’s main remedy for breach of a landlord’s express covenant to repair is an action for the recovery of damages resulting from the breach. Generally, the breach does not authorize a tenant to rescind the lease contract or enable a tenant to escape liability for the payment of rent. The tenant may, however, vacate and relieve himself or herself from liability for further rent when, as a result of the breach, the premises become untenantable or unsuitable for the purposes for which they were rented.  A landlord’s failure to provide a promised service or facility will enable the tenant to recover damages due to such failure.

When the tenant breaches the lease agreement, then the landlord may begin a process known as eviction.  This involves filing a lawsuit.  Such lawsuits are filed in the Justice of the Peace court that serves the area where the property is located.  Unless you are familiar with such suits, you should contact an attorney to assist you.

Landlord and tenant relationships can be advantageous for both the landlord and the tenant.  However, if you are a landlord, or tenant, and things go wrong you would be wise to contact an attorney.  Doing so could save you from a more costly result down the road.

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Central Park was the first landscaped public park in the United States.  While the original advocates of creating the park were wealthy merchants and landowners, they wanted the park give New York an assist similar to public grounds in London and Paris to establish an international reputation.  An additional benefit would offer their own families an attractive setting for relaxation in the center of the city instead of saloons.

Thinking a generous benefactor had set aside the area for a park long ago to preserve some the area, I was surprised to find it was originally formed through eminent domain.  Can you imagine the uproar today if someone decided to establish 843 acres of land for a public park on I-45 through eminent domain?  Yes, I realize State Park is just south of town on I-45.  However, it was not formed through eminent domain.  In the early 1930’s, Walker County residents decided they needed a park and approved the sale of $20,000 in bonds to buy the land, and then donated it to the State Parks Board.  The Civilian Conservation Corps company began construction of a dam, group recreation hall and boat house in 1937, and also completed a frame pump house, stone culverts and stone road curbing..

Today there is a state program, using tax incentives to help preserve historic working farm and ranch lands.  Originally, the Texas Farms and Ranch Lands Conservation Program was established by the Texas Legislature in 2005 to preserve agricultural lands in Texas.  As I am sure you already know, rural and agricultural land is disappearing faster in Texas than anywhere else in the country.

Originally the General Land Office managed this program, but in 2015, the Program was moved to the Texas Parks and Wildlife Department for agricultural conservation easements. Tex. Parks and Wildlife Code §84.001 Additionally, the Texas Natural Resources Code §183.001 establishes what may be a conservation easement to protect natural, scenic or open space property.  Both codes work by providing funds to nonprofit entities, usually land trusts, to purchase conservation easements.  The conservation easement is a permanent easement limiting the use of the property.  Depending on the desired goal, the conservation easement would be established under the proper code.

If the goal is to establish an agricultural conservation easement, then it must be on qualified land and have an additional purpose such as preserving a natural resource, scenic or open space.  To qualify for the agricultural conservation easement, the land must currently be devoted principally to agricultural use to the degree of intensity generally accepted in the area (farming, ranching, timber or forest products).

Many families that have been in farming or ranching for generations, are faced with gift and/or estate tax implications when passing large amounts of land used in farming and ranching to their children.  However, in exchange for  signing the conservation easement and promising not to develop the land, the families could receive a tax relief that allows them to pass the property to the next generation and not have to sell.

The benefits not only pass to the families wishing to preserve their historic way of life, but it also maintains a beautiful setting it what may become a metropolis someday.  Because of the conservation easement, even if the property is no longer farmed or ranched, it will remain undeveloped.

Another important benefit may be the preservation of a watershed.  Many of us take for granted the quality of water we get from our faucets.  As more and more land disappears to developments, the ability for rain water to filter through the soil before running off into our rivers and lakes is hampered.

The final benefit may be the opportunity to display a way of life that is disappearing.  I am amazed each year at the Walker County Fair PreK and Kindergarten Days how many children have never seen a cow, horse, chicken, pig or other animal.  While they may have heard or read about one, there is something different and valuable about actually seeing one live.  I believe the same holds true for timberlands and farmlands.  Reading about how our ancestors timbered or farmed the land becomes more real when you visit a working timber plantation or farm.

Entering a conservation easement is not suited for everyone.  You must have enough land and the desire to preserve something, But, if you have a family ranch or farm you wish to preserve, it would be worth your time to look into the Texas Farms and Ranch Lands Conservation Program further to see if it fits.

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The amendment gives Texans the constitutionally protected right to engage in farming, ranching, timber production, horticulture and wildlife management.  The reasoning behind the amendment was explained as helping to protect our future food security in Texas, and the need to do so by preventing overregulation of agricultural practices.

Separate from the constitutional amendment is the Texas Right to Farm Act.  The Right to Farm Act has been around since 1981, but was amended by the legislature in 2023.  The purpose of the Right to Farm Act is to support the development and improvement of the state’s agricultural lands to produce food or other agricultural products.

The Right to Farm Act works by providing support or defense for property owners in several different scenarios, including lawsuits against them by other persons for nuisance and related restraint actions.  It also provides protections from state or local regulations that prohibit their activities.  Formerly, it was only a defense to a nuisance action, but in 2023 it was expanded to any other action to restrain the agricultural operations.

For properties within city limits, the 2023 updates to the act limit a city’s ability to restrict agricultural activities within the city’s boundaries.  Any limitations by a city must meet certain standards first and the purpose of the limitation cannot be available through less restrictive means.  Then, the requirement must be necessary for protecting people residing in the immediate vicinity or on public property in the immediate vicinity from certain dangers.

To apply, there must be an agricultural operation, which is defined as:

(A) cultivating the soil;

(B) producing crops or growing vegetation for human food, animal food, livestock forage, forage for wildlife management, planting seed, or fiber;

(C) floriculture;

(D) viticulture;

(E) horticulture;

(F) silviculture;

(G) wildlife management;

(H) raising or keeping livestock or poultry, including veterinary services;

(I) planting cover crops or leaving land idle for the purpose of participating in any governmental program or normal crop or livestock rotation procedure; and

(J) the commercial sale of animals

That operation must be operating and remain substantially unchanged for one year or more prior to the lawsuit.

While development across the State of Texas is booming, so are efforts to preserve our farm and ranch heritage and values.  The future is unknown on what will happen with so much acreage around the State, but in the current development targeted areas we are at least seeing efforts using these tools to keep and preserve some of what Texas is known for – wide open spaces and the farm and ranch lifestyle.

Nothing in this column should be construed as permission to put a chicken coop in your yard at Elkins Lake.  Subdivisions still have restrictions that must be followed.

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A carbon storage contract is an agreement where a landowner has committed property to certain practices or activities which will work to sequester additional carbon into the soil (carbon sequestration).  Carbon sequestration is simply the capture and storage of carbon dioxide, rather than the emmission of it into the atmosphere where it remains.  The contract defines what can and/or cannot occur on the lands in order to achieve the carbon sequestration or emission reduction goals.

Financial Benefits:

The landowner entering the carbon storage contract receives carbon credits for the activities it is undertaking.  These credits are a financial benefit to the landowner that can be sold for cash.  An intermediary is used to market/sell these carbon credits to companies with a high volume of carbon emmisons.

In order for the land to be useful, it will have to be able to consistently perform the activities listed in the contract to either reduce or sequester carbon.

What Type of Activities:

Activities on the property must be for either the purpose of reducing carbon emissions or for sequestering carbon, or both.

Activities can be:

– Conservation farming. These include no-till or low-till farming practices to reduce soil erosion.  This is done by leaving crop residue on the surface.  This type of farming means lower fuel usage, less labor, and less equipment use.

– Grass or cover crop planting.  This includes crops that allows the soil to stay in place with less disruption and maintenance.

– Grazing practices.  Rotational grazing that prevents overgrazing and allows waste to be mixed into the soil.

What Are The Negative Impacts:

Carbon storage contracts run with the land, similar to easements, and therefore any sale is subject to the contract.  A carbon storage contract is a long-term commitment.  Thus any activities committed to by the landowner should be able to be sustained for the period of time identified under the contract.  The contract specifies key terms as to who is responsible for what, how long, notices and payments.

While solar panel or wind turbine field leases prevent the use of the surface for grazing cattle or goats and do not allow hunting, carbon storage contracts do not have these limitations.

The carbon storage contracts do require some form of monitoring, such as entry on the property to take measurements of the carbon in the soil and monitoring to ensure the practices to ensure capture of carbon are being followed.

It should be noted that carbon storage contracts are to reduce or capture rather than produce or generate something like oil, gas and other mineral or solar and wind leases.

If you have a property and think you might be interested in carbon storage, then you should consult an attorney to be sure that the property is suitable and help you find and negotiate with the right intermediaries.

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