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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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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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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While it is theoretically possible to do what is called an “exhaustive inspection,” in which entire systems are taken apart and examined, but the economics of such an inspection are generally prohibitive for most real estate transactions. The vast number of real estate inspections are limited visual inspections of readily accessible areas. They are non-destructive, and there is very little disassembly of equipment.  Tested mechanical items are run in normal operating modes, and there is no prediction of expected life of any system. No warranty or guarantee is stated or implied. Home warranty policies are available from other sources. Ask your real estate agent for information.  You should discuss in detail with your inspector what items will be inspected and to what extent.  You have the right to inspections for lead paint, asbestos, PCBs, and other potential environmental hazards, such as mold.  The inspector should provide a written report detailing what exactly was inspected.

Additionally, you should ask the real estate inspector if they are licensed by the Texas Real Estate Commission (link at www.trec.tx.us) and  about their experience, education, background and even whether they are bonded and insured.  The State of Texas has requirements for continuing education, but not errors and omissions insurance.  In fact many inspectors do not carry liability insurance.  This could be important if later you discover the inspector negligently  missed a defect.

All inspections are not equal.  For example, a inspection for termites (or wood destroying insect). Such inspections should be done by wood destroying specialists licensed by the Texas Structural Pest Control Board (link at www.fpcb.state.tx.us).  Again remember to ask about their experience, education, background and even whether they are bonded and insured.  If not you may not have any recourse against them in the event they negligently missed discovering a problem.

If you are purchasing a home with a pool or spa, you should contact a reputable pool company to perform an inspection.  Because pools and spas are unique, this will require someone with expertise in this area to ferret out any potential problems.  Again, you should verify whether the inspector is bonded and insured and that you will receive a written report.

If you are purchasing real estate with well service or a septic system, these items too should be thoroughly inspected.  If the house has been vacant for some time this could hamper a septic inspection.  Discuss the results thoroughly with your inspector.

Finally, mold inspections.  Persons conducting mold assessment or mold remediation in Texas, unless exempt, are required to be licensed.  Further information regarding licensees and mold-related matters can be found at the Texas Department of State Health Services.

If you are new to the area, do some research on deed restrictions and flood history.  Many areas appear dry, but are prone to flood in down pours or storms.  As many have learned with our recent sotrms, you do not want to find out the area floods after the storm.

I hope you find these tips of assistance useful when you decide to sell or buy a home.  Remember, while the seller is under a duty to disclose defects in the property, there is no substitute for thorough inspection by a professional real estate inspector.  The money you spend now, for an average 2500 square foot home about $250, could save you thousands of dollars later.  But beware that the price varies based on the type, style, size and age of the home.

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Property is obtained for a  project like the airport in a similar method to an electric line or pipeline.  It could begin with a request to survey an area of your property for a “potential” expansion.  Then, typically an offer is made for the purchase of the property from the entity seeking to take the property for the expansion.  If the landowner does not think the offer is fair, they have to make a decision.  Accept the low offer or deal with the threat of an eminent domain lawsuit.

In one of the most controversial eminent domain decisions ever, the United States Supreme Court ruled in 2005 (Kelo vs. City of New London ) that a city’s exercise of its eminent domain powers to take private property in furtherance of an economic development plan satisfied the constitutional requirement that such power be used only for a “public use,” even though private developers stood to profit handsomely from the city’s actions. In reaction to that ruling, some state legislatures have been busy crafting legislation to limit the use of condemnation powers in such circumstances. For their part, the owners of property targeted for condemnation have considered how they still might fend off the taking, or, failing that, how to maximize the compensation that the government must pay.

In Kelo vs. City of New London, a landowner was not able to defeat a condemnation initiated by a city so that a new hotel could be built on the property, but he did receive maximum compensation from an obviously sympathetic jury. The landowner was an immigrant who had spent two years and a lot of money renovating a warehouse and building a mail-order cigar business. When two private developers were unsuccessful in negotiations to buy the property as a site for a hotel, they instead reached an agreement with the city whereby the city would condemn the property for their desired use and the developers would pay the costs and fees associated with the condemnation.

When the city was first attempting to buy the property, it sent the landowner a toxic waste notice requiring him to investigate whether any toxins existed in the ground. The landowner tried to comply, but after spending many thousands of dollars he found no toxins. The city would later admit in the litigation that such an investigation was not really feasible so long as a building remained on the property. The toxic waste notice, and especially its suspicious timing, came to be seen as a tactic to put pressure on the landowner during the negotiations leading up to the condemnation.

Although the trial court ruled that the city could condemn the land for the hotel, in the subsequent trial before a jury for damages, the landowner fared much better. The jury awarded him the entire amount he had sought. The award included several million dollars each for the value of the property itself and for the loss of the goodwill associated with the cigar business. Damages for loss of a business are not typical in condemnation cases, but the landowner was able to show that there was no suitable alternative location for the business, so that he would have to start over from scratch. For good measure, the jury also awarded damages equal to the cost of the dubious toxicity study that the landowner had been forced to undertake.

As Texas’ population grows, additional property will be necessary to accommodate this growth, i.e., airports,  roadways, pipelines, utility lines, etc.  Usually the acquisition of this additional property will be through negotiations with the landowner and buyer/developer.  While the landowner may believe he is negotiating the price that he will accept, he could quickly find himself boxed into a corner with limited leverage.  The party pursuing eminent domain could have their lawsuit filed and a group of hand picked special commissioners, whose duty it is to determine a value for the property, already in place well before the owner is aware of what is happening.  This is because the notice requirement in eminent domain lawsuits is much different than the notice requirements in other lawsuits.  Additionally, it may not be the local government pursing this action.  It could be a development company or the state widening a highway or Farm to Market Road.  Their goal is to get the property for the lowest price they can.  On the one hand, they are spending taxpayer money, but on the other hand, it is your home or land they are taking.

If you find yourself in the position of having your property taken by a pipeline company, state or local government about an airport or road expansion, then you should immediately consult an attorney who is skilled in eminent domain, real estate transactions and familiar with the local real estate market.

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While there is no “standard form” for earnest money contracts in Texas, state law requires that if a broker prepares the contract, he or she must use earnest money contract forms promulgated by the Texas Real Estate Commission (TREC) when applicable to a particular transaction.  There is no requirement that TREC forms of contracts be used if a buyer or seller wishes to prepare or have an attorney prepare another form of contract.

This week and next I will go over the more pertinent provisions of the earnest money contract.  I am not a fan of “forms,” however, since the TREC forms are most often used, and their terms are fairly standard for most real estate transactions, I will use the TREC form for a one to four family residential contract as my outline.  The TREC forms are revised and updated periodically and this particular form was revised and implemented on February 1, 2023 and may be found at trec.texas.gov.  It contains twenty-four sections relating to different aspects of the transaction.

Section 1 of the contract deals with the parties to the transaction.  It identifies the seller and buyer.

Section 2 of the contract deals with the property.  In most residential transactions, the county map or plat records, not to be confused with the tax plat, establish a lot and block legal description of the property, if it is in a subdivision.  If the property is not in a platted subdivision, a metes and bounds description, or a description by reference to an existing recorded document will be required.  An address, by itself, is never a sufficient legal description.  It is a prudent business practice to obtain the legal description from the previous deed to the property.  An improper legal description can render the entire contract unenforceable.

Section 3 deals with the sales price.  This section breaks the total sales price down into the amount which will be cash and the amount, if any, which will be financed.

Section 4 deals with the financing aspects of the sale.  It will identify, in the particular transaction, whether a third party lender (i.e., bank, mortgage company, etc.), assumption of the seller’s current note, or seller financing will be utilized.  Typically, this section identifies the amount to be financed and the interest rate desired.

Section 5 deals with the earnest money.  The earnest money or escrow deposit, as it is sometimes called, should be held by a neutral third party as escrow agent.  This is one of the roles of the title company.  The typical seller wants to require as much earnest money as possible as a show of good faith by the buyer that the buyer is serious and will not walk away from the transaction.  Your broker can assist you in negotiating the amount of earnest money.

Section 6 deals with the title policy and survey.   It is very important for the buyer to have an adequate opportunity to review title and to receive adequate title assurances. Although it is a negotiable item, the contract usually provides that the seller furnish an owner’s policy of title insurance.   If a survey is required by the lender or the title company, the lender and the buyer should have an opportunity to review it prior to closing.  Another negotiable item is whether the buyer or seller pays for the survey.  The title company issues a Comittment for Title Insurance before closing.  The buyer MUST review this document and any deed restrictions or items listed.  You may also have to ask for the deed restrictions to read them personally.  This is the only way you will know before you buy what you can and can’t do on the property (i.e. run a business, raise animals) or who has the responsibility for maintenance of roads and community aminities.

Section 7 deals with the property condition.  This section deals with inspections of the property as well as disclosures by the seller of the property’s condition.   This is usually done with a Property Condition Addendum.  To prevent undue hardship on the seller, however, the contract form does contemplate an agreed limit as to how much any repairs required to be made by the seller may cost.  It is the buyer’s obligation to have inspections of the property done and I can’t stress this enough.

Section 8 refers to the parties’ agreement as to their brokers’ fees.  This is generally a separate agreement between each party, seller and buyer, and their respective broker.

Section 9 deals with the date of the closing.  It also explains what each parties’ duties and responsibilities are at closing.

Section 10 states when the seller will turn possession of the premises over to the buyer.  This is commonly done at closing, but may be earlier or later if a temporary residential lease is involved.

Section 11 allows the parties to insert any special provisions or terms of their sale, such as: an “as is” provision; a provision that certain personal property, i.e., drapes, refrigerator, shutters, will be conveyed with the real property; or, that the expenses will be paid differently than is preprinted in Section 12.

Section 12  identifies what expenses of the sale each party to the contract will pay.  Although the TREC form specifies the usual or standard split of expenses between buyer and seller, these are negotiable.

Next week I will review the remaining sections of the typical TREC earnest money contract form.

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Attorneys often face co-ownership issues when advising on inheritance and probate avoidance. Inheritance in such cases may be determined by express language in a deed or a last will and testament, or in the absence of either, by intestacy provisions of the Estates Code. In some circumstances a co-owner may have no survivorship rights at all.

Texas real estate may be owned individually or jointly.  Joint owners are called co-owners or cotenants, and the

relationship is known as a cotenancy.  Texas law recognizes three forms of cotenancy: community property, joint tenants with the right of survivorship (JTWS), and tenants in common (TIC). In this article I will focus on TIC.

Co-ownership, regardless of the type, gives each cotenant the right to use, occupy and possess each part of the property, but not exclusively. Cotenants may not exclude other cotenants from possessing, using or occupying the same part or parcel.  This undivided right of possession forms the basis of the cotenancy relationship.  Cotenants may terminate the cotenancy at any time by

partitioning, which changes co-ownership to sole ownership.  Partitioning divides the property according to value, not area, and may occur voluntarily or judicially.  Voluntary partitioning requires an agreement among the cotenants to divide the property in a certain manner. After

exchanging deeds, each former cotenant owns a certain parcel outright.

Judicial partitioning, on the other hand, is done by the court.  If the court finds the property cannot be divided fairly and

equally, it orders the property to be sold with the proceeds divided among the owners according to their undivided interests.  Judicial partitioning is a time-consuming, expensive process.  Cotenants have the right to transfer their undivided interests to a third party without the other cotenants’ consent.

Although co-owners share the nonexclusive right to use and possess the property, the legal relationship ends there. No cotenant is a legal partner or agent of the other. Except in limited circumstances, no cotenant has the authority to bind another cotenant to an agreement or a debt.  No fiduciary duty exists among the cotenants unless an express agreement exists. However, cotenants do share some responsibilities.

This is often where problems arise between cotenants.

Individually and collectively, cotenants have a duty to protect and preserve the property.  A cotenant who expends funds

for this purpose is entitled to reimbursement from the others for their proportional share. Equity gives the cotenant making the expenditures a lien on the property to enforce repayment.

Similarly, cotenants have a duty to preserve and protect the property from waste. Waste constitutes the unauthorized or wrongful destruction or severance of improvements, trees, minerals or other tangible property from the property. Waste does not include ordinary wear and tear. The party committing the waste becomes liable to the others for damages.

Cotenants are responsible for the payment of a common debt, such as the mortgage and property taxes.  A cotenant paying a disproportionate share of these debts may recover the costs from the others.  Again, equity holds each cotenant equally liable, and all are bound to contribute proportionately according to their undivided interest. This raises some questions.  Assume one cotenant pays all the property taxes for years and the others refuse to reimburse him or her. Rather than sue, the cotenant quits paying the taxes and purchases the property at the tax foreclosure sale.   Does this give the cotenant sole title to

the land?  The answer is no.  Texas law presumes a cotenant purchasing the property at a tax sale does so for the benefit of all the cotenants.  The purchaser simply reinstates the cotenancy relationship as it existed before the tax sale.

Today’s column states just a few examples of the issues that can arise in cotenancy.  Therefore, if you find yourself in a cotenancy relationship that is not working out, then you should consult an attorney for assistance.

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