DETAILS IN

(AND WHY THEY MATTER)

2019 TEXAS LAND INSTITUTE DECEMBER 5-6, 2019 SAN ANTONIO, TEXAS

PAUL J. MCCONNELL, III DE LANGE, HUDSPETH, MCCONNELL & TIBBETS, LLP 1177 WEST LOOP SOUTH, SUITE 1700 HOUSTON, TEXAS 77027 Biography Paul J. McConnell, III

Paul McConnell is a partner in the Houston firm of De Lange, Hudspeth, McConnell & Tibbets, LLP. The firm has tried Texas real cases for over 100 years. In his 46 years with the firm, Paul has tried or settled cases in over thirty Texas counties and several of the Federal courts in Texas. Paul has been involved in over forty appeals, encompassing most of the courts of appeals in the State of Texas, the Fifth Circuit Court of Appeals, and the Texas Supreme Court. Paul frequently lectures on real estate matters and currently sits on the TLTA Judiciary and Legislative committees.

In addition to his trial and appellate practice, Paul also handles real estate transactions and serves as a mediator.

DETAILS IN DEEDS (AND WHY THEY MATTER)

This paper will highlight several issues that have come up over the years in the drafting and interpretation of deeds, in hopes that the information in this paper will help practitioners avoid future problems.

1. Parties to the .

The name of the grantor should “match up” with the title holder as shown on the title commitment. If, for instance, the grantor’s marital status has changed and the grantor is now known by another name, the name in which the grantor took title should also be shown. In other words, if Sally Smith took title to the , was married and is now known as Sally Jones, the grantor in the deed should be “Sally Jones (f/k/a Sally Smith).”

There may be issues if title was taken in the name of a corporation or LLC whose charter or existence has been forfeited due to non-payment of franchise taxes or other fees. Likewise, if a corporation has been dissolved while holding real estate, it may be necessary for deeds reflecting the distribution of assets to be recorded prior to a sale from the individual shareholders. The same holds true for property acquired by a decedent, which may require a deed either from the independent executor or a distribution deed to the heirs prior to conveyance by them.

With respect to the grantee, a deed is void if the grantee is not in existence at the time the deed is executed. Lighthouse Church of Cloverleaf v. Texas Bank, 889 S.W.2d 595, 600 (Tex. App. – Houston [14th Dist.] 1994, writ den.) However, if the grantee is a corporation which has had its charter forfeited, but can apply for reinstatement, the deed is not void. Lighthouse Church at 601.

A conveyance to a trust should be made by conveying the property to the trustee, as trustee for the trust, rather than conveying the property to the trust itself.

If different estates are being conveyed, that should be spelled out. For instance, if a is being conveyed to one grantee, and a interest to another, it should be spelled out clearly in the deed.

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If a grantor owns different interests in the property in different capacities, the capacity in which the property is being conveyed should be spelled out clearly and any limitations should be clearly noted. In a recent San Antonio case, where the mother had both an individual interest in property and also served as trustee for another interest in the same property, it was held that the conveyance by the mother included the interest held by her as trustee for her sons. West 17th Resources, LLC v. Pawelek, 482 S.W.3d 690 (Tex. App. – San Antonio 2015, pet den.) In that situation, the confusion could have been cleared up by a recital that the mother was conveying only her individual interest and not any interest held by her in any other capacity. See also Ethridge v. Optiz, 580 S.W.3d 167, 182 (Tex. App. – Tyler 2019, no pet.) (property acquired in name of partner for partnership business).

2. Consideration.

There are a number of cases stating that consideration is not necessary for a deed. See Woodworth v. Cortez, 660 S.W.2d 561, 564 (Tex. App. – San Antonio 1983, writ ref’d n.r.e.) ( deed); Cannon v. Windgard, 355 S.W.2d 776, 781 (Tex. Civ. App. – Dallas 1962, writ ref’d n.r.e.); McKee v. Douglas, 362 S.W.2d 870, 876 (Tex. Civ. App. – Texarkana 1962, writ ref’d n.r.e.). However, a deed generally recites the consideration, whether it be a gift, ten dollars and other good and valuable consideration, or the vendor’s and loan information. The lack of consideration standing alone is ordinarily not grounds for the avoidance of an executed and delivered deed. Triate v. Petro, 606 S.W.2d 22, 24 (Tex. Civ. App. – Houston [1st Dist.] 1980, writ ref’d n.r.e.).

3. Granting Clause.

While no technical words are necessary to convey land, there should be a clear intent evidenced by the Grantor that the property is being conveyed. Harris v. Strawbridge, 330 S.W.2d 911, 915 (Tex. Civ. App. – Houston 1959, writ ref’d n.r.e.). For instance, words expressing a “wish” that the grantor’s wife “be considered” to “own” or “have” were not sufficient operative words to convey title. Harlan v. Vetter, 732 S.W.2d 390, 393 (Tex. App. – Eastland 1987, writ ref’d n.r.e.). In considering whether an instrument conveys property, the entire instrument should be considered. Masgas v. Anderson, 310 S.W.3d 567, 570 (Tex. App. – Eastland 2010, pet. den.).

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4. Legal Description.

In order to be valid, a deed must contain a sufficient description of the property to be conveyed either within the writing itself or by reference to some other existing writing, by which the means or data identifying the particular land may be sufficient to describe the land with reasonable certainty. AIC Management v. Crews, 246 S.W.3d 640 (Tex. 2008). The general rule is that if enough appears in the description of the land in the deed so that a party familiar with the locality can identify the premises with reasonable certainty, it will be sufficient. Gates v. Asher, 154 Tex. 538, 280 S.W.2d 247, 248 (Tex. 1955). In fact, if a deed conveys all of the grantor’s property in a certain county, without referencing the specific property, that is sufficient. Baker v. Smith, 407 S.W.2d 4, 6 (Tex. Civ. App. – Fort Worth 1966, writ ref’d n.r.e.).

If, however, the deed purports to convey only a portion of a larger tract of land owned by the grantor, the deed must contain a reference sufficient to allow one to determine what portion of the property is being conveyed in order to be valid. In other words, a description of “40 acres out of my 150 acre tract of land in Harris County, Texas” is not sufficient, but a reference to “the southerly 40 acres of my 150 acre tract in Harris County, Texas” may be sufficient. But if any assumptions or surmise not referenced in the deed itself are necessary to determine the tract conveyed, the deed will be void for lack of an adequate legal description. Gaut v. Daniel, 293 S.W.3d 764, 768 (Tex. App. – San Antonio 2009, pet den.).

5. What is Conveyed?

Generally speaking, a conveys all that the grantor has to convey at the time the deed was executed and delivered, while a conveys the grantor’s rights, if any, to the property. Goodyne Energy Income Production Partnership 5-6 v. Newton Corp., 161 S.W.3d 482, 486 (Tex. 2005). This includes any interest in adjacent streets to the center line of the street, and any strips and gores. Escondido Services, LLC v. VKM Holdings, L.P., 321 S.W.3d 102, 106 (Tex. App. – Eastland 2010, no pet.). The law implies a of all of the incidents rightfully belonging to the property at the time of conveyance which are essential to the full and perfect enjoyment of the property. Stradley v. Magnolia Petroleum Co., 155 S.W.2d 649, 651 (Tex. Civ. App. – Amarillo 1941, writ ref’d.).

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In the event that any to get to the property is being conveyed, it should be described as a part of the legal description, either by metes and bounds or by reference to a plat if the easement appears on the plat. If the easement is to be an exclusive easement, that should be set forth.

Quite often, when the property being conveyed abuts a railroad track or roadway, the metes and bounds legal description will stop at the boundary of the railroad or roadway. In this case, the legal description should spell out that rights in any adjacent roadway, railroad easement, or the like, either are or are not being conveyed in order to avoid future issues.

6. Exceptions and Reservations From the Conveyance.

Exceptions and reservations in a deed should be listed separately, as they are two entirely distinct things. Gonzales v. Jansen, 553 S.W.3d 633, 638 (Tex. App. – San Antonio 2018, pet. den.). A reservation is an interest in the land that the grantor keeps for himself, and must be indicated by clear language. Patrick v. Barnett, 734 S.W.2d 646, 647 (Tex. 1987); Homestrum v. Lee, 26 S.W.3d 526, 531 (Tex. App. – Austin 2000, no pet.). An exception, on the other hand, operates to exclude some interest from the grant. Wenske v. Aaly, 521 S.W.2d 791,806 (Tex. 2017). As stated in Terra Road Partners, Ltd. v. 4800 Frederich Lane, LLC, No. 03-13-00221-CV, 14 WL 2568488, at *6 (Tex. App. – Austin, June 4, 2012, pet. den.) (Mem. Op.) “an exception that merely infers to an encroachment on the property, as opposed to specifically reserving the conveyance of title to the property underlying the encroachment does no more than say that the property conveyed is burdened by the encroachment.”) See Cook, et. al v. Nissimov, et al., 580 S.W.3d 745 (Tex. App. – Houston [14th Dist.] 2019, pet. pending) for a recent discussion of this difference. In that case, the developer of a gated subdivision in which the lots were described as lots in a “private, gated subdivision” wanted to use the roadway in the subdivision for access to his property to the north, in connection with its development. He argued that by excepting the roadway that he had created in the deeds to the purchasers in the gated subdivision, he had retained the right to use the road himself. The Court held that in order to do that he would have needed to reserve the right, rather than excepting to it. If one is to reserve an easement through the property conveyed to serve one’s remaining property, this should be spelled out in the deed, and the dimensions and location of the easement should be clearly delineated. There have been numerous

2019 Texas Land Title Institute - Details in Deeds (And Why They Matter) Page 5 of 13 cases where an undefined easement was reserved, and it fell to the court, based upon the produced in the case, to define the easement.

The old State Bar form of deed contributed to this confusion. It lumped the two together under the heading “Reservations From and Exceptions to Conveyance and Warranty.” This has now been corrected and the current State Bar form has separate categories for exceptions and reservations.

When reserving an interest, it is essential to be specific about what is reserved. There have been a number of recent mineral and royalty cases which have dealt with the issue of just what was reserved in the way of minerals and/or royalty. Perryman v. Spartan Texas Six Capital Partners, Ltd., 546 S.W.3d 110 (Tex. 2018); Neuhoff v. Piranha, 578 S.W.3d. 543 (Tex. App. – Amarillo 2018, no pet.); Aery v. Hoskins, Inc., 493 S.W.3d 684 (Tex. App. – San Antonio 2016, pet. den.); Griswold v. EOG Resources, Inc., 459 S.W.3d 713 (Tex. App. – Fort Worth 2015, no pet.); Moore v. Noble Energy, Inc., 374 S.W.3d 644 (Tex. App. – Amarillo 2012 (no pet.); Sundance Minerals, L.P. v. Moore, 354 S.W.3d 507 (Tex. App. – Fort Worth 2011, pet den.); Coghill v. Griffin, 358 S.W.3d 834 (Tex. App. – Tyler 2012, pet den.).

7. Vendor’s .

Where the purchase of the property is being financed, it is essential that a vendor’s lien be retained in the deed. This protects the lender (and the title insurer) against a failure to promptly or properly record the deed, intervening liens, and bankruptcy. In retaining a vendor’s lien, it is important that the lender and the loan be clearly identified to avoid any future issues.

8. What Type of Warranty.

The type of warranty included in the deed makes a difference. I do not let my sellers convey by general warranty deed, as that subjects the grantor to liability for problems with the title that occurred before the grantor even bought the property. A special warranty, on the other hand, only warrants against matters created during the period of the client’s . Institutions which own property almost never convey by general warranty, but only by special warranty, or sometimes, in the case of foreclosures and the like, by a deed without warranty. There is a recent case of interest in this area, Chicago Title Ins. Co. v. Cochran Investments, Inc., decided by the Fourteenth Court of Appeals (550 S.W.3d 196) and currently before the Texas Supreme Court on

2019 Texas Land Title Institute - Details in Deeds (And Why They Matter) Page 6 of 13 petition for review. There, the grantor (Cochran) conveyed by a special warranty deed to Chicago’s insured. However, it was later determined that the grantor did not have any title to convey, as a result of a bankruptcy court decision setting aside the foreclosure sale under which Cochran acquired title. The Court of Appeals held that since Cochran had conveyed by special warranty deed, the grantee had no recourse against him, since Cochran did not create the problem. The Court of Appeals’ decision allowed Cochran to retain the money he had been paid, holding that there was no claim for breach of the livery or of seisen in the face of a special warranty deed. The effect of this holding was to turn the special warranty deed here into a quitclaim deed, which conveyed only the right, title, and interest, if any, held by the grantor. This seems to be in conflict with the earliest case of Childress v. Siler, 272 S.W.2d 417, 420 (Tex. Civ. App. – Waco 1954, writ ref’d n.r.e.), which excepted only quitclaim deeds from the covenant of seisen and of good right to convey. The Texas Supreme Court has requested full briefing in the Cochran case on Chicago Title’s petition for review, so this case could be headed for a decision by our state’s highest court.

9. Special Provisions.

Depending upon the agreement of the parties, deeds may also contain special provisions. If special provisions are to be included in the deed, they should be listed in the earnest money .

One provision commonly contained in deeds is the “as is, where is” provision. Where it appears in the contract, this type of agreement should be referenced in the deed so that future owners are aware of the fact that the conveyance from the grantor was limited.

Depending upon the agreement of the parties, there may also be a reverter clause in the deed, providing that the property will come back to the grantor upon the occurrence of certain events. Once again, such an agreement should be spelled out in the deed in order to place subsequent purchasers on notice.

In the event that special provisions are included in the deed, the best practice is to have the grantee sign the deed as accepting the same, so that there is no question regarding the parties’ agreement.

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Copies of a form deed with disclaimers and form of closing certificate which I commonly use are attached as Exhibits B and C.

10. the Deed.

The deed must, of course, be recorded in the county in which the property is located. Where the property is located in two contiguous counties, the deed may be recorded in either. See Aston Meadows, Ltd., v. Devon Energy Prod. Co., 359 S.W.3d 856, 862 (Tex. App. – Fort Worth 2012, pet. den.). But the better practice is to record in both counties to avoid questions. Of course, a deed recorded in the wrong county does not impart any constructive notice to a bonafide purchaser.

11. The Payoff – by Deed.

Under Texas law, the parties to a deed are bound by the matters contained in the deed. Angell v. Bailey, 225 S.W.3d 834, 841 (Tex. App. – El Paso 2007, no pet.); Glover v. Union Pacific R. Co., 187 S.W.3d 201, 216 (Tex. App. – Texarkana 2006, pet. den.). See Missouri-Kansas –Texas Railroad Co. of Texas v. Taub, 345 S.W.2d 442, 444 (Tex. Civ. App. – Houston 1961, no writ).

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EXHIBIT "B"

NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY OR ALL OF THE FOLLOWING INFORMATION FROM ANY INSTRUMENT THAT TRANSFERS AN INTEREST IN BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER'S NUMBER.

SPECIAL WARRANTY DEED

THE STATE OF TEXAS § § COUNTY OF HARRIS §

______, as "Grantor", for and in consideration of the sum of TEN AND NO/100 DOLLARS ($10.00) paid to Grantor and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, has GRANTED, SOLD and CONVEYED and does hereby GRANT, SELL and CONVEY unto ______("Grantee"), the real property located in Harris County, Texas, as more particularly described in Exhibit “A” attached hereto and incorporated herein by reference, together with any improvements located on such land (such land and improvements being collectively referred to as the "Property").

This conveyance is made and accepted subject to the following matters (the “Permitted Exceptions”): (i) all , building set-back lines, reservations, royalties, mineral reservations, leases, restrictions, zoning ordinances and conditions as recorded with the county clerk of the county where the Property is located, to the extent applicable to and enforceable against the Property; (ii) all matters that a correct survey of the Property would show; (iii) Grantor expressly reserves all right, title and interest in and to all rights and appurtenances pertaining to adjoining owned by Grantor on this date (the “Grantor Properties”), including but not limited to all right, title and interest of Grantor in and to all adjacent streets, alleys or rights of way adjacent to the Grantor Properties and all easements for the use and benefit of such Grantor Properties; and (iv) Grantor reserves all oil, gas and other minerals that may be produced or mined from the Property, and all royalty interests, if any, currently owned or controlled by Grantor. Notwithstanding the foregoing reservation of mineral and royalty interests, Grantor expressly releases and waives, on behalf of itself, its successor, and assigns, all rights of ingress and egress, and all other rights of every kind and character whatsoever, to enter upon or to use the surface of the Property, or any part thereof, including, without limitation, the right to enter upon the surface of the Property for purposes of exploring for, developing, drilling for, transporting, storing or producing the oil, gas and other minerals in, on and under the Property, but such waiver shall not prevent Grantor, its successors, assigns or mineral lessees from: (i) exploring for, developing and producing all such oil, gas, and other minerals in, under and that may be produced from the Property by means or methods, including, without limitation, directional drilling, which do not require or result in operations on the surface of the Property; and (ii) including all or any portion of the Property in one or more “pooling” or unitization units for purposes of exploring for, development or production of such oil, gas or other minerals.

TO HAVE AND TO HOLD the Property, together with all and singular the rights and appurtenances pertaining thereto, subject to the Permitted Exceptions and those matters hereafter set forth,

2019 Texas Land Title Institute - Details in Deeds (And Why They Matter) Page 9 of 13 unto Grantee and Grantee's successors and assigns forever; and Grantor does hereby bind Grantor and Grantor's successors and assigns to warrant and forever defend the Property unto Grantee and Grantee's successors and assigns, against every person whomsoever lawfully claiming or to claim the same or any part thereto, by, through or under Grantor, but not otherwise.

GRANTEE ACKNOWLEDGES THAT GRANTOR HAS NOT MADE AND DOES NOT MAKE ANY REPRESENTATIONS AS TO THE PHYSICAL CONDITION, OR ANY OTHER MATTER AFFECTING OR RELATED TO THE PROPERTY OTHER THAN WARRANTIES OF TITLE AS PROVIDED AND LIMITED HEREIN. GRANTEE EXPRESSLY AGREES THAT TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE PROPERTY IS CONVEYED "AS IS" AND "WITH ALL FAULTS", AND GRANTOR EXPRESSLY DISCLAIMS, AND GRANTEE ACKNOWLEDGES AND ACCEPTS THAT GRANTOR HAS DISCLAIMED, ANY AND ALL REPRESENTATIONS, WARRANTIES OR GUARANTIES OF ANY KIND, ORAL OR WRITTEN, EXPRESS OR IMPLIED, (EXCEPT AS TO TITLE AS HEREIN PROVIDED AND LIMITED) CONCERNING THE PROPERTY, INCLUDING WITHOUT LIMITATION, THE VALUE, CONDITION, MERCHANTABILITY, HABITABILITY, MARKETABILITY, PROFITABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE, OF THE PROPERTY. GRANTEE HAS NOT RELIED UPON ANY REPRESENTATION, STATEMENT, OR OTHER COMMUNICATION FROM SELLER OR ANY AGENT OR REPRESENTATIVE OF SELLER IN PURCHASING THE PROPERTY.

AD VALOREM TAXES WITH RESPECT TO THE PROPERTY ARE PRORATED AS OF THIS DATE (BASED ON ESTIMATES, IF NECESSARY) AND ARE NOT SUBJECT TO READJUSTMENT. GRANTEE EXPRESSLY ASSUMES PAYMENT OF ALL AD VALOREM TAXES AND SPECIAL AND GENERAL ASSESSMENTS OF WHATEVER NATURE APPLICABLE TO THE PROPERTY FOR THE YEAR 2020 AND SUBSEQUENT YEARS, AS WELL AS ALL SPECIAL AND GENERAL ASSESSMENTS OF WHATEVER NATURE APPLICABLE TO THE PROPERTY.

EXECUTED on the date set forth in the acknowledgment attached hereto to be effective as of the ______day of ______, 20___.

GRANTOR:

______By: ______Its: ______

Date: ______

AGREED AND ACCEPTED BY GRANTEE:

______

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By: ______Name: ______Title: ______Date: ______

Address of Grantor: ______

Address of Grantee: ______

STATE OF ______§ § COUNTY OF ______§

The foregoing instrument was acknowledged before me on this ______day of ______, 20___, by ______.

______Notary Public in and for The State of ______

STATE OF ______§ § COUNTY OF ______§

The foregoing instrument was acknowledged before me on this ______day of ______, 20___, by ______.

______Notary Public in and for The State of ______

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EXHIBIT "C"

CLOSING CERTIFICATE

This Closing Certificate (this "Agreement") is made to be effective as of the _____ day of ______, 20____, by ______("Buyer"), for the benefit of ______("Seller ").

BUYER ACKNOWLEDGES AND AGREES THAT THE PROPERTY DESCRIBED ON EXHIBIT “A” HAS BEEN SOLD AND CONVEYED TO BUYER AND BUYER HAS ACCEPTED THE PROPERTY "AS IS, WHERE IS, WITH ALL FAULTS". SELLER HEREBY EXPRESSLY DISCLAIMS ANY AND ALL REPRESENTATIONS AND WARRANTIES OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, WITH RESPECT TO THE PROPERTY. WITHOUT LIMITING THE GENERALITY OF THE PRECEDING SENTENCE OR ANY OTHER DISCLAIMER SET FORTH HEREIN, SELLER AND BUYER HEREBY AGREES THAT NEITHER SELLER NOR ITS PARTNERS, OFFICERS, REPRESENTATIVES, AGENTS OR ATTORNEYS HAVE MADE AND ARE NOT MAKING ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WRITTEN OR ORAL, AS TO (A) THE NATURE OR CONDITION, PHYSICAL OR OTHERWISE, OF THE PROPERTY OR ANY ASPECT THEREOF, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES OF HABITABILITY, SUITABILITY, MERCHANTABILITY, OR DESIGN OR FITNESS FOR A PARTICULAR USE OR PURPOSE, (B) THE NATURE OR QUALITY OF CONSTRUCTION, STRUCTURAL DESIGN OR ENGINEERING OF THE IMPROVEMENTS OR THE STATE OF REPAIR OR LACK OF REPAIR OF ANY OF THE IMPROVEMENTS, (C) THE QUALITY OF THE LABOR OR MATERIALS INCLUDED IN THE IMPROVEMENTS, (D) THE SOIL CONDITIONS, DRAINAGE CONDITIONS, TOPOGRAPHICAL FEATURES, ACCESS TO PUBLIC RIGHTS-OF-WAY OR EASEMENTS, PUBLIC OR PRIVATE, AVAILABILITY OF UTILITIES OR OTHER CONDITIONS OR CIRCUMSTANCES WHICH AFFECT OR MAY AFFECT THE PROPERTY OR ANY USE TO WHICH BUYER MAY PUT THE PROPERTY (E) ANY CONDITIONS AT OR WHICH AFFECT OR MAY AFFECT THE PROPERTY WITH RESPECT TO ANY PARTICULAR PURPOSE, USE, DEVELOPMENT POTENTIAL OR OTHERWISE, (F) THE AREA, SIZE, SHAPE, CONFIGURATION, LOCATION, CAPACITY, TAX CONSEQUENCES, ZONING, UTILITIES, GOVERNMENT APPROVALS, QUANTITY, QUALITY, CASH FLOW, EXPENSES, VALUE, MAKE, MODEL, COMPOSITION, AUTHENTICITY OR AMOUNT OF THE PROPERTY OR ANY PART THEREOF, (G) EXCEPT FOR THE LIMITED WARRANTY OF TITLE EXPRESSLY SET FORTH IN THE DEED, THE NATURE OR EXTENT OF TITLE TO THE PROPERTY, OR ANY EASEMENT, RIGHT-OF-WAY, LEASE, , LIEN, , LICENSE, RESERVATION, CONTRACT, CONDITION OR OTHERWISE THAT MAY AFFECT TITLE TO THE PROPERTY, (H) ANY ENVIRONMENTAL, GEOLOGICAL, METEOROLOGICAL, STRUCTURAL, OR OTHER CONDITION OR HAZARD OR THE ABSENCE THEREOF HERETOFORE, NOW OR HEREAFTER AFFECTING IN ANY MANNER THE PROPERTY, INCLUDING BUT NOT LIMITED TO, THE ABSENCE OF ASBESTOS OR ANY ENVIRONMENTALLY HAZARDOUS SUBSTANCE ON, IN, UNDER OR ADJACENT TO THE PROPERTY, (I) THE COMPLIANCE OF THE PROPERTY OR THE OPERATION OR USE OF THE PROPERTY WITH ANY APPLICABLE RESTRICTIVE COVENANTS, OR WITH ANY , ORDINANCES OR REGULATIONS OF ANY GOVERNMENTAL BODY (INCLUDING SPECIFICALLY, WITHOUT LIMITATION, ANY ZONING LAWS OR REGULATIONS, ANY BUILDING CODES, ANY ENVIRONMENTAL LAWS (INCLUDING, WITHOUT LIMITATION, THE COMPREHENSIVE ENVIRONMENTAL RESPONSE,

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COMPENSATION AND LIABILITY ACT, THE CLEAR WATER ACT, THE CLEAN AIR ACT AND THE TEXAS HEALTH AND SAFETY CODE, AND THE AMERICANS WITH DISABILITIES ACT OF 1990, 42 U.S.C. 12101 ET SEQ.) BUYER RECOGNIZES AND AGREES THAT UPON CLOSING BUYER SHALL BEAR THE RISK THAT ADVERSE MATTERS, INCLUDING BUT NOT LIMITED TO, VIOLATIONS OF ANY APPLICABLE LAWS, CONSTRUCTION DEFECTS, AND ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY BUYER'S INVESTIGATIONS, AND BUYER, UPON CLOSING, SHALL BE DEEMED TO HAVE WAIVED, RELINQUISHED AND RELEASED SELLER FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF ACTION IN ), LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEYS' FEES AND COURT COSTS) OF ANY AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, WHICH BUYER MIGHT HAVE ASSERTED OR ALLEGED AGAINST SELLER AT ANY TIME BY REASON OF OR ARISING OUT OF ANY VIOLATIONS OF ANY APPLICABLE LAWS (INCLUDING ANY ENVIRONMENTAL LAWS), CONSTRUCTION DEFECTS, PHYSICAL CONDITIONS, AND ANY AND ALL OTHER ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS REGARDING THE PROPERTY. BUYER AGREES THAT SHOULD ANY WORK BE REQUIRED TO PUT THE PROPERTY IN COMPLIANCE WITH ANY APPLICABLE LAWS, OR SHOULD ANY CLEANUP, REMEDIATION OR REMOVAL OF HAZARDOUS SUBSTANCES OR OTHER ENVIRONMENTAL CONDITIONS ON THE PROPERTY BE REQUIRED AFTER THE DATE OF CLOSING, SUCH WORK, CLEAN-UP, REMOVAL OR REMEDIATION SHALL NOT BE THE RESPONSIBILITY OF SELLER.

BUYER:

______

Date: ______

STATE OF ______§ § COUNTY OF ______§

The foregoing instrument was acknowledged before me on this ______day of ______, 20___, by ______.

______Notary Public in and for The State of ______

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