Owning Your Piece of Texas: Key Laws Texas Landowners Need to Know Tiffany Dowell Lashmet Assistant Professor & Extension Specialist, Texas A&M AgriLife Extension Acknowledgements They say it takes a village, and I can assure you that sentiment is certainly true with this handbook. I appreciate the support and input from a number of the leaders in Texas agricultural law and economics including Amber Miller of Crenshaw, Dupree & Milam, L.L.P. in Lubbock, TX; Jim Bradbury of James D. Bradbury PLLC in Austin, TX; Stephanie Bradley Fryer of Stephanie Bradley Fryer, PLLC in Abilene, TX; Trace Blair of Wigington Rumley Dunn & Blair LLP in Jourdanton, TX; Alicia Meinzer of Bourland, Wall & Wenzel, P.C. in Ft. Worth, TX; F. Parks Brown of Uhl, Fitzsimons, Jewett, Burton & Wolf, PPLC in San Antonio; Kyle Weldon of Brown Pruitt in Ft. Worth; Paul Goeringer of the University of Maryland; Dr. Greg Kaase of the Texas A&M Department of Agricultural Economics; Dr. Justin Benavidez of the Texas A&M Department of Agricultural Economics; Dr. Blake Bennett of the Texas A&M Department of Agricultural Economics; and Dr. Larry Redmon of the Texas A&M Department of Soil & Crop Sciences. I would also like to thank Emmy Williams Kiphen and Sue Dowell, for helping with layout and proofing of this manuscript. Having a retired English teacher for a mom continues to pay off! Finally, thank you to everyone who graciously shared their photos for use in this handbook. Credit is included with each photo, and credit for the cover photo goes to Dr. Rick Machen of the King Ranch Institute for Ranch Management. Publication Date This handbook was published in April 2019. Disclaimer This handbook is for educational purposes only, does not create an attorney-client relationship, and is not a substitute for competent legal advice by an attorney licensed in your state. The information provided is merely provided as general guidance. Funding Funding for the development of these materials was provided by the USDA National Institute of Food and Agriculture through the Southern Risk Management Education Center, project ID #13642. TABLE OF CONTENTS I. Introduction II. What Do You Own? III. Oil and Gas Law IV. Water Law V. Landowner Liability VI. Fence Law VII. Access to Property VIII. Eminent Domain IX. Pipeline and Transmission Line Easements X. Right to Farm Statute XI. Agricultural Leases XII. Renewable Energy Leases XIII. Special Use Tax Valuation XIV. Key Estate Planning Documents XV. Conclusion XVI. Appendix I – Texas Groundwater Conservation Districts Map Chapter 1: Introduction “I must say as to what I’ve seen of Texas, it is the garden spot of the world. [It is] the best land and the best prospects for health I ever saw, and I do believe it is a fortune to any man to come here.” - Davy Crockett Photo by Mandy Quinn Photography 1 Owning agricultural land in Texas is certainly a privilege, and, as with any great privilege, comes great responsibility. All Texas landowners should take the time to investigate and understand the laws applicable to their property and operation. From ownership of water beneath the land to potential liability if a person is injured on the property to the best practices for negotiating a pipeline easement, several legal issues face agricultural landowners on a daily basis in the Lone Star State. This handbook is designed to offer a basic overview of several of the legal issues facing Texas landowners. Agricultural law is broad and complex, and this handbook is no exception. By the time a person reads the entire book, it may feel like a law school diploma should be included. Specifically, my goal is to write this handbook in a manner that is both understandable and practical for non-attorneys. Having grown up on a family farm and now owning one myself, it is always my goal to write something that can be understood and discussed by the farmers at the local coffee shop. Additionally, for each topic, I will include a list of additional resources where readers may find more detailed information on the various legal issues discussed. With that, let’s get started looking at Texas agricultural law! 2 Chapter 2: What Do You Own? “For a few precious moments…I’m back in Old Texas, under a high sky, where all things are again possible and the wind blows free.” – Larry L. King Photo by Ty Lashmet 3 Although the question of “What do you own?” may seem ridiculous, the starting place for any Texas landowner in considering the legal issues he or she may face is to consider what the landowner actually owns and how that property is held from a legal standpoint. I. Review Deed Records When land is acquired, a good starting point for a new landowner is to take time to do a review of the deed records related to that property. These records are maintained in the courthouse and contain various documents related to the property such as deeds showing transfer of ownership from one party to another, any express reservations when property is transferred, any encumbrances such as mortgages or liens on the property, any easements burdening the property. These records are open to the public. Taking time to review the documents related to a property being purchased, inherited, or otherwise transferred is important and beneficial. When reviewing records, there are a number of issues for a person to consider. First, the new landowner (or potential new landowner) should determine if the most recently filed deed shows the correct owner. When property is transferred by sale, this is generally not an issue as a title company often handles preparing and filing the deed documents to transfer ownership from the seller to the buyer. If property is inherited, however, it may be that there was never a formal deed or other conveyance instrument transferring ownership to the new owner. Ensuring the property is listed as being held by the current owner is an important first step. Second, deed records should be reviewed to determine if there have been any reservations recorded in the deed records. As discussed in detail below, there may be severances of estate that resulted from reservations. It is important to consider if there have been any reservations of rights on the property, such as mineral rights, groundwater rights, or even wind rights. Finally, determine if there are any encumbrances on the property. This could include liens or mortgages on the property that have not been released. For agricultural land, there could also be lease agreements that have been recorded that would have to be honored by a new purchaser. Also important is to determine if there are any existing easements on the land, whether those be for existing pipelines, power lines, water lines, or access easements allowing another party to enter the land. II. Severance of Estates In Texas, like most other states, one piece of property may have numerous owners because of the potential for the severance of estates. The most common example of this is the fact that the ownership of the mineral estate (sometimes called “mineral rights”) can be separated (“severed”) from the ownership of the surface estate. In other words, one person may own the rights to the surface of a piece of property while another person has the right to the minerals underneath the property. Further complicating matters is the fact that both the surface and the minerals may be owned by multiple people or entities simultaneously. For example, let’s consider a 100-acre property where Amy owns the surface estate and the mineral estate is owned by Brett, Cole, and Dan, each being a 33.3% owner of the minerals. Seeing multiple, fractional mineral owners is not uncommon in Texas. Although mineral severances are the most common, other estates may be severed as well. In Texas, severed groundwater estates and severed wind estates have occurred.i There could be one person owning the surface estate, another person owning the mineral estate, and a third 4 person owning the groundwater estate, which was severed off from the surface estate of which it is usually a part. Severance usually occurs either by reservation or conveyance. A reservation severance occurs when a landowner holding both the surface and minerals (that is, a unified estate), sells the surface to a third party, but reserves ownership of the mineral estate. This type of reservation must be expressly stated in the sales contract and deed to be legally effective. Severance by conveyance occurs where a unified estate owner continues to own the surface estate, but sells or otherwise conveys the mineral estate to a another party. Again, that sale should be documented and recorded in the county deed records to be legally effective. III. Determining Ownership of Various Estates Unfortunately, determining whether any portion of the minerals have been severed may be a difficult (and expensive) task. Generally, title insurance commitments do not determine or insure mineral ownership. With regard to groundwater severances or wind right severances, those would be much more likely to show up in a title report, so long as they were properly recorded when executed. For a person interested in determining mineral ownership for a certain piece of property, there are several options to consider. First, if there is an oil or gas company seeking a lease on the property or that already has one in place, the landowner can request a copy of the title research done for that property. Some oil and gas companies are willing to share this information, while others are not. It is worth asking the question, particularly if the landowner and oil and gas company could end up in negotiations to lease the minerals at issue.