Dec 6, 2021

Digging into your Home's Mineral Rights

When purchasing a Texas property, the mineral rights may or may not come with it. Uncovering and then cashing in on mineral rights are not as easy as Jeb Clampett shootin’ up some crude.

Do Mineral Rights Always Transfer?

Whether any mineral rights transfer with a property depends on what rights the current seller owns. Let’s dig a little deeper. In the beginning of time (or for the sake of this article, let’s say 300 years ago), a piece of land included all rights to the property along with the right to do what you wanted with it.

But in time, some property rights may have been given away, taken away, or sold. A property owner can transfer all or part of their property rights by deed, lease, easement, mortgage, or will. Someone who owned your piece of land 100 years ago could have done any of those with the mineral rights. You may own a huge piece of land and have no right to the minerals that lie beneath it.

TREC Residential Contract, Paragraph 2D

Using the standard TREC residential contract, the mineral rights owned by the seller transfer with the property per paragraph 2D. But only the mineral rights owned by the seller will transfer to the buyer. An owner can’t sell you rights that they don’t have. If the seller wants to retain any of the mineral rights, an addendum must be included.

The mineral rights addendum specifically states: “A full examination of the title to the Property completed by an attorney with expertise in this area is the only proper means for determining title to the Mineral Estate with certainty …”

Even though the surface rights may convey to the buyer, the subsurface mineral rights like gas, oil and other mineral rights that may not necessarily transfer. Surface rights that transfer can include natural resources such as plants, water and other resources. Details on ownership of those need expert legal advice as well.

How Do You Get The Mineral Rights?

If you really want to who owns the mineral rights for a property, hire an abstract company. Or you can try the do-it-yourself method by researching the property records at your county clerk’s office. It is often necessary to trace records back through several transactions to determine where they may have initially been sold and then whether those rights were then sold to someone else.

In Texas, mineral rights are transferred with a Mineral Deed.  Occasionally, mineral rights are not sold but are leased. A leasehold is a different scenario that needs a real estate attorney’s guidance.

Laws concerning mineral rights can be complicated. Just remember that property ownership is completely separate from mineral rights ownership. Sorry folks, but you have no rights to your land’s minerals if you don’t legally own the rights.

The opinions expressed are of the individual author for informational purposes only and not for the purpose of providing legal advice. Contact an attorney to obtain advice for any particular issue or problem

 [where: 75230]

Nov 26, 2021

HOA Violations - Who is responsible?

A recent home buyer posed a question about an HOA violation concerning their new home. It seems the fence installed by the previous homeowner a couple of years ago doesn’t conform to the HOA rules. Now the HOA is requiring the new owner to bring the fence into compliance with the HOA regulations. Who is responsible for correcting a violation of an HOA restriction?

What is fair? 

When a property is part of a mandatory homeowners association, a violation of the HOA rules, regulations, or restrictions does not usually hinder a sale. And the seller is not automatically obligated to resolve the violation.

After closing, the new buyer may get a letter from the HOA stating that they are out of compliance and must fix the issue. That kind of surprise shouldn’t happen, but certainly does sometimes.

Know your rights

When there is a mandatory owners association (HOA), the standard TREC contract has a provision for providing HOA documents and for the buyer to object to any issues. The buyer is entitled to receive copies of all documents that govern the maintenance or operation of a property including restrictions, bylaws, rules and regulations, and a resale certificate.

HOA documents are essentially restrictions to the owner’s use of their property. These can include a variety of matters: how many and what kind of pets are allowed, signs or flags being displayed, parking of vehicles, guests allowed, cable or internet services available, front door color, fence design, roof materials, etc. What is fine with one new homeowner may be completely unacceptable to another.

The Resale Certificate discloses the amount and frequency of dues and assessments, any lawsuits they are involved with, and other information. A current resale certificate is required from the HOA to state if they are aware of any current violations to their rules and restrictions.

The HOA disclosure on the resale certificate gives the buyer notice of any violations prior to closing.

As stated in the contract, after receiving the HOA documents and resale certificate, the buyer has three days to terminate the contract if they don’t like what the resale certificate or other documents reveal.

Or the buyer could address any issues with the seller within that three-day period and come to an agreement. The buyer and seller could amend the contract to require the seller to fix a violation.

In the case of our new homeowner, they did not take notice of the violation disclosed by the HOA or the fence restrictions. And they did not object to the HOA documents in the three-day period. The seller claimed to have no previous HOA notice of the violation and therefore had no obligation to disclose an unknown issue.

Know your responsibilities

When it comes to HOA documents, the buyer must be proactive. It is the buyer’s responsibility to review the HOA rules, restrictions, requirements, and resale certificate prior to purchase. The three-day period for objections is important. HOA documents can total more than 100 pages. That’s a lot of reading to do in less than three days.

If the HOA has a website, they are required by law to post their restrictions on their site. If you’re considering the purchase of a property with a mandatory owners association, why not go to their website and review the rules, regulations and restrictions prior to executing a contract?

The buyer has a duty to ask questions and resolve any HOA item they have an issue with. This should happen as soon as they receive HOA documents. The three-day period is their opportunity to request that the seller fix any violations. If they fail to do so, then along with buying the property, they are buying the problem that comes with it.

A buyer of a property with a mandatory HOA is obligated to pay assessments and to follow the restrictive covenants governing the use, maintenance, and occupancy of the property and community. They need to take the time to understand their HOA commitment.

Buyers have the right and responsibility to make an informed decision on their purchase.

The opinions expressed are of the individual author for informational purposes only and not for legal advice. Contact an attorney for any particular issue or problem.

 [where: 75230]

Oct 6, 2021

Texas 2021 Real Estate Legislative Update 2.0

A little property tax relief is coming for some Texas homeowners. Two minor property tax bills were approved at the Texas Legislature’s August 2021 Special Session. With some of the highest property tax rates in the country, most homeowners welcome any law that provides Texans a tax break.

New Homeowner Homestead Exemption

Under current law, when someone purchases a home, they must wait until January 1 of the following year to receive the benefit of a homestead exemption. This new law allows a homebuyer to receive their homestead exemption in the year that they acquire the property, rather than having to wait for January 1 of the following year.

Starting in January 2022, new Texas homeowners who qualify for a homestead exemption will become immediately eligible to receive a property tax reduction when they purchase their property. Those buyers will receive the exemption allocated proportionally from the time they purchase the property. For example, if the buyer purchases the property in February, they will receive the homestead exemption on that year’s tax bill for February through the end of the year.

Texas homestead exemptions from counties, schools, cities, and special districts reduce the property taxes for the homeowner. The amounts vary from county to county. All Texas homesteads receive a $25,000 exemption on their home’s value from school property taxes. Other local entities, like cities and counties, offer a separate residence homestead exemption. A homestead exemption can typically save a homeowner 10%-20% on their property taxes.

Senior and Disabled Exemptions

The Texas Legislature passed “an Act relating to the reduction of the amount of a limitation on the total amount of ad valorem taxes that may be imposed by a school district on the residence homestead of an individual who is elderly or disabled to reflect any reduction from the preceding tax year in the district’s maximum compressed rate and to the protection of school districts against the resulting loss in local revenue.”

That’s a mouthful of legal jargon. Essentially, this legislation proposes a reduction in school taxes for seniors and disabled Texans. It would extend the school property tax rate cuts approved by the Texas Legislature in 2005, 2007, and 2019.

School property taxes for homeowners who are at 65-plus years old or who are disabled are frozen at the amount owed in the year they qualify. However, when some school districts reduced their tax rates, those homeowners did not see a reduction in their tax bills due to this frozen value. The new law would reduce the frozen value by the same percentage as the reduction in a school district’s tax rate, starting in the 2023 tax year.

Because there are different property tax laws for Texas elderly and disabled property owners, reforms to their tax rates must be made by constitutional amendment. Texas voters will need to approve this on local election ballots in 2022. If approved, the amendment to authorize this tax cut would take effect in January 2023.

Texas Property Taxes

No one likes to pay taxes and Texans don’t like hearing that our property taxes are higher than most other states. However, we do not have state income taxes like many other states. Texas counties set their own property tax rates, and they vary across the state. Counties with smaller populations tend to have lower property taxes. The average property tax rate in Texas is 1.8 percent of the property’s appraised value.

[where: 75230]