Property Characteristics — Texas Real Estate

Real vs. Personal Property

Real property includes land and all permanent attachments: structures, improvements, and items affixed to the land. Personal property is movable and not permanently affixed. The distinction determines what transfers with a real estate sale.

Fixtures are items that began as personal property but became real property through attachment. Texas courts apply a three-part test:

1. Annexation — Is it physically attached to the real property? 2. Adaptation — Is it adapted or custom-fitted for the property? 3. Intent — Did the party intend the item to become part of the real property?

Exam tip: Written contracts control. If the parties specify what stays or goes (e.g., "refrigerator excluded"), that agreement governs. When in doubt, a built-in item is a fixture.

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Physical Characteristics of Land

| Characteristic | Description | |---|---| | Immobility | Land cannot be relocated; its geographic position is fixed | | Indestructibility | Land itself cannot be destroyed; improvements can be | | Non-homogeneity | Every parcel is unique in location and characteristics |

Economic Characteristics of Land

| Characteristic | Description | |---|---| | Scarcity | Fixed supply; no new land is created | | Modification | Improvements change value — on-site and off-site | | Permanence of investment | Real estate has a long economic life | | Area preference (Situs) | Location drives value; same improvement has different value in different locations |

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Bundle of Rights

Texas property ownership includes the classic bundle:

• Possession — right to occupy
• Control — right to use within legal limits
• Enjoyment — right to quiet enjoyment
• Exclusion — right to exclude others
• Disposition — right to sell, lease, give, or will

Government limitations (PETE):

• Police power — zoning, building codes, environmental regulation
• Eminent domain — government taking with just compensation
• Taxation — property taxes
• Escheat — property reverts to state if owner dies intestate with no heirs

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Texas-Specific Property Concepts

Homestead in Texas

Texas homestead protections are among the strongest in the nation:
• Urban homestead: Up to 10 acres with improvements used as primary residence
• Rural homestead: Up to 200 acres for a family (100 for single person)
• Protected from forced sale by most creditors; exceptions include purchase money mortgage, property taxes, home equity loans, and mechanic's liens
• A valid homestead designation is automatic upon use as primary residence — no filing required for the basic protection, though formal designation affects agricultural exemptions

Water Rights in Texas

• Prior appropriation system (not riparian): "First in time, first in right." Water rights are separate from land ownership and can be severed and transferred independently.
• Groundwater: In Texas, landowners generally own the groundwater beneath their property under the Rule of Capture — they can pump water even if it draws from a neighbor's aquifer.
• Surface water: Owned by the state; landowners can apply for permits through the Texas Commission on Environmental Quality (TCEQ).

Mineral Rights

Texas is a severed mineral rights state — mineral rights can be (and often are) owned separately from the surface estate. A deed conveys only what the grantor owns; if mineral rights were previously severed, the grantee does not receive them unless expressly stated.

Exam tip: TREC contracts require disclosure of whether the seller is conveying mineral rights. The default in a TREC contract does NOT include mineral rights if they were previously severed.