Acquiring property in Texas often involves an ownership structure known as fee simple. This is the most complete form of private land ownership under state law, affecting how real estate is managed, transferred, taxed, and inherited.
Legal Rights in Fee Simple
Holding real property in Texas under fee simple provides the broadest array of ownership rights available. These rights include using the land for any lawful purpose, such as residential, agricultural, or commercial activities, within the bounds of governmental regulations like zoning and building codes.
A key element of fee simple ownership is the right of disposition, allowing the owner to sell, lease, gift, or transfer the property through a will. Owners also have the right to exclude others, controlling access and preventing trespass.
These ownership rights extend to the physical property, encompassing the surface, underlying minerals like oil and gas (unless previously severed), and the airspace above, subject to aviation regulations. These rights can be limited by governmental powers such as eminent domain, which allows for the taking of private property for public use with just compensation, and by regulations protecting public health, safety, and welfare.
Creation and Transfer Processes
Instruments of Conveyance
Transferring fee simple ownership in Texas primarily occurs through a written document called a deed. Different deed types offer varying levels of protection to the buyer:
- A General Warranty Deed offers the most protection, with the seller warranting the title against all claims.
- A Special Warranty Deed limits this warranty to claims arising during the seller’s ownership.
- A Deed without Warranty transfers the property without title guarantees.
- Quitclaim Deeds, which only transfer any interest the seller may possess, are less commonly used.
For a deed to be valid in Texas, it must be written, signed by the seller (grantor) or an authorized agent, and delivered to the buyer (grantee). It also requires an adequate legal description of the property and language indicating the seller’s intent to transfer ownership.1Texas Legislature Online. Property Code Chapter 5. Conveyances
Title Examination
Prior to finalizing a fee simple ownership transfer, a title examination is commonly performed. This review of property records verifies the seller’s authority to transfer ownership and identifies potential issues affecting the buyer’s claim.
The examiner reviews the chain of title for inconsistencies and searches for recorded encumbrances like easements, restrictive covenants, or financial obligations. The goal is to confirm the seller can convey a marketable title, which is a title free from reasonable doubt or litigation threats. Addressing any discovered issues before purchase protects the new owner’s interest.
Public Recording
Recording the instrument of conveyance in public records is a step to finalize the transfer of fee simple ownership and safeguard the new owner’s rights. In Texas, deeds are recorded with the County Clerk in the county where the property is located. This recording provides constructive notice, meaning all parties are legally considered aware of the buyer’s ownership.
Under the Texas Property Code, an unrecorded conveyance may be void against a subsequent purchaser who pays valuable consideration without notice of the prior transfer.2Texas Public Law. Texas Property Code Section 13.001 – Validity of Unrecorded Instrument Prompt recording is therefore advisable to protect the buyer from claims by subsequent purchasers or creditors. Counties charge a fee for recording these documents.
Mortgage and Lien Position
Fee simple owners in Texas can use their property as collateral for loans, via a deed of trust, which creates a lender’s lien. Lien priority, often determined by the “first in time, first in right” rule, means earlier recorded liens generally have stronger claims. A properly recorded mortgage usually takes precedence over subsequent liens.
In a foreclosure due to loan default, the lender can recover the debt by selling the property, which typically extinguishes junior liens (those recorded later). However, some liens, like those for unpaid property taxes, may have super-priority, taking precedence even over earlier mortgages.3Texas Public Law. Texas Tax Code Section 32.05 – Priority of Tax Liens Over Other Property Interests
Other liens can affect fee simple property. Judgment liens may arise from court judgments for unpaid debts if an abstract of judgment is recorded. Mechanic’s liens can be filed by unpaid contractors or suppliers for property improvements. The priority of mechanic’s liens can be intricate, potentially giving them priority over a mortgage recorded after work began.
Texas homestead laws restrict liens on a homestead. Judgment liens cannot attach to a homestead except for specific debts like purchase money, property taxes, or contracted improvement work.
Real Property Taxes
Fee simple ownership in Texas includes the responsibility for annual real property taxes, which fund local government services like schools and public safety. The state does not levy property tax.
The process begins with county appraisal districts determining the market value of taxable property. Appraisal is at current market value as of January 1st annually.4Texas Public Law. Texas Tax Code Section 23.01 – Appraisals Generally Appraisal districts must reappraise properties at least every three years.5Texas Comptroller of Public Accounts. Texas Property Tax Basics
Property owners receive a notice of appraised value, by early May.6Texas Public Law. Texas Tax Code Section 25.19 – Notice of Appraised Value Owners can protest this valuation to an Appraisal Review Board (ARB), an independent body that resolves disputes. Protest deadlines are usually May 15th or 30 days after the notice is delivered, whichever is later.
Once appraisals are final, local taxing units (counties, cities, school districts) set their tax rates. The tax rate applied to a property’s taxable value (appraised value minus exemptions) determines the tax owed. Texas offers various exemptions, notably a significant homestead exemption for a principal residence, which reduces its taxable value for school district taxes.7Texas Comptroller of Public Accounts. Property Tax Exemptions Additional exemptions exist for seniors, individuals with disabilities, and disabled veterans.
Tax bills are usually mailed in October and are due upon receipt, becoming delinquent if unpaid by February 1st of the following year.8Texas Public Law. Texas Tax Code Section 31.02 – Delinquency Date Penalties and interest apply to delinquent taxes. Not receiving a bill does not waive the tax obligation. Qualified individuals, such as seniors or those with disabilities holding a homestead exemption, may pay in installments.
Inheritance and Estate Transfers
Upon the death of a fee simple owner in Texas, property transfer depends on whether a valid will exists. A valid Texas will has several requirements:9Justia Law. Texas Estates Code Section 251.051 – Written, Signed, and Attested
- The testator must be of sound mind.
- The testator must be at least 18 years old.
- The will must be in writing.
- The will must be signed by the testator.
- The will must be attested by two credible witnesses.
Holographic wills, written entirely in the testator’s handwriting, do not need witnesses.
Transferring property via a will usually involves probate, a court process to validate the will, appoint an executor, and distribute assets. Texas permits independent administration, a streamlined probate if specified in the will or agreed by beneficiaries. For certain estates with a will and no unpaid debts (beyond real estate liens), a muniment of title process can transfer property ownership without full administration.
If someone dies intestate (without a will), Texas laws of descent and distribution determine how property is divided among heirs based on family structure. The rules differ for community property and separate property.
To formally identify heirs without a will, a determination of heirship court proceeding may be used. An Affidavit of Heirship is another method. An Affidavit of Heirship recorded for five years becomes prima facie evidence of heirship and is often accepted by title companies.
Texas law also offers non-probate real property transfers. A Transfer on Death Deed (TODD) allows an owner to name a beneficiary to inherit property automatically upon death, avoiding probate. The TODD must be recorded before the owner’s death. The owner retains full property rights during their lifetime. For small estates (under $75,000, excluding homestead and exempt property) without a will, a Small Estate Affidavit can transfer the decedent’s homestead to a surviving spouse or minor children if it’s the only real property.10Texas Legislature Online. Estates Code Chapter 205. Small Estate Affidavit