Owners of Rural Land in Texas:

1. Should not hold property in their own name, except their homestead. Landowners can be held liable for accidents on their land and forced to pay huge sums. Accidents on farms, ranches, and recreational properties are very common. Owning land in a limited liability company or partnership ensures that only the assets of the company will be at risk when the owners are judged to be liable. An entity also ensures that unrelated financial losses don’t lead to the loss of the land, and finally, there may be estate planning advantages. 

2. Should claim their rights under Texas laws that limit liability. Texas law protects landowners from lawsuits arising out of accidents on their land, but only if a landowner actively claims these rights. Minimum insurance coverage, limits on fees charged to guests, mandatory signage, and a duty to remove hidden hazards are all factors that a landowner must address to qualify for limits on liability. A landowner who successfully claims these rights is not liable for more than the amount of the minimum insurance coverage. 

3. Should claim all their homestead rights if they live on their land. Texas homesteads are protected from bankruptcy and creditors, except mortgage lenders. Each landowner can claim homestead protection on their home and up to 200 acres – a couple can claim 400 acres. Many landowners unintentionally claim only a fraction of their land by only claiming the 20 acres of homestead exemption allowed from property tax. A separate legal filing is necessary to claim all the available protections from creditors. 

4. Should have a thoughtful plan for leaving rural land to heirs. More than other assets, land comes with many responsibilities, liabilities, and challenges. Family land is a legacy but also a liability if care is not taken.  Land is often the largest asset left to heirs, and large taxes are triggered unintentionally, requiring the sale of some land to pay them. Leaving land to more than one heir can lead to division and no one having a desirable piece of land.  Landowners should plan how to give their land with a minimum burden. Many legal tools are available to help landowners avoid taxes and turmoil for their heirs.

5. Should assess and secure their oil, gas, and water rights. The world is changing. Water is becoming more and more valuable as the demand outpaces supply. Technology is making it possible to develop oil and gas and other minerals in regions of the state where it was never feasible before. Landowners need to know what they own and how to secure their claim to it. Billions of dollars will be paid to landowners in the next few decades for the rights to these resources. Every landowner needs to ensure they are fairly compensated for what they own.

6. Should fight for a fair price and reasonable limits if their land is condemned. When the government or a big company has the power to take private land, it is not a level playing field. Landowners can lose big, and those who don’t fight lose big. The first offer is never the best, and often there are “hidden” terms that unnecessarily give away rights. Most landowners need their own attorney and appraiser to have a chance against all the paid “experts” on the other side. Landowners should choose an attorney who is motivated to fight for their rights. Joining with neighbors who are also being condemned can be powerful. 

7. Should remove all possible exceptions to their title and title insurance policy. Farm and ranch land in rural counties often has out-of-date surveys and clouded titles, leading to conflicts with neighbors and outsiders claiming interest in the land. Outdated title instruments can also lead to added expense for heirs. Title insurance companies commonly add exceptions to their policies to make the landowner responsible for any defects in the survey or title. Buyers and sellers can both avoid future problems by clearing up any exceptions that the title company proposes before they become the source of disputes. 

8. Should use written hunting and grazing leases specifically drafted for their land. Leases of hunting and grazing rights are often the largest source of income produced by rural land. Many landowners need the lease income to make the land affordable. Landowners need a clear agreement with lessees to protect themselves. A  handshake or a “back of an envelope” lease may work for years, but when something goes wrong, it is usually very expensive to settle the dispute. Taking the time to negotiate a customized, professional lease gives all the parties a rule book that minimizes misunderstandings and protects them from liability. 

9. Should maintain the lowest possible property tax rates on their land. Property taxes in Texas are among the highest in the country. Thankfully, Texas law allows many options for keeping taxes low on rural land. Qualified farming, ranching, timber management, and wildlife management all greatly reduce the taxes on rural land, but there are annual requirements that must be met to maintain the lowest valuation. Landowners should be familiar with the requirements and actively take steps to maintain the lowest possible rates. Even when property qualifies for a special appraisal, the county appraisal district still appraises the market value of the land and calculates what the full market tax rates would be without the special valuation. Landowners of ten ignore the market value because they do not affect annual taxes. These market rates can become a very big burden when property is developed or if it accidentally fails to qualify for a special valuation. When there is such a “change of use,” landowners owe five years of back taxes that are called “rollback taxes,” plus interest.  Landowners should continue to protest their market value taxes even when receiving a special valuation. 

10. Should know there is no minimum acreage for open space valuations, except subdivisions. Contrary to what some county appraisal districts say, there is no legal limit to the size of property that can qualify for farming, ranching, timber management, or wildlife management valuation. The qualifications depend on the type of land use, the history of this use, whether this is the land’s primary use and the degree of intensity that other landowners mainly follow in the region with the same land use. Small landowners need to know their rights and fight any attempt to take away their special valuations. Most rural land can qualify, so don’t take “no”  for an answer without double-checking.