The Texas House Bill 1221 Law
What You Need to Know before Buying Property in Texas
Having been signed into Texas law, House Bill 1221 requires sellers of residential real estate to disclose all relevant information to buyers. That includes information regarding any part of the property being in a Groundwater Conservation District (GCD) or a subsidence district. These are only a hundred in number and covering seventy percent of the state’s land area. They regulate groundwater and can affect both the value of the land and your ability to develop and use the groundwater under it. Notably, the disclosure law became effective from January 1, 2016.
Notably, the HB 1221 law officially incorporates groundwater as an essential component of real property. Nonetheless, the law expressly states that it has an exemption. It states that the seller must find out whether the real property is located over a GDC, especially if it is residential. More so, a buyer should ask for such information to avoid being on the wrong side of the law. Therefore, if the seller does not have all relevant facts about the property, buyers beware! By not investigating this as a buyer, you could be in for an unwelcome surprise after closing a deal on a property.
What follows a purchase of property in Texas?
Ensure that you are on the safe side and not prosecutable in respect to the HB 1211. The following are five things you encounter after you purchase property in Texas.
You may intend to drill a water well on your newly acquired land. There are requirements or restrictions to learn beforehand if the property is in a GCD. These rules and regulations can affect what you can do with the land. It would be best to understand them before doing anything on it.
You may face minimum well spacing requirements. The state requires that you have enough space on your property to drill a well. The area must hit its wells per section limit. Additionally, you should know whether it is allowed to drill another well around you if you are buying land with an existing well. Imperatively, know that there are different rules and thus it pays to check.
iii. Some districts have old water wells that were drilled before the districts were formed. In such cases, the districts may permit new ones with a lower pump rate. In that case, it will be best to obtain a property with a reliable historical well already on it. Even so, a well may be limited to its historical use. That implies that you need to investigate past use.
If your property is not in a GCD, you may find yourself in a situation like the Hays County folks. Last year, they narrowly avoided massive and unfettered extraction and export of their groundwater.
In case your neighbor drills a large well and draws down your well’s water level, you need to know what to do. If your property is not in a GCD, or your GCD requires no permit, you will have to report the potentially problematic well.
This new disclosure of requirements highlights the growing recognition of the importance of groundwater in Texas State.
What is the process of purchasing property in Texas?
After making an offer on a property within Texas, there are several required steps before you can close on it. Take heed in the following processes. You may be putting your lifetime earnings on the table for the deal.
Conduct a Survey – this is a boundary survey that must be performed by a registered land surveyor. The survey is undertaken to confirm the acreage of the land and confirm the property boundaries. Besides, the surveyor also determines whether there are any encroachments on the property. Nevertheless, there are rare instances when a survey is not needed. For example, you will not need a survey if a former legal description of the property is available.
Title policy – A title policy is a one-off expense. It is meant to ensure that you are protected if someone else tries to claim they own the property after you purchase it. Ideally, the title company will research whether there are any liens on the property. Afterward, the company should confirm that the seller truly owns the property.
Appraisal – An appraisal always required by lenders. It determines the value of the property to ensure the purchase price is appropriate. If you intend to get a smaller loan of less than $250,000, the lender can utilize an in-house appraiser to determine the value. According to Federal law, you should use a state-certified appraiser for any purchases above $250,000.
For people planning to buy property within Texas State, it is essential to add groundwater research to your checklist. There is a host of resources available for such research. You can check data from the GCDs, state agencies or private firms. It is would also be wise to understand the process of acquiring a property. At Mount Bonnell Advisors, we can help you to obtain property in Texas without breaking a sweat. Get in touch with us!
