Section 4: Title Insurance Requirements: Donations, Taxes (for State and LPA)Anchor: #i1027046
General Requirements for Lands Acquired
TxDOT will purchase title insurance in the amount of the consideration paid for all parcels acquired, other than donated parcels. For rare situations when title insurance is not available and a delay in securing title insurance will seriously interfere with the proposed letting date, or when other situations arise and ROW PD believes the requirement for title insurance should be waived, contact the ROW Program Office for case by case instructions. Title insurance requirements are outlined in Title Insurance Requirements (for State) and Title Insurance Requirements (for LPA).Anchor: #i1027489
Title insurance policies are required for donated parcels. In submitting the donation instrument to the ROW Program Office, note in the transmittal that adequate title has been acquired for construction of the highway facility.Anchor: #i1027081
Past Due or Delinquent Taxes
When whole properties are acquired by negotiation, pay all past due or delinquent taxes using funds withheld from the compensation due the owner at the time of closing. If the owner does not agree to such payment and/or withholding, initiate ED proceedings to acquire the property and to join all taxing agencies claiming delinquent taxes. Whether or not taxes are delinquent will be determined by the date ED proceedings are filed. When the amount of delinquent tax exceeds the amount of compensation to be paid to the owner, releases must be secured from all taxing agencies for payment of delinquent taxes on a pro rata basis. If any of the agencies refuse this plan for pro rata payment of delinquent taxes the parcel will be condemned and all agencies claiming delinquent taxes will be made party to the suit. OAG will join all taxing agencies claiming delinquent taxes in the ED proceedings.
In the case of partial takings by negotiation, every effort should be made to reach a mutually acceptable agreement between the property owner and the taxing agency for payment of delinquent taxes. A partial release should be obtained when possible. TxDOT will permit the amount of this tax to be disbursed from the proceeds due the property owner. If the property owner will not pay delinquent taxes in a negotiated acquisition of a partial taking, or the taxing agency refuses to give a partial release, TxDOT will make payment to the property owner without regard to delinquent taxes, provided there is a sufficient remainder that is worth more than the amount of delinquent taxes. If condemnation is necessary, taxing agencies are not included in the ED proceedings, even though delinquent taxes may be involved, if the property remainder affords the taxing agencies adequate security against which their tax liens may be assessed. However, if a significant amount of taxes are delinquent, or tax judgments or suits are present or pending, all taxing authorities must be included in the ED proceeding.Anchor: #i1027897
In normal real estate transactions it is customary for current taxes to be prorated between the buyer and seller, but a different situation occurs in a sale to TxDOT because TxDOT is not obliged to pay state or local tax.
Tax Code, Section 26.11, provides for complete tax proration by all taxing agencies on all acquisitions by governmental agencies or any other body politic having the power of ED. Whenever TxDOT or an LPA purchases or condemns land for right of way, current taxes owed by the landowner are to be prorated by the taxing authority or agency involved on the basis of the months the land remained in private ownership or control, until the date of conveyance to TxDOT or date of possession.
Date of possession on condemned parcels is the date the warrant in the amount of the award is deposited in the registry of the court. If no deposit is made before the date the judgment is rendered, the date of the judgment will constitute the date of taking.
In acquiring right of way by negotiation, TxDOT must cooperate with all taxing agencies for payment of current taxes on whole takings on a prorated basis. Prorated taxes will be determined by the taxing agencies. Prorated taxes may be disbursed from the proceeds due the property owner or may be paid prior to closing by the property owner. In partial takings when payment of current taxes is not handled during the closing of the transaction, future settlement of tax liability will be a matter between the taxing agency and the property owner involved. However, if the taxing agency and property owner cannot agree on a method for tax payment, TxDOT has no option other than to make payment to the property owner without regard to current taxes.
When whole takings are condemned, the taxing agencies will be joined, and they will be notified of the proceedings.Anchor: #i1027284
Hotel/Motel Occupancy Taxes
When a hotel or motel changes ownership, state law (Tax Code, Section 156.204) stipulates that either of the following must occur:
- Anchor: #QVPIRMKA
- the seller must provide a receipt from the State Comptroller showing that all occupancy taxes are paid, or Anchor: #WLKSRCRN
- the buyer must withhold sufficient funds from the purchase payment to pay any outstanding occupancy tax.
The Comptroller may hold the buyer responsible for any back taxes due in this regard. Therefore, TxDOT must receive the following documentation before acquiring hotel/motel property:
- Anchor: #TDOKRDUP
- a Comptroller's receipt of occupancy taxes paid; or Anchor: #XJPDKBFH
- a statement of occupancy taxes due.
Interested parties may call the Comptroller of Public Accounts, Legal Process Section, Revenue Accounting, to obtain this documentation.