Section 2: Title Requirements: General Title Requirements (for State and LPA)Anchor: #i999660
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 the Department believes the requirement for title insurance should be waived, contact the ROW Program Office in Austin for case by case instructions. The Attorney's Certificate procedure for title work in some special situations is outlined in Use of Attorney's Certificate Procedure (for State). Title insurance requirements are outlined in Title Insurance Requirements (for State) and Title Requirements: For LPA.Anchor: #i999680
Title policies or formal Attorney's Certificates are required for donated parcels. In the payment submission for such services, either the Department’s transmittal or Form 132 or ROW-A-15, Payment Request, as appropriate, should show that the amount is as agreed to by the Department and the title services provider. In determining whether or not the preceding instruments should be used for donated parcels, consideration should be given to the value of the parcel being donated. In submitting the donation instrument to the ROW Program Office in Austin, note in the transmittal that adequate title has been acquired for construction of the highway facility.Anchor: #CACBGAJF
Title Requirements: For LPA
When an LPA is the acquiring agency for TxDOT on a project and cost participation is requested from TxDOT, title insurance in the amount of the consideration paid for the parcel will be obtained. When an LPA is the acquiring agency, general title requirements are as set forth in General Title Requirements above.
When an LPA is the acquiring agency and there is no cost participation by the State, title insurance may be obtained at the sole expense of the LPA, or a statement may be obtained from the Department informing the ROW Program Office in Austin that adequate title has been acquired. See Form ROW-N-86, Title Statement. In this instance, the LPA is responsible for any cost or expense as a result of any failure of title.
In instances where an LPA pays a consideration for a parcel but decides to relinquish the right to reimbursement because an acceptable title policy or Attorney's Certificate cannot be obtained, require a written statement from the LPA protecting TxDOT against future liability relative to title questions.Anchor: #CACBBDAE
Mortgages and Liens
If title insurance or the Attorney's Certificate procedure is used, TxDOT will not accept title to property that is subject to an outstanding mortgage or lien. If title insurance is obtained, the title company is responsible for withholding sufficient funds to pay any outstanding interests at the date of closing of the transaction. These amounts should be shown in the title company's closing statement. Normally, when TxDOT is acquiring the fee interest, a lien should be released directly in favor of the original mortgagor. Any form of release may be used that meets the requirements of the title company. See ROW-N-16 (“Right of Way Lien Release").
When TxDOT is acquiring an easement or temporary easement, it is acceptable that the lienholder’s interest be subordinated to the State’s easement rather than released, as with a fee taking. See ROW-N-16E (“Subordination of Lien Agreement; Permanent Easement”) and ROW-N-16TE (“Subordination of Lien Agreement; Temporary Easement”).Anchor: #CACEGADC
Leases and Private Rights
Retention of a private right is permissible if it is determined to be in the best interest of TxDOT and the right retained is compatible with highway use.
Examples of possible compatible use are:
- stock passes;
- private utilities; and
- irrigation or drainage canals.
Determination of compatibility for each retained private right will be made by TxDOT as a part of the right of way transaction. See Approved Special Clauses for Use in Conveyance Instruments for the special clauses that may be used in instruments of conveyance when retention of a private right is involved.
Private easements that are not compatible with highway purposes and operations should be released. Releases should be obtained for all compensable leasehold interests, except for mineral leases described in Minerals.Anchor: #CACHEFIE
Public Utility Easements
Easements held by public utility owners do not need to be acquired if joint use is compatible and the utility owner joins TxDOT in execution of a joint use agreement. Detail of procedures for public utility easements involving joint use are contained in TxDOT's Utility Manual.Anchor: #CACBCBHI
Current and Delinquent Taxes
The principles outlined in this subsection apply to all agencies authorized to collect ad valorem taxes on real property.
Past Due or Delinquent Taxes
- Whole Takings. 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.
- Partial Takings. 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. The Department 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.
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, §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 can not 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: #CACDCCHC
As a general policy, all minerals will be acquired with the exception of oil, gas, and sulfur. Surface rights to oil, gas, and sulfur will be acquired if there is a whole taking of the surface rights of the owner of these minerals. However, in cases involving parcels located in a municipality which has an anti-drilling ordinance deemed adequate to safeguard TxDOT's planned highway facility, it will not be necessary to make a title search for separate mineral interests or to acquire the surface rights of the owners of such mineral interests. It is the Department's responsibility to advise the ROW Program Office in Austin of its determination that the ordinance involved adequately protects TxDOT for the parcel(s) involved.
If parties other than the surface owner possess a mineral interest, no attempt will be made to acquire the ownership rights of the severed mineral owners unless the entire estate of the mineral owner is being acquired, or if there is active production of minerals on the property to be acquired. This practice is due to:
- the owner of the severed minerals will make no attempt to encroach upon the highway since, as a practical matter, the owner will be able to recover the minerals from operations commenced outside the right of way limits;
- the obstructing highways is a penal offense in this State; and the injunctive relief is available to TxDOT.
Gravel, sand, caliche, and iron ore gravel are considered road construction materials and are not regarded as minerals. When the grantor reserves title to minerals, the reservation does not include these road-building items.
If the grantor desires to retain all minerals and will not sign a deed containing the standard reservation of oil, gas, and sulfur, then, as a concession to avoid condemnation, the special mineral clause shown in Approved Special Clauses for Use in Conveyance Instruments for Use in Conveyance Instruments may be substituted in place of the standard clause. Use of this special mineral clause is to be limited and not used as a standard item in deeds.Anchor: #CACJBDBE
Generally, there is no objection to acquiring title to land subject to outstanding restrictions. However, restrictions containing reverter provisions could result in loss or derogation of TxDOT's title. Therefore, TxDOT should examine all applicable restrictions for such reverter provisions. If reverter provisions are encountered a release must be obtained to insure that TxDOT's title will not be negatively affected. Additionally, all restrictive covenants should be carefully reviewed to determine if any reciprocal parking and/or ingress/egress easements might be contained therein, which would require partial releases.Anchor: #CACBEAGC
The property owner is responsible for clearing any questions that may exist regarding title to his property so that clear title can be conveyed to TxDOT. Department personnel should also give as much assistance as possible in the interest of good public relations, and in order to expedite right of way acquisition.
The property owner may be required to pay the cost of curative work by:
- direct payment;
- distribution of TxDOT's approved compensation on Form ROW-N-72, Title Company's Closing Statement at the time of closing; or
- obtaining agreement from the title company to make the payment.
Hotel/Motel Occupancy Taxes
When a hotel or motel changes ownership, State law (Tax Code, §156. 204) stipulates that either of the following must occur:
- the seller must provide a receipt from the State Comptroller showing that all occupancy taxes are paid, or
- 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:
- a Comptroller's receipt of occupancy taxes paid; or
- a statement of occupancy taxes due.
Interested parties may call the Comptroller of Public Accounts, Legal Process Section, Revenue Accounting, to obtain this documentation.