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Section 10: Exchange of Real Property Interests

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Overview

Note: The Right of Way Manual provides guidance for disposition of property interests that are no longer needed for state highway purposes. Unless otherwise stated, procedures outlined below apply to property interests that are no longer needed for state highway purposes.

TxDOT has the authority to exchange an interest in real property no longer needed for another interest in real property needed for a state highway purpose. For transactions involving the exchange rather than the sale of right of way, GE’s and abutting landowners do not have a priority right to purchase the property.

The department will follow the initial procedures outlined in Initial Procedures for all Dispositions and the submission requirements in Sale of Right of Way (Fee Simple) No Longer Needed for State Highway Purpose to a GE under the Statutory Priority . The department needs to verify that the state owns fee title in right of way that can be exchanged for new right of way. In addition, the department will need to complete these steps for the acquisition portion of the exchange:

  • order a title commitment for the new real property
  • complete any title curative needed for the new real property
  • determine fair market value of the new and existing real property
  • prepare an appropriate instrument for the new real property interest to the state and have the appropriate parties execute it

If the party to the exchange requests one, an exchange agreement can be prepared. Please contact the ROW program office in Austin for assistance with exchange agreements.

After the fair market value of the real properties are determined, two situations can occur:

  • If the existing real property is worth more than the new property, then the landowner(s) will owe the state the cash difference. An escrow agreement may be required to outline the responsibility of each party to this arrangement. Please contact the ROW program office in Austin for guidance about escrow agreements.
  • If the new real property is worth more than the existing real property, then the value of the existing real property reduces the amount of money that the state owes the landowner(s) for the new real property. The state can pay the landowner(s) the cash difference, or the landowner(s) can donate the difference. If the landowner(s) decides to donate the cash difference and the difference is $500 or more, then a modified donation agreement will be needed.

The ROW program office in Austin will coordinate preparation of the donation agreement. When the landowner(s) signs the deed conveying the new real property to the state, they can also sign the donation agreement. The ROW program office in Austin will sign the donation agreement after the Commission passes a minute order accepting the donation.

After the deed of the new real property has been signed, the exchange agreement has been signed by the landowner(s) and the state, and the donation agreement, if required, has been signed by the landowner(s), the ROW program office in Austin prepares a minute order for the Texas Transportation Commission.

After the Commission passes the minute order approving the exchange and, if applicable, acknowledging the acceptance of the donation, the ROW program office in Austin will process the document conveying the existing real property to the landowner(s). After all agreements have been fully executed, originals will be provided to all parties and all conveyance documents will be recorded.

The department contact and/or the ROW program office in Austin will follow the procedures in Closing Procedures and Map Notations to ensure the updating of the right of way map(s) showing the exchange of the right of way no longer needed for a state highway purpose.

Occasionally the department will be contacted by coal and lignite mining companies to relocate a portion of an existing road in exchange for the company constructing a new road. This is a special type of exchange that is coordinated with TxDOT’s Office of General Counsel, Contract Services, and the ROW program office in Austin. Contact the ROW program office in Austin for guidance on this type of transaction.

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