Admire from Afar Inquire Up Close

HERE ARE 5 THINGS TO KNOW WHEN BUYING LAND FROM A DISTANCE

STORY BY FARM CREDIT BANK OF TEXAS • FINDFARMCREDIT.COM

Are you looking for that perfect place in the country?

WHEN PURCHASING A RURAL GETAWAY, be aware that local conditions and policies vary greatly across Texas. Understanding state laws and local differences before you buy will help you get the most use, enjoyment and value out of your land.

So if you’re considering buying property from a distance, it’s important to do your homework and work with the right pros. Here are five things to keep in mind.

Water Rights and Availability

Texas water law is complex.

Surface water belongs to the state, which grants permits for its use by farmers, cities, businesses and others. There are exemptions for livestock, wildlife management and some other uses.

Generally, groundwater is the property of the landowner, who has the right to capture it through a well. But be aware that a seller can reserve the water rights and sell them to someone else. Potential buyers should make sure the deed explains their water rights.

It’s also important to understand the local management plan if your dream property is in one of Texas’ 97 groundwater conservation districts. Some districts limit how many wells you can have on your property, for example.

And wherever you’re looking, make sure water is available in the first place. An experienced local expert—such as a broker, appraiser or Farm Credit lender—can be a valuable guide.

“Sometimes water’s really deep, and it may be costly to dig a well,” says Wayne Young, a regional chief appraiser with Capital Farm Credit. “Sometimes there is no groundwater. Maybe there’s a water line in front of your place, but the rural water system is at capacity and can’t handle more homes. “Along the same vein, be aware of how close you are to power. If the nearest power line is some distance away, you’ll likely be responsible for the cost to get power to your property.”

Minerals

Minerals can greatly enhance land’s value. Who benefits depends on who owns the rights.

In Texas, land has a surface estate and a mineral estate. Under the law, those can be severed and owned by different people. Even the rights to revenue from wind power can be severed from the land.

What’s more, the mineral estate is dominant. Whoever owns or leases the mineral rights may freely use the surface to drill for oil and gas, or mine coal, sand and gravel.

Before purchasing, it’s always a good idea to check who owns surface and underground minerals.

“When there’s any type of mineral, wind or other rights, you sure need a knowledgeable broker who can walk you through that,” says Jeff Royal, senior vice president and collateral risk manager for Lone Star Ag Credit. “You need to understand how it could affect the value and use of your property if the owner has sold or leased the rights to someone else.”

A real estate agent or other knowledgeable expert is a necessity to walk you through the process and cover your rights.

—JEFF ROYAL

Senior Vice President and Collateral Risk Manager for Lone Star Ag Credit

Property Taxes

Annual taxes based on a property’s market value can make or break your chances of owning it.

Many Texas landowners reduce their land’s taxable value with a special-use valuation from their county appraisal district. There are three kinds of special-use valuations: agricultural use, open space and wildlife.

“It makes a big difference if you’re close to an urban area, where there’s a lot of extremely costly property,” Young says. “Be aware of the acreage restrictions where you’re buying. In some counties, you’ve got to have 10 acres to have ag use. Some may require 15 acres.”

Many eligible properties already have a specialuse valuation, commonly called an ag exemption. After you purchase, you’ll need to apply for your own. The appraisal district will ask how you’re managing the land in order to qualify.

“Years ago when folks moved to the country, their idea of rural enjoyment was getting a few horses and cows,” Young says. “Now, as often as not, it’s bird-watching and just enjoying the outdoors. A lot of times, the wildlife exemption suits them better. They don’t have to maintain cattle or a hay field.”

Zoning and Restrictions

Rural property on the fringe of an urban area is popular with commuters looking for the best of both worlds.

Be aware that towns and cities can draw rural areas into their extraterritorial jurisdiction (ETJ). This can affect how landowners use and develop the land, such as requiring building permits. Rural subdivisions also have their own deed restrictions, so make sure you read the fine print before signing a contract.

“There could be a restriction on the size of the home, the building materials that can be used, the kind of livestock or animals you can have,” Royal says. “Or there may not be any restrictions.

“Do your homework. Make sure the developer has a good track record, and the restrictions in place will protect you if you purchase.”

Hunting Use

Real estate websites are a great place to start looking for property with live water, a small cabin or wooded areas.

But inspect the property in person before you buy land for wildlife potential. You want to make sure it can support your favorite pastime, whether that’s hunting, fishing or bird-watching.

Local professionals are essential.

“Say you’re buying 50 or 60 acres in the country to hunt on,” Young says. “You have to be there a while to be able to find it. A knowledgeable local broker or Farm Credit person—somebody who’s been in the land market a long time—can narrow down where you should be looking.”

Royal agrees, adding that it’s smart to learn all you can and work with the right professionals when buying any rural property.

“A real estate agent or other knowledgeable expert is a necessity to walk you through the process and cover your rights,” Royal says. “It’s very different than owning a house in town.” °