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Principles of Real Estate: Property, Ownership, and Transfer
This chapter covers the foundational concepts every Texas real estate agent must know: what real property is, the rights that come with ownership, the ways title is held and transferred, and the public and private limits on land use. Texas is regulated by the Texas Real Estate Commission (TREC), and Texas is a community property state, so several rules here are Texas-specific. Program details and statutory amounts can change, so always confirm current TREC rules and Texas statutes.
Real vs. Personal Property and Fixtures
Real property is land and everything permanently attached to it, along with the bundle of legal rights that come with ownership. Personal property (chattel) is movable and not permanently affixed. The distinction matters because real property transfers with the deed while personal property does not, unless the contract says otherwise. Disputes often turn on whether an item is a fixture.
Bundle of rights
Ownership includes the rights of possession, control, enjoyment, exclusion, and disposition, all subject to lawful government limits.
Fixture test
Courts weigh method of attachment, adaptation to the property, and the intent of the person who installed the item; original cost is not part of the test.
Trade fixtures
Items a commercial tenant installs to conduct business generally remain the tenant's personal property and may be removed before the lease ends.
Contract controls
Parties can agree in writing to include or exclude specific items, so ambiguous items should always be addressed in the contract.
Estates and Forms of Ownership
An estate describes the degree, quantity, and duration of a person's interest in land. Freehold estates involve ownership, while leasehold estates involve possession for a term. How co-owners hold title affects what happens on death and sale, and Texas community property rules add another layer for married owners.
Fee simple absolute
The most complete ownership, lasting indefinitely and freely transferable to heirs or buyers.
Life estate
Lasts only for the life of a named measuring person, then passes to a remainderman or reverts to the grantor.
Joint tenancy
Co-owners hold with right of survivorship, so a deceased owner's share passes automatically to the survivors, bypassing probate.
Community property
In Texas, most property acquired during marriage is presumed owned equally by both spouses; property owned before marriage or received by gift or inheritance is separate.
Deeds and Transfer of Title
Title is transferred by a deed, a written instrument from a grantor to a grantee. Different deeds carry different levels of warranty and protection. A valid deed does not require recording, but recording gives public notice and protects the grantee's priority against later claims.
Requirements for a valid deed
Must be in writing, identify a grantee, be signed by the grantor, and be delivered and accepted.
General warranty deed
Offers the broadest protection, warranting title against all defects, even those arising before the grantor owned the property.
Special warranty deed
Warrants only against defects arising during the grantor's period of ownership.
Quitclaim deed
Conveys only whatever interest the grantor holds, with no warranties; often used to clear clouds on title.
Recording
Provides constructive notice and establishes priority, but is not required for the deed to be valid between the parties.
Encumbrances: Liens, Easements, and Encroachments
An encumbrance is any claim or right that another party holds in a property. Encumbrances can be financial (liens) or affect use and possession (easements, deed restrictions, encroachments). Buyers and agents must identify encumbrances early because they affect value and marketability.
Liens
Financial claims securing a debt, such as mortgages, property tax liens, and mechanic's liens; they must usually be cleared at closing.
Easement appurtenant
A use right benefiting an adjoining parcel that runs with the land and passes automatically to new owners.
Easement in gross
Benefits a person or company (such as a utility) rather than a neighboring parcel.
Encroachment
An unauthorized physical intrusion of an improvement onto adjoining land, often revealed by a survey.
Government and Private Limits on Land
Ownership is never absolute. Governments retain powers that limit how land is used and can even take it, and private restrictions can further limit use. Understanding these limits helps agents advise clients accurately about what they can and cannot do with a property.
Police power
Government authority to regulate land use for public health, safety, and welfare, underlying zoning and building codes; generally no compensation is owed.
Eminent domain
The power to take private property for public use through condemnation, but only with just compensation.
Escheat
Property passes to the state when an owner dies with no valid will and no locatable heirs.
Deed restrictions
Private covenants limiting use; when they conflict with zoning, the more restrictive rule generally controls.
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