122. Property

Today, we are going to be talking about property. This is the legal description that is found in the Trek 1 to 4 family residential contract. And before we get into that, there's this is gonna be a, like an overview on the different forms of legal descriptions, but it's also gonna be a foundation in terms of the freehold estate and then also looking at the bundle of rights. And then from that, then we'll get into the legal description. So we'll start off with the freehold estate, the bundle of rights and then we'll get into the freehold estate. What that means, we'll look at real and personal property, we'll look at fixtures and then we'll look at the, get into the legal descriptions themselves and the different types of ways to describe the property. So with that said, let's start off with the bundle of rights. This is a concept that you'll find in just about it, should be in every principle's real estate textbook. And so I wanted to make sure that I covered it here. And the bundle of rights is essentially, if you think about the bundle of rights as a group of sticks and each of those sticks has a right in an interest. It's a certain interest in that property. It gives the property a holder a certain right. And so we call it the bundle of sticks. So collectively it's whatever rights that individual has whatever interest that individual has in the property. And so some examples of the bundle of rights, let me pull up, you know, if you go to Google Images for example, and you type in bundle of rights, I look for a picture to put in the show notes, but the problem one is you got copyright issues. So I'm not gonna do that. I'll let you do that search on your own. So go to Google Images, type in bundle of rights. And then you'll find all sorts of descriptions there that give you a visual of what the bundle of rights look like, what it looks like. But to give you an idea, we look at the right of use. We look at the right of, so the right to occupying use that property. And I'm looking at one here particularly right now. We look at the right to mortgage that property. So to put a security interest on that property, the right to put up a fence, the right to restrict use of others, either now or in the future. The right to exclude others from the property, the right to sell the property. We also call that dispossess, the right of disposition, the right to rent or lease the property, the right to give a license to the property. And an example of a license would be, a movie theater giving you a ticket to enter the property for that specific time for that movie. Or the property owner of the AT&T Center giving you a ticket to go see a spurs game on a certain day at a certain time. That's a license, right? The right to give an easement through the property or to the property of its an easement in gross. And so we look at all of these rights. And so the dependent upon the type of a state that you have will determine what goes into your bundle of rights. How many sticks are in that bundle, so to speak. And so if we look at the freehold estate, the freehold estate provides the ownership with of the property, provides an owner, owner's interest in the property, the most rights to that property. And so if we look at, so we've got the freehold of states, and that's the distinguish from the leasehold of states, we're not gonna cover that right now. But so under the freehold of states, there are different types of freehold of states. So the fee simple, determinable, or what we just refer to as the fee simple gives the property owner that that bundle of rights, they have the most rights in that property. And then there's other limitations that come into play. For example, a life estate. So a life estate gives that property owner at that time, the certain sticks that go on that bundle. But in that case, it is for the life of that individual, and there can be some limitations on that. For example, while they have the right to, right of disposition, they have the right to sell the property, that sale is subject to that remainder interest that exists with the life of state. And so once that individual passes away, then the property is gonna revert to the grantor that conveyed that property under the life of state. So they have the right to disposition, but it's limited. It's conditional upon that life of state. And so if you have a leasehold of state, for example, you have the right to occupy and use the property, but you don't have the right to sell it. You don't have a right to give a security interest in the property. You don't have a right to put restrictions on the property. You don't have a right to give a license. That's outside of your bundle of sticks under a leasehold of state, under like an apartment lease, for example. And so the freehold of state's give, the freehold of state gives the property owner the most sticks in that bundle. And then we look at the fee simple, or what we just, the fee simple absolute, or what we will call shorthand, just the fee simple of state, gives that property owner the most rights. There's the life of state. There's the fee simple conditional. There's the fee simple, determinable. And those place restrictions on that individual's interest in that property. So if you were to buy a property, you know, your typical residential house, 99.9 times out of 100, it will be a fee simple estate, or fee simple absolute. And you'll actually see that referenced in the title commitment, in schedule A of the title commitment. And we'll get to the title commitment in a subsequent episode. So starting off with the bundle of rights, and then looking at the freehold of state, and then more particularly the fee simple absolute, ownership interest in a property, or the interest in a property, gives that owner the complete sticks in that bundle, in terms of the bundle of rights. So we start off with that, because then that determines what you have the right to convey, like what you actually own in that property. What ownership interest you have in that property, okay? And so you can only convey what you own. You can't convey more than what you own. Generally without committing fraud, or making a misrepresentation. So that's where having an understanding of what that individual owns, and then making the conveyance only to the extent of what that individual owns is important. So just like in the previous episode, we talked about making sure that the correct owner is listed as the seller, and not just relying on what's in the appraisal district, or what's in the MLS, that you actually go to that vesting deed, 'cause that's gonna determine what ownership interest that individual has in that property. So that's important to remember. When we look at the Trek 1-4 Family Contract, we're talking about in this section, in section two, or paragraph two, which is titled Property. It says the land, improvements, and accessories are collectively referred to as the quote unquote property. And so in this case, what we have is a combination of real property, real property, personal property, and fixtures. And so if we get into a discussion on the distinction between real and personal property, we'll first start off by looking at the definitions of these terms. So the first is real property. So real property is defined as rights in land, and it's permanent structure. So the improvements to the land. The improvements to the land, or improvements on the land. And so examples would be, you've got your land, you have your dirt, and you build a house on that property. That's an improvement on the land. And you put up a fence, you put a driveway in, those of improvements. If we look at an improvement to the property, we can look at utilities to the property. We can look at sewer, electricity, water, drainage, so improvements to the property. We can look at easement, ingress and egress to the property. And so that's a broad definition of real property. So rights in land, and it's permanent structures and improvements, to or on the land. And we look at personal property. And then personal property is all property that is not real property. So rights in an object. So your computer would be classified as personal property. We get into the distinction between real estate is immobile, that you can't just pick it up and move it. You can pick up and move the dirt, but you don't pick up the phone. up and move that piece of land, it remains intact where it is. Whereas a computer is a mobile product. It's a personal property that is mobile. So we got real property, we've got personal property, and then we have fixtures. And fixtures are items that were once personal property, but now they become attached or fixed to the real property, and now they've become part of that real property. So one of the distinctions we get into is whether or not an item is personal property or it's real property as part of the conveyance of that real estate, as part of the conveyance of that real property. Real property rights can include not only the surface, but can also include the subsurface where we look at the mineral estate, we can look at water rights, and it also includes the air. Now generally the original principle was that property ownership went from the surface of the land all the way to the middle of the earth and then all the way to the heavens. And while that principle is originally true, that has been limited through regulation. So for example, while somebody may own the airspace above their property and have certain rights in that airspace, which a violation of that could constitute a trespass, that we get into government regulation, comes into play to where if you say I don't want an airplane flying 10,000 feet over my house, you're going to have to deal with the FAA on that issue. So that's where you've got a regulatory agency that has determined what by federal law, what actions are legal over your property. So that general principle of you have your rights all the way from the surface to the heavens no longer exist due to regulations and laws that have been enacted. And then same thing in terms of the extent of your ownership interest in the subsurface estate. So one of the things we look at then are the how do we define the property within the contract. So one thing we've done by having a standardized form, a promulgated form, is that a trek through its broker lawyer committee has identified the distinction between the land, the personal property and the fixtures. And then we also now get into the mineral state. That's a recent addition to this contract and then we have an addendum that we'll look at as well. So in this case the definition of property is the land improvements and accessories are collectively referred to as the property. And then we have five sections under property. We have the land, we have the improvements, we have the accessories and then exclusions and reservations. And so we start off first with the land. And so in this case with this being a one to four family residential contract what we have notated here is a lot and block legal definition. Now when we get into the definition of the legal definition of real estate there are a number of ways to identify the property. One is through the street address. The street address however should never be used as the legal description for real estate when transferring title to the real property. And also in terms of the legal description in a contract. One of the under Texas common law, the rule is that a contract must have a sufficient legal description to describe that real property. And so a street address is not going to accomplish that. And the reason is because that street address is generally assigned for 911 purposes, you know for emergency purposes. And that street address can change. So one day it could be on the major street and the house gets torn down and the direction of the house changes and then a petition is made to change the address to the side street. And now you have a different quote unquote legal description of that property which doesn't really constitute legal description. It's just a street address. So that street address should never be used as the legal description in a contract or an indeed. In the track contract there is a place to add the street address and that's more for descriptive purposes. That's in addition to the lot and block description. The other is through the county appraisal district identification number. And while that is relied on heavily by real estate agents when completing the contract and a lot of times that information gets pulled over from resources into MLS. My recommendation is to not use the county appraisal district as the legal description. Now in certain circumstances, so what we're talking about here with a lot and block legal description, what has happened is the in this case the property has been planted and we'll get into a survey and more detail later. So this is not the same thing as a survey. Surveys a picture of the piece of property that is drawn by the surveyor. The plat, which is also prepared by a surveyor or by civil engineer, is a picture of the subdivision. And what you do in that case is you take a larger track of land that is unplatted and you start to add roads and then you start to add the individual lots and then the blocks for that neighborhood. And then that document is approved by the county commissioners and then it is filed with the county clerk. It's recorded with the county clerk. And so you can go pull a plat map for a subdivision that's been platted. So once that subdivision has been platted, now each of those individual lots, each of those individual properties has a lot and block designation. And in San Antonio or Bear County, you'll also see a reference to either NCB or CB. And the NCB is the new county block and I mean I strike that, the new city block and the CB is the county block. And so that we start with a lot and then we go to the block which is a reference of lots, reference to a series of lots. And then we go to the NCB which is an area that has been part of a grid throughout San Antonio or Bear County, depending upon where the property is located either within or without the city limits. And then we'll go to the volume and page number of the county clerk's records where that plat is recorded. So then you go pull that plat and you can look on that plat and see exactly where that lot and block is located in that subdivision. And so what happens is the the the appraisal district will come up with their own identification number for that property. And if it's a newer law, if it's a newer property has been plat it a lot of times you will see the reference to the law and the block and then the NCB. And then you can pull that and then use that for the legal description in the Trek 1-4 family residential contract. My recommendation is always go to the Vesting deed. Always go to the Vesting deed and that's the deed where the current owner received title to the property from the previous owner. And so in that case we want to see exactly what that deed says because that's going to determine what the actual title to the property is. Not the county appraisal district number. That is not the legal description. And the issue is more like more times than not it's accurate but there are errors that can be made. And so you always want to make sure that you've got the lot and block number from the legal description in the Vesting deed. The other thing is you can look at certain property. So a property that's been plat it means you've taken a larger track of land that was unplated and then put a boundary on it, added the roads, added the green spaces, added the lots and blocks and now you have a plat. With a unplated track of land you don't generally have a lot and block description. You're not going to have a lot and block description. It's going to be tied into the meets and bounds. I'll talk about in a minute. So there are times where you've got properties that have not been plated or you have properties that have been plated. But when you look at the county appraisal district description it does not match up with what's in the actual legal description in the deed. They look night and day. And that's because sometimes it may be two lots and then a third part of a new property is a regular lot that's not a cookie cutter lot. And so when you look at the deed, the deed actually spells out the investing deed spells out the true legal description for that property and then you go match that up against what's in the county appraisal district description. I won't say legal description but they're description and it doesn't look the same. so what you'll have a real estate agent. using that description in the county appraisal district from the county appraisal district, but it's not the it's not the truly go description. So that's one thing I always recommend on when filling out the property description is go to the vesting deed and look to see what it says. And then real estate agents can't give an opinion on on title to the property they can't do anything that's outside the bounds of filling in the form and checking the boxes otherwise they can get into practicing law, but but taking the vesting the legal description from the vesting deed and using that for the contract is is part of their job. And if there were any questions then that individual that real estate agent should go to their broker to seek advice or talk to the attorney if the brokerage has an attorney for for their opinion on what to do or what not to do. Okay, so what will we end up having in the in the track 1 to 4 family contract residential contract is under a to a is land lot blank so you'd fill in the lot number and then block blank and then you have another blank and that's where it says blank edition and so in there you could add the NCB and then you could add the so division name in the city of blank so San Antonio County of bear so bear county Texas known as blank and then that's the street address or comma or is described on attached exhibit. Well, in that case if if you took the legal description from the vesting deed and attach that as exhibit a then that becomes part of the contract and my advice would be to not read draft that legal description because you don't want to you know make a mistake you don't want to transpose numbers and so you don't want to take on that liability. If this was a meets and bound situation where so a meets and bounds is if you have a track of land that's not been platted and so that property could be within the city city limits it could be outside of the city limits in the county so there are unplatted tracks of land within the city limits. One of the things if the if if you're going to develop that track of land in the city's going on what that property to be platted and then sign off on that so with with that said you if it's meets and bounds what it's a little bit different legal description so we don't have the clean cut lot and block and then the the NCB or CB and then the the subdivision name what what we'll have is a dependent upon the number of of what we call calls it could either be a you know short document half a page in terms of describing the the boundary of that property all the way up to a couple of pages and so the the lot the lot and block system is used for platted tracks of land meets and bounds is used for unplatted tracks of land okay and if we look at the meets and bounds the definition of meet is a boundary and so with meets and bounds what we do is we start off with a a beginning point or what we call a point of beginning for that property and sometimes it may not even be that so it's going to be a corner for that property and there'll be a stake there now some time that's and so if you ever look on on a survey now you will see the reference to POB which is point of beginning we'll get into surveys in a subsequent episode but in this case so sometimes you may start off with a with a monument that is in close relations with that property so I was I know there's one and a monument is just a marker it's a it's a silver I say silver generally silver maybe copper cover covered copper colored marker that has some language on it and usually it's going to be a reference to the it's going to the surveyor that installed that marker it's going to be a reference to its location there may be some other marker or some other references on it to where it's inventoryed but I know there's one around the intersection of 1604 in northwest military there's actually one in the street and so a surveyor would use that as a reference point for the point of beginning to get to the corner track there for a hill country plaza so instead of starting just at the point of beginning at a corner stake there for the hill country plaza project they would use that monument as a starting point and then and then go to the point of beginning and they would have there would be a direction there would be a call and that call is going to include the direction so which which direction is is that line going and then you'll have degrees minutes and seconds to zero in on the accuracy of that of that direction so it could be going north and I don't have a legal description in front of me if I had a if I had a reference here and I don't want to miss quote let me see if I can find one real quick while let's see here all right so I found an example the let's see here this is on the no dot go website so here here is a square like an exact square and we've started off with the point of beginning in the lower left hand corner we would go north zero degrees zero minutes zero seconds west one hundred feet so that goes straight up and then we go north ninety degrees zero seconds zero minute or zero minutes zero seconds east one hundred feet so that's going straight across and then we go south zero degrees zero minutes zero seconds east one hundred feet that goes straight down and then we go south ninety degrees zero minutes zero seconds west one hundred feet back to the point of beginning and so what I just read off to you was a meets and bounds description of an exact square we start with the point of beginning and then what we want to do is go back to the point original point of beginning to where it closes now in that case that was a very easy meets and bounds legal description if you take a track of land that's out in the in the country side and it's a thousand acres you're going to have pages upon pages of calls because it's going to follow every every different change that takes place and so you're usually not going to have a most of your tracks of land are not going to be exactly square like the one I just mentioned and then you get into curves and so you know the property will will start going one direction and then jet off and then jet back down and jet over and then back up and so there's there's a lot of calls that could be made on a on a larger track of land even even a smaller track of land and so the meets and bounds what it does is it gives a description of the boundary for that property okay and so in that case what you're likely going to want to do is then referring back to the contract is utilize that section where it says or is described on attached exhibit and one of the recommendations I have is that unless you're an attorney or civil engineer I would suggest not drafting that meets and bounds yourself not not redrafting it because the the opportunity for error is is pretty high so use whatever you've been given if the if the printout is bad and that's that's been the case in the past I've experienced that to where it's been a copy of a copy of a copy see if you can't go back to that civil engineer or the engineer that the survey that did the the survey and say can you get me a clean copy of the meets and bounds on this property and rely on them and their professional opinion rather than you making that decision as a as a non professional as a non as a you know as a non civil engineer or non-server so uh so that gets us into the different uh descriptions now I got to go back and make another uh another uh comment on the appraisal district reference so I said don't ever use the street address as the legal description and indeed or in a contract uh and then I would also suggest not using the county appraisal district in the contract or or in the deed use either the lot and block or the meets and bounds from the vesting deed okay so the next thing we get into is the uh section b which is improvements so now we're looking at uh section b says the house so the definition of improvements is the house garage and all other fixtures and improvements attached to the above described real property including without limitation the following permanently installed and built in items if any so all equipment and appliances so that means you're uh um like your your stove your built-in microwave uh in in Texas the fridge uh in the washer and dryer unless it's built in unless it's like a sub zero fridge uh but generally do not convey with the property by default. But you talk to people on other states, they say, no, the fridge usually stays with the house. Something about you people that in Texas, where you really like your fridges and want to take them with you whenever you sell the house. And so there's some truth to that. So it's, which you don't want to ever get into, is a situation where you're guessing or you're assuming on either side, 'cause that can either hold up the transaction at the end or it could create an issue with that property, it doesn't close. So you don't ever want to be in that situation, especially as a real estate professional. You don't want to guess, you don't want to assume. So the house garage and all of their fixtures and improvements attached to the above described real property. So let me take a step back there. So I've already mentioned all equipment and appliances. Let's go to, let's look at the definition of fixtures here. So a fixture is something that was once personal property, but has now become so attached to the property or a fix to the property that it's now part of the real property. And so some examples that we can get into. Let's look at some issues where, well, let's look at the elements that we cover when you're talking about a fixture. Okay. One is, and we're determining, trying to identify using common law if the property is personal property or a fixture. And there are four elements we look at. The first is manner of attachment. So manner of attachment. And what we're looking at here is, will the removal of that item cause damage to the property? Will the item or the removal of that item cause damage to the property? So let's take cabinets. You've got cabinets installed in the kitchen. And if you ever look at, if you've ever looked at what's behind the cabinets, not opening up the door and then looking in the back 'cause there's a false wall back there, but actually looking at what's behind the cabinet, generally when you've got a new construction, the sheet rock is taped and floated, and then you've got the, whatever texture sprayed on and that's just sprayed throughout the, through the whole room. And then that section is usually not painted. And so when you look at it, if you were to remove the cabinets, one, you're gonna leave all these holes in the wall, two, it's not painted back there, so it's not gonna look right. So it's gonna take some work, getting all that cleaned up. And then third, we generally look at a kitchen and go, it's supposed to have cabinets, right? And so in that case, the question is, will the removal cause damage to the property? Well, in that case, we look at it and go, that kitchen's supposed to have cabinets in you for you remove the cabinets, it's not gonna look like the rest of the room. There's gonna be a lot of holes, it's not gonna be painted, and so will the removal cause damage to the property? Yes. So that's just one example. We look at the character of the article in the manner of adaptation. So this is the second element. So the character of the article in the manner of adaptation. So something that is custom made or designed specifically for that property becomes part of that property, becomes a fixture. So for an example, if you had, you know, you go to a production home, and that's what we, you know, when you go to neighborhood and they're just building houses right and left, and you've got some variation in the design and elevation, but generally those are production homes, they're not custom homes, okay? So you go to production home neighborhood, and what you'll generally find is there's a standard size window that gets installed throughout that house. And that's because the builder doesn't want to, when they're designing their plans and when they're doing their ordering, they don't want to have to order all these different variations of windows, and then have to have a different, quality assurance review process for all these different window sizes that are gonna get installed as part of the construction process. It's more of a cookie cutter process, so they can order all these windows in mass. So there's some standard window sizes. And so if you had a custom home, and so then when you go to Home Depot or Lowe's, you buy the blinds and they fit in these standard window sizes. If you have a custom house, and you have custom windows that are installed, so they're, the windows are designed specifically for that living room, so they're not your standard size windows. And then you have custom drapes or blinds or motorized shades that are installed. That's gonna be custom to that property. And if you were to remove those, it's not like you can, if in a production home, you could remove the blinds from one house, go to the next house and probably install them, 'cause you're gonna find the same windows. But you take those custom drapes that were designed for those custom windows, you're not gonna be able to take those to the next house and use them. You could probably reuse the material, but they're designed for that house. Okay, so things that are specifically designed for that house, if you have a custom kitchen, if you have a sub-zero fridge, and then you've got the paneling that's installed on that fridge to where it blends in with the wall, that could fall under a manner of attachment. Number one, because that fridge is built into the wall and it's designed, it's more permanent in nature. And then two, it's custom to that house. Or that kitchen has been built custom to that house. And so if you start removing certain appliances, it's just not gonna work. The next is the intention of the parties. So this is the third element. And so it's based on the facts of the situation. So this is really where the Trek 1 to 4 family contract comes into play, because now we are defining the intention or the intent of the parties here in 2B and 2C, and then also to a certain extent, 2D, which we'll cover here in a minute. So now we're getting into the intent of the parties so that we're not assuming what's personal property or what's a fixture. So the intent of the parties. The one of the issues you don't wanna get involved with is where the parties have a conversation about certain items. And then it doesn't get included in the contract. And then the seller, for example, later they agree to one item that conveys with the property. And then later they change their mind, but it's not in the contract. And then it's like, you know what, we didn't agree to it, because it's not in the contract. The Trek contract does not have a, what we call merger or an integration clause. The Becky says all the agreements between the parties are included in this contract, which an attorney will generally include in the contract or should, which would say that whatever, whatever we do, we look to the four corners of that contract. And only the four corners of that contract to look at the intention between the parties. But in this case, it's possible that emails or other insular information could be brought in, but the problem at that point is usually you're right at the time for closing, and that's gonna hold up to the transaction, and there's all sorts of issues that can arise out of that. So you don't, as a real estate professional, you don't ever wanna create that situation ever. You wanna make sure everything is included in that contract in terms of what conveys or what does not convey, so there's no question, okay? The fourth is the relationship between the parties. And so here are there three elements. There are trade fixtures, there's agricultural fixtures, and then there's residential tenancy fixtures. So the first is trade fixtures. And this is an item of personal property in a commercial tenancy. And in this case, these items are generally considered to be personal property. So if you look at shelving, this is so you've got a retail tenant moves into a space, and they add all the shelving, and they add the counters for checkout. Whether they're installed or not, whether they're permanently affixed or not, those are generally identified or classified as trade fixtures. And most of your lease, your lease should include language that says that those items are to be removed by the tenant. And if they're not, they become, they will, then you get into a case law on this. If it's not stipulated in the lease, whether or not they become property of the landlord, and whether or not the landlord wants to take ownership of that property, because that creates all sorts of issues in terms of removing it and then disposing of it. So generally your lease is going to outline all of that. What happens if the tenant were to leave those personal property items? And the reasoning behind that is because the owner is not in the business of running that business. The owner is not in the business of managing these trade fixtures, the shelving and the countertops and display cases and whatever else may be in that tenant space. They're in the business of leasing real estate to a tenant to operate their business. And so whenever that tenant leaves, they want all of that stuff cleared out so they can turn around and rent it to another tenant because more times than not, most of the time that new tenant moving in is not going to need that equipment. They need that gone so they can bring in their own equipment, their own trade fixtures. So in that case with commercial tenancies, those items are classified as personal property, not fixtures, and then the lease should stipulate what happens to that property. That it's got to be removed by a certain time, and then what happens if it's not removed. The next is agricultural fixtures. And I've driven through the Texas Panhandle many times throughout my life. And when you're driving out there in the farm land, it's open fields, and you'll see these irrigation systems. I know you've seen them. You may have even seen them around San Antonio out in the country going south of town, where you've got this big long contraption that's on wheels that can go on for 50, 100 feet if not more. And it rotates throughout the field and waters, it irrigates the crops. So in that case, that's usually tied into a well, and it's usually tied into a platform that operates that system. And so when you're looking at selling farm and ranch land, you've got to raise the question of, is that personal property or is that a fixture? And it doesn't convey or doesn't stay with the property. Well, again, we really want to rely back on one of the previous elements, which is the intent of the parties to define that. So we want that included in that section in terms of what conveys or what does not. And you may ask the question, well, why does it matter? Well, there's a case where one, here's an example of where this can come into play. There was one, there was a case where a farmer had taken out a loan, and so that loan was for the real estate and for any improvements to or on that real estate. And so there's a deed of trust. And with that deed of trust, there was also a security agreement. It was all included in one. And a security agreement, the deed of trust is a security interest in the property, the security, the real property. The security agreement is a security interest in personal property. And so it covers farm implements, tractors, you know, equipment, you name it. And then there's another loan that was taken out that was just that covered, that was just a security that included a security agreement that just covered personal property items. And then the farmer went into bankruptcy. And then both banks were arguing over whether or not that irrigation system was personal property or was a fixture. And the reason why is because if it was real property, and then the it was covered under the deed of trust and security agreement by one lender. Otherwise, if it was personal property, it was covered under the other security agreement by the other lender. So the determinant on how that property is classified determined which lender got to sell that property as part of the auction. It was either included with the farm and rancher. It was included separately in a sale. And so the court came back and said that in that case it was classified as a fixture. There was this permanent concrete pad and then the well that was associated with it that you wouldn't just pick up and move. And then that was necessary for the operation of that that irrigation equipment. And it's not like you just took this up to your truck and then pull it down the road. You might do that on the property itself, but it's usually something that is necessary for the operation of that property. So in that case, that specific case, the court determined that it was a fixture. So therefore the bank that had the deed of trust with a security agreement got to keep that property with the, got to keep the irrigation equipment with the real property for the sale under the bankruptcy. And so that means that there is more value because this farm and ranch had that irrigation equipment and then they could get additional or create an additional value because of that. So it's important to note that if we go look at the condominium contract, if we go look at the farm and ranch contract, this section looks different because that farm and ranch contract will include other items that you would generally see on property that's out in the country such as farm and ranch equipment, hunting blinds, windmills, things of that nature. But not in the farm, not in the residential contract. You generally don't have a windmill convening with your residential property. So the third is the third aspect of the relationship between the parties is residential tendencies. And so property that's installed by a tenant can be a personal property or a fixture. So if you look at a ceiling fan, for example, one, it depends on the intention between the parties. There's times where a tenant may contact the landlord and say, hey, this bedroom gets really hot in the summer and it doesn't have a ceiling fan. If I go buy one and install it, we knock a hundred bucks off my rent for that month. And the owner can say yes. And so in that case, that is generally going to be classified as a fixture and it's going to remain with the property whenever that tenant moves out. However, if you same scenario, except the tenant doesn't contact the landlord, while this may be in violation of lease, the tenant goes ahead and installs that ceiling fan. And then upon move out, before move out, takes it down and then puts the light fixture that was there back up. And you can't notice that anything is different. There's no damage to the ceiling. There's no damage to the property. And in that case, that fan ceiling fan being classified as personal property would probably be accurate. Okay. So there, I own another example I have was there was an apartment complex in Houston. It was either down Westheimer or Richmond. And I remember this this property, this real estate developer talking about this property specifically because he said these these individuals would move in. It was an older property, a nice property, but they would move in and they would totally redo the interior. I mean, new like new everything. The individuals would do it themselves. And the owner, the owner never objected because basically, these owners were they would live in one unit, fix it up and then want to move into another unit, you know, like upgrade, so to speak, you know, to a better location and then turn around and do the same thing to that unit. So he said these tenants were basically going around it and taking care of the improvements to that to the apartments themselves. And the owner was not having to put any money into these improvements. And so there's no objection here. But in that case, you're talking about new tile, new, you know, base molding, new cabinets, new appliances, new everything, that that's going to be part of the property when that tenant moves out. It's going to be a fixture when that tenant moves out. Those properties are going to be classified as a fixture. You know, you can't go, well, I'm going to undo all of this and put it back to the way it was. So one of the things we do then with the Trek 1-4 family residential contract is we rely on the intent of the parties by looking at 2B and 2C and 2D. So 2B going back to this, it says improvements. The house garage and all of the fixtures and improvements attached to the above described real property, including without limitation, the following permanently installed and built in items if any. So all equipment and appliances, balances, screens, shutters, awnings, wall to wall carpeting. You can go, well, the property is probably supposed to convey it with carpet, but we're going to make sure here mirrors, ceiling fans, attic fans, mailboxes, television antennas, mounts and brackets for televisions and speakers. That's one that's starting to pop up more right now that if you have, there was I saw in a Facebook group where somebody had posted where the seller moved out and they left the wires hanging down the wall and they left the mounting bracket for the TV. This was the buyer's agent. They were all been on a shape because they said, well, the seller should have taken all that down and painted that wall and redone it. Most of the comments were, well, it's already mounted up there. It's in the right location. If you have to go buy one of these brackets, they've come down in price, but they're still expensive and still having to install it and all that. It's already been done for you. They were basically like, what are you complaining about? Yeah, the wall doesn't look that great, but a couple of dollars of paint will fix that. Just take care of that issue yourself or have your buyer take care of that issue themselves. Mounds for brackets and televisions and speakers, heating and air conditioning units, security and fire detection equipment, wiring, plumbing, and lighting fixtures, chandeliers, water softener system, kitchen equipment, garage door openers, cleaning equipment, shrubbery, landscaping, outdoor cooking equipment, and all of the property owned by seller and attached to the above described real property. So that's all under B under improvements. And then C, we look at accessories to those items. So the following describe related accessories, if any. So when the air conditioning units stove, fireplace screens, curtains and rods, blinds, wind-to-shades, draperies and rods, door keys, mailbox keys, above-ground pool, swimming pool equipment and maintenance accessories, artificial fireplace logs, and controls for the garage doors, intrigates and other improvements and accessories. So if you look at that, you go, "Well, okay, some of this is like, what does it matter?" Well, I'll tell you one thing here. When you get into personal property versus fixtures, it is, when you start looking at the common law, the case law out there, it is all over the place, like all over the place. It is very fact specific. It depends upon that jurisdiction, so that state, that community, that specific fact, the fact surrounding that transaction, I think it is very difficult for the research I have seen to come up with a consistent application of what is personal property versus a fixture. Now, it might be possible, it is really not. It is possible to get some guidance, but in terms of coming up with a, if we could draw two columns and go, "Okay, here is everything that is a fixture and here is everything that is personal property." It is just not that clean cut. There is one case where the above ground pool is a fixture and then there is another case where the above ground pool is personal property. Two different states, two different applications, two different facts, situations, but that is where we have the same item, but two different outcomes. So one, it is always best to make sure you have got everything included in the contract, focus on the intention between the parties. The other thing, you start looking at some of these things, you look at entry gate controls, those can cost you 20, 30 bucks a piece or if you go to the HOA or the management company, sometimes more, sometimes 50 or 75 bucks, they are going to charge you and you are like, "Well, I need three of those, four of those." Then you look at just getting keys to the doors. You look at fireplace logs. That can be a couple hundred dollars easy. You look at landscaping. There are cases where people will dig up their flowers or dig up their bushes because there is a connection that they have with them and they want to take them with them. It can get crazy out there. So you have got to make sure everything is included in the contract. Even you start taking one of the hair conditioning unit, you start taking the mirrors, you take the ceiling fans. I mean, all that stuff can add up pretty quick to where it is thousands of dollars, if not tens of thousands of dollars. We have got that stipulated. We have got the intention of the party stipulated in the contract. What is important to note is if you are looking at a property going through and if it is your first time, you probably don't know what to look for. But making sure that what you want to stay is referenced in the contract. I would spell that out specifically. As a seller, making sure that whatever you want to take with you is then included in section D, which is the exclusions. The following improvements and accessories will be retained by seller and must be removed prior to delivery of possession. In the contract later on, we will get to it in a subsequent episode, but we look at when does the buyer take possession of the property and usually that is clothing closing and funding happen. So we will get to that later. In that section, even though we assume that in Texas, the sellers taking their fridge with them, always add that in there, the fridge, the washer, and the dryer, just so there is no doubt. Sometimes you will have people go, "Well, we already know that. Why do we need to include that? I don't. My job is to minimize risk, maximize value. And by including that, I am minimizing risk." So that is important. You have to look at the big picture and you have to ask the questions. The final section is reservations. Here, what we have is any reservation for oil, gas, or other minerals, water, timber, or other interest is made in accordance with an attached to dendom. So now, what we do is if we go to the Trek 1-4 family, and not Trek 1-4 family, if we go to the Trek website and we go. I am going to go to the site. And now, based on the way the website is designed right now, as of the recording of this episode, I am going to go to agency information. That is in the upper right hand corner of the page. And I am going to click on forms and contracts. And then, you have three tabs there, contracts, consumer notices and forms, and then applications. And I am going to go scroll down and there is. The first section is contract forms. So that is where you will find the 1-4 family, residential contract. You will find the condo contract, new home, completed or incomplete, farm and ranch, and then the unimproved property contract. So those are all the contract's track has. And then we go to the addenda. And so I am specifically looking for the addendum related to. Here we go, addendum, it is 44-2. Addendum for reservation of oil gas and other minerals. So I am going to click on that. And this one says addendum for reservation of oil gas and other minerals for the property ad and then we have the street adresses or reference. But we will attach that to the other contract. And here it says notice, for use only if cellar reserves all or a portion of the mineral estate. So only if there is a reservation of the mineral estate by the cellar. And so getting into that, that is a whole separate issue that the cellar needs to understand either what they have or what they don't have. And then if they have an interest in the mineral estate, if they are going to convey it or if they are going to retain all or part of it. And this is where even I have been a real estate attorney for going on 19 years and I do not get involved in the mineral estate. That is such a subset of transactional real estate that I would bring in an oil gas attorney to handle this portion of it just to make sure everything is above board. Because one mistake can cost the client millions of dollars or prevent the client from getting millions of dollars and you just don't want to take on that risk. So in this addendum, mineral estate means all oil gas and other minerals in and under that may be produced from the property, any royalty under any existing or future mineral lease covering any part of the property. Executive rights, implied rights of ingress in egress, exploration and development rights, production and drilling rights, mineral lease payments and all related rights and benefits. You look at all those terms and if you don't know what those terms mean, you need to bring somebody else in that can explain what those mean. And one thing to note is with oil and gas law where terms under, we generally look, the courts will look to general terms and how they are defined in common usage. But oil and gas, those terms don't always have the same meaning under the common meaning. So you've got to know that. The mineral estate does not include water, sand, gravel, limestone, building stone, kalichi, surface shell, near surface, lignite and iron, but does include the reasonable use of these surface materials for mining, drilling, exploring, operating, developing or removing oil gas other minerals from the property. And so if you're getting into water rights, that's a whole different issue. More times than not, when you're looking at a lot in blocks of division, the seller is not going to have any, is not going to have a mineral estate to reserve. Usually that's going to have been done a long time ago, but don't ever rely on that assumption. And so, and then if you if you were the owner of a lot in block property and a lot in block so division, you're not going to have a mineral estate to convey to the subsequent purchaser. And so you're usually not going to get into these issues, including water rights, but you don't want to make those assumptions. And then here in the next section, seller reserves all of the mineral estate owned by seller, or seller reserves an undivided blank interest in the mineral estate owned by seller. And then we there's some other language that's not necessary at this point to get into. So that's where you would include any reservation by the seller. So we covered the bundle of rights, we looked at the distinction between real property, personal property and fixtures. We covered the lot in block and meets and bounds legal descriptions. We talked about not using the street address or the county preysel district reference for the legal description in the contract or indeed, where you transfer entitled property, you should always look at the legal description and the vesting deed. And then we looked at, we covered all the language in paragraph two of the trekked one to four family residential contracts. So next we're going to be covering the sales price. And as part of the sales price, we're going to look at the financing that's tied into a residential contract. And then we've got license holder disclosure, earnest money. I may, you know what those will probably be on their own as short separate sections. And then from there we'll get into the title. policy and that's where we'll cover the elements of the title policy. So from there we still have a number of sections to go but this is where we're starting to get into the substance of the contract now.