Shopping for rural property: Location, property rights, leases, and undivided interestsShopping for rural property: Location, property rights, leases, and undivided interestsCharles GillilandGilliland


This is part one of a two-part series designed to help Texans make better real estate decisions about purchasing rural land.

Focus on specific locations. To find the r​ight property, make a list of desired property attributes. Clearly define the major land use you envision. Specify the physical characteristics needed to support that use. Soil types, topography, hydrology, access, and numerous other features determine the possible uses of a site.

TAKEAWAY: More than anything else, location defines a tract's appeal and potential.

Understand property rights. Property rights define legal control. Combined with property characteristics, property rights support the land's market value. Both property rights and characteristics have a critical influence on the choice of property and price negotiations.

Identify both physical attributes and detractions. View the property as if you intended to resell it. Consider if there's an attribute that would likely repel other potential buyers; something that's unimportant to you may be a problem when you try to sell it. For example, if a current seller has placed a conservation easement on the land, provisions in the agreement may cause potential buyers to look elsewhere.

Property rights issues encompass everything from verifying ownership to identifying easements and land-use restrictions.

TAKEAWAY: Because they specify the potential legal uses of the land, available property rights may be more important than physical features.

Lease provisions. Initially, existing grazing or farming leases may seem insignificant. Most run for short periods. Many are renewed annually. However, lease provisions may exert a decided influence on the purchase process when they specify a right-of-first-refusal.

You don't want to invest time and resources to locate and negotiate terms for a property if it turns out you just negotiated sale terms for an existing tenant.

TAKEAWAY: Consider passing on properties with a right-of-first-refusal clause, or at least investigate the tenant's appetite for the property.

Undivided interests. Difficulties can arise when several individuals own undivided interests. Undivided interests complicate the negotiation process, especially when not all owners want to sell.

TAKEAWAY: Although they do not automatically guarantee problems, undivided interests may present a negotiating challenge.

Buyers unfamiliar with properties in their target area, property values, or the legal documents involved should gather facts and seek help from competent legal and rural real estate professionals.

Editor's note. The 144-page book Buying Rural Land in Texas by Dr. Charles E. Gilliland is in its second printing and available from the Texas A&M University Press. Texas rural land data by region are available on the Real Estate Center's website.

Dr. Gilliland is the Center's land market expert and has been studying land prices since the 1980s. Known throughout the state as the man to go to if you have questions about Texas land, Dr. Gilliland was inducted into the Farm Credit Bank of Texas Hall of Honor in 2010 for his "significant contributions to agriculture."​


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