06 Nov Sole Managed Community Property & Homestead Rights… by Bradley A. Taylor

Sole managed community property is a concept in Texas marital property law that refers to community property (assets acquired during the marriage) that one spouse has the exclusive right to manage and control. Under Texas law, most property acquired during a marriage is presumed to be community property, meaning it is owned equally by both spouses. However, Texas recognizes that each spouse may have the right to manage certain types of community property independently.

Title Examiners will occasionally encounter a deed that names only one spouse as the Grantee. As noted above, Texas law provides that during marriage, property is presumed to be subject to the sole management, control, and disposition of a spouse if it is held in that spouse’s name individually; however, homestead rights create a wrinkle to this rule.

If the land deeded in one spouse’s name is also the homestead of the married couple, it cannot be effectively leased by the named Grantee of the sole managed community property, alone. This is true even if the property is the separate property of a married person. Homestead property can only be leased with the written consent of both spouses. If the materials provided to a Title Examiner are silent as to the homestead status, the examiner should conduct independent research in the subject county’s appraisal district to determine such status.

If the property is the homestead of a married couple and a client has taken a lease from only the sole manager, then the Title Examiner must require a ratification of the lease, with words of present grant, from the other spouse. If the property is unleased, the Title Examiner should require that the client obtain a lease signed by both husband and wife.

A few additional points regarding homestead rights in the context of oil and gas:

Severance of Surface and Mineral Estates

• Texas law permits the separation of surface rights (ownership of the land) and mineral rights (ownership of the subsurface minerals, including oil and gas). This means that even if a property is considered a homestead, the mineral rights may have been previously sold or leased to another party.

• A homeowner may not own the mineral rights under their property, and a third party with rights to the minerals can exploit them, even if the land is protected by homestead rights.

Dominant Estate Rule

• In Texas, the mineral estate is the “dominant” estate, meaning the mineral rights holder has the legal right to enter the surface estate to explore, drill, and produce oil and gas.

• Even if a property is classified as a homestead, if the mineral rights have been severed, the mineral rights owner or their lessee can extract resources, subject to certain restrictions to minimize surface damage.

Protection of Homestead

• While homestead rights offer protection from forced sales due to creditors, they do not protect against oil and gas activities if the mineral rights are owned by another party. In these situations, the surface owner may face disruptions, such as drilling or seismic exploration, although Texas law requires operators to minimize the impact on the surface estate.

Lease Negotiations and Surface Use Agreements

• If a homeowner retains both the surface and mineral rights, they can lease the mineral rights to an oil and gas company. These leases often contain provisions aimed at protecting the homestead and limiting the intrusion or damage caused by oil and gas operations.

• Surface use agreements (SUAs) are often negotiated to ensure that oil and gas development is carried out in a way that reduces disruption to the homestead, including compensation for damages or restrictions on where operations can occur.

Eminent Domain and Condemnation

• In some cases, energy companies may have the right to use eminent domain to obtain surface access, particularly for pipelines or other infrastructure. This can complicate homestead protections, although homeowners may be entitled to compensation for the taking of land or damage to their property.

Surface Owner Protections

• Although the mineral estate is dominant, Texas law does offer some protections to surface owners, including homesteads. The “Accommodation Doctrine” requires the mineral estate holder to accommodate the surface owner’s existing use of the property if there are reasonable alternatives for accessing the minerals.

If you need assistance or guidance with your mineral rights, reach out to KMD Law today to book a consultation.

Written by Bradley A. Taylor, Senior Attorney at KMD Law