If a government agency, utility, or pipeline company wants to take your property in Texas, the Texas Landowner Bill of Rights is the plain-language summary of the protections you already have under Chapter 21 of the Texas Property Code and Article I, Section 17 of the Texas Constitution. Any entity with condemnation power must hand you a copy before or at the moment it first claims that authority, and again at least seven days before it makes a final offer.1State of Texas. Texas Property Code Section 21.0112 – Provision of Landowner’s Bill of Rights Statement Required What follows is what those rights actually mean when someone is trying to take your land.
When Your Land Can and Can’t Be Taken
The Texas Constitution requires that no one’s property be taken, damaged, or destroyed for public use without adequate compensation. When the taker is not the state itself, the money has to be paid or secured by a deposit before the property changes hands.2Justia. Texas Constitution Article 1 Section 17 – Taking, Damaging, or Destroying Property for Public Use Payment comes first, not later.
Texas also narrows what counts as a legitimate taking. A condemning entity cannot use eminent domain to confer a private benefit on a particular party, cannot use a stated public purpose as a pretext for private benefit, and cannot take land for economic development (with narrow exceptions for eliminating slum or blighted areas).3State of Texas. Texas Government Code Section 2206.001 – Limitation on Eminent Domain for Private Parties or Economic Development Purposes Texas passed these limits in response to the U.S. Supreme Court’s Kelo v. City of New London decision, which had allowed economic-development takings under the federal Constitution.
The statute still allows condemnation for transportation projects, water supply and flood control, public buildings, hospitals, parks, utility services, and common carrier pipelines, among other listed uses.3State of Texas. Texas Government Code Section 2206.001 – Limitation on Eminent Domain for Private Parties or Economic Development Purposes If the purpose doesn’t fit one of those categories or another recognized public use, the entity doesn’t have the power to take your land in the first place.
The Written Offer You Must Receive
Before a condemning entity can file a condemnation petition against you, it has to make a bona fide offer to buy the property voluntarily. The statute spells out the steps.4State of Texas. Texas Property Code Section 21.0113 – Bona Fide Offer Required
The entity first sends a written initial offer. It must include a copy of the Landowner Bill of Rights, a statement in bold and larger font saying whether the compensation includes damages to your remaining property, a conveyance instrument, and the name and phone number of a representative.4State of Texas. Texas Property Code Section 21.0113 – Bona Fide Offer Required That initial offer starts a 30-day clock. The entity cannot make its final offer until those 30 days pass.
The final offer has to be backed by a written appraisal from a certified general appraiser, and it must equal or exceed that appraisal amount. The appraisal and conveyance instrument have to be sent with or before the final offer, and you then get at least 14 days to respond.4State of Texas. Texas Property Code Section 21.0113 – Bona Fide Offer Required
These timing rules have teeth. If a court finds the entity didn’t actually make a bona fide offer, the court must halt the condemnation, order the entity to start the offer process over, and require it to pay all costs plus your reasonable attorney’s fees and professional fees connected to the violation.5State of Texas. Texas Property Code Section 21.047 – Assessment of Costs and Fees Checking whether every procedural requirement was met is worth doing before you negotiate on price.
The Special Commissioners Hearing
If you and the entity can’t agree, it files a condemnation petition in the county where the property sits. The judge then appoints three disinterested property owners who live in that county to serve as special commissioners, and their job is to decide how much compensation you’re owed.6State of Texas. Texas Property Code Section 21.041 – Evidence
The commissioners must weigh evidence on four things: the value of the property being taken, the injury to you as the owner, the benefit (if any) to your remaining property, and the intended use of the property for the project.6State of Texas. Texas Property Code Section 21.041 – Evidence Both sides present testimony, appraisals, and documentation. The commissioners then file a written award with the court.
It isn’t a courtroom trial, but it carries real weight. Skip it or arrive unprepared, and the commissioners will issue an award based on whatever the entity puts in front of them. That number becomes the baseline for everything that follows.
How Compensation Is Measured
When the entire property is taken, damages equal local market value at the time of the special commissioners hearing.7Justia. Texas Property Code Chapter 21 – Eminent Domain – Section 21.042 Assessment of Damages That’s the price a willing buyer would pay a willing seller when neither is under pressure. Appraisers usually build the figure from comparable sales nearby.
Partial takings are where most of the real dollar fights happen. When only a piece of your tract is condemned, the commissioners also have to estimate the injury and benefit to what you keep. If a highway cuts off road access to the back of your acreage or disrupts irrigation, that damage to the remainder gets built into the award. But the commissioners can only count injuries or benefits that are unique to your property. A traffic increase that affects your whole neighborhood equally doesn’t factor in.7Justia. Texas Property Code Chapter 21 – Eminent Domain – Section 21.042 Assessment of Damages
Value also isn’t limited to how you happen to use the property today. Appraisers should consider the highest and best use, meaning the most profitable legal use the land could reasonably support. Pastureland zoned for commercial development is worth what a commercial buyer would pay, not what the cattle operation grosses. Government appraisers sometimes value only the current use, which produces offers well below the real number. Hiring your own appraiser who accounts for development potential is one of the most effective ways to close that gap.
Appealing the Award
Either side can object to the commissioners’ findings and move the dispute into court for a full trial.8State of Texas. Texas Property Code Section 21.018 – Appeal From Commissioners’ Findings This is where you can present expert testimony, cross-examine the entity’s appraiser, and put a complex valuation in front of a jury rather than three neighbors.
One protection to know about: once the commissioners issue an award, the entity cannot dismiss the condemnation and start fresh hoping for a lower number.9State of Texas. Texas Property Code Section 21.019 – Dismissal of Condemnation Proceedings It accepts the award, appeals, or proceeds with the taking at the awarded amount.
Who Pays for Attorneys and Appraisers
You have the right to hire counsel at every stage, from the first offer through trial.10Office of the Attorney General of Texas. Landowner’s Bill of Rights Who ends up paying depends on how the numbers land.
If the commissioners award more than what the entity offered before the proceedings began, the entity pays all costs. The same applies if a court later awards more than the commissioners did. If the award or judgment comes in at or below the entity’s pre-proceeding offer, costs fall on you.5State of Texas. Texas Property Code Section 21.047 – Assessment of Costs and Fees
A stronger provision kicks in when the entity botched the written offer process. If the court finds no proper offer was made under Section 21.0113, the court must stop the case, send the entity back to make a compliant offer, and order payment of your reasonable attorney and professional fees tied to the violation.5State of Texas. Texas Property Code Section 21.047 – Assessment of Costs and Fees
Moving Costs If You’re Displaced
Under Texas law, if condemnation displaces you from your home or business, you may be entitled to reimbursement for reasonable moving expenses. The reimbursement can’t exceed the property’s market value, and it isn’t available if another law already covers the same expenses.10Office of the Attorney General of Texas. Landowner’s Bill of Rights
When the project uses federal funding or federal financial assistance, the Uniform Relocation Assistance Act adds more. Displaced homeowners and business owners are entitled to advisory services, payment for actual reasonable moving expenses, and replacement housing payments, and the acquiring agency must confirm comparable replacement housing is available before you’re displaced. Relocation payments under the federal rule are not counted as income for federal or state tax purposes and don’t affect public assistance or welfare eligibility.11eCFR. Uniform Relocation Assistance and Real Property Acquisition for Federal and Federally Assisted Programs
Taxes on the Award
A condemnation award isn’t tax-free. The IRS treats it as a sale, so any gain over your adjusted basis is taxable. Gain from condemned business or investment property is reported on Form 4797, and gain from personal-use property (other than your main home) goes on Form 8949 or Schedule D.12Internal Revenue Service. Publication 544 – Sales and Other Dispositions of Assets
Section 1033 of the Internal Revenue Code lets you defer that tax if you reinvest the proceeds in property that is similar or related in use. To defer all of the gain, you need to spend at least as much on the replacement as you received. Spend less, and you recognize gain up to the shortfall.13Office of the Law Revision Counsel. 26 USC 1033 – Involuntary Conversions
The replacement deadlines matter. For most condemned property, you have two years after the end of the first tax year in which you realized the gain. For real property held for business or investment use, the deadline stretches to three years.12Internal Revenue Service. Publication 544 – Sales and Other Dispositions of Assets The clock starts on whichever is earlier: the date you disposed of the property, or the date the threat of condemnation began. The election is made by attaching a statement to your return for the year the gain is realized. Miss the window and the full tax comes due, so tracking the timeline from the moment condemnation first appears is worth doing from day one.