Summer 2016

TEXAS LAND / Market
House Bill 1221, recently signed into Texas law,
requires sellers of residential real estate to
disclose whether any part of the property is
in a groundwater conservation district (GCD)
or subsidence district. These districts, now
numbering 100 and covering 70 percent of
the state’s land area, regulate groundwater,
and therefore can affect both the value of the
land and your ability to develop and use the
groundwater under it. The disclosure law affects all
transfers taking place January 1, 2016 or later.
HB 1221 officially incorporates groundwater as an
important component of real property, but the law
expressly states that it does not apply “unless the seller
has actual knowledge on the date of the notice that the
real property is located” in a GCD, and does not “create
any duty for any person to investigate to determine if
the residential real property is located” in a GCD. If you
simply don’t know, you’re not required to find out.
So as always, if the seller doesn’t know something,
buyer, beware. By not investigating this for yourself, you
could be in for an unwelcome surprise after you close on
a property. Five things to know before you purchase:
•
•
• If you intend to drill a water well on your newly
acquired land and if the property is in a GCD, there
may be requirements or restrictions to learn ahead of
time. These rules can affect what you are able to do
with the land, so it is important to understand them.
• There may be minimum well spacing requirements.
Do you have enough property to drill a well? Has the
area hit its wells per section limit? If you’re buying
an existing well, are you in a good position because
no more wells can be drilled around you? Every
district has different rules, so it pays to check.
• Some districts have grandfathered the water wells
that were drilled before the district was formed,
and may permit new ones with a lower pump rate
– in that case, you may want a property with a
reliable historical well already on it. Even then, your
historical well may be limited to its historic use, so
you need to investigate past use.
• If your property isn’t covered by a GCD, you could find
yourself in a situation like the Hays County folks last
year, who narrowly avoided massive and unfettered
extraction and export of their groundwater.
• Say your neighbor drills a large well and draws
down your well’s water level. If you’re not in a GCD,
or no permit is required by your GCD, you’ll have no
notice of the potentially problematic well. If your
GCD does require a permit, is your neighbor’s new
well exempt from permitting? Are there nearby
wells that have already been permitted and may
affect the groundwater on your property? Does the
GCD enforce production limits? Is your neighbor
exempt from them? It pays to know your risk.
This new disclosure requirement underscores the
growing recognition of the importance of groundwater
in Texas. For buyers, it’s a heads up to add a little
groundwater research to your checklist. There are a
host of resources available, from the GCDs themselves
to state agencies and also private firms. The recently
launched Water Sage portal, run by Ponderosa
Advisors, LLC, gives landowners the ability to perform
their own research for a small fee. Find out more at
WaterSage.com
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