USA – TEXAS Law and Practice Contributed by: Taylor Cooksey, David Brooks, Serena Kramer and Philip Kinkaid, Cokinos | Young
The process is initiated by written notice given to the property owner. If the parties fail to agree on just com - pensation, the matter is litigated in court to determine the appropriate amount. 2.10 Taxes Applicable to a Transaction In Texas, there are nominal filing fees that vary from county to county and are applicable to the filing of any documents in the real property records. However, real estate transactions are not subject to transfer taxes, nor to document, stamp or similar taxes or fees. Similarly, Texas does not impose any transfer or sim - ilar taxes or fees on transfers of shares in entities, including entities owning real estate. 2.11 Legal Restrictions on Foreign Investors Foreign investors must comply with any applicable US federal laws. For transactions on or after 1 Septem - ber 2025, Texas law prohibits governmental entities, individuals or companies from designated countries identified in federal national security threat assess - ments (currently China, Russia, Iran and North Korea) from purchasing real estate in Texas. Exemptions exist for US and dual citizens, lawful permanent residents and homestead property. In March 2026, the Texas Attorney General’s office proposed new enforcement rules that would impose a duty on “facilitating entities”, including mortgage lend - ers, title insurance companies and licensed real estate professions, to report transactions that they suspect violate the prohibitions applicable to individuals from designated countries. The proposed rules, which are currently subject to a public comment period and may be changed prior to enactment, would also expand these prohibitions to apply to acquisitions of entities that own real property in Texas. 3. Real Estate Finance 3.1 Financing Acquisitions of Commercial Real Estate Commercial real estate financing can be structured through a variety of methods, including traditional bank loans, private investor financing and seller financing, each secured by property being acquired
or developed. Financing may also include mezzanine loans or mortgage-backed securities, particularly with a portfolio or equity transaction. Each method of financing has varying terms depending on factors such as the type of lender, the loan size, the bor - rower’s creditworthiness, and the type and risk of the investment. 3.2 Typical Security Created by Commercial Investors In Texas, a deed of trust (a mortgage instrument) is the document used to grant a lien in real property. The lien is granted in favour of the lender as security for pay - ment and performance of the borrower’s obligations. Technically, a deed of trust is granted to a trustee for the benefit of the lender. The trustee’s role is nominal unless the borrower defaults and the lender exercises its remedies, in which case the trustee’s primary role is to conduct the non-judicial foreclosure sale of the property. To be effective against third parties, the deed of trust must be recorded in the county records. Like a deed or any other document to be recorded, it must be executed and acknowledged before a notary public (or otherwise proved according to law). The lender will also typically take a security interest in tangible and intangible personal property located at or relating to the real property being acquired or devel - oped. This may be created in the deed of trust or by a separate security agreement. The security interest is perfected by the filing of a UCC-1 financing state - ment. If the property is or will become income-producing, the lender will typically also secure the loan with an assignment of rents, which can be included in the deed of trust or created by separate instrument. If a mezzanine loan is involved, equity ownership in the borrower will be pledged to secure the loan, evi - denced by a separate security agreement.
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