USA - TEXAS Law and Practice Contributed by: Brad Holdbrook, Mary Mendoza, Michael Coleman and James Barnett, Haynes and Boone, LLP
zoning or planning law by consulting with local municipal or county zoning offices, where they can access zoning maps and ordinances. It’s also possible to request zoning verification let - ters for specific properties. Moreover, buyers can enter into specific development agreements with relevant public authorities to facilitate a project. These agreements can outline the development conditions, infrastructure improvements, and other project specifics, and they often require approval from local government bodies. 2.9 Condemnation, Expropriation or Compulsory Purchase In Texas, governmental entities and quasi-gov - ernmental entities (eg, municipal utility districts (MUDs) and school districts) have the power to take land through condemnation, expropriation, or compulsory purchase for public use, known as eminent domain. The process typically involves the government entity providing notice to the property owner, making an offer to purchase the property and, if necessary, filing a condemna - tion lawsuit. The owner is entitled to receive just compensation for the property taken. 2.10 Taxes Applicable to a Transaction Generally, in Texas, real estate transactions do not incur transfer, recordation, stamp, or simi - lar taxes that are common in other states. The sharing of transaction costs between buyer and seller, including title insurance, escrow fees, and others, is typically negotiated in the purchase agreement. In the case of share deals or trans - fers of interest in property-owning entities, these transactions are subject to federal and state capital gains taxes, not specific transfer taxes. Typically, sellers of a property will pay for the base policy premium of the owner’s policy of title insurance, buyers for any desired endorsements (which are limited in scope in Texas compared to
many other states), and escrow fees will be split among the parties. 2.11 Legal Restrictions on Foreign Investors In Texas, there are no specific legal restrictions on foreign investors acquiring real estate pure - ly based on their nationality. However, foreign investors must comply with applicable US fed - eral laws.
3. Real Estate Finance 3.1 Financing Acquisitions of Commercial Real Estate
Generally, acquisitions of commercial real estate in Texas can be financed through a variety of methods including traditional bank loans, com - mercial mortgage-backed securities, life insur - ance companies, private lenders, and seller financing. For large real estate portfolios or companies holding real estate, financing options may also include syndicated loans from multiple lenders, mezzanine financing, and equity financ - ing from investment funds. Each financing meth - od comes with its own set of terms, conditions, and costs, which can vary based on the size of the transaction, the risk profile of the investment, and the financial standing of the borrower. 3.2 Typical Security Created by Commercial Investors Generally, in Texas, commercial real estate investors often secure financing through mort - gage loans, where the real estate itself serves as collateral. This involves creating a lien on the property in favour of the lender. The grant of a secured interest in the property to the lender is typically memorialised in a deed of trust. Pursu - ant to the Texas Assignment of Rents Act, codi - fied as Section 64.052(b) of the Texas Property
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