What do the terms in a Texas land deal actually mean?

Texas land runs on a vocabulary borrowed from four separate bodies of law — property tax, water, minerals, and county subdivision — and none of them explain themselves. Below are seventy-four terms defined plainly, with the statute, case, or agency behind each one where there is a single one. If a term is doing real work in your contract and it is not here, ask us.

What are the property tax terms?

1-d-1 open-space valuation. Appraisal of qualifying land on its agricultural productivity value rather than its market value, under Texas Constitution Art. VIII §1-d-1 and Tax Code §23.51 et seq. This is what almost everyone means when they say "ag exemption."

Ag exemption. Common shorthand for 1-d-1 open-space valuation. It is not an exemption at all — the land is still taxed, just on a different value. The distinction matters when a lender or a buyer asks what conveys.

Productivity value. The value assigned to qualifying land based on its capacity to produce agricultural products, calculated by the appraisal district under Comptroller-adopted methodology.

Degree of intensity. The level of agricultural activity an appraisal district requires before it will grant or continue 1-d-1 valuation. Set county by county. There is no statewide standard, and there is no statewide minimum acreage.

County appraisal district (CAD). The local entity that appraises property, administers 1-d-1 applications, and sets degree-of-intensity standards for its county. Name yours before you make an assumption.

Form 50-129. The Texas Comptroller's Application for 1-d-1 (Open-Space) Agricultural Use Appraisal. Filed with the CAD between January 1 and April 30.

Rollback tax. The recapture of the tax savings from 1-d-1 valuation when the use changes, under Tax Code §23.55. HB 1743 (86th Legislature, effective September 1, 2019) cut the lookback from five years to three. HB 3833 (87th Legislature, effective June 15, 2021) then removed interest from §23.55 entirely, so a change of use on or after that date carries no interest on the rollback itself. Codified for timberland at §23.76.

Change of use. The trigger for the rollback tax. A sale alone does not trigger it. Ceasing the qualifying agricultural use does.

Wildlife management valuation. A continuation of 1-d-1 valuation by a different qualifying use, under Tax Code §23.51(7). The land must already be qualified as 1-d-1 in the preceding year, and the owner must perform at least three of seven approved practices annually: habitat control, erosion control, predator control, supplemental water, supplemental food, providing shelter, and census counts.

Residence homestead exemption. Under Tax Code §11.13, the exemption for an owner's principal residence, which may include the home and up to 20 acres used for residential purposes. Acreage beyond that is valued separately.

Late application penalty. A 1-d-1 application filed after April 30 may still be accepted, with a penalty of 10 percent of the tax difference between market value and productivity value.

What are the water terms?

State water. Surface water in a watercourse, owned by the state under Water Code §11.021. Appropriating it requires a permit from the TCEQ under §11.121.

Watercourse. A defined channel with a bed and banks carrying flow. Whether a feature on your tract is a watercourse determines whether the water in it belongs to you or to the state.

Water right. A TCEQ permit authorizing diversion and use of state water for a stated purpose and amount. It is severable property and must be conveyed deliberately.

Section 11.142 exemption. Water Code §11.142 lets a landowner build, on their own property, a dam or reservoir of not more than 200 acre-feet of normal storage for domestic and livestock use with no permit. It does not apply to a commercial operation.

Acre-foot. The volume covering one acre to a depth of one foot — 325,851 gallons.

Rule of capture. The Texas groundwater doctrine under which a landowner may pump water from beneath their land, subject to groundwater conservation district regulation and certain limits.

Groundwater in place. The landowner's vested ownership interest in the groundwater beneath the surface, recognized in Edwards Aquifer Authority v. Day, 369 S.W.3d 814 (Tex. 2012), decided February 24, 2012, and protected under Texas Constitution Art. I §17(a).

Groundwater conservation district (GCD). The local district that regulates well spacing, permitting, and production under Water Code Ch. 36. Rules vary district to district, and not every Texas acre lies in one.

Exempt well. A well a district must exempt from permitting under Water Code §36.117: used solely for domestic use or for livestock or poultry, on a tract larger than 10 acres, incapable of producing more than 25,000 gallons a day. Registration may still be required.

Static water level. The resting depth of water in a well when it is not being pumped. The number that tells you what you actually have.

Live water. A market term for a creek, river, or spring that flows year-round across or along a property. It is not a legal term and carries no rights with it.

Wet-weather creek. A drainage that carries water after rain and is dry otherwise. Often photographed to look like live water.

Rural water supply corporation. A nonprofit member-owned utility serving rural areas. Where one serves your tract, the questions are tap fee, line extension, and capacity, not well depth.

What are the mineral and energy terms?

Mineral estate. The ownership interest in the oil, gas, and other minerals beneath a tract. In Texas it can be owned separately from the surface.

Severed mineral estate. A mineral estate conveyed or reserved apart from the surface. Minerals do not convey unless the deed conveys them.

Dominant estate. The mineral estate's status in Texas: it carries an implied right of reasonable use of the surface to produce the minerals.

Accommodation doctrine. The rule requiring a mineral owner to accommodate an existing surface use where a reasonable alternative means of production exists. Extended to a severed groundwater estate in Coyote Lake Ranch, LLC v. City of Lubbock (Tex. 2016).

Surface use agreement. A negotiated contract governing where and how an operator may use the surface — road locations, pad sites, setbacks, restoration. The single most valuable document a surface owner can have.

Executive right. The right to lease the minerals. It can be separated from the right to receive royalties, which is why "who owns the minerals" is rarely a one-line answer.

Royalty interest. A share of production free of the cost of production.

Non-participating royalty interest (NPRI). A royalty interest whose holder has no right to lease or to receive bonus or delay rentals.

Held by production (HBP). A lease continued past its primary term because production is occurring. An HBP lease is not going away on a date.

Wind, solar, and pipeline easement. A recorded grant of rights across the surface for energy infrastructure, each with its own valuation logic, term, and restoration obligations. Read the setback and decommissioning terms before the payment.

What are the boundary, title, and access terms?

Metes and bounds. A property description by courses, distances, and monuments rather than by lot and block. The standard description for unplatted Texas land.

Original survey and abstract number. The historic land grant a tract sits in, and the abstract number the county uses to index it. The plat requirement in Local Government Code §232.001(b) requires a plat to be located with respect to an original corner of the original survey.

Title commitment. The title company's promise of the policy it will issue, in four schedules. Schedule B lists the exceptions — easements, mineral and groundwater reservations, restrictions — and is where the real information is.

Easement. A recorded right for someone else to use part of your land for a stated purpose. Access, utility, pipeline, and drainage easements all run with the land.

Ingress and egress easement. A recorded right of access to and from a tract. Without one, or without frontage on a public road, a tract may be landlocked.

Landlocked. Having no legal access to a public road. A tract can be landlocked while a gravel road runs right to it, if that road is on someone else's land without a recorded easement.

Encroachment. An improvement crossing a boundary — a barn, a driveway, a fence. Extremely common on older rural tracts and a normal survey finding.

Fence line. Where the fence is. Not necessarily where the boundary is. In Texas the two disagree often enough that the survey, not the fence, governs.

Non-disclosure state. Texas does not require sale prices to be publicly recorded. Land values are built from broker and appraiser data, not looked up.

General and special warranty deed. A general warranty deed warrants title against all claims arising at any time. A special warranty deed warrants title only against claims arising during the grantor's ownership, and is common on estate and institutional sales.

Deed of trust. The Texas instrument creating a lien on real property to secure a note, with a trustee holding power of sale.

What are the subdividing and building terms?

Plat. The recorded map of a subdivision. Required under Local Government Code §232.001 when land outside a municipality is divided into two or more parts to lay out a subdivision, lots, or anything dedicated to public use.

Section 232.0015 exception. The list of circumstances in which a county may not require a plat — including where all lots exceed 10 acres with no public dedication, certain agricultural uses, and transfers to relatives within the third degree.

Commissioners court. The county's governing body, which approves plats and adopts subdivision regulations. Not a court in the judicial sense.

Extraterritorial jurisdiction (ETJ). Unincorporated area outside a city's limits where the city holds certain authority. Under Local Government Code §42.021 it runs from ½ mile for cities under 5,000 people to 5 miles for cities of 100,000 or more.

On-site sewage facility (OSSF). A septic system. Regulated under Health & Safety Code Ch. 366, permitted by TCEQ or its authorized agent, usually the county.

Site evaluation. The soil and site investigation performed by a licensed evaluator that determines which OSSF system type your tract will support. Tight clay soils commonly rule out a conventional system.

Aerobic system. An OSSF that treats effluent with introduced oxygen, typically requiring a maintenance contract. Frequently the answer where soils will not accept a conventional drain field.

Service drop and aid to construction. The electric line extension to your building site and the customer's share of its cost. Distance from the existing line drives it.

Electric cooperative. The member-owned utility serving most rural Texas. The co-op serving your tract, not the utility you know from town, is the one to call.

Floodplain. Land mapped by FEMA as subject to flooding, which affects where you may build, what you must insure, and what a lender will accept.

Driveway approach permit. County or TxDOT authorization for a new driveway connection to a public road, usually including a culvert specification.

What are the financing terms?

Farm Credit System association. A cooperative agricultural lender chartered under the Farm Credit Act. Borrowers are members and may receive patronage distributions.

FSA Direct Farm Ownership loan. A loan made directly by the USDA Farm Service Agency to purchase or develop farm property, up to $600,000, with terms up to 40 years on real estate.

FSA guaranteed loan. A loan made by a commercial lender with an FSA guarantee, up to $2,343,000, adjusted annually for inflation.

FSA Down Payment Program. A beginning farmer and rancher program requiring a 5 percent down payment, with FSA financing up to 45 percent of the purchase price or appraised value, whichever is less. Confirm the current maximum loan amount and purchase price cap with FSA.

VLB land loan. The Texas Veterans Land Board land loan, up to $200,000 for an eligible veteran, or $275,000 for two eligible veteran spouses buying the same tract, with a minimum 5 percent down and a tract of at least one net acre.

Balloon payment. The lump sum due when a loan's term ends before its amortization does. Common on bank land loans and the term most often missed.

Contract for deed. An executory contract under which the seller holds the deed until the last payment. Heavily regulated in Texas under Property Code Ch. 5, Subchapter D.

What are the ranch and land-use terms?

Animal unit (AU). The standard grazing planning unit: a 1,000-pound cow with or without a nursing calf. Forage demand runs roughly 2.5 to 3 percent of body weight per day in dry matter.

Stocking rate. The number of animal units a tract is managed to carry. Not a statewide number — it comes from your soils, rainfall, and range condition.

Ecological site description. The USDA-NRCS characterization of what a specific soil and landscape unit can produce. The honest starting point for any stocking question.

Web Soil Survey. The free USDA-NRCS tool that maps soils and their properties for any tract in the country. Pull it before you make an offer.

Improved pasture. Land planted to introduced forage such as bermudagrass or bahiagrass, usually fertilized and managed.

Native range. Land carrying its native plant community, managed by grazing and brush control rather than planting.

Brush control. Managing woody encroachment — in North and Central Texas most often ashe juniper, mesquite, and yaupon. A recurring cost, not a one-time one.

High fence. A game fence, typically eight feet, used for deer management. It changes the wildlife management picture and the price.

Hunting lease. A contract granting hunting rights for a term. A source of income, a liability question, and a factor in what a lender sees.

Conservation easement. A recorded, usually perpetual restriction limiting development in exchange for tax benefits. It runs with the land and binds every future owner. Read it before you buy the land it encumbers.

Blackland Prairie and Cross Timbers. The two dominant land resource regions across North Texas — heavy clay prairie soils to the east and sandier oak-timbered country to the west. They behave differently for septic, foundations, forage, and price.

Frequently asked questions

Is an ag exemption the same as a tax exemption?

No, and the difference costs people money. Under Texas Constitution Art. VIII §1-d-1 and Tax Code §23.51 et seq., qualifying land is appraised on its agricultural productivity value rather than its market value. The land is still taxed. Nothing is exempt. That is also why a change of use triggers the rollback tax under §23.55 rather than simply ending an exemption.

What is the difference between a water right and groundwater?

Two separate systems. Surface water in a watercourse is state water under Water Code §11.021, and diverting it takes a TCEQ permit under §11.121. Groundwater is owned by the landowner in place, per Edwards Aquifer Authority v. Day (Tex. 2012), and regulated by the local groundwater conservation district under Water Code Ch. 36. Owning one tells you nothing about the other.

What does "live water" legally mean in Texas?

Nothing. It is a market term for water that flows year-round across or along a tract, and it carries no rights. A property marketed with live water may still require a TCEQ water right before the owner may divert any of it for a commercial use. Verify the flow independently and verify the rights separately.

What is an ETJ and how do I know if I am in one?

The extraterritorial jurisdiction is unincorporated land outside a city's limits where the city retains certain authority. Under Local Government Code §42.021 it extends from half a mile for cities under 5,000 people to five miles for cities of 100,000 or more. Ask the city and the county in writing. In fast-growing North Texas, a tract that feels rural is frequently inside one.

What is an OSSF?

An on-site sewage facility — a septic system. It is regulated under Health & Safety Code Ch. 366 and permitted by TCEQ or its authorized agent, usually the county. A licensed site evaluator performs a soil evaluation that determines what system type your tract will support, which is why "can I build here" is often really a soils question.

How many acres is an animal unit?

That is the wrong unit. An animal unit is a 1,000-pound cow with or without a nursing calf — an animal, not an area. How many acres one animal unit needs depends on soils, rainfall, range condition, and management, and it varies enormously across Texas. Start with the ecological site description in the USDA-NRCS Web Soil Survey and your county AgriLife Extension office.

Why can I not just look up what land sold for?

Because Texas is a non-disclosure state. Sale prices are not required to be publicly recorded, so there is no public database of what tracts actually traded for. Land values are built from broker and appraiser records, adjusted for access, water, topography, soils, fencing, minerals, tax status, and tract size. Anyone quoting you a county price per acre off a public source is quoting an estimate.

Sources and method

Sources and method

Texas Constitution Art. I §17(a) and Art. VIII §§1-d and 1-d-1 · Texas Tax Code §§11.13, 23.51, 23.55, and 23.76 · Texas Water Code §§11.021, 11.121, 11.142, and Ch. 36 including §36.117 · Edwards Aquifer Authority v. Day, 369 S.W.3d 814 (Tex. 2012) · Coyote Lake Ranch, LLC v. City of Lubbock (Tex. 2016) · Texas Local Government Code §§42.021, 232.001, 232.004, 232.0015, 232.011, and 232.040 · Texas Health & Safety Code Ch. 366 · Texas Property Code Ch. 5, Subchapter D · Texas Comptroller form 50-129 · USDA Farm Service Agency, Farm Ownership Loans · Texas General Land Office, Veterans Land Board · USDA-NRCS Web Soil Survey and ecological site descriptions · Texas A&M AgriLife Extension · Texas Department of Licensing and Regulation and Texas Water Development Board well records · Figures verified August 2026.

Definitions here are written for landowners, not for litigators, and several of these terms carry a narrower meaning in a specific statute than in ordinary use. County appraisal districts, groundwater conservation districts, and counties set their own standards, and loan program limits change. Confirm anything you intend to rely on with the district, agency, or lender that governs your tract. This is general information, not tax, legal, or financial advice.

If a term in your contract is not on this list, send it to us. We will tell you what it means in plain language, whether it changes what you are buying, and who has to answer for it. That is a five-minute conversation and it has saved deals. Start at Texas Land & Ranch, or read buying land in Texas, the Texas ag exemption, water rights in Texas, and subdividing land in Texas.

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Damon Williamson, Broker-Owner · Licensed Real Estate Agent, State of Texas.

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