Building under construction on the bank of a city lake
By Brian A. Fisher
Effective as of September 1, 2015, Section 5.019 was added to the Texas Property Code. Section 5.019 requires a seller of property (residential or commercial) that adjoins a lake, reservoir or other impoundment of water (a) constructed or maintained under Chapter 11 of the Texas Water Code (governing State water) and (b) having a storage level of at least 5,000 acre–feet or more at its normal operating level to notify (on or before the effective date of the contract), in writing, any buyer of the property that the water level of the impoundment of water fluctuates for various reasons. Those reasons include drought, flood conditions or an entity’s lawful right to use the water. Section 5.019(b) of the Texas Property Code provides a form for such written notice.
What happens if you don’t?
Following the closing of the property, the seller may be sued for misrepresentation if the seller either (i) fails to provide the written notice before the closing or (ii) had actual knowledge that the water level fluctuates for various reasons. Some early commentators on Section 5.019 question whether “adjoins” means touches or nearby or some other standard. While this issue seems ripe for dispute, the safe bet is to give the notice if the property to be sold runs any risk of being impacted by rising levels of water subject to Section 5.019.