{"id":7938,"date":"2019-09-30T04:32:37","date_gmt":"2019-09-30T09:32:37","guid":{"rendered":"https:\/\/agrilife.org\/texasaglaw\/?p=7938"},"modified":"2026-04-17T15:20:51","modified_gmt":"2026-04-17T20:20:51","slug":"case-offers-important-considerations-when-purchasing-property","status":"publish","type":"post","link":"https:\/\/agrilife.org\/texasaglaw\/2019\/09\/30\/case-offers-important-considerations-when-purchasing-property\/","title":{"rendered":"Case Offers Important Considerations When Purchasing Property"},"content":{"rendered":"

\"\"<\/p>\n

A recent case from the Corpus Christi Court of Appeals,\u00a0Chapa v. Arrellano<\/em>, caught my attention and offers the chance to talk through some important reminders for anyone purchasing land.<\/p>\n

\"\"

Image by Zach Schorr<\/a> from Pixabay<\/a><\/em><\/p><\/div>\n

Background<\/strong><\/p>\n

In August 2017, Chapa purchased a piece of land from the Arrellanos in Hidalgo County, Texas.\u00a0 She intended to build a home on the property.\u00a0 Prior to purchase, she conducted a visual inspection of the land and saw no visible impediment for the construction of a home on the property.\u00a0 She did not hire a title company or an attorney to assist with the purchase of the property.<\/p>\n

The parties signed a document labeled a \u201cGeneral Warranty Deed,\u201d which was prepared by a lawyer Chapa selected.\u00a0 Three relevant portions of the deed were as follows:<\/p>\n

Under the section titled “Exceptions to Conveyance and Warranty,” the deed stated there was a “Right of Way easement in favor of Rio Grande Valley Gas Co, as shown by an instrument dated September 12, 1961, in Volume 1028, Page 12, Deed Records of Hidalgo County.”<\/p>\n

The deed also stated this was an “‘as is, where is’ transaction and reflects the agreement of the parties that there are no representations of express or implied warranties. [Chapa] has not relied on any information other than [her] inspection.”<\/p>\n

The deed also contained a clause as follows: “No title examination was required in connection with the above preparation of the document concerning the above described property, nor was any made.\u00a0 The preparer expresses no opinion as to title of this property, nor as to any taxes due on the property.”<\/p>\n

After purchasing the property for $32,000, Ms. Chapa began construction plans.\u00a0 Sometime after that, there was a sign on the property from Rio Grande Valley Gas Company\u00a0indicating that an easement existed and informing her that a gas line ran across the property. Later, she was notified by the gas company she could not build a home on the property due to the easement.<\/p>\n

Litigation<\/strong><\/p>\n

Chapa filed suit against the Arrellanos for breach of contract, recession, and actionable fraud.<\/p>\n

Both parties moved for summary judgment.\u00a0 Chapa argued that the sale was fraudulent because the property was not subject for any surface development and was, therefore, worthless to Chapa.\u00a0 The Arrellanos argued that Chapa had disclaimed any reliance or oral representations by signing the deed, the easement of the gas company was properly disclosed in the deed, and the deed was drafted by a lawyer chosen by Chapa.\u00a0 Further, Mrs. Arrellano stated that although she knew there was an easement for the gas company on the property, which was disclosed in the deed, she had no knowledge that the property was not suitable for residential use due to such easement.<\/p>\n

The trial court granted the Arrellanos’ motion for summary judgment and dismissed the case.\u00a0 Ms. Chapa appealed the dismissal of her fraud and rescission claims.<\/p>\n

Court of Appeals Opinion<\/strong><\/p>\n

The Corpus Christi Court of Appeals ruled in favor of the Arrellanos, affirming the trial court decision.\u00a0 [Read full opinion here<\/a>.]<\/p>\n

Fraud Claim<\/em><\/p>\n

In order to prevail on a statutory claim of fraud in a real estate transaction, Chapa has to prove: (1) there was a transaction involving real estate; (2) during the transaction, the defendant made a false representation of fact, false promise, or benefitted by not disclosing that a third party\u2019s promise or representation was false; (3) the false representation or promise was made with the intent of inducing the plaintiff to enter into the contract; (4) the plaintiff relied on the false promise or representation by entering into the contract; and (5) the reliance caused the plaintiff\u2019s injury.<\/p>\n

Here, the terms of the deed itself state that Chapa did not rely upon any representations or express or implied warranties from the Arrellanos.\u00a0 That clause, alone, defeats a fraud claim. She purchased the property \u201cas is\u201d, which indicates it was her failure to properly inspect or investigate the property that caused her injury. Simply put, an \u201cas is\u201d buyer takes the entire risk as to the quality of the property purchased. Further, the deed made Chapa aware of the existence of the gas company\u2019s easement on the land. \u00a0Based on these reasons, the Court of Appeals affirmed the dismissal of the fraud claim.<\/p>\n

Rescission <\/em><\/p>\n

The court noted that Chapa\u2019s one sentence argument that was entitled to equitable relief was inadequate briefing and, therefore, the claim on appeal was waived.\u00a0 Regardless, the court noted that the equitable remedy of rescission is available only when there has been some injury by violations such as breach of contract or fraud.\u00a0 As noted above, Chapa was aware of the easement, she purchased the property \u201cas is.\u201d\u00a0 Thus, she simply had no claim to form the basis of recovery.<\/p>\n

Key Takeaway Points<\/strong><\/p>\n

This case offers the opportunity to talk through some important considerations when purchasing property.\u00a0 For more information on this topic, be sure to check out a podcast episode<\/a> I recorded with real estate attorney & title company owner, David Waggoner, for the Ag Law in the Field Podcast.<\/p>\n

First, when purchasing property, it is critical to read any contract, deed document, title commitment, and any other document thoroughly and ensure you understand the contents.\u00a0 Here, there are several examples of the importance of this.\u00a0 First, the deed expressly listed the existence of the gas company easement.\u00a0 Parties should always look for any sort of encumbrances on property in a contract, deed, or title commitment. Second, the use of two words in this deed–“as is”–significantly impacted the arguments that Chapa was able to make against the sellers.\u00a0 She claims not to have understood the legal implications of the term “as is.”\u00a0 Further, although the deed was labeled as a “General Warranty Deed,” it expressly disclaimed any warranties, including warranty of title.\u00a0 This actually makes this deed look like a quitclaim deed, due to the lack of any warranty of title.\u00a0 Lastly, with regard to deeds, keep in mind that even a General Warranty Deed does not guarantee the use of land for a particular purpose like building a house, it merely guarantees that title is good to the property.<\/p>\n

Second, anytime a person is purchasing property, he or she should do an investigation of any easements or encumbrances on the land.\u00a0 Here, when Ms. Chapa saw the easement listed in the deed, she should have investigated further by looking at the actual terms of the easement, which she could have obtained from the deed records.\u00a0 If there are any encumbrances listed in documents, found in deed records, or mentioned by a party to the transaction, it is extremely important to investigate the details of such encumbrances.<\/p>\n

Third, on that note, oftentimes when property is transferred, there will be a sales contract\u00a0 signed initially and then a deed that will be executed.\u00a0 It is critical to ensure the terms in each of these two documents match, because if the contract and deed terms are different, the deed terms will govern.\u00a0 For example, there could be a situation where parties agreed in the sales contract that all minerals would transfer to the purchaser, but the deed included a mineral reservation by the seller.\u00a0 Keep in mind that only the seller signs a deed, so this may be easy for a purchaser to overlook.<\/p>\n

Fourth, when entering into any type of contract (such as buying\/selling land, buying\/selling products, a pipeline easement), never rely on oral representations made by the other party.\u00a0 In all transactions dealing with the transfer of real property, Texas law requires that any promises involved in the transaction must be included in writing in the document.\u00a0 Here, it does not appear that false statements were made by the sellers, but oftentimes that can be an issue if promises are not included in the document itself.<\/p>\n

Fifth, consider title insurance when purchasing property.\u00a0 Here, title insurance would likely not have helped Ms. Chapa because there was no problem with her holding legal title to the property, but in many instances title insurance can be an important way to manage risk when purchasing land.\u00a0 Further, in obtaining a title commitment for title insurance, this would give someone another opportunity to view a list of any exceptions or encumbrances, such as easements, that were investigated and listed out by the title company.<\/p>\n

Sixth, I also think it is wise to hire an attorney to assist with drafting a sales contract and deed, and to look over the title commitment for anything unusual.\u00a0 In this case, Ms. Chapa did select an attorney to draft the deed, but it is unclear if she hired the attorney to assist and advise her with regard to the purchase, or if she just selected an attorney who the sellers then hired, on their behalf, to draft a deed.\u00a0 Keep in mind that an attorney cannot represent two parties to the same contract, so it is important to have someone representing your own interest.\u00a0 Also remember that paying for an attorney to review real estate documents up front will be far cheaper than hiring an attorney to represent you in a lawsuit like the\u00a0Chapa<\/em> case down the road.<\/p>\n","protected":false},"excerpt":{"rendered":"

A recent case from the Corpus Christi Court of Appeals,\u00a0Chapa v. Arrellano, caught my attention and offers the chance to talk through some important reminders for anyone purchasing land. Background In August 2017, Chapa purchased a piece of land from the Arrellanos in Hidalgo County, Texas.\u00a0 She intended to build a home on the property.\u00a0 Prior to purchase, she conducted a visual inspection of the land and saw no visible impediment for the construction of a home on the property.\u00a0 She did not hire a title company or… Read More →<\/a><\/span><\/p>\n","protected":false},"author":2443,"featured_media":7985,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[21,72],"tags":[],"class_list":["post-7938","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-easements","category-purchasing-property"],"acf":[],"yoast_head":"\nCase Offers Important Considerations When Purchasing Property - Texas Agriculture Law<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/agrilife.org\/texasaglaw\/2019\/09\/30\/case-offers-important-considerations-when-purchasing-property\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Case Offers Important Considerations When Purchasing Property - Texas Agriculture Law\" \/>\n<meta property=\"og:description\" content=\"A recent case from the Corpus Christi Court of Appeals,\u00a0Chapa v. Arrellano, caught my attention and offers the chance to talk through some important reminders for anyone purchasing land. Background In August 2017, Chapa purchased a piece of land from the Arrellanos in Hidalgo County, Texas.\u00a0 She intended to build a home on the property.\u00a0 Prior to purchase, she conducted a visual inspection of the land and saw no visible impediment for the construction of a home on the property.\u00a0 She did not hire a title company or... 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Arrellano, caught my attention and offers the chance to talk through some important reminders for anyone purchasing land. Background In August 2017, Chapa purchased a piece of land from the Arrellanos in Hidalgo County, Texas.\u00a0 She intended to build a home on the property.\u00a0 Prior to purchase, she conducted a visual inspection of the land and saw no visible impediment for the construction of a home on the property.\u00a0 She did not hire a title company or... 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