19.20 Timber Lands

19.20.1

In General

Timberland is land that is covered with growing trees suitable for use as timber for building purposes.

Ownership of timber land may be either public or private.

The insurance of public timber land is extrahazardous and demands a thorough research of Federal and State Law.

Company approval must be obtained before issuing any commitment in contemplation of insuring a grant of public or private timber land.

19.20.2

Transfer of Private Timber Lands

Rules governing the construction, operation and effect of conveyances of land generally apply to conveyances of timber lands.

Ordinarily, when standing trees are severed from the soil, they become personal property, although the title of the owner is not affected thereby.

After a severance, timber will not pass by a subsequent conveyance of the land.

Any conveyance of timber land without reservation or exception of the timber ordinarily carries the standing timber. However, timber severed prior to the conveyance does not pass with the land.

19.20.3

Reservation and Exception of Timber

The grantor of any timber land may reserve or except the standing timber on the land from the operation of the conveyance, and in such case, the interest in the timber constitutes separate estate.

19.20.4

Power to Sell Timber Separately from the Land

Standing timber may be conveyed separately from the land, and in this event, two distinct estates are created, one in the land and the other in the timber.

However, it appears that the purchaser of the standing timber has only a reasonable time in which to harvest it. See the case of Houston Oil Company of Texas v. B. Boykin et al. Supreme Court of Texas, 109 Tex. 276; 206 S.W. 815; 1918 Tex. LEXIS 84 November 27, 1918, Decided, holding that Instruments which merely convey growing timber with a license to remove same, without stipulating the time within which it may or must be removed, imply the removal of the timber within a reasonable time. It is important that the examination determine if the documents provide for a time in which to harvest the trees.

19.20.5

Insurance of Timber Lands

The specific problems affecting the insurance of timber lands are in the areas of:

·   Insurable legal descriptions.

·   Ownership of the timber.

You must ascertain that the timber:

·   Has not been severed from the land.

·   Has not been excepted or reserved from the land.

·   It is being conveyed in conjunction with land.

NOTE: Any severance, exception or reservation will make it necessary to make an appropriate exception in Schedule B of the policy as to the timber.

·  

That there is no financing statement covering the timber either recorded in the real estate records or filed in the office of the Secretary of State.

With regards to citrus, fruit or nut bearing trees, ownership of the land and the trees may be severed even though the trees may remain in place and continue to produce their crop, unlike timber which will eventually be cut and removed from the land.

Exceptions: The following exceptions must be included in all policies insuring a securing a severed interest in trees whether as timber, citrus, fruit or nuts.


• Company does not insure that there is a particular number, kind or quality of trees of any sort or type located on the Land.

• Company does not insure that the owner of the real property as opposed to the ________ trees will provide any or all care necessary for the growing of any trees or the production of any fruit or nuts located thereon.

• Company does not insure the amount, kind or quality of fruit or nuts from any trees located on the Land.

• Company does not insure that there is a market of any kind for the fruit or nuts, if any, produced from the trees, if any, located on the Land.

• Any provision in any document providing for a reasonable or set time at which all or some portion of the trees, fruit or nuts are to be harvested.

• Company does not insure that the Texas Legislature will not pass a law or that a state agency or a court of competent jurisdiction after policy date will not enter a ruling or judgment of any type holding that citrus trees in place are not real property.

 

19.20.6

Timber Land and Pullback Taxes

Under Sec. 23.51, Texas Tax Code, timber land is subject to qualified open space tax treatment.