What is Title Insurance | With Sean Clemmensen

Real estate attorney Sean Clemmensen joins the show. We discuss where we see the real estate market headed in 2023. What are some legal issues you could run into when buying or selling a home and what title insurance is and how it actually benefits you when buying a home. 

 

Troy: Cool. So Sean, how's it going today?

Sean: Good. Troy, are you my friend?

Troy: I'm doing well. It's, Friday, so that's always a good

Sean: It was a

Troy: good thing. Although in my world that doesn't necessarily always mean a whole lot as a real estate agent, right? Like Friday might be

Sean: Seven days a week.

Troy: starting to get busy, but which is also maybe a good thing as well.

Sean: right. That's also true.

Troy: As a real estate attorney here in Texas, here in Austin specifically, and as an owner of a title company, I was curious as we start the new year, what your sense is as far as the current kind of real estate market and, if you have any insights or information that you can share.

Sean: Yeah, absolutely. Thanks for having me on and appreciate the question. The market is turning around. We see. , the number of questions I'm getting from the attorney side of things is increasing, which means more properties are going under contract. The o the opportunities for me to review contracts or.

Buyers asking me to review contracts in the commercial and the residential world has increased certainly, which shows to me an uptick. And I've always believed for the last six, nine months that the first two quarters of 2023 are gonna be a little bit different, right? They're gonna be a little bit rough, but come the third quarter, I think for sure.

We're going to be back into a, an increased market. And the expectation is that rates are gonna be reduced or fall a little bit in the second quarter of this year to end of first quarter, second quarter. So with the interest rates falling even just a little bit, I do believe the market is turning around we'll in see an increase in buyers.

What are you seeing on your end?

Troy: Yeah, so same things like you mentioned the, there's a lot of renewed interest. It'll be interest, it'll be interesting to see if that interest translate into actual people buying and selling their home, but that's, Still a still better than what we saw towards the end of 2022, which was most people just sitting on the sidelines and waiting to see where things were headed.

If you're looking at the market, if you're thinking, oh, okay, things are picking up you can't use the last two years though as your benchmark like. That was a rare, there are rare blips in time in all different kinds of markets and that was an outlier and so you can't expect that. But to see things go back to 2017 through 2000, 19 I think is potentially more common.

Also, you mentioned interest rates. So had a conversation with one of my one of my margin officers about how. Rates because inflation's obviously a little more under control rate that should help rates come down. But an interesting component is that rates, even if the Federal Reserve doesn't really change their rate a whole lot, which their rate isn't specifically tied to mortgage rates, but the investors who invest in mortgages, they are potentially lowering.

Their rates a little bit because they've gotten up to the level where they think they're gonna be at, where for the last six months they were actually having this spread, which was causing rates to be a little bit higher because they thought rates might continue to go up. And we finally gotten to the point where they believe rates are gonna be in a.

In a range that they're comfortable with. And so their risk is lower, so they're bringing their rates down a little bit, which can help potential home buyers as well too, because that, what those rates are make a difference for some buyers, especially if, especially a first time home buyer.

But it just depends.

Sean: and I think, and that tracks a little bit too what I've been paying attention to on the title side with the number of open orders we have and the number of open orders that we're getting in the last two to three months has been tracking a little bit with 18 and 19. Which was still an incredible year.

Right. 18 and 19. And I think it's, I think like you said, with the interest rates, the change, with that changing, I think it's gonna be hopefully even better than 19. Like you said, it's not gonna be. 20, 20, 21, 20 22. But I think we're gonna get, a 2019 beefed up 2019.

Troy: Yeah. I think the biggest factor now is just jobs, right? Do pe with companies like Amazon, Facebook, having laid off, people are announcing layoffs. It's will, are people confident that they'll have their job or be able to find another job, right? If you, if people have that confidence, that would allow them to then go make a huge purchase, like buying a house.

If you're not, if. Uncomfortable with what that job security might look like for the next 12 to tw 12 to 24 months. A lot less likely to want to purchase a health. So that's the last thing that we need to see, hopefully in quarter one, is that the economy's rolling a little bit more, which allows companies to maybe start hiring a little bit, which I think will make a difference.

Sean: I think so too. Good point.

Troy: Being in the, in being in the legal space as well as the title space, I always, like to, when you get the chance to actually talk to an attorney and you don't have to pay, for your your time. You're not billing me by the hour here. What are one of

Sean: No,

Troy: what are the, yeah, what are one of the biggest pitfalls you generally see home buyers or home sellers running into as a, as an attorney?

Sean: That is a, it's a really good question and one where it depends on the perspective of the buyer really. A lot of the pitfalls it could be. We could be talking pre-closing, we could be talking post-closing pre-closing. Some of the issues that we're seeing buyers come up against or certainly in the new bill contacts, right?

If these buyers are going under contract with custom contracts with builders, Deciding that they don't like the home, and then they end up terminating the contract, and then they're wanting to know if they get their earnest money back. And a lot of those contracts are built in such a way that the earnest money or the initial deposit, initial cash deposits they call it, is non-refundable.

So there's, one pitfall before closing would be what type of contract you're using, right? So it's really, this happens for sure in the new build world because they use their own contracts. Don't have as much of an issue or a concern or pitfall with a buyer that's using a propagated Texas Real Estate Commission form.

One of the other issues that we're seeing, if you want to call it a pitfall, and I guess it would be, was that frankly, buyers get qualified. Having enough cash down. That's more on the title side, but it does relate to the legal side of things because I get phone calls every.

Where somebody can't qualify for financing, and then the seller's refusing to release the earnest money back to the buyer. And the buyer's question to me is, what are my remedies? What can I do? You first you have to mediate right? Under the contract. And then the second thing, if that doesn't work, then you're gonna have to file a lawsuit against the seller.

Unfortunately that's just part of it. And the way it works. So those are some of the two biggest ones pre-closing. Post-closing. A lot of the calls we're getting these days, or I'm getting these days are, Hey, I found a, I've got a water leak, I've got a foundation issue. I feel like there's a defective issue with my home.

Or I don't want to, what can I do? Can I sue the seller for damages? So those are a lot of the questions I get post-closing. Some of the pitfalls that we see post-closing.

Troy: Yeah. No, and I, and like I. . It's one of those where unfortunately in Texas, a lot of, in a lot of cases, it's more buyer beware. There's, unless there's some really negligent, fraudulent kind of situations which can happen. But it's again pretty rare for that, those types of things to really happen.

And it's maybe it's one of the pitfalls of owning home, right? Like suddenly you're actually, suddenly you're actually responsible for replacing the water heater or. , the AC goes out, three months after you purchase the home. It's just it is one of the downsides. It's why I s for some people, occasionally it's not worth owning a home because there is some extra work, some extra stress, some extra money that is required.

So you talked about people getting pre-qualified for homes like. Just because you can technically afford a home doesn't mean you potentially should buy a home, right? If you don't have a little bit of extra cash for emergencies that might come up, you don't wanna start putting all of that on a credit card and building up that debt if you can avoid it.

And so it's about being able to purchase the home, but also understanding that this is an investment in both the good and bad.

Sean: do you find yourself on the, early on before you go into contract, when you're working with some of these buyers, do you find yourself having conversations with them about that, about, budgeting and cash reserves? Do you think it's necessary to have those conversations on your side of the business?

Troy: So I used to be as, since I was a loan officer, it's a really comfortable conversation I can have. That, again, a long, as long as the buyer in this case allows me to talk to the loan officer because that's all their private information. So we all have to get together. But I'm usually trying to find out a.

How much can you qualify for? Because we wanna make sure that, we're looking for homes in the price range you can actually afford. But then two, what do you feel comfortable with? So just because you can afford an $800,000 home doesn't mean you're gonna be comfortable with that payment comfortable with the taxes, all those other things.

So maybe great you qualify for that, but we should really be looking in the $600,000 price range. And but, Now that we have that conversation, I know that, hey, there's this property that's amazing that really has all these things you truly wanted. , but it's six 50. Okay, we can still afford that because we know all those different types of parameters.

And then it's on the buyer, Hey, am I willing to put pay a little bit extra for a property? That might be more that kind of dream home scenario. And so understanding that. But yeah, definitely having the conversation as far as what makes sense to do 30 year fif or 15 year loan in some cases. What makes sense to, for the last few years?

you would not want to pay all cash cuz interest rates were so low that it usually made sense to finance it. Now it might be, now if the property was really hot, you might need to come in with a cash offer in order to get the offer . Because sellers a lot of times didn't want to have have to worry about financing or an appraisal situation that way.

But, it's being able. Provide them information about what their options are and then letting them make an educated decision based on trying to give them as much information about the situation.

Sean: And I think that's, and even, as that plays into being a lawyer, I think that's super important, right? Because. , you know it, having that conversation before you go under contract about budgeting and cash reserves and whether you're gonna waive the appraisal and bring, increase your cash to close.

Having all of those conversations will ultimately I think, save that buyer from possibly going under a contract on a home they can't afford. They don't get qualified for, they don't have the cash reserves to increase the cash to close, and then ultimately they find themselves having to terminate the contract and call me and say, how do you know, how do I get out of this thing?

So I think it's really good to have those conversations before they go into

Troy: And it's really beneficial to have them early as well, because once you're under contract, the stress level, ratches rat rans.

Sean: I imagine. Yeah.

Troy: And so with that being the case, you, if you can have as many conversations ahead of time so that people are aware of what they're getting into, that's gonna make it easier than suddenly at that point in time being hey, we should probably bring more money to closing, but you really don't have it.

Or, however that may be. And trying to have as much of a conversation upfront, also, the benefit of doing that upfront is, Hopefully have time if you're working with someone early enough, if you need to make changes, right? If someone. , I get a call that someone wants to go look at a home this weekend, and they're ready to put an offer in.

Let, that's great. Obviously as a real estate agent, I love that, but maybe there were things that they could have been doing the last three months that would've put them in a better position to afford that home that I, you can't factor in now, right? There's diff different things as far as, hey, you could have, for example, back in the day as a loan officer specifically, you'd see it where someone would pay off a debt.

That they didn't need to pay off to qualify, but they could have used that $10,000 to actually help them with closing costs or qualify for, more And yeah planning as great as it is to just plan stuff on your own as a realtor, I'm sure you're well aware as, as good as it is to have an idea of what you should do right or wrong, like seeking some sound advice from an expert in my opinion is generally pretty beneficial.

Sean: always.

Troy: One of the keys, you're talking about closings, both as dealing on the buyer side and the seller side. One of the biggest questions I always get asked is, what is this huge? Amount of my closing costs, which is the title insurance, and why do I need that? I don't want that. I just wanna, I'll just not get it.

Which is not the case, especially when you're financing home, like that's gonna be a requirement from the lender. Can you maybe explain a little bit more about what a, why that's needed and what it covers? Cuz it actually does help protect a buyer and seller as.

Sean: Yeah. Another gr another great question. Title insurance, and I get that question too. What is this? Do I really need this? Do I really need this policy? And in my opinion even take me outside of owning a title company, right? I, even as an attorney, I believe title insurance is important because what title insurance is insurance on the title to your home, right?

It's a one-time fee. It's based on the sales price. It's set by the state of Texas, so every. And Texas pays the same exact amount for a $200,000 home. What it does is protect against liens, defects, encumbrances to title. I'll give you an example. Let's say you go purchase a property from somebody, and I have people approach me all the time about this as an attorney.

They go buy a property and they just do a handshake deal, right? Okay, I'm gonna give you $200,000. Here's the title to my home, right? No title searches run, no title policies issued. Lo and behold, , right? There is a federal tax lien or there's a mortgage on the property that nobody knew about, right?

The seller knew about it, but they didn't tell the new buyer cause they just wanted the 200 grand cash, and so then all of a sudden this lender for the seller that sold the property, forec closes, right? And then new buyer loses their home. What's the remedy? You don't have one really, right?

 You do and to a certain extent, but it's gonna cost a lot of money. The lender forecloses on the home, the buyer's out the home. The buyer's gonna have to file some hiring a real estate attorney file some sort of lawsuit. Some sort of deceptive act, right? Argue, misrepresentation, fraud make some sort of argument.

Maybe some sort of breach a warranty if a general warranty deed was used or there some, or argue, some warranty claim. But all of those in any lawsuit are gonna cost a lot of money, right? It's not $500. A lot of money. 10, 20, 30, 40, $50,000 type money, right? And you might get your attorney's fees paid for as the if you ultimately win, right?

But that's just part of the risk. Now, flip that to having title insurance. If you have title insurance and maybe the title company misses this lien and that lender forecloses your remedy or your recourse is to make a claim on your title. A policy that was only paid for one time by either the seller or the buyer whoever was negotiated to pay for it.

And the title insurance company, these big national title insurance underwriters, they take care of it. And it's it's kinda like health insurance. Auto insurance, like you, it's one of those things that you don't have to use very often, but you don't want to not.

Like you don't wanna not have health insurance and then you get in a car accident, you got a hundred thousand dollars in medical bills, right? Because that's what ultimately happens. People that don't get title insurance, they hire a real estate attorney like me or somebody else, and they spend thousands and thousands of dollars to file a lawsuit against the seller.

And what's even worse are some of these folks that go out there? and they use what we call a quick claim deed, Q U I T quick claim, which is not a true warranty at all. So if a seller's able to dup a buyer and or trick a buyer into using a quick claim deed, then. , buyer's recourse against the warranty of title is very little.

It's very important to have a title insurance policy for that reason, because you, we research title, we look at if there are liens, if there are defects, if there are unknown errors, if there's a divorce, if there is a mortgage. We look for all of that. That's a title company's role, right?

And then we issued a policy based on what we find and take care of.

Troy: No, I mean it's like most insurance. Like no one likes paying insurance, but you're not paying insurance. It's one of the things you do cuz not because you like it, you do it because of. If not the worst case scenario, the bad case scenarios, right? A lot of people don't like working out or eating healthy, but you're not doing it because it's the most enjoyable thing.

I enjoy it, but you're doing it. You're doing it because of the long term, to negate the downside of what could happen. And again, for most people that would, result in a, bankruptcy or a lot of, if it's medical, bankruptcy situation or things that can be really devastating.

Sean: And I think on the agent side too, I've had some agents before suggest to buyers that they shouldn't get title insurance, on cash transactions. And I'm like, that just scares the beji out of me, right? Because I'm like, what are you doing? One that's essentially legal advice is a, is an license.

Yeah. Which you shouldn't be giving. And two, it's opening you up as an agent to liability. And it's usually, it's the agent will say insurance, title insurance is, an owner's policy is optional in Texas. Which it is, it's optional. You can reject the policy.

You don't have to buy title insurance. But you as the a, as an agent, and I know you've never done this, but some agents, make representations and statements to that effect and expose themselves to liability. So title insurances to me, is a way to keep everybody protected. Me, buyer, seller, you is the broker, right?

It protects all of us. Because the last thing that, when, I'll tell you what, when people sue, guess who gets involved? Everybody gets sued. Everybody agents, the title company, everybody gets sued, so it's just not worth it to me

Troy: Yeah,

Sean: to not have title insurance, but,

Troy: very kind of randomly today we were talking, happened to be part of the podcast talking about different wire and cellar fraud stuff with, and then we saw an actually alert from. The Austin Border Realtors specifically about, there's apparently been reports of seller fraud happening, which is basically someone claiming to own a property that they don't own and selling it to a buyer and trying to get obviously the proceeds from that buyer for selling a property that's not even theirs.

And so it's a crazy. Idea to believe is out there, it's a way for someone to make money. They're more than likely willing to do it. You had mentioned that there's something you've actually come across in the title world is.

Sean: It's and it's relatively recent. And. , fraud is fraud. Anybody could be duped with fraud, right? You do your best. Everybody involved agents, title companies, lenders. You all just have to just all have to be aware that it does exist and it's, it's starting to happen apparently more frequently according to, I've read similar articles in the last week or two that's, it's increasing in frequency, it's.

Shouldn't. Shouldn't cause people not to buy homes.

Troy: It's just, again, more do more verification. So try doing again, one of the reasons that to get title search done is that they, they'll at least do some at least some record searches. So there's like a minimum threshold of verification and more, cuz you, you're asking for IDs and different things, but also , again, another reason to potentially talk to a, an agent cuz they might be able to find out who a listing agent is.

Again, in most cases, they're not gonna have a listing agent, which is part of why they're being fraudulent is trying to avoid the regular loopholes or the regular. Paths to making the transaction happen. But, meeting, actually looking at meeting the seller in person. And the interesting thing you had mentioned as well too, cause I definitely don't wanna try to scare people, is that it feels like it's way more common on raw land, which makes a whole lot of sense because it'd be really weird to show up to a house for an inspection or for an appraisal, and then have the owners be like we aren't selling our house.

So that.

Sean: Yeah. I think it's, that's why I think it's important to really have, to have agents as part of a transaction, buyer. Do you have, yeah, it brings up another thing something I always think about. Do you have buyers ever concerned about insisting on, checks to the title company for the earnest money or wire transfers, or does that happen

Troy: So we definitely, obviously we've seen on my side the seller fraud is much newer. The wire fraud scenario has been around, I feel like, a little bit longer where. You'll get someone that tries to send an email looking a lot like the title company to wire money for closing. And fortunately it's not something where I've run into someone actually sending money then to an offshore account.

But you've heard, I've seen stories of people sending hundreds of thousands of dollars, and one, when you send a. It's done. Like you really have no recourse whatsoever. You can't go to the bank can't get it back like it is. It is gone. And so obviously in these cases, the wire fraud is sending it overseas, so it's even harder.

Like it's one thing if it was sent into another bank, a bank account here locally in the US you might have a little bit of recourse, but that's not how they're gonna do it cuz they're, relatively sophisticated in the wire fraud. But definitely something you try to bring up with.

Buyers about, Hey, just see, just call the title company to make sure and get verification of what the wire information is versus clicking a link or just even writing down the information that That might get sent to you an email, because unfortunately it does happen. As an agent, I probably get three or four random emails a week about, some wire activity and I'm like not something that's not, I've even a part of.

So let's just keep going to the stand folder. You'd like to, you'd like to report it to somebody, but unfortunately it doesn't reach the critical threat level anywhere. So you just have to understand that it's a potential issue and keep.

Sean: I have a, now that I'm, now that I have you as a captive audience I have a question now that I have captive in the Austin area. I know we, we've seen it a little bit in Dallas Fort Worth. In particular after Covid we saw a lot of folks that were in the city say, , I'm selling, I'm out, I'm out of the city and moving out to buy raw land farm, five acres, 10 acres, not just 20 minutes, 30 minutes outside of town, two hours outside of town, hour and a half outside of town.

And that, the sort of working from home I think enabled that. What have you seen in Austin with respect to our folks that are in city moving out? If they stayed relatively the same in their house, have you noticed any difference? I

Troy: Yeah, I feel like Austin's in a really good spot. So some, the fact that it's a pastor, so we have the people in the large city, San Francisco, Los Angeles, New York, where it, they were stuck in small. Small apartments, small, one bedroom, studio condos that they owned and not able to do a lot of things outside.

And obviously those cities were shut down to where they're like, yeah, this isn't how I want to do it, and now that you can work remotely, it was like, okay, let me go somewhere else and I can maybe get a small house, or at least, more places to, to do things. And so we're, we've seen a lot of that as far.

You know the growth. Part of why Austin Home Prices skyrocket as much as they did is all these people moving into the city. On the other side though, we definitely have seen people that have lived here for a while be like, peace, I'm out. There's other places that are cheaper to live. Again, if you're going from New York to Austin, if everything feels cheap, if you're going from.

Austin to somewhere else. It might, Austin can feel very expensive if you just, if you live here as well too. So it's all perspective and so definitely people that have been like, Hey let's move out somewhere and further outside the city cuz you know, you can't, if I don't wanna do stuff like that or don't want to have as many people around me and contingencies for, if something like this happens again in our world.

So yeah, definitely seeing both of it.

Sean: Yeah I was just curious. Just saw a decent amount of it in Dallas Worth for

Troy: I think CoStar, which is like the largest commercial com basically, it's kinda like the mls, or almost like Zillow, but the actual like database for a lot of the commercial listings. And then they do a lot of raw land because of it. I know, I think it, I'm trying to remember if it was 2021 or 2022, but they said like that they had the, it was the most raw land purchased in US history again, which isn't super surprising based.

21 and 22 were some of the largest single family purchases times in US history. But yeah, you definitely saw that on the raw land side of things, whether that was people moving out further. I think it's also a thing a little bit for businesses too, right? If you're able to have a business anywhere and you can do most of your stuff direct to consumer or so many things are done, with. with buying stuff online, like on Amazon. So these companies are buying places for warehouses and ran, off the way places cuz you don't have to be super close necessarily. There's easier transition points for stuff. So yeah, it definitely is constantly changing.

But again, Austin, I feel like has been in a really good spot. Because of both sides of things. Austin traffic for one is I, if you if I think of how bad Austin traffic should be, if we were still in the, everyone has to go to work five days a week. Last scenario, it would be not good with how many people moved here.

But not that there's still our challenges, but that was benefit of increasing that work from home side of things to help Austin grow without the traffic problem getting significantly.

Sean: Yeah. And you just, you raised a good point too in, in that, this discussion right there about the ability to have a business on land, right? Because it just got me thinking. , another reason there, they think what you were alluding to is that a lot of these properties in metro areas, right?

Subdivisions have deed restrictions HOAs that prohibit any sort of commercial or business use, right? So some of these folks that might have been trying to run businesses from home or in and out of their home, like you said, Amazon fulfillment, things of that nature. Those would all be prohibited under a lot of the deed restrictions in a majority of these subdivisions.

And so that makes a lot of sense why people were. Hey, look, my, my business is trying, primarily transferring from home. My own business. It's a commercial activity, but I'm not allowed to do it in my subdivision. can't have people coming in and out. And so that makes a lot more sense about why people would say look, I'm hoo, bye-bye city.

Like I'm going to get some land. Where deed restrictions generally aren't filed as much, right? If you've got 5, 10, 20 acres, usually there are not de restrictions associated with those properties, so that's a good

Troy: No, definitely something you can do. Have a lot, have more freedom. And again, in different states it'll definitely be different. Like in Texas, so much the land is privately owned, that there's usually some kind of restrictions. They might be very minor in a lot of cases. And then, then it gets, just gets tricky as far as if you're buying property, is it a subdivision that a new builder comes in?

Then they're gonna set up a bunch of, their own restrictions. Or is it truly, land that you're just buying from someone that has absolutely nothing like, and so it's always one of the interesting things for people re to me for people relocating to Austin is you'll start driving out towards Dripping Springs or towards Leander and you'll think why isn't this just very.

very systematically getting built out. Built out and built out. And what you'll see, you'll be driving out there and you'll see a bunch of new construction and then a bunch of raw land, and then a new, another subdivision. It's because these properties have been owned for generations. And so this, you'll see the development of someone who sold their land and a, a developer bought it builder bought it and is building their land.

But then this next, three mile stretch is owned by somebody else who hasn't decided they want to sell yet. So the builder after. It gets developed, has to go further out. So you'll see these kind of random pockets where it's why don't you just develop out? But the reason for that is, again, most of the land is actually owned privately.

And so eventually eventually, usually someone will sell cuz the price gets to the point where it's like, yep, I'll sell. That makes sense. But a lot of times they don't have to sell. Like it's not an urgent matter.

Sean: And I know you've done I know you've done transactions or closings or sales out in areas like dripping springs and land, and so do you have people, I'm just curious and hopefully I may be able to chime in here a little bit, but do you ever have people. a question or ask about mineral rights.

Because I get, we get sellers sometimes. Call me here, dfw. Hey, I really gotta have my mineral rights. And they call me directly. But I've ever, I've always been curious as to whether or not these buyers ask for them as a buyer. Or your seller says to you, Troy, we're selling our property and dripping springs.

I gotta keep the minerals. Does that ever come up where you get sort of comments or questions about

Troy: Everyone, every once in a blue moon almo, it feels like the one properties I've dealt with almost all properties in Texas again, that I've dealt with, the minimal rights have been Contracted off to separate ownership from the actual land of the property. And so it's usually it's not that often that someone really asks about it.

It does happen from time to time, but it is something I usually do try to bring, because I know that they're separate. It's something I'll bring up just. because I don't want there to be, something down the road where you know, again, not, I don't generally get far enough out where someone's really putting an oil rig on their property necessarily.

That's not my area of expertise. But you just wouldn't, you don't, wouldn't want someone to thi you just want some, you just want people to be aware, right? You don't want there to be surprises if at all possible. And so if somehow there was something, or they can come up also a little bit as far as.

For Wells, right? Like you have restrictions as in a lot of cases as far as what you're allowed to do in Texas with digging well and groundwater and surface water and those kind of things too. And so it's definitely,

Sean: know a lot, Troy. I'm impressed.

Troy: definitely information you want to make sure people buying out in those, especially when they're buying, larger tracks of land are just aware of, because it's definitely something that they, that you should know about the property you're buying and what your abilities to do different things on.

Sean: Yeah, and I use this, I try it when I explain it to folks. because I, when I get the question so here, there's two estates, right? You have the surface estate and the mineral estate and you are right. A lot of, years 10, 20, 30, 40, 50, 60, 70, 80 years ago, a lot of the mineral estate was severed, right?

And these developers end up retaining the mineral rights or they end up contracting 'em, leasing 'em to somebody else. But I always describe land like this, right? Land is like an ice cream cone. So you've got the mineral estate, which is the cone, and you've got the surface estate, which is the ice cream, right?

So this person that owns the ice cream they can enjoy the surface and do whatever they want. But the ice cream, the cone itself is considered the dominant estate of Texas. And so a lot of times, depending on some of these oil and gas lease,

Troy: How are you?

Sean: Cone the mineral estate can come onto the surface if they have what we call rights of ingress and egress and explore the minerals right below now.

Which is why I always tell people don't if you have your choice, don't grant them rights of ingress and egress because you don't want them coming on the surface. The ice cream to explore the mineral estate. But yeah, you're right. Most of the, and some of the folks that end up basketball do.

Do I own the minerals or not? And ultimately even me as a real estate attorney, I can't tell 'em that. I have to refer 'em to an oil and gas land man. Or land woman or oil. Or oil and gas attorney, right? And they'll go run a title opinion on the mineral estate which is like the wild west.

A lot of those. Severances and mineral deeds and leases. They don't even get filed at the courthouse and they sure as heck don't get filed online, through these title plant databases. So a lot of times these oil and gas landman or land woman end up having to go down and sit in the courthouse basement to figure out whether or not the seller currently owns the minerals.

Yeah, I agree with you. Most of the time they don't because a lot of 'em have been

Troy: A lot of 'em have been, from my experience, a lot of 'em been severed decades ago type of thing, like it's been a long time ago.

Sean: Long time ago. And if a, or if a developer creates a subdivision even 10 years ago and they own 'em, usually they retain 'em and then they just start, they sever 'em and then they start developing the surface. So I was just curious.

Troy: No, it's fun getting into the minutia of some of the details and stuff. Say, it's not things that come up often in, in deals, especially if you're in a subdivision like it's at that point. It's pretty rare, but say when people are looking for larger tracks of land, say plus two acres, then it tend tends to come up a little bit more frequently in conversation.

But it just really depends.

Sean: Yeah,

Troy: Yeah. But I think, you and I know if we could talk minutia in details about real estate all day long, but

Sean: all day long.

Troy: Have to save that for the next episode.

Sean: I'll save it for the next episode, my friend.

Troy: Sounds good. I appreciate you and have a good one.

Sean: Thanks for having me on.