Disclosures and Annexation
Annexation laws in Texas have been an ever-evolving landscape over the past few years, and the 2021 legislative session has provided additional changes once again. Effective September 1, 2021, cities must provide a number of written disclosures to property owners prior to entering into an annexation agreement.
Following the legislative overhaul of Texas annexation laws in 2017 and again in 2019, forced annexations have essentially become a thing of the past. Since that time, one of the most common methods of annexing property into a city’s corporate limits is through a development agreement with the property owner. This allows for a little give and take between a city and a property owner and allows the parties to negotiate the terms. However, in recent years, some property owners have complained that they’re being pressured into these annexation agreements. As the House Committee Report put it,
“Concerns have been raised regarding certain notification procedures relating to municipal annexation. It has been suggested that current procedures provide an insufficient amount of transparency with regard to a property owner’s options after receiving an offer, leading some property owners to believe that they have very limited options in these scenarios.”
Earlier this year the State legislature took action to remedy these complaints by requiring cities to make certain disclosures to property owners before entering into an annexation agreement. Texas SB 1338 now requires a city to make a number of written disclosures, it amended Tex. Loc. Gov’t Code Sec. 212.172 to include these new provisions.
“(b-1) At the time a municipality makes an offer to a landowner to enter into an agreement under this subchapter, the municipality must provide the landowner with a written disclosure that includes:
(1) a statement that the landowner is not required to enter into the agreement;
(2) the authority under which the municipality may annex the land with references to relevant law;
(3) a plain-language description of the annexation procedures applicable to the land;
(4) whether the procedures require the landowner’s consent; and
(5) a statement regarding the municipality’s waiver of immunity to suit.
(b-2) An agreement for which a disclosure is not provided in accordance with Subsection (b-1) is void.”
Most notably, if a city fails to make these written disclosures “At the time a municipality makes an offer to a landowner to enter into an agreement…” the entire development agreement is void. One question remains somewhat unclear; when exactly is the moment that a municipality makes an offer to a landowner to enter into such an agreement? Should these written disclosures be provided when the city first has contact with a landowner about a potential agreement; or should the disclosures be included within the body of development agreement itself? Given the uncertainty of this new legislation, the conservative move is to do both.
Until some state court or other authority provides more guidance, the safest route is to make these disclosures in writing, upon first communication with a property owner concerning a development agreement; then work the disclosures into the development agreement itself and have the parties acknowledge that the disclosures were timely provided.
Please do not rely on this article as legal advice. We can tell you what the law is, but until we know the facts of your given situation, we cannot provide legal guidance. This website is for informational purposes and not for the purposes of providing legal advice. Information about our commercial and business litigation practice can be found here.