Honorable Joe Resweber Opinion No. w-.691 

County Attorney 

Harris County Courthouse Re: Severability of improveHouston 2, Texas ments from land and classification thereof as realty 

Dear Mr. Resweber: 

or personalty for tax purposes. 

We quote from your opinion request as follows: 

"'On March lst, 1957 this office, at the : 

request of Mr. Carl S. Smith, Tax Assessor 

and Collector of Harris County, rendered an 

opinion regarding the severability of improvements erected by a lessee on land owned by 

another party, but under lease to said lessee, 

and the classification of such improvements as 

realty or personalty. 

"It is the feeling of this writer that the 

provisions of Article 7146, V.C.S., are very clear c 

and definite as to what Is real property for the 

purpose of taxation. It is our further feeling 

that the effects of this Statute cannot be varied 

by contracts or.agreements to the contrary between private parties. 

"On March 34d, 1943 your Office rendered Its 

Opinion No. O-5059 regarding a similar situation 

where improvements had been erected by the vendee 

under a contract for deed. In this opinion views 

similar to ours were expressed. However, with the 

great number of leases currently in existence in 

Harris County providing that the improvements 

shall remain the property of the Lessee and that 

the Lessee shall have the right to remove such at 

the termination of the lease, (with taxes becoming 

delinquent on many of such improvements), Mr. Smith 

feels that anopinion should be requested from your 

Office." 

Article 7146, Vernon's Annotated Civil Statutes, 

provides that: 
Honorable Joe Resweber, page 2 Opinion NO. WW-691 

"Real property for the purpose of taxation, 

shall be construed to include the land Itself, 

whether laid out in town lots or otherwise, and 

all buildings, structures and improvements, or 

other fixtures of whatsoever kind thereon, and 

all the rights and privileges belonging or in 

anywise appertaining thereto, and all mines, 

minerals, 

same. Id." 

quarries and fossils in and under the 

The early case of W. J. Hutchins v. Masterson and 

Street, 46 Tex. 551, 26 Am. Rep. 28b (l&%77), established t ee 

criteria for determining whether improvements should be classed 

as real orpersonal property: (1) there must be a real or 

constructive annexation of the article in question to the 

realty; (2) the article mustbe adapted to the uses or purposes of the realty to which it is connected; (3) the party 

'making the annexation must intend that the improvement become a permanent accession to the freehold. Of the three 

tests, pre-eminence is given the question of intention. 

See Maro Company v. State, 168 S.W.2d 510 (Tex.Civ.App.,1943, 

error refused). However, the rules of common law which govern 

'the right of private persons to fixtures are not necessarily 

controlling In the field of taxation. This question turns 

primarily upon the intention ;of the Legislature as expressed '-. 

in the tax statutes and construed by the courts. 1% A.L.R. 

1309, 1311. 

The A.L.R. Annotation cited above discusses the 

varying treatment of this problem,by different jurisdictions. 

Certain jurisdictions hold that the improvements are part of 

the realty and as such are taxable to the lessor. Other jurisdictions hold that the improvements may be severed for the 

purpose of taxation but are taxable to the lessee as realty. 

A third school of though taxes the improvements to the 

lessee as personalty. Texas falls,within the third group. 

The case of Maro Company v. State, supra, held tha 

casings, rods, tubing, pumps and tanks which the lessee was 

entitled to remove from-the leasehold were personal property 

for the purpose of taxation. In reaching its conclusion, 

the court stated:, 

"Appellee tries to make a distinction between 

-the rule making accessories orappliances such 

as these a part of the realty for taxable purposes and any other rules governing the question 

of.whether such appliances or accessories are 

personal property or a part of the realty. After 
, 

Honorable Joe Resweber, page 3 

:m5 

Opinion No. W-691 

making an exhaustive research we have failed to 

find any distinction or any difference in the 

rules applicable in such cases." 

To the same effect is Shugart v. Nocona Independent 

School District, 288 S.W.2d 243 (Tex.Clv.App., 1956). 

The case of Armstrong v. Mission Independent School 

District, 195 S.W. 895 (Tex.Civ.App. 1917) specifically 

stated that certain buildings constituting a cotton mill 

located on the property of a lessor were 

and not real estate because "it 

improvements placed upon the lan of a railroad company 

by a lessee with an agreement that it was for the use of 

the lessee and with the further agreement that it could be 

removed." This case was reversed in Mission v. Armstrong 

222 S.W. 201 (Tex.Com.App. 1920, opinion approved), but o;ly 

upon the point of whether or not the school district had a 

lien for taxes upon the personal property in question.~ 

For further support of the proposition that Texas 

regards the general principles of the law of fixtures as 

controlling the determination of whether property is real 

or personal for the purposes of taxation, see the case of 

900 Main, Inc. v. City of Houston, 150 S.W.2d 468 (Tex.Civ. 

App. 1941, Dism.Judg.Cor.), in Which it was held that an 

air conditioning system was realty for the purpose of taxation; the court rested its decision on the general law of 

fixtures and in particular upon the intention of the parties 

as evidenced by the contract between the lessor and lessee. 

In view of the foregoing authorities, you are 

respectfully advised that improvements placed upon demised 

premises by the lessee which remain the property of the 

lessee and which may be removed at the termination of the 

lease are personal property for the purpose of taxation. 

SUMMARY 

Improvements placed upon leased land 

by a lessee which remain the property of the 

lessee and which may be removed at the termination of the lease are severable for the purpose 
,‘?f?.3c- 

,J :P.-LFP 

Honorable Joe Resweber, page 4 Opinion No. w-691 

of taxation and are classified as personalty. 

Yours very truly, 

WILL WILSON 

Attorney General 

JNP:cm 

APPROVED: 

OPINION COMMITTEE: 

Geo. P. Blackburn, 

C. K. Richards 

J. Arthur Sandlin 

Howard Mays 

Chairman 

... .._ 

REVIEWED FOR THE ATTORNEY GENERAL 

By: W. V. GEPPERT