Honorable Loyd R. Kennedy 

County Attorney 

Cochran County 

Morton, Texas 

Dear Sir: Opinion No. O-4711 

Re: Whether improvements on land should 

be assessed as realty to landlord 

or as personaltg to tenant und,er 

stated facts. 

We are in receipt of your letter of July 14, 1942, In 

which you request the opinion of this department construing 

certain provisions of a lease contract. We quote from your 

letter: 

"Your construction of the contract hereto attached is requested upon the following question involved therein: 

"Should the improvements described in paragraph 

Number 5 of the contract, for the purpose of assessment for State and County taxes, be considered personal property belonging to the tenant, or should such 

improvements be considered as a part of the land upon 

which they are located, and assessed to the fee owner 

of the land as a part of the land?" 

Paragraph No. 5 of the contract referred to reads as 

follows: 

"Improvements and Repairs: The tenant has applied 

for a loan from the Farm Security Administration and 

agrees that out of the proceeds of such loan and with 

his own labor he ~111 make the following improvements 

thereon which the Landlord hereby authorizes, provided 

the total cost thereof does not exceed $1,350.00: 

"1 . The following farm buildings and repairs to 

buildings: 

"1 h-room house (residence) 

barn and poultry house 

sanitary privy 
Honorable Loyd R. Kennedy, page 2 o-4711 

"2 * Well and water supplies as follows: 

'%igging of the water well 

1 overhead tank & tower 

"In consideration of the making of such improvements by the Tenant and of the loan or advance made by 

the Farm Security Administration for that purpose the 

Landlord agrees that upon any termination of this lease 

she will pay the Tenant at Morton, Texas, the appraised 

value of all such improvements, and that this agreement 

shall be a covenant running with the land. In case the 

Tenant Is indebted to the Farm Security Administration 

at the time of such termination and compensation, both 

the Landlord and Tenant agree that such payments shall-~ 

be made by the Landlord to the Farm Security Admlnistration or its successors, and that any surplus remaining 

after the debt to the Government Is satisfied, shall be 

paid to the Tenant. The Landlord and Tenant, or the~lr 

heirs and assigns shall have fourteen (14) days after 

any termination of the lease to agree on the appraised 

value of any such improvements, and ln the event they 

shall fall to so agree, such appraised value shall be 

determined by three appraisers, one to be appointed by 

the Landlord, one by the Tenant or his assignee, and the 

third to be selected by the two as appointed. Each ap-' 

praiser shall be appointed within not to exceed ten (10) 

days after the expiration of the fourteen (14) day period 

stated above, and the decision of such arbltration committee shall be binding on both parties and the amount 

determined by them shall be due and payable withln ninety 

days after their findings at Morton, In Cochran County, 

Texas, and such arbitration shall be a condition precedent to any action In law or equity. The failure of 

either party to appoint his appraiser after notice in 

writing within the time prescribed shall authorize the 

County Agricultural Agent in Cochran County, Texas, to 

appoint his appraiser for him." 

The contract itself, thus contemplates 'improvements" 

to the land, and the enhancement of the value thereof. Those 

Improvements are permanent, and in consideration of the tenant's 

construction of said improvements the landlord speclflcally 

agrees to pay therefor upon termination of the lease. There 1s 

no indication that the parties ever intended that such improvements should ever become the property of the tenant or that 

they should ever be regarded by anyone as personalty. They 

should not bb separately assessed, but are taxable to the landlord as a part of the value of the real estate under the~provisions of Article 7146, R.C.S., 1925, which defines "real 
Honorable Loyd R. Kennedy, page 3 o-4711 

estate" for purposes of taxation as including the land itself together with all "buildings, structures and improvements, 

or other fixtures of whatever kind thereon." 

Trusting that we have fully answered your inquiry, we 

are 

Yours very truly 

ATTORNEY GENERAL OF TEXAS 

By s/Fowler Roberts 

Fowler Roberts 

Assistant 

FR:ej:wc 

APPROVED SEP 3, 1942 

s/Gerald C. Mann 

ATTORNEY GENERAL OF TEXAS 

Approved Opinion Committee By s/BWB Chairman