Honorable Loyd R. Kennedy

CountyAttorney Cochran County Morton, Texas
Dear Sir: OpinionNo. O-4711 Re: Whether improvementson 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:
"Yourconstruction of the contract hereto attached is requested upon the followingquestion involved therein:
"Should the improvementsdescribed inparagraph Number 5 of the contract, for the purpose of assessment for State and County taxes, be consideredpersonalproperty belonging to the tenant, or should such improvementsbe 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?" ParagraphNo. 5 of the contract referred to reads as follows:"Improvementsand Repairs: The tenant has applied for a loan from the Farm Security Administrationand agrees that out of the proceeds of such loan and with his own labor he ~111 make the following improvements thereonwhich the Landlord hereby authorizes,provided the total cost thereofdoes not exceed $1,350.00:
"1

. The following farm buildings and repairs to buildings:
"1 h-room house (residence) barn and poultry house sanitaryprivyHonorable Loyd R. Kennedy, page 2 o-4711

"2* Well and water suppliesas follows: '%iggingof the water well 1 overhead tank & tower

"Inconsideration of the making of such improvements by the Tenant and of the loan or advance made by the Farm SecurityAdministration for that purpose the Landlord agrees that upon any termination of this lease shewill pay the Tenant at Morton, Texas, the appraised value of all such improvements,and that this agreement shall be a covenantrunningwith the land. In case the Tenant Is indebted to the Farm SecurityAdministration at the time of such terminationand compensation,both the Landlord and Tenant agree that suchpayments shall-~ be made by the Landlord to the Farm Security Admlnistration or its successors,and that any surplusremaining after the debt to the Government Is satisfied, shallbe paid to the Tenant. The Landlord and Tenant, or the~lr heirs and assigns shallhave 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 shallbe determined by three appraisers, one to be appointed by the Landlord, one by the Tenant or his assignee, and the third to be selectedby the two as appointed. Each ap-' praiser shall be appointedwithin not to exceed ten (10) days after the expiration of the fourteen (14)day period stated above, and the decision of such arbltration committee shallbe binding on both parties and the amount determined by them shallbe due and payable withln ninety days after their findings at Morton, In Cochran County, Texas, and such arbitration shallbe a conditionprecedent 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 CountyAgriculturalAgent in Cochran County, Texas, to appoint his appraiser for him."
The contract itself, thus contemplates 'improvements" to the land, and the enhancementof the value thereof. Those Improvementsare permanent,and in consideration of the tenant's construction of said improvementsthe landlord speclflcally agrees to pay thereforupon termination of the lease. There 1s no indicationthat the parties ever intendedthat 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 separatelyassessed, 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 "realHonorable Loyd R. Kennedy, page 

### 3 o-4711

estate" for purposes of taxation as includingthe land itself togetherwith all "buildings, structuresand 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/FowlerRoberts Fowler Roberts Assistant FR:ej:wc

APPROVED SEP 

### 3, 1942 s/Gerald C. Mann ATTORNEYGENERAL OF TEXAS Approved Opinion CommitteeBy s/BWB Chairman