TEE ATTORNEY GENERAL 

OF TEXAS 

Dacaber 14, 1987 

Mr. Earl Hale Opinion No. JM-834 

Deputy Commissioner 

Texas Savings and Loan Re: Applicability of open 

Department beach disclosure reguire3601 North Lamar, Suite 201 ments, section 61.025 of 

Austin, Texas 78705 the Natural Resources 

Code, to certain activities of savings and loan 

associations (RQ-1092) 

Dear Deputy Commissioner Hale: 

Section 61.025 of the Natural Resources Code was 

enacted in 1985 and provides that a person who sells or 

conveys an interest, other than a mineral, leasehold, or 

security interest, in real property located essentially 

seaward of the Gulf Intracoastal Waterway must provide a 

specified notice to the purchaser stating, inter alia, 

that any structure erected seaward of the vegetation line 

(or that subsequently becomes seaward of the vegetation 

line) is subject to a lawsuit by the state to remove the 

structure. YOU ask six questions regarding the 

applicability and scope of section 61.025 of the Natural 

Resources Code. We will answer each of your questions in 

turn. 

You first ask: 

Does the Disclosure Requirement apply to 

non-judicial foreclosure sales whereby the 

mortgaged properties are acquired by: (i) 

the mortgagee: or (ii) an unrelated third 

party? 

The disclosure requirements to which you refer are 

set forth in section 61.025 of the Natural Resources Code, 

which provides the following: 

(a) A person who sells or convevs an 

interest. other than a mineral. leasehold, 

or securitv interest. in real oronerty 

p. 4002 
Mr. Earl Hale - Page 2 (JM-834) 

located seaward of the Gulf Intracoastal 

Waterway to its southernmost point and then 

seaward of the longitudinal line also hOWlI 

as 97 degrees, 12', 19" which runs southerly 

to the international boundary from the 

intersection of the centerline of the Gulf 

Intracoastal Waterway and the Brownsville 

Ship Channel must include in anv executorv 

contract for convevance the following 

statement. . 

The real property described in this 

contract is located seaward of the Gulf 

Intracoastal Waterway to its southermost 

point and then seaward of the longitudinal 

line also known as 97 degrees, 12*, 19" 

which runs southerly to the. international 

boundary from the intersection of the centerline of the Gulf Intracoastal Waterway 

and the Brownsville Ship Channel. If the 

property is in close proximity to a beach 

fronting the Gulf of Mexico, the purchaser 

is hereby advised that the public has 

acquired a right of use or easement to or 

over the area of any public beach by 

preqxiption, dedication, or presumption, or 

has retained a right by virtue of continuous 

right in the public since time immemorial, 

as recognized in law and custom. 

The extreme seaward boundary of natural 

vegetation that spreads continuously inland 

customarily marks the landward boundary of 

the public easement. If there is no clearly 

marked natural vegetation line, the landward 

boundary of the easement is as provided by 

Sections 61.016 and 61.017, ,Natural 

Resources Code. 

State law prohibits any obstruction, 

barrier, restraint, or interference with the 

use of the public easement, including the 

placement of structures seaward of the landward boundary of the easement. STRUCTURES 

ERECTED SEAWARD OF THE VEGETATION LINE (OR 

OTHER APPLICABLE EASEMENT BOUNDARY) OR THAT 

BECOME SEAWARD OF THE VEGETATION LINE AS A 

RESULT OF NATURAL PROCESSES ARE SUBJECT TO A 

LAWSUIT BY THE STATE OF TEXAS TO REMOVE THE 

STRUCTURES. 

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p. 4003 
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Mr. Earl Hale - Page 3 CM-834) 

The purchaser is hereby notified that the 

purchaser should seek the advice of an 

attorney or other qualified person before 

executing this contract or instrument of 

conveyance as to the relevance of these 

statutes and facts to the value of the 

property the purchaser is hereby purchasing 

or contracting to purchase. 

(b) If there is no executory contract for 

conveyance, the statement must be delivered 

to, and receipt thereof acknowledged by, the 

purchaser prior to closing the transaction. 

(c) Failure to include the statement in 

an executory contract for conveyance shall 

be grounds for the purchaser to terminate 

such contract, and upon termination any 

earnest money shall be returned to the party 

making the deposit. 

(d) Failure to provide this statement 

prior to closing, either in the executory 

contract for conveyance or in a separate 

written statement, shall constitute a 

deceptive act under Section 17.46, Business 

& Commerce Code. 

(e) This section, or the failure of a 

person to give or receive the notice 

required by this section, does not diminish 

or modify the beach access and use rights of 

the public acquired through statute or under 

common law. (Emphasis added.) 

Section 2 of the original 1985 act provides: "This Act 

applies only to a contract for conveyance or a conveyance 

executed on or after October 1, 1986." Acts 1985, 69th 

Leg., ch. 350, 52 at 2616. 

Essentially, you wish to know whether a nonjudicial 

foreclosure sale effects a sale or conveyance for purposes 

of subsection (a) of section 61.025 of the Natural 

Resources Code. We conclude that it does. 

Section 51.002 of the Property Code authorizes a 

mortgagee to sell real property pursuant to the powers 

granted in a deed of trust. See aenerally Baggett, 

"Acceleration and Foreclosure on Texas Real Estate," 14 

Tex. Tech L. Rev. 695 (1983); Rant, "ULTA [Uniform Land 

p. 4004 
Mr. Earl Hale - Page 4 (JI+834 ) 

Transactions Act] and Nonjudicial Mortgage Foreclosure in 

Texas, I@ 12 St. Mary's L.J. 1104 (1981); Cotellesse, 

"Nonjudicial Foreclosure under a Deed of TNSt: Some 

Problems of Notice," 49 Tex. L. Rev. 1085 (1971). The 

section does not require a lawsuit and entry of a judgment 

directing foreclosure: thus, Texas permits what is, in 

effect, nonjudicial foreclosure. Seam al 

on v. Tucker I 

Dallas 1981, writ rek'd 

615 S.W.2d 881 (Tex. Civ. App. 

n.r.e.); menta v. Nusbauq 

Christi 1975,' 

519 

S.W.Zd 673 (Tex. Civ. App. - corpus writ 

ref'd n.r.e.). The section requires that public sale be 

held under certain conditions with notice being posted at 

the county courthouse, filed with the county clerk, and 

served by certified mail on each debtor who is obligated 

to pay the debt. 

Section 61.025(a) of the Natural Resources Code 

provides that ':[a] person who S ells 

9th r th n a mineral. 1 as hold. or securltv 

rea? przperty locatede &thin 

interest, in 

designated areas] must 

include h anv executorv contract for convevance" a 

specified statement. Subsection (b) provides: "If there 

is no executory contract for conveyance, the statement 

must be delivered to, and receipt thereof acknowledged by, 

the purchaser prior to closing the transaction." A 

mortgage of real property is an executed contract in which 

the legal or equitable owner of the property pledges the 

title to the property as security for the performance of 

an obligation, ordinarily a debt that is evidenced by a 

promissory note. porriss v. Pattersqn 261 S.W.2d 75% 

(Tex. Civ. App. 

Lushe v. 

- Fort Worth 1953, 

-First 

writ ref'd n.r.e.); 

Fort Worth 1953, wri& 

26O.S.W.2d 621 (Tex. Civ. 

ADD. - 

words, 

ref'd n.r.e.). 

a mortgage contract conveys a security 

In other 

interest. 

Accordingly, the debtor/mortgagor need not provide a 

section 61.025 notice to the creditor/mortgagee. You wish 

to know, however, whether such a notice must be provided 

by a trustee in a nonjudicial foreclosure sale when the 

purchaser is either the mortgagee or a non-related third 

pa*y. The answer to your question is determined by the 

nature of the interest conveyed by the nonjudicial foreclosure sale. 

A purchaser at a foreclosure sale obtains only, such 

title as the trustee has authority to convey. First 

So u ther v. V 0 e, 533 S.W.2d 339 (Tex. 

1976); Slauahter V. ualls; 162 S.W.2d 671 (Tex. 1942). 

If the interest conveyed is "an interest, other than a 

mineral, leasehold, or security interest, in real 

property," then a section 61.025 notice must be provided 

p. 4005 
Mr. Earl Hale - Page 5 (m-834 ) 

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by the trustee to the purchaser, regardless of whether the 

purchaser is the mortgagee/creditor or an unrelated third 

p---W. 

Second, you ask: 

If the Disclosure Requirement is found to 

be applicable, must the disclosures be set 

forth in the TNStee’S or Substitute TNStee's Deed or in a separate document? 

Section 61.025(a) of the Natural Resources Code 

requires that the specified notice be included "in any 

executory contract for conveyance. I0 Subsection (b) 

provides: "If there is no executory contract for 

conveyance, the statement must be delivered to, and 

receipt thereof acknowledged by, the purchaser prior to 

closing the transaction." You ask whether the notice must 

be set forth in the TNStee’S or Substitute Trustee's Deed 

or in a separate document. 

An "executed contract" refers to a completed 

cont~ract, i.e., one in which the object of the contract is 

performed. B. L. Nelson & Associates. Inc. iv 

Arovle, 535 S.W.2d 906 (Tex. Civ. App. - Fort W&t: t197Ef 

writ ref'd n.r.e.); General Electric Credit Corn. v. Firs& 

National Bank of Dumas, 432 S.W.Zd 737 (Tex. Civ. App. - 

Amarillo 1968, no writ). It has also been said that, 

despite any doubts that may once have existed on the 

matter, it is now well settled that an executed contract 

also exists where the contract has been wholly performed 

on one side regardless of whether or not it has been 

performed on the other side. Guaenheim v. Hancock, 231 

S.W.2d 935 (Tex. Civ. App. - Amarillo 1950, writ ref'd 

n.r.e.); Lammers v. Wolfertz, 164 S.W. 1102 (Tex. Civ. 

APP. - San Antonio 1914, writ ref'd). An "executory 

contract," on the other hand, is one that is still 

unperformed by both parties or one with respect to which 

something still remains to be done on both sides. Id. 

For example, a contract for the sale of land is still 

executory where the deed conveying the property has not 

been delivered and accepted. &cCall v. Whalev, 115 S.W. 

658 (Tex. Civ. App. 1908, no writ). 

A deed is an instrument in writing that conveys title 

to real estate. &S Lockridae v. Mccommon, 38 S.W. 33 

(Tex. 1896): Wilson v. Beck, 286 S.W. 315 (Tex. CiV. APP. 

- Dallas 1926, writ ref'd). The terms t'deed,'l "conveyance," and "deed of conveyance" are frequently used 

interchangeably to denote an instrument in writing whereby 

p. 4006 
Mr. Earl Hale - Page 6 (JM-834) 

a grantor conveys to a grantee some right, title, or 

interest in or to real property. Texas Electric Railway 

Co. v. Neale, 244 S.W.2d 329 (Tex. Civ. App. - Waco 1951), 

ev'd on other arm u 252 S.W.2d 451 (Tex. 1952). An 

instrument that fails t& operate as a present conveyance 

may be COnStNed as a contract to convey. Hanrick v. 

Gurley, 54 S.W. 347 (Tex. 1899), on, 55 S.W. 119 

(Tex. 1900)! mod. on other arounds 56 S.W.330 (Tex. 

1900); un . Texas Co, 89 S.W.Zd'260 (Tex. Civ. 

- Fort Worth lz35, writ dism#d by agreement). 

APP. 

The words 

t'sold and conveyed" and words of a similar meaning are 

presumptively words of a present conveyance. Snow v. 

Prince, 13 S;W.2d 342 (Tex.-Comm'n App. 1929); Continental 

Bpvaltv Co. v. Marshall 239 S.W.2d 837 (Tex. Civ. App. - 

Texarkana 1951. no wriC1. If it is manifest from the 

whole instrument, however, that further acts or 

conveyances are contemplated by the parties, the writing 

will be deemed an agreement to convey rather than a 

conveyance. L For example, a deed conveying real 

property and reserving a lien for the unpaid purchase 

money is an executory contract that will ripen into title 

in the purchaser when the purchaser has performed the 

obligation to pay the purchase price. Baker V. Marable, 

396 S.W.2d 222 (Tex. Civ. App. - El Paso 1965, writ ref'd 

n.r.e.); Bailey v. Burkitt, 201 S.W. 725 (Tex. Civ. App. - 

Galveston 1918, no writ). 

The Property Code does not set forth specific 

language that must be contained in a Trustee's 

Substitute TNstee*s Deed. If the deed fairly can :: 

construed as an executory contract, then, by the terms of 

subsection (a) of section 61.025 of the Natural Resources 

Code, the notice must be contained therein. If, however, 

the deed is not executory in nature, subsection (b) 

requires that notice must be delivered in a separate 

document. 

Your third question is: 

If the Disclosure Requirement is found to 

be applicable, must disclosure be provided 

to the mortgagee (which has the potential to 

acquire any or all of the properties posted 

for non-judicial foreclosure sale) for each 

individual foreclosure or may the Disclosure 

Requirement be satisfied by either (i) one 

'master disclosure8 whereby the mortgagee 

acknowledges that the properties located in 

certain designated counties are subject to 

the Disclosure Requirement; or (ii) by a 

p. 4007 
Mr. Earl Hale - Page 7 (JM-834) 

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monthly 'master disclosure' whereby the 

mortgagee, on a monthly basis, acknowledges 

that certain designated properties are 

subject to the Disclosure Requirement? 

You ask about a situation in which a mortgagee purchases 

the security at a nonjudicial foreclosure sale. Section 

61.025 of the Natural Resources Code evidences the 

apparent legislative intent that notice must be provided 

for & individual foreclosure. The statute specifically 

provides that the person who sells or conveys the real 

property interest must include the statutory notice *Iin 

a executory contract for conveyance." The required 

notice itself begins: "The real property described in 

this contract . . . (a (emphasis added). We think that the 

legislature intended that the sale of each parcel subject 

to foreclosure must be accompanied by a notice. 

Our conclusion that notice must be provided for each 

foreclosure is strengthened by the fact that Texas courts, 

in the absence of contractual provisions permitting 

acceleration and foreclosure, have permitted partition and 

foreclosure: 

If the security is susceptible to sale in 

parcels, the Court should, with respect to 

each deed of trust separately, order a sale 

of as much of the security as may be 

necessary to satisfy the on 

the note secured thereby plus the expenses 

of sale and one-third of the court costs. 

Motor h I ndustria 1 Finance Corn. v. Huahes, 302 S.W.2d 

386, 395 (Tex. 1957), affirming W arren v. Harrold, 49 S.W. 

364 (Tex. 1899). (Emphasis added.) If the deed of trust 

so provides, the trustee can sell the'security in its 

entirety, subject to a lien retained by the mortgagee, for 

the unmatured portion of the debt, or reserve the power to 

make additional partial foreclosures in the future. See 

Dorah v. Younq, 129 S.W.2d 782, 784 (Tex. Civ. App. - San 

Antonio 1939, writ ref'd) (sale in entirety); Todd v. 

&p&, 127 S.W.2d 340, 342-43 (Tex. Civ. App. - El Paso 

1939, writ ref'd) (reserved power). If we were to 

conclude that notice is not required for each foreclosure, 

the.evident legislative intention to provide notice to 

each purchaser would be thwarted. 

We are required to give effect to the evident intent 

of the legislature when it enacts a provision. Minton v. 

p. 4008 
Mr. Earl Hale - Page 8 (JM-834) 

-, 

p&, 545 S.W.2d 442 (Tex. 1976); Calvert v. Texa PiDe 

Line Co. 517 S.W.2d 777 (Tex. 1974). 

section il.025 of the Natural Resources 

We concludz that 

Code requires a -Y 

notice for each parcel upon which there'is a foreclosure. 

Your fourth question is: 

On a related matter, in the event such 

disclosures are provided to the mortgagee 

and the property is actually purchased by an 

unrelated third party either before the 

non-judicial foreclosure sale or at the 

non-judicial foreclosure sale, is the act of 

giving such a notice to the non-purchasing 

mortgagee a deceptive act under the Texas 

Deceptive Trade Practices-Consumer 

Protection Act, Tex. Bus. & Corn. Code Ann. 

17.41 St sea. (Vernon Supp. 1987)? 

Subsection (d) of section 61.025 of the Natural 

Resources Code provides: "Failure to provide this 

statement prior to closing, either in the executory 

contract for conveyance or in a separate written 

statement, shall constitute a deceptive act under section 

17.46, Business & Commerce Code." You ask whether a 

deceptive trade practice is committed in an instance in 

which a section 61.025 notice has been provided to a 

non-purchasing mortgagee. We have examined section 17.46 

of the Business and Commerce Code and the cases and 

opinions decided under it. We fail to see in what way the 

Deceptive Trade Practices Act can be violated by giving 

notice to someone to whom the statute does not require 

that notice be given. We assume that you intend to ask 

whether the failure to give notice to a purchasing 

unrelated third party, even though notice was given to the 

non-purchasing mortgagee, constitutes a violation of the 

Deceptive Trade Practices Act. Clearly, by the very terms 

of subsection (d), it does; the purchaser must be given 

notice and failure to do so constitutes a violation of the 

act. 

Your fifth question is: 

With respect .to purchases by unrelated 

third parties at non-judicial foreclosure 

sales, is it sufficient to obtain the . . 

acknowledgment required by the statute at 

the time of the sale? 

? 

p. 4009 
Mr. Earl Hale - Page 9 (JM-834) 

Subsection (a) of section 61.025 requires that proper 

notice be included in any executory contract for conveyante . Subsection (b) provides that, in the event that 

there is no executory contract for conveyance, notice must 

be delivered to the purchaser (and acknowledged thereby) 

prior to closlna the t=wix$&m . Obviously, by the very 

terms of section 61.025, providing notice and obtaining 

acknowledgment at the time of the nonjudicial foreclosure 

sale satisfies the requirements of the section. 

Your final question asks: 

Will a list of the counties deemed to 

'border' the Gulf of Mexico ever be 

promulgated and published? In the interim, 

or in the event such a list will not be 

promulgated and published, is Harris County 

considered to 'border' the Gulf of Mexico? 

Your request for an opinion was submitted prior to 

the adjournment of the 70th Legislature. The originally 

enacted version of section 61.025 provided that the notice 

requirements applied to Veal property . . . located in a 

county that borders the Gulf of Mexico.@' Acts 1985, 69th 

Leg., ch. 350, 51, at 2616. The section was amended 

during the 70th Legislature to address the concern that 

you raise. Now the notice requirements apply to real 

property located 

seaward of the Gulf Intracoastal Waterway to 

its southernmost point and then seaward of 

the longitudinal line also known as 97 

degrees, 12', 19" which runs southerly to 

the international boundary from the 

intersection of the centerline of the Gulf 

Intracoastal Waterway and the Brownsville 

Ship Channel. 

Acts 1987, 70th beg., ch. 75, at 370. Though we do not 

make findings of fact in the opinion process, we note, 

after examination of a map, that Harris County does not 

fall within.the ambit of the section's boundaries. For 

purposes of section 61.025 of the Natural Resources Code, 

then, Harris County does not border the Gulf of Mexico. 

p. 4010 
Mr. Earl Hale - Page 10 W-834) 

SUMMARY 

1. If the interest in real property 

conveyed pursuant to nonjudicial 

foreclosure sale is man inte:est, other than 

a mineral, leasehold, or security interest 

in real property," then a statement as 

specified by section 61.025 of the Natural 

Resources Code must be provided to the 

purchaser, regardless of whether the 

purchaser is the mortgagee or an unrelated 

third party. 

2. If the Trustee t s or Substitute 

Trustee's Deed fairly can be characterized 

as an executory contract for conveyance, 

then the section 61.025 statement must be 

included therein. If, on the other hand, 

the deed is not an executory contract, then 

the section 61.025 statement must be 

included in a separate document. 

3. Section 61.025 of the Natural 

Resources Code applies to each individual 

nonjudicial foreclosure sale. 

4. The act of giving to a non-purchasing 

mortgagee a section 61.025 statement does 

not constitute a deceptive trade practice in 

violation of section 17.46 of the Business 

and Commerce Code. 

5. With respect to purchases by 

unrelated third parties at nonjudicial 

foreclosure sales, it is sufficient that the 

buyer obtain the acknowledgment required by 

the statute at any time prior to closing the 

transaction. 

6. Section 61.025 of the Natural 

Resources Code does not apply to real 

property located in Harris County. 

JIM M ANT T 0 X 

Attorney General of Texas 

--. 

p. 4011 
Mr. Earl Hale - Page 11 UM-834) 

NARYKELLER 

Executive Assistant Attorney General 

JUDGE ZOLLIE STEAKLEY 

Special Assistant Attorney General 

RICK GILPIN 

Chairman, Opinion Committee 

Prepared by Jim Moellinger 

Assistant Attorney General 

p. 4012