Special Rules for School Real Estate Transactions

November 15, 2007

Special rules exist involving the sale of property by Texas school districts.  The statewide lawsuit relating to the desegregation of Texas school districts is located in the court of Judge William Wayne Justice in Tyler, Texas under the style Civil Action No. 5281, United States of America v. State of Texas.  One of Judge Justice's orders in this case mandates that the sale of school district property must contain the reversionary restrictions against use or operation of a segregated school.  That is, the deed must contain a reversionary clause in which the property will revert back to the school district in the event that the property is used as a segregated school.  In lieu of this reversionary clause, alternative language is available upon prior approval of the Texas Education Agency ("TEA").  Most parties opt for the alternative language available through TEA.  It is important that this process be followed when any party buys school district property in Texas.  The failure to include this language in the deed and closing documents could render the real estate transaction void.