                                             KEN PAXTON
                                        ATTORNEY GENERAL OF TEXAS




                                               August 9, 2018



Mr. Michael Reeser                                         Opinion No. KP-0209
Chancellor
Texas State Technical College                              Re: Whether a right of reverter on property
3801 Campus Drive                                          owned by Texas State Technical College is
Waco, Texas76705                                           enforceable ,against it as a state agency
                                                           (RQ-0210-KP)

Dear Mr. Reeser:

        You ask about the enforceability of a right of reverter contained in a real property deed
conveying property from an economic development corporation to a state agency. 1 You tell us
that the Marshall Economic Development Corporation (the "Corporation") conveyed a building
and real property to Texas State Technical College (the "College") in a deed contain~ng a "Fee
Simple Determinable Condition"-requiring that the College and any successors "shall use the
property exclusively for" specified educational purposes. Request Letter at 1. The deed further
provides that the Corporation grants the property

                 for as long as the. Fee Simple Determinable Condition is satisfied,
                 and if the Fee Simple Determinable Condition is not satisfied, the
                 Property will automatically revert to and be owned by Grantor [the
                 Corporation] without the necessity of any further act on the part of
                 the Grantor, it being Grantor's intent to convey a fee simple
                 determinable estate to Grantee [the College]. 2

        You tell us that the College no longer wishes to own the property but is uncertain about
how to divest itself of the property in light of the reverter. You question whether a right of reverter
is enforceable against the property because: \El) property belonging to the College is state property,
and (2) state sovereignty principles generally prevent local government property restrictions such
as ordinances and codes from applying to state or state agency property. Id. at 2 (citing several
attorney general opinions about local restrictions on state or agency property); see also Walsh v.
Univ. of Tex., 169 S.W.2d 993, 993 (Tex. Civ. App.-El Paso 1942, writrefd) (explaining that

                                                                      I                    '
         1See Letter from Mr. Michael Reeser, Chancellor, Tex. State Tech. Coll., to Honorable Ken Paxton, Tex.
Att'y Gen. at 1 (Jan. 29, 2018), https://www.texasattomeygeneral.gov/opinion/requests-for-opinions-rqs ("Request
Letter").
        2See Briefofthe Marshall Econ. Dev. Corp. at I (Mar. 2, 2018) ("Corporation's Brief'') (on file with the

 Op. Comm.).
Mr. Michael Reeser - Page 2                     (KP-0209)



university property is state property because the university has no existence independent of the
State). You inform us that the College intends to either disregard the right of reverter and sell the
property, sell the property subject to the right ofreverter, or return the property to the Corporation,
depending on the answer to your question:

                [D]oes a right of reverter related to a Fee Simple Determinable
                Condition bind the State, or do the sovereign property rights of an
                agency of the State of Texas result in Fee Simple _ownership of the
                property?

Request Letter at 1-3.

         In essence you ask whether the College owns a fee simple absolute-"an estate over which
the owner has unlimited power of disposition in perpetuity without condition or limitation." Hoke
v. O'Bryen, 281 S.W.3d 457, 460 (Tex. App.-San Antonio 2007, no pet.). However, the deed
from the Corporation characterizes the estate owned by the College as a "fee simple determinable."
Corporation's Brief at 1. "A 'fee simple determinable' is an estate that automatically expires upon
the happening of a limiting event," in this case the cessation of the College's use of the property
for the educational purposes specified. Hoke, 281 S.W.3d at 460. The Corporation claims a
possibility of reverter, see Corporation Brief at 4, which is "a future interest retained by a grantor
after conveying a fee simple determinable, so that the grantee's estate terminates automatically
and reverts to the grantor if the terminating event ever occurs." Singer v. State, 391 S.W.3d 627,
632 n.1 (Tex. App.-El Paso 2012, pet. denied) (quotation marks omitted); see also Lucke! v.
White, 819 S. W.2d 459, 464 (Tex. 1991) ("The 'possibility of reverter' is the real property term of
art for what the grantor owns as a future interest in a determinable fee grant; it is the grantor's right
to fee ownership in the real property reverting to him if the condition terminating the determinable
fee occurs."). While this office does not determine rights under a specific deed, we assume for
purposes of this opinion that the deed, construed as a whole, reserves to the Corporation a possible
right ofreverter. See Singer, 391 S.W.3d at 632-33 & n.2 (construing the language of a deed as a
whole to determine if it reserves a possibility ofreverter); Tex. Att'y Gen. Op. No. JM-675 (1987)
at 3, 8 (stating that the opinion process is not intended to determine "[w ]hether specific deeds
create covenants, conditions, or determinable fees").

          You do not identify any principle of sovereignty that would effectively convert a fee simple
  determinable owned by the State or an agency into a fee simple absolute. The attorn~y general
  opinions that you reference all concern the principle based on sovereignty that the police powers
  oflocal governmental entities generally do not apply to property owned by the State. See Request
  Letter at 2 (citing Tex. Att'y Gen. Op. Nos. JM-117 (1983) at 2-3 (concerning building and zoning
  ordinances), MW-508 (1982) at 4-5 (concerning city fire codes), M:182 (1968) at 2 (concerning
  municipal building permits)). One opinion explains the rationale for the principle, that because
  subordinate governmental entities derive their existence and all of their powers from the State,
  when the Legislature grants them police powers, it does not thereby surrender the State's right to
. regulate its own property. See Tex. Att'y Gen. Op. No. M-182 (1968) at 2. Unlike police powers
  that derive from the State, a right of reverter is a private property interest that derives from the
  terms of a deed or other conveyance according to Texas real-property principles. Lucke!, 819
Mr. Michael Reeser- Page 3                              (KP-0209)



S.W.2d at 464. Police powers and real property ownership rights are fundamentally unrelated
concepts.

         The parties' intent as expressed in the language of a deed determines the extent of the estate
or interest granted. See Lucke!, 819 S.W.2d at 461. A right of reverter is a "claim[] to property
that the grantor never gave away." El Dorado Land Co. v. City of McKinney, 395 S.W.3d 798,
802-03 (Tex. 2013) (quotation marks omitted); accord ConocoPhillips Co. v. Koopmann, 547
S.W.3d 858, 867 (Tex. 2018). The Texas Supreme Court explained that a right of reverter is "a
protected property interest," which a governmental entity may appropriate, if at all, only by giving
just compensation. El Dorado Land Co., 395 S.W.3d at 801-04 (holding that a right ofreverter is
a type of reversionary interest, which may be the subject of an inverse-condemnation claim);
accordLeeco Gas & Oil Co. v. Cty. a/Nueces, 736 S.W.2d 629, 631-32 (Tex. 1987) (holding that
when a governmental entity is the grantee in a gift containing a right of reverter, the governmental
entity cannot take that right in condemnation without paying just compensation). Moreover, a
governmental entity does not extinguish a right of reverter by conveying the property to a third
party. See Stewart v. Mobley, 500 S.W.2d 246,250 (Tex. Civ. App.-Beaumont 1973, writ ref d
n.r.e.) (holding that when property conveyed to the United States in a deed containing a possibility
of reverter was sold to a third party, the third party took the property subject to the possibility of
reverter); Cypress-Fairbanks Indep. Sch. Dist. v. Glenn W Loggins, Inc., 115 S. W.3d 67, 72-73
(Tex. App.-San Antonio 2003, pet. denied) (holding that a tax sale did not extinguish possibility
of reverter). 3 In sum, a state agency's ownership interest in real property conveyed to it by deed
is generally governed by the terms of the deed, and thus, an agency's ownership of a fee simple
determinable can terminate and title revert to the grantor upon the occurrence of the terminating
event specified in the deed.




          3Sovereign immunity may affect the procedure or remedy to assert a right of reverter, but not its ultimate
 enforceability. See Tex. Parks & Wildlife Dep't v. Sawyer Tr., 354 S.W.3d 384, 389-90 (Tex. 2011) (holding that
 sovereign immunity bars a suit that is in substance a trespass to try title action against the State, but does not prevent
 an owner from recovering possession of property unlawfully claimed by a state official on behalf of the State).
Mr. Michael Reeser - Page 4                (KP-0209)



                                    SUMMARY

                       A state agency's ownership of a fee simple determinable
              interest in real property conveyed to it by deed can terminate and
              title revert to the grantor according to the terms of the deed.

                                           Very truly yours,




                                           KEN PAXTON
                                           Attorney General of Texas



JEFFREY C. MATEER
First Assistant Attorney General

BRANTLEY STARR
Deputy First Assistant Attorney Qeneral

VIRGINIA K. HOELSCHER
Chair, Opinion Committee

WILLIAM A. HILL
Assistant Attorney General, Opinion Committee
