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 at-
   tached is requested upon the following question in-
   volved therein:
       "Should the improvements described in paragraph
   Number 5 of the contract, for the purpose of assess-
   ment for State and County taxes, be considered per-
   sonal 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 improve-
    ments 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 Admlnistra-
    tion 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 com-
    mittee 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 prece-
    dent 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 improve-
ments 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 land-
lord as a part of the value of the real estate under the~pro-
visions 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 it-
self 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
