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Texas Buy-Sell Agreement Template

The Texas rules that shape the document: sole-management community property with a third-person reliance safe harbor, and an enforceable reasonable non-compete on the sale.

Introduction

A buy-sell agreement is the contract Texas co-owners use to decide in advance who may buy an owner's share of the business, at what price, and on which triggers such as death, disability, divorce, or a voluntary exit. In Texas, two rules shape the document beyond the national template. First, Texas is a community property state that uses a sole-management scheme: under Texas Family Code Section 3.102(a) a spouse has sole management, control, and disposition of the community property that spouse would have owned if single, and under Texas Family Code Section 3.104(b) a third person dealing with that spouse may rely on the spouse's authority absent fraud or notice of a lack of authority. Second, a covenant not to compete against a departing Texas owner is enforceable, not void: Texas Business and Commerce Code Section 15.50(a) upholds a covenant that is ancillary to an otherwise enforceable agreement and reasonable in time, geographic area, and scope, so a Texas buy-sell can include a tailored non-compete rather than the void-by-default posture used elsewhere.

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Key Things to Know

  1. 1

    A Texas buy-sell agreement is a binding contract among the co-owners of a business that fixes who can buy a departing owner's interest, the price or valuation method, and the triggering events, so a death, divorce, or exit does not force the business into a dispute or a sale to an outsider in Texas.

  2. 2

    Texas is a community property state that uses a sole-management scheme. Under Texas Family Code Section 3.102(a) a spouse has sole management, control, and disposition of the community property that spouse would have owned if single, so whether spousal joinder is needed turns on sole versus joint management classification of the interest.

  3. 3

    In Texas, a buyer of an ownership interest gets a statutory reliance safe harbor. Texas Family Code Section 3.104(b) lets a third person rely on a spouse's authority over property presumed subject to sole management if the third person is not party to a fraud and lacks actual or constructive notice of a lack of authority.

  4. 4

    A non-compete against a departing owner is enforceable in Texas, not void. Texas Business and Commerce Code Section 15.50(a) upholds a covenant that is ancillary to an otherwise enforceable agreement and reasonable as to time, geographic area, and scope, so a Texas buy-sell can carry a tailored covenant that protects the business goodwill.

  5. 5

    In Texas, keep the non-compete no broader than necessary. Texas Business and Commerce Code Section 15.50(a) enforces a covenant only to the extent it does not impose a greater restraint than is needed to protect the goodwill or other business interest of the promisee, so draft the time, area, and scope limits to the specific business.

  6. 6

    In Texas, a transfer restriction binds a later buyer only if noted conspicuously on the certificate, or the registered owner is notified for uncertificated shares (Texas Business and Commerce Code Section 8.204). Add the legend when your Texas company issues or endorses certificates so the restriction is effective against a buyer without knowledge.

  7. 7

    In Texas, no notarization, witnesses, or government filing is required for a private buy-sell contract. A signed writing satisfies the Texas statute of frauds (Texas Business and Commerce Code Section 26.01) where it applies. Keep the signed Texas agreement with the company records and update the valuation periodically.

Key decisions before you file

Before you file a Buy-Sell Agreement in Texas, a few decisions shape the document: which option to choose and what each one means. The Buy-Sell Agreement guide walks through them.

Open the Buy-Sell Agreement guide

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Texas Buy-Sell Agreement (Compact State Terms)

This compact set states the Texas-specific terms of a Buy-Sell Agreement. Use it together with the full national Buy-Sell Agreement template, which contains the general purchase, trigger, and closing provisions.

1. Governing Law. This Agreement is governed by the laws of the State of Texas, without regard to its conflict-of-laws rules.

2. Community Property; Spousal Authority and Reliance. Each married Owner acknowledges that an interest in the Company may be community property under Texas law. Under Texas Family Code Section 3.102(a), a spouse has sole management, control, and disposition of the community property that spouse would have owned if single, including personal earnings and revenue from separate property. Where an Owner's interest is presumed subject to that Owner's sole management, the Company and the other Owners may rely on that Owner's authority to deal with the interest under Texas Family Code Section 3.104(b), provided they are not party to a fraud on the other spouse and have no actual or constructive notice of a lack of authority. Where the interest is subject to joint management, the Owner's spouse signs the Spousal Consent below to consent to this Agreement and its transfer restrictions.

3. Restrictive Covenant (Enforceable if Reasonable). A departing Owner agrees not to carry on a competing business within [specify counties or geographic area] for a period of [specify duration] after the transfer of the Owner's interest. This covenant is ancillary to this otherwise enforceable Agreement and to the sale of the Owner's interest and goodwill, and is intended to be enforceable under Texas Business and Commerce Code Section 15.50(a). The parties intend the limitations as to time, geographic area, and scope of activity to be reasonable and no greater than necessary to protect the goodwill and other business interest of the Company.

4. Valuation. The purchase price is the [fixed price / formula / appraised fair value] stated in the national template, updated at least [annually]. The parties elect this method to fix the price payable on a triggering event under this Agreement in Texas.

5. Transfer Restriction Legend. The Company shall note the transfer restrictions in this Agreement conspicuously on each share certificate, and shall notify the registered owner of any uncertificated shares, so the restrictions are effective against a person without knowledge under Texas Business and Commerce Code Section 8.204.

6. Execution. This Agreement is effective when signed by the Owners and the Company. No notarization or witness is required; a signed writing satisfies the Texas statute of frauds under Texas Business and Commerce Code Section 26.01 where it applies.

Spousal Consent. The undersigned is the spouse of an Owner. I have read this Agreement, consent to it, and agree that my interest, if any, in the Owner's business interest is subject to its terms.

Owner: ______________________ Date: __________

Spouse: _____________________ Date: __________

This compact Texas set supplements the national Buy-Sell Agreement template. It is general information, not legal advice; attorney review is available.

Texas Requirements for Buy-Sell Agreement

Texas Sole-Management Community Property and Spousal Consent

Texas is a community property state using a sole-management scheme. Under Texas Family Code Section 3.102(a), a spouse has sole management, control, and disposition of the community property that spouse would have owned if single. Include a spousal consent for jointly managed interests so transfers are not later challenged in Texas.

Texas Third-Person Reliance Safe Harbor

Under Texas Family Code Section 3.104(b), a third person dealing with a spouse may rely on that spouse's authority over property presumed subject to sole management if the person is not party to a fraud and lacks actual or constructive notice of a lack of authority. Recite this Texas safe harbor to support a buyer's reliance.

Texas Non-Compete Enforceable if Reasonable

A covenant not to compete against a departing owner is enforceable in Texas under Business and Commerce Code Section 15.50(a) if it is ancillary to an otherwise enforceable agreement and reasonable as to time, geographic area, and scope, and no greater than necessary to protect the goodwill. Draft the Texas covenant to those limits.

Texas Transfer Restriction Noted on the Certificate

Under Texas Business and Commerce Code Section 8.204, a transfer restriction is ineffective against a person without knowledge unless it is noted conspicuously on the security certificate, or, for uncertificated shares, the registered owner has been notified. Add the legend when your Texas company issues or endorses certificates.

Texas Signed Writing; No Notarization Required

A Texas buy-sell agreement needs no notarization, witnesses, or government filing as a private contract. A signed writing satisfies the Texas statute of frauds under Business and Commerce Code Section 26.01 where it applies. Keep the signed Texas agreement with the company records and update the valuation periodically.

Frequently Asked Questions

It is a contract among the owners of a Texas business that sets who may buy an owner's interest, the price or valuation method, and the triggers such as death, disability, divorce, or a voluntary exit. It keeps ownership inside the group and prevents disputes when an owner leaves.

In Texas, an operating agreement or bylaws set how the business runs day to day. A buy-sell agreement covers only ownership transitions: what happens to an owner's share on death, disability, divorce, or departure, how it is priced, and who may buy it. Many Texas companies keep both.

It depends. Texas is a community property state with a sole-management scheme. Under Texas Family Code Section 3.102(a), a spouse may act alone over interests presumed subject to sole management. If the interest is jointly managed, get spousal consent so the transfer is not later challenged.

Yes, within limits. Texas Family Code Section 3.104(b) lets a third person rely on a spouse's authority over property presumed subject to sole management, if the buyer is not party to a fraud and has no actual or constructive notice of a lack of authority. Notice defeats the safe harbor.

Yes, if it is reasonable. Texas Business and Commerce Code Section 15.50(a) enforces a covenant not to compete that is ancillary to an otherwise enforceable agreement and reasonable in time, geographic area, and scope, and no broader than needed to protect the business goodwill. Draft the limits to the specific business.

Only if it is disclosed. Under Texas Business and Commerce Code Section 8.204, a transfer restriction is ineffective against a person without knowledge unless it is noted conspicuously on the certificate, or, for uncertificated shares, the registered owner has been notified. Add the legend when the Texas company issues certificates.

No. There is no notarization, witness, or filing requirement for a private buy-sell contract in Texas. A signed writing satisfies the Texas statute of frauds under Business and Commerce Code Section 26.01 where it applies. Keep the signed Texas agreement with the company records and update the valuation periodically.