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
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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
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
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
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
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.
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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
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.
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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.