Come Fly With Me Come Fly With Me

Drones have numerous applications in the world of real estate. Drone users and those who hire them should be aware of and comply with the laws that govern drone use.

Radio-controlled airplanes have been around for decades, but modern unmanned aircraft—drones—are truly taking it to the next level. Drones are able to go where other technologies cannot, and without a pilot.

Their use is growing in aerial photography, agriculture, public safety, law enforcement, mapping, commercial deliveries, monitoring infrastructure, construction, and real estate. And of course, many people fly them just because it’s fun. Yes, flying drones has really taken off, so to speak.

Real estate professionals and landowners who use drones need to understand the law surrounding this new and burgeoning technology and how it applies to them. In the law, drones are called unmanned aircraft, unmanned aircraft systems (UAS), or unmanned aerial vehicles (UAV). Drones are affected by federal law and regulations, as well as by state and local laws and regulations.

Federal law gives regulatory power over UAS operation to the Federal Aviation Administration (FAA). The rules vary depending on where, what, and why an operator is flying.

Drone regulations promulgated by the FAA are found in 14 CFR Pt. 107 (Part 107). Other federal aviation regulations dealing with larger and manned aircraft, but also applicable to drones, are found elsewhere. Which regulations apply depends on the reason for the use of the drone.

By Rusty Adams

Generally, drone use is regulated by Part 107, also known as the FAA’s Small UAS Rules. To fly a small drone (less than 55 pounds, including any payload) for work or business, a pilot must follow the guidelines of Part 107. This requires a Remote Pilot Certificate issued by the FAA. This certificate is available only to persons over 16 years of age, and it requires passage of a test, satisfactory physical and mental condition, and the ability to read, speak, write, and understand English. A refresher course must be taken online every two years. The drone must be registered with the FAA and marked with its registration number. It must fly in Class G (uncontrolled) airspace and within a visual line-of-sight of the operator or observer. This means the operator must be able to see the drone unaided. The drone must avoid and yield to manned aircraft.

All airspace in the United States is regulated. Some airspace is “controlled” and some is “uncontrolled.” Controlled airspace includes airspace around some airports and at altitudes where air traffic controllers are actively communicating with, directing, and separating air traffic. Controlled airspace is divided into several classes. Airspace where air traffic controllers are not directing air traffic is considered uncontrolled.

The Exception for Limited Recreational Operations of Unmanned Aircraft (49 U.S.C. § 44809) provides a statutory carve-out for recreational or hobby use. Recreational use means flying for enjoyment and not for work, business purposes, or for compensation or hire. Drone operators beware! An operator should not assume that his use is a recreational one, even in the absence of compensation. The FAA gives several examples of nonrecreational flights. These include taking photos to help sell a property or service (even if not otherwise compensated), roof inspections (even if for personal use, in lieu of hiring an inspector), and taking pictures of a high school football game for the school’s website (even if not otherwise compensated). When in doubt, an operator should have a Part 107 certificate. When enlisting the services of a drone operator, one should make sure the operator has the certificate.

Recreational flyers fly pursuant to 49 U.S.C. § 44809 and are not required to be licensed. They must, however, pass the Recreational UAS Safety Test (TRUST), a knowledge and safety test that is available online from multiple providers. Proof of passage and proof of registration must be available to law enforcement on request. A drone that weighs more than 0.55 pounds (250 g) must be registered with the FAA. The operator must follow the safety guidelines of an FAA-recognized Community Based Organization (CBO). CBOs are organizations recognized by the FAA as meeting certain requirements, including a comprehensive set of safety guidelines. Recreational use must be in Class G airspace (uncontrolled airspace) no more than 400 feet above ground level (AGL). Prior authorization from air traffic control is required to fly in controlled airspace (Class B, C, D, or E). All recreational flight must be strictly for recreational purposes (i.e., personal enjoyment). Drones must be flown within the visual line of sight of the operator or a visual observer colocated and in direct communication with the operator. Drones must comply with all airspace restrictions and prohibitions and may not interfere with manned aircraft.

CBOs may also establish “fixed sites” and FAA-recognized identification areas (“FRIAs”) where UASs may be operated. Unmanned aircraft weighing more than 55 pounds (25 kg) must comply with additional requirements and be operated from a fixed site established by a CBO and designated as such by the FAA. These fixed sites are generally maintained by model aircraft clubs. Recreational operators are also now required to comply with Part 89, which requires remote identification capability, unless operating within a FRIA and within visual line of sight.

Government employees such as police and fire personnel may operate under Part 107 or by obtaining a federal Certificate of Authorization (COA).

All drones generally may be flown in uncontrolled airspace up to 400 feet AGL and no faster than 100 miles per hour. Drones may not interfere with manned aircraft, emergency operations, or law enforcement. Drones may not weigh more than 55 pounds unless operated from a fixed site as mentioned above. A drone must be registered with the FAA and be marked with the registration number. The drone must be visible by the operator or observer at all times.

Because it is difficult for manned aircraft to see and avoid drones, all drone operators should avoid flying near airports. All drone operators must avoid interfering with manned aircraft. Drone operators are responsible for any safety hazards they create. Drone operators must be aware of FAA “No Drone Zones,” where drone use is restricted or prohibited, such as areas near airports, stadiums, and other sensitive areas. This can be facilitated by using the FAA’s safety app for mobile devices—B4UFLY. Additional rules apply in special circumstances where drones are operated over people or at night. Some of these circumstances require special authorization from the FAA.

The FAA may enforce its rules against any person who endangers the safety of the National Airspace System, including operators who are careless or reckless, or endanger persons or property.

While there is a dearth of cases on unmanned aircraft, Texas common law provides some protection through the law of nuisance and trespass, as well as invasion of privacy.

“Trespass” means an unauthorized entry onto another’s property without the owner’s consent. “Entry” includes causing something to enter the property. The question then becomes whether the air above one’s land is part of the property. Under the ancient ad coelum doctrine, the landowner owns not just the surface, but to the center of the earth and to the heavens. However, that doctrine has been modified somewhat over time. After all, every airplane in the sky is flying over someone’s land.

While the doctrine still exists, courts have made it clear that there are situations where flights through private airspace may be low enough and frequent enough as to be impermissible. However, the courts have not made it clear how low or how frequent they have to be. Ultimately, it looks like the true test is whether the flights constitute a direct and immediate interference with the property rights of the landowner—a factspecific investigation.

“Nuisance” means substantial interference with the owner’s use and enjoyment of his property by causing unreasonable discomfort or annoyance to persons of ordinary sensibilities. Once again, this is a fact-specific question for which the law provides little guidance. A drone that kept owners awake in their homes, monitored the personal activities of family members, or disturbed pets or livestock would likely qualify.

Trespass and nuisance are similar. Legally, the distinction is that trespass is an interference with possession, whereas a nuisance is an interference with use and enjoyment.

“Invasion of Privacy” includes four different types: intrusion into seclusion or solitude, intrusion into private affairs, public disclosure of embarrassing private facts, and appropriation of name or likeness. The first could be met by an intrusion of the drone itself. The others would ultimately turn on what is done with any photographs or recordings made.

Texas case law in these areas, while well-developed, has not yet been applied to drones. The law will continue to develop, but, ultimately, the same principles will apply.

It is admittedly tempting for some landowners to consider shooting down a drone if they deem it a trespass, nuisance, or invasion of privacy. While in some cases their frustration might be understandable, landowners who shoot down a drone could be subjecting themselves to both civil and criminal liability.

The Texas Use of Unmanned Aircraft Act, passed in 2013 and later amended, was codified as Chapter 423 of the Texas Government Code. The statute did not address the actual physical presence of drones over the property of others. Rather, it limited the use of drones in two ways.

First, it made it a criminal offense to fly a drone over correctional facilities, critical infrastructure facilities (e.g., refineries, power plants, chemical plants, dams, feedlots), and sports venues.

Second, it created a criminal offense to use a drone for capturing images and making recordings, including sound recordings, “with the intent to conduct surveillance on the individual or property captured in the image.” Exceptions were made for certain permissible uses, among them scholarly research, military use, satellite mapping, operating and maintaining utilities, pipelines, or telecommunications facilities, and certain law enforcement applications. Additionally, exceptions were made for surveyors, engineers, and real estate brokers. The statute was challenged by photojournalists, and a federal court found most of Chapter 423 unconstitutional as a violation of the First Amendment and as unconstitutionally vague [Nat’l Press Photographers Ass’n v. McCraw, 594 F.Supp.3d 789, 112 Fed. R. Serv. 3d 876 (W.D. Tex. March 28, 2022, appeal filed)].

Another part of the act grants authority to political subdivisions, such as counties and municipalities, to adopt ordinances about unmanned aircraft, but only in certain situations (Tex. Gov’t Code § 423.009). Still another directs the Texas Department of Public Safety to adopt rules for law enforcement use and requires law enforcement agencies to report on their use of drones (Tex. Gov’t Code §§ 423.007-423.008). These portions are not affected by the McCraw decision. All law enforcement use must comply with FAA requirements. For additional changes to the Texas statutes on unmanned aircraft, stay tuned to the federal courts and the Texas Legislature.

The collection of photographs or video recordings is, of course, governed by other laws regarding visual recording. Thus, Section 21.15 of the Texas Penal Code, which prohibits invasive visual recording without consent applies to drones just as it would to any other camera or device.

31 TAC Pt. 2, Ch. 65, Subchapter F, promulgated by the Texas Parks & Wildlife Department (TPWD), regulates the aerial management of wildlife and exotic species. Under Rule 65.152, a pilot operating under an aerial management permit (AMP) or AMP holder may use an unmanned aerial vehicle (UAV)— a drone—solely for the purpose of locating feral hogs. To do so, the management must take place only on land specified in a valid landowner’s agreement as provided by TPWD. No person may kill or attempt to kill feral hogs from a UAV. Before using any aircraft for management of wildlife or exotic species, landowners and drone operators should consult Subchapter F to ensure compliance with TPWD rules.

UAVs may not be operated in or over the Capitol Complex in Austin unless specifically authorized by the State Preservation Board or the Capitol Complex area, as set forth in 37 TAC Pt. 1, Ch. 8, Subchapter B, Rules 8.21-8.22. Exceptions exist for law enforcement and certain governmental functions.

To reduce security vulnerabilities, Governor Greg Abbott recently prohibited the use of certain technologies on stateowned or issued devices. Additionally, personal devices enabled with prohibited technologies may not be used for state business.

The list of prohibited technologies includes several foreign manufacturers of drones. Drones manufactured by these manufacturers or equipped with prohibited technologies may not be used for state business, whether the drones are owned or issued by the state, or are personally owned. The following companies, including any of their subsidiaries or affiliates, are prohibited:

• Dahua Technology Company,

• Huawei Technologies Company,

• Hangzhou Hikvision Digital Technology Company,

• Hytera Communications Corporation,

• SZ DJI Technology Company, and

• ZTE Corporation.

Nothing in TG should be considered legal advice. For advice on a specific situation, consult an attorney.

Adams (r_adams@tamu.edu) is a member of the State Bar of Texas and a research attorney for the Texas Real Estate Research Center at Texas A&M University.

A homeowners policy does not cover all property for all perils under all circumstances. Understanding a policy’s exclusions, restrictions, and limitations is as important as understanding what the policy does cover.

One important part of owning a home is protecting the home and its contents from loss with a homeowners policy. Texas homeowners have two common options for homeowners coverage.

Most Texas homeowners policies are issued using the ISO Homeowners 3–Special Form (HO3), the basic form for insuring homes. Although this form is the “industry standard,” each insurance company files its own variation in coverages, so coverages will differ between insurance companies. A smaller number of policies are issued on the Texas Homeowners Policy–Form B (HOB). The HOB has several differences in coverages, limitations, and exclusions compared with the standard ISO form. Homeowners should read the policy language carefully or seek assistance from a trusted insurance professional to avoid unpleasant surprises and unexpected expenses. This article analyzes the ISO form, with notations of the HOB differences.

The three primary property coverage grants address the dwelling (Coverage A), other structures (Coverage B), and personal property (Coverage C). Coverages A and B are covered for “all risk of direct physical loss” unless excluded, restricted, or limited. Coverage C is a named peril form, insuring against direct physical loss caused by fire or lightning; windstorm or hail; explosion; riot or civil commotion; aircraft; vehicles; smoke; vandalism or malicious mischief; theft; falling objects; weight of ice, sleet, or snow; accidental discharge or overflow

By Richard Rudolph

of water or steam; sudden and accidental tearing apart, cracking, burning, or bulging; freezing; sudden and accidental damage from artificially generated electrical current; and volcanic eruption.

Most property limitations in the HO3 are found in Coverage C, and most homeowners have property that falls under these limitations. In the policy, these limitations are called “special limits.” When a policy form is silent regarding a special limit or a specific peril, the property would be considered as personal property and included in the amount of coverage for Coverage C for the stated perils.

The following types of property have these special limits. Money and Securities. Only $200 coverage is available for currency, coins, stored value cards, and smart cards. There is a separate special limit of $1,500 for securities or similar valuable documents and papers, including personal records, passports, tickets, and stamps.

The Texas HOB form has less coverage—a $100 special limit for money and a $500 sublimit for securities and valuable documents.

Watercraft. There is a special limit of $1,500 on watercraft of all types, including related equipment. Recreational motorboats for fishing, waterskiing, or cruising and the boat trailer and equipment will quickly exceed this limit. However, smaller vessels, such as small sailboats, canoes, and kayaks can easily exceed the limitation as well. With a simple kayak costing from $200 to over $1,000, plus paddle, rack or trailer, and related equipment, the $1,500 sublimit is likely to be insufficient for adequate coverage for a family of four.

The Texas HOB form excludes all watercraft except while on land at the residence property.

Trailers. Nonwatercraft trailers have a special limit of $1,500. While a recreational travel trailer is likely to be separately insured, the cost of a modest-sized utility trailer would exceed this sublimit.

The Texas HOB excludes all such trailers unless designed for principal use off public roads. Boat trailers are covered but only while on the residence premises.

Jewelry and Firearms. These two types of personal property have special limits that apply only in the event of theft. In the event of other perils, such as fire or wind, there are no special limits, but proving the value and even existence of the property requires documentation, including appraisals.

There is a special limit of $1,500 on jewelry, watches, furs, and precious and semiprecious stones. The conventional ruleof-thumb for buying an engagement ring is to spend two times monthly income. At the 2022 Federal poverty level of income for two people of $18,310, the special limit is only half of the recommended spending for an engagement ring, and that only addresses one ring. Thus, this special limit is inadequate for most homeowners.

The special limit for firearms and related equipment is more generous, with $2,500 for loss by theft.

The Texas HOB form limits jewelry to $500, and the form is silent regarding a special limit or specific perils for firearms.

Precious Metals. Silverware, silverplate ware, goldware, goldplate ware, platinum ware, platinum-plated ware, and pewterware—including flatware, hollow-ware, tea sets, trays and trophies made of or including gold, silver, or pewter—are subject to a special limit of $2,500.

The Texas HOB is silent for this type of property.

Business Property. Business property on the residence premises is covered with a special limit of $2,500, with a separate special limit of $500 if the loss occurs away from the residence. A further stipulation of the lower limit states the limit does not apply to loss of electronic apparatus and other described property.

The Texas HOB excludes loss of business property away from the residence premises.

Electronic Apparatus. This type of property consists of portable electronic apparatus and accessories while in or on a motor vehicle, whether used for personal or business purposes. The apparatus must be capable of being operated by the motor vehicle or other power sources, and the accessories include antennas, wires, and various media.

The Texas HOB is silent on this type of property.

Credit Cards. One significant excluded type of property is credit cards, electronic fund transfer (EFT) cards, or access devices, with a coverage “give-back” of $500 for fraud or theft of such items, and counterfeit U.S. and Canadian currency.

The Texas HOB is silent on this type of property.

Art. The HO3 policy is silent on coverage for art objects such as paintings, sculptures, vases, or similar items. An ordinary reading of the policy terms would suggest these items are covered as any other item of personal property for their “actual cash value” (ACV). ACV, a term defined not in the policy but, in the ordinary practice of insurance, means the market cost of a similar item less an amount for wear and tear or physical depreciation, but no more than the amount required to repair or replace the item. Since most art is unique and irreplaceable, determining the value of a “similar” item is difficult.

The Texas HOB is silent as to this type of property.

Collectibles. Collectibles such as coin and stamp collections, comic books, rare books, sports trading cards, and collectible memorabilia present an unusual problem. Such items are covered but only for their nominal value (coins and stamps) or ACV.

For example, the rarest penny, a 1909 S VDB, with a base numismatic value of $500 in good condition, is valued at one cent, and a Mickey Mantel Topps #311 baseball card would be valued as a piece of used cardboard, not the $5.2 million it brought at auction.

The Texas HOB is silent on this type of property.

Trees. Additional coverages offered by the HO3 include limitations both in the exclusion of certain perils or special limits. Trees, shrubs, and plants are covered for seven named perils; importantly, loss by wind is not one of the seven. Further, there is a limit of $500 for any one tree, shrub, or plant. However, there is an extension of coverage for only the cost of removal of a tree felled by windstorm, hail, or weight of ice, snow, or sleet in the amount of $1,000 for any one loss, $500 for any one tree.

For example, say a homeowner has three trees—a pine, an oak, and a hickory, costing $400, $500, and $600, respectively. If the homeowner has a loss due to a covered peril, such as a teenaged driver running into the hickory, that would be one loss. The loss is under $1,000, but there is a limit of $500 for any one tree. The homeowner would receive $500 for that tree.

Now assume the home catches fire and is destroyed, taking with it all three trees. Again, that is one loss, so the most the homeowner would receive is $1,000. If the fire destroyed only the pine and the hickory, it is still one loss ($1,000 limit), but now she would receive only $900 ($400 for the pine and $500 for the hickory), even though the total cost of both the pine and hickory is $1,000.

The Texas HOB limits coverage for trees to 5 percent of Coverage A limits, subject to a maximum of $250 per tree, which includes the cost of removal.

These are not the only limitations, restrictions, and exclusions applying to personal property, but most other limitations address either property specifically insured elsewhere or business-related property the typical homeowner does not possess.

Once limitations are identified, the homeowner has three options to address these limitations: insure the property or increase the limits provided; reduce the likelihood or severity of the loss with loss control measures; or retain the financial consequences of a loss that is not insured.

Money and Securities. The recommended option is to limit the amount of money and securities kept in the home. With the convenience of ATMs, there is little need for a homeowner to have significant sums of cash in the home. While home safes offer limited protection for cash and important documents, a better treatment is to store them in a safe deposit box at a bank.

Watercraft. Watercraft is best insured separately or endorsed to the homeowners policy, subject to restrictions as to length of the watercraft and horsepower of the motor. This approach is convenient when there are multiple small watercraft, such as kayaks or canoes. Under the Texas HOB, owners of watercraft, even nonpowered watercraft, need to purchase separate insurance.

Trailers. Trailers must be insured separately on an automobile policy when the value exceeds the special limit. A homeowner can eliminate this exposure by simply renting trailers when needed.

Jewelry and Firearms. Jewelry and firearms are best insured using a different policy form, the inland marine form, often called a personal property floater. Items are valued according to bills of sale or appraisals and are covered for a wider variety of perils than offered on the homeowners policy, including full insured value for theft. Owners of such items should keep these items in a secured location or device as a loss control measure.

Precious Metals. Objects made of precious metals are best insured on a personal property floater and kept in a secured location or device as a loss control measure.

Business Personal Property. Business personal property is typically covered by the insurance carried by the business and is included in the homeowners policy as a convenience for the special value. The homeowner keeping such property in the residence should confirm the business has adequate limits for the property away from the insured business location.

Electronic Apparatus. The preferred approach to address this special limit is to limit the number and value of devices and related materials while in a motor vehicle, and to secure it out of sight when the vehicle is parked. The standard automobile policy excludes such equipment unless it is permanently installed in the vehicle, and media is excluded entirely.

Credit Cards. Credit card issuers and banks often provide protection, including transaction limitations. Electronic devices used to access credit cards, banking information, and transfer funds should be protected by security software.

Art and Collectibles. These items should be separately insured on a personal property floater. Alarm systems and/or secured storage should be used as a loss control measure.

Trees, Shrubs, and Plants. The homeowner will have to assume the risk of loss for these items, as coverage is not available beyond the special limit.

A homeowner should not assume all property is covered for all perils under all circumstances simply because a homeowners policy was purchased. It is as important to understand what the policy does not cover because of exclusions, restrictions, or limitations to avoid disappointment or unexpected expense at the time of a loss.

Dr. Rudolph (famousreindeer2@yahoo.com) has 20 years in insurance brokerage and 30 years of experience in insurance and risk management consulting and education.