1-1 By: Brimer (Senate Sponsor - Brown) H.B. No. 1081 1-2 (In the Senate - Received from the House April 1, 1993; 1-3 April 5, 1993, read first time and referred to Committee on State 1-4 Affairs; May 5, 1993, reported favorably, as amended, by the 1-5 following vote: Yeas 7, Nays 0; May 5, 1993, sent to printer.) 1-6 COMMITTEE VOTE 1-7 Yea Nay PNV Absent 1-8 Harris of Dallas x 1-9 Rosson x 1-10 Carriker x 1-11 Henderson x 1-12 Leedom x 1-13 Lucio x 1-14 Luna x 1-15 Nelson x 1-16 Patterson x 1-17 Shelley x 1-18 Sibley x 1-19 West x 1-20 Whitmire x 1-21 COMMITTEE AMENDMENT NO. 1 By: Sibley 1-22 Amend H.B. 1081, Section 1 as follows: 1-23 (1) Strike lines 37 through 49 in Subsection (b), page 4; 1-24 (2) Strike Subsection (f) on page 5, and insert Subsection 1-25 (f) to read: 1-26 (f) The notice shall be delivered by the seller to the 1-27 purchaser on or before the effective date of an executory contract 1-28 binding the purchaser to purchase the property. If a contract is 1-29 entered without the seller providing the notice required by this 1-30 section, the purchaser may terminate the contract for any reason 1-31 within seven days after receiving the notice. 1-32 (3) Strike Subsection (g) on page 5. 1-33 COMMITTEE AMENDMENT NO. 2 By: Rosson 1-34 Amend H.B. No. 1081 as follows: 1-35 Amend SECTION 1 by striking lines 24 and 25 on page 4. 1-36 COMMITTEE AMENDMENT NO. 3 By: Carriker 1-37 Amend C.S.H.B. No. 1081 as follows: 1-38 Amend SECTION 1 by striking lines 11 and 12 on page 3 and 1-39 substituting the following: 1-40 2. Are there any defects or malfunctions in any of the 1-41 following? 1-42 Amend SECTION 1 by striking line 28 on page 3 and substituting the 1-43 following: 1-44 3. Write Yes (Y) if you are aware, write No (N) if you are 1-45 not aware. 1-46 Amend SECTION 1, by striking lines 2 and 3 on page 4 and 1-47 substituting the following: 1-48 4. Is any item, equipment, or system in or on the property 1-49 in need of repair? _____ Yes 1-50 Amend SECTION 1 by striking line 9 on page 4 and substituting the 1-51 following: 1-52 5. Do any of the following exist on or affect the property? 1-53 Amend SECTION 1 by adding a new subdivision (11) under subsection 1-54 5.008(e) after line 23 on page 5: 1-55 (11) transfers of real property where the value of any 1-56 dwelling does not exceed five percent (5%) of the value of the 1-57 property. 1-58 A BILL TO BE ENTITLED 1-59 AN ACT 1-60 relating to a seller's duty to disclose the condition of real 1-61 property to a purchaser. 1-62 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-63 SECTION 1. Subchapter A, Chapter 5, Property Code, is 1-64 amended by adding Section 5.008 to read as follows: 1-65 Sec. 5.008. SELLER'S DISCLOSURE OF PROPERTY CONDITION. 1-66 (a) A seller of residential real property comprising not more than 1-67 one dwelling unit located in this state shall give to the purchaser 1-68 of the property a written notice as prescribed by this section or a 2-1 written notice substantially similar to the notice prescribed by 2-2 this section which contains, at a minimum, all of the items in the 2-3 notice prescribed by this section. 2-4 (b) The notice must be executed and must, at a minimum, read 2-5 substantially similar to the following: 2-6 SELLER'S DISCLOSURE NOTICE 2-7 CONCERNING THE PROPERTY AT 2-8 (Street Address and City) 2-9 THIS NOTICE IS A DISCLOSURE OF SELLER'S KNOWLEDGE OF 2-10 THE CONDITION OF THE PROPERTY AS OF THE DATE SIGNED BY 2-11 SELLER AND IS NOT A SUBSTITUTE FOR ANY INSPECTIONS OR 2-12 WARRANTIES THE PURCHASER MAY WISH TO OBTAIN. IT IS NOT 2-13 A WARRANTY OF ANY KIND BY SELLER OR SELLER'S AGENTS. 2-14 Seller _____ is _____ is not occupying the Property. 2-15 If unoccupied, how long since Seller has occupied the Property? 2-16 ______________________ 2-17 1. The Property has the items checked below: 2-18 Write Yes (Y), No (N), or Unknown (U). 2-19 ____ Range ____ Oven ____ Microwave 2-20 ____ Dishwasher ____ Trash Compactor ____ Disposal 2-21 ____ Washer/Dryer ____ Window Screens ____ Rain Gutters 2-22 Hookups 2-23 ____ Security System ____ Fire Detection ____ Intercom 2-24 Equipment System 2-25 ____ TV Antenna ____ Cable TV Wiring ____ Satellite 2-26 Dish 2-27 ____ Ceiling Fan(s) ____ Attic Fan(s) ____ Exhaust 2-28 Fan(s) 2-29 ____ Central A/C ____ Central Heating ____ Wall/Window Air 2-30 Conditioning 2-31 ____ Plumbing System ____ Septic System ____ Public Sewer 2-32 System 2-33 ____ Patio/Decking ____ Outdoor Grill ____ Fences 2-34 ____ Pool ____ Sauna ____ Spa ___ Hot Tub 2-35 ____ Pool Equipment ____ Pool Heater ____ Automatic Lawn 2-36 Sprinkler 2-37 System 2-38 ____ Fireplace(s) & Chimney ____ Fireplace(s) & 2-39 (Woodburning) Chimney (Mock) 2-40 ____ Gas Lines (Nat./LP) ____ Gas Fixtures 2-41 Garage: ___ Attached ____ Not Attached ____ Carport 2-42 Garage Door Opener(s): ____ Electronic ____ Control(s) 2-43 Water Heater: ____ Gas ____ Electric 2-44 Water Supply: ___ City ____ Well ____ MUD ____ Co-op 2-45 Roof Type: _____________________ Age: _______________(approx) 2-46 Are you (Seller) aware of any of the above items that are not in 2-47 working condition, that have known defects, or that are in need of 2-48 repair? _____ Yes _____ No _____ Unknown. 2-49 If yes, then describe. (Attach additional sheets if necessary): 2-50 ___________________________________________________________________ 2-51 ___________________________________________________________________ 2-52 ___________________________________________________________________ 2-53 ___________________________________________________________________ 2-54 2. Are you (Seller) aware of any known defects/malfunctions in any 2-55 of the following? 2-56 Write Yes (Y), No (N), or Unknown (U). 2-57 ____ Interior Walls ____ Ceilings ____ Floors 2-58 ____ Exterior Walls ____ Doors ____ Windows 2-59 ____ Roof ____ Foundation/ ____ Basement 2-60 Slab(s) 2-61 ____ Walls/Fences ____ Driveways ____ Sidewalks 2-62 ____ Plumbing/Sewers/ ____ Electrical ____ Lighting 2-63 Septics Systems Fixtures 2-64 ____ Other Structural Components (Describe): _____________________ 2-65 ___________________________________________________________________ 2-66 ___________________________________________________________________ 2-67 If the answer to any of the above is yes, explain. (Attach 2-68 additional sheets if necessary): _________________________________ 2-69 ___________________________________________________________________ 2-70 ___________________________________________________________________ 3-1 3. Are you (Seller) aware of any of the following conditions? 3-2 Write Yes (Y), No (N), or Unknown (U). 3-3 ____ Active Termites ____ Previous Structural 3-4 (includes wood-destroying or Roof Repair 3-5 insects) 3-6 ____ Termite or Wood Rot Damage ____ Hazardous or Toxic 3-7 Needing Repair Waste 3-8 ____ Previous Termite Damage ____ Asbestos Components 3-9 ____ Previous Termite Treatment ____ Urea formaldehyde 3-10 Insulation 3-11 ____ Previous Flooding ____ Radon Gas 3-12 ____ Improper Drainage ____ Lead Based Paint 3-13 ____ Water Penetration ____ Aluminum Wiring 3-14 ____ Located in 100-Year ____ Previous Fires 3-15 Floodplain 3-16 ____ Present Flood Insurance ____ Unplatted Easements 3-17 Coverage 3-18 ____ Landfill, Settling, Soil ____ Subsurface 3-19 Movement, Fault Lines Structure or Pits 3-20 If the answer to any of the above is yes, explain. (Attach 3-21 additional sheets if necessary): _________________________________ 3-22 ___________________________________________________________________ 3-23 ___________________________________________________________________ 3-24 ___________________________________________________________________ 3-25 4. Are you (Seller) aware of any item, equipment, or system in 3-26 or on the property that is in need of repair? _________ Yes 3-27 ________ No _________ Unknown. If yes, explain (attach additional 3-28 sheets if necessary). ____________________________________________ 3-29 ___________________________________________________________________ 3-30 ___________________________________________________________________ 3-31 ___________________________________________________________________ 3-32 5. Are you (Seller) aware of any of the following? 3-33 Write Yes (Y), No (N), or Unknown (U). 3-34 ____ Room additions, structural modifications, or other 3-35 alterations or repairs made without necessary permits or not 3-36 in compliance with building codes in effect at that time. 3-37 ____ Homeowners' Association or maintenance fees or assessments. 3-38 ____ Any "common area" (facilities such as pools, tennis courts, 3-39 walkways, or other areas) co-owned in undivided interest with 3-40 others. 3-41 ____ Any notices of violations of deed restrictions or 3-42 governmental ordinances affecting the condition or use of the 3-43 Property. 3-44 ____ Any lawsuits directly or indirectly affecting the Property. 3-45 ____ Any condition on the Property which materially affects the 3-46 physical health or safety of an individual. 3-47 ____ Any murder, sexual assault (rape), or other serious assault 3-48 that occurred on the Property in the last twelve (12) months. 3-49 If the answer to any of the above is yes, explain. (Attach 3-50 additional sheets if necessary): _________________________ 3-51 ___________________________________________________________________ 3-52 ___________________________________________________________________ 3-53 ___________________________________________________________________ 3-54 ___________________________ _____________________________ 3-55 Date Signature of Seller 3-56 The undersigned purchaser hereby acknowledges receipt of the 3-57 foregoing notice. 3-58 ___________________________ _____________________________ 3-59 Date Signature of Purchaser 3-60 NOTICE: Section 5.008 of the Texas Property Code provides that 3-61 this notice shall be delivered to the purchaser before the 3-62 effective date of a contract binding the purchaser to purchase the 3-63 property. In the event a contract is entered into without this 3-64 notice being provided, the purchaser may terminate the contract 3-65 prior to closing. If the notice is furnished to the purchaser at 3-66 or prior to closing and the purchaser does not elect to terminate 3-67 the contract within 48 hours after receipt of this notice or if the 3-68 purchaser elects to close within 48 hours after receipt of this 3-69 notice, the purchaser will waive all rights to terminate the 3-70 contract for failing to timely receive this notice. In any event, 4-1 a purchaser is not entitled to rescind the purchase of the property 4-2 after closing for failing to receive this notice. 4-3 (c) A seller or seller's agent shall have no duty to make a 4-4 disclosure or release information related to whether a death by 4-5 natural causes, suicide, or accident unrelated to the condition of 4-6 the property occurred on the property or whether a previous 4-7 occupant had, may have had, has, or may have AIDS, HIV related 4-8 illnesses, or HIV infection. 4-9 (d) The notice shall be completed to the best of seller's 4-10 belief and knowledge as of the date the notice is completed and 4-11 signed by the seller. If the information required by the notice is 4-12 unknown to the seller, the seller shall indicate that fact on the 4-13 notice, and by that act is in compliance with this section. 4-14 (e) This section does not apply to a transfer: 4-15 (1) pursuant to a court order or foreclosure sale; 4-16 (2) by a trustee in bankruptcy; 4-17 (3) to a mortgage by a mortgagor or successor in 4-18 interest, or to a beneficiary of a deed of trust by a trustor or 4-19 successor in interest; 4-20 (4) by a mortgagee or a beneficiary under a deed of 4-21 trust who has acquired the real property at a sale conducted 4-22 pursuant to a power of sale under a deed of trust or a sale 4-23 pursuant to a court ordered foreclosure or has acquired the real 4-24 property by a deed in lieu of foreclosure; 4-25 (5) by a fiduciary in the course of the administration 4-26 of a decedent's estate, guardianship, conservatorship, or trust; 4-27 (6) from one co-owner to one or more other co-owners; 4-28 (7) made to a spouse or to a person or persons in the 4-29 lineal line of consanguinity of one or more of the transferors; 4-30 (8) between spouses resulting from a decree of 4-31 dissolution of marriage or a decree of legal separation or from a 4-32 property settlement agreement incidental to such a decree; 4-33 (9) to or from any governmental entity; or 4-34 (10) transfers of new residences of not less than one 4-35 or more than four dwelling units which have not previously been 4-36 occupied for residential purposes. 4-37 (f) The notice shall be delivered by the seller to the 4-38 purchaser on or before the effective date of an executory contract 4-39 binding the purchaser to purchase the property. If a contract of 4-40 purchase and sale is entered into without the seller providing the 4-41 notice required by this section, the purchaser is entitled to 4-42 terminate the contract prior to the closing of the contract. If, 4-43 however, the seller furnishes the notice required by this section 4-44 at or before closing the purchase and sale contract and the 4-45 purchaser does not elect to terminate the contract within 48 hours 4-46 after receipt of the notice or if the purchaser elects to close the 4-47 purchase and sale contract within 48 hours after receipt of the 4-48 notice, the purchaser waives all rights to terminate the contract 4-49 for failing to timely receive the notice required by this section. 4-50 Notwithstanding any other provision of this subchapter, a purchaser 4-51 is not entitled to rescind the sale or purchase of a property after 4-52 closing the purchase and sale contract for failing to receive or 4-53 failing to timely receive the notice required by this section. 4-54 (g) A seller who provides the information required by this 4-55 section is not liable for any error, inaccuracy, or omission unless 4-56 the seller knew of same and such misinformation was intended to 4-57 induce the purchaser into a transaction into which the purchaser 4-58 would not have entered had the information been correct. An agent 4-59 for the seller shall not be liable for any error, inaccuracy, or 4-60 omission of any information provided by the seller under this 4-61 section unless the agent had personal knowledge of the error, 4-62 inaccuracy, or omission and such misinformation was intended to 4-63 induce the purchaser into a transaction into which the purchaser 4-64 would not have entered had the information been correct. 4-65 SECTION 2. This Act takes effect January 1, 1994. 4-66 SECTION 3. The importance of this legislation and the 4-67 crowded condition of the calendars in both houses create an 4-68 emergency and an imperative public necessity that the 4-69 constitutional rule requiring bills to be read on three several 4-70 days in each house be suspended, and this rule is hereby suspended. 5-1 * * * * * 5-2 Austin, 5-3 Texas 5-4 May 5, 1993 5-5 Hon. Bob Bullock 5-6 President of the Senate 5-7 Sir: 5-8 We, your Committee on State Affairs to which was referred H.B. No. 5-9 1081, have had the same under consideration, and I am instructed to 5-10 report it back to the Senate with the recommendation that it do 5-11 pass, as amended, and be printed. 5-12 Harris of 5-13 Dallas, Chairman 5-14 * * * * * 5-15 WITNESSES 5-16 FOR AGAINST ON 5-17 FOR AGAINST ON 5-18 ___________________________________________________________________ 5-19 ___________________________________________________________________ 5-20 Name: Mark J Hanna x 5-21 Representing: Texas Realty Committee 5-22 City: Austin 5-23 ------------------------------------------------------------------- 5-24 Name: Ronald Walker x 5-25 Representing: Texas Assn of Realtors 5-26 City: Austin 5-27 ------------------------------------------------------------------- 5-28 Name: Parker McCullough x 5-29 Representing: Texas Assn of Realtors 5-30 City: Austin 5-31 ------------------------------------------------------------------- 5-32 Name: Don Harvey x 5-33 Representing: Don Harvey Realtors 5-34 City: Midland 5-35 ------------------------------------------------------------------- 5-36 Name: Ralph L Hull x 5-37 Representing: Indep Brokers of America Inc 5-38 City: Irving 5-39 ------------------------------------------------------------------- 5-40 Name: David Bragg x 5-41 Representing: Self 5-42 City: Austin 5-43 ------------------------------------------------------------------- 5-44 Name: Joe Longley x 5-45 Representing: Texas Trial Lawyers Assn 5-46 City: Austin 5-47 ------------------------------------------------------------------- 5-48 Name: Mike Curry x 5-49 Representing: Texas Trial Lawyers Assn 5-50 City: Austin 5-51 ------------------------------------------------------------------- 5-52 Name: Russell Blair x 5-53 Representing: Garland Board of Realtors 5-54 City: Garland 5-55 ------------------------------------------------------------------- 5-56 Name: Reggie James x 5-57 Representing: Consumers Union 5-58 City: Austin 5-59 ------------------------------------------------------------------- 5-60 Name: Gerald Uretsky x 5-61 Representing: Self 5-62 City: San Antonio 5-63 -------------------------------------------------------------------