1-1 By: Solomons (Senate Sponsor - Shapiro) H.B. No. 2224 1-2 (In the Senate - Received from the House May 5, 1999; 1-3 May 6, 1999, read first time and referred to Committee on State 1-4 Affairs; May 13, 1999, reported adversely, with favorable Committee 1-5 Substitute by the following vote: Yeas 7, Nays 0; May 13, 1999, 1-6 sent to printer.) 1-7 COMMITTEE SUBSTITUTE FOR H.B. No. 2224 By: Shapiro 1-8 A BILL TO BE ENTITLED 1-9 AN ACT 1-10 relating to requiring disclosure notices for the sale of real 1-11 property governed by a property owners' association and requiring 1-12 the filing of dedicatory instruments governing property owners' 1-13 associations. 1-14 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-15 SECTION 1. Subchapter A, Chapter 5, Property Code, is 1-16 amended by adding Section 5.012 to read as follows: 1-17 Sec. 5.012. NOTICE OF OBLIGATIONS RELATED TO MEMBERSHIP IN 1-18 PROPERTY OWNERS' ASSOCIATION. (a) A seller of residential real 1-19 property that is subject to membership in a property owners' 1-20 association and that comprises not more than one dwelling unit 1-21 located in this state shall give to the purchaser of the property a 1-22 written notice that reads substantially similar to the following: 1-23 NOTICE OF MEMBERSHIP IN PROPERTY OWNERS' ASSOCIATION 1-24 CONCERNING THE PROPERTY AT (street address) 1-25 (name of residential community) 1-26 As a purchaser of property in the residential community in 1-27 which this property is located, you are obligated to be a member of 1-28 a property owners' association. Restrictive covenants governing 1-29 the use and occupancy of the property and a dedicatory instrument 1-30 governing the establishment, maintenance, and operation of this 1-31 residential community have been or will be recorded in the Real 1-32 Property Records of the county in which the property is located. 1-33 Copies of the restrictive covenants and dedicatory instrument may 1-34 be obtained from the county clerk. 1-35 You are obligated to pay assessments to the property owners' 1-36 association. The amount of the assessments is subject to change. 1-37 Your failure to pay the assessments could result in a lien on and 1-38 the foreclosure of your property. 1-39 You are encouraged to obtain from the seller a resale 1-40 certificate that provides important information regarding the 1-41 property and the financial condition of the property owners' 1-42 association. 1-43 Date: ______________________________________ 1-44 Signature of Purchaser 1-45 (b) The seller shall deliver the notice to the purchaser 1-46 before the date the executory contract binds the purchaser to 1-47 purchase the property. The notice may be given separately, as part 1-48 of the contract during negotiations, or as part of any other notice 1-49 the seller delivers to the purchaser. If the notice is included as 1-50 part of the executory contract or another notice, the title of the 1-51 notice prescribed by this section, the references to the street 1-52 address and date in the notice, and the purchaser's signature on 1-53 the notice may be omitted. 1-54 (c) This section does not apply to a transfer: 1-55 (1) under a court order or foreclosure sale; 1-56 (2) by a trustee in bankruptcy; 1-57 (3) to a mortgagee by a mortgagor or successor in 1-58 interest or to a beneficiary of a deed of trust by a trustor or 1-59 successor in interest; 1-60 (4) by a mortgagee or a beneficiary under a deed of 1-61 trust who has acquired the land at a sale conducted under a power 1-62 of sale under a deed of trust or a sale under a court-ordered 1-63 foreclosure or has acquired the land by a deed in lieu of 1-64 foreclosure; 2-1 (5) by a fiduciary in the course of the administration 2-2 of a decedent's estate, guardianship, conservatorship, or trust; 2-3 (6) from one co-owner to another co-owner of an 2-4 undivided interest in the real property; 2-5 (7) to a spouse or a person in the lineal line of 2-6 consanguinity of the seller; 2-7 (8) to or from a governmental entity; 2-8 (9) of only a mineral interest, leasehold interest, or 2-9 security interest; or 2-10 (10) of a real property interest in a condominium. 2-11 (d) If an executory contract is entered into without the 2-12 seller providing the notice required by this section, the purchaser 2-13 may terminate the contract for any reason within the earlier of: 2-14 (1) seven days after the date the purchaser receives 2-15 the notice; or 2-16 (2) the date the transfer occurs as provided by the 2-17 executory contract. 2-18 (e) The purchaser's right to terminate the executory 2-19 contract under Subsection (d) is the purchaser's exclusive remedy 2-20 for the seller's failure to provide the notice required by this 2-21 section. 2-22 SECTION 2. Chapter 202, Property Code, is amended by adding 2-23 Section 202.006 to read as follows: 2-24 Sec. 202.006. PUBLIC RECORDS. A property owners' 2-25 association shall file the dedicatory instrument governing the 2-26 property owners' association in the real property records of each 2-27 county in which the property to which the dedicatory instrument 2-28 relates is located. 2-29 SECTION 3. (a) Except as provided by Subsection (b) of this 2-30 section, this Act takes effect September 1, 1999. 2-31 (b) Section 5.012, Property Code, as added by this Act, 2-32 takes effect January 1, 2000, and applies only to an executory 2-33 contract that is binding on a seller and purchaser on or after 2-34 January 1, 2000. 2-35 SECTION 4. Not later than January 1, 2000, each property 2-36 owners' association shall present for recording with the county 2-37 clerk as prescribed by Section 202.006, Property Code, as added by 2-38 this Act, each dedicatory instrument governing the association that 2-39 has not been previously recorded in the real property records of 2-40 the county. 2-41 SECTION 5. The importance of this legislation and the 2-42 crowded condition of the calendars in both houses create an 2-43 emergency and an imperative public necessity that the 2-44 constitutional rule requiring bills to be read on three several 2-45 days in each house be suspended, and this rule is hereby suspended. 2-46 * * * * *