By Solomons                                           H.B. No. 2605
         76R8371 PAM-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to providing a right of rescission for certain owners
 1-3     executing residential construction contracts for improvements on
 1-4     homestead property.
 1-5           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-6           SECTION 1.  Subchapter K, Chapter 53, Property Code, is
 1-7     amended by adding Section 53.2541 to read as follows:
 1-8           Sec. 53.2541.  RIGHT OF RESCISSION.  (a)  This section
 1-9     applies only to a residential construction contract for the repair
1-10     or renovation of  homestead property if the contract is executed at
1-11     the homestead property by the owner or by either spouse in the case
1-12     of a family homestead.
1-13           (b)  This section does not apply if:
1-14                 (1)  the owner or, in the case of a family homestead,
1-15     both spouses are represented by a licensed attorney; or
1-16                 (2)  the residential construction contract is
1-17     negotiated by a licensed real estate broker.
1-18           (c)  The owner, or either spouse in the case of a family
1-19     homestead, may rescind a contract subject to this section as
1-20     provided by Chapter 39, Business & Commerce Code.
1-21           SECTION 2.  Subchapter K, Chapter 53, Property Code, is
1-22     amended by adding Section 53.2551 to read as follows:
1-23           Sec. 53.2551.  ADDITIONAL DISCLOSURE STATEMENT REQUIRED FOR
1-24     CERTAIN RESIDENTIAL CONSTRUCTION CONTRACTS.  (a)  This section
 2-1     applies only to a residential construction contract for the repair
 2-2     or renovation of homestead property if the contract is executed at
 2-3     the homestead property by the owner or by either spouse in the case
 2-4     of a family homestead.
 2-5           (b)  This section does not apply if:
 2-6                 (1)  the owner or, in the case of a family homestead,
 2-7     both spouses are represented by a licensed attorney; or
 2-8                 (2)  the residential construction contract is
 2-9     negotiated by a licensed real estate broker.
2-10           (c)  A contract subject to this section must contain a
2-11     disclosure statement as prescribed by Chapter 39, Business &
2-12     Commerce Code.
2-13           (d)  The failure of a contractor to comply with this section
2-14     does not invalidate a lien under this chapter.
2-15           (e)  A purchaser, lender, or assignee for value without
2-16     actual knowledge may conclusively rely on a statement in a
2-17     residential  construction contract initialed by the owner or, in
2-18     the case of a family homestead, both spouses acknowledging that the
2-19     contract was not signed at the homestead property.
2-20           SECTION 3.  This Act takes effect January 1, 2000, but only
2-21     if the constitutional amendment proposed by the 76th Legislature,
2-22     Regular Session, 1999, prescribing requirements for imposing a lien
2-23     for work and material used in the construction, repair, or
2-24     renovation of improvements on homestead property, takes effect.  If
2-25     that amendment is not approved by the voters, this Act has no
2-26     effect.
2-27           SECTION 4.  The importance of this legislation and the
 3-1     crowded condition of the calendars in both houses create an
 3-2     emergency and an imperative public necessity that the
 3-3     constitutional rule requiring bills to be read on three several
 3-4     days in each house be suspended, and this rule is hereby suspended.