By Ellis S.B. No. 319 76R3444 PAM-D A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to disclosure notices required for the sale of certain 1-3 residential real property. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. Subchapter A, Chapter 5, Property Code, is 1-6 amended by adding Sections 5.012 and 5.013 to read as follows: 1-7 Sec. 5.012. NOTICE OF HOMESTEAD FORECLOSURE INFORMATION. 1-8 (a) A seller of residential real property comprising not more than 1-9 one dwelling unit located in this state shall give to the purchaser 1-10 of the property before the transfer of the property a written 1-11 notice as prescribed by this section. 1-12 (b) The notice must be conspicuous and printed in 14-point 1-13 bold-faced type and read substantially similar to the following: 1-14 NOTICE OF HOMESTEAD FORECLOSURE INFORMATION 1-15 CONCERNING THE PROPERTY AT (street address and city) 1-16 WARNING: UNDER TEXAS LAW, YOU MAY LOSE THIS PROPERTY THROUGH 1-17 FORECLOSURE, EVEN IF IT IS DESIGNATED AS HOMESTEAD PROPERTY, IF YOU 1-18 FAIL TO TIMELY PAY ANY OF THE FOLLOWING OBLIGATIONS: 1-19 (1) a purchase money obligation secured by a lien on 1-20 this property; 1-21 (2) a home improvement contract obligation secured by 1-22 a lien on this property; 1-23 (3) a property owners' association assessment and 1-24 certain related costs secured by a lien on this property, including 2-1 a lien provided for in restrictive covenants applicable to this 2-2 property; 2-3 (4) ad valorem property taxes assessed against this 2-4 property; 2-5 (5) federal income taxes owed by you; or 2-6 (6) a lien on this property that preexists your 2-7 purchase of this property and that was not paid at the time you 2-8 purchased this property. 2-9 Depending on state law or the terms of the agreement relating 2-10 to the financial obligation, a financial obligation listed above 2-11 may be foreclosed by judicial foreclosure, which would require the 2-12 filing of a lawsuit against you, or by nonjudicial foreclosure, 2-13 which would require notifying you but would not require the filing 2-14 of a lawsuit against you. In certain circumstances, attorney's 2-15 fees and other costs associated with the foreclosure may be added 2-16 to the original obligation, which would increase the amount of the 2-17 debt owed. 2-18 If you cease using this home as your primary residence or 2-19 otherwise lose your homestead exemption, the failure to timely pay 2-20 financial obligations other than those listed above may result in 2-21 the foreclosure of this property. 2-22 I UNDERSTAND THAT I CAN LOSE THIS PROPERTY THROUGH 2-23 FORECLOSURE FOR THE REASONS STATED ABOVE. 2-24 Date:__________ ________________________________________ 2-25 Signature of Purchaser 2-26 Print Name:_________________________ 2-27 Property Address:_____________________ 3-1 (c) The seller's failure to provide the notice required by 3-2 this section: 3-3 (1) is a false, misleading, or deceptive act or 3-4 practice within the meaning of Section 17.46, Business & Commerce 3-5 Code, and is actionable in a public or private suit brought under 3-6 Subchapter E, Chapter 17, Business & Commerce Code; and 3-7 (2) entitles the purchaser to cancel and rescind the 3-8 purchase contract and receive a full refund of any purchase payment 3-9 made to the seller. 3-10 Sec. 5.013. NOTICE OF OBLIGATIONS RELATED TO MEMBERSHIP IN 3-11 PROPERTY OWNERS' ASSOCIATION. (a) A seller of residential real 3-12 property that is subject to membership in a property owners' 3-13 association and comprising not more than one dwelling unit located 3-14 in this state shall give to the purchaser of the property before 3-15 the transfer of the property a written notice as prescribed by 3-16 this section. 3-17 (b) The notice must be conspicuous and printed in 14-point 3-18 bold-faced type and read substantially similar to the following: 3-19 NOTICE OF MEMBERSHIP IN PROPERTY OWNERS' ASSOCIATION 3-20 CONCERNING THE PROPERTY AT (street address) 3-21 (name of residential community) 3-22 As a purchaser of property in this residential community, you 3-23 are obligated to be a member of (name of property owners' 3-24 association). 3-25 Restrictive covenants governing the use and occupancy of 3-26 property located in this residential community and a dedicatory 3-27 instrument governing the establishment, maintenance, and operation 4-1 of this residential community have been or will be recorded in the 4-2 Real Property Records of (name of county). Copies of the 4-3 restrictive covenants and dedicatory instrument may be obtained 4-4 from the county clerk. 4-5 The restrictive covenants ________ may ________ may not be 4-6 amended without the approval of the members of the property owners' 4-7 association. 4-8 You are obligated to pay assessments to the property owners' 4-9 association. The amount of the assessments is subject to change. 4-10 Your failure to pay the assessments could result in a lien on and 4-11 the foreclosure of your property. 4-12 THE STATEMENTS CONTAINED IN THIS NOTICE ARE SUMMARY IN 4-13 NATURE. AS A PROSPECTIVE PURCHASER, YOU SHOULD REFER TO THE 4-14 RESTRICTIVE COVENANTS AND THE DEDICATORY INSTRUMENT FOR FURTHER 4-15 DETAIL. 4-16 I UNDERSTAND MY OBLIGATIONS RELATING TO MEMBERSHIP IN THE 4-17 PROPERTY OWNERS' ASSOCIATION AS STATED ABOVE. 4-18 Date:__________ ________________________________________ 4-19 Signature of Purchaser 4-20 Print Name:_________________________ 4-21 Property Address:_____________________ 4-22 (c) The seller's failure to provide the notice required by 4-23 this section: 4-24 (1) is a false, misleading, or deceptive act or 4-25 practice within the meaning of Section 17.46, Business & Commerce 4-26 Code, and is actionable in a public or private suit brought under 4-27 Subchapter E, Chapter 17, Business & Commerce Code; and 5-1 (2) entitles the purchaser to cancel and rescind the 5-2 purchase contract and receive a full refund of any purchase payment 5-3 made to the seller. 5-4 SECTION 2. This Act takes effect September 1, 1999. The 5-5 change in law made by this Act applies only to a real property 5-6 transaction described by this Act in which the transfer of the 5-7 property occurs on or after the effective date of this Act. 5-8 SECTION 3. The importance of this legislation and the 5-9 crowded condition of the calendars in both houses create an 5-10 emergency and an imperative public necessity that the 5-11 constitutional rule requiring bills to be read on three several 5-12 days in each house be suspended, and this rule is hereby suspended.