1-1 By: Pitts (Senate Sponsor - Lucio) H.B. No. 2033 1-2 (In the Senate - Received from the House May 3, 2001; 1-3 May 4, 2001, read first time and referred to Committee on Natural 1-4 Resources; May 11, 2001, reported favorably by the following vote: 1-5 Yeas 7, Nays 0; May 11, 2001, sent to printer.) 1-6 A BILL TO BE ENTITLED 1-7 AN ACT 1-8 relating to requiring notice to purchasers of real property located 1-9 in a certificated service area of a utility service provider 1-10 regarding the cost or availability of water or sewer service. 1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-12 SECTION 1. Subchapter G, Chapter 13, Water Code, is amended 1-13 by adding Section 13.257 to read as follows: 1-14 Sec. 13.257. NOTICE TO PURCHASERS. (a) In this section, 1-15 "utility service provider" means a utility, a water supply or sewer 1-16 service corporation, or a special utility district organized and 1-17 operating under Chapter 65. 1-18 (b) If a person proposes to sell or convey unimproved real 1-19 property located in a certificated service area of a utility 1-20 service provider, the person must give to the purchaser written 1-21 notice as prescribed by this section. An executory contract for 1-22 the purchase and sale of real property that has a performance 1-23 period of more than six months is considered a sale of real 1-24 property under this section. 1-25 (c) This section does not apply to: 1-26 (1) a transfer of title under any type of lien 1-27 foreclosure; 1-28 (2) a transfer of title by deed in cancellation of 1-29 indebtedness secured by a lien on the property conveyed; 1-30 (3) a transfer of title by reason of a will or probate 1-31 proceeding; 1-32 (4) a transfer of title to or from a governmental 1-33 entity; 1-34 (5) a transfer of title to property located within the 1-35 corporate limits of a municipality; 1-36 (6) a transfer of title to property that receives 1-37 water or sewer service from a utility service provider on the date 1-38 the property is transferred; 1-39 (7) a transfer of title by a trustee in bankruptcy; 1-40 (8) a transfer of title by a mortgagee or beneficiary 1-41 under a deed of trust who acquired the property: 1-42 (A) at a sale conducted under a power of sale 1-43 conferred by a deed of trust or other contract lien; 1-44 (B) at a sale under a court judgment foreclosing 1-45 a lien; or 1-46 (C) by a deed in lieu of foreclosure; 1-47 (9) a transfer of title from one co-owner to another 1-48 co-owner; 1-49 (10) a transfer of title between spouses or to a 1-50 person in the lineal line of consanguinity of the transferor; or 1-51 (11) a transfer of a mineral interest, leasehold 1-52 interest, or security interest. 1-53 (d) The notice must be executed by the seller and read as 1-54 follows: 1-55 "The real property, described below, that you are about to 1-56 purchase is located in the water or sewer service area of 1-57 ___________________, which is the utility service provider 1-58 authorized by law to provide water or sewer service to your 1-59 property. No other retail public utility is authorized to provide 1-60 water or sewer service to your property. There may be special 1-61 costs or charges that you will be required to pay before you can 1-62 receive water or sewer service. There may be a period required to 1-63 construct lines or other facilities necessary to provide water or 1-64 sewer service to your property. You are advised to contact the 2-1 utility service provider to determine the cost that you will be 2-2 required to pay and the period, if any, that is required to provide 2-3 water or sewer service to your property. 2-4 "The undersigned purchaser hereby acknowledges receipt of the 2-5 foregoing notice at or before the execution of a binding contract 2-6 for the purchase of the real property described in the notice or at 2-7 closing of purchase of the real property. 2-8 ______________________ 2-9 Date 2-10 _______________________________ 2-11 Signature of Purchaser 2-12 "(Note: Correct name of utility service provider is to be 2-13 placed in the appropriate space.) Except for notices included as 2-14 an addendum to or paragraph of a purchase contract, the notice must 2-15 be executed by the seller and purchaser, as indicated." 2-16 (e) The notice must be given to the prospective purchaser 2-17 before the execution of a binding contract of purchase and sale. 2-18 The notice may be given separately or as an addendum to or 2-19 paragraph of the contract. If the seller fails to provide the 2-20 notice required by this section, the purchaser may terminate the 2-21 contract. If the seller provides the notice at or before the 2-22 closing of the purchase and sale contract and the purchaser elects 2-23 to close even though the notice was not timely provided before the 2-24 execution of the contract, it is conclusively presumed that the 2-25 purchaser has waived all rights to terminate the contract and 2-26 recover damages or pursue other remedies or rights under this 2-27 section. Notwithstanding any provision of this section to the 2-28 contrary, a seller, title insurance company, real estate broker, or 2-29 examining attorney, or an agent, representative, or person acting 2-30 on behalf of the seller, company, broker, or attorney, is not 2-31 liable for damages under Subsection (m) or (n) or liable for any 2-32 other damages to any person for: 2-33 (1) failing to provide the notice required by this 2-34 section to a purchaser before the execution of a binding contract 2-35 of purchase and sale or at or before the closing of the purchase 2-36 and sale contract if: 2-37 (A) the utility service provider did not file 2-38 the map of the certificated service area in the real property 2-39 records of the county in which the service area is located and with 2-40 the commission depicting the boundaries of the service area of the 2-41 utility service provider as shown in the real property records of 2-42 the county in which the service area is located; and 2-43 (B) the commission did not maintain an accurate 2-44 map of the certificated service area of the utility service 2-45 provider as required by this chapter; or 2-46 (2) unintentionally providing a notice required by 2-47 this section that is incorrect under the circumstances before the 2-48 execution of a binding contract of purchase and sale or at or 2-49 before the closing of the purchase and sale contract. 2-50 (f) The purchaser shall sign the notice or the purchase and 2-51 sale contract that includes the notice to evidence the purchaser's 2-52 receipt of the notice. 2-53 (g) At the closing of the purchase and sale contract, a 2-54 separate copy of the notice with current information shall be 2-55 executed by the seller and purchaser, acknowledged, and 2-56 subsequently recorded in the real property records of the county in 2-57 which the property is located. In completing the notice to be 2-58 executed by the seller and purchaser at the closing of the purchase 2-59 and sale contract, any seller, title insurance company, real estate 2-60 broker, or examining attorney, or any agent, representative, or 2-61 person acting on behalf of the seller, company, broker, or 2-62 attorney, may rely on the accuracy of the information required by 2-63 this chapter that is last filed in the real property records by the 2-64 utility service provider and the accuracy of the map of the 2-65 certificated service area of the utility service provider. Any 2-66 information taken from the map is, for purposes of this section, 2-67 conclusively presumed to be correct as a matter of law. Any 2-68 subsequent seller, purchaser, title insurance company, real estate 2-69 broker, examining attorney, or lienholder may rely on the map of 3-1 the certificated service area filed in the real property records by 3-2 the utility service provider. 3-3 (h) In completing the notice required to be given to a 3-4 prospective purchaser before the execution of a binding contract of 3-5 purchase and sale, any seller, and any person completing the notice 3-6 on behalf of the seller, may rely on the information contained in 3-7 the map of the certificated service area filed in the real property 3-8 records by the utility service provider. Any subsequent seller, 3-9 purchaser, title insurance company, real estate broker, examining 3-10 attorney, or lienholder may rely on the map of the certificated 3-11 service area filed in the real property records by the utility 3-12 service provider. 3-13 (i) If the notice is given at closing as provided by 3-14 Subsection (g), a purchaser, or the purchaser's heirs, successors, 3-15 or assigns, may not maintain an action for damages or maintain an 3-16 action against a seller, title insurance company, real estate 3-17 broker, or lienholder, or any agent, representative, or person 3-18 acting on behalf of the seller, company, broker, or lienholder, by 3-19 reason of the seller's use of the information filed with the 3-20 commission by the utility service provider or the seller's use of 3-21 the map of the certificated service area of the utility service 3-22 provider filed in the real property records to determine whether 3-23 the property to be purchased is within the certificated service 3-24 area of the utility service provider. An action may not be 3-25 maintained against a title insurance company for the failure to 3-26 disclose that the described real property is included within the 3-27 certificated service area of a utility service provider if the 3-28 utility service provider did not file in the real property records 3-29 or with the commission the map of the certificated service area. 3-30 (j) Any purchaser who purchases real property in a 3-31 certificated service area of a utility service provider and who 3-32 subsequently sells or conveys the property is conclusively 3-33 considered on the closing of the subsequent sale to have waived any 3-34 previous right to damages under this section. 3-35 (k) It is the express intent of this section that any 3-36 seller, title insurance company, examining attorney, vendor of 3-37 property and tax information, real estate broker, or lienholder, or 3-38 any agent, representative, or person acting on behalf of the 3-39 seller, company, attorney, vendor, broker, or lienholder, may rely 3-40 for the purpose of completing the notice required by this section 3-41 on the accuracy of the map of the certificated service area of the 3-42 utility service provider filed in the real property records by the 3-43 utility service provider. 3-44 (l) Except as otherwise provided by Subsection (e), if any 3-45 sale or conveyance of real property within the certificated service 3-46 area of a utility service provider fails to comply with this 3-47 section, the purchaser may file a suit for damages under Subsection 3-48 (m) or (n). 3-49 (m) If the sale or conveyance of real property fails to 3-50 comply with this section, the purchaser may file a suit for damages 3-51 in the amount of all costs related to the purchase of the property 3-52 plus interest and reasonable attorney's fees. The suit for damages 3-53 may be filed jointly or severally against the individual or entity 3-54 that sold or conveyed the property to the purchaser. Following the 3-55 recovery of damages under this subsection, the amount of the 3-56 damages shall be paid first to satisfy all unpaid obligations on 3-57 each outstanding lien on the property and the remainder of the 3-58 damage amount shall be paid to the purchaser. On payment of all 3-59 damages respectively to each lienholder and the purchaser, the 3-60 purchaser shall reconvey the property to the seller. 3-61 (n) If the sale or conveyance of the property fails to 3-62 comply with this section, the purchaser may file a suit for damages 3-63 in an amount not to exceed $5,000, plus reasonable attorney's fees. 3-64 (o) A purchaser may not recover damages under both 3-65 Subsections (m) and (n). An entry of a final decision awarding 3-66 damages to the purchaser under either Subsection (m) or (n) 3-67 precludes the purchaser from recovering damages under the other 3-68 subsection. Notwithstanding general or special law or the common 3-69 law of this state to the contrary, the relief provided under 4-1 Subsections (m) and (n) provides the exclusive remedy for a 4-2 purchaser aggrieved by the seller's failure to comply with this 4-3 section. Any action for damages under this section does not apply 4-4 to, affect, alter, or impair the validity of any existing vendor's 4-5 lien, mechanic's lien, or deed of trust lien on the property. 4-6 (p) A suit for damages under this section must be filed by 4-7 the earlier of: 4-8 (1) a date on or before the 90th day after the date 4-9 the purchaser discovers: 4-10 (A) the cost the purchaser is required to pay to 4-11 the utility service provider to obtain water or sewer service; or 4-12 (B) the period required by the utility service 4-13 provider to provide water or sewer service; or 4-14 (2) the fourth anniversary of the date the property 4-15 was sold or conveyed to the purchaser. 4-16 (q) Notwithstanding any other provision of this section to 4-17 the contrary, a purchaser may not recover damages under this 4-18 section if the person: 4-19 (1) purchases an equity interest in real property and, 4-20 in conjunction with the purchase, assumes any liens, including a 4-21 purchase money lien; and 4-22 (2) does not require proof of title by abstract, title 4-23 insurance policy, or any other method. 4-24 SECTION 2. (a) This Act takes effect September 1, 2001. 4-25 (b) The change in law made by this Act applies only to a 4-26 transfer of property that occurs on or after the effective date of 4-27 this Act. For purposes of this section, a transfer of property 4-28 occurs before the effective date of this Act if the contract of 4-29 purchase and sale binding the purchaser to purchase the property 4-30 was executed before that date. 4-31 (c) Property transferred before the effective date of this 4-32 Act is covered by the law in effect when the property was 4-33 transferred, and the former law is continued in effect for that 4-34 purpose. 4-35 * * * * *