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                                  * * * * *