By: Moncrief, et al. S.B. No. 198
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to executory contracts for the conveyance of real
1-3 property.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subchapters D and E, Chapter 5, Property Code,
1-6 are amended to consolidate the subchapters by amending and
1-7 redesignating Section 5.065 as Section 5.061, amending and
1-8 redesignating Section 5.091 as Section 5.062, amending and
1-9 redesignating Section 5.062 as Section 5.063, amending and
1-10 redesignating Section 5.061 as Section 5.064, amending and
1-11 redesignating Section 5.063 as Section 5.065, amending and
1-12 redesignating Section 5.101 as Section 5.066, redesignating Section
1-13 5.064 as Section 5.067, amending and redesignating Section 5.093 as
1-14 Section 5.068, amending and redesignating Section 5.094 as Section
1-15 5.069, adding Section 5.070, amending and redesignating Section
1-16 5.095 as Section 5.071, adding Section 5.072, amending and
1-17 redesignating Section 5.096 as Section 5.073, redesignating Section
1-18 5.097 as Section 5.074, amending and redesignating Section 5.098 as
1-19 Section 5.075, amending and redesignating Section 5.099 as Section
1-20 5.076, amending and redesignating Section 5.100 as Section 5.077,
1-21 adding Section 5.078, amending and redesignating Section 5.102 as
1-22 Section 5.079, and redesignating Section 5.103 as Section 5.080 to
1-23 read as follows:
1-24 Sec. 5.061 [5.065]. DEFINITION [DEFAULT]. In this
1-25 subchapter, "default" means the failure to:
2-1 (1) make a timely payment; or
2-2 (2) comply with a term of an executory contract.
2-3 Sec. 5.062 [5.091]. APPLICABILITY. (a) [This subchapter
2-4 applies only to an executory contract that covers real property
2-5 located in a county that, as determined by the Texas Department of
2-6 Housing and Community Affairs:]
2-7 [(1) has a per capita income that averaged 25 percent
2-8 below the state average for the most recent three consecutive years
2-9 for which statistics are available and an unemployment rate that
2-10 averaged 25 percent above the state average for the most recent
2-11 three consecutive years for which statistics are available; and]
2-12 [(2) is within 200 miles of an international border.]
2-13 [(b)] This subchapter applies only to a transaction
2-14 involving an executory contract for conveyance of real property
2-15 used or to be used as the purchaser's residence or as the residence
2-16 of a person related to the purchaser within the second degree by
2-17 consanguinity or affinity, as determined under Chapter 573,
2-18 Government Code. For purposes of this subchapter, a lot measuring
2-19 one acre or less is presumed to be residential property.
2-20 (b) [(c)] This subchapter does not apply to a transaction
2-21 involving the sale of state land or a sale of land by the Veterans'
2-22 Land Board under an executory contract.
2-23 (c) [(d)] This subchapter does not apply to an executory
2-24 contract that provides for the delivery of a deed from the seller
2-25 to the purchaser within 180 days of the date of the final execution
2-26 of the executory contract.
3-1 (d) Section 5.066 and Sections 5.068-5.080 do not apply to a
3-2 transaction involving an executory contract for conveyance if the
3-3 purchaser of the property:
3-4 (1) is related to the seller of the property within
3-5 the second degree by consanguinity or affinity, as determined under
3-6 Chapter 573, Government Code; and
3-7 (2) has waived the applicability of those sections in
3-8 a written agreement.
3-9 Sec. 5.063 [5.062]. NOTICE. (a) Notice under Section 5.064
3-10 [5.061 of this code] must be in writing and[. If the notice is
3-11 mailed, it] must be delivered by registered or certified mail,
3-12 return receipt requested. The notice must be conspicuous and
3-13 printed in 14-point boldface type or 14-point uppercase typewritten
3-14 letters, and must include on a separate page the statement:
3-15 NOTICE
3-16 YOU ARE NOT COMPLYING WITH THE TERMS OF THE CONTRACT TO
3-17 BUY YOUR PROPERTY. UNLESS YOU TAKE THE ACTION
3-18 SPECIFIED IN THIS NOTICE BY (date) THE SELLER HAS THE
3-19 RIGHT TO TAKE POSSESSION OF YOUR PROPERTY.
3-20 (b) The notice must also:
3-21 (1) identify and explain the remedy the seller intends
3-22 to enforce;
3-23 (2) if the purchaser has failed to make a timely
3-24 payment, specify:
3-25 (A) the delinquent amount, itemized into
3-26 principal and interest;
4-1 (B) any additional charges claimed, such as late
4-2 charges or attorney's fees; and
4-3 (C) the period to which the delinquency and
4-4 additional charges relate; and
4-5 (3) if the purchaser has failed to comply with a term
4-6 of the contract, identify the term violated and the action required
4-7 to cure the violation.
4-8 (c) Notice by mail is given when it is mailed to the
4-9 purchaser's residence or place of business. [Notice by other
4-10 writing is given when it is delivered to the purchaser at the
4-11 purchaser's residence or place of business.] The affidavit of a
4-12 person knowledgeable of the facts to the effect that notice was
4-13 given is prima facie evidence of notice in an action involving a
4-14 subsequent bona fide purchaser for value if the purchaser is not in
4-15 possession of the real property and if the stated time to avoid the
4-16 forfeiture has expired. A bona fide subsequent purchaser for value
4-17 who relies upon the affidavit under this subsection shall take
4-18 title free and clear of the contract.
4-19 Sec. 5.064 [5.061]. SELLER'S REMEDIES ON DEFAULT [AVOIDANCE
4-20 OF FORFEITURE AND ACCELERATION OR OF RESCISSION]. A seller may
4-21 enforce the remedy of rescission or of forfeiture and acceleration
4-22 against a purchaser in default under an executory contract for
4-23 conveyance of real property [used or to be used as the purchaser's
4-24 residence] only if:
4-25 (1) the seller notifies the purchaser of:
4-26 (A) [(1)] the seller's intent to enforce a
5-1 remedy under this section; and
5-2 (B) [(2)] the purchaser's right to cure the
5-3 default within the 60-day period described by Section 5.065;
5-4 (2) the purchaser fails to cure the default within the
5-5 60-day period described by Section 5.065; and
5-6 (3) Section 5.066 does not apply [expiration of the
5-7 following periods:]
5-8 [(A) if the purchaser has paid less than 10
5-9 percent of the purchase price, 15 days after the date notice is
5-10 given;]
5-11 [(B) if the purchaser has paid 10 percent or
5-12 more but less than 20 percent of the purchase price, 30 days after
5-13 the date notice is given; and]
5-14 [(C) if the purchaser has paid 20 percent or
5-15 more of the purchase price, 60 days after the date notice is
5-16 given].
5-17 Sec. 5.065 [5.063]. RIGHT TO CURE DEFAULT. Notwithstanding
5-18 an agreement to the contrary, a purchaser in default under an
5-19 executory contract for the conveyance of real property [used or to
5-20 be used as the purchaser's residence] may[, at any time before
5-21 expiration of the applicable period provided by Section 5.061 of
5-22 this code,] avoid the enforcement of a remedy described by Section
5-23 5.064 [that section] by complying with the terms of the contract on
5-24 or before the 60th day after the date notice is given under that
5-25 section [up to the date of compliance].
5-26 Sec. 5.066 [5.101]. EQUITY PROTECTION; SALE OF PROPERTY.
6-1 (a) If a purchaser defaults after the purchaser has paid 40
6-2 percent or more of the amount due or the equivalent of 48 monthly
6-3 payments under the executory contract, the seller is granted the
6-4 power to sell, through a trustee designated by the seller, the
6-5 purchaser's interest in the property as provided by this section.
6-6 The seller may not enforce the remedy of rescission or of
6-7 forfeiture and acceleration.
6-8 (b) The seller shall notify a purchaser of a default under
6-9 the contract and allow the purchaser at least 60 days after the
6-10 date notice is given to cure the default. The notice must be
6-11 provided as prescribed by Section 5.063 [5.062] except that the
6-12 notice must substitute the following statement:
6-13 NOTICE
6-14 YOU ARE NOT COMPLYING WITH THE TERMS OF THE CONTRACT TO
6-15 BUY YOUR PROPERTY. UNLESS YOU TAKE THE ACTION
6-16 SPECIFIED IN THIS NOTICE BY (date) A TRUSTEE DESIGNATED
6-17 BY THE SELLER HAS THE RIGHT TO SELL YOUR PROPERTY AT A
6-18 PUBLIC AUCTION.
6-19 (c) The trustee or a substitute trustee designated by the
6-20 seller must post, file, and serve a notice of sale and the county
6-21 clerk shall record and maintain the notice of sale as prescribed by
6-22 Section 51.002. A notice of sale is not valid unless it is given
6-23 after the period to cure has expired.
6-24 (d) The trustee or a substitute trustee designated by the
6-25 seller must conduct the sale as prescribed by Section 51.002. The
6-26 seller must:
7-1 (1) convey to a purchaser at a sale conducted under
7-2 this section fee simple title to the real property; and
7-3 (2) warrant that the property is free from any
7-4 encumbrance.
7-5 (e) The remaining balance of the amount due under the
7-6 executory contract is the debt for purposes of a sale under this
7-7 section. If the proceeds of the sale exceed the debt amount, the
7-8 seller shall disburse the excess funds to the purchaser under the
7-9 executory contract. If the proceeds of the sale are insufficient
7-10 to extinguish the debt amount, the seller's right to recover the
7-11 resulting deficiency is subject to Sections 51.003, 51.004, and
7-12 51.005 unless a provision of the executory contract releases the
7-13 purchaser under the contract from liability.
7-14 (f) The affidavit of a person knowledgeable of the facts
7-15 that states that the notice was given and the sale was conducted as
7-16 provided by this section is prima facie evidence of those facts [in
7-17 an action involving a bona fide purchaser at the sale or a
7-18 subsequent bona fide purchaser for value if the purchaser under the
7-19 executory contract is not in possession of the property and if the
7-20 period to cure the default has expired]. A [bona fide] purchaser
7-21 for value who relies on an affidavit under this subsection acquires
7-22 title to the property free and clear of the executory contract.
7-23 (g) If a purchaser defaults before the purchaser has paid 40
7-24 percent of the amount due or the equivalent of 48 monthly payments
7-25 under the executory contract, the seller may enforce the remedy of
7-26 rescission or of forfeiture and acceleration of the indebtedness if
8-1 the seller complies with the notice requirements of Sections 5.063
8-2 and 5.064 [5.061 and 5.062].
8-3 Sec. 5.067 [5.064]. PLACEMENT OF LIEN FOR UTILITY SERVICE.
8-4 Notwithstanding any terms of a contract to the contrary, the
8-5 placement of a lien for the reasonable value of improvements to
8-6 residential real estate for purposes of providing utility service
8-7 to the property shall not constitute a default under the terms of
8-8 an executory contract for the purchase of the real property.
8-9 Sec. 5.068 [5.093]. FOREIGN [SPANISH] LANGUAGE REQUIREMENT.
8-10 (a) If the negotiations that precede the execution of an executory
8-11 contract are conducted primarily in Spanish, the seller shall
8-12 provide a copy in Spanish of all written documents relating to the
8-13 transaction, including the contract, disclosure notices [notice],
8-14 [and] annual accounting statements, [required by this subchapter]
8-15 and a notice of default required by this subchapter [Subchapter D].
8-16 (b) If the negotiations that precede the execution of an
8-17 executory contract are conducted primarily in a language other than
8-18 English, the seller shall provide a copy in that language of all
8-19 written documents relating to the transaction, including the
8-20 contract, disclosure notices, annual accounting statements, and a
8-21 notice of default required by this subchapter.
8-22 (c) The attorney general, on the request of a seller, shall
8-23 provide document translation services for the purpose of assisting
8-24 the seller in complying with this section.
8-25 (d) Subsections (b) and (c) take effect beginning on the
8-26 first day of the first state fiscal biennium for which the
9-1 legislature appropriates funds to the attorney general to provide
9-2 document translation services to sellers for the purpose of
9-3 assisting sellers in complying with this section.
9-4 Sec. 5.069 [5.094]. SELLER'S DISCLOSURE OF PROPERTY
9-5 CONDITION. (a) Before an executory contract is signed by the
9-6 purchaser, the seller shall provide the purchaser with:
9-7 (1) a survey, which was completed within the past
9-8 year, or plat of a current survey of the real property;
9-9 (2) a legible copy of any document that describes an
9-10 encumbrance or other claim, including a restrictive covenant or
9-11 easement, that affects title to the real property; and
9-12 (3) a written notice, which must be attached to the
9-13 contract, informing the purchaser of the condition of the property
9-14 that must, at a minimum, be executed by the seller and purchaser
9-15 and read substantially similar to the following:
9-16 WARNING
9-17 IF ANY OF THE ITEMS BELOW HAVE NOT BEEN CHECKED, YOU MAY NOT BE
9-18 ABLE TO LIVE ON THE PROPERTY.
9-19 SELLER'S DISCLOSURE NOTICE
9-20 CONCERNING THE PROPERTY AT (street address or legal description and
9-21 city)
9-22 THIS DOCUMENT STATES CERTAIN APPLICABLE FACTS ABOUT THE PROPERTY
9-23 [LAND] YOU ARE CONSIDERING PURCHASING.
9-24 CHECK ALL THE ITEMS THAT ARE APPLICABLE OR TRUE:
9-25 ____ The property is in a recorded subdivision.
9-26 ____ The property has water service that provides potable water.
10-1 ____ The property has sewer service.
10-2 ____ The property has been approved by the appropriate municipal,
10-3 county, or state agency for installation of a septic system.
10-4 ____ The property has electric service.
10-5 ____ The property is not in a floodplain.
10-6 ____ The roads to the boundaries of the property are paved and
10-7 maintained by:
10-8 ____ the seller;
10-9 ____ the owner of the property on which the road exists;
10-10 ____ the municipality;
10-11 ____ the county; or
10-12 ____ the state.
10-13 ____ No individual or entity other than the seller:
10-14 (1) owns the property;
10-15 (2) has a claim of ownership to the property; or
10-16 (3) has an interest in the property.
10-17 ____ No individual or entity has a lien filed against the
10-18 property.
10-19 [____ There are no back taxes owed on the property.]
10-20 ____ There are no restrictive covenants, easements, or other title
10-21 exceptions or encumbrances that prohibit construction of a house on
10-22 the property.
10-23 NOTICE: SELLER ADVISES PURCHASER TO:
10-24 (1) OBTAIN A TITLE ABSTRACT OR TITLE COMMITMENT
10-25 COVERING THE PROPERTY AND HAVE THE ABSTRACT OR COMMITMENT REVIEWED
10-26 BY AN ATTORNEY BEFORE SIGNING A CONTRACT OF THIS TYPE; AND
11-1 (2) PURCHASE AN OWNER'S POLICY OF TITLE INSURANCE
11-2 COVERING THE PROPERTY.
11-3 ____________________________ ____________________________
11-4 (Date) (Signature of Seller)
11-5 ____________________________ ____________________________
11-6 (Date) (Signature of Purchaser)
11-7 (b) If the property is not located in a recorded
11-8 subdivision, the seller shall provide the purchaser with a separate
11-9 disclosure form stating that utilities may not be available to the
11-10 property until the subdivision is recorded as required by law.
11-11 (c) If the seller advertises property for sale under an
11-12 executory contract, the advertisement must disclose information
11-13 regarding the availability of water, sewer, and electric service.
11-14 (d) The seller's failure to provide information required by
11-15 this section:
11-16 (1) is a false, misleading, or deceptive act or
11-17 practice within the meaning of Section 17.46, Business & Commerce
11-18 Code, and is actionable in a public or private suit brought under
11-19 Subchapter E, Chapter 17, Business & Commerce Code; and
11-20 (2) entitles the purchaser to cancel and rescind the
11-21 executory contract and receive a full refund of all payments made
11-22 to the seller.
11-23 (e) Subsection (d) does not limit the purchaser's remedy
11-24 against the seller for other false, misleading, or deceptive acts
11-25 or practices actionable in a suit brought under Subchapter E,
11-26 Chapter 17, Business & Commerce Code.
12-1 Sec. 5.070. SELLER'S DISCLOSURE OF TAX PAYMENTS AND
12-2 INSURANCE COVERAGE. (a) Before an executory contract is signed by
12-3 the purchaser, the seller shall provide the purchaser with:
12-4 (1) a tax certificate from the collector for each
12-5 taxing unit that collects taxes due on the property as provided by
12-6 Section 31.08, Tax Code; and
12-7 (2) a legible copy of any insurance policy, binder, or
12-8 other evidence relating to the property that indicates:
12-9 (A) the name of the insurer and the insured;
12-10 (B) a description of the property insured; and
12-11 (C) the amount for which the property is
12-12 insured.
12-13 (b) The seller's failure to provide information required by
12-14 this section:
12-15 (1) is a false, misleading, or deceptive act or
12-16 practice within the meaning of Section 17.46, Business & Commerce
12-17 Code, and is actionable in a public or private suit brought under
12-18 Subchapter E, Chapter 17, Business & Commerce Code; and
12-19 (2) entitles the purchaser to cancel and rescind the
12-20 executory contract and receive a full refund of all payments made
12-21 to the seller.
12-22 (c) Subsection (b) does not limit the purchaser's remedy
12-23 against the seller for other false, misleading, or deceptive acts
12-24 or practices actionable in a suit brought under Subchapter E,
12-25 Chapter 17, Business & Commerce Code.
12-26 Sec. 5.071 [5.095]. SELLER'S DISCLOSURE OF FINANCING TERMS.
13-1 Before an executory contract is signed by the purchaser, the seller
13-2 shall provide to the purchaser a written statement that specifies:
13-3 (1) the purchase price of the property;
13-4 (2) the interest rate charged under the contract;
13-5 (3) the dollar amount, or an estimate of the dollar
13-6 amount if the interest rate is variable, of the interest charged
13-7 for the term of the contract;
13-8 (4) the total amount of principal and interest to be
13-9 paid under the contract;
13-10 (5) the late charge, if any, that may be assessed
13-11 under the contract; and
13-12 (6) the fact that the seller may not charge a
13-13 prepayment penalty or any similar fee if the purchaser elects to
13-14 pay the entire amount due under the contract before the scheduled
13-15 payment date under the contract.
13-16 Sec. 5.072. ORAL AGREEMENTS PROHIBITED. (a) An executory
13-17 contract is not enforceable unless the contract is in writing and
13-18 signed by the party to be bound or by that party's authorized
13-19 representative.
13-20 (b) The rights and obligations of the parties to a contract
13-21 are determined solely from the written contract, and any prior oral
13-22 agreements between the parties are superseded by and merged into
13-23 the contract.
13-24 (c) An executory contract may not be varied by any oral
13-25 agreements or discussions that occur before or contemporaneously
13-26 with the execution of the contract.
14-1 (d) The seller shall include in a separate document or in a
14-2 provision of the contract a statement printed in 14-point boldfaced
14-3 type or 14-point uppercase typewritten letters that reads
14-4 substantially similar to the following:
14-5 THIS EXECUTORY CONTRACT REPRESENTS THE FINAL AGREEMENT
14-6 BETWEEN THE SELLER AND PURCHASER AND MAY NOT BE
14-7 CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
14-8 SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
14-9 NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
14-10 _____________________ ____________________________
14-11 (Date) (Signature of Seller)
14-12 _____________________ ____________________________
14-13 (Date) (Signature of Purchaser)
14-14 (e) The seller's failure to provide the notice required by
14-15 this section:
14-16 (1) is a false, misleading, or deceptive act or
14-17 practice within the meaning of Section 17.46, Business & Commerce
14-18 Code, and is actionable in a public or private suit brought under
14-19 Subchapter E, Chapter 17, Business & Commerce Code; and
14-20 (2) entitles the purchaser to cancel and rescind the
14-21 executory contract and receive a full refund of all payments made
14-22 to the seller.
14-23 (f) Subsection (e) does not limit the purchaser's remedy
14-24 against the seller for other false, misleading, or deceptive acts
14-25 or practices actionable in a suit brought under Subchapter E,
14-26 Chapter 17, Business & Commerce Code.
15-1 Sec. 5.073 [5.096]. CONTRACT TERMS PROHIBITED. A seller may
15-2 not include as a term of the executory contract a provision that:
15-3 (1) imposes an additional late-payment fee that
15-4 exceeds the lesser of:
15-5 (A) eight percent of the monthly payment under
15-6 the contract; or
15-7 (B) the actual administrative cost of processing
15-8 the late payment;
15-9 (2) prohibits the purchaser from pledging the
15-10 purchaser's interest in the property as security to obtain a loan
15-11 to place improvements, including utility improvements or fire
15-12 protection improvements, on the property; or
15-13 (3) imposes a prepayment penalty or any similar fee if
15-14 the purchaser elects to pay the entire amount due under the
15-15 contract before the scheduled payment date under the contract.
15-16 Sec. 5.074 [5.097]. PURCHASER'S RIGHT TO CANCEL CONTRACT
15-17 WITHOUT CAUSE. (a) In addition to other rights or remedies
15-18 provided by law, the purchaser may cancel and rescind an executory
15-19 contract for any reason by sending by telegram or certified or
15-20 registered mail, return receipt requested, or by delivering in
15-21 person a signed, written notice of cancellation to the seller not
15-22 later than the 14th day after the date of the contract.
15-23 (b) If the purchaser cancels the contract as provided by
15-24 Subsection (a), the seller shall, not later than the 10th day after
15-25 the date the seller receives the purchaser's notice of
15-26 cancellation:
16-1 (1) return to the purchaser the executed contract and
16-2 any property exchanged or payments made by the purchaser under the
16-3 contract; and
16-4 (2) cancel any security interest arising out of the
16-5 contract.
16-6 (c) The seller shall include in immediate proximity to the
16-7 space reserved in the executory contract for the purchaser's
16-8 signature a statement printed in 14-point boldface type or 14-point
16-9 uppercase typewritten letters that reads substantially similar to
16-10 the following:
16-11 YOU, THE PURCHASER, MAY CANCEL THIS CONTRACT AT ANY
16-12 TIME DURING THE NEXT TWO WEEKS. THE DEADLINE FOR
16-13 CANCELING THE CONTRACT IS (date). THE ATTACHED NOTICE
16-14 OF CANCELLATION EXPLAINS THIS RIGHT.
16-15 (d) The seller shall provide a notice of cancellation form
16-16 to the purchaser at the time the purchaser signs the executory
16-17 contract that is printed in 14-point boldface type or 14-point
16-18 uppercase typewritten letters and that reads substantially similar
16-19 to the following:
16-20 NOTICE OF CANCELLATION
16-21 (date of contract)
16-22 YOU MAY CANCEL THE EXECUTORY CONTRACT FOR ANY
16-23 REASON WITHOUT ANY PENALTY OR OBLIGATION BY (date).
16-24 (1) YOU MUST SEND BY TELEGRAM OR CERTIFIED OR
16-25 REGISTERED MAIL, RETURN RECEIPT REQUESTED, OR DELIVER
16-26 IN PERSON A SIGNED AND DATED COPY OF THIS CANCELLATION
17-1 NOTICE OR ANY OTHER WRITTEN NOTICE TO (Name of Seller)
17-2 AT (Seller's Address) BY (date).
17-3 (2) THE SELLER SHALL, NOT LATER THAN THE 10TH
17-4 DAY AFTER THE DATE THE SELLER RECEIVES YOUR
17-5 CANCELLATION NOTICE:
17-6 (A) RETURN THE EXECUTED CONTRACT AND ANY
17-7 PROPERTY EXCHANGED OR PAYMENTS MADE BY YOU UNDER THE
17-8 CONTRACT; AND
17-9 (B) CANCEL ANY SECURITY INTEREST ARISING
17-10 OUT OF THE CONTRACT.
17-11 I ACKNOWLEDGE RECEIPT OF THIS NOTICE OF CANCELLATION
17-12 FORM.
17-13 _________________________ _______________________
17-14 (Date) (Purchaser's Signature)
17-15 I HEREBY CANCEL THIS CONTRACT.
17-16 _________________________ _______________________
17-17 (Date) (Purchaser's Signature)
17-18 (e) The seller may not request the purchaser to sign a
17-19 waiver of receipt of the notice of cancellation form required by
17-20 this section.
17-21 Sec. 5.075 [5.098]. PURCHASER'S RIGHT TO PLEDGE INTEREST IN
17-22 PROPERTY ON CONTRACTS ENTERED INTO BEFORE SEPTEMBER 1, 2001 [1995].
17-23 (a) On an executory contract entered into before September 1, 2001
17-24 [1995], a purchaser may pledge the interest in the property, which
17-25 accrues pursuant to Section 5.066 [5.101], only to obtain a loan
17-26 for improving the safety of the property or any improvements on the
18-1 property.
18-2 (b) Loans that improve the safety of the property and
18-3 improvements on the property include loans for:
18-4 (1) improving or connecting a residence to water
18-5 service;
18-6 (2) improving or connecting a residence to a
18-7 wastewater system;
18-8 (3) building or improving a septic system;
18-9 (4) structural improvements in the residence; and
18-10 (5) improved fire protection.
18-11 Sec. 5.076 [5.099]. RECORDING REQUIREMENTS. (a) Except as
18-12 provided by Subsection (b), the seller shall record the executory
18-13 contract, including the attached disclosure statement required by
18-14 Section 5.069 [5.094], as prescribed by Title 3 on or before the
18-15 30th day after the date the contract is executed.
18-16 (b) Section 12.002(c) does not apply to an executory
18-17 contract filed for record under this section.
18-18 (c) If the executory contract is terminated for any reason,
18-19 the seller shall record the instrument that terminates the
18-20 contract.
18-21 (d) The county clerk shall collect the filing fee prescribed
18-22 by Section 118.011, Local Government Code.
18-23 Sec. 5.077 [5.100]. ANNUAL ACCOUNTING STATEMENT. (a) The
18-24 seller shall provide the purchaser with an annual statement in
18-25 January of each year for the term of the executory contract. If
18-26 the seller mails the statement to the purchaser, the statement must
19-1 be postmarked not later than January 31.
19-2 (b) The statement must include the following information:
19-3 (1) the amount paid under the contract;
19-4 (2) the remaining amount owed under the contract;
19-5 (3) the number of payments remaining under the
19-6 contract; [and]
19-7 (4) the amounts paid to taxing authorities on the
19-8 purchaser's behalf if collected by the seller;
19-9 (5) the amounts paid to insure the property on the
19-10 purchaser's behalf if collected by the seller;
19-11 (6) if the property has been damaged and the seller
19-12 has received insurance proceeds, an accounting of the proceeds
19-13 applied to the property; and
19-14 (7) if the seller has changed insurance coverage, a
19-15 legible copy of the current policy, binder, or other evidence that
19-16 satisfies the requirements of Section 5.070(a)(2).
19-17 (c) A [If the] seller who fails to comply with Subsection
19-18 (a) is liable to[,] the purchaser for [may]:
19-19 (1) liquidated damages in the amount of $250 a day for
19-20 each day after January 31 that [notify] the seller fails to provide
19-21 [that] the purchaser with [has not received] the statement [and
19-22 will deduct 15 percent of each monthly payment due until the
19-23 statement is received]; and
19-24 (2) reasonable attorney's fees [not earlier than the
19-25 25th day after the date the purchaser provides the seller notice
19-26 under this subsection, deduct 15 percent of each monthly payment
20-1 due until the statement is received by the purchaser.]
20-2 [(d) A purchaser who makes a deduction under Subsection (c)
20-3 is not required to reimburse the seller for the amount deducted].
20-4 Sec. 5.078. DISPOSITION OF INSURANCE PROCEEDS. (a) The
20-5 named insured under an insurance policy, binder, or other coverage
20-6 relating to property subject to an executory contract for the
20-7 conveyance of real property shall inform the insurer, not later
20-8 than the 10th day after the date the coverage is obtained or the
20-9 contract executed, whichever is later, of:
20-10 (1) the executory contract for conveyance and the term
20-11 of the contract; and
20-12 (2) the name and address of the other party to the
20-13 contract.
20-14 (b) An insurer who disburses proceeds under an insurance
20-15 policy, binder, or other coverage relating to property that has
20-16 been damaged shall issue the proceeds jointly to the purchaser and
20-17 the seller designated in the contract.
20-18 (c) If proceeds under an insurance policy, binder, or other
20-19 coverage are disbursed, the purchaser and seller shall ensure that
20-20 the proceeds are used to repair, remedy, or improve the condition
20-21 on the property.
20-22 (d) The failure of a seller or purchaser to comply with
20-23 Subsection (c) is a false, misleading, or deceptive act or practice
20-24 within the meaning of Section 17.46, Business & Commerce Code, and
20-25 is actionable in a public or private suit brought under Subchapter
20-26 E, Chapter 17, Business & Commerce Code.
21-1 (e) Subsection (d) does not limit either party's remedy for
21-2 other false, misleading, or deceptive acts or practices actionable
21-3 in a suit brought under Subchapter E, Chapter 17, Business &
21-4 Commerce Code.
21-5 Sec. 5.079 [5.102]. TITLE TRANSFER. (a) The seller shall
21-6 transfer recorded, legal title of the property covered by the
21-7 executory contract to the purchaser not later than the 30th day
21-8 after the date the seller receives the purchaser's final payment
21-9 due under the contract.
21-10 (b) A seller who violates Subsection (a) is liable to the
21-11 purchaser for [subject to a penalty of]:
21-12 (1) liquidated damages in the amount of:
21-13 (A) $250 a day for each day the seller fails to
21-14 transfer the title to the purchaser during the period that begins
21-15 the 31st day and ends the 90th day after the date the seller
21-16 receives the purchaser's final payment due under the contract; and
21-17 (B) [(2)] $500 a day for each day the seller
21-18 fails to transfer title to the purchaser after the 90th day after
21-19 the date the seller receives the purchaser's final payment due
21-20 under the contract; and
21-21 (2) reasonable attorney's fees.
21-22 (c) If a person to whom a seller's property interest passes
21-23 by will or intestate succession is required to obtain a court order
21-24 to clarify the person's status as an heir or to clarify the status
21-25 of the seller or the property before the person may convey good and
21-26 indefeasible title to the property, the court in which the action
22-1 is pending may waive payment of the liquidated damages and
22-2 attorney's fees under Subsection (b) if the court finds that the
22-3 person is pursuing the action to establish good and indefeasible
22-4 title with reasonable diligence.
22-5 (d) [(c)] In this section, "seller" includes a successor,
22-6 assignee, personal representative, executor, or administrator of
22-7 the seller.
22-8 Sec. 5.080 [5.103]. LIABILITY FOR DISCLOSURES. For purposes
22-9 of this subchapter, a disclosure required by this subchapter that
22-10 is made by a seller's agent is a disclosure made by the seller.
22-11 SECTION 2. The following are repealed:
22-12 (1) the heading to Subchapter E, Chapter 5, Property
22-13 Code; and
22-14 (2) Section 5.092, Property Code.
22-15 SECTION 3. (a) This Act takes effect September 1, 2001.
22-16 (b) The changes in law made by Sections 5.063, 5.064, 5.065,
22-17 and 5.066, Property Code, as amended and redesignated by this Act,
22-18 apply only to a purchaser who defaults under Subchapter D, Chapter
22-19 5, Property Code, as amended by this Act, on or after September 1,
22-20 2001, regardless of when the contract was entered into. A
22-21 purchaser who is in default before September 1, 2001, is covered by
22-22 the law in effect when the default occurred, and the former law is
22-23 continued in effect for that purpose.
22-24 (c) The changes in law made by Sections 5.068 and 5.069,
22-25 Property Code, as amended and redesignated by this Act, and Section
22-26 5.070, Property Code, as added by this Act, apply only to
23-1 transactions involving executory contracts for conveyance for which
23-2 negotiations begin on or after September 1, 2001. For purposes of
23-3 this subsection, negotiations begin on the date an offer to enter
23-4 into an executory contract for conveyance is made. Transactions
23-5 involving executory contracts for conveyance for which negotiations
23-6 begin before September 1, 2001, are covered by the law in effect
23-7 when the negotiations began, and the former law is continued in
23-8 effect for that purpose.
23-9 (d) The change in law made by the amendment of Section 5.091
23-10 and the repeal of Section 5.092, Property Code, by this Act and the
23-11 application of Section 5.071, Property Code, as amended and
23-12 redesignated by this Act, and Section 5.080, Property Code, as
23-13 redesignated by this Act, applies only to transactions involving
23-14 executory contracts for conveyance for which negotiations begin on
23-15 or after September 1, 2001. For purposes of this subsection,
23-16 negotiations begin on the date an offer to enter into an executory
23-17 contract for conveyance is made.
23-18 (e) The change in law made by the amendment of Section 5.091
23-19 and the repeal of Section 5.092, Property Code, by this Act and the
23-20 application of Section 5.072, Property Code, as added by this Act,
23-21 Section 5.074, Property Code, as redesignated by this Act, and
23-22 Sections 5.073 and 5.076, Property Code, as amended and
23-23 redesignated by this Act, applies only to a contract entered into
23-24 on or after September 1, 2001.
23-25 (f) The change in law made by the amendment of Section 5.091
23-26 and the repeal of Section 5.092, Property Code, by this Act and the
24-1 application of Section 5.075, Property Code, as amended and
24-2 redesignated by this Act, applies to a purchaser on or after
24-3 September 1, 2001, who accrues interest as provided by that section
24-4 regardless of when the interest accrued.
24-5 (g) The changes in law made by the amendment of Section
24-6 5.091 and the repeal of Section 5.092, Property Code, by this Act
24-7 and the application of Subsections (a) and (b), Section 5.077,
24-8 Property Code, as amended and redesignated by this Act, and
24-9 Subsection (a), Section 5.079, Property Code, as redesignated by
24-10 this Act, apply to an executory contract on or after September 1,
24-11 2001, regardless of when the contract was entered into.
24-12 (h) The change in law made by Subsection (c), Section 5.077,
24-13 and Subsection (b), Section 5.079, Property Code, as amended and
24-14 redesignated by this Act, applies only to a violation that occurs
24-15 on or after September 1, 2001. A violation that occurs before
24-16 September 1, 2001, is covered by the law in effect when the
24-17 violation occurred, and the former law is continued in effect for
24-18 that purpose.
24-19 (i) The change in law made by Section 5.078, Property Code,
24-20 as added by this Act, applies to an executory contract regardless
24-21 of when the contract was entered into. A named insured who
24-22 currently holds an insurance policy binder or other coverage
24-23 relating to property subject to an executory contract shall notify
24-24 the insurer as provided by Subsection (a), Section 5.078, Property
24-25 Code, not later than January 1, 2002.