77R6600 PAM-D
By Moncrief, et al. S.B. No. 198
Substitute the following for S.B. No. 198:
By Brimer C.S.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, are
1-6 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
2-1 subchapter, "default" means the failure to:
2-2 (1) make a timely payment; or
2-3 (2) comply with a term of an executory contract.
2-4 Sec. 5.062 [5.091]. APPLICABILITY. (a) [This subchapter
2-5 applies only to an executory contract that covers real property
2-6 located in a county that, as determined by the Texas Department of
2-7 Housing and Community Affairs:]
2-8 [(1) has a per capita income that averaged 25 percent
2-9 below the state average for the most recent three consecutive years
2-10 for which statistics are available and an unemployment rate that
2-11 averaged 25 percent above the state average for the most recent
2-12 three consecutive years for which statistics are available; and]
2-13 [(2) is within 200 miles of an international border.]
2-14 [(b)] This subchapter applies only to a transaction
2-15 involving an executory contract for conveyance of real property
2-16 used or to be used as the purchaser's residence or as the residence
2-17 of a person related to the purchaser within the second degree by
2-18 consanguinity or affinity, as determined under Chapter 573,
2-19 Government Code. For purposes of this subchapter, a lot measuring
2-20 one acre or less is presumed to be residential property.
2-21 (b) [(c)] This subchapter does not apply to a transaction
2-22 involving the sale of state land or a sale of land by the Veterans'
2-23 Land Board under an executory contract.
2-24 (c) [(d)] This subchapter does not apply to an executory
2-25 contract that provides for the delivery of a deed from the seller
2-26 to the purchaser within 180 days of the date of the final execution
2-27 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 SPECIFIED
3-18 IN THIS NOTICE BY (date) THE SELLER HAS THE RIGHT TO
3-19 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;
3-27 (B) any additional charges claimed, such as late
4-1 charges or attorney's fees; and
4-2 (C) the period to which the delinquency and
4-3 additional charges relate; and
4-4 (3) if the purchaser has failed to comply with a term
4-5 of the contract, identify the term violated and the action required
4-6 to cure the violation.
4-7 (c) Notice by mail is given when it is mailed to the
4-8 purchaser's residence or place of business. [Notice by other
4-9 writing is given when it is delivered to the purchaser at the
4-10 purchaser's residence or place of business.] The affidavit of a
4-11 person knowledgeable of the facts to the effect that notice was
4-12 given is prima facie evidence of notice in an action involving a
4-13 subsequent bona fide purchaser for value if the purchaser is not in
4-14 possession of the real property and if the stated time to avoid the
4-15 forfeiture has expired. A bona fide subsequent purchaser for value
4-16 who relies upon the affidavit under this subsection shall take
4-17 title free and clear of the contract.
4-18 Sec. 5.064 [5.061]. SELLER'S REMEDIES ON DEFAULT [AVOIDANCE
4-19 OF FORFEITURE AND ACCELERATION OR OF RESCISSION]. A seller may
4-20 enforce the remedy of rescission or of forfeiture and acceleration
4-21 against a purchaser in default under an executory contract for
4-22 conveyance of real property [used or to be used as the purchaser's
4-23 residence] only if:
4-24 (1) the seller notifies the purchaser of:
4-25 (A) [(1)] the seller's intent to enforce a
4-26 remedy under this section; and
4-27 (B) [(2)] the purchaser's right to cure the
5-1 default within the 60-day period described by Section 5.065;
5-2 (2) the purchaser fails to cure the default within the
5-3 60-day period described by Section 5.065; and
5-4 (3) Section 5.066 does not apply [expiration of the
5-5 following periods:]
5-6 [(A) if the purchaser has paid less than 10
5-7 percent of the purchase price, 15 days after the date notice is
5-8 given;]
5-9 [(B) if the purchaser has paid 10 percent or
5-10 more but less than 20 percent of the purchase price, 30 days after
5-11 the date notice is given; and]
5-12 [(C) if the purchaser has paid 20 percent or
5-13 more of the purchase price, 60 days after the date notice is
5-14 given].
5-15 Sec. 5.065 [5.063]. RIGHT TO CURE DEFAULT. Notwithstanding
5-16 an agreement to the contrary, a purchaser in default under an
5-17 executory contract for the conveyance of real property [used or to
5-18 be used as the purchaser's residence] may[, at any time before
5-19 expiration of the applicable period provided by Section 5.061 of
5-20 this code,] avoid the enforcement of a remedy described by Section
5-21 5.064 [that section] by complying with the terms of the contract on
5-22 or before the 60th day after the date notice is given under that
5-23 section [up to the date of compliance].
5-24 Sec. 5.066 [5.101]. EQUITY PROTECTION; SALE OF PROPERTY. (a)
5-25 If a purchaser defaults after the purchaser has paid 40 percent or
5-26 more of the amount due or the equivalent of 48 monthly payments
5-27 under the executory contract, the seller is granted the power to
6-1 sell, through a trustee designated by the seller, the purchaser's
6-2 interest in the property as provided by this section. The seller
6-3 may not enforce the remedy of rescission or of forfeiture and
6-4 acceleration.
6-5 (b) The seller shall notify a purchaser of a default under
6-6 the contract and allow the purchaser at least 60 days after the
6-7 date notice is given to cure the default. The notice must be
6-8 provided as prescribed by Section 5.063 [5.062] except that the
6-9 notice must substitute the following statement:
6-10 NOTICE
6-11 YOU ARE NOT COMPLYING WITH THE TERMS OF THE CONTRACT TO
6-12 BUY YOUR PROPERTY. UNLESS YOU TAKE THE ACTION SPECIFIED
6-13 IN THIS NOTICE BY (date) A TRUSTEE DESIGNATED BY THE
6-14 SELLER HAS THE RIGHT TO SELL YOUR PROPERTY AT A PUBLIC
6-15 AUCTION.
6-16 (c) The trustee or a substitute trustee designated by the
6-17 seller must post, file, and serve a notice of sale and the county
6-18 clerk shall record and maintain the notice of sale as prescribed by
6-19 Section 51.002. A notice of sale is not valid unless it is given
6-20 after the period to cure has expired.
6-21 (d) The trustee or a substitute trustee designated by the
6-22 seller must conduct the sale as prescribed by Section 51.002. The
6-23 seller must:
6-24 (1) convey to a purchaser at a sale conducted under
6-25 this section fee simple title to the real property; and
6-26 (2) warrant that the property is free from any
6-27 encumbrance.
7-1 (e) The remaining balance of the amount due under the
7-2 executory contract is the debt for purposes of a sale under this
7-3 section. If the proceeds of the sale exceed the debt amount, the
7-4 seller shall disburse the excess funds to the purchaser under the
7-5 executory contract. If the proceeds of the sale are insufficient
7-6 to extinguish the debt amount, the seller's right to recover the
7-7 resulting deficiency is subject to Sections 51.003, 51.004, and
7-8 51.005 unless a provision of the executory contract releases the
7-9 purchaser under the contract from liability.
7-10 (f) The affidavit of a person knowledgeable of the facts
7-11 that states that the notice was given and the sale was conducted as
7-12 provided by this section is prima facie evidence of those facts [in
7-13 an action involving a bona fide purchaser at the sale or a
7-14 subsequent bona fide purchaser for value if the purchaser under the
7-15 executory contract is not in possession of the property and if the
7-16 period to cure the default has expired]. A [bona fide] purchaser
7-17 for value who relies on an affidavit under this subsection acquires
7-18 title to the property free and clear of the executory contract.
7-19 (g) If a purchaser defaults before the purchaser has paid 40
7-20 percent of the amount due or the equivalent of 48 monthly payments
7-21 under the executory contract, the seller may enforce the remedy of
7-22 rescission or of forfeiture and acceleration of the indebtedness if
7-23 the seller complies with the notice requirements of Sections 5.063
7-24 and 5.064 [5.061 and 5.062].
7-25 Sec. 5.067 [5.064]. PLACEMENT OF LIEN FOR UTILITY SERVICE.
7-26 Notwithstanding any terms of a contract to the contrary, the
7-27 placement of a lien for the reasonable value of improvements to
8-1 residential real estate for purposes of providing utility service
8-2 to the property shall not constitute a default under the terms of
8-3 an executory contract for the purchase of the real property.
8-4 Sec. 5.068 [5.093]. FOREIGN [SPANISH] LANGUAGE REQUIREMENT.
8-5 If the negotiations that precede the execution of an executory
8-6 contract are conducted primarily in a language other than English
8-7 [Spanish], the seller shall provide a copy in that language
8-8 [Spanish] of all written documents relating to the transaction,
8-9 including the contract, disclosure notices [notice], [and] annual
8-10 accounting statements, [required by this subchapter] and a notice
8-11 of default required by this subchapter [Subchapter D].
8-12 Sec. 5.069 [5.094]. SELLER'S DISCLOSURE OF PROPERTY
8-13 CONDITION. (a) Before an executory contract is signed by the
8-14 purchaser, the seller shall provide the purchaser with:
8-15 (1) a survey, which was completed within the past
8-16 year, or plat of a current survey of the real property;
8-17 (2) a legible copy of any document that describes an
8-18 encumbrance or other claim, including a restrictive covenant or
8-19 easement, that affects title to the real property; and
8-20 (3) a written notice, which must be attached to the
8-21 contract, informing the purchaser of the condition of the property
8-22 that must, at a minimum, be executed by the seller and purchaser
8-23 and read substantially similar to the following:
8-24 WARNING
8-25 IF ANY OF THE ITEMS BELOW HAVE NOT BEEN CHECKED, YOU MAY NOT BE
8-26 ABLE TO LIVE ON THE PROPERTY.
8-27 SELLER'S DISCLOSURE NOTICE
9-1 CONCERNING THE PROPERTY AT (street address or legal description and
9-2 city)
9-3 THIS DOCUMENT STATES CERTAIN APPLICABLE FACTS ABOUT THE PROPERTY
9-4 [LAND] YOU ARE CONSIDERING PURCHASING.
9-5 CHECK ALL THE ITEMS THAT ARE APPLICABLE OR TRUE:
9-6 ____ The property is in a recorded subdivision.
9-7 ____ The property has water service that provides potable water.
9-8 ____ The property has sewer service.
9-9 ____ The property has been approved by the appropriate municipal,
9-10 county, or state agency for installation of a septic system.
9-11 ____ The property has electric service.
9-12 ____ The property is not in a floodplain.
9-13 ____ The roads to the boundaries of the property are paved and
9-14 maintained by:
9-15 ____ the seller;
9-16 ____ the owner of the property on which the road exists;
9-17 ____ the municipality;
9-18 ____ the county; or
9-19 ____ the state.
9-20 ____ No individual or entity other than the seller:
9-21 (1) owns the property;
9-22 (2) has a claim of ownership to the property; or
9-23 (3) has an interest in the property.
9-24 ____ No individual or entity has a lien filed against the
9-25 property.
9-26 [____ There are no back taxes owed on the property.]
9-27 ____ There are no restrictive covenants, easements, or other title
10-1 exceptions or encumbrances that prohibit construction of a house on
10-2 the property.
10-3 NOTICE: SELLER ADVISES PURCHASER TO:
10-4 (1) OBTAIN A TITLE ABSTRACT OR TITLE COMMITMENT COVERING THE
10-5 PROPERTY AND HAVE THE ABSTRACT OR COMMITMENT REVIEWED BY AN
10-6 ATTORNEY BEFORE SIGNING A CONTRACT OF THIS TYPE; AND
10-7 (2) PURCHASE AN OWNER'S POLICY OF TITLE INSURANCE COVERING
10-8 THE PROPERTY.
10-9 ____________________________ ____________________________
10-10 (Date) (Signature of Seller)
10-11
10-12 ____________________________ ____________________________
10-13 (Date) (Signature of Purchaser)
10-14 (b) If the property is not located in a recorded
10-15 subdivision, the seller shall provide the purchaser with a separate
10-16 disclosure form stating that utilities may not be available to the
10-17 property until the subdivision is recorded as required by law.
10-18 (c) If the seller advertises property for sale under an
10-19 executory contract, the advertisement must disclose information
10-20 regarding the availability of water, sewer, and electric service.
10-21 (d) The seller's failure to provide information required by
10-22 this section:
10-23 (1) is a false, misleading, or deceptive act or
10-24 practice within the meaning of Section 17.46, Business & Commerce
10-25 Code, and is actionable in a public or private suit brought under
10-26 Subchapter E, Chapter 17, Business & Commerce Code; and
10-27 (2) entitles the purchaser to cancel and rescind the
11-1 executory contract and receive a full refund of all payments made
11-2 to the seller.
11-3 (e) Subsection (d) does not limit the purchaser's remedy
11-4 against the seller for other false, misleading, or deceptive acts
11-5 or practices actionable in a suit brought under Subchapter E,
11-6 Chapter 17, Business & Commerce Code.
11-7 Sec. 5.070. SELLER'S DISCLOSURE OF TAX PAYMENTS AND
11-8 INSURANCE COVERAGE. (a) Before an executory contract is signed by
11-9 the purchaser, the seller shall provide the purchaser with:
11-10 (1) a tax certificate from the collector for each
11-11 taxing unit that collects taxes due on the property as provided by
11-12 Section 31.08, Tax Code; and
11-13 (2) a legible copy of any insurance policy, binder, or
11-14 other evidence relating to the property that indicates:
11-15 (A) the name of the insurer and the insured;
11-16 (B) a description of the property insured; and
11-17 (C) the amount for which the property is
11-18 insured.
11-19 (b) The seller's failure to provide information required by
11-20 this section:
11-21 (1) is a false, misleading, or deceptive act or
11-22 practice within the meaning of Section 17.46, Business & Commerce
11-23 Code, and is actionable in a public or private suit brought under
11-24 Subchapter E, Chapter 17, Business & Commerce Code; and
11-25 (2) entitles the purchaser to cancel and rescind the
11-26 executory contract and receive a full refund of all payments made
11-27 to the seller.
12-1 (c) Subsection (b) does not limit the purchaser's remedy
12-2 against the seller for other false, misleading, or deceptive acts
12-3 or practices actionable in a suit brought under Subchapter E,
12-4 Chapter 17, Business & Commerce Code.
12-5 Sec. 5.071 [5.095]. SELLER'S DISCLOSURE OF FINANCING TERMS.
12-6 Before an executory contract is signed by the purchaser, the seller
12-7 shall provide to the purchaser a written statement that specifies:
12-8 (1) the purchase price of the property;
12-9 (2) the interest rate charged under the contract;
12-10 (3) the dollar amount, or an estimate of the dollar
12-11 amount if the interest rate is variable, of the interest charged
12-12 for the term of the contract;
12-13 (4) the total amount of principal and interest to be
12-14 paid under the contract;
12-15 (5) the late charge, if any, that may be assessed
12-16 under the contract; and
12-17 (6) the fact that the seller may not charge a
12-18 prepayment penalty or any similar fee if the purchaser elects to
12-19 pay the entire amount due under the contract before the scheduled
12-20 payment date under the contract.
12-21 Sec. 5.072. ORAL AGREEMENTS PROHIBITED. (a) An executory
12-22 contract is not enforceable unless the contract is in writing and
12-23 signed by the party to be bound or by that party's authorized
12-24 representative.
12-25 (b) The rights and obligations of the parties to a contract
12-26 are determined solely from the written contract, and any prior oral
12-27 agreements between the parties are superseded by and merged into
13-1 the contract.
13-2 (c) An executory contract may not be varied by any oral
13-3 agreements or discussions that occur before or contemporaneously
13-4 with the execution of the contract.
13-5 (d) The seller shall include in a separate document or in a
13-6 provision of the contract a statement printed in 14-point boldfaced
13-7 type or 14-point uppercase typewritten letters that reads
13-8 substantially similar to the following:
13-9 THIS EXECUTORY CONTRACT REPRESENTS THE FINAL AGREEMENT
13-10 BETWEEN THE SELLER AND PURCHASER AND MAY NOT BE
13-11 CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
13-12 SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
13-13 UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
13-14 _____________________ ____________________________
13-15 (Date) (Signature of Seller)
13-16 _____________________ ____________________________
13-17 (Date) (Signature of Purchaser)
13-18 (e) The seller's failure to provide the notice required by
13-19 this section:
13-20 (1) is a false, misleading, or deceptive act or
13-21 practice within the meaning of Section 17.46, Business & Commerce
13-22 Code, and is actionable in a public or private suit brought under
13-23 Subchapter E, Chapter 17, Business & Commerce Code; and
13-24 (2) entitles the purchaser to cancel and rescind the
13-25 executory contract and receive a full refund of all payments made
13-26 to the seller.
13-27 (f) Subsection (e) does not limit the purchaser's remedy
14-1 against the seller for other false, misleading, or deceptive acts
14-2 or practices actionable in a suit brought under Subchapter E,
14-3 Chapter 17, Business & Commerce Code.
14-4 Sec. 5.073 [5.096]. CONTRACT TERMS PROHIBITED. A seller may
14-5 not include as a term of the executory contract a provision that:
14-6 (1) imposes an additional late-payment fee that
14-7 exceeds the lesser of:
14-8 (A) eight percent of the monthly payment under
14-9 the contract; or
14-10 (B) the actual administrative cost of processing
14-11 the late payment;
14-12 (2) prohibits the purchaser from pledging the
14-13 purchaser's interest in the property as security to obtain a loan
14-14 to place improvements, including utility improvements or fire
14-15 protection improvements, on the property; or
14-16 (3) imposes a prepayment penalty or any similar fee if
14-17 the purchaser elects to pay the entire amount due under the
14-18 contract before the scheduled payment date under the contract.
14-19 Sec. 5.074 [5.097]. PURCHASER'S RIGHT TO CANCEL CONTRACT
14-20 WITHOUT CAUSE. (a) In addition to other rights or remedies
14-21 provided by law, the purchaser may cancel and rescind an executory
14-22 contract for any reason by sending by telegram or certified or
14-23 registered mail, return receipt requested, or by delivering in
14-24 person a signed, written notice of cancellation to the seller not
14-25 later than the 14th day after the date of the contract.
14-26 (b) If the purchaser cancels the contract as provided by
14-27 Subsection (a), the seller shall, not later than the 10th day after
15-1 the date the seller receives the purchaser's notice of
15-2 cancellation:
15-3 (1) return to the purchaser the executed contract and
15-4 any property exchanged or payments made by the purchaser under the
15-5 contract; and
15-6 (2) cancel any security interest arising out of the
15-7 contract.
15-8 (c) The seller shall include in immediate proximity to the
15-9 space reserved in the executory contract for the purchaser's
15-10 signature a statement printed in 14-point boldface type or 14-point
15-11 uppercase typewritten letters that reads substantially similar to
15-12 the following:
15-13 YOU, THE PURCHASER, MAY CANCEL THIS CONTRACT AT ANY
15-14 TIME DURING THE NEXT TWO WEEKS. THE DEADLINE FOR
15-15 CANCELING THE CONTRACT IS (date). THE ATTACHED NOTICE
15-16 OF CANCELLATION EXPLAINS THIS RIGHT.
15-17 (d) The seller shall provide a notice of cancellation form
15-18 to the purchaser at the time the purchaser signs the executory
15-19 contract that is printed in 14-point boldface type or 14-point
15-20 uppercase typewritten letters and that reads substantially similar
15-21 to the following:
15-22 NOTICE OF CANCELLATION
15-23 (date of contract)
15-24 YOU MAY CANCEL THE EXECUTORY CONTRACT FOR ANY
15-25 REASON WITHOUT ANY PENALTY OR OBLIGATION BY (date).
15-26 (1) YOU MUST SEND BY TELEGRAM OR CERTIFIED OR
15-27 REGISTERED MAIL, RETURN RECEIPT REQUESTED, OR DELIVER
16-1 IN PERSON A SIGNED AND DATED COPY OF THIS CANCELLATION
16-2 NOTICE OR ANY OTHER WRITTEN NOTICE TO (Name of Seller)
16-3 AT (Seller's Address) BY (date).
16-4 (2) THE SELLER SHALL, NOT LATER THAN THE 10TH
16-5 DAY AFTER THE DATE THE SELLER RECEIVES YOUR
16-6 CANCELLATION NOTICE:
16-7 (A) RETURN THE EXECUTED CONTRACT AND ANY
16-8 PROPERTY EXCHANGED OR PAYMENTS MADE BY YOU UNDER THE
16-9 CONTRACT; AND
16-10 (B) CANCEL ANY SECURITY INTEREST ARISING OUT OF
16-11 THE CONTRACT.
16-12 I ACKNOWLEDGE RECEIPT OF THIS NOTICE OF
16-13 CANCELLATION FORM.
16-14 _________________________ _______________________
16-15 (Date) (Purchaser's Signature)
16-16 I HEREBY CANCEL THIS CONTRACT.
16-17 _________________________ _______________________
16-18 (Date) (Purchaser's Signature)
16-19 (e) The seller may not request the purchaser to sign a
16-20 waiver of receipt of the notice of cancellation form required by
16-21 this section.
16-22 Sec. 5.075 [5.098]. PURCHASER'S RIGHT TO PLEDGE INTEREST IN
16-23 PROPERTY ON CONTRACTS ENTERED INTO BEFORE SEPTEMBER 1, 2001 [1995].
16-24 (a) On an executory contract entered into before September 1, 2001
16-25 [1995], a purchaser may pledge the interest in the property, which
16-26 accrues pursuant to Section 5.066 [5.101], only to obtain a loan
16-27 for improving the safety of the property or any improvements on the
17-1 property.
17-2 (b) Loans that improve the safety of the property and
17-3 improvements on the property include loans for:
17-4 (1) improving or connecting a residence to water
17-5 service;
17-6 (2) improving or connecting a residence to a
17-7 wastewater system;
17-8 (3) building or improving a septic system;
17-9 (4) structural improvements in the residence; and
17-10 (5) improved fire protection.
17-11 Sec. 5.076 [5.099]. RECORDING REQUIREMENTS. (a) Except as
17-12 provided by Subsection (b), the seller shall record the executory
17-13 contract, including the attached disclosure statement required by
17-14 Section 5.069 [5.094], as prescribed by Title 3 on or before the
17-15 30th day after the date the contract is executed.
17-16 (b) Section 12.002(c) does not apply to an executory
17-17 contract filed for record under this section.
17-18 (c) If the executory contract is terminated for any reason,
17-19 the seller shall record the instrument that terminates the
17-20 contract.
17-21 (d) The county clerk shall collect the filing fee prescribed
17-22 by Section 118.011, Local Government Code.
17-23 Sec. 5.077 [5.100]. ANNUAL ACCOUNTING STATEMENT. (a) The
17-24 seller shall provide the purchaser with an annual statement in
17-25 January of each year for the term of the executory contract. If
17-26 the seller mails the statement to the purchaser, the statement must
17-27 be postmarked not later than January 31.
18-1 (b) The statement must include the following information:
18-2 (1) the amount paid under the contract;
18-3 (2) the remaining amount owed under the contract;
18-4 (3) the number of payments remaining under the
18-5 contract; [and]
18-6 (4) the amounts paid to taxing authorities on the
18-7 purchaser's behalf if collected by the seller;
18-8 (5) the amounts paid to insure the property on the
18-9 purchaser's behalf if collected by the seller;
18-10 (6) if the property has been damaged and the seller
18-11 has received insurance proceeds, an accounting of the proceeds
18-12 applied to the property; and
18-13 (7) if the seller has changed insurance coverage, a
18-14 legible copy of the current policy, binder, or other evidence that
18-15 satisfies the requirements of Section 5.070(a)(2).
18-16 (c) A [If the] seller who fails to comply with Subsection
18-17 (a) is liable to [,] the purchaser for [may]:
18-18 (1) liquidated damages in the amount of $250 a day for
18-19 each day after January 31 that [notify] the seller fails to provide
18-20 [that] the purchaser with [has not received] the statement [and
18-21 will deduct 15 percent of each monthly payment due until the
18-22 statement is received]; and
18-23 (2) reasonable attorney's fees [not earlier than the
18-24 25th day after the date the purchaser provides the seller notice
18-25 under this subsection, deduct 15 percent of each monthly payment
18-26 due until the statement is received by the purchaser.]
18-27 [(d) A purchaser who makes a deduction under Subsection (c)
19-1 is not required to reimburse the seller for the amount deducted].
19-2 Sec. 5.078. DISPOSITION OF INSURANCE PROCEEDS. (a) The
19-3 named insured under an insurance policy, binder, or other coverage
19-4 relating to property subject to an executory contract for the
19-5 conveyance of real property shall inform the insurer, not later
19-6 than the 10th day after the date the coverage is obtained or the
19-7 contract executed, whichever is later, of:
19-8 (1) the executory contract for conveyance and the term
19-9 of the contract; and
19-10 (2) the name and address of the other party to the
19-11 contract.
19-12 (b) An insurer who disburses proceeds under an insurance
19-13 policy, binder, or other coverage relating to property that has
19-14 been damaged shall issue the proceeds jointly to the purchaser and
19-15 the seller designated in the contract.
19-16 (c) If proceeds under an insurance policy, binder, or other
19-17 coverage are disbursed, the purchaser and seller shall ensure that
19-18 the proceeds are used to repair, remedy, or improve the condition
19-19 on the property.
19-20 (d) The failure of a seller or purchaser to comply with
19-21 Subsection (c) is a false, misleading, or deceptive act or practice
19-22 within the meaning of Section 17.46, Business & Commerce Code, and
19-23 is actionable in a public or private suit brought under Subchapter
19-24 E, Chapter 17, Business & Commerce Code.
19-25 (e) Subsection (d) does not limit either party's remedy for
19-26 other false, misleading, or deceptive acts or practices actionable
19-27 in a suit brought under Subchapter E, Chapter 17, Business &
20-1 Commerce Code.
20-2 Sec. 5.079 [5.102]. TITLE TRANSFER. (a) The seller shall
20-3 transfer recorded, legal title of the property covered by the
20-4 executory contract to the purchaser not later than the 30th day
20-5 after the date the seller receives the purchaser's final payment
20-6 due under the contract.
20-7 (b) A seller who violates Subsection (a) is liable to the
20-8 purchaser for [subject to a penalty of]:
20-9 (1) liquidated damages in the amount of:
20-10 (A) $250 a day for each day the seller fails to
20-11 transfer the title to the purchaser during the period that begins
20-12 the 31st day and ends the 90th day after the date the seller
20-13 receives the purchaser's final payment due under the contract; and
20-14 (B) [(2)] $500 a day for each day the seller
20-15 fails to transfer title to the purchaser after the 90th day after
20-16 the date the seller receives the purchaser's final payment due
20-17 under the contract; and
20-18 (2) reasonable attorney's fees.
20-19 (c) If a person to whom a seller's property interest passes
20-20 by will or intestate succession is required to obtain a court order
20-21 to clarify the person's status as an heir or to clarify the status
20-22 of the seller or the property before the person may convey good and
20-23 indefeasible title to the property, the court in which the action
20-24 is pending may waive payment of the liquidated damages and
20-25 attorney's fees under Subsection (b) if the court finds that the
20-26 person is pursuing the action to establish good and indefeasible
20-27 title with reasonable diligence.
21-1 (d) [(c)] In this section, "seller" includes a successor,
21-2 assignee, personal representative, executor, or administrator of
21-3 the seller.
21-4 Sec. 5.080 [5.103]. LIABILITY FOR DISCLOSURES. For purposes
21-5 of this subchapter, a disclosure required by this subchapter that
21-6 is made by a seller's agent is a disclosure made by the seller.
21-7 SECTION 2. The following are repealed:
21-8 (1) the heading to Subchapter E, Chapter 5, Property
21-9 Code; and
21-10 (2) Section 5.092, Property Code.
21-11 SECTION 3. (a) This Act takes effect September 1, 2001.
21-12 (b) The changes in law made by Sections 5.063, 5.064, 5.065,
21-13 and 5.066, Property Code, as amended and redesignated by this Act,
21-14 apply only to a purchaser who defaults under Subchapter D, Chapter
21-15 5, Property Code, as amended by this Act, on or after September 1,
21-16 2001, regardless of when the contract was entered into. A
21-17 purchaser who is in default before September 1, 2001, is covered by
21-18 the law in effect when the default occurred, and the former law is
21-19 continued in effect for that purpose.
21-20 (c) The changes in law made by Sections 5.068 and 5.069,
21-21 Property Code, as amended and redesignated by this Act, and Section
21-22 5.070, Property Code, as added by this Act, apply only to
21-23 transactions involving executory contracts for conveyance for which
21-24 negotiations begin on or after September 1, 2001. For purposes of
21-25 this subsection, negotiations begin on the date an offer to enter
21-26 into an executory contract for conveyance is made. Transactions
21-27 involving executory contracts for conveyance for which negotiations
22-1 begin before September 1, 2001, are covered by the law in effect
22-2 when the negotiations began, and the former law is continued in
22-3 effect for that purpose.
22-4 (d) The change in law made by the amendment of Section 5.091
22-5 and the repeal of Section 5.092, Property Code, by this Act and the
22-6 application of Section 5.071, Property Code, as amended and
22-7 redesignated by this Act, and 5.080, Property Code, as redesignated
22-8 by this Act, applies only to transactions involving executory
22-9 contracts for conveyance for which negotiations begin on or after
22-10 September 1, 2001. For purposes of this subsection, negotiations
22-11 begin on the date an offer to enter into an executory contract for
22-12 conveyance is made.
22-13 (e) The change in law made by the amendment of Section 5.091
22-14 and the repeal of Section 5.092, Property Code, by this Act and the
22-15 application of Section 5.072, Property Code, as added by this Act,
22-16 Section 5.074, Property Code, as redesignated by this Act, and
22-17 Sections 5.073 and 5.076, Property Code, as amended and
22-18 redesignated by this Act, applies only to a contract entered into
22-19 on or after September 1, 2001.
22-20 (f) The change in law made by the amendment of Section 5.091
22-21 and the repeal of Section 5.092, Property Code, by this Act and the
22-22 application of Section 5.075, Property Code, as amended and
22-23 redesignated by this Act, applies to a purchaser on or after
22-24 September 1, 2001, who accrues interest as provided by that section
22-25 regardless of when the interest accrued.
22-26 (g) The changes in law made by the amendment of Section
22-27 5.091 and the repeal of Section 5.092, Property Code, by this Act
23-1 and the application of Sections 5.077(a) and (b), Property Code, as
23-2 amended and redesignated by this Act, and Section 5.079(a),
23-3 Property Code, as redesignated by this Act, apply to an executory
23-4 contract on or after September 1, 2001, regardless of when the
23-5 contract was entered into.
23-6 (h) The change in law made by Sections 5.077(c) and
23-7 5.079(b), Property Code, as amended and redesignated by this Act,
23-8 applies only to a violation that occurs on or after September 1,
23-9 2001. A violation that occurs before September 1, 2001, is covered
23-10 by the law in effect when the violation occurred, and the former
23-11 law is continued in effect for that purpose.
23-12 (i) The change in law made by Section 5.078, Property Code,
23-13 as added by this Act, applies to an executory contract regardless
23-14 of when the contract was entered into. A named insured who
23-15 currently holds an insurance policy binder or other coverage
23-16 relating to property subject to an executory contract shall notify
23-17 the insurer as provided by Section 5.078(a), Property Code, not
23-18 later than January 1, 2002.