1-1 By: Moncrief S.B. No. 198
1-2 (In the Senate - Filed January 8, 2001; January 11, 2001,
1-3 read first time and referred to Committee on Intergovernmental
1-4 Relations; February 15, 2001, reported adversely, with favorable
1-5 Committee Substitute by the following vote: Yeas 7, Nays 0;
1-6 February 15, 2001, sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 198 By: Cain
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to executory contracts for the conveyance of real
1-11 property.
1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13 SECTION 1. Subchapters D and E, Chapter 5, Property Code,
1-14 are amended to consolidate the subchapters by amending and
1-15 redesignating Section 5.065 as Section 5.061, amending and
1-16 redesignating Section 5.091 as Section 5.062, amending and
1-17 redesignating Section 5.062 as Section 5.063, amending and
1-18 redesignating Section 5.061 as Section 5.064, amending and
1-19 redesignating Section 5.063 as Section 5.065, amending and
1-20 redesignating Section 5.101 as Section 5.066, redesignating Section
1-21 5.064 as Section 5.067, amending and redesignating Section 5.093 as
1-22 Section 5.068, amending and redesignating Section 5.094 as Section
1-23 5.069, adding Section 5.070, amending and redesignating Section
1-24 5.095 as Section 5.071, adding Section 5.072, amending and
1-25 redesignating Section 5.096 as Section 5.073, redesignating Section
1-26 5.097 as Section 5.074, amending and redesignating Section 5.098 as
1-27 Section 5.075, amending and redesignating Section 5.099 as Section
1-28 5.076, amending and redesignating Section 5.100 as Section 5.077,
1-29 adding Section 5.078, amending and redesignating Section 5.102 as
1-30 Section 5.079, and redesignating Section 5.103 as Section 5.080 to
1-31 read as follows:
1-32 Sec. 5.061 [5.065]. DEFINITION [DEFAULT]. In this
1-33 subchapter, "default" means the failure to:
1-34 (1) make a timely payment; or
1-35 (2) comply with a term of an executory contract.
1-36 Sec. 5.062 [5.091]. APPLICABILITY. (a) [This subchapter
1-37 applies only to an executory contract that covers real property
1-38 located in a county that, as determined by the Texas Department of
1-39 Housing and Community Affairs:]
1-40 [(1) has a per capita income that averaged 25 percent
1-41 below the state average for the most recent three consecutive years
1-42 for which statistics are available and an unemployment rate that
1-43 averaged 25 percent above the state average for the most recent
1-44 three consecutive years for which statistics are available; and]
1-45 [(2) is within 200 miles of an international border.]
1-46 [(b)] This subchapter applies only to a transaction
1-47 involving an executory contract for conveyance of real property
1-48 used or to be used as the purchaser's residence or as the residence
1-49 of a person related to the purchaser within the second degree by
1-50 consanguinity or affinity, as determined under Chapter 573,
1-51 Government Code. For purposes of this subchapter, a lot measuring
1-52 one acre or less is presumed to be residential property.
1-53 (b) [(c)] This subchapter does not apply to a transaction
1-54 involving the sale of state land or a sale of land by the Veterans'
1-55 Land Board under an executory contract.
1-56 (c) [(d)] This subchapter does not apply to an executory
1-57 contract that provides for the delivery of a deed from the seller
1-58 to the purchaser within 180 days of the date of the final execution
1-59 of the executory contract.
1-60 (d) Section 5.066 and Sections 5.068-5.080 do not apply to a
1-61 transaction involving an executory contract for conveyance if the
1-62 purchaser of the property:
1-63 (1) is related to the seller of the property within
1-64 the second degree by consanguinity or affinity, as determined under
2-1 Chapter 573, Government Code; and
2-2 (2) has waived the applicability of those sections in
2-3 a written agreement.
2-4 Sec. 5.063 [5.062]. NOTICE. (a) Notice under Section 5.064
2-5 [5.061 of this code] must be in writing and[. If the notice is
2-6 mailed, it] must be delivered by registered or certified mail,
2-7 return receipt requested. The notice must be conspicuous and
2-8 printed in 14-point boldface type or 14-point uppercase typewritten
2-9 letters, and must include on a separate page the statement:
2-10 NOTICE
2-11 YOU ARE NOT COMPLYING WITH THE TERMS OF THE CONTRACT TO
2-12 BUY YOUR PROPERTY. UNLESS YOU TAKE THE ACTION
2-13 SPECIFIED IN THIS NOTICE BY (date) THE SELLER HAS THE
2-14 RIGHT TO TAKE POSSESSION OF YOUR PROPERTY.
2-15 (b) The notice must also:
2-16 (1) identify and explain the remedy the seller intends
2-17 to enforce;
2-18 (2) if the purchaser has failed to make a timely
2-19 payment, specify:
2-20 (A) the delinquent amount, itemized into
2-21 principal and interest;
2-22 (B) any additional charges claimed, such as late
2-23 charges or attorney's fees; and
2-24 (C) the period to which the delinquency and
2-25 additional charges relate; and
2-26 (3) if the purchaser has failed to comply with a term
2-27 of the contract, identify the term violated and the action required
2-28 to cure the violation.
2-29 (c) Notice by mail is given when it is mailed to the
2-30 purchaser's residence or place of business. [Notice by other
2-31 writing is given when it is delivered to the purchaser at the
2-32 purchaser's residence or place of business.] The affidavit of a
2-33 person knowledgeable of the facts to the effect that notice was
2-34 given is prima facie evidence of notice in an action involving a
2-35 subsequent bona fide purchaser for value if the purchaser is not in
2-36 possession of the real property and if the stated time to avoid the
2-37 forfeiture has expired. A bona fide subsequent purchaser for value
2-38 who relies upon the affidavit under this subsection shall take
2-39 title free and clear of the contract.
2-40 Sec. 5.064 [5.061]. SELLER'S REMEDIES ON DEFAULT [AVOIDANCE
2-41 OF FORFEITURE AND ACCELERATION OR OF RESCISSION]. A seller may
2-42 enforce the remedy of rescission or of forfeiture and acceleration
2-43 against a purchaser in default under an executory contract for
2-44 conveyance of real property [used or to be used as the purchaser's
2-45 residence] only if:
2-46 (1) the seller notifies the purchaser of:
2-47 (A) [(1)] the seller's intent to enforce a
2-48 remedy under this section; and
2-49 (B) [(2)] the purchaser's right to cure the
2-50 default within the 60-day period described by Section 5.065;
2-51 (2) the purchaser fails to cure the default within the
2-52 60-day period described by Section 5.065; and
2-53 (3) Section 5.066 does not apply [expiration of the
2-54 following periods:]
2-55 [(A) if the purchaser has paid less than 10
2-56 percent of the purchase price, 15 days after the date notice is
2-57 given;]
2-58 [(B) if the purchaser has paid 10 percent or
2-59 more but less than 20 percent of the purchase price, 30 days after
2-60 the date notice is given; and]
2-61 [(C) if the purchaser has paid 20 percent or
2-62 more of the purchase price, 60 days after the date notice is
2-63 given].
2-64 Sec. 5.065 [5.063]. RIGHT TO CURE DEFAULT. Notwithstanding
2-65 an agreement to the contrary, a purchaser in default under an
2-66 executory contract for the conveyance of real property [used or to
2-67 be used as the purchaser's residence] may[, at any time before
2-68 expiration of the applicable period provided by Section 5.061 of
2-69 this code,] avoid the enforcement of a remedy described by Section
3-1 5.064 [that section] by complying with the terms of the contract on
3-2 or before the 60th day after the date notice is given under that
3-3 section [up to the date of compliance].
3-4 Sec. 5.066 [5.101]. EQUITY PROTECTION; SALE OF PROPERTY.
3-5 (a) If a purchaser defaults after the purchaser has paid 40
3-6 percent or more of the amount due or the equivalent of 48 monthly
3-7 payments under the executory contract, the seller is granted the
3-8 power to sell, through a trustee designated by the seller, the
3-9 purchaser's interest in the property as provided by this section.
3-10 The seller may not enforce the remedy of rescission or of
3-11 forfeiture and acceleration.
3-12 (b) The seller shall notify a purchaser of a default under
3-13 the contract and allow the purchaser at least 60 days after the
3-14 date notice is given to cure the default. The notice must be
3-15 provided as prescribed by Section 5.063 [5.062] except that the
3-16 notice must substitute the following statement:
3-17 NOTICE
3-18 YOU ARE NOT COMPLYING WITH THE TERMS OF THE CONTRACT TO
3-19 BUY YOUR PROPERTY. UNLESS YOU TAKE THE ACTION
3-20 SPECIFIED IN THIS NOTICE BY (date) A TRUSTEE DESIGNATED
3-21 BY THE SELLER HAS THE RIGHT TO SELL YOUR PROPERTY AT A
3-22 PUBLIC AUCTION.
3-23 (c) The trustee or a substitute trustee designated by the
3-24 seller must post, file, and serve a notice of sale and the county
3-25 clerk shall record and maintain the notice of sale as prescribed by
3-26 Section 51.002. A notice of sale is not valid unless it is given
3-27 after the period to cure has expired.
3-28 (d) The trustee or a substitute trustee designated by the
3-29 seller must conduct the sale as prescribed by Section 51.002. The
3-30 seller must:
3-31 (1) convey to a purchaser at a sale conducted under
3-32 this section fee simple title to the real property; and
3-33 (2) warrant that the property is free from any
3-34 encumbrance.
3-35 (e) The remaining balance of the amount due under the
3-36 executory contract is the debt for purposes of a sale under this
3-37 section. If the proceeds of the sale exceed the debt amount, the
3-38 seller shall disburse the excess funds to the purchaser under the
3-39 executory contract. If the proceeds of the sale are insufficient
3-40 to extinguish the debt amount, the seller's right to recover the
3-41 resulting deficiency is subject to Sections 51.003, 51.004, and
3-42 51.005 unless a provision of the executory contract releases the
3-43 purchaser under the contract from liability.
3-44 (f) The affidavit of a person knowledgeable of the facts
3-45 that states that the notice was given and the sale was conducted as
3-46 provided by this section is prima facie evidence of those facts [in
3-47 an action involving a bona fide purchaser at the sale or a
3-48 subsequent bona fide purchaser for value if the purchaser under the
3-49 executory contract is not in possession of the property and if the
3-50 period to cure the default has expired]. A [bona fide] purchaser
3-51 for value who relies on an affidavit under this subsection acquires
3-52 title to the property free and clear of the executory contract.
3-53 (g) If a purchaser defaults before the purchaser has paid 40
3-54 percent of the amount due or the equivalent of 48 monthly payments
3-55 under the executory contract, the seller may enforce the remedy of
3-56 rescission or of forfeiture and acceleration of the indebtedness if
3-57 the seller complies with the notice requirements of Sections 5.063
3-58 and 5.064 [5.061 and 5.062].
3-59 Sec. 5.067 [5.064]. PLACEMENT OF LIEN FOR UTILITY SERVICE.
3-60 Notwithstanding any terms of a contract to the contrary, the
3-61 placement of a lien for the reasonable value of improvements to
3-62 residential real estate for purposes of providing utility service
3-63 to the property shall not constitute a default under the terms of
3-64 an executory contract for the purchase of the real property.
3-65 Sec. 5.068 [5.093]. FOREIGN [SPANISH] LANGUAGE REQUIREMENT.
3-66 If the negotiations that precede the execution of an executory
3-67 contract are conducted primarily in a language other than English
3-68 [Spanish], the seller shall provide a copy in that language
3-69 [Spanish] of all written documents relating to the transaction,
4-1 including the contract, disclosure notices [notice], [and] annual
4-2 accounting statements, [required by this subchapter] and a notice
4-3 of default required by this subchapter [Subchapter D].
4-4 Sec. 5.069 [5.094]. SELLER'S DISCLOSURE OF PROPERTY
4-5 CONDITION. (a) Before an executory contract is signed by the
4-6 purchaser, the seller shall provide the purchaser with:
4-7 (1) a survey, which was completed within the past
4-8 year, or plat of a current survey of the real property;
4-9 (2) a legible copy of any document that describes an
4-10 encumbrance or other claim, including a restrictive covenant or
4-11 easement, that affects title to the real property; and
4-12 (3) a written notice, which must be attached to the
4-13 contract, informing the purchaser of the condition of the property
4-14 that must, at a minimum, be executed by the seller and purchaser
4-15 and read substantially similar to the following:
4-16 WARNING
4-17 IF ANY OF THE ITEMS BELOW HAVE NOT BEEN CHECKED, YOU MAY NOT BE
4-18 ABLE TO LIVE ON THE PROPERTY.
4-19 SELLER'S DISCLOSURE NOTICE
4-20 CONCERNING THE PROPERTY AT (street address or legal description and
4-21 city)
4-22 THIS DOCUMENT STATES CERTAIN APPLICABLE FACTS ABOUT THE PROPERTY
4-23 [LAND] YOU ARE CONSIDERING PURCHASING.
4-24 CHECK ALL THE ITEMS THAT ARE APPLICABLE OR TRUE:
4-25 ____ The property is in a recorded subdivision.
4-26 ____ The property has water service that provides potable water.
4-27 ____ The property has sewer service.
4-28 ____ The property has been approved by the appropriate municipal,
4-29 county, or state agency for installation of a septic system.
4-30 ____ The property has electric service.
4-31 ____ The property is not in a floodplain.
4-32 ____ The roads to the boundaries of the property are paved and
4-33 maintained by:
4-34 ____ the seller;
4-35 ____ the owner of the property on which the road exists;
4-36 ____ the municipality;
4-37 ____ the county; or
4-38 ____ the state.
4-39 ____ No individual or entity other than the seller:
4-40 (1) owns the property;
4-41 (2) has a claim of ownership to the property; or
4-42 (3) has an interest in the property.
4-43 ____ No individual or entity has a lien filed against the
4-44 property.
4-45 [____ There are no back taxes owed on the property.]
4-46 ____ There are no restrictive covenants, easements, or other title
4-47 exceptions or encumbrances that prohibit construction of a house on
4-48 the property.
4-49 NOTICE: SELLER ADVISES PURCHASER TO:
4-50 (1) OBTAIN A TITLE ABSTRACT OR TITLE COMMITMENT
4-51 COVERING THE PROPERTY AND HAVE THE ABSTRACT OR COMMITMENT REVIEWED
4-52 BY AN ATTORNEY BEFORE SIGNING A CONTRACT OF THIS TYPE; AND
4-53 (2) PURCHASE AN OWNER'S POLICY OF TITLE INSURANCE
4-54 COVERING THE PROPERTY.
4-55 ____________________________ ____________________________
4-56 (Date) (Signature of Seller)
4-57 ____________________________ ____________________________
4-58 (Date) (Signature of Purchaser)
4-59 (b) If the property is not located in a recorded
4-60 subdivision, the seller shall provide the purchaser with a separate
4-61 disclosure form stating that utilities may not be available to the
4-62 property until the subdivision is recorded as required by law.
4-63 (c) If the seller advertises property for sale under an
4-64 executory contract, the advertisement must disclose information
4-65 regarding the availability of water, sewer, and electric service.
4-66 (d) The seller's failure to provide information required by
4-67 this section:
4-68 (1) is a false, misleading, or deceptive act or
4-69 practice within the meaning of Section 17.46, Business & Commerce
5-1 Code, and is actionable in a public or private suit brought under
5-2 Subchapter E, Chapter 17, Business & Commerce Code; and
5-3 (2) entitles the purchaser to cancel and rescind the
5-4 executory contract and receive a full refund of all payments made
5-5 to the seller.
5-6 (e) Subsection (d) does not limit the purchaser's remedy
5-7 against the seller for other false, misleading, or deceptive acts
5-8 or practices actionable in a suit brought under Subchapter E,
5-9 Chapter 17, Business & Commerce Code.
5-10 Sec. 5.070. SELLER'S DISCLOSURE OF TAX PAYMENTS AND
5-11 INSURANCE COVERAGE. (a) Before an executory contract is signed by
5-12 the purchaser, the seller shall provide the purchaser with:
5-13 (1) a tax certificate from the collector for each
5-14 taxing unit that collects taxes due on the property as provided by
5-15 Section 31.08, Tax Code; and
5-16 (2) a legible copy of any insurance policy, binder, or
5-17 other evidence relating to the property that indicates:
5-18 (A) the name of the insurer and the insured;
5-19 (B) a description of the property insured; and
5-20 (C) the amount for which the property is
5-21 insured.
5-22 (b) The seller's failure to provide information required by
5-23 this section:
5-24 (1) is a false, misleading, or deceptive act or
5-25 practice within the meaning of Section 17.46, Business & Commerce
5-26 Code, and is actionable in a public or private suit brought under
5-27 Subchapter E, Chapter 17, Business & Commerce Code; and
5-28 (2) entitles the purchaser to cancel and rescind the
5-29 executory contract and receive a full refund of all payments made
5-30 to the seller.
5-31 (c) Subsection (b) does not limit the purchaser's remedy
5-32 against the seller for other false, misleading, or deceptive acts
5-33 or practices actionable in a suit brought under Subchapter E,
5-34 Chapter 17, Business & Commerce Code.
5-35 Sec. 5.071 [5.095]. SELLER'S DISCLOSURE OF FINANCING TERMS.
5-36 Before an executory contract is signed by the purchaser, the seller
5-37 shall provide to the purchaser a written statement that specifies:
5-38 (1) the purchase price of the property;
5-39 (2) the interest rate charged under the contract;
5-40 (3) the dollar amount, or an estimate of the dollar
5-41 amount if the interest rate is variable, of the interest charged
5-42 for the term of the contract;
5-43 (4) the total amount of principal and interest to be
5-44 paid under the contract;
5-45 (5) the late charge, if any, that may be assessed
5-46 under the contract; and
5-47 (6) the fact that the seller may not charge a
5-48 prepayment penalty or any similar fee if the purchaser elects to
5-49 pay the entire amount due under the contract before the scheduled
5-50 payment date under the contract.
5-51 Sec. 5.072. ORAL AGREEMENTS PROHIBITED. (a) An executory
5-52 contract is not enforceable unless the contract is in writing and
5-53 signed by the party to be bound or by that party's authorized
5-54 representative.
5-55 (b) The rights and obligations of the parties to a contract
5-56 are determined solely from the written contract, and any prior oral
5-57 agreements between the parties are superseded by and merged into
5-58 the contract.
5-59 (c) An executory contract may not be varied by any oral
5-60 agreements or discussions that occur before or contemporaneously
5-61 with the execution of the contract.
5-62 (d) The seller shall include in a separate document or in a
5-63 provision of the contract a statement printed in 14-point boldfaced
5-64 type or 14-point uppercase typewritten letters that reads
5-65 substantially similar to the following:
5-66 THIS EXECUTORY CONTRACT REPRESENTS THE FINAL AGREEMENT
5-67 BETWEEN THE SELLER AND PURCHASER AND MAY NOT BE
5-68 CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
5-69 SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
6-1 NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
6-2 _____________________ ____________________________
6-3 (Date) (Signature of Seller)
6-4 _____________________ ____________________________
6-5 (Date) (Signature of Purchaser)
6-6 (e) The seller's failure to provide the notice required by
6-7 this section:
6-8 (1) is a false, misleading, or deceptive act or
6-9 practice within the meaning of Section 17.46, Business & Commerce
6-10 Code, and is actionable in a public or private suit brought under
6-11 Subchapter E, Chapter 17, Business & Commerce Code; and
6-12 (2) entitles the purchaser to cancel and rescind the
6-13 executory contract and receive a full refund of all payments made
6-14 to the seller.
6-15 (f) Subsection (e) does not limit the purchaser's remedy
6-16 against the seller for other false, misleading, or deceptive acts
6-17 or practices actionable in a suit brought under Subchapter E,
6-18 Chapter 17, Business & Commerce Code.
6-19 Sec. 5.073 [5.096]. CONTRACT TERMS PROHIBITED. A seller may
6-20 not include as a term of the executory contract a provision that:
6-21 (1) imposes an additional late-payment fee that
6-22 exceeds the lesser of:
6-23 (A) eight percent of the monthly payment under
6-24 the contract; or
6-25 (B) the actual administrative cost of processing
6-26 the late payment;
6-27 (2) prohibits the purchaser from pledging the
6-28 purchaser's interest in the property as security to obtain a loan
6-29 to place improvements, including utility improvements or fire
6-30 protection improvements, on the property; or
6-31 (3) imposes a prepayment penalty or any similar fee if
6-32 the purchaser elects to pay the entire amount due under the
6-33 contract before the scheduled payment date under the contract.
6-34 Sec. 5.074 [5.097]. PURCHASER'S RIGHT TO CANCEL CONTRACT
6-35 WITHOUT CAUSE. (a) In addition to other rights or remedies
6-36 provided by law, the purchaser may cancel and rescind an executory
6-37 contract for any reason by sending by telegram or certified or
6-38 registered mail, return receipt requested, or by delivering in
6-39 person a signed, written notice of cancellation to the seller not
6-40 later than the 14th day after the date of the contract.
6-41 (b) If the purchaser cancels the contract as provided by
6-42 Subsection (a), the seller shall, not later than the 10th day after
6-43 the date the seller receives the purchaser's notice of
6-44 cancellation:
6-45 (1) return to the purchaser the executed contract and
6-46 any property exchanged or payments made by the purchaser under the
6-47 contract; and
6-48 (2) cancel any security interest arising out of the
6-49 contract.
6-50 (c) The seller shall include in immediate proximity to the
6-51 space reserved in the executory contract for the purchaser's
6-52 signature a statement printed in 14-point boldface type or 14-point
6-53 uppercase typewritten letters that reads substantially similar to
6-54 the following:
6-55 YOU, THE PURCHASER, MAY CANCEL THIS CONTRACT AT ANY
6-56 TIME DURING THE NEXT TWO WEEKS. THE DEADLINE FOR
6-57 CANCELING THE CONTRACT IS (date). THE ATTACHED NOTICE
6-58 OF CANCELLATION EXPLAINS THIS RIGHT.
6-59 (d) The seller shall provide a notice of cancellation form
6-60 to the purchaser at the time the purchaser signs the executory
6-61 contract that is printed in 14-point boldface type or 14-point
6-62 uppercase typewritten letters and that reads substantially similar
6-63 to the following:
6-64 NOTICE OF CANCELLATION
6-65 (date of contract)
6-66 YOU MAY CANCEL THE EXECUTORY CONTRACT FOR ANY
6-67 REASON WITHOUT ANY PENALTY OR OBLIGATION BY (date).
6-68 (1) YOU MUST SEND BY TELEGRAM OR CERTIFIED OR
6-69 REGISTERED MAIL, RETURN RECEIPT REQUESTED, OR DELIVER
7-1 IN PERSON A SIGNED AND DATED COPY OF THIS CANCELLATION
7-2 NOTICE OR ANY OTHER WRITTEN NOTICE TO (Name of Seller)
7-3 AT (Seller's Address) BY (date).
7-4 (2) THE SELLER SHALL, NOT LATER THAN THE 10TH
7-5 DAY AFTER THE DATE THE SELLER RECEIVES YOUR
7-6 CANCELLATION NOTICE:
7-7 (A) RETURN THE EXECUTED CONTRACT AND ANY
7-8 PROPERTY EXCHANGED OR PAYMENTS MADE BY YOU UNDER THE
7-9 CONTRACT; AND
7-10 (B) CANCEL ANY SECURITY INTEREST ARISING
7-11 OUT OF THE CONTRACT.
7-12 I ACKNOWLEDGE RECEIPT OF THIS NOTICE OF CANCELLATION
7-13 FORM.
7-14 _________________________ _______________________
7-15 (Date) (Purchaser's Signature)
7-16 I HEREBY CANCEL THIS CONTRACT.
7-17 _________________________ _______________________
7-18 (Date) (Purchaser's Signature)
7-19 (e) The seller may not request the purchaser to sign a
7-20 waiver of receipt of the notice of cancellation form required by
7-21 this section.
7-22 Sec. 5.075 [5.098]. PURCHASER'S RIGHT TO PLEDGE INTEREST IN
7-23 PROPERTY ON CONTRACTS ENTERED INTO BEFORE SEPTEMBER 1, 2001 [1995].
7-24 (a) On an executory contract entered into before September 1, 2001
7-25 [1995], a purchaser may pledge the interest in the property, which
7-26 accrues pursuant to Section 5.066 [5.101], only to obtain a loan
7-27 for improving the safety of the property or any improvements on the
7-28 property.
7-29 (b) Loans that improve the safety of the property and
7-30 improvements on the property include loans for:
7-31 (1) improving or connecting a residence to water
7-32 service;
7-33 (2) improving or connecting a residence to a
7-34 wastewater system;
7-35 (3) building or improving a septic system;
7-36 (4) structural improvements in the residence; and
7-37 (5) improved fire protection.
7-38 Sec. 5.076 [5.099]. RECORDING REQUIREMENTS. (a) Except as
7-39 provided by Subsection (b), the seller shall record the executory
7-40 contract, including the attached disclosure statement required by
7-41 Section 5.069 [5.094], as prescribed by Title 3 on or before the
7-42 30th day after the date the contract is executed.
7-43 (b) Section 12.002(c) does not apply to an executory
7-44 contract filed for record under this section.
7-45 (c) If the executory contract is terminated for any reason,
7-46 the seller shall record the instrument that terminates the
7-47 contract.
7-48 (d) The county clerk shall collect the filing fee prescribed
7-49 by Section 118.011, Local Government Code.
7-50 Sec. 5.077 [5.100]. ANNUAL ACCOUNTING STATEMENT. (a) The
7-51 seller shall provide the purchaser with an annual statement in
7-52 January of each year for the term of the executory contract. If
7-53 the seller mails the statement to the purchaser, the statement must
7-54 be postmarked not later than January 31.
7-55 (b) The statement must include the following information:
7-56 (1) the amount paid under the contract;
7-57 (2) the remaining amount owed under the contract;
7-58 (3) the number of payments remaining under the
7-59 contract; [and]
7-60 (4) the amounts paid to taxing authorities on the
7-61 purchaser's behalf if collected by the seller;
7-62 (5) the amounts paid to insure the property on the
7-63 purchaser's behalf if collected by the seller;
7-64 (6) if the property has been damaged and the seller
7-65 has received insurance proceeds, an accounting of the proceeds
7-66 applied to the property; and
7-67 (7) if the seller has changed insurance coverage, a
7-68 legible copy of the current policy, binder, or other evidence that
7-69 satisfies the requirements of Section 5.070(a)(2).
8-1 (c) A [If the] seller who fails to comply with Subsection
8-2 (a) is liable to[,] the purchaser for [may]:
8-3 (1) liquidated damages in the amount of $250 a day for
8-4 each day after January 31 that [notify] the seller fails to provide
8-5 [that] the purchaser with [has not received] the statement [and
8-6 will deduct 15 percent of each monthly payment due until the
8-7 statement is received]; and
8-8 (2) reasonable attorney's fees [not earlier than the
8-9 25th day after the date the purchaser provides the seller notice
8-10 under this subsection, deduct 15 percent of each monthly payment
8-11 due until the statement is received by the purchaser.]
8-12 [(d) A purchaser who makes a deduction under Subsection (c)
8-13 is not required to reimburse the seller for the amount deducted].
8-14 Sec. 5.078. DISPOSITION OF INSURANCE PROCEEDS. (a) The
8-15 named insured under an insurance policy, binder, or other coverage
8-16 relating to property subject to an executory contract for the
8-17 conveyance of real property shall inform the insurer, not later
8-18 than the 10th day after the date the coverage is obtained or the
8-19 contract executed, whichever is later, of:
8-20 (1) the executory contract for conveyance and the term
8-21 of the contract; and
8-22 (2) the name and address of the other party to the
8-23 contract.
8-24 (b) An insurer who disburses proceeds under an insurance
8-25 policy, binder, or other coverage relating to property that has
8-26 been damaged shall issue the proceeds jointly to the purchaser and
8-27 the seller designated in the contract.
8-28 (c) If proceeds under an insurance policy, binder, or other
8-29 coverage are disbursed, the purchaser and seller shall ensure that
8-30 the proceeds are used to repair, remedy, or improve the condition
8-31 on the property.
8-32 (d) The failure of a seller or purchaser to comply with
8-33 Subsection (c) is a false, misleading, or deceptive act or practice
8-34 within the meaning of Section 17.46, Business & Commerce Code, and
8-35 is actionable in a public or private suit brought under Subchapter
8-36 E, Chapter 17, Business & Commerce Code.
8-37 (e) Subsection (d) does not limit either party's remedy for
8-38 other false, misleading, or deceptive acts or practices actionable
8-39 in a suit brought under Subchapter E, Chapter 17, Business &
8-40 Commerce Code.
8-41 Sec. 5.079 [5.102]. TITLE TRANSFER. (a) The seller shall
8-42 transfer recorded, legal title of the property covered by the
8-43 executory contract to the purchaser not later than the 30th day
8-44 after the date the seller receives the purchaser's final payment
8-45 due under the contract.
8-46 (b) A seller who violates Subsection (a) is liable to the
8-47 purchaser for [subject to a penalty of]:
8-48 (1) liquidated damages in the amount of:
8-49 (A) $250 a day for each day the seller fails to
8-50 transfer the title to the purchaser during the period that begins
8-51 the 31st day and ends the 90th day after the date the seller
8-52 receives the purchaser's final payment due under the contract; and
8-53 (B) [(2)] $500 a day for each day the seller
8-54 fails to transfer title to the purchaser after the 90th day after
8-55 the date the seller receives the purchaser's final payment due
8-56 under the contract; and
8-57 (2) reasonable attorney's fees.
8-58 (c) If a person to whom a seller's property interest passes
8-59 by will or intestate succession is required to obtain a court order
8-60 to clarify the person's status as an heir or to clarify the status
8-61 of the seller or the property before the person may convey good and
8-62 indefeasible title to the property, the court in which the action
8-63 is pending may waive payment of the liquidated damages and
8-64 attorney's fees under Subsection (b) if the court finds that the
8-65 person is pursuing the action to establish good and indefeasible
8-66 title with reasonable diligence.
8-67 (d) [(c)] In this section, "seller" includes a successor,
8-68 assignee, personal representative, executor, or administrator of
8-69 the seller.
9-1 Sec. 5.080 [5.103]. LIABILITY FOR DISCLOSURES. For purposes
9-2 of this subchapter, a disclosure required by this subchapter that
9-3 is made by a seller's agent is a disclosure made by the seller.
9-4 SECTION 2. The following are repealed:
9-5 (1) the heading to Subchapter E, Chapter 5, Property
9-6 Code; and
9-7 (2) Section 5.092, Property Code.
9-8 SECTION 3. (a) This Act takes effect September 1, 2001.
9-9 (b) The changes in law made by Sections 5.063, 5.064, 5.065,
9-10 and 5.066, Property Code, as amended and redesignated by this Act,
9-11 apply only to a purchaser who defaults under Subchapter D, Chapter
9-12 5, Property Code, as amended by this Act, on or after September 1,
9-13 2001, regardless of when the contract was entered into. A
9-14 purchaser who is in default before September 1, 2001, is covered by
9-15 the law in effect when the default occurred, and the former law is
9-16 continued in effect for that purpose.
9-17 (c) The changes in law made by Sections 5.068 and 5.069,
9-18 Property Code, as amended and redesignated by this Act, and Section
9-19 5.070, Property Code, as added by this Act, apply only to
9-20 transactions involving executory contracts for conveyance for which
9-21 negotiations begin on or after September 1, 2001. For purposes of
9-22 this subsection, negotiations begin on the date an offer to enter
9-23 into an executory contract for conveyance is made. Transactions
9-24 involving executory contracts for conveyance for which negotiations
9-25 begin before September 1, 2001, are covered by the law in effect
9-26 when the negotiations began, and the former law is continued in
9-27 effect for that purpose.
9-28 (d) The change in law made by the amendment of Section 5.091
9-29 and the repeal of Section 5.092, Property Code, by this Act and the
9-30 application of Section 5.071, Property Code, as amended and
9-31 redesignated by this Act, and 5.080, Property Code, as redesignated
9-32 by this Act, applies only to transactions involving executory
9-33 contracts for conveyance for which negotiations begin on or after
9-34 September 1, 2001. For purposes of this subsection, negotiations
9-35 begin on the date an offer to enter into an executory contract for
9-36 conveyance is made.
9-37 (e) The change in law made by the amendment of Section 5.091
9-38 and the repeal of Section 5.092, Property Code, by this Act and the
9-39 application of Section 5.072, Property Code, as added by this Act,
9-40 Section 5.074, Property Code, as redesignated by this Act, and
9-41 Sections 5.073 and 5.076, Property Code, as amended and
9-42 redesignated by this Act, applies only to a contract entered into
9-43 on or after September 1, 2001.
9-44 (f) The change in law made by the amendment of Section 5.091
9-45 and the repeal of Section 5.092, Property Code, by this Act and the
9-46 application of Section 5.075, Property Code, as amended and
9-47 redesignated by this Act, applies to a purchaser on or after
9-48 September 1, 2001, who accrues interest as provided by that section
9-49 regardless of when the interest accrued.
9-50 (g) The changes in law made by the amendment of Section
9-51 5.091 and the repeal of Section 5.092, Property Code, by this Act
9-52 and the application of Subsections (a) and (b), Section 5.077,
9-53 Property Code, as amended and redesignated by this Act, and
9-54 Subsection (a), Section 5.079, Property Code, as redesignated by
9-55 this Act, apply to an executory contract on or after September 1,
9-56 2001, regardless of when the contract was entered into.
9-57 (h) The change in law made by Subsection (c), Section 5.077,
9-58 and Subsection (b), Section 5.079, Property Code, as amended and
9-59 redesignated by this Act, applies only to a violation that occurs
9-60 on or after September 1, 2001. A violation that occurs before
9-61 September 1, 2001, is covered by the law in effect when the
9-62 violation occurred, and the former law is continued in effect for
9-63 that purpose.
9-64 (i) The change in law made by Section 5.078, Property Code,
9-65 as added by this Act, applies to an executory contract regardless
9-66 of when the contract was entered into. A named insured who
9-67 currently holds an insurance policy binder or other coverage
9-68 relating to property subject to an executory contract shall notify
9-69 the insurer as provided by Subsection (a), Section 5.078, Property
10-1 Code, not later than January 1, 2002.
10-2 * * * * *