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A BILL TO BE ENTITLED
|
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AN ACT
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relating to lease-option contracts. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 5.062(a), Property Code, is amended to |
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read as follows: |
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(a) This subchapter applies only to a transaction involving |
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an executory contract for conveyance of real property used or to be |
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used as the purchaser's residence or as the residence of a person |
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related to the purchaser within the second degree by consanguinity |
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or affinity, as determined under Chapter 573, Government Code. For |
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purposes of this subchapter, and only for the purposes of this |
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subchapter,[:
|
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[(1)] a lot measuring one acre or less is presumed to |
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be residential property[; and
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[(2)
an option to purchase real property that
|
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includes or is combined or executed concurrently with a residential
|
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lease agreement, together with the lease, is considered an
|
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executory contract for conveyance of real property]. |
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SECTION 2. Chapter 5, Property Code, is amended by adding |
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Subchapter G to read as follows: |
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SUBCHAPTER G. LEASE-OPTION CONTRACTS |
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Sec. 5.201. DEFINITIONS. In this subchapter: |
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(1) "Default" means: |
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(A) the failure to make a timely payment under a |
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lease-option contract; or |
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(B) a material breach of a term of the |
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lease-option contract. |
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(2) "Lease-option contract" means one or more |
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contracts that together provide an option to purchase residential |
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property to the purchaser who is also authorized to occupy the |
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property under a lease. |
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(3) "Purchaser" means a potential purchaser of |
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property under an option contract who is also authorized in a lease |
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agreement to occupy the property as a tenant. |
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(4) "Seller" means a potential seller of property |
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under an option contract who has also leased the property to the |
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purchaser. |
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Sec. 5.202. APPLICABILITY. (a) Unless otherwise excluded, |
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this subchapter applies only to a lease-option contract for real |
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property used or to be used as the purchaser's principal residence |
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or as the principal residence of a person related to the purchaser |
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within the second degree by consanguinity or affinity, as |
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determined under Chapter 573, Government Code. |
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(b) This subchapter does not apply to the following |
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transactions: |
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(1) the sale of state land; |
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(2) a sale of land by: |
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(A) the Veterans' Land Board; |
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(B) this state or a political subdivision of this |
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state; or |
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(C) an instrumentality, public corporation, or |
|
other entity created to act on behalf of this state or a political |
|
subdivision of this state, including an entity created under |
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Chapter 303, 392, or 394, Local Government Code; or |
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(3) a transaction involving a lease-option contract if |
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the purchaser of the property: |
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(A) is related to the seller of the property |
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within the second degree by consanguinity or affinity, as |
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determined under Chapter 573, Government Code; and |
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(B) has waived the applicability of this |
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subchapter in a written agreement. |
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Sec. 5.203. CONSTRUCTION WITH OTHER LAW. (a) Except as |
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provided by Subsection (b), the provisions of this subchapter do |
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not affect the rights or remedies provided by other law, including |
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Chapters 91 and 92. |
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(b) A seller may not: |
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(1) lock out or terminate the utility service of a |
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purchaser except: |
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(A) for bona fide repairs or construction; or |
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(B) in an emergency; or |
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(2) seize personal property unless the purchaser has |
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abandoned the premises. |
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(c) In addition to any other remedy available by law, a |
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seller who violates Subsection (b) is liable to the purchaser for: |
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(1) actual damages; |
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(2) a civil penalty of one month's rent plus $1,000; |
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and |
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(3) court costs and reasonable attorney's fees. |
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(d) To remedy a violation under this section, a purchaser |
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is entitled to injunctive relief and a writ of reentry under Section |
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92.009, if applicable. |
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Sec. 5.204. NOTICE. (a) Notice under Section 5.205 must be |
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in writing and must be delivered by regular and certified mail, |
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return receipt requested. The notice must be conspicuous and |
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printed in 14-point boldfaced type or 14-point uppercase |
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typewritten letters, and must include on a separate page the |
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statement: |
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NOTICE |
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YOU ARE NOT COMPLYING WITH THE TERMS OF THE CONTRACT TO BUY |
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YOUR PROPERTY. UNLESS YOU TAKE THE ACTION SPECIFIED IN THIS NOTICE |
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BY (date) THE SELLER HAS THE RIGHT TO TERMINATE YOUR LEASE-OPTION |
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CONTRACT AND TAKE POSSESSION OF THE PROPERTY. |
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(b) The notice must also: |
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(1) identify and explain the remedy the seller intends |
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to enforce; |
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(2) if the purchaser has failed to make a timely |
|
payment, specify: |
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(A) the delinquent amount; |
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(B) any additional charges claimed, including |
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late charges; and |
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(C) the period to which the delinquency and |
|
additional charges relate; and |
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(3) if the purchaser has failed to comply with a term |
|
of the contract, identify the term violated and the action required |
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to cure the violation. |
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(c) Notice by mail is given when it is mailed to the |
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purchaser's residence by regular and certified mail, return receipt |
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requested. The affidavit of a person knowledgeable of the facts |
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indicating that notice was given is prima facie evidence of notice |
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in an action involving a subsequent bona fide purchaser for value if |
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the purchaser is not in possession of the real property and if the |
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stated time to avoid the forfeiture has expired. A bona fide |
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subsequent purchaser for value who relies on the affidavit under |
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this subsection shall take title free and clear of the contract. |
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Sec. 5.205. SELLER'S REMEDIES ON DEFAULT. A seller may |
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enforce the remedy of rescission or of forfeiture and acceleration |
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against a purchaser in default under a lease-option contract only |
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if: |
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(1) the seller notifies the purchaser of: |
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(A) the seller's intent to enforce a remedy under |
|
this section; and |
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(B) the purchaser's right to cure the default |
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within the 30-day period described by Section 5.206; and |
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(2) the purchaser fails to cure the default within the |
|
30-day period described by Section 5.206. |
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Sec. 5.206. RIGHT TO CURE DEFAULT. A purchaser in default |
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under a lease-option contract may avoid the forfeiture of the |
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option fee or the enforcement of a remedy described by Section 5.205 |
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by complying with the terms of the contract on or before the 30th |
|
day after the date notice is given under that section or the date |
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indicated in the notice, whichever is later. |
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Sec. 5.207. FOREIGN LANGUAGE REQUIREMENT. If the |
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negotiations that precede the execution of a lease-option contract |
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are conducted primarily in a language other than English, the |
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seller shall provide a copy in that language of all written |
|
documents relating to the transaction, including the contract, |
|
disclosure notices, annual accounting statements, and a notice of |
|
default required by this subchapter. |
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Sec. 5.208. SELLER'S DISCLOSURE OF PROPERTY |
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CONDITION. (a) Not later than the fifth day before a lease-option |
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contract is signed by the purchaser, the seller shall provide the |
|
purchaser with: |
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(1) a survey that was completed within the past year or |
|
a plat of a current survey of the real property; |
|
(2) a legible copy of any document, or a copy as it |
|
appears in the official real property records, that describes an |
|
encumbrance or other claim, including a restrictive covenant or |
|
easement, that affects title to the real property; and |
|
(3) a written notice attached to the contract |
|
informing the purchaser of the condition of the property that must, |
|
at a minimum, be executed by the seller and purchaser and read |
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substantially similar to the following: |
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WARNING |
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IF ANY OF THE ITEMS BELOW HAVE NOT BEEN CHECKED, YOU MAY NOT BE ABLE |
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TO LIVE ON THE PROPERTY OR BE ABLE TO OBTAIN CLEAR TITLE TO THE |
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PROPERTY. |
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SELLER'S DISCLOSURE NOTICE |
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CONCERNING THE PROPERTY AT (street address or legal description and |
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city) |
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THIS DOCUMENT STATES CERTAIN APPLICABLE FACTS ABOUT THE PROPERTY |
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YOU ARE CONSIDERING PURCHASING. |
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CHECK ALL THE ITEMS THAT ARE APPLICABLE OR TRUE: |
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_____ The property is in a recorded subdivision. |
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_____ The property has water service that provides potable water. |
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_____ The property has sewer service. |
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_____ The property has been approved by the appropriate municipal, |
|
county, or state agency for installation of a septic system. |
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_____ The property has electric service. |
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_____ The property is not in a floodplain. |
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_____ The roads to the boundaries of the property are paved and |
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maintained by: |
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____ the seller; |
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____ the owner of the property on which the road exists; |
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____ the municipality; |
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____ the county; or |
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____ the state. |
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____ No individual or entity other than the seller: |
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(1) owns the property; |
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(2) has a claim of ownership to the property; or |
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(3) has an interest in the property. |
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____ No individual or entity has a lien filed against the property. |
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____ There are no restrictive covenants, easements, or other title |
|
exceptions or encumbrances that prohibit construction of a house on |
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the property. |
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NOTICE: SELLER ADVISES PURCHASER TO: |
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(1) OBTAIN A TITLE ABSTRACT OR |
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TITLE COMMITMENT COVERING THE PROPERTY AND |
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HAVE THE ABSTRACT OR COMMITMENT REVIEWED BY |
|
AN ATTORNEY BEFORE SIGNING A CONTRACT OF |
|
THIS TYPE; AND |
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(2) PURCHASE AN OWNER'S POLICY |
|
OF TITLE INSURANCE COVERING THE PROPERTY. |
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________________________________________________________________ |
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(Date) (Signature of Seller) |
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________________________________________________________________ |
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(Date) (Signature of Purchaser) |
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(b) If the property is not located in a recorded |
|
subdivision, the seller shall provide the purchaser with a separate |
|
disclosure form stating that utilities may not be available to the |
|
property until the subdivision is recorded as required by law. |
|
(c) If the seller advertises property for sale under a |
|
lease-option contract, the advertisement must disclose information |
|
regarding the availability of water, sewer, and electric service. |
|
(d) The seller's failure to provide information required by |
|
this section: |
|
(1) is a false, misleading, or deceptive act or |
|
practice within the meaning of Section 17.46, Business & Commerce |
|
Code, and is actionable in a public or private suit brought under |
|
Subchapter E, Chapter 17, Business & Commerce Code; and |
|
(2) entitles the purchaser to cancel and rescind the |
|
lease-option contract and receive a full refund of all payments |
|
made to the seller. |
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(e) Subsection (d) does not limit the purchaser's remedy |
|
against the seller for other false, misleading, or deceptive acts |
|
or practices actionable in a suit brought under Subchapter E, |
|
Chapter 17, Business & Commerce Code. |
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Sec. 5.209. SELLER'S DISCLOSURE OF LIENS, APPRAISED VALUE, |
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TAX PAYMENTS, AND INSURANCE COVERAGE. (a) Not later than the |
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fifth day before a lease-option contract is signed by the |
|
purchaser, the seller shall provide the purchaser with: |
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(1) a statement disclosing each recorded lien that is |
|
filed against the property including: |
|
(A) the name and address of the lienholder; |
|
(B) the amount of the lien; |
|
(C) the payments required to be made on the debt |
|
secured by the lien; |
|
(D) the name of the account holder; and |
|
(E) whether or not the lienholder has consented |
|
to the purchaser's ownership of the property; |
|
(2) a statement disclosing the appraised value of the |
|
property according to the last valuation of the tax appraisal |
|
district with a copy of the last appraisal performed on the property |
|
attached; |
|
(3) a tax certificate from the collector for each |
|
taxing unit that collects taxes due on the property as provided by |
|
Section 31.08, Tax Code; and |
|
(4) a legible copy of any insurance policy, binder, or |
|
other evidence of coverage relating to the property that indicates: |
|
(A) the name of the insurer and the insured; |
|
(B) a description of the property insured; and |
|
(C) the amount for which the property is insured. |
|
(b) The seller's failure to provide information required by |
|
this section: |
|
(1) is a false, misleading, or deceptive act or |
|
practice within the meaning of Section 17.46, Business & Commerce |
|
Code, and is actionable in a public or private suit brought under |
|
Subchapter E, Chapter 17, Business & Commerce Code; and |
|
(2) entitles the purchaser to cancel and rescind the |
|
lease-option contract and receive a full refund of all payments |
|
made to the seller. |
|
(c) Subsection (b) does not limit the purchaser's remedy |
|
against the seller for other false, misleading, or deceptive acts |
|
or practices actionable in a suit brought under Subchapter E, |
|
Chapter 17, Business & Commerce Code. |
|
Sec. 5.210. ORAL AGREEMENTS PROHIBITED. (a) A |
|
lease-option contract is not enforceable unless the contract is in |
|
writing and signed by the party to be bound or by that party's |
|
authorized representative. |
|
(b) The rights and obligations of the parties to a contract |
|
are determined solely from the written contract, and any prior oral |
|
agreements between the parties are superseded by and merged into |
|
the contract. |
|
(c) A lease-option contract may not be varied by any oral |
|
agreements or discussions that occur before or contemporaneously |
|
with the execution of the contract. |
|
(d) The seller shall include in a separate document or in a |
|
provision of the contract a statement printed in 14-point boldfaced |
|
type or 14-point uppercase typewritten letters that reads |
|
substantially similar to the following: |
|
THIS LEASE-OPTION CONTRACT REPRESENTS THE FINAL |
|
AGREEMENT BETWEEN THE SELLER AND PURCHASER AND MAY NOT |
|
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, |
|
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE |
|
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. |
|
________________________________________________________________ |
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(Date) (Signature of Seller) |
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________________________________________________________________ |
|
(Date) (Signature of Purchaser) |
|
(e) The seller's failure to provide the notice required by |
|
this section: |
|
(1) is a false, misleading, or deceptive act or |
|
practice within the meaning of Section 17.46, Business & Commerce |
|
Code, and is actionable in a public or private suit brought under |
|
Subchapter E, Chapter 17, Business & Commerce Code; and |
|
(2) entitles the purchaser to cancel and rescind the |
|
lease-option contract and receive a full refund of all payments |
|
made to the seller. |
|
(f) Subsection (e) does not limit the purchaser's remedy |
|
against the seller for other false, misleading, or deceptive acts |
|
or practices actionable in a suit brought under Subchapter E, |
|
Chapter 17, Business & Commerce Code. |
|
Sec. 5.211. CONTRACT TERMS, CERTAIN WAIVERS |
|
PROHIBITED. (a) A seller may not include as a term of the |
|
lease-option contract a provision that: |
|
(1) imposes a late-payment fee that exceeds eight |
|
percent of the monthly payment under the contract; |
|
(2) imposes a penalty, charge, or fee if the purchaser |
|
elects to pay the entire amount due under the contract before the |
|
scheduled payment date under the contract; |
|
(3) terminates the lease-option contract or forfeits |
|
the option payment for a late payment; |
|
(4) increases the purchase price, imposes a penalty, |
|
charge, or fee of any type, or otherwise penalizes the purchaser |
|
leasing property for requesting repairs or exercising any other |
|
right under Chapter 92; |
|
(5) permits the option to purchase to be exercised |
|
after the third anniversary of the execution of the lease-option |
|
contract; or |
|
(6) provides for a purchase price that exceeds the |
|
appraised value of the property according to the last valuation of |
|
the tax appraisal district by more than five percent for each year |
|
of the lease-option contract. |
|
(b) A provision of the lease-option contract that purports |
|
to waive a right or exempt a party from a liability or duty under |
|
this subchapter is void. In addition to any other remedy provided |
|
by law, a landlord who knowingly violates this subsection by |
|
contracting with a purchaser to waive a right of the purchaser or a |
|
liability or duty by the seller under this subchapter is liable to |
|
the purchaser for: |
|
(1) actual damages; |
|
(2) a civil penalty of one month's rent plus $2,000; |
|
and |
|
(3) reasonable attorney's fees. |
|
(c) A violation of this subchapter is actionable regardless |
|
of whether a purchaser pays the improper penalty, charge, or fee. |
|
(d) A lease-option contract must include each provision of |
|
this subchapter unless the seller provides the purchaser a copy of |
|
this subchapter at the execution of the lease-option contract. |
|
Sec. 5.212. PURCHASER'S RIGHT TO CANCEL CONTRACT WITHOUT |
|
CAUSE. (a) In addition to other rights or remedies provided by |
|
law, the purchaser may cancel and rescind a lease-option contract |
|
for any reason by sending by regular or certified mail, return |
|
receipt requested, or by delivering in person a signed, written |
|
notice of cancellation to the seller not later than the 14th day |
|
after the date of the contract or the date the option fee is |
|
tendered, whichever is later. |
|
(b) If the purchaser cancels the contract as provided by |
|
Subsection (a), the seller shall, not later than the 10th day after |
|
the date the seller receives the purchaser's notice of |
|
cancellation: |
|
(1) return to the purchaser the executed contract and |
|
any property exchanged or payments made by the purchaser under the |
|
contract; and |
|
(2) cancel any security interest arising out of the |
|
contract. |
|
(c) The seller shall include in immediate proximity to the |
|
space reserved in the lease-option contract for the purchaser's |
|
signature a statement printed in 14-point boldfaced type or |
|
14-point uppercase typewritten letters that reads substantially |
|
similar to the following: |
|
YOU, THE PURCHASER, MAY CANCEL THIS CONTRACT AT ANY TIME DURING THE |
|
NEXT TWO WEEKS OR THE TWO WEEKS AFTER YOU PAY THE OPTION FEE, |
|
WHICHEVER ENDS LATER. THE DEADLINE FOR CANCELING THE CONTRACT IS |
|
(date) UNLESS YOU PAY THE OPTION FEE AFTER THE DATE ON WHICH THIS |
|
CONTRACT IS ENTERED INTO, IN WHICH CASE THE DEADLINE FOR |
|
CANCELLATION IS THE 14TH DAY AFTER THE DATE THAT PAYMENT IS MADE. |
|
THE ATTACHED NOTICE OF CANCELLATION EXPLAINS THIS RIGHT. |
|
(d) The seller shall provide a notice of cancellation form |
|
to the purchaser at the time the purchaser signs the lease-option |
|
contract that is printed in 14-point boldfaced type or 14-point |
|
uppercase typewritten letters and that reads substantially similar |
|
to the following: |
|
(date of contract) |
|
NOTICE OF CANCELLATION |
|
YOU MAY CANCEL THE LEASE-OPTION CONTRACT FOR ANY REASON |
|
WITHOUT ANY PENALTY OR OBLIGATION BY (date) UNLESS YOU PAY THE |
|
OPTION FEE AFTER THE DATE ON WHICH THIS CONTRACT IS ENTERED INTO, IN |
|
WHICH CASE THE DEADLINE FOR CANCELLATION IS THE 14TH DAY AFTER THE |
|
DATE THAT PAYMENT IS MADE. |
|
(1) YOU MUST SEND BY REGULAR OR CERTIFIED MAIL, RETURN |
|
RECEIPT REQUESTED, OR DELIVER IN PERSON A SIGNED AND DATED COPY OF |
|
THIS CANCELLATION NOTICE OR ANY OTHER WRITTEN NOTICE TO (Name of |
|
Seller) AT (Seller's Address) BY (date) UNLESS YOU PAY THE OPTION |
|
FEE AFTER THE DATE ON WHICH YOU ENTERED INTO THE LEASE-OPTION |
|
CONTRACT, IN WHICH CASE THE LAST DAY TO SEND OR DELIVER NOTICE IS |
|
THE 14TH DAY AFTER THE DATE THAT PAYMENT IS MADE. |
|
(2) THE SELLER SHALL, NOT LATER THAN THE 10TH DAY AFTER |
|
THE DATE THE SELLER RECEIVES YOUR CANCELLATION NOTICE: |
|
(A) RETURN THE EXECUTED CONTRACT AND ANY PROPERTY |
|
EXCHANGED OR PAYMENTS MADE BY YOU UNDER THE CONTRACT; AND |
|
(B) CANCEL ANY SECURITY INTEREST ARISING OUT OF |
|
THE CONTRACT. |
|
I ACKNOWLEDGE RECEIPT OF THIS NOTICE OF CANCELLATION FORM. |
|
________________________________________________________________ |
|
(Date) (Purchaser's Signature) |
|
I HEREBY CANCEL THIS CONTRACT. |
|
________________________________________________________________ |
|
(Date) (Purchaser's Signature) |
|
(e) The seller may not request the purchaser to sign a |
|
waiver of receipt of the notice of cancellation form required by |
|
this section. |
|
Sec. 5.213. RECORDING REQUIREMENTS. (a) Except as |
|
provided by Subsection (b), the seller shall record the |
|
lease-option contract, including the attached disclosure statement |
|
required by Section 5.208, as prescribed by Title 3 on or before the |
|
30th day after the date the contract is executed. |
|
(b) Section 12.002(c) does not apply to a lease-option |
|
contract filed for record under this section. |
|
(c) If the lease-option contract is terminated for any |
|
reason, the seller shall record the instrument that terminates the |
|
contract. |
|
(d) The county clerk shall collect the filing fee prescribed |
|
by Section 118.011, Local Government Code. |
|
Sec. 5.214. ANNUAL ACCOUNTING STATEMENT. (a) The seller |
|
shall provide the purchaser with an annual statement in January of |
|
each year for the term of the lease-option contract. If the seller |
|
mails the statement to the purchaser, the statement must be |
|
postmarked not later than January 31. |
|
(b) The statement must include the following information: |
|
(1) the amount paid under the contract; |
|
(2) the remaining amount owed under the contract; |
|
(3) the number of payments remaining under the |
|
contract; |
|
(4) the amounts paid to taxing authorities on the |
|
purchaser's behalf if collected by the seller and any amount owing |
|
to the taxing authorities; |
|
(5) the amounts paid to insure the property if |
|
collected by the seller; |
|
(6) if the property has been damaged and the seller has |
|
received insurance proceeds, an accounting of the proceeds applied |
|
to the property; and |
|
(7) if the seller has changed insurance coverage, a |
|
legible copy of the current policy, binder, or other evidence that |
|
satisfies the requirements of Section 5.209(a)(4). |
|
(c) A seller who violates this section is liable to the |
|
purchaser for: |
|
(1) actual damages; |
|
(2) a civil penalty in the amount of $50 for each day |
|
the seller fails to provide the purchaser the complete statement as |
|
required under Subsection (a); |
|
(3) an additional civil penalty in the amount of $25 |
|
for each day after the 60th day after the date on which the |
|
provision of the statement as required under Subsection (a) becomes |
|
overdue; and |
|
(4) court costs and reasonable attorney's fees. |
|
(d) A purchaser is not required to demonstrate actual harm |
|
to be entitled to recover under this section. |
|
Sec. 5.215. DISPOSITION OF INSURANCE PROCEEDS. (a) The |
|
named insured under an insurance policy, binder, or other coverage |
|
relating to property subject to a lease-option contract shall |
|
inform the insurer, not later than the 10th day after the date the |
|
coverage is obtained or the contract executed, whichever is later, |
|
of: |
|
(1) the lease-option contract for conveyance and the |
|
term of the contract; and |
|
(2) the name and address of the other party to the |
|
contract. |
|
(b) An insurer who disburses proceeds under an insurance |
|
policy, binder, or other coverage relating to property that has |
|
been damaged shall issue the proceeds jointly to the purchaser and |
|
the seller designated in the contract. |
|
(c) If proceeds under an insurance policy, binder, or other |
|
coverage are disbursed, the purchaser and seller shall ensure that |
|
the proceeds are used to repair, remedy, or improve the condition on |
|
the property. |
|
(d) The failure of a seller or purchaser to comply with |
|
Subsection (c) is a false, misleading, or deceptive act or practice |
|
within the meaning of Section 17.46, Business & Commerce Code, and |
|
is actionable in a public or private suit brought under Subchapter |
|
E, Chapter 17, Business & Commerce Code. |
|
(e) Subsection (d) does not limit either party's remedy for |
|
other false, misleading, or deceptive acts or practices actionable |
|
in a suit brought under Subchapter E, Chapter 17, Business & |
|
Commerce Code. |
|
Sec. 5.216. TITLE TRANSFER. (a) The seller shall transfer |
|
recorded, legal title of the property covered by the lease-option |
|
contract to the purchaser on receiving the purchaser's final |
|
payment due under the contract. The title transferred may be |
|
subject only to a lien described by Section 5.220. |
|
(b) In addition to any other remedy provided by law, a |
|
seller who violates Subsection (a) is liable to the purchaser for: |
|
(1) a civil penalty of: |
|
(A) $250 a day for each day the seller fails to |
|
transfer the title to the purchaser during the period that begins |
|
the 31st day and ends the 90th day after the date the seller |
|
receives the purchaser's final payment due under the contract; and |
|
(B) $500 a day for each day the seller fails to |
|
transfer title to the purchaser after the 90th day after the date |
|
the seller receives the purchaser's final payment due under the |
|
contract; and |
|
(2) court costs and reasonable attorney's fees. |
|
(c) If a person to whom a seller's property interest passes |
|
by will or intestate succession is required to obtain a court order |
|
to clarify the person's status as an heir or to clarify the status |
|
of the seller or the property before the person may convey good and |
|
indefeasible title to the property, the court in which the action is |
|
pending may waive payment of the liquidated damages and attorney's |
|
fees under Subsection (b) if the court finds that the person is |
|
pursuing the action to establish good and indefeasible title with |
|
reasonable diligence. |
|
(d) In this section, "seller" includes a successor, |
|
assignee, personal representative, executor, or administrator of |
|
the seller. |
|
Sec. 5.217. LIABILITY FOR DISCLOSURES. For purposes of |
|
this subchapter, a disclosure required by this subchapter that is |
|
made by a seller's agent is a disclosure made by the seller. |
|
Sec. 5.218. RIGHT TO CANCEL CONTRACT FOR IMPROPER |
|
PLATTING. (a) Except as provided by Subsection (c), in addition to |
|
other rights or remedies provided by law, the purchaser may cancel |
|
and rescind a lease-option contract at any time if the purchaser |
|
learns that the seller has not properly subdivided or platted the |
|
property that is covered by the contract in accordance with state |
|
and local law. A purchaser canceling and rescinding a contract |
|
under this subsection must: |
|
(1) deliver a signed, written notice of the |
|
cancellation and rescission to the seller in person; or |
|
(2) send a signed, written notice of the cancellation |
|
and rescission to the seller by regular or certified mail, return |
|
receipt requested. |
|
(b) If the purchaser cancels the contract as provided under |
|
Subsection (a), the seller, not later than the 30th day after the |
|
date the seller receives the notice of cancellation and rescission, |
|
shall: |
|
(1) deliver in person or send by regular and certified |
|
mail, return receipt requested, to the purchaser a signed, written |
|
notice that the seller intends to properly subdivide or plat the |
|
property; or |
|
(2) return to the purchaser all payments of any kind |
|
made to the seller under the contract, including reimbursement to |
|
the purchaser for any payments the purchaser made to a taxing |
|
authority for the property and the value of any improvements made to |
|
the property by the purchaser, minus the fair market rental value of |
|
the property during the term of the purchaser's occupancy. |
|
(c) A purchaser may not exercise the purchaser's right to |
|
cancel and rescind a lease-option contract under this section if, |
|
on or before the 90th day after the date the purchaser receives the |
|
seller's notice under Subsection (b)(1), the seller: |
|
(1) properly subdivides or plats the property; and |
|
(2) delivers in person or sends by regular and |
|
certified mail, return receipt requested, to the purchaser a |
|
signed, written notice providing evidence that the property has |
|
been subdivided or platted in accordance with state and local law. |
|
(d) The seller may not terminate the purchaser's possession |
|
of the property covered by the contract being canceled and |
|
rescinded before the seller properly plats or subdivides the |
|
property and pays the purchaser any money to which the purchaser is |
|
entitled under Subsection (b). |
|
Sec. 5.219. RIGHT TO DEDUCT. (a) Except as provided by |
|
Subsection (b), if a seller is liable to a purchaser under this |
|
subchapter, the purchaser, without taking judicial action, may |
|
deduct the amount owed to the purchaser by the seller from any |
|
amounts owed to the seller by the purchaser under the terms of a |
|
lease-option contract. |
|
(b) A purchaser may not make a deduction under this section |
|
unless, before making the deduction, the purchaser: |
|
(1) notifies the seller in writing of the amount for |
|
which the seller is liable and specifies the date after which the |
|
purchaser will make a deduction under this section if the seller |
|
does not pay the specified amount; and |
|
(2) if the deduction is for an expenditure made by the |
|
purchaser in connection with the property, provides the seller with |
|
adequate documentation of the amount and purpose of the |
|
expenditure. |
|
(c) The seller may recover from the purchaser any improper |
|
reduction plus court costs and attorney's fees by taking judicial |
|
action. |
|
Sec. 5.220. MAINTENANCE OF TITLE. (a) A potential seller |
|
may enter into a lease-option contract with a potential purchaser |
|
only if the seller maintains the property free from any liens other |
|
than liens described by this section. |
|
(b) Except as provided by this section, a seller, or the |
|
seller's heirs or assigns, must maintain title to the property |
|
covered by the lease-option contract free from any liens against |
|
the property covered by the lease-option contract for the entire |
|
duration of the contract. This subsection does not apply to a lien |
|
placed on the property that is: |
|
(1) placed on the property because of the conduct of |
|
the purchaser; or |
|
(2) described in a title commitment for the leasehold |
|
estate provided by the seller to the purchaser under Subsection (c) |
|
before the lease-option contract is executed that: |
|
(A) is placed on the property by the seller |
|
before the date the lease-option contract is executed in exchange |
|
for a loan that is secured only by the property that is the subject |
|
of the lease-option contract; |
|
(B) is attached only to the property sold to the |
|
purchaser under the contract; and |
|
(C) secures in its aggregate with all liens or |
|
other indebtedness an amount that at no time is or will be greater |
|
than the amount of the total outstanding balance owed by the |
|
purchaser under the lease-option contract. |
|
(c) The seller must: |
|
(1) provide to the purchaser at the seller's sole |
|
expense at the time the lease-option contract is executed a current |
|
title policy for the leasehold estate; and |
|
(2) file a memorandum of the lease-option contract for |
|
record in the official real property records of the county in which |
|
the property is located. |
|
(d) A violation of this section: |
|
(1) is a false, misleading, or deceptive act or |
|
practice within the meaning of Section 17.46, Business & Commerce |
|
Code, and is actionable in a public or private suit brought under |
|
Subchapter E, Chapter 17, Business & Commerce Code; and |
|
(2) in addition to other rights or remedies provided |
|
by law, entitles the purchaser to cancel and rescind the |
|
lease-option contract and receive from the seller: |
|
(A) the return of all payments of any kind made to |
|
the seller by the purchaser under the contract; and |
|
(B) reimbursement for the costs of any |
|
improvements made to the property by the purchaser. |
|
(e) A seller is not liable under this section if: |
|
(1) a lien is placed on the property by a person other |
|
than the seller; and |
|
(2) not later than the 30th day after the date the |
|
seller receives notice of the lien, the seller: |
|
(A) takes all steps necessary to remove the lien; |
|
and |
|
(B) has the lien removed from the property. |
|
SECTION 3. Sections 5.062(e), (f), and (g), Property Code, |
|
are repealed. |
|
SECTION 4. The change in law made by this Act applies only |
|
to a lease-option contract entered into on or after the effective |
|
date of this Act. A contract entered into before the effective date |
|
of this Act is governed by the law in effect immediately before that |
|
date, and that law is continued in effect for that purpose. |
|
SECTION 5. This Act takes effect September 1, 2009. |