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A BILL TO BE ENTITLED
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AN ACT
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relating to prohibiting certain private transfer fees and the |
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preservation of private real property rights; providing penalties. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Chapter 5, Property Code, is amended by adding |
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Subchapter G to read as follows: |
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SUBCHAPTER G. CERTAIN PRIVATE TRANSFER FEES PROHIBITED; |
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PRESERVATION OF PRIVATE REAL PROPERTY RIGHTS |
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Sec. 5.201. DEFINITIONS. In this subchapter: |
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(1) "Lender" means a lending institution, including a |
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bank, trust company, banking association, savings and loan |
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association, mortgage company, investment bank, credit union, life |
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insurance company, and governmental agency, that customarily |
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provides financing or an affiliate of a lending institution. |
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(2) "Payee" means a person who claims the right to |
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receive or collect a private transfer fee payable under a private |
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transfer fee obligation and who may or may not have a pecuniary |
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interest in the obligation. |
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(3) "Private transfer fee" means an amount of money, |
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regardless of the method of determining the amount, that is payable |
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on the transfer of an interest in real property or payable for a |
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right to make or accept a transfer. |
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(4) "Private transfer fee obligation" means an |
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obligation to pay a private transfer fee created under: |
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(A) a declaration or other covenant recorded in |
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the real property records in the county in which the property |
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subject to the private transfer fee obligation is located; |
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(B) a contractual agreement or promise; or |
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(C) an unrecorded contractual agreement or |
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promise. |
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(5) "Subsequent owner" means a person who acquires |
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real property by transfer from a person other than the person who is |
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the seller of the property on the date the private transfer fee |
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obligation is created. |
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(6) "Subsequent purchaser" means a person who |
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purchases real property from a person other than the person who is |
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the seller on the date the private transfer fee obligation is |
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created. The term includes a lender who provides a mortgage loan to |
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a subsequent purchaser to purchase the property. |
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(7) "Transfer" means the sale, gift, conveyance, |
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assignment, inheritance, or other transfer of an ownership interest |
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in real property. |
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Sec. 5.202. CERTAIN PRIVATE TRANSFER FEE OBLIGATIONS VOID. |
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(a) Except as provided by this subchapter, a private transfer fee |
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obligation is not binding or enforceable against a subsequent owner |
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or subsequent purchaser of an interest in real property and is void. |
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(b) For purposes of this subchapter, the following payments |
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are not considered private transfer fee obligations: |
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(1) consideration paid by a purchaser to a seller for |
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an interest in real property transferred, including, as applicable, |
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a mineral interest transferred, including additional consideration |
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paid to a seller for the property's appreciation, development, or |
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sale after the interest in the property has been transferred to the |
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purchaser, if the additional consideration is paid only once and |
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that payment does not bind successors in interest to the property to |
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any private transfer fee obligation; |
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(2) a commission paid to a licensed real estate broker |
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under a written agreement between a seller or purchaser and the |
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broker, including an additional commission for the property's |
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appreciation, development, or sale after the interest in property |
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is transferred to the purchaser; |
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(3) interest, a fee, a charge, or another type of |
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payment to a lender under a loan secured by a mortgage on the |
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property, including: |
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(A) a fee payable for the lender's consent to an |
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assumption of the loan or transfer of the property subject to the |
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mortgage; |
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(B) a fee or charge payable for an estoppel |
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letter or certificate; |
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(C) a shared appreciation interest or profit |
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participation; or |
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(D) other consideration payable in connection |
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with the loan; |
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(4) rent, reimbursement, a fee, a charge, or another |
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type of payment to a lessor under a lease, including a fee for |
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consent to an assignment, sublease, encumbrance, or transfer of a |
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lease; |
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(5) consideration paid to the holder of an option to |
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purchase an interest in property, or to the holder of a right of |
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first refusal or first offer to purchase an interest in property, |
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for waiving, releasing, or not exercising the option or right when |
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the property is transferred to another person; |
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(6) a fee payable to or imposed by a governmental |
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entity in connection with recording the transfer of the property; |
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(7) dues, a fee, a charge, an assessment, a fine, a |
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contribution, or another type of payment to a property owners' |
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association, as defined by Section 209.002, under a declaration or |
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other covenant or under law, including a fee or charge payable for |
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an estoppel letter or certificate issued by the association or an |
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authorized agent of the association, provided that no portion of |
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the fee or charge is required to be passed through to a third party |
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designated or identifiable in the declaration or other covenant or |
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law or in a document referenced in the declaration or other covenant |
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or law; or |
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(8) dues, a fee, a charge, an assessment, a fine, a |
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contribution, or another type of payment for the transfer of a club |
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membership related to the property. |
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Sec. 5.203. NOTICE REQUIREMENTS FOR CONTINUATION OF |
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EXISTING PRIVATE TRANSFER FEE OBLIGATIONS. (a) A person who |
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receives or collects a private transfer fee under a private |
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transfer fee obligation created before the effective date of this |
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subchapter must, on or before January 31, 2012, file for record a |
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"Notice of Private Transfer Fee Obligation" as provided by this |
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section in the real property records of each county in which the |
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property is located. |
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(b) Multiple payees of a single private transfer fee under a |
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private transfer fee obligation must designate one payee as the |
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payee of record for the fee. |
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(c) A notice under Subsection (a) must: |
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(1) be printed in at least 14-point boldface type; |
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(2) state the amount of the private transfer fee and |
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the method of determination, if applicable; |
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(3) state the date or any circumstance under which the |
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private transfer fee obligation expires, if any; |
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(4) state the purpose for which the money from the |
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private transfer fee obligation will be used; |
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(5) notwithstanding Subsection (b), state the name of |
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each payee and each payee's contact information; |
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(6) state the name and address of the payee of record |
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to whom the payment of the fee must be sent; |
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(7) include the acknowledged signature of each payee |
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or authorized representative of each payee; and |
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(8) state the legal description of the property |
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subject to the private transfer fee obligation. |
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(d) A person required to file a notice under this section |
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shall: |
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(1) refile the notice described by this section on or |
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before January 31 of each year in which a private transfer fee may |
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be collected or received; and |
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(2) amend the notice to reflect any change in the name |
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or address of any payee included in the notice not later than the |
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30th day after the date the change occurs. |
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(e) A person who amends a notice under Subsection (d)(2) |
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must include: |
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(1) the recording information of the original notice |
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filed as required by this section; and |
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(2) the legal description of the property subject to |
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the private transfer fee obligation. |
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(f) If a person required to file a notice under this section |
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fails to comply with this section: |
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(1) payment of the private transfer fee may not be a |
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requirement for the conveyance of an interest in the property to a |
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purchaser; |
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(2) the property is not subject to further obligation |
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under the private transfer fee obligation; and |
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(3) the private transfer fee obligation is void. |
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Sec. 5.204. ADDITIONAL COMPLIANCE REQUIREMENT: RESPONSE TO |
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REQUEST FOR NOTICE. (a) A person may send a written request to the |
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payee of record at the payee's address of record requesting a copy |
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of the most recently filed notice under Section 5.203 and a |
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statement of the amount of the private transfer fee. The payee |
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shall provide to the requesting party a copy of the notice and a |
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statement of the amount of the private transfer fee not later than |
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the 30th day after the date the party sends the written request to |
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the payee of record. |
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(b) If the payee of record fails to comply with Subsection |
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(a), a subsequent purchaser of property subject to the private |
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transfer fee obligation may file an affidavit as provided by this |
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subsection. The affidavit must: |
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(1) state that: |
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(A) a written request for a copy of the notice |
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required under Section 5.203 and a statement of the amount of the |
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private transfer fee was sent to the payee of record at the address |
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shown in the most recent notice filed on the date the request was |
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sent; and |
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(B) the payee failed to provide a copy of the |
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notice and a statement of the amount of the private transfer fee in |
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a timely manner; and |
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(2) include: |
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(A) the legal description of the property subject |
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to the private transfer fee obligation; |
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(B) the name of the record owner of the property |
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on the date the affidavit is signed; |
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(C) recording information for the instrument of |
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record, if any, imposing the private transfer fee obligation; and |
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(D) a description of the unrecorded contractual |
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agreement or promise, if any, imposing the private transfer fee |
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obligation. |
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(c) An affidavit filed for record under Subsection (b) is |
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prima facie evidence that the payee failed to comply with Section |
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5.203. |
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(d) After the date an affidavit under this section is filed: |
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(1) payment of the private transfer fee may not be a |
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requirement for the conveyance of an interest in the property to a |
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purchaser; |
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(2) the property is not subject to further obligation |
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under the private transfer fee obligation; and |
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(3) the private transfer fee obligation is void. |
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Sec. 5.205. ADDITIONAL COMPLIANCE REQUIREMENT: TIMELY |
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ACCEPTANCE OF FEES PAID UNDER EXISTING PRIVATE TRANSFER FEE |
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OBLIGATIONS. (a) The payee of record on the date a private |
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transfer fee is paid under a private transfer fee obligation |
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subject to Section 5.203 must accept the payment on or before the |
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30th day after the date the payment is made. |
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(b) If the payee of record fails to comply with Subsection |
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(a): |
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(1) the payment must be returned to the purchaser; |
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(2) payment of the private transfer fee may not be a |
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requirement for the conveyance of an interest in the property to a |
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purchaser; |
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(3) the property is not subject to further obligation |
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under the private transfer fee obligation; and |
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(4) the private transfer fee obligation is void. |
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Sec. 5.206. DISCLOSURE OF EXISTING TRANSFER FEE OBLIGATION |
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REQUIRED IN CONTRACT FOR SALE. (a) A contract for the sale of real |
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property subject to a private transfer fee obligation authorized |
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under this subchapter must describe the obligation and state that |
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the obligation is governed by this subchapter. |
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(b) If a contract for the sale of real property subject to a |
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private transfer fee obligation authorized under this subchapter |
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fails to comply with this section: |
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(1) payment of the private transfer fee may not be a |
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requirement for the conveyance of an interest in the property to a |
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purchaser; |
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(2) the property is not subject to further obligation |
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under the private transfer fee obligation; and |
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(3) the private transfer fee obligation is void. |
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Sec. 5.207. WAIVER VOID. A provision that purports to waive |
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a purchaser's rights under this subchapter is void. |
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Sec. 5.208. LIABILITY FOR IMPOSING PRIVATE TRANSFER FEE |
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OBLIGATION. A person who imposes or enters into an agreement |
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imposing a private transfer fee obligation in the person's favor in |
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violation of this subchapter is liable for: |
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(1) damages resulting from the imposition of the |
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private transfer fee obligation, including the amount of any |
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private transfer fee paid; and |
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(2) attorney's fees, expenses, and costs incurred in |
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an action to recover the private transfer fee paid or to quiet title |
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to the real property. |
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Sec. 5.209. INJUNCTIVE OR DECLARATORY RELIEF; PROVIDING |
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PENALTIES. (a) The attorney general may institute an action for |
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injunctive or declaratory relief to restrain a violation of this |
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subchapter. |
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(b) In addition to instituting an action for injunctive or |
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declaratory relief under Subsection (a), the attorney general may |
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institute an action for civil penalties against a payee for a |
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violation of this chapter. Except as provided by Subsection (c), a |
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civil penalty assessed under this section may not exceed an amount |
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equal to two times the amount of the private transfer fee charged or |
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collected by the payee in violation of this subchapter. |
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(c) If the court in which an action under Subsection (b) is |
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pending finds that a payee violated this subchapter with a |
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frequency that constitutes a pattern or practice, the court may |
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assess a civil penalty not to exceed $250,000. |
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(d) If the attorney general substantially prevails in an |
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action for injunctive relief or a civil penalty under this section, |
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the attorney general may recover reasonable attorney's fees, costs, |
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and expenses incurred in obtaining the relief or penalty, including |
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court costs and witness fees. |
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(e) The comptroller shall deposit to the credit of the |
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general revenue fund all money collected under this section. |
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SECTION 2. Section 5.017, Property Code, is repealed. |
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SECTION 3. This Act takes effect immediately if it receives |
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a vote of two-thirds of all the members elected to each house, as |
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provided by Section 39, Article III, Texas Constitution. If this |
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Act does not receive the vote necessary for immediate effect, this |
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Act takes effect September 1, 2011. |