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A BILL TO BE ENTITLED
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AN ACT
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relating to the use of earnest money contracts to purchase land in |
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certain border and economically distressed counties. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Sections 232.033(a) and (h), Local Government |
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Code, are amended to read as follows: |
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(a) Brochures, publications, [and] advertising of any form, |
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and earnest money contracts relating to [subdivided] land required |
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to be platted under this subchapter: |
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(1) may not contain any misrepresentation; [and] |
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(2) except for a for-sale sign posted on the property |
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that is no larger than three feet by three feet, must accurately |
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describe the availability of water and sewer service facilities and |
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electric and gas utilities; and |
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(3) if a plat for the land has not been finally |
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approved and recorded, must include a notice that: |
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(A) subject to Section 232.045, a contract for |
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the sale of any portion of the land may not be entered into until the |
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land receives final plat approval under Section 232.024; and |
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(B) the land may not be possessed or occupied |
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until: |
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(i) the land receives final plat approval |
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under Section 232.024; and |
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(ii) all water and sewer service facilities |
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for the lot are connected or installed in compliance with the model |
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rules adopted under Section 16.343, Water Code. |
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(h) A person who is a seller of lots for which a plat is |
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required under this subchapter [in a subdivision], or a subdivider |
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or an agent of a seller or subdivider, commits an offense if the |
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person knowingly authorizes or assists in the publication, |
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advertising, distribution, or circulation of any statement or |
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representation that the person knows is false concerning any |
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[subdivided] land offered for sale or lease. An offense under this |
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section is a Class A misdemeanor. |
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SECTION 2. Subchapter B, Chapter 232, Local Government |
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Code, is amended by adding Section 232.045 to read as follows: |
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Sec. 232.045. EARNEST MONEY CONTRACTS. (a) This section |
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applies in addition to other applicable law and prevails to the |
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extent of a conflict with that other law. This section applies only |
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to a person who is a seller or subdivider and who is a licensed, |
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registered, or otherwise credentialed residential mortgage loan |
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originator under applicable state law, federal law, and the |
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Nationwide Mortgage Licensing System and Registry. A person may, |
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before a plat has been finally approved and recorded: |
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(1) enter into an earnest money contract with a |
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potential purchaser and accept payment under the contract in an |
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amount of $250 or less; and |
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(2) advertise in accordance with Section 232.033. |
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(b) An earnest money contract is void if the plat for the |
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land has not been finally approved and recorded before the 91st day |
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after the date the earnest money contract is signed by the potential |
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purchaser, unless the potential purchaser agrees in writing to |
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extend the period for plat approval and recording for an additional |
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90-day period. Only one extension may be granted under this |
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subsection. |
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(c) If an earnest money contract is void under Subsection |
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(b), the seller shall refund all earnest money paid to the potential |
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purchaser not later than the 30th day after the date the earnest |
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money contract becomes void. If the seller fails to refund the |
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earnest money to the potential purchaser in violation of this |
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subsection, the potential purchaser, in a suit to recover the |
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earnest money, may recover an amount equal to three times the amount |
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of the earnest money required to be refunded, plus reasonable |
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attorney's fees. |
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(d) Before entering into an earnest money contract, a person |
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must provide written notice to the attorney general and to the local |
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government responsible for approving the plat. The notice must |
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include: |
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(1) a statement of intent to enter into an earnest |
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money contract under this section; |
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(2) a legal description of the land to be included in |
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the subdivision; |
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(3) each county in which all or part of the subdivision |
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is located; and |
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(4) the number of proposed individual lots to be |
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included in the subdivision. |
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(e) An earnest money contract must contain the following |
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statement: |
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"NOTICE: THIS IS AN EARNEST MONEY CONTRACT ONLY. THE MAXIMUM |
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AMOUNT THAT THE SELLER MAY COLLECT UNDER THIS CONTRACT IS $250. THE |
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SELLER MAY NOT DEMAND ANY ADDITIONAL PAYMENT UNTIL A PLAT OF THE |
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SUBDIVISION HAS BEEN APPROVED AND FILED BY THE COUNTY CLERK |
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." |
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SECTION 3. Section 232.021(9), Local Government Code, is |
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repealed. |
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SECTION 4. This Act takes effect September 1, 2015. |