By: Parker H.B. No. 1543
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to certain procedural requirements for public improvement
  districts and transfers of property located in public improvement
  districts.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Sections 372.010(a) and (b), Local Government
  Code, are amended to read as follows:
         (a)  During the six-month period after the date of the final
  adjournment of the hearing under Section 372.009, the governing
  body of the municipality or county may authorize an improvement
  district if, by majority vote of all members of the governing body,
  the members adopt a resolution authorizing the district in
  accordance with its finding as to the advisability of the
  improvement. The resolution must provide that the authorization
  takes effect on the date the resolution is adopted.
         (b)  Not later than the seventh day after the date the
  governing body of a municipality or county adopts a resolution
  under Subsection (a), the municipality or county shall file a copy
  of the resolution with the county clerk of each county in which all
  or part of the improvement district is located [An authorization
  takes effect when it has been published one time in a newspaper of
  general circulation in the municipality or county. If any part of
  the improvement district is located in the municipality's
  extraterritorial jurisdiction or if any part of the improvements is
  to be undertaken in the municipality's extraterritorial
  jurisdiction, the authorization does not take effect until the
  notice is also given one time in a newspaper of general circulation
  in the part of the extraterritorial jurisdiction in which the
  district is located or in which the improvements are to be
  undertaken].
         SECTION 2.  Section 372.013, Local Government Code, is
  amended to read as follows:
         Sec. 372.013.  SERVICE PLAN. (a) The advisory body shall
  prepare an ongoing service plan and present the plan to the
  governing body of the municipality or county for review and
  approval. The governing body may approve the plan only by ordinance
  or order. The governing body may assign responsibility for the plan
  to another entity in the absence of an advisory body.
         (b)  The service plan must:
               (1)  cover a period of at least five years;
               (2)  [and must also] define the annual indebtedness and
  the projected costs for improvements; and
               (3)  include a copy of the notice form required by
  Section 5.014, Property Code.
         (c)  Not later than the seventh day after the date the
  governing body of a municipality or county approves a service plan,
  the municipality or county shall file a copy of the plan with the
  county clerk of each county in which all or part of the public
  improvement district is located.
         (d)  The governing body of the municipality or county [plan]
  shall review and update the service plan [be reviewed and updated]
  annually for the purpose of determining the annual budget for
  improvements. The governing body may amend or update the plan only
  by ordinance or order.
         (e)  Not later than the seventh day after the date the
  governing body of a municipality or county amends or updates the
  service plan, including the notice form required by Section 5.014,
  Property Code, the municipality or county shall file a copy of the
  amended or updated plan with the county clerk of each county in
  which all or part of the public improvement district is located.
         SECTION 3.  Section 5.014, Property Code, is amended to read
  as follows:
         Sec. 5.014.  NOTICE OF OBLIGATIONS RELATED TO PUBLIC
  IMPROVEMENT DISTRICT. (a) A person who proposes to sell or
  otherwise convey [A seller of residential] real property that is
  located in a public improvement district established under
  Subchapter A, Chapter 372, Local Government Code, or Chapter 382,
  Local Government Code, [and that consists of not more than one
  dwelling unit located in this state] shall first give to the
  purchaser of the property the [a] written notice prescribed by
  Subsection (a-1).
         (a-1)  The notice required by Subsection (a) shall be
  executed by the seller and must, except as provided by Subsection
  (b), read as follows [that reads substantially similar to the
  following]:
  NOTICE OF OBLIGATION TO PAY [PUBLIC] IMPROVEMENT DISTRICT
  ASSESSMENT TO (insert name of municipality or county levying
  assessment), TEXAS
  CONCERNING THE FOLLOWING PROPERTY [AT]
  (insert property [street] address)
         As the [a] purchaser of the [this parcel of] real property
  described above, you are obligated to pay assessments [an
  assessment] to (insert name of [a] municipality or county, as
  applicable), Texas, for the costs of a portion of a public [an]
  improvement or services project (the "Authorized Improvements")
  undertaken for the benefit of the property within (insert name of
  public improvement district) (the "District") created [by a public
  improvement district] under (insert Subchapter A, Chapter 372,
  Local Government Code, or Chapter 382, Local Government Code, as
  applicable).
  AN ASSESSMENT HAS BEEN LEVIED AGAINST YOUR PROPERTY FOR THE
  AUTHORIZED IMPROVEMENTS, WHICH MAY BE PAID IN FULL AT ANY TIME. IF
  THE ASSESSMENT IS NOT PAID IN FULL, IT WILL BE DUE AND PAYABLE IN
  ANNUAL INSTALLMENTS THAT WILL VARY FROM YEAR TO YEAR DEPENDING ON
  THE AMOUNT OF INTEREST PAID, COLLECTION COSTS, ADMINISTRATIVE
  COSTS, AND DELINQUENCY COSTS.
         The exact amount of the assessment may be obtained from
  (insert name of municipality or county, as applicable). The exact
  amount of each annual installment will be approved each year by
  (insert name of city council or county commissioners court, as
  applicable) in the annual service plan update for the district [The
  assessment may be due annually or in periodic installments]. More
  information about the assessments, including [concerning] the
  amounts [amount of the assessment] and [the] due dates, [of that
  assessment] may be obtained from (insert name of [the] municipality
  or county, as applicable) [levying the assessment].
         [The amount of the assessments is subject to change.] Your
  failure to pay any assessment or any annual installment may [the
  assessments could] result in penalties and interest being added to
  what you owe or in a lien on and the foreclosure of your property.
         The undersigned purchaser acknowledges receipt of this
  notice before the effective date of a binding contract for the
  purchase of the real property at the address described above.
  Date: __________ _______________
  Signature of Purchaser
         (b)  The seller or the municipality or county that created
  the public improvement district may provide additional information
  regarding the district in the notice prescribed by Subsection
  (a-1), including whether an assessment has been levied, the amount
  of the assessment, and the payment schedule for assessments. [The
  seller shall deliver the notice required under Subsection (a) to
  the purchaser before the effective date of an executory contract
  binding the purchaser to purchase the property. The notice may be
  given separately, as part of the contract during negotiations, or
  as part of any other notice the seller delivers to the purchaser.
  If the notice is included as part of the executory contract or
  another notice, the title of the notice prescribed by this section,
  the references to the street address and date in the notice, and the
  purchaser's signature on the notice may be omitted.]
         (c)  This section does not apply to a transfer:
               (1)  under a court order or foreclosure sale;
               (2)  by a trustee in bankruptcy;
               (3)  to a mortgagee by a mortgagor or successor in
  interest or to a beneficiary of a deed of trust by a trustor or
  successor in interest;
               (4)  by a mortgagee or a beneficiary under a deed of
  trust who has acquired the land at a sale conducted under a power of
  sale under a deed of trust or a sale under a court-ordered
  foreclosure or has acquired the land by a deed in lieu of
  foreclosure;
               (5)  by a fiduciary in the course of the administration
  of a decedent's estate, guardianship, conservatorship, or trust;
               (6)  from one co-owner to another co-owner of an
  undivided interest in the real property;
               (7)  to a spouse or a person in the lineal line of
  consanguinity of the seller;
               (8)  to or from a governmental entity; or
               (9)  of only a mineral interest, leasehold interest, or
  security interest[; or
               [(10)  of a real property interest in a condominium].
         (d)  For the purposes of this section,[If] an executorya
  contract for the purchase and sale having a performance period of
  less than six months is considered a sale requiring notice [is
  entered into without the seller providing the notice required by
  this section, the purchaser may terminate the contract for any
  reason not later than the earlier of:
               [(1)  the seventh day after the date the purchaser
  receives the notice; or
               [(2)  the date the transfer occurs as provided by the
  executory contract].
         [(e)  The purchaser's right to terminate the executory
  contract under Subsection (d) is the purchaser's exclusive remedy
  for the seller's failure to provide the notice required by this
  section.]
         SECTION 4.  Subchapter A, Chapter 5, Property Code, is
  amended by adding Sections 5.0141, 5.0142, 5.0143, 5.0144, and
  5.0145 to read as follows:
         Sec. 5.0141.  NOTICE REQUIRED BEFORE CONTRACT EXECUTION.
  (a) The notice required by Section 5.014 shall be given to the
  prospective purchaser before the execution of a binding contract of
  purchase and sale, either separately or as an addendum or paragraph
  of a purchase contract.
         (b)  In the event a contract of purchase and sale is entered
  into without the seller providing the notice, the purchaser is
  entitled to terminate the contract.
         (c)  If, however, the seller furnishes the notice at or
  before closing the purchase and sale contract and the purchaser
  elects to close even though the notice was not timely furnished
  before execution of the contract, it shall be conclusively presumed
  that the purchaser has waived all rights to terminate the contract
  under Subsection (b) or recover damages or other remedies or rights
  under Section 5.0145.
         (d)  Notwithstanding any provision of this section, Section
  5.014, 5.0142, 5.0143, 5.0144, or 5.0145, all sellers, title
  companies, real estate brokers, and examining attorneys, and any
  agent, representative, or person acting on their behalf, are not
  liable for damages under Section 5.0145, or for any other damages to
  any person, for:
               (1)  failing to provide the notice to a purchaser
  before execution of a binding contract of purchase and sale or at or
  before the closing of the purchase and sale contract when the
  municipality or county has not filed the service plan as required by
  Section 372.013, Local Government Code; or
               (2)  unintentionally providing a notice that is not the
  correct notice under the circumstances before execution of a
  binding contract of purchase and sale, or at or before the closing
  of the purchase and sale contract.
         Sec. 5.0142.  PURCHASER SIGNATURE REQUIRED. The purchaser
  shall sign the notice required by Section 5.014 or the purchase
  contract including the notice to evidence the receipt of notice.
         Sec. 5.0143.  RECORDING OF NOTICE AT CLOSING. At the closing
  of purchase and sale, a separate copy of the notice required by
  Section 5.014 with current information shall be executed by the
  seller and purchaser, acknowledged, and recorded in the deed
  records of the county in which the property is located.
         Sec. 5.0144.  RELIANCE ON FILED SERVICE PLAN. (a) For the
  purposes of the notice required by Section 5.014, all sellers,
  title companies, real estate brokers, and examining attorneys, and
  any agent, representative, or person acting on their behalf, are
  entitled to rely on the accuracy of the service plan as last filed
  by each municipality or county under Section 372.013, Local
  Government Code, in completing the notice form to be executed by the
  seller and purchaser at the closing of purchase and sale.
         (b)  Any information taken from the service plan as last
  filed by the municipality or county and the information contained
  in or shown on the notice form contained in the service plan under
  Section 372.013, Local Government Code, not including information
  provided as to the assessments or annual installment amounts as
  authorized by Section 5.014(b), shall be, for purposes of the
  notice required by Section 5.014, conclusively presumed as a matter
  of law to be correct.
         (c)  All subsequent sellers, purchasers, title insurance
  companies, real estate brokers, examining attorneys, and
  lienholders are entitled to rely on the service plan filed by the
  municipality or county, including the notice form contained in the
  service plan, under Section 372.013, Local Government Code.
         (d)  If the notice required by Section 5.014 is given at
  closing as provided by Section 5.0141(c), a purchaser, or the
  purchaser's heirs, successors, or assigns, are not entitled to
  maintain an action for damages against a seller, title insurance
  company, real estate broker, or lienholder, or any agent,
  representative, or person acting on their behalf, because the
  seller:
               (1)  used the notice form included in the service plan
  filed by the municipality or county under Section 372.013, Local
  Government Code; or
               (2)  relied on the filed legal description of the
  public improvement district in determining whether the property is
  located in the district.
         (e)  No action may be maintained against any title company
  for failure to disclose the inclusion of the property in a public
  improvement district when the municipality or county has not filed
  the service plan under Section 372.013, Local Government Code, with
  the clerk of each county in which the district is located.
         (f)  All sellers, title insurance companies, examining
  attorneys, vendors of property and tax information, real estate
  brokers, and lienholders, and any agent, representative, or person
  acting on their behalf, are entitled to rely on the accuracy of:
               (1)  the service plan last filed by the municipality or
  county or the information in the notice form filed by the district
  under Section 372.013, Local Government Code; or
               (2)  for the purposes of the notice required by Section
  5.014, the information in the service plan filed by the
  municipality or county in effect as of January 1 of each year for
  the period January 1 through December 31 of such calendar year.
         Sec. 5.0145.  SUITS FOR DAMAGES. (a) If any sale or
  conveyance of real property within a public improvement district is
  not made in compliance with Section 5.014, 5.0141, 5.0142, or
  5.0143, the purchaser may institute a suit for damages under the
  provisions of Subsection (b) or (e).
         (b)  A purchaser of real property whose sale or conveyance is
  subject to the notice requirement under Section 5.014, if the sale
  or conveyance of the property is not made in compliance with that
  section or Section 5.0141, 5.0142, or 5.0143, may institute a suit
  for damages in the amount of all costs relative to the purchase of
  the property at the time of purchase, plus interest and reasonable
  attorney's fees.
         (c)  The suit for damages under Subsection (b) may be
  instituted jointly or severally against the person, firm,
  corporation, partnership, organization, business trust, estate,
  trust, association, or other legal entity that sold or conveyed the
  property to the purchaser.
         (d)  Following the recovery of damages under Subsection (b),
  the amount of the damages shall first be paid to satisfy all unpaid
  obligations on each outstanding lien on the property and the
  remainder of the damage amount shall be paid to the purchaser. On
  payment of all damages respectively to the lienholders and
  purchaser, the purchaser shall reconvey the property to the seller.
         (e)  A purchaser of real property whose sale or conveyance is
  subject to the notice requirement under Section 5.014, if the sale
  or conveyance of the property is not made in compliance with that
  section or Section 5.0141, 5.0142, or 5.0143, may institute a suit
  for damages in an amount not to exceed $5,000, plus reasonable
  attorney's fees.
         (f)  A purchaser is not entitled to recover damages under
  both Subsections (b) and (e), and entry of a final decision awarding
  damages to the purchaser under either Subsection (b) or (e) shall
  preclude the purchaser from recovering damages under the other
  subsection.
         (g)  The relief provided under Subsections (b) and (e) shall
  be the exclusive remedies for a purchaser aggrieved by the seller's
  failure to comply with the provisions of Section 5.014, 5.0141,
  5.0142, or 5.0143.
         (h)  An action for damages does not apply to, affect, alter,
  or impair the validity of any existing vendor's lien, mechanic's
  lien, or deed of trust lien on the property.
         (i)  A suit for damages under this section must be brought
  not later than the earlier of:
               (1)  the 90th day after the date the purchaser receives
  the first public improvement district annual assessment
  installment or tax notice; or
               (2)  the fourth anniversary of the date the property is
  sold or conveyed to the purchaser.
         (j)  Notwithstanding a provision of this section, a
  purchaser may not recover damages under this section if the
  purchaser:
               (1)  purchases an equity in real property and in
  conjunction with the purchase assumes any liens, whether purchase
  money or otherwise; and
               (2)  does not require proof of title by abstract, title
  policy, or any other proof of title.
         (k)  A purchaser who purchases real property in a public
  improvement district and who then sells or conveys the property
  shall on closing of the subsequent sale or conveyance be
  conclusively considered to have waived any prior right to damages
  under this section.
         SECTION 5.  Section 372.010, Local Government Code, as
  amended by this Act, applies only to a resolution adopted under that
  section on or after the effective date of this Act. A resolution
  adopted before the effective date of this Act is governed by the law
  in effect on the date the resolution was adopted, and the former law
  is continued in effect for that purpose.
         SECTION 6.  Sections 372.013(a) and (b), Local Government
  Code, as amended by this Act, and Section 372.013(c), Local
  Government Code, as added by this Act, apply only to a service plan
  approved under that section on or after the effective date of this
  Act. A service plan approved before the effective date of this Act
  is governed by the law in effect on the date the service plan was
  approved, and the former law is continued in effect for that
  purpose.
         SECTION 7.  Sections 372.013(d) and (e), Local Government
  Code, as added by this Act, apply only to a service plan amended or
  updated under that section on or after the effective date of this
  Act.
         SECTION 8.  Section 5.014, Property Code, as amended by this
  Act, and Sections 5.0141, 5.0142, 5.0143, 5.0144, and 5.0145,
  Property Code, as added by this Act, apply only to a sale or
  conveyance of property for which a binding contract is executed on
  or after the effective date of this Act. A sale or conveyance for
  which a binding contract is executed before the effective date of
  this Act is governed by the law in effect on the date the contract is
  executed, and the former law is continued in effect for that
  purpose.
         SECTION 9.  This Act takes effect September 1, 2021.