BILL ANALYSIS

Senate Research Center	H.B. 4277
88R13293 DRS-F	By: Longoria (Parker)
	Business & Commerce
	5/10/2023
	Engrossed

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

The 87th Texas Legislature enacted legislation requiring that notification be given to a prospective buyer before the transfer of property located in a public improvement district (PID). This legislation also included an unrestricted right to terminate a contract if a sale is entered into without the seller providing the required notice. While PID service plans are required to be filed with the county clerk, there is no enforcement mechanism that ensures this happens. It is not uncommon for a PID service plan to not be filed, which can lead to a seller not providing the required notice, subsequently triggering the termination of the contract. Sellers should not be held liable for information that is not properly disclosed and should not have their contract canceled at the last minute. H.B. 4277 seeks to address this problem by establishing that the termination option is only available if the municipality or county that established the PID has filed a copy of the service plan with the county clerk and limiting the allowed termination period for properly filed service plans to seven days after the purchaser receives the notice.

H.B. 4277 amends the Property Code to limit the period during which the purchaser of real property that is located in a public improvement district may exercise the right to terminate the contract of purchase on the basis of the seller's failure to provide notice before execution of the contract that the property is located in a public improvement district to not later than the seventh day after the date the purchaser receives the notice. The bill clarifies that the purchaser may terminate the contract for any reason during that period but conditions the authority of the purchaser to terminate the contract on the applicable municipality or county filing a copy of the district's service plan with the county clerk before the date the contract was entered into. The bill applies only to a sale or conveyance of property for which a binding contract is executed on or after the bill's effective date.

H.B. 4277 amends current law relating to the right of a purchaser to terminate a contract of purchase and sale of real property for failure to provide notice that the property is located in a public improvement district.

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 5.0141(b), Property Code, as follows:

(b) Provides that in the event a contract of purchase and sale is entered into without the seller providing the notice that the property is in a public improvement district, the purchaser is entitled to terminate the contract for any reason, not later than the seventh day after the date the purchaser receives the notice. Authorizes a purchaser to terminate the contract under this subsection only if the municipality or county filed a copy of the service plan with the county clerk in accordance with Section 372.013 (Service Plan), Local Government Code, before the date the contract was entered into.

SECTION 2. Makes application of Section 5.0141, Property Code, as amended by this Act prospective.

SECTION 3. Effective date: upon passage or September 1, 2023.