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A BILL TO BE ENTITLED
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AN ACT
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relating to the withdrawal of certain deposits placed in escrow in |
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connection with the purchase or reservation of a condominium unit. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 82.158, Property Code, is amended to |
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read as follows: |
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Sec. 82.158. ESCROW OF DEPOSITS. (a) Except as provided by |
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Subsection (b), a [A] deposit for [made in connection with] the |
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purchase or reservation of a unit from a declarant shall be placed |
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in escrow and held in this state in an account designated for that |
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purpose by a real estate broker, an attorney, a title insurance |
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company licensed in this state, an independent bonded escrow |
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company, or an institution whose accounts are insured by a |
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governmental agency or instrumentality until delivered to the |
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declarant at closing, delivered to the declarant because of the |
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purchaser's default under a contract to purchase the unit, or |
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refunded to the purchaser because of the declarant's default under |
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a contract to purchase the unit. Escrow deposits may be placed in |
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interest-bearing accounts, and the interest is payable as may be |
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agreed in writing between the declarant and the purchaser. |
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(b) If a contract or reservation agreement to purchase a |
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unit provides, in bold or underlined type, that the deposit made for |
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the purchase or reservation of the unit may be used for actual |
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development and construction costs and the declarant obtains and |
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maintains a surety bond or insurance as described by Subsection |
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(d), the declarant may withdraw escrow funds when development or |
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construction of improvements to the condominium project begins. |
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The funds may be used only for actual development and construction |
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costs of the project in which the unit is located. For the purposes |
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of this subsection, actual development and construction costs: |
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(1) include expenditures for demolition, site |
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clearing, permit fees, impact fees, and utility reservation fees, |
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as well as architectural, consultant, engineering, and surveying |
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fees that directly relate to construction and development of the |
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condominium project or the easements and rights appurtenant to the |
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project; and |
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(2) do not include expenditures for: |
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(A) salaries, commissions, or expenses of |
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salespersons; |
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(B) advertising, marketing, or promotional |
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purposes; or |
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(C) loan fees, principal and interest on loans, |
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attorney fees, accounting fees, or insurance costs. |
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(c) The deposits made for the purchase or reservation of the |
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unit and used for actual development and construction costs shall |
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be, as applicable: |
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(1) applied as a credit against the purchase price of |
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the unit at closing; |
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(2) delivered to the declarant because of the |
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purchaser's default under the contract to purchase the unit; or |
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(3) refunded to the purchaser because of the |
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declarant's default under the contract to purchase the unit. |
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(d) The bond or insurance required under Subsection (b) must |
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be issued by an insurer licensed in this state in favor of the |
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purchaser in an amount adequate to cover the amount of the deposit |
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to be withdrawn from escrow funds under Subsection (b). The |
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declarant may not withdraw an amount from the escrow funds greater |
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than the face amount of the bond or the insurance coverage amount. |
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The bond or insurance must be payable to the purchaser if the |
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purchaser obtains a final judgment against the declarant requiring |
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the declarant to return the deposit under the purchase agreement. |
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The bond or insurance may be either in the form of an individual |
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bond or policy for each deposit accepted by the declarant or in the |
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form of a blanket bond or policy assuring the return of all deposits |
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received by the declarant. |
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(e) The party holding escrow funds who releases any portion |
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of the funds to the declarant has no obligation to monitor the |
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progress of construction or the expenditure of the funds by the |
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declarant and is not liable to any purchaser for the release of |
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funds under this section. |
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SECTION 2. This Act takes effect September 1, 2025. |