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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 made in connection with the purchase |
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or reservation of a unit from a declarant shall be placed in escrow |
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and held in this state in an account designated for that purpose by |
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a real estate broker, an attorney, a title insurance company |
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licensed in this state, an independent bonded escrow company, or an |
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institution whose accounts are insured by a governmental agency or |
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instrumentality until delivered to the declarant at closing, |
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delivered to the declarant because of the purchaser's default under |
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a contract to purchase the unit, or refunded to the purchaser. |
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Escrow deposits may be placed in interest-bearing accounts, and the |
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interest is payable as may be agreed in writing between the |
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declarant and the purchaser. |
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(b) If a contract to purchase a unit provides that the |
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deposit made in connection with the purchase or reservation of the |
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unit may be used for construction costs and the declarant obtains |
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and maintains a surety bond or insurance as described by Subsection |
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(c), the declarant may withdraw escrow funds when construction of |
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improvements begins. The funds may be used only for actual building |
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and construction costs of the project in which the unit is located. |
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(c) 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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(d) 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. |