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A BILL TO BE ENTITLED
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AN ACT
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relating to prohibiting the use of unfair service agreements; |
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creating an offense. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Chapter 17, Business & Commerce Code, is amended |
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by adding Subchapter M to read as follows: |
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SUBCHAPTER M. UNFAIR SERVICE AGREEMENTS |
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Sec. 17.971. DEFINITIONS. In this subchapter: |
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(1) "Residential real estate" means real property |
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located in this state used primarily for personal, family, or |
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household purposes and improved by one to four dwelling units. |
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(2) "Service agreement" means a contract under which a |
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person agrees to provide services in connection with: |
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(A) the maintenance of residential real estate; |
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or |
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(B) the purchase or sale of residential real |
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estate. |
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(3) "Service provider" means an individual or entity |
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that provides services to a person. |
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Sec. 17.972. CHARACTERISTICS OF UNFAIR SERVICE AGREEMENTS. |
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(a) A service agreement is unfair under this subchapter if any part |
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of the service subject to the agreement is not to be performed on or |
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before the first anniversary of the date the agreement is entered |
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into and: |
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(1) purports to run with the land or bind current |
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owners or successors in title to specified real property located in |
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this state; |
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(2) allows for assignment of the right to provide |
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service without notice to and consent of the owner of residential |
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real estate; or |
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(3) purports to create a lien, encumbrance, or other |
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real property security interest. |
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(b) This section does not apply to: |
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(1) a home warranty or similar guarantee that is |
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designed to guarantee or warrant the repair or service of an |
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appliance, system, or component of a residential property for a |
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fixed period; |
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(2) an insurance contract; |
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(3) an option or right of refusal to purchase the |
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residential real estate; |
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(4) a declaration created in the formation of a common |
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interest community or an amendment to the declaration; |
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(5) a maintenance or repair agreement entered into by |
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a homeowners' association in a common interest community; |
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(6) a mortgage loan or a commitment to make or receive |
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a mortgage loan; |
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(7) a security agreement under Title 1 relating to the |
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sale or lease of personal property or fixtures; or |
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(8) water, sewer, electrical, telephone, cable, or |
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other regulated utility service providers. |
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(c) This section does not impair the rights granted by |
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Section 53.123, Property Code. |
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(d) A service agreement that is unfair is void and |
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unenforceable. |
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(e) A person that enters into an unfair service agreement |
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with a consumer commits a false, misleading, or deceptive act or |
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practice actionable under Subchapter E. |
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Sec. 17.973. RECORDING PROHIBITED. (a) A person may not |
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file for recording or cause to be filed for recording an unfair |
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service agreement or notice or memorandum thereof. |
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(b) A person commits an offense if the person files for |
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recording or causes to be filed for recording an unfair service |
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agreement or notice or memorandum of an unfair service agreement. |
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(c) An offense under this section is a Class A misdemeanor. |
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(d) Notwithstanding any other law, a county clerk may refuse |
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to record an unfair service agreement. |
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(e) If an unfair service agreement is recorded, it does not |
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provide actual or constructive notice against an otherwise bona |
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fide purchaser or creditor. |
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Sec. 17.974. APPLICATION FOR ISSUANCE OF COURT ORDER. If an |
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unfair service agreement or a notice or memorandum thereof is |
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recorded, any person with an interest in the real property that is |
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the subject of that agreement may file an application with the |
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district court in the county in which the agreement is recorded for |
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the issuance of an order declaring that the agreement is void and |
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unenforceable. |
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Sec. 17.975. DAMAGES. If an unfair service agreement or a |
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notice or memorandum thereof is recorded, any person with an |
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interest in the real property that is the subject of that agreement |
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is entitled to recover from the service provider who recorded the |
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agreement: |
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(1) actual damages; and |
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(2) reasonable attorney's fees and other litigation |
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costs reasonably incurred. |
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SECTION 2. Subchapter M, Chapter 17, Business & Commerce |
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Code, as added by this Act, applies only to a contract entered into |
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on or after the effective date of this Act. |
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SECTION 3. This Act takes effect September 1, 2025. |