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Texas House Bill HB3993

Texas 2009 - 81st Regular

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11 By: Dutton H.B. No. 3993
22
33
44 A BILL TO BE ENTITLED
55 AN ACT
66 relating to lease-option contracts.
77 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
88 SECTION 1. Section 5.062(a), Property Code, is amended to
99 read as follows:
1010 (a) This subchapter applies only to a transaction involving
1111 an executory contract for conveyance of real property used or to be
1212 used as the purchaser's residence or as the residence of a person
1313 related to the purchaser within the second degree by consanguinity
1414 or affinity, as determined under Chapter 573, Government Code. For
1515 purposes of this subchapter, and only for the purposes of this
1616 subchapter,[:
1717 [(1)] a lot measuring one acre or less is presumed to
1818 be residential property[; and
1919 [(2) an option to purchase real property that
2020 includes or is combined or executed concurrently with a residential
2121 lease agreement, together with the lease, is considered an
2222 executory contract for conveyance of real property].
2323 SECTION 2. Chapter 5, Property Code, is amended by adding
2424 Subchapter G to read as follows:
2525 SUBCHAPTER G. LEASE-OPTION CONTRACTS
2626 Sec. 5.201. DEFINITIONS. In this subchapter:
2727 (1) "Default" means:
2828 (A) the failure to make a timely payment under a
2929 lease-option contract; or
3030 (B) a material breach of a term of the
3131 lease-option contract.
3232 (2) "Lease-option contract" means one or more
3333 contracts that together provide an option to purchase residential
3434 property to the purchaser who is also authorized to occupy the
3535 property under a lease.
3636 (3) "Purchaser" means a potential purchaser of
3737 property under an option contract who is also authorized in a lease
3838 agreement to occupy the property as a tenant.
3939 (4) "Seller" means a potential seller of property
4040 under an option contract who has also leased the property to the
4141 purchaser.
4242 Sec. 5.202. APPLICABILITY. (a) Unless otherwise excluded,
4343 this subchapter applies only to a lease-option contract for real
4444 property used or to be used as the purchaser's principal residence
4545 or as the principal residence of a person related to the purchaser
4646 within the second degree by consanguinity or affinity, as
4747 determined under Chapter 573, Government Code.
4848 (b) This subchapter does not apply to the following
4949 transactions:
5050 (1) the sale of state land;
5151 (2) a sale of land by:
5252 (A) the Veterans' Land Board;
5353 (B) this state or a political subdivision of this
5454 state; or
5555 (C) an instrumentality, public corporation, or
5656 other entity created to act on behalf of this state or a political
5757 subdivision of this state, including an entity created under
5858 Chapter 303, 392, or 394, Local Government Code; or
5959 (3) a transaction involving a lease-option contract if
6060 the purchaser of the property:
6161 (A) is related to the seller of the property
6262 within the second degree by consanguinity or affinity, as
6363 determined under Chapter 573, Government Code; and
6464 (B) has waived the applicability of this
6565 subchapter in a written agreement.
6666 Sec. 5.203. CONSTRUCTION WITH OTHER LAW. (a) Except as
6767 provided by Subsection (b), the provisions of this subchapter do
6868 not affect the rights or remedies provided by other law, including
6969 Chapters 91 and 92.
7070 (b) A seller may not:
7171 (1) lock out or terminate the utility service of a
7272 purchaser except:
7373 (A) for bona fide repairs or construction; or
7474 (B) in an emergency; or
7575 (2) seize personal property unless the purchaser has
7676 abandoned the premises.
7777 (c) In addition to any other remedy available by law, a
7878 seller who violates Subsection (b) is liable to the purchaser for:
7979 (1) actual damages;
8080 (2) a civil penalty of one month's rent plus $1,000;
8181 and
8282 (3) court costs and reasonable attorney's fees.
8383 (d) To remedy a violation under this section, a purchaser
8484 is entitled to injunctive relief and a writ of reentry under Section
8585 92.009, if applicable.
8686 Sec. 5.204. NOTICE. (a) Notice under Section 5.205 must be
8787 in writing and must be delivered by regular and certified mail,
8888 return receipt requested. The notice must be conspicuous and
8989 printed in 14-point boldfaced type or 14-point uppercase
9090 typewritten letters, and must include on a separate page the
9191 statement:
9292 NOTICE
9393 YOU ARE NOT COMPLYING WITH THE TERMS OF THE CONTRACT TO BUY
9494 YOUR PROPERTY. UNLESS YOU TAKE THE ACTION SPECIFIED IN THIS NOTICE
9595 BY (date) THE SELLER HAS THE RIGHT TO TERMINATE YOUR LEASE-OPTION
9696 CONTRACT AND TAKE POSSESSION OF THE PROPERTY.
9797 (b) The notice must also:
9898 (1) identify and explain the remedy the seller intends
9999 to enforce;
100100 (2) if the purchaser has failed to make a timely
101101 payment, specify:
102102 (A) the delinquent amount;
103103 (B) any additional charges claimed, including
104104 late charges; and
105105 (C) the period to which the delinquency and
106106 additional charges relate; and
107107 (3) if the purchaser has failed to comply with a term
108108 of the contract, identify the term violated and the action required
109109 to cure the violation.
110110 (c) Notice by mail is given when it is mailed to the
111111 purchaser's residence by regular and certified mail, return receipt
112112 requested. The affidavit of a person knowledgeable of the facts
113113 indicating that notice was given is prima facie evidence of notice
114114 in an action involving a subsequent bona fide purchaser for value if
115115 the purchaser is not in possession of the real property and if the
116116 stated time to avoid the forfeiture has expired. A bona fide
117117 subsequent purchaser for value who relies on the affidavit under
118118 this subsection shall take title free and clear of the contract.
119119 Sec. 5.205. SELLER'S REMEDIES ON DEFAULT. A seller may
120120 enforce the remedy of rescission or of forfeiture and acceleration
121121 against a purchaser in default under a lease-option contract only
122122 if:
123123 (1) the seller notifies the purchaser of:
124124 (A) the seller's intent to enforce a remedy under
125125 this section; and
126126 (B) the purchaser's right to cure the default
127127 within the 30-day period described by Section 5.206; and
128128 (2) the purchaser fails to cure the default within the
129129 30-day period described by Section 5.206.
130130 Sec. 5.206. RIGHT TO CURE DEFAULT. A purchaser in default
131131 under a lease-option contract may avoid the forfeiture of the
132132 option fee or the enforcement of a remedy described by Section 5.205
133133 by complying with the terms of the contract on or before the 30th
134134 day after the date notice is given under that section or the date
135135 indicated in the notice, whichever is later.
136136 Sec. 5.207. FOREIGN LANGUAGE REQUIREMENT. If the
137137 negotiations that precede the execution of a lease-option contract
138138 are conducted primarily in a language other than English, the
139139 seller shall provide a copy in that language of all written
140140 documents relating to the transaction, including the contract,
141141 disclosure notices, annual accounting statements, and a notice of
142142 default required by this subchapter.
143143 Sec. 5.208. SELLER'S DISCLOSURE OF PROPERTY
144144 CONDITION. (a) Not later than the fifth day before a lease-option
145145 contract is signed by the purchaser, the seller shall provide the
146146 purchaser with:
147147 (1) a survey that was completed within the past year or
148148 a plat of a current survey of the real property;
149149 (2) a legible copy of any document, or a copy as it
150150 appears in the official real property records, that describes an
151151 encumbrance or other claim, including a restrictive covenant or
152152 easement, that affects title to the real property; and
153153 (3) a written notice attached to the contract
154154 informing the purchaser of the condition of the property that must,
155155 at a minimum, be executed by the seller and purchaser and read
156156 substantially similar to the following:
157157 WARNING
158158 IF ANY OF THE ITEMS BELOW HAVE NOT BEEN CHECKED, YOU MAY NOT BE ABLE
159159 TO LIVE ON THE PROPERTY OR BE ABLE TO OBTAIN CLEAR TITLE TO THE
160160 PROPERTY.
161161 SELLER'S DISCLOSURE NOTICE
162162 CONCERNING THE PROPERTY AT (street address or legal description and
163163 city)
164164 THIS DOCUMENT STATES CERTAIN APPLICABLE FACTS ABOUT THE PROPERTY
165165 YOU ARE CONSIDERING PURCHASING.
166166 CHECK ALL THE ITEMS THAT ARE APPLICABLE OR TRUE:
167167 _____ The property is in a recorded subdivision.
168168 _____ The property has water service that provides potable water.
169169 _____ The property has sewer service.
170170 _____ The property has been approved by the appropriate municipal,
171171 county, or state agency for installation of a septic system.
172172 _____ The property has electric service.
173173 _____ The property is not in a floodplain.
174174 _____ The roads to the boundaries of the property are paved and
175175 maintained by:
176176 ____ the seller;
177177 ____ the owner of the property on which the road exists;
178178 ____ the municipality;
179179 ____ the county; or
180180 ____ the state.
181181 ____ No individual or entity other than the seller:
182182 (1) owns the property;
183183 (2) has a claim of ownership to the property; or
184184 (3) has an interest in the property.
185185 ____ No individual or entity has a lien filed against the property.
186186 ____ There are no restrictive covenants, easements, or other title
187187 exceptions or encumbrances that prohibit construction of a house on
188188 the property.
189189 NOTICE: SELLER ADVISES PURCHASER TO:
190190 (1) OBTAIN A TITLE ABSTRACT OR
191191 TITLE COMMITMENT COVERING THE PROPERTY AND
192192 HAVE THE ABSTRACT OR COMMITMENT REVIEWED BY
193193 AN ATTORNEY BEFORE SIGNING A CONTRACT OF
194194 THIS TYPE; AND
195195 (2) PURCHASE AN OWNER'S POLICY
196196 OF TITLE INSURANCE COVERING THE PROPERTY.
197197 ________________________________________________________________
198198 (Date) (Signature of Seller)
199199 ________________________________________________________________
200200 (Date) (Signature of Purchaser)
201201 (b) If the property is not located in a recorded
202202 subdivision, the seller shall provide the purchaser with a separate
203203 disclosure form stating that utilities may not be available to the
204204 property until the subdivision is recorded as required by law.
205205 (c) If the seller advertises property for sale under a
206206 lease-option contract, the advertisement must disclose information
207207 regarding the availability of water, sewer, and electric service.
208208 (d) The seller's failure to provide information required by
209209 this section:
210210 (1) is a false, misleading, or deceptive act or
211211 practice within the meaning of Section 17.46, Business & Commerce
212212 Code, and is actionable in a public or private suit brought under
213213 Subchapter E, Chapter 17, Business & Commerce Code; and
214214 (2) entitles the purchaser to cancel and rescind the
215215 lease-option contract and receive a full refund of all payments
216216 made to the seller.
217217 (e) Subsection (d) does not limit the purchaser's remedy
218218 against the seller for other false, misleading, or deceptive acts
219219 or practices actionable in a suit brought under Subchapter E,
220220 Chapter 17, Business & Commerce Code.
221221 Sec. 5.209. SELLER'S DISCLOSURE OF LIENS, APPRAISED VALUE,
222222 TAX PAYMENTS, AND INSURANCE COVERAGE. (a) Not later than the
223223 fifth day before a lease-option contract is signed by the
224224 purchaser, the seller shall provide the purchaser with:
225225 (1) a statement disclosing each recorded lien that is
226226 filed against the property including:
227227 (A) the name and address of the lienholder;
228228 (B) the amount of the lien;
229229 (C) the payments required to be made on the debt
230230 secured by the lien;
231231 (D) the name of the account holder; and
232232 (E) whether or not the lienholder has consented
233233 to the purchaser's ownership of the property;
234234 (2) a statement disclosing the appraised value of the
235235 property according to the last valuation of the tax appraisal
236236 district with a copy of the last appraisal performed on the property
237237 attached;
238238 (3) a tax certificate from the collector for each
239239 taxing unit that collects taxes due on the property as provided by
240240 Section 31.08, Tax Code; and
241241 (4) a legible copy of any insurance policy, binder, or
242242 other evidence of coverage relating to the property that indicates:
243243 (A) the name of the insurer and the insured;
244244 (B) a description of the property insured; and
245245 (C) the amount for which the property is insured.
246246 (b) The seller's failure to provide information required by
247247 this section:
248248 (1) is a false, misleading, or deceptive act or
249249 practice within the meaning of Section 17.46, Business & Commerce
250250 Code, and is actionable in a public or private suit brought under
251251 Subchapter E, Chapter 17, Business & Commerce Code; and
252252 (2) entitles the purchaser to cancel and rescind the
253253 lease-option contract and receive a full refund of all payments
254254 made to the seller.
255255 (c) Subsection (b) does not limit the purchaser's remedy
256256 against the seller for other false, misleading, or deceptive acts
257257 or practices actionable in a suit brought under Subchapter E,
258258 Chapter 17, Business & Commerce Code.
259259 Sec. 5.210. ORAL AGREEMENTS PROHIBITED. (a) A
260260 lease-option contract is not enforceable unless the contract is in
261261 writing and signed by the party to be bound or by that party's
262262 authorized representative.
263263 (b) The rights and obligations of the parties to a contract
264264 are determined solely from the written contract, and any prior oral
265265 agreements between the parties are superseded by and merged into
266266 the contract.
267267 (c) A lease-option contract may not be varied by any oral
268268 agreements or discussions that occur before or contemporaneously
269269 with the execution of the contract.
270270 (d) The seller shall include in a separate document or in a
271271 provision of the contract a statement printed in 14-point boldfaced
272272 type or 14-point uppercase typewritten letters that reads
273273 substantially similar to the following:
274274 THIS LEASE-OPTION CONTRACT REPRESENTS THE FINAL
275275 AGREEMENT BETWEEN THE SELLER AND PURCHASER AND MAY NOT
276276 BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
277277 OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
278278 ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
279279 ________________________________________________________________
280280 (Date) (Signature of Seller)
281281 ________________________________________________________________
282282 (Date) (Signature of Purchaser)
283283 (e) The seller's failure to provide the notice required by
284284 this section:
285285 (1) is a false, misleading, or deceptive act or
286286 practice within the meaning of Section 17.46, Business & Commerce
287287 Code, and is actionable in a public or private suit brought under
288288 Subchapter E, Chapter 17, Business & Commerce Code; and
289289 (2) entitles the purchaser to cancel and rescind the
290290 lease-option contract and receive a full refund of all payments
291291 made to the seller.
292292 (f) Subsection (e) does not limit the purchaser's remedy
293293 against the seller for other false, misleading, or deceptive acts
294294 or practices actionable in a suit brought under Subchapter E,
295295 Chapter 17, Business & Commerce Code.
296296 Sec. 5.211. CONTRACT TERMS, CERTAIN WAIVERS
297297 PROHIBITED. (a) A seller may not include as a term of the
298298 lease-option contract a provision that:
299299 (1) imposes a late-payment fee that exceeds eight
300300 percent of the monthly payment under the contract;
301301 (2) imposes a penalty, charge, or fee if the purchaser
302302 elects to pay the entire amount due under the contract before the
303303 scheduled payment date under the contract;
304304 (3) terminates the lease-option contract or forfeits
305305 the option payment for a late payment;
306306 (4) increases the purchase price, imposes a penalty,
307307 charge, or fee of any type, or otherwise penalizes the purchaser
308308 leasing property for requesting repairs or exercising any other
309309 right under Chapter 92;
310310 (5) permits the option to purchase to be exercised
311311 after the third anniversary of the execution of the lease-option
312312 contract; or
313313 (6) provides for a purchase price that exceeds the
314314 appraised value of the property according to the last valuation of
315315 the tax appraisal district by more than five percent for each year
316316 of the lease-option contract.
317317 (b) A provision of the lease-option contract that purports
318318 to waive a right or exempt a party from a liability or duty under
319319 this subchapter is void. In addition to any other remedy provided
320320 by law, a landlord who knowingly violates this subsection by
321321 contracting with a purchaser to waive a right of the purchaser or a
322322 liability or duty by the seller under this subchapter is liable to
323323 the purchaser for:
324324 (1) actual damages;
325325 (2) a civil penalty of one month's rent plus $2,000;
326326 and
327327 (3) reasonable attorney's fees.
328328 (c) A violation of this subchapter is actionable regardless
329329 of whether a purchaser pays the improper penalty, charge, or fee.
330330 (d) A lease-option contract must include each provision of
331331 this subchapter unless the seller provides the purchaser a copy of
332332 this subchapter at the execution of the lease-option contract.
333333 Sec. 5.212. PURCHASER'S RIGHT TO CANCEL CONTRACT WITHOUT
334334 CAUSE. (a) In addition to other rights or remedies provided by
335335 law, the purchaser may cancel and rescind a lease-option contract
336336 for any reason by sending by regular or certified mail, return
337337 receipt requested, or by delivering in person a signed, written
338338 notice of cancellation to the seller not later than the 14th day
339339 after the date of the contract or the date the option fee is
340340 tendered, whichever is later.
341341 (b) If the purchaser cancels the contract as provided by
342342 Subsection (a), the seller shall, not later than the 10th day after
343343 the date the seller receives the purchaser's notice of
344344 cancellation:
345345 (1) return to the purchaser the executed contract and
346346 any property exchanged or payments made by the purchaser under the
347347 contract; and
348348 (2) cancel any security interest arising out of the
349349 contract.
350350 (c) The seller shall include in immediate proximity to the
351351 space reserved in the lease-option contract for the purchaser's
352352 signature a statement printed in 14-point boldfaced type or
353353 14-point uppercase typewritten letters that reads substantially
354354 similar to the following:
355355 YOU, THE PURCHASER, MAY CANCEL THIS CONTRACT AT ANY TIME DURING THE
356356 NEXT TWO WEEKS OR THE TWO WEEKS AFTER YOU PAY THE OPTION FEE,
357357 WHICHEVER ENDS LATER. THE DEADLINE FOR CANCELING THE CONTRACT IS
358358 (date) UNLESS YOU PAY THE OPTION FEE AFTER THE DATE ON WHICH THIS
359359 CONTRACT IS ENTERED INTO, IN WHICH CASE THE DEADLINE FOR
360360 CANCELLATION IS THE 14TH DAY AFTER THE DATE THAT PAYMENT IS MADE.
361361 THE ATTACHED NOTICE OF CANCELLATION EXPLAINS THIS RIGHT.
362362 (d) The seller shall provide a notice of cancellation form
363363 to the purchaser at the time the purchaser signs the lease-option
364364 contract that is printed in 14-point boldfaced type or 14-point
365365 uppercase typewritten letters and that reads substantially similar
366366 to the following:
367367 (date of contract)
368368 NOTICE OF CANCELLATION
369369 YOU MAY CANCEL THE LEASE-OPTION CONTRACT FOR ANY REASON
370370 WITHOUT ANY PENALTY OR OBLIGATION BY (date) UNLESS YOU PAY THE
371371 OPTION FEE AFTER THE DATE ON WHICH THIS CONTRACT IS ENTERED INTO, IN
372372 WHICH CASE THE DEADLINE FOR CANCELLATION IS THE 14TH DAY AFTER THE
373373 DATE THAT PAYMENT IS MADE.
374374 (1) YOU MUST SEND BY REGULAR OR CERTIFIED MAIL, RETURN
375375 RECEIPT REQUESTED, OR DELIVER IN PERSON A SIGNED AND DATED COPY OF
376376 THIS CANCELLATION NOTICE OR ANY OTHER WRITTEN NOTICE TO (Name of
377377 Seller) AT (Seller's Address) BY (date) UNLESS YOU PAY THE OPTION
378378 FEE AFTER THE DATE ON WHICH YOU ENTERED INTO THE LEASE-OPTION
379379 CONTRACT, IN WHICH CASE THE LAST DAY TO SEND OR DELIVER NOTICE IS
380380 THE 14TH DAY AFTER THE DATE THAT PAYMENT IS MADE.
381381 (2) THE SELLER SHALL, NOT LATER THAN THE 10TH DAY AFTER
382382 THE DATE THE SELLER RECEIVES YOUR CANCELLATION NOTICE:
383383 (A) RETURN THE EXECUTED CONTRACT AND ANY PROPERTY
384384 EXCHANGED OR PAYMENTS MADE BY YOU UNDER THE CONTRACT; AND
385385 (B) CANCEL ANY SECURITY INTEREST ARISING OUT OF
386386 THE CONTRACT.
387387 I ACKNOWLEDGE RECEIPT OF THIS NOTICE OF CANCELLATION FORM.
388388 ________________________________________________________________
389389 (Date) (Purchaser's Signature)
390390 I HEREBY CANCEL THIS CONTRACT.
391391 ________________________________________________________________
392392 (Date) (Purchaser's Signature)
393393 (e) The seller may not request the purchaser to sign a
394394 waiver of receipt of the notice of cancellation form required by
395395 this section.
396396 Sec. 5.213. RECORDING REQUIREMENTS. (a) Except as
397397 provided by Subsection (b), the seller shall record the
398398 lease-option contract, including the attached disclosure statement
399399 required by Section 5.208, as prescribed by Title 3 on or before the
400400 30th day after the date the contract is executed.
401401 (b) Section 12.002(c) does not apply to a lease-option
402402 contract filed for record under this section.
403403 (c) If the lease-option contract is terminated for any
404404 reason, the seller shall record the instrument that terminates the
405405 contract.
406406 (d) The county clerk shall collect the filing fee prescribed
407407 by Section 118.011, Local Government Code.
408408 Sec. 5.214. ANNUAL ACCOUNTING STATEMENT. (a) The seller
409409 shall provide the purchaser with an annual statement in January of
410410 each year for the term of the lease-option contract. If the seller
411411 mails the statement to the purchaser, the statement must be
412412 postmarked not later than January 31.
413413 (b) The statement must include the following information:
414414 (1) the amount paid under the contract;
415415 (2) the remaining amount owed under the contract;
416416 (3) the number of payments remaining under the
417417 contract;
418418 (4) the amounts paid to taxing authorities on the
419419 purchaser's behalf if collected by the seller and any amount owing
420420 to the taxing authorities;
421421 (5) the amounts paid to insure the property if
422422 collected by the seller;
423423 (6) if the property has been damaged and the seller has
424424 received insurance proceeds, an accounting of the proceeds applied
425425 to the property; and
426426 (7) if the seller has changed insurance coverage, a
427427 legible copy of the current policy, binder, or other evidence that
428428 satisfies the requirements of Section 5.209(a)(4).
429429 (c) A seller who violates this section is liable to the
430430 purchaser for:
431431 (1) actual damages;
432432 (2) a civil penalty in the amount of $50 for each day
433433 the seller fails to provide the purchaser the complete statement as
434434 required under Subsection (a);
435435 (3) an additional civil penalty in the amount of $25
436436 for each day after the 60th day after the date on which the
437437 provision of the statement as required under Subsection (a) becomes
438438 overdue; and
439439 (4) court costs and reasonable attorney's fees.
440440 (d) A purchaser is not required to demonstrate actual harm
441441 to be entitled to recover under this section.
442442 Sec. 5.215. DISPOSITION OF INSURANCE PROCEEDS. (a) The
443443 named insured under an insurance policy, binder, or other coverage
444444 relating to property subject to a lease-option contract shall
445445 inform the insurer, not later than the 10th day after the date the
446446 coverage is obtained or the contract executed, whichever is later,
447447 of:
448448 (1) the lease-option contract for conveyance and the
449449 term of the contract; and
450450 (2) the name and address of the other party to the
451451 contract.
452452 (b) An insurer who disburses proceeds under an insurance
453453 policy, binder, or other coverage relating to property that has
454454 been damaged shall issue the proceeds jointly to the purchaser and
455455 the seller designated in the contract.
456456 (c) If proceeds under an insurance policy, binder, or other
457457 coverage are disbursed, the purchaser and seller shall ensure that
458458 the proceeds are used to repair, remedy, or improve the condition on
459459 the property.
460460 (d) The failure of a seller or purchaser to comply with
461461 Subsection (c) is a false, misleading, or deceptive act or practice
462462 within the meaning of Section 17.46, Business & Commerce Code, and
463463 is actionable in a public or private suit brought under Subchapter
464464 E, Chapter 17, Business & Commerce Code.
465465 (e) Subsection (d) does not limit either party's remedy for
466466 other false, misleading, or deceptive acts or practices actionable
467467 in a suit brought under Subchapter E, Chapter 17, Business &
468468 Commerce Code.
469469 Sec. 5.216. TITLE TRANSFER. (a) The seller shall transfer
470470 recorded, legal title of the property covered by the lease-option
471471 contract to the purchaser on receiving the purchaser's final
472472 payment due under the contract. The title transferred may be
473473 subject only to a lien described by Section 5.220.
474474 (b) In addition to any other remedy provided by law, a
475475 seller who violates Subsection (a) is liable to the purchaser for:
476476 (1) a civil penalty of:
477477 (A) $250 a day for each day the seller fails to
478478 transfer the title to the purchaser during the period that begins
479479 the 31st day and ends the 90th day after the date the seller
480480 receives the purchaser's final payment due under the contract; and
481481 (B) $500 a day for each day the seller fails to
482482 transfer title to the purchaser after the 90th day after the date
483483 the seller receives the purchaser's final payment due under the
484484 contract; and
485485 (2) court costs and reasonable attorney's fees.
486486 (c) If a person to whom a seller's property interest passes
487487 by will or intestate succession is required to obtain a court order
488488 to clarify the person's status as an heir or to clarify the status
489489 of the seller or the property before the person may convey good and
490490 indefeasible title to the property, the court in which the action is
491491 pending may waive payment of the liquidated damages and attorney's
492492 fees under Subsection (b) if the court finds that the person is
493493 pursuing the action to establish good and indefeasible title with
494494 reasonable diligence.
495495 (d) In this section, "seller" includes a successor,
496496 assignee, personal representative, executor, or administrator of
497497 the seller.
498498 Sec. 5.217. LIABILITY FOR DISCLOSURES. For purposes of
499499 this subchapter, a disclosure required by this subchapter that is
500500 made by a seller's agent is a disclosure made by the seller.
501501 Sec. 5.218. RIGHT TO CANCEL CONTRACT FOR IMPROPER
502502 PLATTING. (a) Except as provided by Subsection (c), in addition to
503503 other rights or remedies provided by law, the purchaser may cancel
504504 and rescind a lease-option contract at any time if the purchaser
505505 learns that the seller has not properly subdivided or platted the
506506 property that is covered by the contract in accordance with state
507507 and local law. A purchaser canceling and rescinding a contract
508508 under this subsection must:
509509 (1) deliver a signed, written notice of the
510510 cancellation and rescission to the seller in person; or
511511 (2) send a signed, written notice of the cancellation
512512 and rescission to the seller by regular or certified mail, return
513513 receipt requested.
514514 (b) If the purchaser cancels the contract as provided under
515515 Subsection (a), the seller, not later than the 30th day after the
516516 date the seller receives the notice of cancellation and rescission,
517517 shall:
518518 (1) deliver in person or send by regular and certified
519519 mail, return receipt requested, to the purchaser a signed, written
520520 notice that the seller intends to properly subdivide or plat the
521521 property; or
522522 (2) return to the purchaser all payments of any kind
523523 made to the seller under the contract, including reimbursement to
524524 the purchaser for any payments the purchaser made to a taxing
525525 authority for the property and the value of any improvements made to
526526 the property by the purchaser, minus the fair market rental value of
527527 the property during the term of the purchaser's occupancy.
528528 (c) A purchaser may not exercise the purchaser's right to
529529 cancel and rescind a lease-option contract under this section if,
530530 on or before the 90th day after the date the purchaser receives the
531531 seller's notice under Subsection (b)(1), the seller:
532532 (1) properly subdivides or plats the property; and
533533 (2) delivers in person or sends by regular and
534534 certified mail, return receipt requested, to the purchaser a
535535 signed, written notice providing evidence that the property has
536536 been subdivided or platted in accordance with state and local law.
537537 (d) The seller may not terminate the purchaser's possession
538538 of the property covered by the contract being canceled and
539539 rescinded before the seller properly plats or subdivides the
540540 property and pays the purchaser any money to which the purchaser is
541541 entitled under Subsection (b).
542542 Sec. 5.219. RIGHT TO DEDUCT. (a) Except as provided by
543543 Subsection (b), if a seller is liable to a purchaser under this
544544 subchapter, the purchaser, without taking judicial action, may
545545 deduct the amount owed to the purchaser by the seller from any
546546 amounts owed to the seller by the purchaser under the terms of a
547547 lease-option contract.
548548 (b) A purchaser may not make a deduction under this section
549549 unless, before making the deduction, the purchaser:
550550 (1) notifies the seller in writing of the amount for
551551 which the seller is liable and specifies the date after which the
552552 purchaser will make a deduction under this section if the seller
553553 does not pay the specified amount; and
554554 (2) if the deduction is for an expenditure made by the
555555 purchaser in connection with the property, provides the seller with
556556 adequate documentation of the amount and purpose of the
557557 expenditure.
558558 (c) The seller may recover from the purchaser any improper
559559 reduction plus court costs and attorney's fees by taking judicial
560560 action.
561561 Sec. 5.220. MAINTENANCE OF TITLE. (a) A potential seller
562562 may enter into a lease-option contract with a potential purchaser
563563 only if the seller maintains the property free from any liens other
564564 than liens described by this section.
565565 (b) Except as provided by this section, a seller, or the
566566 seller's heirs or assigns, must maintain title to the property
567567 covered by the lease-option contract free from any liens against
568568 the property covered by the lease-option contract for the entire
569569 duration of the contract. This subsection does not apply to a lien
570570 placed on the property that is:
571571 (1) placed on the property because of the conduct of
572572 the purchaser; or
573573 (2) described in a title commitment for the leasehold
574574 estate provided by the seller to the purchaser under Subsection (c)
575575 before the lease-option contract is executed that:
576576 (A) is placed on the property by the seller
577577 before the date the lease-option contract is executed in exchange
578578 for a loan that is secured only by the property that is the subject
579579 of the lease-option contract;
580580 (B) is attached only to the property sold to the
581581 purchaser under the contract; and
582582 (C) secures in its aggregate with all liens or
583583 other indebtedness an amount that at no time is or will be greater
584584 than the amount of the total outstanding balance owed by the
585585 purchaser under the lease-option contract.
586586 (c) The seller must:
587587 (1) provide to the purchaser at the seller's sole
588588 expense at the time the lease-option contract is executed a current
589589 title policy for the leasehold estate; and
590590 (2) file a memorandum of the lease-option contract for
591591 record in the official real property records of the county in which
592592 the property is located.
593593 (d) A violation of this section:
594594 (1) is a false, misleading, or deceptive act or
595595 practice within the meaning of Section 17.46, Business & Commerce
596596 Code, and is actionable in a public or private suit brought under
597597 Subchapter E, Chapter 17, Business & Commerce Code; and
598598 (2) in addition to other rights or remedies provided
599599 by law, entitles the purchaser to cancel and rescind the
600600 lease-option contract and receive from the seller:
601601 (A) the return of all payments of any kind made to
602602 the seller by the purchaser under the contract; and
603603 (B) reimbursement for the costs of any
604604 improvements made to the property by the purchaser.
605605 (e) A seller is not liable under this section if:
606606 (1) a lien is placed on the property by a person other
607607 than the seller; and
608608 (2) not later than the 30th day after the date the
609609 seller receives notice of the lien, the seller:
610610 (A) takes all steps necessary to remove the lien;
611611 and
612612 (B) has the lien removed from the property.
613613 SECTION 3. Sections 5.062(e), (f), and (g), Property Code,
614614 are repealed.
615615 SECTION 4. The change in law made by this Act applies only
616616 to a lease-option contract entered into on or after the effective
617617 date of this Act. A contract entered into before the effective date
618618 of this Act is governed by the law in effect immediately before that
619619 date, and that law is continued in effect for that purpose.
620620 SECTION 5. This Act takes effect September 1, 2009.