By: Lucio S.B. No. 1320
(In the Senate - Filed March 8, 2011; March 23, 2011, read
first time and referred to Committee on Business and Commerce;
April 18, 2011, reported adversely, with favorable Committee
Substitute by the following vote: Yeas 9, Nays 0; April 18, 2011,
sent to printer.)
COMMITTEE SUBSTITUTE FOR S.B. No. 1320 By: Lucio
A BILL TO BE ENTITLED
AN ACT
relating to the execution of deeds conveying residential real
estate in connection with certain transactions involving
residential real estate.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Title 2, Business & Commerce Code, is amended by
adding Chapter 21 to read as follows:
CHAPTER 21. EXECUTION OF DEEDS IN CERTAIN TRANSACTIONS INVOLVING
RESIDENTIAL REAL ESTATE
Sec. 21.001. DEFINITION. In this chapter, "residential
real estate" means real property on which a dwelling designed for
occupancy for one to four families is constructed or intended to be
constructed.
Sec. 21.002. PROHIBITION OF EXECUTION OF DEEDS CONVEYING
RESIDENTIAL REAL ESTATE IN CERTAIN TRANSACTIONS. (a) A seller of
residential real estate or a person who makes an extension of credit
and takes a security interest or mortgage against residential real
estate may not, before or at the time of the conveyance of the
residential real estate to the purchaser or the extension of credit
to the borrower, request or require the purchaser or borrower to
execute and deliver to the seller or person making the extension of
credit a deed conveying the residential real estate to the seller or
person making the extension of credit.
(b) A deed executed in violation of this section is voidable
unless a subsequent purchaser of the residential real estate, for
valuable consideration, obtains an interest in the property after
the deed was recorded without notice of the violation, including
notice provided by actual possession of the property by the grantor
of the deed. The residential real estate continues to be subject to
the security interest of a creditor who, without notice of the
violation, granted an extension of credit to a borrower based on the
deed executed in violation of this section.
(c) A purchaser or borrower must bring an action to void a
deed executed in violation of this section not later than the fourth
anniversary of the date the deed was recorded.
Sec. 21.003. CIVIL ACTION FOR DAMAGES. A person who
violates Section 21.002 is liable to the purchaser or borrower for:
(1) actual damages;
(2) exemplary damages in an amount equal to or greater
than $5,000 and not more than three times the amount of actual
damages;
(3) court costs; and
(4) reasonable attorney's fees.
SECTION 2. Section 24.004, Property Code, is amended to
read as follows:
Sec. 24.004. JURISDICTION; DISMISSAL. (a) Except as
provided by Subsection (b), a [A] justice court in the precinct in
which the real property is located has jurisdiction in eviction
suits. Eviction suits include forcible entry and detainer and
forcible detainer suits.
(b) A justice court does not have jurisdiction in a forcible
entry and detainer or forcible detainer suit and shall dismiss the
suit if the defendant files a sworn statement alleging the suit is
based on a deed executed in violation of Chapter 21, Business &
Commerce Code.
SECTION 3. This Act takes effect September 1, 2011.
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