82R7830 PMO-D
By: Harris S.B. No. 1459
A BILL TO BE ENTITLED
AN ACT
relating to prohibiting certain private transfer fees and the
preservation of private real property rights; providing penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 5, Property Code, is amended by adding
Subchapter G to read as follows:
SUBCHAPTER G. CERTAIN PRIVATE TRANSFER FEES PROHIBITED;
PRESERVATION OF PRIVATE REAL PROPERTY RIGHTS
Sec. 5.201. DEFINITIONS. In this subchapter:
(1) "Lender" means a lending institution, including a
bank, trust company, banking association, savings and loan
association, mortgage company, investment bank, credit union, life
insurance company, and governmental agency, that customarily
provides financing or an affiliate of a lending institution.
(2) "Payee" means a person who claims the right to
receive or collect a private transfer fee payable under a private
transfer fee obligation and who may or may not have a pecuniary
interest in the obligation.
(3) "Private transfer fee" means an amount of money,
regardless of the method of determining the amount, that is payable
on the transfer of an interest in real property or payable for a
right to make or accept a transfer.
(4) "Private transfer fee obligation" means an
obligation to pay a private transfer fee created under:
(A) a declaration or other covenant recorded in
the real property records in the county in which the property
subject to the private transfer fee obligation is located;
(B) a contractual agreement or promise; or
(C) an unrecorded contractual agreement or
promise.
(5) "Subsequent owner" means a person who acquires
real property by transfer from a person other than the person who is
the seller of the property on the date the private transfer fee
obligation is created.
(6) "Subsequent purchaser" means a person who
purchases real property from a person other than the person who is
the seller on the date the private transfer fee obligation is
created. The term includes a lender who provides a mortgage loan to
a subsequent purchaser to purchase the property.
(7) "Transfer" means the sale, gift, conveyance,
assignment, inheritance, or other transfer of an ownership interest
in real property.
Sec. 5.202. CERTAIN PRIVATE TRANSFER FEE OBLIGATIONS VOID.
(a) Except as provided by this subchapter, a private transfer fee
obligation is not binding or enforceable against a subsequent owner
or subsequent purchaser of an interest in real property and is void.
(b) For purposes of this subchapter, the following payments
are not considered private transfer fee obligations:
(1) consideration paid by a purchaser to a seller for
an interest in real property transferred, including, as applicable,
a mineral interest transferred, including additional consideration
paid to a seller for the property's appreciation, development, or
sale after the interest in the property has been transferred to the
purchaser, if the additional consideration is paid only once and
that payment does not bind successors in interest to the property to
any private transfer fee obligation;
(2) a commission paid to a licensed real estate broker
under a written agreement between a seller or purchaser and the
broker, including an additional commission for the property's
appreciation, development, or sale after the interest in property
is transferred to the purchaser;
(3) interest, a fee, a charge, or another type of
payment to a lender under a loan secured by a mortgage on the
property, including:
(A) a fee payable for the lender's consent to an
assumption of the loan or transfer of the property subject to the
mortgage;
(B) a fee or charge payable for an estoppel
letter or certificate;
(C) a shared appreciation interest or profit
participation; or
(D) other consideration payable in connection
with the loan;
(4) rent, reimbursement, a fee, a charge, or another
type of payment to a lessor under a lease, including a fee for
consent to an assignment, sublease, encumbrance, or transfer of a
lease;
(5) consideration paid to the holder of an option to
purchase an interest in property, or to the holder of a right of
first refusal or first offer to purchase an interest in property,
for waiving, releasing, or not exercising the option or right when
the property is transferred to another person;
(6) a fee payable to or imposed by a governmental
entity in connection with recording the transfer of the property;
(7) dues, a fee, a charge, an assessment, a fine, a
contribution, or another type of payment to a property owners'
association, as defined by Section 209.002, under a declaration or
other covenant or under law, including a fee or charge payable for
an estoppel letter or certificate issued by the association or an
authorized agent of the association, provided that no portion of
the fee or charge is required to be passed through to a third party
designated or identifiable in the declaration or other covenant or
law or in a document referenced in the declaration or other covenant
or law; or
(8) dues, a fee, a charge, an assessment, a fine, a
contribution, or another type of payment for the transfer of a club
membership related to the property.
Sec. 5.203. NOTICE REQUIREMENTS FOR CONTINUATION OF
EXISTING PRIVATE TRANSFER FEE OBLIGATIONS. (a) A person who
receives or collects a private transfer fee under a private
transfer fee obligation created before the effective date of this
subchapter must, on or before January 31, 2012, file for record a
"Notice of Private Transfer Fee Obligation" as provided by this
section in the real property records of each county in which the
property is located.
(b) Multiple payees of a single private transfer fee under a
private transfer fee obligation must designate one payee as the
payee of record for the fee.
(c) A notice under Subsection (a) must:
(1) be printed in at least 14-point boldface type;
(2) state the amount of the private transfer fee and
the method of determination, if applicable;
(3) state the date or any circumstance under which the
private transfer fee obligation expires, if any;
(4) state the purpose for which the money from the
private transfer fee obligation will be used;
(5) notwithstanding Subsection (b), state the name of
each payee and each payee's contact information;
(6) state the name and address of the payee of record
to whom the payment of the fee must be sent;
(7) include the acknowledged signature of each payee
or authorized representative of each payee; and
(8) state the legal description of the property
subject to the private transfer fee obligation.
(d) A person required to file a notice under this section
shall:
(1) refile the notice described by this section on or
before January 31 of each year in which a private transfer fee may
be collected or received; and
(2) amend the notice to reflect any change in the name
or address of any payee included in the notice not later than the
30th day after the date the change occurs.
(e) A person who amends a notice under Subsection (d)(2)
must include:
(1) the recording information of the original notice
filed as required by this section; and
(2) the legal description of the property subject to
the private transfer fee obligation.
(f) If a person required to file a notice under this section
fails to comply with this section:
(1) payment of the private transfer fee may not be a
requirement for the conveyance of an interest in the property to a
purchaser;
(2) the property is not subject to further obligation
under the private transfer fee obligation; and
(3) the private transfer fee obligation is void.
Sec. 5.204. ADDITIONAL COMPLIANCE REQUIREMENT: RESPONSE TO
REQUEST FOR NOTICE. (a) A person may send a written request to the
payee of record at the payee's address of record requesting a copy
of the most recently filed notice under Section 5.203 and a
statement of the amount of the private transfer fee. The payee
shall provide to the requesting party a copy of the notice and a
statement of the amount of the private transfer fee not later than
the 30th day after the date the party sends the written request to
the payee of record.
(b) If the payee of record fails to comply with Subsection
(a), a subsequent purchaser of property subject to the private
transfer fee obligation may file an affidavit as provided by this
subsection. The affidavit must:
(1) state that:
(A) a written request for a copy of the notice
required under Section 5.203 and a statement of the amount of the
private transfer fee was sent to the payee of record at the address
shown in the most recent notice filed on the date the request was
sent; and
(B) the payee failed to provide a copy of the
notice and a statement of the amount of the private transfer fee in
a timely manner; and
(2) include:
(A) the legal description of the property subject
to the private transfer fee obligation;
(B) the name of the record owner of the property
on the date the affidavit is signed;
(C) recording information for the instrument of
record, if any, imposing the private transfer fee obligation; and
(D) a description of the unrecorded contractual
agreement or promise, if any, imposing the private transfer fee
obligation.
(c) An affidavit filed for record under Subsection (b) is
prima facie evidence that the payee failed to comply with Section
5.203.
(d) After the date an affidavit under this section is filed:
(1) payment of the private transfer fee may not be a
requirement for the conveyance of an interest in the property to a
purchaser;
(2) the property is not subject to further obligation
under the private transfer fee obligation; and
(3) the private transfer fee obligation is void.
Sec. 5.205. ADDITIONAL COMPLIANCE REQUIREMENT: TIMELY
ACCEPTANCE OF FEES PAID UNDER EXISTING PRIVATE TRANSFER FEE
OBLIGATIONS. (a) The payee of record on the date a private
transfer fee is paid under a private transfer fee obligation
subject to Section 5.203 must accept the payment on or before the
30th day after the date the payment is made.
(b) If the payee of record fails to comply with Subsection
(a):
(1) the payment must be returned to the purchaser;
(2) payment of the private transfer fee may not be a
requirement for the conveyance of an interest in the property to a
purchaser;
(3) the property is not subject to further obligation
under the private transfer fee obligation; and
(4) the private transfer fee obligation is void.
Sec. 5.206. DISCLOSURE OF EXISTING TRANSFER FEE OBLIGATION
REQUIRED IN CONTRACT FOR SALE. (a) A contract for the sale of real
property subject to a private transfer fee obligation authorized
under this subchapter must describe the obligation and state that
the obligation is governed by this subchapter.
(b) If a contract for the sale of real property subject to a
private transfer fee obligation authorized under this subchapter
fails to comply with this section:
(1) payment of the private transfer fee may not be a
requirement for the conveyance of an interest in the property to a
purchaser;
(2) the property is not subject to further obligation
under the private transfer fee obligation; and
(3) the private transfer fee obligation is void.
Sec. 5.207. WAIVER VOID. A provision that purports to waive
a purchaser's rights under this subchapter is void.
Sec. 5.208. LIABILITY FOR IMPOSING PRIVATE TRANSFER FEE
OBLIGATION. A person who imposes or enters into an agreement
imposing a private transfer fee obligation in the person's favor in
violation of this subchapter is liable for:
(1) damages resulting from the imposition of the
private transfer fee obligation, including the amount of any
private transfer fee paid; and
(2) attorney's fees, expenses, and costs incurred in
an action to recover the private transfer fee paid or to quiet title
to the real property.
Sec. 5.209. INJUNCTIVE OR DECLARATORY RELIEF; PROVIDING
PENALTIES. (a) The attorney general may institute an action for
injunctive or declaratory relief to restrain a violation of this
subchapter.
(b) In addition to instituting an action for injunctive or
declaratory relief under Subsection (a), the attorney general may
institute an action for civil penalties against a payee for a
violation of this chapter. Except as provided by Subsection (c), a
civil penalty assessed under this section may not exceed an amount
equal to two times the amount of the private transfer fee charged or
collected by the payee in violation of this subchapter.
(c) If the court in which an action under Subsection (b) is
pending finds that a payee violated this subchapter with a
frequency that constitutes a pattern or practice, the court may
assess a civil penalty not to exceed $250,000.
(d) If the attorney general substantially prevails in an
action for injunctive relief or a civil penalty under this section,
the attorney general may recover reasonable attorney's fees, costs,
and expenses incurred in obtaining the relief or penalty, including
court costs and witness fees.
(e) The comptroller shall deposit to the credit of the
general revenue fund all money collected under this section.
SECTION 2. Section 5.017, Property Code, is repealed.
SECTION 3. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2011.