Relating to the use of earnest money contracts and other offers for the sale of land before a subdivision plat is approved in certain border counties.
This bill amends Section 232 of the Local Government Code, introducing new conditions under which earnest money contracts may be formalized. By allowing these contracts prior to official plat approval, the bill could facilitate real estate transactions in border counties, potentially stimulating economic activity in these regions. However, it also requires that potential purchasers are notified in writing before entering into any contract, which aims to maintain transparency in real estate dealings. The measure, effective from September 1, 2017, only applies to applications submitted after its enactment date, thus ensuring that pre-existing applications remain governed by earlier laws.
SB2160 is a legislative act aimed at regulating the use of earnest money contracts in specific border counties of Texas. The bill allows individuals who are sellers or subdividers and who hold the necessary credentials as mortgage loan originators to enter into earnest money contracts for the sale of lots in subdivisions before the approval of a subdivision plat. The maximum amount of earnest money that can be collected under such contracts is capped at $250, which establishes a safeguard for potential purchasers.
While SB2160 may provide more flexibility for developers and enhance the real estate market, it raises questions regarding consumer protection, especially for purchasers who might find themselves in precarious situations due to potential delays in plat approvals. Critics may argue that enabling earnest money contracts before final approvals could expose buyers to undue risks, especially if they place money on land that may not be developed as expected. Additionally, the requirement for local government notification before entering contracts could either alleviate potential disputes or lead to complications if communications fail.