Texas 2021 - 87th Regular

Texas Senate Bill SB2024 Compare Versions

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1	1	By: Creighton S.B. No. 2024
2	2
3	3
4	4	A BILL TO BE ENTITLED
5	5	AN ACT
6	6	relating to certain procedural requirements for public improvement
7	7	districts and transfers of property located in public improvement
8	8	districts.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Sections 372.010(a) and (b), Local Government
11	11	Code, are amended to read as follows:
12	12	(a) During the six-month period after the date of the final
13	13	adjournment of the hearing under Section 372.009, the governing
14	14	body of the municipality or county may authorize an improvement
15	15	district if, by majority vote of all members of the governing body,
16	16	the members adopt a resolution authorizing the district in
17	17	accordance with its finding as to the advisability of the
18	18	improvement. The resolution must provide that the authorization
19	19	takes effect on the date the resolution is adopted.
20	20	(b) Not later than the seventh day after the date the
21	21	governing body of a municipality or county adopts a resolution
22	22	under Subsection (a), the municipality or county shall file a copy
23	23	of the resolution with the county clerk of each county in which all
24	24	or part of the improvement district is located [An authorization
25	25	takes effect when it has been published one time in a newspaper of
26	26	general circulation in the municipality or county. If any part of
27	27	the improvement district is located in the municipality's
28	28	extraterritorial jurisdiction or if any part of the improvements is
29	29	to be undertaken in the municipality's extraterritorial
30	30	jurisdiction, the authorization does not take effect until the
31	31	notice is also given one time in a newspaper of general circulation
32	32	in the part of the extraterritorial jurisdiction in which the
33	33	district is located or in which the improvements are to be
34	34	undertaken].
35	35	SECTION 2. Section 372.013, Local Government Code, is
36	36	amended to read as follows:
37	37	Sec. 372.013. SERVICE PLAN. (a) The advisory body shall
38	38	prepare an ongoing service plan and present the plan to the
39	39	governing body of the municipality or county for review and
40	40	approval. The governing body may approve the plan only by ordinance
41	41	or order. The governing body may assign responsibility for the plan
42	42	to another entity in the absence of an advisory body.
43	43	(b) The service plan must:
44	44	(1) cover a period of at least five years;
45	45	(2) [and must also] define the annual indebtedness and
46	46	the projected costs for improvements; and
47	47	(3) include a copy of the notice form required by
48	48	Section 5.014, Property Code.
49	49	(c) Not later than the seventh day after the date the
50	50	governing body of a municipality or county approves a service plan,
51	51	the municipality or county shall file a copy of the plan with the
52	52	county clerk of each county in which all or part of the public
53	53	improvement district is located.
54	54	(d) The governing body of the municipality or county [plan]
55	55	shall review and update the service plan [be reviewed and updated]
56	56	annually for the purpose of determining the annual budget for
57	57	improvements. The governing body may amend or update the plan only
58	58	by ordinance or order.
59	59	(e) Not later than the seventh day after the date the
60	60	governing body of a municipality or county amends or updates the
61	61	service plan, including the notice form required by Section 5.014,
62	62	Property Code, the municipality or county shall file a copy of the
63	63	amended or updated plan with the county clerk of each county in
64	64	which all or part of the public improvement district is located.
65	65	SECTION 3. Section 5.014, Property Code, is amended to read
66	66	as follows:
67	67	Sec. 5.014. NOTICE OF OBLIGATIONS RELATED TO PUBLIC
68	68	IMPROVEMENT DISTRICT. (a) A person who proposes to sell or
69	69	otherwise convey [A seller of residential] real property that is
70	70	located in a public improvement district established under
71	71	Subchapter A, Chapter 372, Local Government Code, or Chapter 382,
72	72	Local Government Code, [and that consists of not more than one
73	73	dwelling unit located in this state] shall first give to the
74	74	purchaser of the property the [a] written notice prescribed by
75	75	Subsection (a-1).
76	76	(a-1) The notice required by Subsection (a) shall be
77	77	executed by the seller and must, except as provided by Subsection
78	78	(b), read as follows [that reads substantially similar to the
79	79	following]:
80	80	NOTICE OF OBLIGATION TO PAY [PUBLIC] IMPROVEMENT DISTRICT
81	81	ASSESSMENT TO (insert name of municipality or county levying
82	82	assessment), TEXAS
83	83	CONCERNING THE FOLLOWING PROPERTY [AT]
84	84	(insert property [street] address)
85	85	As the [a] purchaser of the [this parcel of] real property
86	86	described above, you are obligated to pay assessments [an
87	87	assessment] to (insert name of [a] municipality or county, as
88	88	applicable), Texas, for the costs of a portion of a public [an]
89	89	improvement or services project (the "Authorized Improvements")
90	90	undertaken for the benefit of the property within (insert name of
91	91	public improvement district) (the "District") created [by a public
92	92	improvement district] under (insert Subchapter A, Chapter 372,
93	93	Local Government Code, or Chapter 382, Local Government Code, as
94	94	applicable).
95	95	AN ASSESSMENT HAS BEEN LEVIED AGAINST YOUR PROPERTY FOR THE AUTHORIZED
96	96	IMPROVEMENTS, WHICH MAY BE PAID IN FULL AT ANY TIME. IF THE ASSESSMENT
97	97	IS NOT PAID IN FULL, IT WILL BE DUE AND PAYABLE IN ANNUAL INSTALLMENTS
98	98	THAT WILL VARY FROM YEAR TO YEAR DEPENDING ON THE AMOUNT OF INTEREST
99	99	PAID, COLLECTION COSTS, ADMINISTRATIVE COSTS, AND DELINQUENCY COSTS.
100	100	The exact amount of the assessment may be obtained from
101	101	(insert name of municipality or county, as applicable). The exact
102	102	amount of each annual installment will be approved each year by
103	103	(insert name of city council or county commissioners court, as
104	104	applicable) in the annual service plan update for the district [The
105	105	assessment may be due annually or in periodic installments]. More
106	106	information about the assessments, including [concerning] the
107	107	amounts [amount of the assessment] and [the] due dates, [of that
108	108	assessment] may be obtained from (insert name of [the] municipality
109	109	or county, as applicable) [levying the assessment].
110	110	[The amount of the assessments is subject to change.] Your
111	111	failure to pay any assessment or any annual installment may [the
112	112	assessments could] result in penalties and interest being added to
113	113	what you owe or in a lien on and the foreclosure of your property.
114	114	The undersigned purchaser acknowledges receipt of this
115	115	notice before the effective date of a binding contract for the
116	116	purchase of the real property at the address described above.
117	117	Date: __________________ ________________________________
118	118	Signature of Purchaser
119	119	(b) The seller or the municipality or county that created
120	120	the public improvement district may provide additional information
121	121	regarding the district in the notice prescribed by Subsection
122	122	(a-1), including whether an assessment has been levied, the amount
123	123	of the assessment, and the payment schedule for assessments. [The
124	124	seller shall deliver the notice required under Subsection (a) to
125	125	the purchaser before the effective date of an executory contract
126	126	binding the purchaser to purchase the property. The notice may be
127	127	given separately, as part of the contract during negotiations, or
128	128	as part of any other notice the seller delivers to the purchaser.
129	129	If the notice is included as part of the executory contract or
130	130	another notice, the title of the notice prescribed by this section,
131	131	the references to the street address and date in the notice, and the
132	132	purchaser's signature on the notice may be omitted.]
133	133	(c) This section does not apply to a transfer:
134	134	(1) under a court order or foreclosure sale;
135	135	(2) by a trustee in bankruptcy;
136	136	(3) to a mortgagee by a mortgagor or successor in
137	137	interest or to a beneficiary of a deed of trust by a trustor or
138	138	successor in interest;
139	139	(4) by a mortgagee or a beneficiary under a deed of
140	140	trust who has acquired the land at a sale conducted under a power of
141	141	sale under a deed of trust or a sale under a court-ordered
142	142	foreclosure or has acquired the land by a deed in lieu of
143	143	foreclosure;
144	144	(5) by a fiduciary in the course of the administration
145	145	of a decedent's estate, guardianship, conservatorship, or trust;
146	146	(6) from one co-owner to another co-owner of an
147	147	undivided interest in the real property;
148	148	(7) to a spouse or a person in the lineal line of
149	149	consanguinity of the seller;
150	150	(8) to or from a governmental entity; or
151	151	(9) of only a mineral interest, leasehold interest, or
152	152	security interest[; or
153	153	[(10) of a real property interest in a condominium].
154	154	(d) For the purposes of this section, [If] an executory a
155	155	contract for the purchase and sale having a performance period of
156	156	less than six months is considered a sale requiring notice [is
157	157	entered into without the seller providing the notice required by
158	158	this section, the purchaser may terminate the contract for any
159	159	reason not later than the earlier of:
160	160	[(1) the seventh day after the date the purchaser
161	161	receives the notice; or
162	162	[(2) the date the transfer occurs as provided by the
163	163	executory contract].
164	164	[(e) The purchaser's right to terminate the executory
165	165	contract under Subsection (d) is the purchaser's exclusive remedy
166	166	for the seller's failure to provide the notice required by this
167	167	section.]
168	168	SECTION 4. Subchapter A, Chapter 5, Property Code, is
169	169	amended by adding Sections 5.0141, 5.0142, 5.0143, 5.0144, and
170	170	5.0145 to read as follows:
171	171	Sec. 5.0141. NOTICE REQUIRED BEFORE CONTRACT EXECUTION.
172	172	(a) The notice required by Section 5.014 shall be given to the
173	173	prospective purchaser before the execution of a binding contract of
174	174	purchase and sale, either separately or as an addendum or paragraph
175	175	of a purchase contract.
176	176	(b) In the event a contract of purchase and sale is entered
177	177	into without the seller providing the notice, the purchaser is
178	178	entitled to terminate the contract.
179	179	(c) If, however, the seller furnishes the notice at or
180	180	before closing the purchase and sale contract and the purchaser
181	181	elects to close even though the notice was not timely furnished
182	182	before execution of the contract, it shall be conclusively presumed
183	183	that the purchaser has waived all rights to terminate the contract
184	184	under Subsection (b) or recover damages or other remedies or rights
185	185	under Section 5.0145.
186	186	(d) Notwithstanding any provision of this section, Section
187	187	5.014, 5.0142, 5.0143, 5.0144, or 5.0145, all sellers, title
188	188	companies, real estate brokers, and examining attorneys, and any
189	189	agent, representative, or person acting on their behalf, are not
190	190	liable for damages under Section 5.0145, or for any other damages to
191	191	any person, for:
192	192	(1) failing to provide the notice to a purchaser
193	193	before execution of a binding contract of purchase and sale or at or
194	194	before the closing of the purchase and sale contract when the
195	195	municipality or county has not filed the service plan as required by
196	196	Section 372.013, Local Government Code; or
197	197	(2) unintentionally providing a notice that is not the
198	198	correct notice under the circumstances before execution of a
199	199	binding contract of purchase and sale, or at or before the closing
200	200	of the purchase and sale contract.
201	201	Sec. 5.0142. PURCHASER SIGNATURE REQUIRED. The purchaser
202	202	shall sign the notice required by Section 5.014 or the purchase
203	203	contract including the notice to evidence the receipt of notice.
204	204	Sec. 5.0143. RECORDING OF NOTICE AT CLOSING. At the closing
205	205	of purchase and sale, a separate copy of the notice required by
206	206	Section 5.014 with current information shall be executed by the
207	207	seller and purchaser, acknowledged, and recorded in the deed
208	208	records of the county in which the property is located.
209	209	Sec. 5.0144. RELIANCE ON FILED SERVICE PLAN. (a) For the
210	210	purposes of the notice required by Section 5.014, all sellers,
211	211	title companies, real estate brokers, and examining attorneys, and
212	212	any agent, representative, or person acting on their behalf, are
213	213	entitled to rely on the accuracy of the service plan as last filed
214	214	by each municipality or county under Section 372.013, Local
215	215	Government Code, in completing the notice form to be executed by the
216	216	seller and purchaser at the closing of purchase and sale.
217	217	(b) Any information taken from the service plan as last
218	218	filed by the municipality or county and the information contained
219	219	in or shown on the notice form contained in the service plan under
220	220	Section 372.013, Local Government Code, not including information
221	221	provided as to the assessments or annual installment amounts as
222	222	authorized by Section 5.014(b), shall be, for purposes of the
223	223	notice required by Section 5.014, conclusively presumed as a matter
224	224	of law to be correct.
225	225	(c) All subsequent sellers, purchasers, title insurance
226	226	companies, real estate brokers, examining attorneys, and
227	227	lienholders are entitled to rely on the service plan filed by the
228	228	municipality or county, including the notice form contained in the
229	229	service plan, under Section 372.013, Local Government Code.
230	230	(d) If the notice required by Section 5.014 is given at
231	231	closing as provided by Section 5.0141(c), a purchaser, or the
232	232	purchaser's heirs, successors, or assigns, are not entitled to
233	233	maintain an action for damages against a seller, title insurance
234	234	company, real estate broker, or lienholder, or any agent,
235	235	representative, or person acting on their behalf, because the
236	236	seller:
237	237	(1) used the notice form included in the service plan
238	238	filed by the municipality or county under Section 372.013, Local
239	239	Government Code; or
240	240	(2) relied on the filed legal description of the
241	241	public improvement district in determining whether the property is
242	242	located in the district.
243	243	(e) No action may be maintained against any title company
244	244	for failure to disclose the inclusion of the property in a public
245	245	improvement district when the municipality or county has not filed
246	246	the service plan under Section 372.013, Local Government Code, with
247	247	the clerk of each county in which the district is located.
248	248	(f) All sellers, title insurance companies, examining
249	249	attorneys, vendors of property and tax information, real estate
250	250	brokers, and lienholders, and any agent, representative, or person
251	251	acting on their behalf, are entitled to rely on the accuracy of:
252	252	(1) the service plan last filed by the municipality or
253	253	county or the information in the notice form filed by the district
254	254	under Section 372.013, Local Government Code; or
255	255	(2) for the purposes of the notice required by Section
256	256	5.014, the information in the service plan filed by the
257	257	municipality or county in effect as of January 1 of each year for
258	258	the period January 1 through December 31 of such calendar year.
259	259	Sec. 5.0145. SUITS FOR DAMAGES. (a) If any sale or
260	260	conveyance of real property within a public improvement district is
261	261	not made in compliance with Section 5.014, 5.0141, 5.0142, or
262	262	5.0143, the purchaser may institute a suit for damages under the
263	263	provisions of Subsection (b) or (e).
264	264	(b) A purchaser of real property whose sale or conveyance is
265	265	subject to the notice requirement under Section 5.014, if the sale
266	266	or conveyance of the property is not made in compliance with that
267	267	section or Section 5.0141, 5.0142, or 5.0143, may institute a suit
268	268	for damages in the amount of all costs relative to the purchase of
269	269	the property at the time of purchase, plus interest and reasonable
270	270	attorney's fees.
271	271	(c) The suit for damages under Subsection (b) may be
272	272	instituted jointly or severally against the person, firm,
273	273	corporation, partnership, organization, business trust, estate,
274	274	trust, association, or other legal entity that sold or conveyed the
275	275	property to the purchaser.
276	276	(d) Following the recovery of damages under Subsection (b),
277	277	the amount of the damages shall first be paid to satisfy all unpaid
278	278	obligations on each outstanding lien on the property and the
279	279	remainder of the damage amount shall be paid to the purchaser. On
280	280	payment of all damages respectively to the lienholders and
281	281	purchaser, the purchaser shall reconvey the property to the seller.
282	282	(e) A purchaser of real property whose sale or conveyance is
283	283	subject to the notice requirement under Section 5.014, if the sale
284	284	or conveyance of the property is not made in compliance with that
285	285	section or Section 5.0141, 5.0142, or 5.0143, may institute a suit
286	286	for damages in an amount not to exceed $5,000, plus reasonable
287	287	attorney's fees.
288	288	(f) A purchaser is not entitled to recover damages under
289	289	both Subsections (b) and (e), and entry of a final decision awarding
290	290	damages to the purchaser under either Subsection (b) or (e) shall
291	291	preclude the purchaser from recovering damages under the other
292	292	subsection.
293	293	(g) The relief provided under Subsections (b) and (e) shall
294	294	be the exclusive remedies for a purchaser aggrieved by the seller's
295	295	failure to comply with the provisions of Section 5.014, 5.0141,
296	296	5.0142, or 5.0143.
297	297	(h) An action for damages does not apply to, affect, alter,
298	298	or impair the validity of any existing vendor's lien, mechanic's
299	299	lien, or deed of trust lien on the property.
300	300	(i) A suit for damages under this section must be brought
301	301	not later than the earlier of:
302	302	(1) the 90th day after the date the purchaser receives
303	303	the first public improvement district annual assessment
304	304	installment or tax notice; or
305	305	(2) the fourth anniversary of the date the property is
306	306	sold or conveyed to the purchaser.
307	307	(j) Notwithstanding a provision of this section, a
308	308	purchaser may not recover damages under this section if the
309	309	purchaser:
310	310	(1) purchases an equity in real property and in
311	311	conjunction with the purchase assumes any liens, whether purchase
312	312	money or otherwise; and
313	313	(2) does not require proof of title by abstract, title
314	314	policy, or any other proof of title.
315	315	(k) A purchaser who purchases real property in a public
316	316	improvement district and who then sells or conveys the property
317	317	shall on closing of the subsequent sale or conveyance be
318	318	conclusively considered to have waived any prior right to damages
319	319	under this section.
320	320	SECTION 5. Section 372.010, Local Government Code, as
321	321	amended by this Act, applies only to a resolution adopted under that
322	322	section on or after the effective date of this Act. A resolution
323	323	adopted before the effective date of this Act is governed by the law
324	324	in effect on the date the resolution was adopted, and the former law
325	325	is continued in effect for that purpose.
326	326	SECTION 6. Sections 372.013(a) and (b), Local Government
327	327	Code, as amended by this Act, and Section 372.013(c), Local
328	328	Government Code, as added by this Act, apply only to a service plan
329	329	approved under that section on or after the effective date of this
330	330	Act. A service plan approved before the effective date of this Act
331	331	is governed by the law in effect on the date the service plan was
332	332	approved, and the former law is continued in effect for that
333	333	purpose.
334	334	SECTION 7. Sections 372.013(d) and (e), Local Government
335	335	Code, as added by this Act, apply only to a service plan amended or
336	336	updated under that section on or after the effective date of this
337	337	Act.
338	338	SECTION 8. Section 5.014, Property Code, as amended by this
339	339	Act, and Sections 5.0141, 5.0142, 5.0143, 5.0144, and 5.0145,
340	340	Property Code, as added by this Act, apply only to a sale or
341	341	conveyance of property for which a binding contract is executed on
342	342	or after the effective date of this Act. A sale or conveyance for
343	343	which a binding contract is executed before the effective date of
344	344	this Act is governed by the law in effect on the date the contract is
345	345	executed, and the former law is continued in effect for that
346	346	purpose.
347	347	SECTION 9. This Act takes effect September 1, 2021.