| 1 | 1 | | 89R8904 JBD-D |
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| 2 | 2 | | By: Parker S.B. No. 1407 |
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| 3 | 3 | | |
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| 4 | 4 | | |
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| 5 | 5 | | |
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| 6 | 6 | | |
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| 7 | 7 | | A BILL TO BE ENTITLED |
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| 8 | 8 | | AN ACT |
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| 9 | 9 | | relating to the withdrawal of certain deposits placed in escrow in |
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| 10 | 10 | | connection with the purchase or reservation of a condominium unit. |
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| 11 | 11 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 12 | 12 | | SECTION 1. Section 82.158, Property Code, is amended to |
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| 13 | 13 | | read as follows: |
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| 14 | 14 | | Sec. 82.158. ESCROW OF DEPOSITS. (a) Except as provided by |
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| 15 | 15 | | Subsection (b), a [A] deposit made in connection with the purchase |
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| 16 | 16 | | or reservation of a unit from a declarant shall be placed in escrow |
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| 17 | 17 | | and held in this state in an account designated for that purpose by |
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| 18 | 18 | | a real estate broker, an attorney, a title insurance company |
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| 19 | 19 | | licensed in this state, an independent bonded escrow company, or an |
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| 20 | 20 | | institution whose accounts are insured by a governmental agency or |
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| 21 | 21 | | instrumentality until delivered to the declarant at closing, |
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| 22 | 22 | | delivered to the declarant because of the purchaser's default under |
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| 23 | 23 | | a contract to purchase the unit, or refunded to the purchaser. |
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| 24 | 24 | | Escrow deposits may be placed in interest-bearing accounts, and the |
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| 25 | 25 | | interest is payable as may be agreed in writing between the |
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| 26 | 26 | | declarant and the purchaser. |
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| 27 | 27 | | (b) If a contract to purchase a unit provides that the |
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| 28 | 28 | | deposit made in connection with the purchase or reservation of the |
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| 29 | 29 | | unit may be used for construction costs and the declarant obtains |
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| 30 | 30 | | and maintains a surety bond or insurance as described by Subsection |
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| 31 | 31 | | (c), the declarant may withdraw escrow funds when construction of |
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| 32 | 32 | | improvements begins. The funds may be used only for actual building |
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| 33 | 33 | | and construction costs of the project in which the unit is located. |
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| 34 | 34 | | (c) The bond or insurance required under Subsection (b) must |
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| 35 | 35 | | be issued by an insurer licensed in this state in favor of the |
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| 36 | 36 | | purchaser in an amount adequate to cover the amount of the deposit |
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| 37 | 37 | | to be withdrawn from escrow funds under Subsection (b). The |
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| 38 | 38 | | declarant may not withdraw an amount from the escrow funds greater |
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| 39 | 39 | | than the face amount of the bond or the insurance coverage amount. |
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| 40 | 40 | | The bond or insurance must be payable to the purchaser if the |
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| 41 | 41 | | purchaser obtains a final judgment against the declarant requiring |
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| 42 | 42 | | the declarant to return the deposit under the purchase agreement. |
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| 43 | 43 | | The bond or insurance may be either in the form of an individual |
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| 44 | 44 | | bond or policy for each deposit accepted by the declarant or in the |
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| 45 | 45 | | form of a blanket bond or policy assuring the return of all deposits |
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| 46 | 46 | | received by the declarant. |
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| 47 | 47 | | (d) The party holding escrow funds who releases any portion |
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| 48 | 48 | | of the funds to the declarant has no obligation to monitor the |
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| 49 | 49 | | progress of construction or the expenditure of the funds by the |
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| 50 | 50 | | declarant and is not liable to any purchaser for the release of |
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| 51 | 51 | | funds under this section. |
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| 52 | 52 | | SECTION 2. This Act takes effect September 1, 2025. |
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