89R9055 PRL-F
By: Parker S.B. No. 2957
A BILL TO BE ENTITLED
AN ACT
relating to prohibiting the use of unfair service agreements;
creating an offense.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 17, Business & Commerce Code, is amended
by adding Subchapter M to read as follows:
SUBCHAPTER M. UNFAIR SERVICE AGREEMENTS
Sec. 17.971. DEFINITIONS. In this subchapter:
(1) "Residential real estate" means real property
located in this state used primarily for personal, family, or
household purposes and improved by one to four dwelling units.
(2) "Service agreement" means a contract under which a
person agrees to provide services in connection with:
(A) the maintenance of residential real estate;
or
(B) the purchase or sale of residential real
estate.
(3) "Service provider" means an individual or entity
that provides services to a person.
Sec. 17.972. CHARACTERISTICS OF UNFAIR SERVICE AGREEMENTS.
(a) A service agreement is unfair under this subchapter if any part
of the service subject to the agreement is not to be performed on or
before the first anniversary of the date the agreement is entered
into and:
(1) purports to run with the land or bind current
owners or successors in title to specified real property located in
this state;
(2) allows for assignment of the right to provide
service without notice to and consent of the owner of residential
real estate; or
(3) purports to create a lien, encumbrance, or other
real property security interest.
(b) This section does not apply to:
(1) a home warranty or similar guarantee that is
designed to guarantee or warrant the repair or service of an
appliance, system, or component of a residential property for a
fixed period;
(2) an insurance contract;
(3) an option or right of refusal to purchase the
residential real estate;
(4) a declaration created in the formation of a common
interest community or an amendment to the declaration;
(5) a maintenance or repair agreement entered into by
a homeowners' association in a common interest community;
(6) a mortgage loan or a commitment to make or receive
a mortgage loan;
(7) a security agreement under Title 1 relating to the
sale or lease of personal property or fixtures; or
(8) water, sewer, electrical, telephone, cable, or
other regulated utility service providers.
(c) This section does not impair the rights granted by
Section 53.123, Property Code.
(d) A service agreement that is unfair is void and
unenforceable.
(e) A person that enters into an unfair service agreement
with a consumer commits a false, misleading, or deceptive act or
practice actionable under Subchapter E.
Sec. 17.973. RECORDING PROHIBITED. (a) A person may not
file for recording or cause to be filed for recording an unfair
service agreement or notice or memorandum thereof.
(b) A person commits an offense if the person files for
recording or causes to be filed for recording an unfair service
agreement or notice or memorandum of an unfair service agreement.
(c) An offense under this section is a Class A misdemeanor.
(d) Notwithstanding any other law, a county clerk may refuse
to record an unfair service agreement.
(e) If an unfair service agreement is recorded, it does not
provide actual or constructive notice against an otherwise bona
fide purchaser or creditor.
Sec. 17.974. APPLICATION FOR ISSUANCE OF COURT ORDER. If an
unfair service agreement or a notice or memorandum thereof is
recorded, any person with an interest in the real property that is
the subject of that agreement may file an application with the
district court in the county in which the agreement is recorded for
the issuance of an order declaring that the agreement is void and
unenforceable.
Sec. 17.975. DAMAGES. If an unfair service agreement or a
notice or memorandum thereof is recorded, any person with an
interest in the real property that is the subject of that agreement
is entitled to recover from the service provider who recorded the
agreement:
(1) actual damages; and
(2) reasonable attorney's fees and other litigation
costs reasonably incurred.
SECTION 2. Subchapter M, Chapter 17, Business & Commerce
Code, as added by this Act, applies only to a contract entered into
on or after the effective date of this Act.
SECTION 3. This Act takes effect September 1, 2025.