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AN ACT
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relating to the conveyance of certain residential real property |
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encumbered by a lien. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subchapter A, Chapter 5, Property Code, is |
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amended by adding Sections 5.016 and 5.017 to read as follows: |
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Sec. 5.016. CONVEYANCE OF RESIDENTIAL PROPERTY ENCUMBERED |
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BY LIEN. (a) A person may not convey an interest in or enter into a |
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contract to convey an interest in residential real property that |
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will be encumbered by a recorded lien at the time the interest is |
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conveyed unless, on or before the seventh day before the earlier of |
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the effective date of the conveyance or the execution of an |
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executory contract binding the purchaser to purchase the property, |
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an option contract, or other contract, the person provides the |
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purchaser and each lienholder a separate written disclosure |
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statement in at least 12-point type that: |
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(1) identifies the property and includes the name, |
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address, and phone number of each lienholder; |
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(2) states the amount of the debt that is secured by |
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each lien; |
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(3) specifies the terms of any contract or law under |
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which the debt that is secured by the lien was incurred, including, |
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as applicable: |
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(A) the rate of interest; |
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(B) the periodic installments required to be |
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paid; and |
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(C) the account number; |
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(4) indicates whether the lienholder has consented to |
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the transfer of the property to the purchaser; |
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(5) specifies the details of any insurance policy |
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relating to the property, including: |
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(A) the name of the insurer and insured; |
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(B) the amount for which the property is insured; |
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and |
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(C) the property that is insured; |
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(6) states the amount of any property taxes that are |
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due on the property; and |
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(7) includes a statement at the top of the disclosure |
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in a form substantially similar to the following: |
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WARNING: ONE OR MORE RECORDED LIENS HAVE BEEN FILED THAT MAKE A |
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CLAIM AGAINST THIS PROPERTY AS LISTED BELOW. IF A LIEN IS NOT |
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RELEASED AND THE PROPERTY IS CONVEYED WITHOUT THE CONSENT OF THE |
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LIENHOLDER, IT IS POSSIBLE THE LIENHOLDER COULD DEMAND FULL PAYMENT |
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OF THE OUTSTANDING BALANCE OF THE LIEN IMMEDIATELY. YOU MAY WISH TO |
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CONTACT EACH LIENHOLDER FOR FURTHER INFORMATION AND DISCUSS THIS |
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MATTER WITH AN ATTORNEY. |
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(b) A violation of this section does not invalidate a |
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conveyance. Except as provided by Subsections (c) and (d), if a |
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contract is entered into without the seller providing the notice |
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required by this section, the purchaser may terminate the contract |
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for any reason on or before the seventh day after the date the |
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purchaser receives the notice in addition to other remedies |
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provided by this section or other law. |
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(c) This section does not apply to a transfer: |
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(1) under a court order or foreclosure sale; |
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(2) by a trustee in bankruptcy; |
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(3) to a mortgagee by a mortgagor or successor in |
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interest or to a beneficiary of a deed of trust by a trustor or |
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successor in interest; |
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(4) by a mortgagee or a beneficiary under a deed of |
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trust who has acquired the real property at a sale conducted under a |
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power of sale under a deed of trust or a sale under a court-ordered |
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foreclosure or has acquired the real property by a deed in lieu of |
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foreclosure; |
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(5) by a fiduciary in the course of the administration |
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of a decedent's estate, guardianship, conservatorship, or trust; |
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(6) from one co-owner to one or more other co-owners; |
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(7) to a spouse or to a person or persons in the lineal |
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line of consanguinity of one or more of the transferors; |
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(8) between spouses resulting from a decree of |
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dissolution of marriage or a decree of legal separation or from a |
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property settlement agreement incidental to one of those decrees; |
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(9) to or from a governmental entity; |
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(10) where the purchaser obtains a title insurance |
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policy insuring the transfer of title to the real property; or |
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(11) to a person who has purchased, conveyed, or |
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entered into contracts to purchase or convey an interest in real |
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property four or more times in the preceding 12 months. |
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(d) A violation of this section is not actionable if the |
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person required to give notice reasonably believes and takes any |
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necessary action to ensure that each lien for which notice was not |
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provided will be released on or before the 30th day after the date |
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on which title to the property is transferred. |
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Sec. 5.017. FEE FOR FUTURE CONVEYANCE OF RESIDENTIAL REAL |
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PROPERTY AND RELATED LIEN PROHIBITED. (a) In this section, |
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"property owners' association" has the meaning assigned by Section |
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209.002. |
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(b) A deed restriction or other covenant running with the |
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land applicable to the conveyance of residential real property that |
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requires a transferee of residential real property or the |
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transferee's heirs, successors, or assigns to pay a declarant or |
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other person imposing the deed restriction or covenant on the |
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property or a third party designated by a transferor of the property |
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a fee in connection with a future transfer of the property is |
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prohibited. A deed restriction or other covenant running with the |
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land that violates this section or a lien purporting to encumber the |
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land to secure a right under a deed restriction or other covenant |
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running with the land that violates this section is void and |
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unenforceable. For purposes of this section, a conveyance of real |
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property includes a conveyance or other transfer of an interest or |
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estate in residential real property. |
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(c) This section does not apply to a deed restriction or |
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other covenant running with the land that requires a fee associated |
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with the conveyance of property in a subdivision that is payable to: |
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(1) a property owners' association that manages or |
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regulates the subdivision or the association's managing agent if |
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the subdivision contains more than one platted lot; |
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(2) an entity organized under Section 501(c)(3), |
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Internal Revenue Code of 1986; or |
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(3) a governmental entity. |
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SECTION 2. The change in law made by this Act applies only |
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to a transfer of property that occurs or a contract entered into on |
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or after the effective date of this Act. A transfer of property |
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that occurs or a contract entered into before the effective date of |
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this Act is governed by the law in effect immediately before the |
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effective date of this Act, and that law is continued in effect for |
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that purpose. |
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SECTION 3. This Act takes effect January 1, 2008. |
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______________________________ |
______________________________ |
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President of the Senate |
Speaker of the House |
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I certify that H.B. No. 2207 was passed by the House on May |
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11, 2007, by the following vote: Yeas 135, Nays 2, 2 present, not |
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voting; that the House refused to concur in Senate amendments to |
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H.B. No. 2207 on May 25, 2007, and requested the appointment of a |
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conference committee to consider the differences between the two |
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houses; and that the House adopted the conference committee report |
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on H.B. No. 2207 on May 27, 2007, by the following vote: Yeas 144, |
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Nays 0, 2 present, not voting. |
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______________________________ |
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Chief Clerk of the House |
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I certify that H.B. No. 2207 was passed by the Senate, with |
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amendments, on May 23, 2007, by the following vote: Yeas 31, Nays |
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0; at the request of the House, the Senate appointed a conference |
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committee to consider the differences between the two houses; and |
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that the Senate adopted the conference committee report on H.B. No. |
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2207 on May 26, 2007, by the following vote: Yeas 30, Nays 0. |
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______________________________ |
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Secretary of the Senate |
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APPROVED: __________________ |
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Date |
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__________________ |
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Governor |