2009 Texas Code
PROPERTY CODE
TITLE 2. CONVEYANCES
CHAPTER 5. CONVEYANCES  

PROPERTY CODE

TITLE 2. CONVEYANCES

CHAPTER 5. CONVEYANCES

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 5.001. FEE SIMPLE. (a) An estate in land that is conveyed

or devised is a fee simple unless the estate is limited by

express words or unless a lesser estate is conveyed or devised by

construction or operation of law. Words previously necessary at

common law to transfer a fee simple estate are not necessary.

(b) This section applies only to a conveyance occurring on or

after February 5, 1840.

Acts 1983, 68th Leg., p. 3480, ch. 576, Sec. 1, eff. Jan. 1,

1984.

Sec. 5.002. FAILING AS A CONVEYANCE. An instrument intended as

a conveyance of real property or an interest in real property

that, because of this chapter, fails as a conveyance in whole or

in part is enforceable to the extent permitted by law as a

contract to convey the property or interest.

Acts 1983, 68th Leg., p. 3480, ch. 576, Sec. 1, eff. Jan. 1,

1984.

Sec. 5.003. PARTIAL CONVEYANCE. (a) An alienation of real

property that purports to transfer a greater right or estate in

the property than the person making the alienation may lawfully

transfer alienates only the right or estate that the person may

convey.

(b) Neither the alienation by deed or will of an estate on which

a remainder depends nor the union of the estate with an

inheritance by purchase or descent affects the remainder.

Acts 1983, 68th Leg., p. 3480, ch. 576, Sec. 1, eff. Jan. 1,

1984.

Sec. 5.004. CONVEYANCE BY AUTHORIZED OFFICER. (a) A conveyance

of real property by an officer legally authorized to sell the

property under a judgment of a court within the state passes

absolute title to the property to the purchaser.

(b) This section does not affect the rights of a person who is

not or who does not claim under a party to the conveyance or

judgment.

Acts 1983, 68th Leg., p. 3480, ch. 576, Sec. 1, eff. Jan. 1,

1984.

Sec. 5.005. ALIENS. An alien has the same real and personal

property rights as a United States citizen.

Acts 1983, 68th Leg., p. 3481, ch. 576, Sec. 1, eff. Jan. 1,

1984.

Sec. 5.006. ATTORNEY'S FEES IN BREACH OF RESTRICTIVE COVENANT

ACTION. (a) In an action based on breach of a restrictive

covenant pertaining to real property, the court shall allow to a

prevailing party who asserted the action reasonable attorney's

fees in addition to the party's costs and claim.

(b) To determine reasonable attorney's fees, the court shall

consider:

(1) the time and labor required;

(2) the novelty and difficulty of the questions;

(3) the expertise, reputation, and ability of the attorney; and

(4) any other factor.

Acts 1983, 68th Leg., p. 3481, ch. 576, Sec. 1, eff. Jan. 1,

1984.

Sec. 5.007. VENDOR AND PURCHASER RISK ACT. (a) Any contract

made in this state for the purchase and sale of real property

shall be interpreted as including an agreement that the parties

have the rights and duties prescribed by this section, unless the

contract expressly provides otherwise.

(b) If, when neither the legal title nor the possession of the

subject matter of the contract has been transferred, all or a

material part of the property is destroyed without fault of the

purchaser or is taken by eminent domain, the vendor may not

enforce the contract, and the purchaser is entitled to recover

any portion of the contract price paid.

(c) If, when either the legal title or the possession of the

subject matter of the contract has been transferred, all or any

part of the property is destroyed without fault of the vendor or

is taken by eminent domain, the purchaser is not relieved from

the duty to pay the contract price, nor is the purchaser entitled

to recover any portion of the price already paid.

(d) This section shall be interpreted and construed to

accomplish its general purpose to make uniform the law of those

states that enact the Uniform Vendor and Purchaser Risk Act.

(e) This section may be cited as the Uniform Vendor and

Purchaser Risk Act.

Added by Acts 1989, 71st Leg., ch. 1002, Sec. 1, eff. Sept. 1,

1989.

Sec. 5.008. SELLER'S DISCLOSURE OF PROPERTY CONDITION. (a) A

seller of residential real property comprising not more than one

dwelling unit located in this state shall give to the purchaser

of the property a written notice as prescribed by this section or

a written notice substantially similar to the notice prescribed

by this section which contains, at a minimum, all of the items in

the notice prescribed by this section.

(b) The notice must be executed and must, at a minimum, read

substantially similar to the following:

SELLER'S DISCLOSURE NOTICE

CONCERNING THE PROPERTY AT ___________________________________

(Street Address and City)

THIS NOTICE IS A DISCLOSURE OF SELLER'S KNOWLEDGE OF THE

CONDITION OF THE PROPERTY AS OF THE DATE SIGNED BY SELLER AND IS

NOT A SUBSTITUTE FOR ANY INSPECTIONS OR WARRANTIES THE PURCHASER

MAY WISH TO OBTAIN. IT IS NOT A WARRANTY OF ANY KIND BY SELLER OR

SELLER'S AGENTS.

Seller __ is __ is not occupying the Property.

If unoccupied, how long since Seller has occupied the Property?

________________________________________________________________

1. The Property has the items checked below:

Write Yes (Y), No (N), or Unknown (U).

__ Range

__ Oven

__ Microwave

__ Dishwasher

__ Trash Compactor

__ Disposal

__ Washer/Dryer

__ Window

__ Rain Gutters

Hookups

Screens

__ Security

__ Fire Detection

__ Intercom

System

Equipment

System

__ Smoke Detector

__ Smoke Detector -

Hearing Impaired

__ Carbon Monoxide

Alarm

__ Emergency Escape

Ladder(s)

__ TV Antenna

__ Cable TV

__ Satellite

Wiring

Dish

__ Ceiling Fan(s)

__ Attic Fan(s)

__ Exhaust

Fan(s)

__ Central A/C

__ Central Heating

__ Wall/Window

Air

Conditioning

__ Plumbing System

__ Septic System

__ Public Sewer

System

__ Patio/Decking

__ Outdoor Grill

__ Fences

__ Pool

__ Sauna

__ Spa

__ Hot Tub

__ Pool Equipment

__ Pool Heater

__ Automatic Lawn

Sprinkler

System

__ Fireplace(s) &

__ Fireplace(s) &

Chimney

Chimney

(Woodburning)

(Mock)

__ Gas Lines

__ Gas Fixtures

(Nat./LP)

Garage: __ Attached

__ Not Attached

__ Carport

Garage Door Opener(s):

__ Electronic

__ Control(s)

Water Heater:

__ Gas

__ Electric

Water Supply: __ City

__ Well __ MUD

__ Co-op

Roof Type: ________________________________Age: _____(approx)

Are you (Seller) aware of any of the above items that are not in

working condition, that have known defects, or that are in need

of repair? __ Yes __ No __ Unknown.

If yes, then describe. (Attach additional sheets if necessary):

________________________________________________________________

________________________________________________________________

2. Does the property have working smoke detectors installed in

accordance with the smoke detector requirements of Chapter 766,

Health and Safety Code?* __ Yes __ No __ Unknown.

If the answer to the question above is no or unknown, explain.

(Attach additional sheets if necessary):

________________________________________________________________

________________________________________________________________

*Chapter 766 of the Health and Safety Code requires

one-family or two-family dwellings to have working smoke

detectors installed in accordance with the requirements of the

building code in effect in the area in which the dwelling is

located, including performance, location, and power source

requirements. If you do not know the building code requirements

in effect in your area, you may check unknown above or contact

your local building official for more information. A buyer may

require a seller to install smoke detectors for the hearing

impaired if: (1) the buyer or a member of the buyer's family who

will reside in the dwelling is hearing impaired; (2) the buyer

gives the seller written evidence of the hearing impairment from

a licensed physician; and (3) within 10 days after the effective

date, the buyer makes a written request for the seller to install

smoke detectors for the hearing impaired and specifies the

locations for installation. The parties may agree who will bear

the cost of installing the smoke detectors and which brand of

smoke detectors to install.

3. Are you (Seller) aware of any known defect/malfunctions in

any of the following?

Write Yes (Y) if you are aware, write No (N) if you are not

aware.

__ Interior Walls

__ Ceilings

__ Floors

__ Exterior Walls

__ Doors

__ Windows

__ Roof

__ Foundation/

__ Basement

Slab(s)

__ Walls/Fences

__ Driveways

__ Sidewalks

__ Plumbing/Sewers/

__ Electrical

__ Lighting

Septics

Systems

Fixtures

__ Other Structural Components (Describe):____________________

________________________________________________________________

________________________________________________________________

If the answer to any of the above is yes, explain. (Attach

additional sheets if necessary):_____________________________

________________________________________________________________

________________________________________________________________

4. Are you (Seller) aware of any of the following conditions?

Write Yes (Y) if you are aware, write No (N) if you are not

aware.

__ Active Termites

__ Previous Structural

(includes

or Roof Repair

wood-destroying insects)

__ Termite or Wood Rot Damage

__ Hazardous or Toxic Waste

Needing Repair

__ Previous Termite Damage

__ Asbestos Components

__ Previous Termite

__ Urea formaldehyde

Treatment

Insulation

__ Previous Flooding

__ Radon Gas

__ Improper Drainage

__ Lead Based Paint

__ Water Penetration

__ Aluminum Wiring

__ Located in 100-Year

__ Previous Fires

Floodplain

__ Present Flood Insurance

__ Unplatted Easements

Coverage

__ Landfill, Settling, Soil

__ Subsurface

Movement, Fault Lines

Structure or Pits

__ Previous Use of Premises for

Manufacture of Methamphetamine

If the answer to any of the above is yes, explain. (Attach

additional sheets if necessary):_____________________________

________________________________________________________________

________________________________________________________________

5. Are you (Seller) aware of any item, equipment, or system in

or on the property that is in need of repair? __ Yes (if you are

aware) __ No (if you are not aware). If yes, explain (attach

additional sheets as necessary)._________________________________

6. Are you (Seller) aware of any of the following?

Write Yes (Y) if you aware, write No (N) if you are not aware.

__

Room additions, structural modifications, or other

alterations or repairs made without necessary permits or

not in compliance with building codes in effect at that

time.

__

Homeowners' Association or maintenance fees or assessments.

__

Any "common area" (facilities such as pools, tennis courts,

walkways, or other areas) co-owned in undivided interest

with others.

__

Any notices of violations of deed restrictions or

governmental ordinances affecting the condition or use of

the Property.

__

Any lawsuits directly or indirectly affecting the Property.

__

Any condition on the Property which materially affects the

physical health or safety of an individual.

If the answer to any of the above is yes, explain. (Attach

additional sheets if necessary): _____________________________

________________________________________________________________

________________________________________________________________

7. If the property is located in a coastal area that is seaward

of the Gulf Intracoastal Waterway or within 1,000 feet of the

mean high tide bordering the Gulf of Mexico, the property may be

subject to the Open Beaches Act or the Dune Protection Act

(Chapter 61 or 63, Natural Resources Code, respectively) and a

beachfront construction certificate or dune protection permit may

be required for repairs or improvements. Contact the local

government with ordinance authority over construction adjacent to

public beaches for more information.

_______________________________________________________

Date Signature of Seller

The undersigned purchaser hereby acknowledges receipt of the

foregoing notice.

_______________________________________________________

Date Signature of Purchaser

(c) A seller or seller's agent shall have no duty to make a

disclosure or release information related to whether a death by

natural causes, suicide, or accident unrelated to the condition

of the property occurred on the property or whether a previous

occupant had, may have had, has, or may have AIDS, HIV related

illnesses, or HIV infection.

(d) The notice shall be completed to the best of seller's belief

and knowledge as of the date the notice is completed and signed

by the seller. If the information required by the notice is

unknown to the seller, the seller shall indicate that fact on the

notice, and by that act is in compliance with this section.

(e) This section does not apply to a transfer:

(1) pursuant to a court order or foreclosure sale;

(2) by a trustee in bankruptcy;

(3) to a mortgagee by a mortgagor or successor in interest, or

to a beneficiary of a deed of trust by a trustor or successor in

interest;

(4) by a mortgagee or a beneficiary under a deed of trust who

has acquired the real property at a sale conducted pursuant to a

power of sale under a deed of trust or a sale pursuant to a court

ordered foreclosure or has acquired the real property by a deed

in lieu of foreclosure;

(5) by a fiduciary in the course of the administration of a

decedent's estate, guardianship, conservatorship, or trust;

(6) from one co-owner to one or more other co-owners;

(7) made to a spouse or to a person or persons in the lineal

line of consanguinity of one or more of the transferors;

(8) between spouses resulting from a decree of dissolution of

marriage or a decree of legal separation or from a property

settlement agreement incidental to such a decree;

(9) to or from any governmental entity;

(10) of a new residence of not more than one dwelling unit which

has not previously been occupied for residential purposes; or

(11) of real property where the value of any dwelling does not

exceed five percent of the value of the property.

(f) The notice shall be delivered by the seller to the purchaser

on or before the effective date of an executory contract binding

the purchaser to purchase the property. If a contract is entered

without the seller providing the notice required by this section,

the purchaser may terminate the contract for any reason within

seven days after receiving the notice.

Added by Acts 1993, 73rd Leg., ch. 356, Sec. 1, eff. Jan. 1,

1994.

Amended by:

Acts 2005, 79th Leg., Ch.

728, Sec. 17.001, eff. September 1, 2005.

Acts 2007, 80th Leg., R.S., Ch.

448, Sec. 1, eff. January 1, 2008.

Acts 2007, 80th Leg., R.S., Ch.

1051, Sec. 11, eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

1256, Sec. 22, eff. September 1, 2007.

Acts 2009, 81st Leg., R.S., Ch.

87, Sec. 20.001, eff. September 1, 2009.

Acts 2009, 81st Leg., R.S., Ch.

1178, Sec. 1, eff. January 1, 2010.

Sec. 5.009. DUTIES OF LIFE TENANT. (a) Subject to Subsection

(b), if the life tenant of a legal life estate is given the power

to sell and reinvest any life tenancy property, the life tenant

is subject, with respect to the sale and investment of the

property, to all of the fiduciary duties of a trustee imposed by

the Texas Trust Code (Subtitle B, Title 9, Property Code) or the

common law of this state.

(b) A life tenant may retain, as life tenancy property, any real

property originally conveyed to the life tenant without being

subject to the fiduciary duties of a trustee; however, the life

tenant is subject to the common law duties of a life tenant.

Acts 1993, 73rd Leg., ch. 846, Sec. 34, eff. Sept. 1, 1993.

Renumbered from Property Code Sec. 5.008 by Acts 1995, 74th Leg.,

ch. 76, Sec. 17.01(42), eff. Sept. 1, 1995.

Sec. 5.010. NOTICE OF ADDITIONAL TAX LIABILITY. (a) A person

who is the owner of an interest in vacant land and who contracts

for the transfer of that interest shall include in the contract

the following bold-faced notice:

NOTICE REGARDING POSSIBLE LIABILITY FOR ADDITIONAL TAXES

If for the current ad valorem tax year the taxable value of the

land that is the subject of this contract is determined by a

special appraisal method that allows for appraisal of the land at

less than its market value, the person to whom the land is

transferred may not be allowed to qualify the land for that

special appraisal in a subsequent tax year and the land may then

be appraised at its full market value. In addition, the transfer

of the land or a subsequent change in the use of the land may

result in the imposition of an additional tax plus interest as a

penalty for the transfer or the change in the use of the land.

The taxable value of the land and the applicable method of

appraisal for the current tax year is public information and may

be obtained from the tax appraisal district established for the

county in which the land is located.

(b) This section does not apply to a contract for a transfer:

(1) under a court order or foreclosure sale;

(2) by a trustee in bankruptcy;

(3) to a mortgagee by a mortgagor or successor in interest or to

a beneficiary of a deed of trust by a trustor or successor in

interest;

(4) by a mortgagee or a beneficiary under a deed of trust who

has acquired the land at a sale conducted under a power of sale

under a deed of trust or a sale under a court-ordered foreclosure

or has acquired the land by a deed in lieu of foreclosure;

(5) by a fiduciary in the course of the administration of a

decedent's estate, guardianship, conservatorship, or trust;

(6) of only a mineral interest, leasehold interest, or security

interest; or

(7) to or from a governmental entity.

(c) The notice described by Subsection (a) is not required to be

included in a contract for transfer of an interest in land if

every transferee under the contract is:

(1) a person who is a co-owner with an owner described by

Subsection (a) of an undivided interest in the land; or

(2) a spouse or a person in the lineal line of consanguinity of

an owner described by Subsection (a).

(d) The notice described by Subsection (a) is not required to be

given if in a separate paragraph of the contract the contract

expressly provides for the payment of any additional ad valorem

taxes and interest that become due as a penalty because of:

(1) the transfer of the land; or

(2) a subsequent change in the use of the land.

(e) If the owner fails to include in the contract the notice

described by Subsection (a), the person to whom the land is

transferred is entitled to recover from that owner an amount

equal to the amount of any additional taxes and interest that the

person is required to pay as a penalty because of:

(1) the transfer of the land; or

(2) a subsequent change in the use of the land that occurs

before the fifth anniversary of the date of the transfer.

Added by Acts 1997, 75th Leg., ch. 174, Sec. 1, eff. Jan. 1,

1998.

Sec. 5.011. SELLER'S DISCLOSURE REGARDING POTENTIAL ANNEXATION.

(a) A person who sells an interest in real property in this

state shall give to the purchaser of the property a written

notice that reads substantially similar to the following:

NOTICE REGARDING POSSIBLE ANNEXATION

If the property that is the subject of this contract is located

outside the limits of a municipality, the property may now or

later be included in the extraterritorial jurisdiction of a

municipality and may now or later be subject to annexation by the

municipality. Each municipality maintains a map that depicts its

boundaries and extraterritorial jurisdiction. To determine if the

property is located within a municipality's extraterritorial

jurisdiction or is likely to be located within a municipality's

extraterritorial jurisdiction, contact all municipalities located

in the general proximity of the property for further information.

(b) The seller shall deliver the notice to the purchaser before

the date the executory contract binds the purchaser to purchase

the property. The notice may be given separately, as part of the

contract during negotiations, or as part of any other notice the

seller delivers to the purchaser.

(c) This section does not apply to a transfer:

(1) under a court order or foreclosure sale;

(2) by a trustee in bankruptcy;

(3) to a mortgagee by a mortgagor or successor in interest or to

a beneficiary of a deed of trust by a trustor or successor in

interest;

(4) by a mortgagee or a beneficiary under a deed of trust who

has acquired the land at a sale conducted under a power of sale

under a deed of trust or a sale under a court-ordered foreclosure

or has acquired the land by a deed in lieu of foreclosure;

(5) by a fiduciary in the course of the administration of a

decedent's estate, guardianship, conservatorship, or trust;

(6) from one co-owner to another co-owner of an undivided

interest in the real property;

(7) to a spouse or a person in the lineal line of consanguinity

of the seller;

(8) to or from a governmental entity;

(9) of only a mineral interest, leasehold interest, or security

interest; or

(10) of real property that is located wholly within a

municipality's corporate boundaries.

(d) If the notice is delivered as provided by this section, the

seller has no duty to provide additional information regarding

the possible annexation of the property by a municipality.

(e) If an executory contract is entered into without the seller

providing the notice required by this section, the purchaser may

terminate the contract for any reason within the earlier of:

(1) seven days after the date the purchaser receives the notice;

or

(2) the date the transfer occurs.

Added by Acts 1999, 76th Leg., ch. 529, Sec. 1, eff. Jan. 1,

2000.

Sec. 5.012. NOTICE OF OBLIGATIONS RELATED TO MEMBERSHIP IN

PROPERTY OWNERS' ASSOCIATION. (a) A seller of residential real

property that is subject to membership in a property owners'

association and that comprises not more than one dwelling unit

located in this state shall give to the purchaser of the property

a written notice that reads substantially similar to the

following:

NOTICE OF MEMBERSHIP IN PROPERTY OWNERS' ASSOCIATION CONCERNING

THE PROPERTY AT (street address) (name of residential community)

As a purchaser of property in the residential community in which

this property is located, you are obligated to be a member of a

property owners' association. Restrictive covenants governing the

use and occupancy of the property and a dedicatory instrument

governing the establishment, maintenance, and operation of this

residential community have been or will be recorded in the Real

Property Records of the county in which the property is located.

Copies of the restrictive covenants and dedicatory instrument may

be obtained from the county clerk.

You are obligated to pay assessments to the property owners'

association. The amount of the assessments is subject to change.

Your failure to pay the assessments could result in a lien on and

the foreclosure of your property.

Date: ____________________

_______________________________

Signature of Purchaser

(b) The seller shall deliver the notice to the purchaser before

the date the executory contract binds the purchaser to purchase

the property. The notice may be given separately, as part of the

contract during negotiations, or as part of any other notice the

seller delivers to the purchaser. If the notice is included as

part of the executory contract or another notice, the title of

the notice prescribed by this section, the references to the

street address and date in the notice, and the purchaser's

signature on the notice may be omitted.

(c) This section does not apply to a transfer:

(1) under a court order or foreclosure sale;

(2) by a trustee in bankruptcy;

(3) to a mortgagee by a mortgagor or successor in interest or to

a beneficiary of a deed of trust by a trustor or successor in

interest;

(4) by a mortgagee or a beneficiary under a deed of trust who

has acquired the land at a sale conducted under a power of sale

under a deed of trust or a sale under a court-ordered foreclosure

or has acquired the land by a deed in lieu of foreclosure;

(5) by a fiduciary in the course of the administration of a

decedent's estate, guardianship, conservatorship, or trust;

(6) from one co-owner to another co-owner of an undivided

interest in the real property;

(7) to a spouse or a person in the lineal line of consanguinity

of the seller;

(8) to or from a governmental entity;

(9) of only a mineral interest, leasehold interest, or security

interest; or

(10) of a real property interest in a condominium.

(d) If an executory contract is entered into without the seller

providing the notice required by this section, the purchaser may

terminate the contract for any reason within the earlier of:

(1) seven days after the date the purchaser receives the notice;

or

(2) the date the transfer occurs as provided by the executory

contract.

(e) The purchaser's right to terminate the executory contract

under Subsection (d) is the purchaser's exclusive remedy for the

seller's failure to provide the notice required by this section.

Added by Acts 1999, 76th Leg., ch. 1420, Sec. 1, eff. Jan. 1,

2000.

Sec. 5.013. SELLER'S DISCLOSURE OF LOCATION OF CONDITIONS UNDER

SURFACE OF UNIMPROVED REAL PROPERTY. (a) A seller of unimproved

real property to be used for residential purposes shall provide

to the purchaser of the property a written notice disclosing the

location of a transportation pipeline, including a pipeline for

the transportation of natural gas, natural gas liquids, synthetic

gas, liquefied petroleum gas, petroleum or a petroleum product,

or a hazardous substance.

(b) The notice must state the information to the best of the

seller's belief and knowledge as of the date the notice is

completed and signed by the seller. If the information required

to be disclosed is not known to the seller, the seller shall

indicate that fact in the notice.

(c) The notice must be delivered by the seller on or before the

effective date of an executory contract binding the purchaser to

purchase the property. If a contract is entered without the

seller providing the notice as required by this section, the

purchaser may terminate the contract for any reason not later

than the seventh day after the effective date of the contract.

(d) This section applies to any seller of unimproved real

property, including a seller who is the developer of the property

and who sells the property to others for resale.

(e) In this section, "hazardous substance" and "hazardous waste"

have the meanings assigned by Section 361.003, Health and Safety

Code.

(f) A seller is not required to give the notice if:

(1) the seller is obligated under an earnest money contract to

furnish a title insurance commitment to the buyer prior to

closing; and

(2) the buyer is entitled to terminate the contract if the

buyer's objections to title as permitted by the contract are not

cured by the seller prior to closing.

Added by Acts 1997, 75th Leg., ch. 1239, Sec. 1, eff. Sept. 1,

1997. Renumbered from Property Code Sec. 5.010 by Acts 2001, 77th

Leg., ch. 1420, Sec. 21.001(95), eff. Sept. 1, 2001.

Sec. 5.014. NOTICE OF OBLIGATIONS RELATED TO PUBLIC IMPROVEMENT

DISTRICT. (a) A seller of residential real property that is

located in a public improvement district established under

Subchapter A, Chapter 372, Local Government Code, or Chapter 382,

Local Government Code, and that consists of not more than one

dwelling unit located in this state shall give to the purchaser

of the property a written notice that reads substantially similar

to the following:

NOTICE OF OBLIGATION TO PAY PUBLIC IMPROVEMENT DISTRICT

ASSESSMENT TO (municipality or county levying assessment)

CONCERNING THE PROPERTY AT (street address)

As a purchaser of this parcel of real property you are obligated

to pay an assessment to a municipality or county for an

improvement project undertaken by a public improvement district

under Subchapter A, Chapter 372, Local Government Code, or

Chapter 382, Local Government Code. The assessment may be due

annually or in periodic installments. More information

concerning the amount of the assessment and the due dates of that

assessment may be obtained from the municipality or county

levying the assessment.

The amount of the assessments is subject to change. Your failure

to pay the assessments could result in a lien on and the

foreclosure of your property.

Date: __________________ ________________________________

Signature of Purchaser

(b) The seller shall deliver the notice required under

Subsection (a) to the purchaser before the effective date of an

executory contract binding the purchaser to purchase the

property. The notice may be given separately, as part of the

contract during negotiations, or as part of any other notice the

seller delivers to the purchaser. If the notice is included as

part of the executory contract or another notice, the title of

the notice prescribed by this section, the references to the

street address and date in the notice, and the purchaser's

signature on the notice may be omitted.

(c) This section does not apply to a transfer:

(1) under a court order or foreclosure sale;

(2) by a trustee in bankruptcy;

(3) to a mortgagee by a mortgagor or successor in interest or to

a beneficiary of a deed of trust by a trustor or successor in

interest;

(4) by a mortgagee or a beneficiary under a deed of trust who

has acquired the land at a sale conducted under a power of sale

under a deed of trust or a sale under a court-ordered foreclosure

or has acquired the land by a deed in lieu of foreclosure;

(5) by a fiduciary in the course of the administration of a

decedent's estate, guardianship, conservatorship, or trust;

(6) from one co-owner to another co-owner of an undivided

interest in the real property;

(7) to a spouse or a person in the lineal line of consanguinity

of the seller;

(8) to or from a governmental entity;

(9) of only a mineral interest, leasehold interest, or security

interest; or

(10) of a real property interest in a condominium.

(d) If an executory contract is entered into without the seller

providing the notice required by this section, the purchaser may

terminate the contract for any reason not later than the earlier

of:

(1) the seventh day after the date the purchaser receives the

notice; or

(2) the date the transfer occurs as provided by the executory

contract.

(e) The purchaser's right to terminate the executory contract

under Subsection (d) is the purchaser's exclusive remedy for the

seller's failure to provide the notice required by this section.

Added by Acts 2005, 79th Leg., Ch.

1085, Sec. 1, eff. January 1, 2006.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

87, Sec. 20.002, eff. September 1, 2009.

Sec. 5.015. PROHIBITED FEES. A person who has a right of first

refusal in real property that is a condominium subject to Chapter

81 or Chapter 82 may not charge a fee for declining to exercise

that right, such as a fee for providing written evidence of the

declination.

Added by Acts 2005, 79th Leg., Ch.

825, Sec. 14, eff. September 1, 2005.

Renumbered from Property Code, Section 5.014 by Acts 2007, 80th

Leg., R.S., Ch.

921, Sec. 17.001(63), eff. September 1, 2007.

Sec. 5.016. CONVEYANCE OF RESIDENTIAL PROPERTY ENCUMBERED BY

LIEN. (a) A person may not convey an interest in or enter into

a contract to convey an interest in residential real property

that will be encumbered by a recorded lien at the time the

interest is conveyed unless, on or before the seventh day before

the earlier of the effective date of the conveyance or the

execution of an executory contract binding the purchaser to

purchase the property, an option contract, or other contract, the

person provides the purchaser and each lienholder a separate

written disclosure statement in at least 12-point type that:

(1) identifies the property and includes the name, address, and

phone number of each lienholder;

(2) states the amount of the debt that is secured by each lien;

(3) specifies the terms of any contract or law under which the

debt that is secured by the lien was incurred, including, as

applicable:

(A) the rate of interest;

(B) the periodic installments required to be paid; and

(C) the account number;

(4) indicates whether the lienholder has consented to the

transfer of the property to the purchaser;

(5) specifies the details of any insurance policy relating to

the property, including:

(A) the name of the insurer and insured;

(B) the amount for which the property is insured; and

(C) the property that is insured;

(6) states the amount of any property taxes that are due on the

property; and

(7) includes a statement at the top of the disclosure in a form

substantially similar to the following:

WARNING: ONE OR MORE RECORDED LIENS HAVE BEEN FILED THAT MAKE A

CLAIM AGAINST THIS PROPERTY AS LISTED BELOW. IF A LIEN IS NOT

RELEASED AND THE PROPERTY IS CONVEYED WITHOUT THE CONSENT OF THE

LIENHOLDER, IT IS POSSIBLE THE LIENHOLDER COULD DEMAND FULL

PAYMENT OF THE OUTSTANDING BALANCE OF THE LIEN IMMEDIATELY. YOU

MAY WISH TO CONTACT EACH LIENHOLDER FOR FURTHER INFORMATION AND

DISCUSS THIS MATTER WITH AN ATTORNEY.

(b) A violation of this section does not invalidate a

conveyance. Except as provided by Subsections (c) and (d), if a

contract is entered into without the seller providing the notice

required by this section, the purchaser may terminate the

contract for any reason on or before the seventh day after the

date the purchaser receives the notice in addition to other

remedies provided by this section or other law.

(c) This section does not apply to a transfer:

(1) under a court order or foreclosure sale;

(2) by a trustee in bankruptcy;

(3) to a mortgagee by a mortgagor or successor in interest or to

a beneficiary of a deed of trust by a trustor or successor in

interest;

(4) by a mortgagee or a beneficiary under a deed of trust who

has acquired the real property at a sale conducted under a power

of sale under a deed of trust or a sale under a court-ordered

foreclosure or has acquired the real property by a deed in lieu

of foreclosure;

(5) by a fiduciary in the course of the administration of a

decedent's estate, guardianship, conservatorship, or trust;

(6) from one co-owner to one or more other co-owners;

(7) to a spouse or to a person or persons in the lineal line of

consanguinity of one or more of the transferors;

(8) between spouses resulting from a decree of dissolution of

marriage or a decree of legal separation or from a property

settlement agreement incidental to one of those decrees;

(9) to or from a governmental entity;

(10) where the purchaser obtains a title insurance policy

insuring the transfer of title to the real property; or

(11) to a person who has purchased, conveyed, or entered into

contracts to purchase or convey an interest in real property four

or more times in the preceding 12 months.

(d) A violation of this section is not actionable if the person

required to give notice reasonably believes and takes any

necessary action to ensure that each lien for which notice was

not provided will be released on or before the 30th day after the

date on which title to the property is transferred.

Added by Acts 2007, 80th Leg., R.S., Ch.

1056, Sec. 1, eff. January 1, 2008.

Sec. 5.017. FEE FOR FUTURE CONVEYANCE OF RESIDENTIAL REAL

PROPERTY AND RELATED LIEN PROHIBITED. (a) In this section,

"property owners' association" has the meaning assigned by

Section 209.002.

(b) A deed restriction or other covenant running with the land

applicable to the conveyance of residential real property that

requires a transferee of residential real property or the

transferee's heirs, successors, or assigns to pay a declarant or

other person imposing the deed restriction or covenant on the

property or a third party designated by a transferor of the

property a fee in connection with a future transfer of the

property is prohibited. A deed restriction or other covenant

running with the land that violates this section or a lien

purporting to encumber the land to secure a right under a deed

restriction or other covenant running with the land that violates

this section is void and unenforceable. For purposes of this

section, a conveyance of real property includes a conveyance or

other transfer of an interest or estate in residential real

property.

(c) This section does not apply to a deed restriction or other

covenant running with the land that requires a fee associated

with the conveyance of property in a subdivision that is payable

to:

(1) a property owners' association that manages or regulates the

subdivision or the association's managing agent if the

subdivision contains more than one platted lot;

(2) an entity organized under Section 501(c)(3), Internal

Revenue Code of 1986; or

(3) a governmental entity.

Added by Acts 2007, 80th Leg., R.S., Ch.

1056, Sec. 1, eff. January 1, 2008.

Sec. 5.018. DISCLOSURE OF ABSENCE OF CERTAIN WARRANTIES. (a) A

seller of residential real property that is exempt from Title 16

under Section 401.005 shall give to the purchaser of the property

a written notice that reads substantially similar to the

following:

NOTICE OF NONAPPLICABILITY OF CERTAIN WARRANTIES

AND BUILDING AND PERFORMANCE STANDARDS

The property that is subject to this contract is exempt from

Title 16, Property Code, including the provisions of that title

that provide statutory warranties and building and performance

standards.

(b) A notice required by this section shall be delivered by the

seller to the purchaser on or before the effective date of an

executory contract binding the purchaser to purchase the

property. If a contract is entered into without the seller

providing the notice, the purchaser may terminate the contract

for any reason on or before the seventh day after the date the

purchaser receives the notice.

(c) This section does not apply to a transfer:

(1) under a court order or foreclosure sale;

(2) by a trustee in bankruptcy;

(3) to a mortgagee by a mortgagor or successor in interest or to

a beneficiary of a deed of trust by a trustor or successor in

interest;

(4) by a mortgagee or a beneficiary under a deed of trust who

has acquired the land at a sale conducted under a power of sale

under a deed of trust or a sale under a court-ordered foreclosure

or has acquired the land by a deed in lieu of foreclosure;

(5) by a fiduciary in the course of the administration of a

decedent's estate, guardianship, conservatorship, or trust;

(6) from one co-owner to another co-owner of an undivided

interest in the real property;

(7) to a spouse or a person in the lineal line of consanguinity

of the seller;

(8) to or from a governmental entity; or

(9) of only a mineral interest, leasehold interest, or security

interest.

Added by Acts 2007, 80th Leg., R.S., Ch.

843, Sec. 1, eff. September 1, 2007.

Renumbered from Property Code, Section 5.016 by Acts 2009, 81st

Leg., R.S., Ch.

87, Sec. 27.001(76), eff. September 1, 2009.

SUBCHAPTER B. FORM AND CONSTRUCTION OF INSTRUMENTS

Sec. 5.021. INSTRUMENT OF CONVEYANCE. A conveyance of an estate

of inheritance, a freehold, or an estate for more than one year,

in land and tenements, must be in writing and must be subscribed

and delivered by the conveyor or by the conveyor's agent

authorized in writing.

Acts 1983, 68th Leg., p. 3481, ch. 576, Sec. 1, eff. Jan. 1,

1984.

Sec. 5.022. FORM. (a) The following form or a form that is the

same in substance conveys a fee simple estate in real property

with a covenant of general warranty:

"The State of Texas,

"County of ____________________.

"Know all men by these presents, That I, __________________, of

the __________________ (give name of city, town, or county), in

the state aforesaid, for and in consideration of

__________________ dollars, to me in hand paid by

__________________, have granted, sold, and conveyed, and by

these presents do grant, sell, and convey unto the said

__________________, of the __________________ (give name of city,

town, or county), in the state of __________________, all that

certain __________________ (describe the premises). To have and

to hold the above described premises, together with all and

singular the rights and appurtenances thereto in any wise

belonging, unto the said __________________, his heirs or assigns

forever. And I do hereby bind myself, my heirs, executors, and

administrators to warrant and forever defend all and singular the

said premises unto the said __________________, his heirs, and

assigns, against every person whomsoever, lawfully claiming or to

claim the same, or any part thereof.

"Witness my hand, this __________________ day of

__________________, A.D. 19___.

"Signed and delivered in the presence of ____________________"

(b) A covenant of warranty is not required in a conveyance.

(c) The parties to a conveyance may insert any clause or use any

form not in contravention of law.

Acts 1983, 68th Leg., p. 3481, ch. 576, Sec. 1, eff. Jan. 1,

1984.

Sec. 5.023. IMPLIED COVENANTS. (a) Unless the conveyance

expressly provides otherwise, the use of "grant" or "convey" in a

conveyance of an estate of inheritance or fee simple implies only

that the grantor and the grantor's heirs covenant to the grantee

and the grantee's heirs or assigns:

(1) that prior to the execution of the conveyance the grantor

has not conveyed the estate or any interest in the estate to a

person other than the grantee; and

(2) that at the time of the execution of the conveyance the

estate is free from encumbrances.

(b) An implied covenant under this section may be the basis for

a lawsuit as if it had been expressed in the conveyance.

Acts 1983, 68th Leg., p. 3482, ch. 576, Sec. 1, eff. Jan. 1,

1984.

Sec. 5.024. ENCUMBRANCES. "Encumbrance" includes a tax, an

assessment, and a lien on real property.

Acts 1983, 68th Leg., p. 3482, ch. 576, Sec. 1, eff. Jan. 1,

1984.

Sec. 5.025. WOOD SHINGLE ROOF. To the extent that a deed

restriction applicable to a structure on residential property

requires the use of a wood shingle roof, the restriction is void.

Acts 1983, 68th Leg., p. 3482, ch. 576, Sec. 1, eff. Jan. 1,

1984.

Sec. 5.026. DISCRIMINATORY PROVISIONS. (a) If a restriction

that affects real property, or a provision in a deed that conveys

real property or an interest in real property, whether express or

incorporated by reference, prohibits the use by or the sale,

lease, or transfer to a person because of race, color, religion,

or national origin, the provision or restriction is void.

(b) A court shall dismiss a suit or part of a suit to enforce a

provision that is void under this section.

Acts 1983, 68th Leg., p. 3483, ch. 576, Sec. 1, eff. Jan. 1,

1984.

SUBCHAPTER C. FUTURE ESTATES

Sec. 5.041. FUTURE ESTATES. A person may make an inter vivos

conveyance of an estate of freehold or inheritance that commences

in the future, in the same manner as by a will.

Acts 1983, 68th Leg., p. 3483, ch. 576, Sec. 1, eff. Jan. 1,

1984.

Sec. 5.042. ABOLITION OF COMMON-LAW RULES. (a) The common-law

rules known as the rule in Shelley's case, the rule forbidding a

remainder to the grantor's heirs, the doctrine of worthier title,

and the doctrine or rule prohibiting an existing lien upon part

of a homestead from extending to another part of the homestead

not charged with the debts secured by the existing lien upon part

of the homestead do not apply in this state.

(b) A deed, will, or other conveyance of property in this state

that limits an interest in the property to a particular person or

to a class such as the heirs, heirs of the body, issue, or next

of kin of the conveyor or of a person to whom a particular

interest in the same property is limited is effective according

to the intent of the conveyor.

(c) Status as an heir or next of kin of a conveyor or the

failure of a conveyor to describe a person in a conveyance other

than as a member of a class does not affect a person's right to

take or share in an interest as a conveyee.

(d) Subject to the intention of a conveyor, which controls

unless limited by law, the membership of a class described in

this section and the participation of a member in a property

interest conveyed to the class are determined under this state's

laws of descent and distribution.

(e) This section does not apply to a conveyance taking effect

before January 1, 1964.

Acts 1983, 68th Leg., p. 3483, ch. 576, Sec. 1, eff. Jan. 1,

1984. Amended by Acts 1999, 76th Leg., ch. 1510, Sec. 5, eff.

Sept. 1, 1999.

Sec. 5.043. REFORMATION OF INTERESTS VIOLATING RULE AGAINST

PERPETUITIES. (a) Within the limits of the rule against

perpetuities, a court shall reform or construe an interest in

real or personal property that violates the rule to effect the

ascertainable general intent of the creator of the interest. A

court shall liberally construe and apply this provision to

validate an interest to the fullest extent consistent with the

creator's intent.

(b) The court may reform or construe an interest under

Subsection (a) of this section according to the doctrine of cy

pres by giving effect to the general intent and specific

directives of the creator within the limits of the rule against

perpetuities.

(c) If an instrument that violates the rule against perpetuities

may be reformed or construed under this section, a court shall

enforce the provisions of the instrument that do not violate the

rule and shall reform or construe under this section a provision

that violates or might violate the rule.

(d) This section applies to legal and equitable interests,

including noncharitable gifts and trusts, conveyed by an inter

vivos instrument or a will that takes effect on or after

September 1, 1969, and this section applies to an appointment

made on or after that date regardless of when the power was

created.

Acts 1983, 68th Leg., p. 3484, ch. 576, Sec. 1, eff. Jan. 1,

1984. Amended by Acts 1991, 72nd Leg., ch. 895, Sec. 16, eff.

Sept. 1, 1991.

SUBCHAPTER D. EXECUTORY CONTRACT FOR CONVEYANCE

Sec. 5.061. DEFINITION. In this subchapter, "default" means the

failure to:

(1) make a timely payment; or

(2) comply with a term of an executory contract.

Added by Acts 1995, 74th Leg., ch. 994, Sec. 2, eff. Sept. 1,

1995. Renumbered from Property Code Sec. 5.065 and amended by Act

2001, 77th Leg., ch. 693, Sec. 1, Sept. 1, 2001.

Sec. 5.062. APPLICABILITY. (a) This subchapter applies only to

a transaction involving an executory contract for conveyance of

real property used or to be used as the purchaser's residence or

as the residence of a person related to the purchaser within the

second degree by consanguinity or affinity, as determined under

Chapter 573, Government Code. For purposes of this subchapter,

and only for the purposes of this subchapter:

(1) a lot measuring one acre or less is presumed to be

residential property; and

(2) an option to purchase real property that includes or is

combined or executed concurrently with a residential lease

agreement, together with the lease, is considered an executory

contract for conveyance of real property.

(b) This subchapter does not apply to the following transactions

under an executory contract:

(1) the sale of state land; or

(2) a sale of land by:

(A) the Veterans' Land Board;

(B) this state or a political subdivision of this state; or

(C) an instrumentality, public corporation, or other entity

created to act on behalf of this state or a political subdivision

of this state, including an entity created under Chapter 303,

392, or 394, Local Government Code.

(c) This subchapter does not apply to an executory contract that

provides for the delivery of a deed from the seller to the

purchaser within 180 days of the date of the final execution of

the executory contract.

(d) Section 5.066 and Sections 5.068-5.080 do not apply to a

transaction involving an executory contract for conveyance if the

purchaser of the property:

(1) is related to the seller of the property within the second

degree by consanguinity or affinity, as determined under Chapter

573, Government Code; and

(2) has waived the applicability of those sections in a written

agreement.

(e) Sections 5.066, 5.067, 5.071, 5.075, 5.081, and 5.082 do not

apply to an executory contract described by Subsection (a)(2).

(f) Notwithstanding any other provision of this subchapter, only

the following sections apply to an executory contract described

by Subsection (a)(2) if the term of the contract is three years

or less and the purchaser and seller, or the purchaser's or

seller's assignee, agent, or affiliate, have not been parties to

an executory contract to purchase the property covered by the

executory contract for longer than three years:

(1) Sections 5.063-5.065;

(2) Section 5.073, except for Section 5.073(a)(2); and

(3) Sections 5.083 and 5.085.

(g) Except as provided by Subsection (b), if Subsection (f)

conflicts with another provision of this subchapter, Subsection

(f) prevails.

Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1,

1995. Renumbered from Property Code Sec. 5.091 and amended by

Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.

Amended by:

Acts 2005, 79th Leg., Ch.

978, Sec. 2, eff. September 1, 2005.

Sec. 5.0621. CONSTRUCTION WITH OTHER LAW. (a) Except as

provided by Subsection (b), the provisions of this subchapter and

Chapter 92 apply to the portion of an executory contract

described by Section 5.062(a)(2) that is a residential lease

agreement.

(b) After a tenant exercises an option to purchase leased

property under a residential lease described by Subsection (a),

Chapter 92 no longer applies to the lease.

Added by Acts 2005, 79th Leg., Ch.

978, Sec. 3, eff. September 1, 2005.

Sec. 5.063. NOTICE. (a) Notice under Section 5.064 must be in

writing and must be delivered by registered or certified mail,

return receipt requested. The notice must be conspicuous and

printed in 14-point boldface type or 14-point uppercase

typewritten letters, and must include on a separate page the

statement:

NOTICE

YOU ARE NOT COMPLYING WITH THE TERMS OF THE CONTRACT TO BUY YOUR

PROPERTY. UNLESS YOU TAKE THE ACTION SPECIFIED IN THIS NOTICE BY

(date) THE SELLER HAS THE RIGHT TO TAKE POSSESSION OF YOUR

PROPERTY.

(b) The notice must also:

(1) identify and explain the remedy the seller intends to

enforce;

(2) if the purchaser has failed to make a timely payment,

specify:

(A) the delinquent amount, itemized into principal and interest;

(B) any additional charges claimed, such as late charges or

attorney's fees; and

(C) the period to which the delinquency and additional charges

relate; and

(3) if the purchaser has failed to comply with a term of the

contract, identify the term violated and the action required to

cure the violation.

(c) Notice by mail is given when it is mailed to the purchaser's

residence or place of business. The affidavit of a person

knowledgeable of the facts to the effect that notice was given is

prima facie evidence of notice in an action involving a

subsequent bona fide purchaser for value if the purchaser is not

in possession of the real property and if the stated time to

avoid the forfeiture has expired. A bona fide subsequent

purchaser for value who relies upon the affidavit under this

subsection shall take title free and clear of the contract.

Acts 1983, 68th Leg., p. 3485, ch. 576, Sec. 1, eff. Jan. 1,

1984. Amended by Acts 1993, 73rd Leg., ch. 444, Sec. 1, eff.

Sept. 1, 1993; Acts 1995, 74th Leg., ch. 994, Sec. 2, eff. Sept.

1, 1995. Renumbered from Property Code Sec. 5.062 and amended by

Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.

Sec. 5.064. SELLER'S REMEDIES ON DEFAULT. A seller may enforce

the remedy of rescission or of forfeiture and acceleration

against a purchaser in default under an executory contract for

conveyance of real property only if:

(1) the seller notifies the purchaser of:

(A) the seller's intent to enforce a remedy under this section;

and

(B) the purchaser's right to cure the default within the 30-day

period described by Section 5.065;

(2) the purchaser fails to cure the default within the 30-day

period described by Section 5.065; and

(3) Section 5.066 does not apply.

Acts 1983, 68th Leg., p. 3484, ch. 576, Sec. 1, eff. Jan. 1,

1984. Amended by Acts 1995, 74th Leg., ch. 994, Sec. 2, eff.

Sept. 1, 1995. Renumbered from Property Code Sec. 5.061 and

amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1,

2001. Amended by Acts 2003, 78th Leg., ch. 959, Sec. 1, eff.

Sept. 1, 2003.

Sec. 5.065. RIGHT TO CURE DEFAULT. Notwithstanding an agreement

to the contrary, a purchaser in default under an executory

contract for the conveyance of real property may avoid the

enforcement of a remedy described by Section 5.064 by complying

with the terms of the contract on or before the 30th day after

the date notice is given under that section.

Acts 1983, 68th Leg., p. 3485, ch. 576, Sec. 1, eff. Jan. 1,

1984. Amended by Acts 1995, 74th Leg., ch. 994, Sec. 2, eff.

Sept. 1, 1995. Renumbered from Property Code Sec. 5.063 and

amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1,

2001. Amended by Acts 2003, 78th Leg., ch. 959, Sec. 2, eff.

Sept. 1, 2003.

Sec. 5.066. EQUITY PROTECTION; SALE OF PROPERTY. (a) If a

purchaser defaults after the purchaser has paid 40 percent or

more of the amount due or the equivalent of 48 monthly payments

under the executory contract, the seller is granted the power to

sell, through a trustee designated by the seller, the purchaser's

interest in the property as provided by this section. The seller

may not enforce the remedy of rescission or of forfeiture and

acceleration.

(b) The seller shall notify a purchaser of a default under the

contract and allow the purchaser at least 60 days after the date

notice is given to cure the default. The notice must be provided

as prescribed by Section 5.063 except that the notice must

substitute the following statement:

NOTICE

YOU ARE NOT COMPLYING WITH THE TERMS OF THE CONTRACT TO BUY YOUR

PROPERTY. UNLESS YOU TAKE THE ACTION SPECIFIED IN THIS NOTICE BY

(date) A TRUSTEE DESIGNATED BY THE SELLER HAS THE RIGHT TO SELL

YOUR PROPERTY AT A PUBLIC AUCTION.

(c) The trustee or a substitute trustee designated by the seller

must post, file, and serve a notice of sale and the county clerk

shall record and maintain the notice of sale as prescribed by

Section 51.002. A notice of sale is not valid unless it is given

after the period to cure has expired.

(d) The trustee or a substitute trustee designated by the seller

must conduct the sale as prescribed by Section 51.002. The seller

must:

(1) convey to a purchaser at a sale conducted under this section

fee simple title to the real property; and

(2) warrant that the property is free from any encumbrance.

(e) The remaining balance of the amount due under the executory

contract is the debt for purposes of a sale under this section.

If the proceeds of the sale exceed the debt amount, the seller

shall disburse the excess funds to the purchaser under the

executory contract. If the proceeds of the sale are insufficient

to extinguish the debt amount, the seller's right to recover the

resulting deficiency is subject to Sections 51.003, 51.004, and

51.005 unless a provision of the executory contract releases the

purchaser under the contract from liability.

(f) The affidavit of a person knowledgeable of the facts that

states that the notice was given and the sale was conducted as

provided by this section is prima facie evidence of those facts.

A purchaser for value who relies on an affidavit under this

subsection acquires title to the property free and clear of the

executory contract.

(g) If a purchaser defaults before the purchaser has paid 40

percent of the amount due or the equivalent of 48 monthly

payments under the executory contract, the seller may enforce the

remedy of rescission or of forfeiture and acceleration of the

indebtedness if the seller complies with the notice requirements

of Sections 5.063 and 5.064.

Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1,

1995. Renumbered from Property Code Sec. 5.101 and amended by

Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.

Sec. 5.067. PLACEMENT OF LIEN FOR UTILITY SERVICE.

Notwithstanding any terms of a contract to the contrary, the

placement of a lien for the reasonable value of improvements to

residential real estate for purposes of providing utility service

to the property shall not constitute a default under the terms of

an executory contract for the purchase of the real property.

Added by Acts 1991, 72nd Leg., ch. 743, Sec. 1, eff. Sept. 1,

1991. Amended by Acts 1995, 74th Leg., ch. 994, Sec. 2, eff.

Sept. 1, 1995. Renumbered from Property Code Sec. 5.064 and

amended by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1,

2001.

Sec. 5.068. FOREIGN LANGUAGE REQUIREMENT. If the negotiations

that precede the execution of an executory contract are conducted

primarily in a language other than English, the seller shall

provide a copy in that language of all written documents relating

to the transaction, including the contract, disclosure notices,

annual accounting statements, and a notice of default required by

this subchapter.

Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1,

1995. Renumbered from Property Code Sec. 5.093 and amended by

Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.

Sec. 5.069. SELLER'S DISCLOSURE OF PROPERTY CONDITION. (a)

Before an executory contract is signed by the purchaser, the

seller shall provide the purchaser with:

(1) a survey, which was completed within the past year, or plat

of a current survey of the real property;

(2) a legible copy of any document that describes an encumbrance

or other claim, including a restrictive covenant or easement,

that affects title to the real property; and

(3) a written notice, which must be attached to the contract,

informing the purchaser of the condition of the property that

must, at a minimum, be executed by the seller and purchaser and

read substantially similar to the following:

WARNING

IF ANY OF THE ITEMS BELOW HAVE NOT BEEN CHECKED, YOU MAY NOT BE

ABLE TO LIVE ON THE PROPERTY.

SELLER'S DISCLOSURE NOTICE

CONCERNING THE PROPERTY AT (street address or legal description

and city)

THIS DOCUMENT STATES CERTAIN APPLICABLE FACTS ABOUT THE PROPERTY

YOU ARE CONSIDERING PURCHASING.

CHECK ALL THE ITEMS THAT ARE APPLICABLE OR TRUE:

_____ The property is in a recorded subdivision.

_____ The property has water service that provides potable

water.

_____ The property has sewer service.

_____ The property has been approved by the appropriate

municipal, county, or state agency for installation of a septic

system.

_____ The property has electric service.

_____ The property is not in a floodplain.

_____ The roads to the boundaries of the property are paved and

maintained by:

_____ the seller;

_____ the owner of the property on which the road exists;

_____ the municipality;

_____ the county; or

_____ the state.

_____ No individual or entity other than the seller:

(1) owns the property;

(2) has a claim of ownership to the property; or

(3) has an interest in the property.

_____ No individual or entity has a lien filed against the

property.

_____ There are no restrictive covenants, easements, or other

title exceptions or encumbrances that prohibit construction of a

house on the property.

NOTICE: SELLER ADVISES PURCHASER TO:

(1) OBTAIN A TITLE ABSTRACT OR TITLE COMMITMENT COVERING

THE PROPERTY AND HAVE THE ABSTRACT OR COMMITMENT REVIEWED

BY AN ATTORNEY BEFORE SIGNING A CONTRACT OF THIS TYPE; AND

(2) PURCHASE AN OWNER'S POLICY OF TITLE INSURANCE

COVERING THE PROPERTY.

_____________________________

______________________________

(Date)

(Signature of Seller)

_____________________________

______________________________

(Date)

(Signature of Purchaser)

(b) If the property is not located in a recorded subdivision,

the seller shall provide the purchaser with a separate disclosure

form stating that utilities may not be available to the property

until the subdivision is recorded as required by law.

(c) If the seller advertises property for sale under an

executory contract, the advertisement must disclose information

regarding the availability of water, sewer, and electric service.

(d) The seller's failure to provide information required by this

section:

(1) is a false, misleading, or deceptive act or practice within

the meaning of Section 17.46, Business & Commerce Code, and

is actionable in a public or private suit brought under

Subchapter E, Chapter 17, Business & Commerce Code; and

(2) entitles the purchaser to cancel and rescind the executory

contract and receive a full refund of all payments made to the

seller.

(e) Subsection (d) does not limit the purchaser's remedy against

the seller for other false, misleading, or deceptive acts or

practices actionable in a suit brought under Subchapter E,

Chapter 17, Business & Commerce Code.

Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1,

1995. Renumbered from Property Code Sec. 5.094 and amended by

Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.

Sec. 5.070. SELLER'S DISCLOSURE OF TAX PAYMENTS AND INSURANCE

COVERAGE. (a) Before an executory contract is signed by the

purchaser, the seller shall provide the purchaser with:

(1) a tax certificate from the collector for each taxing unit

that collects taxes due on the property as provided by Section

31.08, Tax Code; and

(2) a legible copy of any insurance policy, binder, or other

evidence relating to the property that indicates:

(A) the name of the insurer and the insured;

(B) a description of the property insured; and

(C) the amount for which the property is insured.

(b) The seller's failure to provide information required by this

section:

(1) is a false, misleading, or deceptive act or practice within

the meaning of Section 17.46, Business & Commerce Code, and

is actionable in a public or private suit brought under

Subchapter E, Chapter 17, Business & Commerce Code; and

(2) entitles the purchaser to cancel and rescind the executory

contract and receive a full refund of all payments made to the

seller.

(c) Subsection (b) does not limit the purchaser's remedy against

the seller for other false, misleading, or deceptive acts or

practices actionable in a suit brought under Subchapter E,

Chapter 17, Business & Commerce Code.

Added by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1,

2001.

Sec. 5.071. SELLER'S DISCLOSURE OF FINANCING TERMS. Before an

executory contract is signed by the purchaser, the seller shall

provide to the purchaser a written statement that specifies:

(1) the purchase price of the property;

(2) the interest rate charged under the contract;

(3) the dollar amount, or an estimate of the dollar amount if

the interest rate is variable, of the interest charged for the

term of the contract;

(4) the total amount of principal and interest to be paid under

the contract;

(5) the late charge, if any, that may be assessed under the

contract; and

(6) the fact that the seller may not charge a prepayment penalty

or any similar fee if the purchaser elects to pay the entire

amount due under the contract before the scheduled payment date

under the contract.

Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1,

1995. Renumbered from Property Code Sec. 5.095 and amended by

Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.

Sec. 5.072. ORAL AGREEMENTS PROHIBITED. (a) An executory

contract is not enforceable unless the contract is in writing and

signed by the party to be bound or by that party's authorized

representative.

(b) The rights and obligations of the parties to a contract are

determined solely from the written contract, and any prior oral

agreements between the parties are superseded by and merged into

the contract.

(c) An executory contract may not be varied by any oral

agreements or discussions that occur before or contemporaneously

with the execution of the contract.

(d) The seller shall include in a separate document or in a

provision of the contract a statement printed in 14-point

boldfaced type or 14-point uppercase typewritten letters that

reads substantially similar to the following:

THIS EXECUTORY CONTRACT REPRESENTS THE FINAL AGREEMENT BETWEEN

THE SELLER AND PURCHASER AND MAY NOT BE CONTRADICTED BY EVIDENCE

OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE

PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE

PARTIES.

____________________________

____________________________

(Date)

(Date)

____________________________

____________________________

(Date)

(Date)

(e) The seller's failure to provide the notice required by this

section:

(1) is a false, misleading, or deceptive act or practice within

the meaning of Section 17.46, Business & Commerce Code, and

is actionable in a public or private suit brought under

Subchapter E, Chapter 17, Business & Commerce Code; and

(2) entitles the purchaser to cancel and rescind the executory

contract and receive a full refund of all payments made to the

seller.

(f) Subsection (e) does not limit the purchaser's remedy against

the seller for other false, misleading, or deceptive acts or

practices actionable in a suit brought under Subchapter E,

Chapter 17, Business & Commerce Code.

Added by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1,

2001.

Sec. 5.073. CONTRACT TERMS, CERTAIN WAIVERS PROHIBITED. (a) A

seller may not include as a term of the executory contract a

provision that:

(1) imposes an additional late-payment fee that exceeds the

lesser of:

(A) eight percent of the monthly payment under the contract; or

(B) the actual administrative cost of processing the late

payment;

(2) prohibits the purchaser from pledging the purchaser's

interest in the property as security to obtain a loan to place

improvements, including utility improvements or fire protection

improvements, on the property;

(3) imposes a prepayment penalty or any similar fee if the

purchaser elects to pay the entire amount due under the contract

before the scheduled payment date under the contract;

(4) forfeits an option fee or other option payment paid under

the contract for a late payment; or

(5) increases the purchase price, imposes a fee or charge of any

type, or otherwise penalizes a purchaser leasing property with an

option to buy the property for requesting repairs or exercising

any other right under Chapter 92.

(b) A provision of the executory contract that purports to waive

a right or exempt a party from a liability or duty under this

subchapter is void.

Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1,

1995. Renumbered from Property Code Sec. 5.096 and amended by

Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.

Amended by:

Acts 2005, 79th Leg., Ch.

978, Sec. 4, eff. September 1, 2005.

Sec. 5.074. PURCHASER'S RIGHT TO CANCEL CONTRACT WITHOUT CAUSE.

(a) In addition to other rights or remedies provided by law, the

purchaser may cancel and rescind an executory contract for any

reason by sending by telegram or certified or registered mail,

return receipt requested, or by delivering in person a signed,

written notice of cancellation to the seller not later than the

14th day after the date of the contract.

(b) If the purchaser cancels the contract as provided by

Subsection (a), the seller shall, not later than the 10th day

after the date the seller receives the purchaser's notice of

cancellation:

(1) return to the purchaser the executed contract and any

property exchanged or payments made by the purchaser under the

contract; and

(2) cancel any security interest arising out of the contract.

(c) The seller shall include in immediate proximity to the space

reserved in the executory contract for the purchaser's signature

a statement printed in 14-point boldface type or 14-point

uppercase typewritten letters that reads substantially similar to

the following:

YOU, THE PURCHASER, MAY CANCEL THIS CONTRACT AT ANY TIME DURING

THE NEXT TWO WEEKS. THE DEADLINE FOR CANCELING THE CONTRACT IS

(date). THE ATTACHED NOTICE OF CANCELLATION EXPLAINS THIS RIGHT.

(d) The seller shall provide a notice of cancellation form to

the purchaser at the time the purchaser signs the executory

contract that is printed in 14-point boldface type or 14-point

uppercase typewritten letters and that reads substantially

similar to the following:

(date of contract)

NOTICE OF CANCELLATION

YOU MAY CANCEL THE EXECUTORY CONTRACT FOR ANY REASON WITHOUT ANY

PENALTY OR OBLIGATION BY (date).

(1) YOU MUST SEND BY TELEGRAM OR CERTIFIED OR REGISTERED MAIL,

RETURN RECEIPT REQUESTED, OR DELIVER IN PERSON A SIGNED AND DATED

COPY OF THIS CANCELLATION NOTICE OR ANY OTHER WRITTEN NOTICE TO

(Name of Seller) AT (Seller's Address) BY (date).

(2) THE SELLER SHALL, NOT LATER THAN THE 10TH DAY AFTER THE DATE

THE SELLER RECEIVES YOUR CANCELLATION NOTICE:

(A) RETURN THE EXECUTED CONTRACT AND ANY PROPERTY EXCHANGED OR

PAYMENTS MADE BY YOU UNDER THE CONTRACT; AND

(B) CANCEL ANY SECURITY INTEREST ARISING OUT OF THE CONTRACT.

I ACKNOWLEDGE RECEIPT OF THIS NOTICE OF CANCELLATION FORM.

_________________________

_________________________

(Date) (Purchaser's Signature)

I HEREBY CANCEL THIS CONTRACT.

_________________________

_________________________

(Date) (Purchaser's Signature)

(e) The seller may not request the purchaser to sign a waiver of

receipt of the notice of cancellation form required by this

section.

Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1,

1995. Renumbered from Property Code Sec. 5.097 by Acts 2001, 77th

Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.

Sec. 5.075. PURCHASER'S RIGHT TO PLEDGE INTEREST IN PROPERTY ON

CONTRACTS ENTERED INTO BEFORE SEPTEMBER 1, 2001. (a) On an

executory contract entered into before September 1, 2001 , a

purchaser may pledge the interest in the property, which accrues

pursuant to Section 5.066, only to obtain a loan for improving

the safety of the property or any improvements on the property.

(b) Loans that improve the safety of the property and

improvements on the property include loans for:

(1) improving or connecting a residence to water service;

(2) improving or connecting a residence to a wastewater system;

(3) building or improving a septic system;

(4) structural improvements in the residence; and

(5) improved fire protection.

Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1,

1995. Renumbered from Property Code Sec. 5.098 and amended by

Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.

Sec. 5.076. RECORDING REQUIREMENTS. (a) Except as provided by

Subsection (b), the seller shall record the executory contract,

including the attached disclosure statement required by Section

5.069, as prescribed by Title 3 on or before the 30th day after

the date the contract is executed.

(b) Section 12.002(c) does not apply to an executory contract

filed for record under this section.

(c) If the executory contract is terminated for any reason, the

seller shall record the instrument that terminates the contract.

(d) The county clerk shall collect the filing fee prescribed by

Section 118.011, Local Government Code.

Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1,

1995. Renumbered from Property Code Sec. 5.099 and amended Acts

2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.

Sec. 5.077. ANNUAL ACCOUNTING STATEMENT. (a) The seller shall

provide the purchaser with an annual statement in January of each

year for the term of the executory contract. If the seller mails

the statement to the purchaser, the statement must be postmarked

not later than January 31.

(b) The statement must include the following information:

(1) the amount paid under the contract;

(2) the remaining amount owed under the contract;

(3) the number of payments remaining under the contract;

(4) the amounts paid to taxing authorities on the purchaser's

behalf if collected by the seller;

(5) the amounts paid to insure the property on the purchaser's

behalf if collected by the seller;

(6) if the property has been damaged and the seller has received

insurance proceeds, an accounting of the proceeds applied to the

property; and

(7) if the seller has changed insurance coverage, a legible copy

of the current policy, binder, or other evidence that satisfies

the requirements of Section 5.070(a)(2).

(c) A seller who conducts less than two transactions in a

12-month period under this section who fails to comply with

Subsection (a) is liable to the purchaser for:

(1) liquidated damages in the amount of $100 for each annual

statement the seller fails to provide to the purchaser within the

time required by Subsection (a); and

(2) reasonable attorney's fees.

(d) A seller who conducts two or more transactions in a 12-month

period under this section who fails to comply with Subsection (a)

is liable to the purchaser for:

(1) liquidated damages in the amount of $250 a day for each day

after January 31 that the seller fails to provide the purchaser

with the statement, but not to exceed the fair market value of

the property; and

(2) reasonable attorney's fees.

Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1,

1995. Renumbered from Property Code Sec. 5.100 and amended by

Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.

Amended by:

Acts 2005, 79th Leg., Ch.

978, Sec. 5, eff. September 1, 2005.

Sec. 5.078. DISPOSITION OF INSURANCE PROCEEDS. (a) The named

insured under an insurance policy, binder, or other coverage

relating to property subject to an executory contract for the

conveyance of real property shall inform the insurer, not later

than the 10th day after the date the coverage is obtained or the

contract executed, whichever is later, of:

(1) the executory contract for conveyance and the term of the

contract; and

(2) the name and address of the other party to the contract.

(b) An insurer who disburses proceeds under an insurance policy,

binder, or other coverage relating to property that has been

damaged shall issue the proceeds jointly to the purchaser and the

seller designated in the contract.

(c) If proceeds under an insurance policy, binder, or other

coverage are disbursed, the purchaser and seller shall ensure

that the proceeds are used to repair, remedy, or improve the

condition on the property.

(d) The failure of a seller or purchaser to comply with

Subsection (c) is a false, misleading, or deceptive act or

practice within the meaning of Section 17.46, Business &

Commerce Code, and is actionable in a public or private suit

brought under Subchapter E, Chapter 17, Business & Commerce

Code.

(e) Subsection (d) does not limit either party's remedy for

other false, misleading, or deceptive acts or practices

actionable in a suit brought under Subchapter E, Chapter 17,

Business & Commerce Code.

Added by Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1,

2001.

Sec. 5.079. TITLE TRANSFER. (a) The seller shall transfer

recorded, legal title of the property covered by the executory

contract to the purchaser not later than the 30th day after the

date the seller receives the purchaser's final payment due under

the contract.

(b) A seller who violates Subsection (a) is liable to the

purchaser for:

(1) liquidated damages in the amount of:

(A) $250 a day for each day the seller fails to transfer the

title to the purchaser during the period that begins the 31st day

and ends the 90th day after the date the seller receives the

purchaser's final payment due under the contract; and

(B) $500 a day for each day the seller fails to transfer title

to the purchaser after the 90th day after the date the seller

receives the purchaser's final payment due under the contract;

and

(2) reasonable attorney's fees.

(c) If a person to whom a seller's property interest passes by

will or intestate succession is required to obtain a court order

to clarify the person's status as an heir or to clarify the

status of the seller or the property before the person may convey

good and indefeasible title to the property, the court in which

the action is pending may waive payment of the liquidated damages

and attorney's fees under Subsection (b) if the court finds that

the person is pursuing the action to establish good and

indefeasible title with reasonable diligence.

(d) In this section, "seller" includes a successor, assignee,

personal representative, executor, or administrator of the

seller.

Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1,

1995. Renumbered from Property Code Sec. 5.102 and amended by

Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.

Sec. 5.080. LIABILITY FOR DISCLOSURES. For purposes of this

subchapter, a disclosure required by this subchapter that is made

by a seller's agent is a disclosure made by the seller.

Added by Acts 1995, 74th Leg., ch. 994, Sec. 3, eff. Sept. 1,

1995. Renumbered from Property Code Sec. 5.103 and amended by

Acts 2001, 77th Leg., ch. 693, Sec. 1, eff. Sept. 1, 2001.

Sec. 5.081. RIGHT TO CONVERT CONTRACT. (a) A purchaser, at any

time and without paying penalties or charges of any kind, is

entitled to convert the purchaser's interest in property under an

executory contract into recorded, legal title in accordance with

this section.

(b) If the purchaser tenders to the seller an amount of money

equal to the balance of the total amount owed by the purchaser to

the seller under the executory contract, the seller shall

transfer to the purchaser recorded, legal title of the property

covered by the contract.

(c) Subject to Subsection (d), if the purchaser delivers to the

seller of property covered by an executory contract a promissory

note that is equal in amount to the balance of the total amount

owed by the purchaser to the seller under the contract and that

contains the same interest rate, due dates, and late fees as the

contract:

(1) the seller shall execute a deed containing any warranties

required by the contract and conveying to the purchaser recorded,

legal title of the property; and

(2) the purchaser shall simultaneously execute a deed of trust

that:

(A) contains the same terms as the contract regarding the

purchaser's and seller's duties concerning the property;

(B) secures the purchaser's payment and performance under the

promissory note and deed of trust; and

(C) conveys the property to the trustee, in trust, and confers

on the trustee the power to sell the property if the purchaser

defaults on the promissory note or the terms of the deed of

trust.

(d) On or before the 10th day after the date the seller receives

a promissory note under Subsection (c) that substantially

complies with that subsection, the seller shall:

(1) deliver to the purchaser a written explanation that legally

justifies why the seller refuses to convert the purchaser's

interest into recorded, legal title under Subsection (c); or

(2) communicate with the purchaser to schedule a mutually

agreeable day and time to execute the deed and deed of trust

under Subsection (c).

(e) A seller who violates this section is liable to the

purchaser in the same manner and amount as a seller who violates

Section 5.079 is liable to a purchaser. This subsection does not

limit or affect any other rights or remedies a purchaser has

under other law.

(f) On the last date that all of the conveyances described by

Subsections (b) and (c) are executed, the executory contract:

(1) is considered completed; and

(2) has no further effect.

(g) The appropriate use of forms published by the Texas Real

Estate Commission for transactions described by this section

constitutes compliance with this section.

Added by Acts 2005, 79th Leg., Ch.

978, Sec. 6, eff. September 1, 2005.

Sec. 5.082. REQUEST FOR BALANCE AND TRUSTEE. (a) A purchaser

under an executory contract, on written request, is entitled to

receive the following information from the seller:

(1) as of the date of the request or another date specified by

the purchaser, the amount owed by the purchaser under the

contract; and

(2) if applicable, the name and address of the seller's desired

trustee for a deed of trust to be executed under Section 5.081.

(b) On or before the 10th day after the date the seller receives

from the purchaser a written request for information described by

Subsection (a), the seller shall provide to the purchaser a

written statement of the requested information.

(c) If the seller does not timely respond to a request made

under this section, the purchaser may:

(1) determine or pay the amount owed under the contract,

including determining the amount necessary for a promissory note

under Section 5.081; and

(2) if applicable, select a trustee for a deed of trust under

Section 5.081.

(d) For purposes of Subsection (c)(2), a purchaser must select a

trustee that lives or has a place of business in the same county

where the property covered by the executory contract is located.

(e) Not later than the 20th day after the date a seller receives

notice of an amount determined by a purchaser under Subsection

(c)(1), the seller may contest that amount by sending a written

objection to the purchaser. An objection under this subsection

must:

(1) be sent to the purchaser by regular and certified mail;

(2) include the amount the seller claims is the amount owed

under the contract; and

(3) be based on written records kept by the seller or the

seller's agent that were maintained and regularly updated for the

entire term of the executory contract.

Added by Acts 2005, 79th Leg., Ch.

978, Sec. 6, eff. September 1, 2005.

Sec. 5.083. RIGHT TO CANCEL CONTRACT FOR IMPROPER PLATTING. (a)

Except as provided by Subsection (c), in addition to other

rights or remedies provided by law, the purchaser may cancel and

rescind an executory contract at any time if the purchaser learns

that the seller has not properly subdivided or platted the

property that is covered by the contract in accordance with state

and local law. A purchaser canceling and rescinding a contract

under this subsection must:

(1) deliver a signed, written notice of the cancellation and

rescission to the seller in person; or

(2) send a signed, written notice of the cancellation and

rescission to the seller by telegram or certified or registered

mail, return receipt requested.

(b) If the purchaser cancels the contract as provided under

Subsection (a), the seller, not later than the 10th day after the

date the seller receives the notice of cancellation and

rescission, shall:

(1) deliver in person or send by telegram or certified or

registered mail, return receipt requested, to the purchaser a

signed, written notice that the seller intends to subdivide or

plat the property properly; or

(2) return to the purchaser all payments of any kind made to the

seller under the contract and reimburse the purchaser for:

(A) any payments the purchaser made to a taxing authority for

the property; and

(B) the value of any improvements made to the property by the

purchaser.

(c) A purchaser may not exercise the purchaser's right to cancel

and rescind an executory contract under this section if, on or

before the 90th day after the date the purchaser receives the

seller's notice under Subsection (b)(1), the seller:

(1) properly subdivides or plats the property; and

(2) delivers in person or sends by telegram or certified or

registered mail, return receipt requested, to the purchaser a

signed, written notice evidencing that the property has been

subdivided or platted in accordance with state and local law.

(d) The seller may not terminate the purchaser's possession of

the property covered by the contract being canceled and rescinded

before the seller pays the purchaser any money to which the

purchaser is entitled under Subsection (b).

Added by Acts 2005, 79th Leg., Ch.

978, Sec. 6, eff. September 1, 2005.

Sec. 5.084. RIGHT TO DEDUCT. If a seller is liable to a

purchaser under this subchapter, the purchaser, without taking

judicial action, may deduct the amount owed to the purchaser by

the seller from any amounts owed to the seller by the purchaser

under the terms of an executory contract.

Added by Acts 2005, 79th Leg., Ch.

978, Sec. 6, eff. September 1, 2005.

Sec. 5.085. FEE SIMPLE TITLE REQUIRED; MAINTENANCE OF FEE SIMPLE

TITLE. (a) A potential seller may not execute an executory

contract with a potential purchaser if the seller does not own

the property in fee simple free from any liens or other

encumbrances.

(b) Except as provided by this subsection, a seller, or the

seller's heirs or assigns, must maintain fee simple title free

from any liens or other encumbrances to property covered by an

executory contract for the entire duration of the contract. This

subsection does not apply to a lien or encumbrance placed on the

property that is:

(1) placed on the property because of the conduct of the

purchaser;

(2) agreed to by the purchaser as a condition of a loan obtained

to place improvements on the property, including utility or fire

protection improvements; or

(3) placed on the property by the seller prior to the execution

of the contract in exchange for a loan used only to purchase the

property if:

(A) the seller, not later than the third day before the date the

contract is executed, notifies the purchaser in a separate

written disclosure:

(i) of the name, address, and phone number of the lienholder or,

if applicable, servicer of the loan;

(ii) of the loan number and outstanding balance of the loan;

(iii) of the monthly payments due on the loan and the due date

of those payments; and

(iv) in 14-point type that, if the seller fails to make timely

payments to the lienholder, the lienholder may attempt to collect

the debt by foreclosing on the lien and selling the property at a

foreclosure sale;

(B) the lien:

(i) is attached only to the property sold to the purchaser under

the contract; and

(ii) secures indebtedness that, at no time, is or will be

greater in amount than the amount of the total outstanding

balance owed by the purchaser under the executory contract;

(C) the lienholder:

(i) does not prohibit the property from being encumbered by an

executory contract; and

(ii) consents to verify the status of the loan on request of the

purchaser and to accept payments directly from the purchaser if

the seller defaults on the loan; and

(D) the following covenants are placed in the executory

contract:

(i) a covenant that obligates the seller to make timely payments

on the loan and to give monthly statements to the purchaser

reflecting the amount paid to the lienholder, the date the

lienholder receives the payment, and the information described

by Paragraph (A);

(ii) a covenant that obligates the seller, not later than the

third day the seller receives or has actual knowledge of a

document or an event described by this subparagraph, to notify

the purchaser in writing in 14-point type that the seller has

been sent a notice of default, notice of acceleration, or notice

of foreclosure or has been sued in connection with a lien on the

property and to attach a copy of all related documents received

to the written notice; and

(iii) a covenant that warrants that if the seller does not make

timely payments on the loan or any other indebtedness secured by

the property, the purchaser may, without notice, cure any

deficiency with a lienholder directly and deduct from the total

outstanding balance owed by the purchaser under the executory

contract, without the necessity of judicial action, 150 percent

of any amount paid to the lienholder.

(c) A violation of this section:

(1) is a false, misleading, or deceptive act or practice within

the meaning of Section 17.46, Business & Commerce Code, and

is actionable in a public or private suit brought under

Subchapter E, Chapter 17, Business & Commerce Code; and

(2) in addition to other rights or remedies provided by law,

entitles the purchaser to cancel and rescind the executory

contract and receive from the seller:

(A) the return of all payments of any kind made to the seller

under the contract; and

(B) reimbursement for:

(i) any payments the purchaser made to a taxing authority for

the property; and

(ii) the value of any improvements made to the property by the

purchaser.

(d) A seller is not liable under this section if:

(1) a lien is placed on the property by a person other than the

seller; and

(2) not later than the 30th day after the date the seller

receives notice of the lien, the seller takes all steps necessary

to remove the lien and has the lien removed from the property.

Added by Acts 2005, 79th Leg., Ch.

978, Sec. 6, eff. September 1, 2005.

SUBCHAPTER F. REQUIREMENTS FOR CONVEYANCES OF MINERAL OR ROYALTY

INTERESTS

Sec. 5.151. DISCLOSURE IN OFFER TO PURCHASE MINERAL INTEREST.

(a) A person who mails to the owner of a mineral or royalty

interest an offer to purchase only the mineral or royalty

interest, it being understood that for the purpose of this

section the taking of an oil, gas, or mineral lease shall not be

deemed a purchase of a mineral or royalty interest, and encloses

an instrument of conveyance of only the mineral or royalty

interest and a draft or other instrument, as defined in Section

3.104, Business & Commerce Code, providing for payment for

that interest shall include in the offer a conspicuous statement

printed in a type style that is approximately the same size as

14-point type style or larger and is in substantially the

following form:

BY EXECUTING AND DELIVERING THIS INSTRUMENT YOU ARE SELLING ALL

OR A PORTION OF YOUR MINERAL OR ROYALTY INTEREST IN (DESCRIPTION

OF PROPERTY BEING CONVEYED).

(b) A person who conveys a mineral or royalty interest as

provided by Subsection (a) may bring suit against the purchaser

of the interest if:

(1) the purchaser did not give the notice required by Subsection

(a); and

(2) the person has given 30 days' written notice to the

purchaser that a suit will be filed unless the matter is

otherwise resolved.

(c) A plaintiff who prevails in a suit under Subsection (b) may

recover from the initial purchaser of the mineral or royalty

interest the greater of:

(1) $100; or

(2) an amount up to the difference between the amount paid by

the purchaser for the mineral or royalty interest and the fair

market value of the mineral or royalty interest at the time of

the sale.

(d) The prevailing party in a suit under Subsection (b) may

recover:

(1) court costs; and

(2) reasonable attorney's fees.

(e) A person must bring a suit under Subsection (b) not later

than the second anniversary of the date the person executed the

conveyance.

(f) The remedy provided under this section shall be in addition

to any other remedies existing under law, excluding rescission or

other remedies that would make the conveyance of the mineral or

royalty interest void or of no force and effect.

Added by Acts 1999, 76th Leg., ch. 1200, Sec. 1, eff. Sept. 1,

1999.

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