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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