Bill Text: TX HB1543 | 2021-2022 | 87th Legislature | Enrolled

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Bill Title: Relating to certain procedural requirements for public improvement districts and transfers of property located in public improvement districts.

Spectrum: Partisan Bill (Republican 2-0)

Status: (Passed) 2021-06-04 - Effective on 9/1/21 [HB1543 Detail]

Download: Texas-2021-HB1543-Enrolled.html

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H.B. No. 1543

AN ACT
relating to certain procedural requirements for public improvement
districts and transfers of property located in public improvement
districts.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Sections 372.010(a) and (b), Local Government
Code, are amended to read as follows:
(a) During the six-month period after the date of the final
adjournment of the hearing under Section 372.009, the governing
body of the municipality or county may authorize an improvement
district if, by majority vote of all members of the governing body,
the members adopt a resolution authorizing the district in
accordance with its finding as to the advisability of the
improvement. Except for a resolution authorizing a district
described by Section 372.0035, the resolution must provide that the
authorization takes effect on the date the resolution is adopted.
(b) Not later than the seventh day after the date the
governing body of a municipality or county adopts a resolution
under Subsection (a), the municipality or county shall file a copy
of the resolution with the county clerk of each county in which all
or part of the improvement district is located [An authorization
takes effect when it has been published one time in a newspaper of
general circulation in the municipality or county. If any part of
the improvement district is located in the municipality's
extraterritorial jurisdiction or if any part of the improvements is
to be undertaken in the municipality's extraterritorial
jurisdiction, the authorization does not take effect until the
notice is also given one time in a newspaper of general circulation
in the part of the extraterritorial jurisdiction in which the
district is located or in which the improvements are to be
undertaken].
SECTION 2. Section 372.013, Local Government Code, is
amended to read as follows:
Sec. 372.013. SERVICE PLAN. (a) The advisory body shall
prepare an ongoing service plan and present the plan to the
governing body of the municipality or county for review and
approval. The governing body may approve the plan only by ordinance
or order. The governing body may assign responsibility for the plan
to another entity in the absence of an advisory body.
(b) The service plan must:
(1) cover a period of at least five years;
(2) [and must also] define the annual indebtedness and
the projected costs for improvements; and
(3) include a copy of the notice form required by
Section 5.014, Property Code.
(c) Not later than the seventh day after the date the
governing body of a municipality or county approves a service plan,
the municipality or county shall file a copy of the plan with the
county clerk of each county in which all or part of the public
improvement district is located.
(d) The governing body of the municipality or county [plan]
shall review and update the service plan [be reviewed and updated]
annually for the purpose of determining the annual budget for
improvements. Except for the service plan for a district described
by Section 372.0035, the governing body may amend or update the plan
only by ordinance or order.
(e) Not later than the seventh day after the date the
governing body of a municipality or county amends or updates the
service plan, including the notice form required by Section 5.014,
Property Code, the municipality or county shall file a copy of the
amended or updated plan with the county clerk of each county in
which all or part of the public improvement district is located.
SECTION 3. Section 5.014, Property Code, is amended to read
as follows:
Sec. 5.014. NOTICE OF OBLIGATIONS RELATED TO PUBLIC
IMPROVEMENT DISTRICT. (a) A person who proposes to sell or
otherwise convey [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 first give to the
purchaser of the property the [a] written notice prescribed by
Subsection (a-1) or (a-2), as applicable.
(a-1) Except for the notice prescribed by Subsection (a-2),
the notice required by Subsection (a) shall be executed by the
seller and must, except as provided by Subsection (b), read as
follows [that reads substantially similar to the following]:
NOTICE OF OBLIGATION TO PAY [PUBLIC] IMPROVEMENT DISTRICT
ASSESSMENT TO (insert name of municipality or county levying
assessment), TEXAS
CONCERNING THE FOLLOWING PROPERTY [AT]
(insert property [street] address)
As the [a] purchaser of the [this parcel of] real property
described above, you are obligated to pay assessments [an
assessment] to (insert name of [a] municipality or county, as
applicable), Texas, for the costs of a portion of a public [an]
improvement or services project (the "Authorized Improvements")
undertaken for the benefit of the property within (insert name of
public improvement district) (the "District") created [by a public
improvement district] under (insert Subchapter A, Chapter 372,
Local Government Code, or Chapter 382, Local Government Code, as
applicable).
AN ASSESSMENT HAS BEEN LEVIED AGAINST YOUR PROPERTY FOR THE
AUTHORIZED IMPROVEMENTS, WHICH MAY BE PAID IN FULL AT ANY TIME. IF
THE ASSESSMENT IS NOT PAID IN FULL, IT WILL BE DUE AND PAYABLE IN
ANNUAL INSTALLMENTS THAT WILL VARY FROM YEAR TO YEAR DEPENDING ON
THE AMOUNT OF INTEREST PAID, COLLECTION COSTS, ADMINISTRATIVE
COSTS, AND DELINQUENCY COSTS.
The exact amount of the assessment may be obtained from
(insert name of municipality or county, as applicable). The exact
amount of each annual installment will be approved each year by
(insert name of city council or county commissioners court, as
applicable) in the annual service plan update for the district [The
assessment may be due annually or in periodic installments]. More
information about the assessments, including [concerning] the
amounts [amount of the assessment] and [the] due dates, [of that
assessment] may be obtained from (insert name of [the] municipality
or county, as applicable) [levying the assessment].
[The amount of the assessments is subject to change.] Your
failure to pay any assessment or any annual installment may [the
assessments could] result in penalties and interest being added to
what you owe or in a lien on and the foreclosure of your property.
The undersigned purchaser acknowledges receipt of this
notice before the effective date of a binding contract for the
purchase of the real property at the address described above.
Date: __________________ ________________________________
Signature of Purchaser
(a-2) For a district described by Section 372.0035, Local
Government Code, the notice required by Subsection (a) shall be
executed by the seller and must, except as provided by Subsection
(b), read as follows:
NOTICE OF OBLIGATION TO PAY IMPROVEMENT DISTRICT ASSESSMENT TO
(insert name of municipality levying assessment), TEXAS
CONCERNING THE FOLLOWING HOTEL PROPERTY
(insert property address)
As the purchaser of the real property described above, you
are obligated to pay assessments to (insert name of municipality),
Texas, for the costs of a portion of a public improvement or
services project (the "Authorized Services") undertaken for the
benefit of the property within (insert name of public improvement
district) (the "District") created under Subchapter A, Chapter 372,
Local Government Code.
AN ASSESSMENT HAS BEEN LEVIED AGAINST YOUR PROPERTY FOR THE
AUTHORIZED SERVICES, WHICH MUST BE PAID IN FULL WITH EVERY PAYMENT
BY THE HOTEL OF LOCAL HOTEL OCCUPANCY TAX REMITTANCES TO THE
MUNICIPALITY. YOUR FAILURE TO PAY THE ASSESSMENT MAY RESULT IN
PENALTIES AND INTEREST BEING ADDED TO WHAT YOU OWE, AND MAY INCLUDE
THE PURSUIT OF ANY OTHER REMEDY THAT IS AUTHORIZED UNDER SECTION
372.0035(d), LOCAL GOVERNMENT CODE.
Information about the calculation of the assessment may be
obtained from (insert name of the municipality). The exact
assessment rate will be approved each year by (insert name of city
council) in the annual service plan update for the district. More
information about the assessments, including the assessment rate
and due dates, may be obtained from (insert name of municipality).
The undersigned purchaser acknowledges receipt of this
notice before the effective date of a binding contract for the
purchase of the real property at the address described above.
Date: __________________ ________________________________
Signature of Purchaser
(b) The seller or the municipality or county that created
the public improvement district may provide additional information
regarding the district in the notice prescribed by Subsection (a-1)
or (a-2), including whether an assessment has been levied, the
amount of the assessment, and the payment schedule for assessments.
[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; or
(9) of only a mineral interest, leasehold interest, or
security interest[; or
[(10) of a real property interest in a condominium].
(d) For the purposes of this section, a [If an executory]
contract for the purchase and sale of real property having a
performance period of less than six months is considered a sale
requiring notice [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.]
SECTION 4. Subchapter A, Chapter 5, Property Code, is
amended by adding Sections 5.0141, 5.0142, 5.0143, 5.0144, and
5.0145 to read as follows:
Sec. 5.0141. NOTICE REQUIRED BEFORE CONTRACT EXECUTION.
(a) The notice required by Section 5.014 shall be given to the
prospective purchaser before the execution of a binding contract of
purchase and sale, either separately or as an addendum or paragraph
of a purchase contract.
(b) In the event a contract of purchase and sale is entered
into without the seller providing the notice, the purchaser is
entitled to terminate the contract.
(c) If, however, the seller furnishes the notice at or
before closing the purchase and sale contract and the purchaser
elects to close even though the notice was not timely furnished
before execution of the contract, it shall be conclusively presumed
that the purchaser has waived all rights to terminate the contract
under Subsection (b) or recover damages or other remedies or rights
under Section 5.0145.
(d) Notwithstanding any provision of this section, Section
5.014, 5.0142, 5.0143, 5.0144, or 5.0145, all sellers, title
companies, real estate brokers, and examining attorneys, and any
agent, representative, or person acting on their behalf, are not
liable for damages under Section 5.0145, or for any other damages to
any person, for:
(1) failing to provide the notice to a purchaser
before execution of a binding contract of purchase and sale or at or
before the closing of the purchase and sale contract when the
municipality or county has not filed the service plan as required by
Section 372.013, Local Government Code; or
(2) unintentionally providing a notice that is not the
correct notice under the circumstances before execution of a
binding contract of purchase and sale, or at or before the closing
of the purchase and sale contract.
Sec. 5.0142. PURCHASER SIGNATURE REQUIRED. The purchaser
shall sign the notice required by Section 5.014 or the purchase
contract including the notice to evidence the receipt of notice.
Sec. 5.0143. RECORDING OF NOTICE AT CLOSING. At the closing
of purchase and sale, a separate copy of the notice required by
Section 5.014 with current information shall be executed by the
seller and purchaser, acknowledged, and recorded in the deed
records of the county in which the property is located.
Sec. 5.0144. RELIANCE ON FILED SERVICE PLAN. (a) For the
purposes of the notice required by Section 5.014, all sellers,
title companies, real estate brokers, and examining attorneys, and
any agent, representative, or person acting on their behalf, are
entitled to rely on the accuracy of the service plan as last filed
by each municipality or county under Section 372.013, Local
Government Code, in completing the notice form to be executed by the
seller and purchaser at the closing of purchase and sale.
(b) Any information taken from the service plan as last
filed by the municipality or county and the information contained
in or shown on the notice form contained in the service plan under
Section 372.013, Local Government Code, not including information
provided as to the assessments or annual installment amounts as
authorized by Section 5.014(b), shall be, for purposes of the
notice required by Section 5.014, conclusively presumed as a matter
of law to be correct.
(c) All subsequent sellers, purchasers, title insurance
companies, real estate brokers, examining attorneys, and
lienholders are entitled to rely on the service plan filed by the
municipality or county, including the notice form contained in the
service plan, under Section 372.013, Local Government Code.
(d) If the notice required by Section 5.014 is given at
closing as provided by Section 5.0141(c), a purchaser, or the
purchaser's heirs, successors, or assigns, are not entitled to
maintain an action for damages against a seller, title insurance
company, real estate broker, or lienholder, or any agent,
representative, or person acting on their behalf, because the
seller:
(1) used the notice form included in the service plan
filed by the municipality or county under Section 372.013, Local
Government Code; or
(2) relied on the filed legal description of the
public improvement district in determining whether the property is
located in the district.
(e) No action may be maintained against any title company
for failure to disclose the inclusion of the property in a public
improvement district when the municipality or county has not filed
the service plan under Section 372.013, Local Government Code, with
the clerk of each county in which the district is located.
(f) All sellers, title insurance companies, examining
attorneys, vendors of property and tax information, real estate
brokers, and lienholders, and any agent, representative, or person
acting on their behalf, are entitled to rely on the accuracy of:
(1) the service plan last filed by the municipality or
county or the information in the notice form filed by the district
under Section 372.013, Local Government Code; or
(2) for the purposes of the notice required by Section
5.014, the information in the service plan filed by the
municipality or county in effect as of January 1 of each year for
the period January 1 through December 31 of such calendar year.
Sec. 5.0145. SUITS FOR DAMAGES. (a) If any sale or
conveyance of real property within a public improvement district is
not made in compliance with Section 5.014, 5.0141, 5.0142, or
5.0143, the purchaser may institute a suit for damages under the
provisions of Subsection (b) or (e).
(b) A purchaser of real property whose sale or conveyance is
subject to the notice requirement under Section 5.014, if the sale
or conveyance of the property is not made in compliance with that
section or Section 5.0141, 5.0142, or 5.0143, may institute a suit
for damages in the amount of all costs relative to the purchase of
the property at the time of purchase, plus interest and reasonable
attorney's fees.
(c) The suit for damages under Subsection (b) may be
instituted jointly or severally against the person, firm,
corporation, partnership, organization, business trust, estate,
trust, association, or other legal entity that sold or conveyed the
property to the purchaser.
(d) Following the recovery of damages under Subsection (b),
the amount of the damages shall first be paid to satisfy all unpaid
obligations on each outstanding lien on the property and the
remainder of the damage amount shall be paid to the purchaser. On
payment of all damages respectively to the lienholders and
purchaser, the purchaser shall reconvey the property to the seller.
(e) A purchaser of real property whose sale or conveyance is
subject to the notice requirement under Section 5.014, if the sale
or conveyance of the property is not made in compliance with that
section or Section 5.0141, 5.0142, or 5.0143, may institute a suit
for damages in an amount not to exceed $5,000, plus reasonable
attorney's fees.
(f) A purchaser is not entitled to recover damages under
both Subsections (b) and (e), and entry of a final decision awarding
damages to the purchaser under either Subsection (b) or (e) shall
preclude the purchaser from recovering damages under the other
subsection.
(g) The relief provided under Subsections (b) and (e) shall
be the exclusive remedies for a purchaser aggrieved by the seller's
failure to comply with the provisions of Section 5.014, 5.0141,
5.0142, or 5.0143.
(h) An action for damages does not apply to, affect, alter,
or impair the validity of any existing vendor's lien, mechanic's
lien, or deed of trust lien on the property.
(i) A suit for damages under this section must be brought
not later than the earlier of:
(1) the 90th day after the date the purchaser receives
the first public improvement district annual assessment
installment or tax notice; or
(2) the fourth anniversary of the date the property is
sold or conveyed to the purchaser.
(j) Notwithstanding a provision of this section, a
purchaser may not recover damages under this section if the
purchaser:
(1) purchases an equity in real property and in
conjunction with the purchase assumes any liens, whether purchase
money or otherwise; and
(2) does not require proof of title by abstract, title
policy, or any other proof of title.
(k) A purchaser who purchases real property in a public
improvement district and who then sells or conveys the property
shall on closing of the subsequent sale or conveyance be
conclusively considered to have waived any prior right to damages
under this section.
SECTION 5. Section 372.010, Local Government Code, as
amended by this Act, applies only to a resolution adopted under that
section on or after the effective date of this Act. A resolution
adopted before the effective date of this Act is governed by the law
in effect on the date the resolution was adopted, and the former law
is continued in effect for that purpose.
SECTION 6. Sections 372.013(a) and (b), Local Government
Code, as amended by this Act, and Section 372.013(c), Local
Government Code, as added by this Act, apply only to a service plan
approved under that section on or after the effective date of this
Act. A service plan approved before the effective date of this Act
is governed by the law in effect on the date the service plan was
approved, and the former law is continued in effect for that
purpose.
SECTION 7. Sections 372.013(d) and (e), Local Government
Code, as added by this Act, apply only to a service plan amended or
updated under that section on or after the effective date of this
Act.
SECTION 8. Section 5.014, Property Code, as amended by this
Act, and Sections 5.0141, 5.0142, 5.0143, 5.0144, and 5.0145,
Property Code, as added by this Act, apply only to a sale or
conveyance of property for which a binding contract is executed on
or after the effective date of this Act. A sale or conveyance for
which a binding contract is executed before the effective date of
this Act is governed by the law in effect on the date the contract is
executed, and the former law is continued in effect for that
purpose.
SECTION 9. This Act takes effect September 1, 2021.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 1543 was passed by the House on April
16, 2021, by the following vote: Yeas 142, Nays 3, 2 present, not
voting.
______________________________
Chief Clerk of the House
I certify that H.B. No. 1543 was passed by the Senate on May
19, 2021, by the following vote: Yeas 31, Nays 0.
______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor