Bill Text: TX HB8 | 2011-2012 | 82nd Legislature | Enrolled
Bill Title: Relating to prohibiting certain private transfer fees and the preservation of private real property rights; providing penalties.
Spectrum: Moderate Partisan Bill (Republican 73-14)
Status: (Passed) 2011-06-17 - Effective immediately [HB8 Detail]
Download: Texas-2011-HB8-Enrolled.html
H.B. No. 8 |
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relating to prohibiting certain private transfer fees and the | ||
preservation of private real property rights; providing penalties. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Chapter 5, Property Code, is amended by adding | ||
Subchapter G to read as follows: | ||
SUBCHAPTER G. CERTAIN PRIVATE TRANSFER FEES PROHIBITED; | ||
PRESERVATION OF PRIVATE REAL PROPERTY RIGHTS | ||
Sec. 5.201. DEFINITIONS. In this subchapter: | ||
(1) "Encumbered property" means all property, | ||
including the property of a subsequent purchaser, subject to the | ||
same private transfer fee obligation. | ||
(2) "Lender" means a lending institution, including a | ||
bank, trust company, banking association, savings and loan | ||
association, mortgage company, investment bank, credit union, life | ||
insurance company, and governmental agency, that customarily | ||
provides financing or an affiliate of a lending institution. | ||
(3) "Payee" means a person who claims the right to | ||
receive or collect a private transfer fee payable under a private | ||
transfer fee obligation and who may or may not have a pecuniary | ||
interest in the obligation. | ||
(4) "Private transfer fee" means an amount of money, | ||
regardless of the method of determining the amount, that is payable | ||
on the transfer of an interest in real property or payable for a | ||
right to make or accept a transfer. | ||
(5) "Private transfer fee obligation" means an | ||
obligation to pay a private transfer fee created under: | ||
(A) a declaration or other covenant recorded in | ||
the real property records in the county in which the property | ||
subject to the private transfer fee obligation is located; | ||
(B) a contractual agreement or promise; or | ||
(C) an unrecorded contractual agreement or | ||
promise. | ||
(6) "Subsequent owner" means a person who acquires | ||
real property by transfer from a person other than the person who is | ||
the seller of the property on the date the private transfer fee | ||
obligation is created. | ||
(7) "Subsequent purchaser" means a person who | ||
purchases real property from a person other than the person who is | ||
the seller on the date the private transfer fee obligation is | ||
created. The term includes a lender who provides a mortgage loan to | ||
a subsequent purchaser to purchase the property. | ||
(8) "Transfer" means the sale, gift, conveyance, | ||
assignment, inheritance, or other transfer of an ownership interest | ||
in real property. | ||
Sec. 5.202. CERTAIN PRIVATE TRANSFER FEE OBLIGATIONS VOID. | ||
(a) Except as provided by this subchapter, a private transfer fee | ||
obligation created on or after the effective date of this | ||
subchapter is not binding or enforceable against a subsequent owner | ||
or subsequent purchaser of an interest in real property and is void. | ||
(b) For purposes of this subchapter, the following payments | ||
are not considered private transfer fee obligations: | ||
(1) consideration paid by a purchaser to a seller for | ||
an interest in real property transferred, including, as applicable, | ||
a mineral interest transferred, including additional consideration | ||
paid to a seller for the property's appreciation, development, or | ||
sale after the interest in the property has been transferred to the | ||
purchaser, if the additional consideration is paid only once and | ||
that payment does not bind successors in interest to the property to | ||
any private transfer fee obligation; | ||
(2) a commission paid to a licensed real estate broker | ||
under a written agreement between a seller or purchaser and the | ||
broker, including an additional commission for the property's | ||
appreciation, development, or sale after the interest in property | ||
is transferred to the purchaser; | ||
(3) interest, a fee, a charge, or another type of | ||
payment to a lender under a loan secured by a mortgage on the | ||
property, including: | ||
(A) a fee payable for the lender's consent to an | ||
assumption of the loan or transfer of the property subject to the | ||
mortgage; | ||
(B) a fee or charge payable for an estoppel | ||
letter or certificate; | ||
(C) a shared appreciation interest or profit | ||
participation; or | ||
(D) other consideration payable in connection | ||
with the loan; | ||
(4) rent, reimbursement, a fee, a charge, or another | ||
type of payment to a lessor under a lease, including a fee for | ||
consent to an assignment, sublease, encumbrance, or transfer of a | ||
lease; | ||
(5) consideration paid to the holder of an option to | ||
purchase an interest in property, or to the holder of a right of | ||
first refusal or first offer to purchase an interest in property, | ||
for waiving, releasing, or not exercising the option or right when | ||
the property is transferred to another person; | ||
(6) a fee payable to or imposed by a governmental | ||
entity in connection with recording the transfer of the property; | ||
(7) dues, a fee, a charge, an assessment, a fine, a | ||
contribution, or another type of payment under a declaration or | ||
other covenant or under law, including a fee or charge payable for a | ||
change of ownership entered in the records of an association to | ||
which this subdivision applies or an estoppel letter or resale | ||
certificate issued under Section 207.003 by an association to which | ||
this subdivision applies or the person identified under Section | ||
209.004(a)(6), provided that no portion of the fee or charge is | ||
required to be passed through to a third party designated or | ||
identifiable in the declaration or other covenant or law or in a | ||
document referenced in the declaration or other covenant or law, | ||
unless paid to: | ||
(A) an association as defined by Section 82.003 | ||
or 221.002 or the person or entity managing the association as | ||
provided by Section 82.116(a)(5) or 221.032(b)(11), as applicable; | ||
(B) a property owners' association as defined by | ||
Section 202.001 or 209.002 or the person or entity described by | ||
Section 209.004(a)(6); or | ||
(C) a property owners' association as defined by | ||
Section 202.001 that does not require an owner of property governed | ||
by the association to be a member of the association or the person | ||
or entity described by Section 209.004(a)(6); | ||
(8) dues, a fee, a charge, an assessment, a fine, a | ||
contribution, or another type of payment for the transfer of a club | ||
membership related to the property; | ||
(9) dues, a fee, a charge, an assessment, a fine, a | ||
contribution, or another type of payment paid to an organization | ||
exempt from federal taxation under Section 501(c)(3) or 501(c)(4), | ||
Internal Revenue Code of 1986, only if the organization uses the | ||
payments to directly benefit the encumbered property by: | ||
(A) supporting or maintaining only the | ||
encumbered property; | ||
(B) constructing or repairing improvements only | ||
to the encumbered property; or | ||
(C) providing activities or infrastructure to | ||
support quality of life, including cultural, educational, | ||
charitable, recreational, environmental, and conservation | ||
activities and infrastructure, that directly benefit the | ||
encumbered property; or | ||
(10) a fee payable to or imposed by the Veterans' Land | ||
Board for consent to an assumption or transfer of a contract of sale | ||
and purchase. | ||
(c) The benefit described by Subsection (b)(9)(C) may | ||
collaterally benefit a community composed of: | ||
(1) property that is adjacent to the encumbered | ||
property; or | ||
(2) property a boundary of which is not more than 1,000 | ||
yards from a boundary of the encumbered property. | ||
(d) Notwithstanding Subsection (c), an organization may | ||
provide a direct benefit under Subsection (b)(9) if: | ||
(1) the organization provides to the general public | ||
activities or infrastructure described by Subsection (b)(9)(C); | ||
(2) the provision of activities or infrastructure | ||
substantially benefits the encumbered property; and | ||
(3) the governing body of the organization: | ||
(A) is controlled by owners of the encumbered | ||
property; and | ||
(B) approves payments for activities or | ||
infrastructure at least annually. | ||
(e) An organization may provide activities and | ||
infrastructure described by Subsection (b)(9)(C) to another | ||
organization exempt from federal taxation under Section 501(c)(3) | ||
or 501(c)(4), Internal Revenue Code of 1986, at no charge for de | ||
minimis usage without violating the requirements of this section. | ||
Sec. 5.203. NOTICE REQUIREMENTS FOR CONTINUATION OF | ||
EXISTING PRIVATE TRANSFER FEE OBLIGATIONS. (a) A person who | ||
receives a private transfer fee under a private transfer fee | ||
obligation created before the effective date of this subchapter | ||
must, on or before January 31, 2012, file for record a "Notice of | ||
Private Transfer Fee Obligation" as provided by this section in the | ||
real property records of each county in which the property is | ||
located. | ||
(b) Multiple payees of a single private transfer fee under a | ||
private transfer fee obligation must designate one payee as the | ||
payee of record for the fee. | ||
(c) A notice under Subsection (a) must: | ||
(1) be printed in at least 14-point boldface type; | ||
(2) state the amount of the private transfer fee and | ||
the method of determination, if applicable; | ||
(3) state the date or any circumstance under which the | ||
private transfer fee obligation expires, if any; | ||
(4) state the purpose for which the money from the | ||
private transfer fee obligation will be used; | ||
(5) notwithstanding Subsection (b), state the name of | ||
each payee and each payee's contact information; | ||
(6) state the name and address of the payee of record | ||
to whom the payment of the fee must be sent; | ||
(7) include the acknowledged signature of each payee | ||
or authorized representative of each payee; and | ||
(8) state the legal description of the property | ||
subject to the private transfer fee obligation. | ||
(d) A person required to file a notice under this section | ||
shall: | ||
(1) refile the notice described by this section not | ||
earlier than the 30th day before the third anniversary of the | ||
original filing date described by Subsection (a) and within a | ||
similar 30-day period every third year thereafter; and | ||
(2) amend the notice to reflect any change in the name | ||
or address of any payee included in the notice not later than the | ||
30th day after the date the change occurs. | ||
(e) A person who amends a notice under Subsection (d)(2) | ||
must include: | ||
(1) the recording information of the original notice | ||
filed as required by this section; and | ||
(2) the legal description of the property subject to | ||
the private transfer fee obligation. | ||
(f) If a person required to file a notice under this section | ||
fails to comply with this section: | ||
(1) payment of the private transfer fee may not be a | ||
requirement for the conveyance of an interest in the property to a | ||
purchaser; | ||
(2) the property is not subject to further obligation | ||
under the private transfer fee obligation; and | ||
(3) the private transfer fee obligation is void. | ||
Sec. 5.204. ADDITIONAL COMPLIANCE REQUIREMENT: TIMELY | ||
ACCEPTANCE OF FEES PAID UNDER EXISTING PRIVATE TRANSFER FEE | ||
OBLIGATIONS. (a) The payee of record on the date a private | ||
transfer fee is paid under a private transfer fee obligation | ||
subject to Section 5.203 must accept the payment on or before the | ||
30th day after the date the payment is tendered to the payee. | ||
(b) If the payee of record fails to comply with Subsection | ||
(a): | ||
(1) the payment must be returned to the remitter; | ||
(2) payment of the private transfer fee may not be a | ||
requirement for the conveyance of an interest in the property to a | ||
purchaser; and | ||
(3) the property is not subject to further obligation | ||
under the private transfer fee obligation. | ||
Sec. 5.205. DISCLOSURE OF EXISTING TRANSFER FEE OBLIGATION | ||
REQUIRED IN CONTRACT FOR SALE. A seller of real property that may | ||
be subject to a private transfer fee obligation shall provide | ||
written notice to a potential purchaser stating that the obligation | ||
may be governed by this subchapter. | ||
Sec. 5.206. WAIVER VOID. A provision that purports to waive | ||
a purchaser's rights under this subchapter is void. | ||
Sec. 5.207. INJUNCTIVE OR DECLARATORY RELIEF; PROVIDING | ||
PENALTIES. (a) The attorney general may institute an action for | ||
injunctive or declaratory relief to restrain a violation of this | ||
subchapter. | ||
(b) In addition to instituting an action for injunctive or | ||
declaratory relief under Subsection (a), the attorney general may | ||
institute an action for civil penalties against a payee for a | ||
violation of this chapter. Except as provided by Subsection (c), a | ||
civil penalty assessed under this section may not exceed an amount | ||
equal to two times the amount of the private transfer fee charged or | ||
collected by the payee in violation of this subchapter. | ||
(c) If the court in which an action under Subsection (b) is | ||
pending finds that a payee violated this subchapter with a | ||
frequency that constitutes a pattern or practice, the court may | ||
assess a civil penalty not to exceed $250,000. | ||
(d) The comptroller shall deposit to the credit of the | ||
general revenue fund all money collected under this section. | ||
SECTION 2. Section 5.017, Property Code, is repealed. | ||
SECTION 3. Section 5.205, Property Code, as added by this | ||
Act, applies only to a contract for the sale of real property | ||
entered into on or after January 1, 2012. A contract for the sale of | ||
real property entered into before January 1, 2012, is governed by | ||
the law in effect immediately before the effective date of this Act, | ||
and the former law is continued in effect for that purpose. | ||
SECTION 4. This Act takes effect immediately if it receives | ||
a vote of two-thirds of all the members elected to each house, as | ||
provided by Section 39, Article III, Texas Constitution. If this | ||
Act does not receive the vote necessary for immediate effect, this | ||
Act takes effect September 1, 2011. | ||
______________________________ | ______________________________ | |
President of the Senate | Speaker of the House | |
I certify that H.B. No. 8 was passed by the House on May 4, | ||
2011, by the following vote: Yeas 135, Nays 1, 2 present, not | ||
voting; and that the House concurred in Senate amendments to H.B. | ||
No. 8 on May 21, 2011, by the following vote: Yeas 142, Nays 1, 2 | ||
present, not voting. | ||
______________________________ | ||
Chief Clerk of the House | ||
I certify that H.B. No. 8 was passed by the Senate, with | ||
amendments, on May 19, 2011, by the following vote: Yeas 31, Nays | ||
0 | ||
. | ||
______________________________ | ||
Secretary of the Senate | ||
APPROVED: __________________ | ||
Date | ||
__________________ | ||
Governor |