H.B. No. 8
 
 
 
 
AN ACT
  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