By: Creighton S.B. No. 2024               A BILL TO BE ENTITLED   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. 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. 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).          (a-1)  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          (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), 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, [If] an executory a    contract for the purchase and sale 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.