HB4876 - Relating to the withdrawal of certain deposits placed in escrow in connection with the purchase or reservation of a condominium unit.

  89R26657 JBD-D     By: Lambert H.B. No. 4876     Substitute the following for H.B. No. 4876:     By:  Button C.S.H.B. No. 4876       A BILL TO BE ENTITLED   AN ACT   relating to the withdrawal of certain deposits placed in escrow in   connection with the purchase or reservation of a condominium unit.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 82.158, Property Code, is amended to   read as follows:          Sec. 82.158.  ESCROW OF DEPOSITS. (a)   Except as provided by   Subsection (b), a [ A ] deposit for  [ made in connection with ] the   purchase or reservation of a unit from a declarant shall be placed   in escrow and held in this state in an account designated for that   purpose by a real estate broker, an attorney, a title insurance   company licensed in this state, an independent bonded escrow   company, or an institution whose accounts are insured by a   governmental agency or instrumentality until delivered to the   declarant at closing, delivered to the declarant because of the   purchaser's default under a contract to purchase the unit, or   refunded to the purchaser because of the declarant's default under   a contract to purchase the unit . Escrow deposits may be placed in   interest-bearing accounts, and the interest is payable as may be   agreed in writing between the declarant and the purchaser.           (b)     If a contract or reservation agreement to purchase a   unit provides, in bold or underlined type, that the deposit made for   the purchase or reservation of the unit may be used for actual   development and construction costs and the declarant obtains and   maintains a surety bond or insurance as described by Subsection   (d), the declarant may withdraw escrow funds when development or   construction of improvements to the condominium project begins.   The funds may be used only for actual development and construction   costs of the project in which the unit is located.   For the purposes   of this subsection, actual development and construction costs:                 (1)     include expenditures for demolition, site   clearing, permit fees, impact fees, and utility reservation fees,   as well as architectural, consultant, engineering, and surveying   fees that directly relate to construction and development of the   condominium project or the easements and rights appurtenant to the   project; and                 (2)  do not include expenditures for:                       (A)     salaries, commissions, or expenses of   salespersons;                       (B)     advertising, marketing, or promotional   purposes; or                       (C)     loan fees, principal and interest on loans,   attorney fees, accounting fees, or insurance costs.           (c)     The deposits made for the purchase or reservation of the   unit and used for actual development and construction costs shall   be, as applicable:                 (1)     applied as a credit against the purchase price of   the unit at closing;                 (2)     delivered to the declarant because of the   purchaser's default under the contract to purchase the unit; or                 (3)     refunded to the purchaser because of the   declarant's default under the contract to purchase the unit.           (d)     The bond or insurance required under Subsection (b) must   be issued by an insurer licensed in this state in favor of the   purchaser in an amount adequate to cover the amount of the deposit   to be withdrawn from escrow funds under Subsection (b).   The   declarant may not withdraw an amount from the escrow funds greater   than the face amount of the bond or the insurance coverage amount.   The bond or insurance must be payable to the purchaser if the   purchaser obtains a final judgment against the declarant requiring   the declarant to return the deposit under the purchase agreement.     The bond or insurance may be either in the form of an individual   bond or policy for each deposit accepted by the declarant or in the   form of a blanket bond or policy assuring the return of all deposits   received by the declarant.           (e)     The party holding escrow funds who releases any portion   of the funds to the declarant has no obligation to monitor the   progress of construction or the expenditure of the funds by the   declarant and is not liable to any purchaser for the release of   funds under this section.          SECTION 2.  This Act takes effect September 1, 2025.