HBA-MPM C.S.H.B. 2033 77(R) BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 2033 By: Pitts Business & Industry 4/2/2001 Committee Report (Substituted) BACKGROUND AND PURPOSE Under current law, water and sewer utilities provide service to customers upon prepayment of certain costs, including the cost of capital projects such as extension of distribution and collection lines, the expansion of well production capability, the construction of additional overhead storage, or the adjustment of a wholesale water or sewer contract to accommodate additional service demand. In some cases, individuals purchase lots for residential or commercial purposes without realizing that the extension of water or sewer services may require additional expense on the individual's part, and that there might be a delay in the utility's ability to provide the services. This is problematic in areas served by private utilities, nonprofit water supply and sewer service corporations, and special utility districts, which typically service areas outside a municipality's jurisdiction. Current law does not require that the purchasers of property receive notice about possible additional expenditures or delay in services. C.S.H.B. 2033 requires the notice to be provided to a purchaser of unimproved real property and gives the purchaser the option to recover certain damages if the notice is not provided by the seller. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS C.S.H.B. 2033 amends the Water Code to provide that if a person proposes to sell or convey unimproved real property located in a certificated service area of a utility service provider, the person must give the purchaser adequate written notice specifying the water or sewer service area of the property and specifying that the provider is the sole utility service provider authorized by law to provide water or sewer service to the property. The bill exempts persons who transfer title by certain methods from providing the notice. The bill sets forth the language of the notice (Secs. 13.257(b)-(d)). The bill provides that the notice must be given to the prospective purchaser before the execution of the binding contract of purchase or sale, either separately or as part of the contract. The bill authorizes the purchaser to terminate a contract if the seller does not provide the notice. The bill provides that it is conclusively presumed that a purchaser has waived all rights to terminate a contract if the seller provides notice at or before the closing of the purchase and sale contract, even though the notice was not provided in a timely manner. Notwithstanding any provision of this bill to the contrary, the bill provides that the seller and other persons involved in the transactions are not liable for any damages to the buyer if notice was not provided because the utility service provider did not file a map of the certificated service area with the Texas Natural Resource Conservation Commission (TNRCC) and TNRCC did not maintain an accurate map of the area (Sec. 13.257(e)). The bill requires the purchaser to sign the notice or the purchase and sale contract that includes the notice to evidence the purchaser's receipt of the notice (Sec. 13.257(f)). A separate copy of the notice with current information is required to be executed by the seller and purchaser, acknowledged, and recorded in the real property records of the county where the property is located at the closing of the purchase and sale contract. The bill authorizes the seller, title insurance company, real estate broker, examining attorney, or any person acting on the seller's behalf (seller) to rely on the accuracy of the information and map. The bill specifies that any information taken from the map is conclusively presumed to be correct as a matter of law (Sec. 13.257(g)). In addition, any seller or subsequent seller may rely on the map (Sec. 13.257(h)). The bill prohibits a purchaser, purchaser's heirs, successors, or assignees (purchaser) from maintaining an action for damages or maintaining an action against a seller by reason of the seller's use of the map to determine if the property to be purchased is within the certificated service area of the utility service provider (Sec. 13.257(i)). Any purchaser who purchases real property in a certificated service area of a utility service provider and who then sells or conveys the property is conclusively considered on the closing of the subsequent sale to have waived previous rights under the provisions of this bill (Sec. 13.257(j)). Unless a purchaser has waived rights to terminate a contract as provided by this bill, the purchaser may file a suit for damages if the sale or conveyance of real property does not comply with the provisions of this bill (Sec. 13.257(l)). The bill establishes certain deadlines under which a suit for damages must be filed and specifies the amount which may be sought in a suit (Secs. 13.257(m), (n), and (p)). EFFECTIVE DATE September 1, 2001. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.H.B. 2033 modifies the original bill by clarifying that the sale or purchase of property under the provisions of this bill apply to unimproved real property, rather than real property in general. The substitute also adds methods of transferring a title for which a written notice specifying the water or sewer service area of a property is not required (Sec. 13.257(b)). The substitute provides that a map of the certificated service area filed in the real property records by the utility service provider, rather than a map of the certificated service area of the utility service provider maintained by the Texas Natural Resource Conservation Commission, may be relied upon.