bill voiding long-term home service contracts that bind future owners

The text as introduced · 710 words

89R9055 PRL-F

By: Parker
S.B. No. 2957

A BILL TO BE ENTITLED

AN ACT

relating to prohibiting the use of unfair service agreements;

creating an offense.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Chapter 17, Business & Commerce Code, is amended

by adding Subchapter M to read as follows:

SUBCHAPTER M. UNFAIR SERVICE AGREEMENTS

Sec. 17.971. DEFINITIONS. In this subchapter:

(1) "Residential real estate" means real property

located in this state used primarily for personal, family, or

household purposes and improved by one to four dwelling units.

(2) "Service agreement" means a contract under which a

person agrees to provide services in connection with:

(A) the maintenance of residential real estate;

or

(B) the purchase or sale of residential real

estate.

(3) "Service provider" means an individual or entity

that provides services to a person.

Sec. 17.972. CHARACTERISTICS OF UNFAIR SERVICE AGREEMENTS.

(a) A service agreement is unfair under this subchapter if any part

of the service subject to the agreement is not to be performed on or

before the first anniversary of the date the agreement is entered

into and:

(1) purports to run with the land or bind current

owners or successors in title to specified real property located in

this state;

(2) allows for assignment of the right to provide

service without notice to and consent of the owner of residential

real estate; or

(3) purports to create a lien, encumbrance, or other

real property security interest.

(b) This section does not apply to:

(1) a home warranty or similar guarantee that is

designed to guarantee or warrant the repair or service of an

appliance, system, or component of a residential property for a

fixed period;

(2) an insurance contract;

(3) an option or right of refusal to purchase the

residential real estate;

(4) a declaration created in the formation of a common

interest community or an amendment to the declaration;

(5) a maintenance or repair agreement entered into by

a homeowners' association in a common interest community;

(6) a mortgage loan or a commitment to make or receive

a mortgage loan;

(7) a security agreement under Title 1 relating to the

sale or lease of personal property or fixtures; or

(8) water, sewer, electrical, telephone, cable, or

other regulated utility service providers.

(c) This section does not impair the rights granted by

Section 53.123, Property Code.

(d) A service agreement that is unfair is void and

unenforceable.

(e) A person that enters into an unfair service agreement

with a consumer commits a false, misleading, or deceptive act or

practice actionable under Subchapter E.

Sec. 17.973. RECORDING PROHIBITED. (a) A person may not

file for recording or cause to be filed for recording an unfair

service agreement or notice or memorandum thereof.

(b) A person commits an offense if the person files for

recording or causes to be filed for recording an unfair service

agreement or notice or memorandum of an unfair service agreement.

(c) An offense under this section is a Class A misdemeanor.

(d) Notwithstanding any other law, a county clerk may refuse

to record an unfair service agreement.

(e) If an unfair service agreement is recorded, it does not

provide actual or constructive notice against an otherwise bona

fide purchaser or creditor.

Sec. 17.974. APPLICATION FOR ISSUANCE OF COURT ORDER. If an

unfair service agreement or a notice or memorandum thereof is

recorded, any person with an interest in the real property that is

the subject of that agreement may file an application with the

district court in the county in which the agreement is recorded for

the issuance of an order declaring that the agreement is void and

unenforceable.

Sec. 17.975. DAMAGES. If an unfair service agreement or a

notice or memorandum thereof is recorded, any person with an

interest in the real property that is the subject of that agreement

is entitled to recover from the service provider who recorded the

agreement:

(1) actual damages; and

(2) reasonable attorney's fees and other litigation

costs reasonably incurred.

SECTION 2. Subchapter M, Chapter 17, Business & Commerce

Code, as added by this Act, applies only to a contract entered into

on or after the effective date of this Act.

SECTION 3. This Act takes effect September 1, 2025.