HBA-MPM H.B. 2033 77(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 2033
By: Pitts
Business & Industry
3/20/2001
Introduced



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.  House Bill 2033 requires such a notice
to be provided to a purchaser of 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

House Bill 2033 amends the Water Code to provide that if a person proposes
to sell or convey 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
such 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 the information or the Texas Natural Resource
Conservation Commission (TNRCC) did not maintain an accurate map of the
utility service provider's certificated service area or the seller or other
persons provided a notice that was unintentionally incorrect (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 information that is last filed
with TNRCC by the utility service provider and the accuracy of the map of
the certificated service area of the utility service provider provided by
TNRCC. The bill specifies that any information taken from the information
or map is conclusively presumed to be correct as a matter of law (Sec.
13.257 (g)).  The bill provides that in completing the notice required by
this bill, any seller or subsequent seller may rely on the information and
map filed by the utility service provider (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 and information
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.