SB1407 - Relating to the withdrawal of certain deposits placed in escrow in connection with the purchase or reservation of a condominium unit.

  89R8904 JBD-D     By: Parker S.B. No. 1407       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 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.   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 to purchase a unit provides that the   deposit made in connection with the purchase or reservation of the   unit may be used for construction costs and the declarant obtains   and maintains a surety bond or insurance as described by Subsection   (c), the declarant may withdraw escrow funds when construction of   improvements begins. The funds may be used only for actual building   and construction costs of the project in which the unit is located.           (c)     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licensed in this state in favor of the   purchaser in an amount adequate to cover the amount of the deposit   to be withdrawn from escrow funds under Subsection (b).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.           (d)     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.