Every Texas legislative session produces new laws related to real estate. Those measures may require you to use new or modified forms, change the way you operate, or affect the rights and obligations of parties to a transaction. Here are several bills passed during the 88th Texas Legislature that affect you and your clients.

Seller’s Disclosure Notice to require info on gas piping

For contracts with effective dates on or after September 1, 2023, sellers must use an updated Seller’s Disclosure Notice with a spot to note if the seller is aware whether the property has fuel gas piping and whether the seller is aware if the piping is made of black iron pipe, copper, or corrugated stainless steel tubing. Texas REALTORS® has updated its form, which is available for use through zipForm and other forms vendors who have licensed the Texas REALTORS® forms library.

Municipal Utility District (MUD) notice updates

Sellers were already required to provide potential buyers a notice when selling a property located in a MUD. A new law modifies the content that must be in the notice. Since this bill passed by at least two-thirds of the vote, it became effective immediately upon the governor’s signature in June.

The revised notice separately lists the property tax and property assessments levied against the property for greater clarity.

The revision also lists the amounts of bonds that have been issued by the MUD categorized by the type of facility the bonds will be used for: water, sewer, and drainage facilities; road facilities; parks and recreational facilities; and other facilities. MUDs are required to start using the new format when providing the notice and were required to post the notice on their website as of the effective date, June 18, 2023.

TREC is considering creating a form that can be filled out with the information from the MUD. For now, sellers and agents will continue getting the form from the MUDs directly.

Note: There are no changes to the requirements for sellers to provide MUD notices to potential buyers.

Texas Real Estate Commission

The Texas Sunset Advisory Commission extended the sunset date for TREC to 2033. That is the periodic review every state agency goes through to eliminate duplication, waste, and inefficiency. Additionally, the Sunset Advisory Commission will conduct a special-purpose review of TREC for the 89th Legislature in 2025. The review is limited to required seller’s disclosures and TREC’s disclosure forms.

Other changes include the following:

  • Beginning January 1, 2024, a business will be exempt from the business entity licensing requirement if the business entity:
    1. receives compensation on behalf of a broker or sales agent
    2. performs no other acts of a broker
    3. is an LLC or S Corp
    4. is registered with TREC
    5. is at least 51 % owned by the license holder on whose behalf the entity receives compensation.

    This change takes effect January 1, 2024, and TREC is in the process of adopting rules and forms to allow for business entity registration.

  • Currently, a person selling or offering to sell an option or assigning an interest in a contract to purchase real property—also known as wholesaling—must disclose to potential buyers the nature of the interest offered. If a person offers a property for sale when the person does not own the property, that person is engaged in brokerage and must be licensed to do so. A new law changes the disclosure requirement to include disclosure to sellers. These disclosures will now need to be made in writing. These changes take effect January 1, 2024.
  • The existing exceptions for military spouses to obtain an occupational license, including a real estate license, is being extended to include military service members. This change takes effect September 1, 2023.
  • TREC license-holder information will now be confidential. This includes home addresses, telephone numbers, email addresses, and other personal information. Previously, this information was available to the public through an open records request or on TREC’s website. This change takes effect September 1, 2023.
  • The fees brokers and sales agents pay with initial and renewal license applications for the Texas Real Estate Research Center have been clarified. Fees are for each year of the two-year term of the license.
  • Currently, the education hours required to become a broker are specified in statute, which means any edits to the hours to address changes in the market or to modernize the education needs must be made by the Legislature. TREC will now have rule-making authority to make such changes.
  • Real Estate Recovery Trust Account: TREC will now have rulemaking authority to set and collect fees to cover maintenance of the Real Estate Recovery Trust Account. The trust account was established to reimburse consumers who suffer damages caused by TREC license holders. This law also increases the statutory amounts for the trust account related to claims to account for inflation and increased claim costs. Those amounts had not been updated since 2003. They have been raised from $50,000 to $125,000 per claim; the cap per license holder has been raised from $100,000 to $250,000.

Fair housing/Discrimination

A bill known as the CROWN Act (Creating a Respectful and Open World for Natural Hair) establishes that the Texas Fair Housing Act prohibits discrimination on the basis of a person’s hair texture or protective hairstyle commonly or historically associated with race. Protective hairstyle includes braids, locks, and twists. This law, which goes into effect September 1, 2023, also applies to employment practices.

Employment (brokerages and REALTOR® associations)

A new law requires all employers with one or more employees to post a notice to employees containing the contact information for reporting instances of workplace violence or suspicious activity to the Department of Public Safety. The notice must be posted in a conspicuous place in the workplace and in sufficient locations for all employees. Notices must be in English (and Spanish if an employer has Spanish-speaking employees), and include information on making anonymous complaints. While the new law is effective September 1, 2023, the notice is not required to be issued by the Texas Workforce Commission until March 1, 2024.

Additionally, the CROWN Act applies to all employers and prohibits discrimination on the basis of a person’s hair texture or protective hairstyle commonly or historically associated with race. Protective hairstyle includes braids, locks, and twists. This law goes into effect September 1, 2023.

Homeowners Associations

A law that goes into effect January 1, 2024, requires homeowners associations to adopt an enforcement policy regarding levying fines. The policy must include:

  • A list of each category of restrictive covenants for which fines may be assessed
  • A schedule of fines for each category of violations
  • Information about hearings before the board.

The policy must be posted on the HOA’s website, or once per year the policy must be sent to owners by mail, email, or hand-delivery.

Another law related to HOAs provides the following requirements to file a homeowners association lien:

  • The HOA must provide two monthly delinquency notices, the first by first-class mail, and the second by certified mail, return-receipt-requested, to the owner’s last known address
  • The HOA is prohibited from filing a lien before the 90th day after the date the second notice was sent. The new requirements do not apply to an owner protected by the Servicemembers Civil Relief Act, which has higher protections. That law helps servicemembers in the event that legal or financial transactions adversely affect their rights during military or uniformed service.

This law is effective September 1, 2023.

Real property records

To cut down on deed fraud, a new law expands the number of counties that may require a person to present a photo ID when filing a record. Now, a clerk in any county that allows electronic filing of documents in the real property records may ask for a photo ID and retain a copy of the ID.

Another law provides for the use of a remote ink notarization, which allows a person to remotely use a “wet ink” signature rather than an electronic signature.

Property tax appraisal process

Several new laws have the following provisions:

  • Requires each central appraisal district (CAD) to maintain a publicly available and searchable internet database that provides information regarding protest hearings.
  • Allows a property owner to choose to communicate via electronic means with a CAD.
  • Expands the tax-liaison-officer role to assist property owners who have grievances with their appraisal district.
  • Ownership of property that qualified for a designation as open-space land was considered to have changed when transferred to a deceased’s owner’s surviving family. The law required the surviving family to reapply for the exemption, and if they did not do so by the May 1 deadline, subjected them to a larger tax bill on the otherwise qualifying land for the year. Under one new law, the surviving spouse will no longer need to reapply for open-space valuation and, if the land otherwise qualifies for appraisal as open-space land, the surviving spouse will be able to maintain the special appraisal on the property after the passing of the owner. Another new law provides for late application (past the May 1 deadline) for appraisal of land as qualified open-space land following death of the owner if filed by the surviving spouse or surviving child, the executor or administrator of the estate, or a fiduciary acting on behalf of the surviving spouse or surviving child of the deceased owner.
  • A new law clarifies that in an appeal of an order of an appraisal review board (ARB) determining a property tax protest, or a motion involving an increase in the appraised value of property, the appraisal district has the burden of establishing the appraised value of the property by clear and convincing evidence if the appraised value of the property in the preceding year was determined at a trial on the merits.
  • Allows a property owner to file a request for limited binding arbitration to compel the appraisal review board (ARB) or chief appraiser to comply with the hearing procedures adopted by the ARB.
  • Entitles the surviving spouse of a person receiving a residence homestead property tax exemption for an individual 65 years of age or older who dies in a tax year to receive that exemption in the next tax year on the same property without applying for the exemption if certain conditions are met.
  • Allows requests for binding arbitration in an appeal of an appraisal review board order to be filed directly with the comptroller as opposed to the CAD. This will help to alleviate the backlog in requests that are filed annually with each CAD.

Geothermal rights

A new law creates a new property right in geothermal energy and associated resources below the surface of land. TREC is considering potential contract changes to reflect this right. This law went into effect on June 18, 2023.

Property Management

Justice court amounts

Justice courts currently allow citizens to sue for amounts up to $20,000 and allow landlords and tenants to resolve disputes such as evictions and repairs. However, under current law, these residential rental disputes can only be settled for up to $10,000. A new law raises the amount a justice court can award as judgment under Section 92.0563 (Tenant’s Judicial Remedies), including an order of repair, to $20,000, rather than $10,000, excluding interest and costs of court. This effectively raises the maximum amount a justice court may award for residential rental disputes to $20,000—on par with the existing amount people can sue one another for in justice court. Specifically, the $20,000 judgment limit would apply to any judgment that provides remedy to a tenant, including orders that require a landlord to make repairs, orders that reduce the tenant’s rent while repairs are ongoing, judgments against the landlord for damages, and court costs and attorney’s fees incurred by the tenant. This law takes effect September 1, 2023.

Source of Funds

Recently, an HOA in Texas passed a rule prohibiting tenants who participate in the Housing Choice Voucher Program, also known as Section 8, from renting homes in that homeowners association. This rule disproportionately affected residents who were Black and female. Further, that rule directly went against the work the Legislature has done in creating processes for neighborhoods to remove discriminatory deed restrictions. A new law that goes into effect September 1, 2023, prohibits an HOA from prohibiting or restricting a property owner from renting to a person based on their method of payment, including payment made in whole or in part by a housing choice voucher under Section 8 or any other federal, state, or local housing assistance, including rental vouchers, rental assistance, or rental subsidies from a nongovernmental organization.

Evictions

Evictions are covered under a new “pre-emption” law passed this session. Unless expressly authorized by another state statute, a municipality or county may not adopt, enforce, or maintain an ordinance, order, or rule regulating evictions or otherwise prohibiting, restricting, or delaying delivery of notice to vacate or filing a suit to recover possession of the premises under Chapter 24, Property Code. This law goes into effect September 1, 2023, and prohibits municipalities and counties from enacting their own regulations regarding these issues. At least one lawsuit has been filed to stop this law from taking effect. Texas REALTORS® staff is currently monitoring this legal action, as it may impact implementation of the law.

Service animals

There has been an increase in reports of people who are not disabled misrepresenting their dogs as service animals to obtain the benefits provided to individuals with disabilities. For example, some people have attempted to pass off their pets as service dogs to circumvent breed restrictions and avoid paying a pet deposit at their apartments. As a result, some businesses have become increasingly distrustful that an animal represented as a service dog is, in fact, a legitimate service animal.

A new law revises provisions relating to the improper use of assistance animals in order to deter future offenders from fraudulently exploiting this accommodation.

Under the new law, a person commits an offense if intentionally or knowingly representing that an animal is an assistance animal or service animal when the animal is not specially trained or equipped to help a person with a disability. An offense is a misdemeanor punishable by a fine of not more than $1,000 (previously $300) and 30 hours of community service.

The bill also includes a provision that subjects a person who habitually abuses or neglects to feed or otherwise neglects to properly care for the person’s service animal to seizure of the animal under the Health and Safety Code. This law takes effect September 1, 2023.

Commercial Property Management

Current law already permits a commercial landlord to terminate a lease—regardless of the lease term—if the commercial tenant used the premises for prostitution or trafficking.

A law that takes effect September 1, 2023, adds provisions related to massage businesses. The law specifies that a commercial tenant’s right to possession terminates and the landlord has the right to recover possession—regardless of the terms of the lease—if the tenant is using the premises for operating, maintaining, or advertising a massage establishment without the required license or if the massage establishment was issued a citation, administrative penalty, civil penalty, or other civil or criminal sanction for violating a local ordinance that relates to operating a sexually oriented business.