This legislative update summarizes the remaining 12 bills effective September 1, 2011, that were not addressed in the Part One legislative update that we consider are of interest to our clients. The legislative updates that follow this update will summarize the following bills that we consider are of interest to our clients: (i) bills that we consider important enough to be the subject of a separate legislative update; and (ii) bills and constitutional amendments effective after September 1, 2011. • AMENDMENTS TO BUSINESS AND COMMERCE CODE, CIVIL PRACTICE AND REMEDIES CODE, AND PROPERTY CODE RELATING TO DEEDS CONVEYING RESIDENTIAL REAL ESTATE AND OTHER INSTRUMENTS INVOLVING RESIDENTIAL REAL ESTATE (SB 1320) Senate Bill 1320 enacts the following amendments to the Business and Commerce Code, the Civil Practice and Remedies Code, and the Property Code, respectively, relating to the conveyance of and transactions involving residential real estate: Business and Commerce Code. Senate Bill 1320 adds Chapter 21 to Title 2 of the Business and Commerce Code to prohibit a seller of residential real estate or a person who makes a loan and takes a contractual lien against residential real estate (herein “lender”), before or at the time of the conveyance of the residential real estate to the purchaser or the loan to the borrower, from requesting or requiring the purchaser or borrower to execute and deliver to the seller or lender a deed conveying the residential real estate to the seller or lender. For the purposes of new Chapter 21, Senate Bill 1320 defines residential real estate as “real property on which a dwelling designed for occupancy for one to four families is constructed or intended to be constructed. Senate Bill 1320 further provides that a deed executed in violation of Chapter 21 is voidable unless a subsequent purchaser of the residential real estate, for valuable consideration, obtains an interest in the residential real estate after the voidable deed was recorded without notice of the violation, including notice of actual possession of the property by the grantor of the voidable deed. The residential real estate continues to be subject to the lien of a creditor who, without notice of the violation, granted a loan to a borrower based on the voidable deed.
