Ceremonial Signing of Act providing Colonia and Low Income Residents
Rights under Contracts for Deed Law
(Austin, Texas) Today, Governor Rick Perry was joined by Rep. Harold Dutton (D-Houston) and Sen. Eddie Lucio (D-Brownsville) in the ceremonial signing of a bill relating to the rights of a purchaser under an Executory Contract for conveyance of real property.
"After more than 40 years of abuse, the contracts-for-deed system has finally been fixed once and for all," said John Henneberger, co-director of the Texas Low Income Housing Information (TLIHIS) Service, a non-profit entity whose goal is to assist low income Texans.
"For more than 10 years, we have worked with Senator Lucio to curb the predatory practices of those who would take advantage of low income residents. With this bill, Senator Lucio has ensured that residents of colonias and low income neighborhoods all along the Border will no longer be subject to arbitrarily losing their homes under the old contract-for-deed system," added Mr. Henneberger.
House Bill 1823 proposes key reforms to curb the abuses on contracts-for-deed by unscrupulous developers and attempts to curtail the emerging predatory practice of option-to-buy lease contracts in a well-balanced manner. This measure was the companion bill to Senate Bill 629 which overwhelmingly passed the Senate but stalled in the Texas House. By working with Rep. Dutton along with Chairman Troy Fraser (R-Horseshoe Bay) of the Senate Business and Commerce Committee, Senator Lucio was successful in substituting the provisions of his SB 629 into HB 1823. The revised HB 1823 passed the Senate Business and Commerce Committee with a vote of eight to zero and subsequently passed the Senate with unanimous approval and now has been signed into law.
"The Texas Senate sent a strong message to those who would prey on the innocence of our low-income Texans with this unanimous vote that we will not let the unscrupulous take advantage of our constituents," said Senator Lucio.
Housing advocates are praising this bill as the most far-reaching housing bill of the regular 79th legislative session. Mr. Henneberger was quoted in the Quorum Report as saying, "This bill is historic because it finally puts a stop to contracts-for-deed abuses. . . These are the abuses that built the colonias. These are the abuses that prey on poor, hardworking immigrant families." In their June Newsletter, the TLIHIS said that with the passage of this Act, the state would be "putting a halt to contract-for-deed and rent-to-own home sales scams."
"Now we are going to be able to be active owners of our homes," said Gloria Romo, a Webb County El Cenizo Colonia resident and a victim of contracts-for-deed. "I am grateful to the Senator because with his help we will finally become true homeowners. Senator Lucio has always been our foremost hero on issues that affect colonia residents."
As passed, the Act would (among other matters):
- Help people become property owners by giving them the option to convert their contracts for deed into traditional mortgages.
- Requires property sold under contracts for deed to be legally platted/subdivided.
- Enables contract for deed owners to obtain information to determine whether their property has been properly platted.
- Clarifies that residential option-to-buy lease contracts are in practice "executory contracts" and entitles buyers with certain protections.
- Requires sellers to keep the property free of liens during the term of the contract but allows certain prior mortgage liens with certain protections to the buyers.
- Provides reasonable time for sellers to remove certain liens.
- Provides reasonable time so that option-contract provisions/forms can become updated as per new laws.
Note: International Relations and Trade Committee Director Dan Esparza handles this issue Senator Eddie Lucio, Jr.