Tex. Prop. Code Section 5.016
Conveyance of Residential Property Encumbered by Lien


(a)

A person may not convey an interest in or enter into a contract to convey an interest in residential real property that will be encumbered by a recorded lien at the time the interest is conveyed unless, on or before the seventh day before the earlier of the effective date of the conveyance or the execution of an executory contract binding the purchaser to purchase the property, an option contract, or other contract, the person provides the purchaser and each lienholder a separate written disclosure statement in at least 12-point type that:

(1)

identifies the property and includes the name, address, and phone number of each lienholder;

(2)

states the amount of the debt that is secured by each lien;

(3)

specifies the terms of any contract or law under which the debt that is secured by the lien was incurred, including, as applicable:

(A)

the rate of interest;

(B)

the periodic installments required to be paid; and

(C)

the account number;

(4)

indicates whether the lienholder has consented to the transfer of the property to the purchaser;

(5)

specifies the details of any insurance policy relating to the property, including:

(A)

the name of the insurer and insured;

(B)

the amount for which the property is insured; and

(C)

the property that is insured;

(6)

states the amount of any property taxes that are due on the property; and

(7)

includes a statement at the top of the disclosure in a form substantially similar to the following:
WARNING: ONE OR MORE RECORDED LIENS HAVE BEEN FILED THAT MAKE A CLAIM AGAINST THIS PROPERTY AS LISTED BELOW. IF A LIEN IS NOT RELEASED AND THE PROPERTY IS CONVEYED WITHOUT THE CONSENT OF THE LIENHOLDER, IT IS POSSIBLE THE LIENHOLDER COULD DEMAND FULL PAYMENT OF THE OUTSTANDING BALANCE OF THE LIEN IMMEDIATELY. YOU MAY WISH TO CONTACT EACH LIENHOLDER FOR FURTHER INFORMATION AND DISCUSS THIS MATTER WITH AN ATTORNEY.

(b)

A violation of this section does not invalidate a conveyance. Except as provided by Subsections (c) and (d), if a contract is entered into without the seller providing the notice required by this section, the purchaser may terminate the contract for any reason on or before the seventh day after the date the purchaser receives the notice in addition to other remedies provided by this section or other law.

(c)

This section does not apply to a transfer:

(1)

under a court order or foreclosure sale;

(2)

by a trustee in bankruptcy;

(3)

to a mortgagee by a mortgagor or successor in interest or to a beneficiary of a deed of trust by a trustor or successor in interest;

(4)

by a mortgagee or a beneficiary under a deed of trust who has acquired the real property at a sale conducted under a power of sale under a deed of trust or a sale under a court-ordered foreclosure or has acquired the real property by a deed in lieu of foreclosure;

(5)

by a fiduciary in the course of the administration of a decedent’s estate, guardianship, conservatorship, or trust;

(6)

from one co-owner to one or more other co-owners;

(7)

to a spouse or to a person or persons in the lineal line of consanguinity of one or more of the transferors;

(8)

between spouses resulting from a decree of dissolution of marriage or a decree of legal separation or from a property settlement agreement incidental to one of those decrees;

(9)

to or from a governmental entity;

(10)

where the purchaser obtains a title insurance policy insuring the transfer of title to the real property; or

(11)

to a person who has purchased, conveyed, or entered into contracts to purchase or convey an interest in real property four or more times in the preceding 12 months.

(d)

A violation of this section is not actionable if the person required to give notice reasonably believes and takes any necessary action to ensure that each lien for which notice was not provided will be released on or before the 30th day after the date on which title to the property is transferred.
Added by Acts 2007, 80th Leg., R.S., Ch. 1056 (H.B. 2207), Sec. 1, eff. January 1, 2008.

Source: Section 5.016 — Conveyance of Residential Property Encumbered by Lien, https://statutes.­capitol.­texas.­gov/Docs/PR/htm/PR.­5.­htm#5.­016 (accessed Apr. 13, 2024).

5.001
Fee Simple
5.002
Failing as a Conveyance
5.003
Partial Conveyance
5.004
Conveyance by Authorized Officer
5.005
Aliens
5.006
Attorney’s Fees in Breach of Restrictive Covenant Action
5.007
Vendor and Purchaser Risk Act
5.008
Seller’s Disclosure of Property Condition
5.009
Duties of Life Tenant
5.010
Notice of Additional Tax Liability
5.011
Seller’s Disclosure Regarding Potential Annexation
5.012
Notice of Obligations Related to Membership in Property Owners’ Association
5.013
Seller’s Disclosure of Location of Conditions Under Surface of Unimproved Real Property
5.014
Notice of Obligations Related to Public Improvement District
5.015
Prohibited Fees
5.016
Conveyance of Residential Property Encumbered by Lien
5.019
Notice of Water Level Fluctuations
5.020
Easements Restricting Possession of Firearms or Alcoholic Beverages Prohibited
5.021
Instrument of Conveyance
5.022
Form
5.023
Implied Covenants
5.024
Encumbrances
5.025
Wood Shingle Roof
5.026
Discriminatory Provisions
5.027
Correction Instruments: Generally
5.028
Correction Instruments: Nonmaterial Corrections
5.029
Correction Instruments: Material Corrections
5.030
Correction Instrument: Effect
5.041
Future Estates
5.042
Abolition of Common-law Rules
5.043
Reformation of Interests Violating Rule Against Perpetuities
5.061
Definition
5.062
Applicability
5.063
Notice
5.064
Seller’s Remedies on Default
5.065
Right to Cure Default
5.066
Equity Protection
5.067
Placement of Lien for Utility Service
5.068
Foreign Language Requirement
5.069
Seller’s Disclosure of Property Condition
5.070
Seller’s Disclosure of Tax Payments and Insurance Coverage
5.071
Seller’s Disclosure of Financing Terms
5.072
Oral Agreements Prohibited
5.073
Contract Terms, Certain Waivers Prohibited
5.074
Purchaser’s Right to Cancel Contract Without Cause
5.076
Recording Requirements
5.077
Annual Accounting Statement
5.078
Disposition of Insurance Proceeds
5.079
Title Transfer
5.080
Liability for Disclosures
5.081
Right to Convert Contract
5.082
Request for Balance and Trustee
5.083
Right to Cancel Contract for Improper Platting
5.084
Right to Deduct
5.085
Fee Simple Title Required
5.087
Additional Provisions: Certain Counties
5.0141
Notice Required Before Contract Execution
5.0142
Purchaser Signature Required
5.0143
Recording of Notice at Closing
5.0144
Reliance on Filed Service Plan
5.0145
Suits for Damages
5.151
Disclosure in Offer to Purchase Mineral Interest
5.152
Certain Purchases of Mineral or Royalty Interests Void
5.201
Definitions
5.202
Certain Private Transfer Fee Obligations Void
5.203
Notice Requirements for Continuation of Existing Private Transfer Fee Obligations
5.204
Additional Compliance Requirement: Timely Acceptance of Fees Paid Under Existing Private Transfer Fee Obligations
5.0205
Equitable Interest Disclosure
5.205
Disclosure of Existing Transfer Fee Obligation Required in Contract for Sale
5.206
Waiver Void
5.207
Injunctive or Declaratory Relief
5.0261
Removal of Discriminatory Provision from Recorded Conveyance Instrument
5.0621
Construction with Other Law
5.0622
Additional Applicability: Certain Counties

Accessed:
Apr. 13, 2024

§ 5.016’s source at texas​.gov