Bill > SB1407

This bill modifies Texas Property Code Section 82.158 regarding escrow deposits for condominium unit purchases, creating new provisions that allow declarants (property developers) to withdraw escrow funds for construction costs under specific conditions. Previously, deposits were strictly held in escrow until closing or refund. The new law permits withdrawal of funds when construction begins, provided the declarant obtains a surety bond or insurance that protects the purchaser's deposit. The bond or insurance must be issued by a state-licensed insurer and cover the full amount of the deposit being withdrawn. Importantly, the bond must be payable to the purchaser if they obtain a legal judgment requiring the return of the deposit. The escrow agent holding the funds is explicitly relieved of responsibility for monitoring how the withdrawn funds are used, and the declarant can only withdraw funds up to the face amount of the bond or insurance coverage. The bill will take effect on September 1, 2025, providing developers more flexibility in using initial unit purchase deposits while still maintaining protections for potential buyers.

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https://capitol.texas.gov/BillLookup/History.aspx?LegSess=89R&Bill=SB1407