Bill > HB4876

This bill modifies Texas law regarding deposits made for purchasing or reserving a condominium unit by expanding the conditions under which a declarant (the person selling or developing the condominium) can withdraw escrow funds. Under the new provisions, if a purchase contract specifically states in bold or underlined type that the deposit may be used for development costs, and the declarant obtains a surety bond or insurance to protect the purchaser, they can withdraw the escrow funds when construction begins. The bill details what qualifies as actual development and construction costs (such as permit fees and architectural expenses) and explicitly excludes certain expenses like salaries and marketing costs. The declarant must obtain a bond or insurance from a state-licensed insurer that covers the full amount of the deposit and is payable to the purchaser if they are awarded a judgment requiring the deposit's return. The bill also clarifies that the escrow agent holding the funds is not responsible for monitoring how the funds are used after release. The changes aim to provide more flexibility for condominium developers while still protecting purchasers' financial interests, and the law will take effect on September 1, 2025.

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https://capitol.texas.gov/BillLookup/History.aspx?LegSess=89R&Bill=HB4876