As the Texas House and Senate chambers are called to order for the 82nd Legislative Session, numerous issues that affect the way Texas REALTORS® do business will be brought to the table. The HAR Governmental Affairs department works closely with Texas Association of REALTORS® to ensure the industry is secure moving forward, and that our REALTORS® are not negatively impacted by the legislation being passed.
The following information highlights legislative areas of interest to REALTORS® and the real estate industry. It is important to note that there is a projected $24 billion budget shortfall that the Texas Legislature will be tasked with balancing during session. This is in addition to re-drawing Texas’s legislative district borders because of the 2010 Census, and the 28 government agencies that are due for Sunset review.
Appraisal Issues/Broker Price Opinions
Laws clarifying appraisal standards and regulating appraisal management companies (AMCs) could be introduced in response to the implementation of the Home Valuation Code of Conduct (HVCC). Also, language might be added that would draw a distinct line between appraisals and broker price opinions.
County Rulemaking Authority
Many county governments in Texas believe more regulation is necessary to limit continued development in the state. Counties currently have authority over various things such as regulating land use and structures, platting and subdividing land, providing and regulating water, sewer and other utility service to residential property.
Last November, Texans voted in favor of a constitutional amendment that strengthens private property rights against abusive eminent domain practices. It is now the responsibility of the Legislature to enact the proper legislation to implement these security measures for property owners.
With the population of Texas expected to more than double between 2000 and 2060, it is imperative that legislation be introduced establishing a comprehensive state-wide energy policy. This would include using current resources such as natural gas, electricity and gasoline, and implementing an energy plan which would possibly include other energy sources such as wind, nuclear, solar, coal, bio-fuels and geothermal.
Expansion of Gaming in Texas
As the budget shortfall continues to increase, more groups are pressing the Legislature to expand gaming in Texas to include destination resort style casinos or slot machines at licensed race tracks. It is possible the revenue raised from these voluntary gaming activities could suppress any new attempts by Legislators to tax real estate specific activities.
*Any expansion of gaming activities in Texas must first be approved by Texas voters.
Homeowners Associations (HOAs)
Although the Legislature has addressed HOAs numerous times in the past, the topic might arise again with legislation that would address many property owners’ and buyers’ concerns. Most of the problems arising from HOAs fall into three categories: money or collection issues, deed restriction enforcement, and lack of responsiveness from the HOA itself.
Mandatory Sales Price Disclosure
It is possible, in response to a push by some appraisal districts, cities and counties, that a bill requiring full disclosure of all real estate sales in order to establish a market value of real property in Texas will be introduced. According to these groups, more accurate appraisals could be obtained if sales price information was disclosed, although recent reports from the Texas comptroller indicate all real property in Texas is currently being valued at 99% of market value.
Mortgage Finance: Home Equity
Currently, the Texas Constitution contains consumer protections for home equity loans. These protections include: a 12-day waiting period, three-day right to rescind the loan, an 80% loan-to-value ratio maximum, and refinancing is allowed after the first year of the loan. There are continuing discussions in the state Legislature to “water down” these constitutional amendments, although any piece of legislation that passes will have to be voted on by Texas voters before it can pass.
Mortgage Finance: Seller Financing
In 2008, President Bush signed into law the Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act, which mandated state passage of uniform minimum licensing provisions for originators of residential mortgage loans, including residential property seller-financers. Implementation of the SAFE Act in Texas did not abolish seller-financing altogether, but it did necessitate seller-financers be licensed as a residential mortgage loan originator. It is probable the Texas Association of REALTORS® will be able to achieve a de minimis exception to the SAFE Act allowing sellers to finance up to five transactions per 12-month period without triggering the licensing requirement.
Private Transfer Fees
During the 2007 Legislature, Texas legislators passed a law prohibiting private transfer fees, and in 2009 they clarified the law that regardless of who pays a private transfer fee, the fee is prohibited in Texas. In 2011, another simple clarification in the law is necessary, because some developers are recording deed restrictions that require the payment of a percentage of the proceeds of future property sales back to the developer or other entity for the next 99 years.
Sales Tax on Professional Services
Texas currently imposes a sales and use tax (sales tax) on all retail sales, leases and rentals of most goods, and some taxable services. Discussions continue to expand this sales tax to include professional services, including real estate services. If the state were to do this, it would be considered a “targeted income tax” and would have a detrimental effect on the overall economy and real estate industry in Texas.
Sales Tax on Real Estate
Some legislators will continue their lobbying efforts for a bill which would apply the combined state-local sales tax rate (8.25%) to all real estate transactions that involve selling the ownership of the property or transferring from one party to another. It would also apply to long-term leases. These legislators contend that applying the sales tax rate to all real estate transactions could help eliminate the burden of school property taxes.
With the continual influx of people moving to Texas, the Legislature must address the state’s inadequate transportation system. Failure to implement a statewide, multi-modal transportation plan will only worsen our current roadway congestion, stall the movement of goods, and limit the housing opportunities for individuals and families throughout the state.
The Texas Water Development Board (TWDB) estimates that roughly 85% of the projected population in 2060 will not have enough water during drought conditions if the current Legislature does not implement a dedicated state funding source to pay for strategies and projects by the TWDB to address this serious problem.
• The Texas Legislature meets every two years for 140 days. Session begins on the second Tuesday of January at noon.
• Texas House of Representatives is composed of 150 members, each elected for a two-year term.
• Texas Senate is composed of 31 members, each elected for a four-year term.
• The state constitution requires that all bills increasing taxes or raising revenue for use by the state originate in the House.
• According to the state constitution, only the governor of Texas can call a “special session”, which is an additional session that addresses only a set list of issues the governor deems critically important to the conducting of state affairs. Each special session is only allowed to last 30 days.
•The duties of the Legislature include consideration of proposed laws and resolutions, consideration of proposed constitutional amendments for submission to the voters, and appropriation of all funds for the operation of state government.
2011 Important Legislative Dates
Tuesday, January 11: Session Begins (first day)
Friday, March 11: Deadline for filing most bills (60th day)
Tuesday, April 12: REALTOR® LOBBY DAY IN AUSTIN
Monday, May 30: Session Ends (140th day)
Sunday, June 19: Last day governor can sign or veto bills passed during the regular legislative session
Monday, August 29: Date that bills without specific effective dates (that could not be effective immediately) become law