89R25891 SCR-D     By: Noble, Leach, et al. H.B. No. 4211     Substitute the following for H.B. No. 4211:     By:  King C.S.H.B. No. 4211       A BILL TO BE ENTITLED   AN ACT   relating to certain residential property interests controlled by   certain entities.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Title 12, Property Code, is amended by adding   Chapter 223 to read as follows:   CHAPTER 223. CERTAIN RESIDENTIAL ARRANGEMENTS CONTROLLED BY   BUSINESS ENTITIES   SUBCHAPTER A.  GENERAL PROVISIONS          Sec. 223.001.  DEFINITIONS. In this chapter:                (1)  "Business entity" means a partnership,   corporation, joint venture, limited liability company, nonprofit   organization, or other business organization or business   association, however organized.                (2)  "Managing entity" means a business entity that   owns or controls residential property used in a residential   arrangement.                (3)  "Residential arrangement" means an arrangement in   which the purchaser of an interest in a business entity is entitled   to exclusive possession of or an interest in residential property   owned or controlled by the entity as long as the purchaser holds the   interest in the business entity.                (4)  "Residential property" means the real property or   improvements for a dwelling, including a single-family house,   duplex, condominium unit, or unit in a multiunit residential   structure.          Sec. 223.002.  APPLICABILITY. This chapter does not apply   to a timeshare plan, as defined by Section 221.002.   SUBCHAPTER B.  REGULATION OF RESIDENTIAL ARRANGEMENTS          Sec. 223.101.  AGREEMENTS AND RULES; DISPUTE RESOLUTION.   (a) An agreement documenting a residential arrangement or for the   purchase of an interest in a managing entity must disclose to the   purchaser if the agreement is for the purchase of an interest in the   entity and not in any residential property.          (b)  A dispute concerning an agreement described by   Subsection (a), a related agreement, or rules governing a   residential arrangement or an ownership interest in a managing   entity must be brought before a court established under the laws of   this state or the United States and must be adjudicated under the   laws of this state or the United States.  Notwithstanding any other   law, any decision relating to a dispute under this subsection   issued by an arbitrator, an organization offering alternative   dispute resolution services, or any other tribunal other than a   court established under the laws of this state or the United States   is void and unenforceable.          (c)  A provision in an agreement that requires a dispute   described by Subsection (b) to be governed by a law other than the   laws of this state and the United States is void and unenforceable.          Sec. 223.102.  DISCRIMINATION PROHIBITED. A managing entity   may not take an action or refuse to take an action with respect to an   interest in the entity in a manner that would be a violation of   Chapter 301 if the interest in the entity were an interest in real   property, including:                (1)  restricting the transfer of the interest;                (2)  imposing requirements to maintain the interest; or                (3)  refusing to grant an interest in the entity to a   bona fide purchaser or investor.          Sec. 223.103.  TRANSFER OF INTEREST. Notwithstanding any   provision in an agreement relating to a residential arrangement, an   owner of an interest in a managing entity may transfer the interest   without approval from the managing entity.  Any restriction in   violation of this section or Section 223.102 is void and   unenforceable.          Sec. 223.104.  CERTAIN CHARGES PROHIBITED. A managing   entity may not charge a fee for or share in the proceeds of the   transfer of an interest in the managing entity from an owner to a   subsequent purchaser.   SUBCHAPTER C.  ENFORCEMENT AND REMEDIES          Sec. 223.201.  DEFINITIONS.  In this subchapter:                (1)  "Commission" means the Texas Commission on   Environmental Quality.                (2)  "District" means a municipal utility district   created under Chapter 54, Water Code.                (3)  "Governmental entity" includes the following as   defined by Section 2254.021, Government Code:                      (A)  a state governmental entity; and                      (B)  a political subdivision.                (4)  "Public money or benefit" means:                      (A)  state or local funds, grants, or tax   incentives or credits; or                      (B)  the issuance of a required construction or   development permit.          Sec. 223.202.  DECEPTIVE TRADE PRACTICE. A violation of   this chapter is a deceptive trade practice under Subchapter E,   Chapter 17, Business & Commerce Code.          Sec. 223.203.  ATTORNEY GENERAL ENFORCEMENT ACTION; EFFECT   ON PETITION FOR CREATION OF MUNICIPAL UTILITY DISTRICT AND RECEIPT   OF PUBLIC MONEY OR BENEFIT.  (a)  The attorney general may bring an   action for declaratory or temporary or permanent injunctive relief   to enforce this chapter.  The attorney general shall file notice of   an action under this section for recording in the real property   records of each county where any part of the real property subject   to the residential arrangement that is the subject of the action is   located.          (b)  A court may issue an order under this section enjoining   a managing entity or a person affiliated with the managing entity   from taking action in furtherance of development of or construction   on residential property used in a residential arrangement subject   to an action under this section, including:                (1)  filing a petition with the commission for the   creation of a district;                (2)  taking action in connection with a petition for   the creation of a district filed before the issuance of the order;   or                (3)  receiving, directly or indirectly, any public   money or benefit.          (c)  On entry of an order under Subsection (b), the attorney   general shall:                (1)  file notice of the order for recording in the real   property records described by Subsection (a) and attach a copy of   the order as an exhibit; and                (2)  notify:                      (A)  the commission; and                      (B)  any governmental entity the attorney general   determines may provide any public money or benefit to the managing   entity or other person that is subject to the injunction imposed by   the order.          (d)  On receiving the notice described by Subsection (c) and   until final judgment is entered in the action:                (1)  the commission shall stay consideration of a   petition to create a district consisting of territory that is   subject to a residential arrangement that is the subject of the   order; and                (2)  a governmental entity shall cease providing any   public money or benefit to the managing entity or other person that   is the subject of the injunction imposed by the order.          (e)  On entry of final judgment in the action, the attorney   general shall file notice of the judgment for recording in the real   property records described by Subsection (a) and attach a copy of   the judgment as an exhibit.          (f)  The commission shall deny a petition described by   Subsection (d)(1) if the judgment entered in the action finds that   the residential arrangement violates this chapter.          Sec. 223.204.  ATTORNEY GENERAL INVESTIGATION AND   DISCOVERY; SECRETARY OF STATE INTERROGATORIES AND   RECORDS.  (a)  The attorney general may conduct discovery to   investigate a potential action under Section 223.203 or in an   action brought under Section 223.203, including by:                (1)  petitioning for an order authorizing the taking of   a deposition under Rule 202, Texas Rules of Civil Procedure; or                (2)  if the attorney general has reason to believe that   a person may be in possession, custody, or control of any   documentary material or other evidence or may have any information   relevant to an investigation of a suspected violation of this   chapter, issuing in writing and serving on the person a civil   investigative demand requiring the person to:                      (A)  produce any of the documentary material for   inspection and copying;                      (B)  answer in writing any written   interrogatories;                      (C)  give oral testimony; or                      (D)  provide any combination of civil   investigative demands under Paragraph (A), (B), or (C).          (b)  The secretary of state shall on request by the attorney   general:                (1)  serve interrogatories on an individual or entity   as necessary to determine the ownership or control of a business   entity that is the subject of an action by the attorney general   under Section 223.203; and                (2)  provide to the attorney general all records held   by the secretary relating to the ownership or control of a business   entity that is the subject of an action by the attorney general   under Section 223.203.          Sec. 223.205.  PROHIBITED USE OR RECEIPT OF PUBLIC MONEY OR   BENEFIT. On issuance of an order for injunctive relief under   Section 223.203 or entry of a judgment finding that a residential   arrangement or a managing entity or other person violated this   chapter, a governmental entity may not grant, issue, approve, or   permit the use of any public money or benefit for residential   property used in a residential arrangement subject to the order or   judgment.          Sec. 223.206.  REMEDIES NOT EXCLUSIVE.  The remedies   provided by this chapter are in addition to any other remedy or   procedure provided by state or federal law.          SECTION 2.  This Act takes effect immediately if it receives   a vote of two-thirds of all the members elected to each house, as   provided by Section 39, Article III, Texas Constitution.  If this   Act does not receive the vote necessary for immediate effect, this   Act takes effect September 1, 2025.