Will Assignments be Illegal In Texas? In a Word, No


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We have had a lot of questions from Real Estate Investors about House Bill 8 in Texas. The language, like most bills, requires an attorney to translate.

David Smitherman, a friend and great real estate attorney in Houston, gives us common real estate investors his translation:

HB 8 is not what the real estate investor public thinks it is.

The intent of HB 8 (which should go into effect by Sunday at the latest) was to prohibit past owners of real estate from retaining an interest in property they have already sold through the use of transfer fees.  Moreover, HB 8 specifically excludes consideration paid for an assignment or transfer of interest in real estate within the “real estate investor” context –

(b)        For purposes of this subchapter, the following payments are not considered private transfer fee obligations:

(1)        consideration paid by a purchaser to a seller for an interest in real property transferred…if the additional consideration is paid only once and that payment does not bind successors in interest to the property to any private transfer fee obligation;

(5)        consideration paid to the holder of an option to purchase an interest in property, or to the holder of a right of first refusal or first offer to purchase an interest in property, for waiving, releasing or not exercising the option or right when the property is transferred to another person;

So, HB 8 won’t operate the way in which it has been purported it would.  In fact, HB 8 is good for all Texans, investors and non-investors alike, because it will prohibit the trend sweeping the country today wherein present-day opportunists are creating a system which pays huge dividends to them for many years to come while also acting as a restraint on alienation of property.

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