A bill introduced on February 3, 2025 by Rep. Gina Hinojosa (D- Austin) would restrict investment firms from from entering into executory contracts to purchase single family homes during the first thirty (30) days that the property is listed for sale. The measure, HB 2334, proposes to add a new section to Chapter 5 of the Texas Property Code.
Under Texas law, an executory contract is an agreement involving the lease, purchase, sale or exchange of real estate whose terms require one or both parties to take action in the future. This includes contracts for deed, lease options (lease to own), or purchase options that last longer than 180 days. I have previously written about executory contracts, their challenges and disfavor in prior posts.
The Bill is short on details, and the Bill Analysis explaining its purpose is not yet available. At first glance, I’m left with a few questions that do not appear to be addressed in the Bill’s plain text:
- What activities or abuses necessitated this measure, and how are they mitigated by a 30 day moratorium?
- What are the negative impacts for a Seller of a single family residence that is anxious to sell quickly? Wouldn’t this measure limit their options and possibly delay their ability to sell?
- Are off market deals (where there is no listing) exempted from the 30 day moratorium?
The answers to these questions may come during committee consideration of the Bill. It’s only a few days old, and still needs to work its way through the Legislative process if it is going to become law.
Here’s the verbatim language of the Bill as introduced:
“A BILL TO BE ENTITLED AN ACT
relating to restrictions on the purchase of a single-family home by an investment firm.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter A, Chapter 5, Property Code, is amended by adding Section 5.0155 to read as follows:
Sec. 5.0155. LIMITATION ON CERTAIN PURCHASERS. (a) In this section, “”investment firm”” means a corporation or trust engaged in the business of investing the pooled capital of investors in financial securities.
(b) An investment firm may not enter into an executory contract to purchase a single-family home that is listed for sale before the 30th day after the date the home is listed.
(c) A contract entered into in violation of this section is voidable by the seller at any time before the contract is fully executed.
SECTION 2. Section 5.0155, Property Code, as added by this Act, applies only to an executory contract entered into on or after the effective date of this Act.
SECTION 3. This Act takes effect September 1, 2025.”
