| (11) Changes and extras. The model clause regarding
changes and extras reads: "All labor or material furnished outside
of this Contract must be agreed upon in writing or it will be considered
as performed under the original Contract and you will receive no extra
money."
(12) Receipts and releases. The model clause regarding
receipts and releases reads: "If I ask, you will give me valid receipts
and releases for the Work from any subcontractor, worker, and supplier."
(13) No work commenced. The model clause specifying
that no work has commenced prior to execution of the contract reads:
"This Contract is executed, acknowledged, and delivered before any
labor has been performed and any material has been furnished for the
Work."
(14) Owner's promises and rights. The model clause
regarding the owner's promises and rights reads:
Attached Graphic
(15) Owner's duties. The model clause regarding the
owner's duties reads:
Attached Graphic
(16) Contractor's duties. The model clause regarding
the contractor's duties reads:
Attached Graphic
(17) Contractor's rights. The model clause regarding
the contractor's rights reads:
Attached Graphic
(18) Trustee's duties. The model clause regarding the
trustee's duties reads:
Attached Graphic
(19) General provisions. The model clause regarding
general contract provisions reads:
Attached Graphic
(20) Preservation of claims and defenses. In accordance
with the Federal Trade Commission's Holder in Due Course Rule, 16
C.F.R. §433.2, it is an unfair or deceptive act or practice to
take or receive a consumer credit contract in connection with the
sale or lease of goods or services to consumers that does not include
the following notice. The notice regarding the preservation of claims
and defenses reads: "NOTICE. ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT
IS SUBJECT TO ALL CLAIMS AND DEFENSES WHICH THE DEBTOR COULD ASSERT
AGAINST THE SELLER OF GOODS OR SERVICES OBTAINED PURSUANT HERETO OR
WITH THE PROCEEDS HEREOF. RECOVERY HEREUNDER BY THE DEBTOR SHALL NOT
EXCEED AMOUNTS PAID BY THE DEBTOR HEREUNDER."
(21) Owner and contractor responsible. Texas Property
Code, §41.007 specifies that a home improvement contract must
contain a notice specifying that the owner and the contractor are
responsible for meeting the terms of the contract. The notice must
appear in either this contract or the residential construction contract.
The Property Code requires that the notice must be conspicuously printed,
stamped, or typed in a font size equal to at least 10-point boldfaced
type or computer equivalent and appear next to the owner's signature
line on the contract. The wording of the notice is specified by the
Property Code, which uses the pronouns "you" and "your" to refer to
the owner. Licensees are encouraged to explain in the contract, prior
to the notice, that "you" and "your" refer to the owner in this notice.
The parties' signatures must be notarized. The licensee may use a
different notary acknowledgment without having to submit the contract
to the agency as a non-standard contract. The notice specifying that
the owner and the contractor are responsible for meeting the terms
of the contract, the model explanatory clause regarding the use of
"you" and "your" in the notice, and the signature blanks read:
Attached Graphic
(22) Assignment. The parties may use a different assignment
or a separate document for the assignment without having to submit
the contract to the agency as a non-standard contract. The model assignment
in which the contractor transfers and assigns the lien to the licensee
reads:
Attached Graphic
(23) Notice of confidentiality rights disclosure. The
security document must incorporate a "Notice of Confidentiality Rights"
disclosure. The disclosure or notice must:
(A) appear on the top of the first page of the security
document;
(B) be in at least 12-point boldfaced type or 12-point
uppercase lettering; and
(C) be substantially similar to the required notice
or disclosure under Texas Property Code, §11.008(b). The model
notice of confidentiality rights reads: "NOTICE OF CONFIDENTIALITY
RIGHTS: I MAY REMOVE OR STRIKE MY SOCIAL SECURITY NUMBER OR MY DRIVER'S
LICENSE NUMBER FROM THIS DOCUMENT BEFORE IT IS FILED IN THE PUBLIC
RECORDS."
(e) Model clauses for a Chapter 342, Subchapter G second
lien home improvement loan promissory note for use in a transaction
that allows for withdrawals or multiple advances.
(1) Identification.
(A) The model identification clause lists the account
or contract number, the name and address of the lender, the date of
the note, the name and address of the borrower, the property address,
the principal amount, and the terms of payment. It also lists the
following items that must be included on the promissory note under
Regulation Z, 12 C.F.R. §1026.36(g):
(i) the lender's Nationwide Mortgage Licensing System
and Registry identification number (labeled "Creditor/Lender NMLS
ID");
(ii) the name of the individual residential mortgage
loan originator with primary responsibility for the origination (labeled
"Loan Originator"); and
(iii) the originator's Nationwide Mortgage Licensing
System and Registry identification number (labeled "Loan Originator
NMLS ID").
(B) The model identification clause reads:
Attached Graphic
(2) Security for payment. The model clause relating
to the security for payment reads: "The Deed of Trust and the Lien
created in the Contract secure this Note. You will have a security
interest in the following described property: (property description)"
(3) Definitions. The model definitions section reads:
(A) "Owner" means (name of Owner), whose address is
(address of Owner, including county). If Owner and Maker are not the
same person, the word "Owner" includes Maker.
(B) "Contractor" means (name of Contractor), whose
address is (address of Contractor, including county) and includes
those to whom the Contractor has assigned or transferred Contractor's
rights and remedies.
(C) "Lender" means (name of Lender), whose address
is (address of Lender, including county) and includes those to whom
the Lender has assigned or transferred Lender's rights and remedies.
(D) "Trustee" means (name of Trustee), whose address
is (address of Trustee, including county).
(E) "Property" means the Property at (list address
of the Property), whose legal description is (list legal description
of the Property).
(F) "Work" means the construction project as agreed
to in writing between the Owner and Contractor.
(G) "Completion Date" means (date on which the Work
will be completed).
(H) "Contract" means this Texas Home Improvement Mechanic's
Lien Contract for Improvement, Power of Sale, and Deed of Trust.
(I) "Note" means the Texas Home Improvement Mechanic's
Lien Note signed by me and dated ____________________ and includes
all amounts secured by this Contract. The Note states that the amount
I owe you is _____________________ dollars (U.S. $________________)
plus interest.
(J) "Loan Agreement" means the Note, Contract, and
any other related document under which Lender has made a loan to me.
(K) "Applicable Law" means all controlling applicable
federal, state, and local law.
(L) "Tenant at Sufferance" means a person who continues
to possess the Property with no current right to possess it.
(M) "Forcible Detainer" means a lawsuit to remove a
person from the Property.
(N) "Periodic Payment" means the regularly scheduled
amount due for principal and interest under the Note plus any amount
under this Contract.
(O) "Successor in Interest" means any party that has
taken title to the Property.
(P) "Lien" means the Mechanic's and Materialman's Lien
on the Property that results from the Contract and the Work performed.
The Lien includes all existing and future improvements, easements,
and rights in the Property.
(4) Promise to pay. One permissible change to the model
language for the scheduled installment earnings method would be to
allow partial prepayments of the principal during the term of the
loan. This variation on the scheduled installment earnings method
would allow periodic reductions of the principal balance by partial
prepayments. This variation would allow reductions of the principal
balance that were not originally scheduled. The model clause options
for the borrower's promise to pay read:
Cont'd... |
