Community propane house – resale value

[IC_deLight]

Originally Posted by austin-steve

FYI - The new TAR (TX Assc of Realtors) Seller Disclosure Notice now includes the following:



I don't know the background or rationale for adding the information, but usually stuff like this gets added because there have been problems with buyers not knowing what they were buying into and getting mad about it. A $600 propane bill will do that.

Steve

What's interesting about the disclosure statement is that it is somewhat inaccurate and the language does not follow the required statutory language. The propane vendors don't "own an area" and they are not issued CCNs nor given an exclusive license from any state agency. What they do own is the tank, vaporizers, and distribution lines. Restrictive covenants, an HOA, and threats are used to force people to consume from the privately owned propane system.

The disclosure requirement is new and was a result of HB 2532 by Workman/Isaac.

Texas Legislature Online - 83(R) History for HB 2532


The bill provided for new provisions in the Utility Code. The disclosure requirement is found at Utility Code §141.010, here:
UTILITIES CODE CHAPTER 141. STANDARDS FOR DISTRIBUTION SYSTEM RETAILERS

[austin-steve]

Originally Posted by IC_deLight

What's interesting about the disclosure statement is that it is somewhat inaccurate and the language does not follow the required statutory language. The propane vendors don't "own an area" and they are not issued CCNs nor given an exclusive license from any state agency. What they do own is the tank, vaporizers, and distribution lines. Restrictive covenants, an HOA, and threats are used to force people to consume from the privately owned propane system.

The disclosure requirement is new and was a result of HB 2532 by Workman/Isaac.

Texas Legislature Online - 83(R) History for HB 2532


The bill provided for new provisions in the Utility Code. The disclosure requirement is found at Utility Code §141.010, here:
UTILITIES CODE CHAPTER 141. STANDARDS FOR DISTRIBUTION SYSTEM RETAILERS

Turns out there is a new addendum as well, to include with the sale of a home subject to mandatory participation in a propane community.

http://www.trec.texas.gov/pdf/contracts/47-0.pdf

The form also seems a bit vague. But the real value is to make sure it becomes a topic of conversation for buyers, so they can investigate to whatever degree they wish, ask questions, etc. Many simply buy into these communities 100% ignorant, clueless and unaware of the implications of the propane scheme.

I've personally always encouraged buyers to avoid community propane setups, though it's not a deal breaker if everything else over-rides the benefits of a particular location and home. But any additional permanent overhead or usage cost should be carefully considered when buying a home, whether it's propane costs, HOA, tolls on daily commute, yard upkeep, etc. It should all go into a proper "Total Cost of Ownership" evaluation of a candidate home.

Steve

[IC_deLight]

Originally Posted by austin-steve

Turns out there is a new addendum as well, to include with the sale of a home subject to mandatory participation in a propane community.

http://www.trec.texas.gov/pdf/contracts/47-0.pdf

The form also seems a bit vague. But the real value is to make sure it becomes a topic of conversation for buyers, so they can investigate to whatever degree they wish, ask questions, etc. Many simply buy into these communities 100% ignorant, clueless and unaware of the implications of the propane scheme.

I've personally always encouraged buyers to avoid community propane setups, though it's not a deal breaker if everything else over-rides the benefits of a particular location and home. But any additional permanent overhead or usage cost should be carefully considered when buying a home, whether it's propane costs, HOA, tolls on daily commute, yard upkeep, etc. It should all go into a proper "Total Cost of Ownership" evaluation of a candidate home.

Steve

Thanks for helpful info on what's going on in this area.
I agree about the 100% ignorant remark - the disclosure might not really be helpful considering it's in a stack of documents. In a place under declarant control, the monopoly can be imposed and changed after purchase.

The buyer just sees the physical house - not the legal entanglement. They see nice gas appliances without knowing that they have to pay monthly payments to a private vendor into perpetuity in an amount that is completely out of their control - and that is before the amount they pay for actual propane gas consumption which is also largely out of their control.

As far as "HOA" it is virtually impossible to estimate the cost since you have no idea when/if you will be pulled into a lawsuit with the HOA and its vendors, or the board will decide to borrow several million dollars with the homeowners' homes as security for the loan, or how much assessments will be increased every year, or the amount and frequency of special assessments, or the windfall "transfer" fees the management company and HOA will try to impose, etc., etc., etc.