1-1 By: Brimer (Senate Sponsor - Wentworth) H.B. No. 113
1-2 (In the Senate - Received from the House April 26, 1993;
1-3 April 27, 1993, read first time and referred to Committee on
1-4 Economic Development; May 19, 1993, reported favorably by the
1-5 following vote: Yeas 8, Nays 0; May 19, 1993, sent to printer.)
1-6 COMMITTEE VOTE
1-7 Yea Nay PNV Absent
1-8 Parker x
1-9 Lucio x
1-10 Ellis x
1-11 Haley x
1-12 Harris of Dallas x
1-13 Harris of Tarrant x
1-14 Leedom x
1-15 Madla x
1-16 Rosson x
1-17 Shapiro x
1-18 Wentworth x
1-19 A BILL TO BE ENTITLED
1-20 AN ACT
1-21 relating to an insurance claim payment held by a lender during
1-22 repair of residential real property subject to security interest.
1-23 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-24 SECTION 1. Subchapter E, Chapter 21, Insurance Code, is
1-25 amended by adding Article 21.48B to read as follows:
1-26 Art. 21.48B. INSURANCE CLAIM PAYMENT HELD BY LENDER PENDING
1-27 REPAIR OF RESIDENTIAL REAL PROPERTY
1-28 Sec. 1. DEFINITIONS. In this article:
1-29 (1) "Lender" means a person holding a mortgage, lien,
1-30 deed of trust, or other security interest in property.
1-31 (2) "Residential real property" means a single-family
1-32 house, a duplex, triplex, or quadraplex, or a unit in a multi-unit
1-33 residential structure in which title to an individual unit is
1-34 transferred to the owner of the unit under a condominium or
1-35 cooperative system.
1-36 Sec. 2. NOTIFICATION REQUIREMENT; PAYMENT. (a) If a claim
1-37 under an insurance policy for damage to residential real property
1-38 is paid to the insured and a lender holding a security interest in
1-39 the property, and the lender holds all or part of the insurance
1-40 claim payment pending completion of all or part of the repairs, the
1-41 lender not later than the 10th day after the date the payment of
1-42 the insurance proceeds is received shall notify the insured of the
1-43 requirements that the insured must satisfy before the lender
1-44 releases the insurance proceeds.
1-45 (b) Not later than the 10th day after the date the insured's
1-46 request for payment of all or part of the insurance proceeds is
1-47 received by the lender, the lender shall:
1-48 (1) pay to the insured, if the lender has received
1-49 sufficient evidence of compliance with the requirements and
1-50 conditions for release of the funds as specified in Subsection (a)
1-51 of this section, all or part of the proceeds held by the lender, as
1-52 requested; or
1-53 (2) explain, in specific detail, the reason for the
1-54 lender's refusal to pay the proceeds to the insured and the
1-55 requirements the insured must satisfy before the lender releases
1-56 the insurance proceeds.
1-57 Sec. 3. INTEREST. (a) If the lender fails to give the
1-58 notice required under Section 2(a) or (b)(2) of this article or
1-59 fails to make a payment within the time required by Section 2(b)(1)
1-60 of this article, the lender shall pay to the insured interest on
1-61 the money held at the rate of 10 percent a year.
1-62 (b) If the lender fails to give the notice required under
1-63 Section 2(a) or (b)(2) of this article, the interest begins to
1-64 accrue on the date the lender receives the insurance proceeds. If
1-65 the lender fails to make a payment within the time required by
1-66 Section 2(b)(1) of this article, the interest begins to accrue on
1-67 the date the lender receives satisfactory evidence of compliance
1-68 with the requirements and conditions for release of the funds as
2-1 specified in Section 2(a) or 2(b)(1) of this article.
2-2 (c) Interest terminates on the date the lender complies with
2-3 Section 2 of this article.
2-4 (d) A lender is not required to pay interest on money
2-5 applied, in accordance with the terms and conditions of a deed of
2-6 trust or other security agreement, to reduce the note.
2-7 SECTION 2. This Act takes effect September 1, 1993, and
2-8 applies only to an insurance claim payment paid on or after January
2-9 1, 1994. A payment that is paid before January 1, 1994, is
2-10 governed by the law as it existed immediately before the effective
2-11 date of this Act, and that law is continued in effect for that
2-12 purpose.
2-13 SECTION 3. The importance of this legislation and the
2-14 crowded condition of the calendars in both houses create an
2-15 emergency and an imperative public necessity that the
2-16 constitutional rule requiring bills to be read on three several
2-17 days in each house be suspended, and this rule is hereby suspended.
2-18 * * * * *
2-19 Austin,
2-20 Texas
2-21 May 19, 1993
2-22 Hon. Bob Bullock
2-23 President of the Senate
2-24 Sir:
2-25 We, your Committee on Economic Development to which was referred
2-26 H.B. No. 113, have had the same under consideration, and I am
2-27 instructed to report it back to the Senate with the recommendation
2-28 that it do pass and be printed.
2-29 Parker,
2-30 Chairman
2-31 * * * * *
2-32 WITNESSES
2-33 FOR AGAINST ON
2-34 ___________________________________________________________________
2-35 Name: Larry Temple x
2-36 Representing: TX Mortgage Bankers Assn.
2-37 City: Austin
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