By: Patterson H.B. No. 1684
73R3210 CAS-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the farm and ranch finance program; granting the
1-3 authority to issue bonds; providing penalties.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Title 8, Agriculture Code, is amended by adding
1-6 Chapter 254 to read as follows:
1-7 CHAPTER 254. FARM AND RANCH FINANCE PROGRAM
1-8 SUBCHAPTER A. ADMINISTRATION
1-9 Sec. 254.001. DEFINITIONS. In this chapter:
1-10 (1) "Board" means the Veterans Land Board.
1-11 (2) "Commissioner" means the commissioner of
1-12 agriculture.
1-13 (3) "Department" means the Department of Agriculture.
1-14 (4) "Fund" means the farm and ranch finance program
1-15 fund.
1-16 (5) "Program" means the farm and ranch finance
1-17 program.
1-18 Sec. 254.002. ADMINISTRATION. (a) The commissioner shall
1-19 administer the program.
1-20 (b) The board shall administer the fund. At the request of
1-21 the department, the board shall make available to the department
1-22 money from the fund to pay debt service on the program's bonds and
1-23 to purchase land as provided by this chapter.
1-24 Sec. 254.003. LIMITED IMMUNITY FROM SUIT OR LIABILITY. The
2-1 commissioner or a member of the board may be sued and held
2-2 personally liable for damages that result from an official act or
2-3 omission only if the act or omission is corrupt or malicious.
2-4 (Sections 254.004-254.010 reserved for expansion
2-5 SUBCHAPTER B. BONDS
2-6 Sec. 254.011. BONDS. (a) The commissioner may provide by
2-7 order or resolution for the issuance and sale of negotiable bonds
2-8 authorized by Article III, Section 49-f, of the Texas Constitution.
2-9 The proceeds from the sale of the bonds constitute the fund.
2-10 (b) Except as provided by Subsection (c) of this section,
2-11 the commissioner shall issue and sell bonds to finance the program
2-12 in the same manner as is provided for the board to issue and sell
2-13 bonds to finance the veterans land fund under Subchapter D, Chapter
2-14 161, Natural Resources Code.
2-15 (c) If the aggregate principal amount of a series or issue
2-16 of bonds being issued and sold to finance the program is $20
2-17 million or less, in issuing the bonds, the commissioner may
2-18 exercise the powers granted to the governing body of an issuer
2-19 under Chapter 656, Acts of the 68th Legislature, Regular Session,
2-20 1983 (Article 717q, Vernon's Texas Civil Statutes).
2-21 Sec. 254.012. DISPOSITION OF BOND PROCEEDS. (a) Except as
2-22 provided by Subsections (b) and (c) of this section, proceeds from
2-23 the sale of the bonds, less the administrative costs of issuing the
2-24 bonds, shall be deposited in the state treasury to the credit of
2-25 the fund.
2-26 (b) The board may provide for transferring to the interest
2-27 and sinking fund from the fund an amount that, together with the
3-1 accrued interest received, is sufficient to pay interest coupons
3-2 becoming due during the fiscal year in which the bonds are sold and
3-3 to establish appropriate reserves.
3-4 (c) At the timely request of the commissioner, the board
3-5 shall provide for transferring from the proceeds of the sale of
3-6 bonds or directly from available money in the fund an amount
3-7 certified by the commissioner as reasonable and necessary to cover
3-8 the costs of administering the program. That amount shall be
3-9 deposited in the state treasury to the credit of a special fund to
3-10 be known as the farm and ranch administrative expense fund.
3-11 Sec. 254.013. PAYMENT OF PRINCIPAL AND INTEREST. The
3-12 commissioner shall arrange for payment of the principal on bonds as
3-13 they mature and the interest as it becomes payable.
3-14 Sec. 254.014. PURCHASE AND DESTRUCTION OF BONDS. (a) The
3-15 commissioner may use money in the fund to purchase on the open
3-16 market any bonds issued and sold under this chapter. The debt
3-17 represented by the bonds purchased is considered canceled.
3-18 (b) Bonds purchased by the commissioner under Subsection (a)
3-19 of this section shall be mutilated, burned, or otherwise destroyed
3-20 by the state treasurer. The state treasurer shall certify that the
3-21 bonds have been destroyed to the commissioner under the seal of the
3-22 state treasurer's office.
3-23 Sec. 254.015. USE OF FUND. (a) The commissioner may use
3-24 money in the fund attributable to the sale of bonds to pay the
3-25 following expenses related to the purchase or sale of land:
3-26 (1) the expense of surveying and monumenting the land;
3-27 (2) the cost of constructing roads on the land;
4-1 (3) legal fees, recordation fees, or advertising costs
4-2 arising from the purchase and sale or resale of the land; or
4-3 (4) similar costs necessary or incidental to the
4-4 purchase or sale of the land.
4-5 (b) The expenses under Subsection (a) of this section shall
4-6 be added to the price of the land if sold or resold by the
4-7 commissioner.
4-8 (c) The commissioner may use money in the fund attributable
4-9 to the sale of bonds to pay the following expenses related to
4-10 bonds:
4-11 (1) legal fees and fees for financial advice the
4-12 commissioner finds necessary for the sale of bonds;
4-13 (2) the expense of publishing notice of sale of an
4-14 installment of bonds;
4-15 (3) the expense of printing the bonds;
4-16 (4) the expense of issuing the bonds, including the
4-17 actual costs of travel, lodging, and meals of the commissioner,
4-18 members of the board, officers or employees of the department or
4-19 board, the comptroller, the state treasurer, and the attorney
4-20 general that the commissioner finds necessary to implement the
4-21 issuance, rating, or delivery of the bonds;
4-22 (5) the cost of manually signing the bonds;
4-23 (6) remuneration to any agent employed by the
4-24 commissioner to pay the principal of and interest on the bonds;
4-25 (7) any amount required to be paid to maintain the
4-26 federal tax exemption of interest on the bonds; or
4-27 (8) any other cost, fee, or expense relating to the
5-1 issuance of the bonds.
5-2 (d) Money in the fund that is not spent for the purposes
5-3 provided by this section remains in the fund until sufficient to
5-4 retire fully bonds issued and sold under this chapter.
5-5 (e) Money in the fund that is in addition to that necessary
5-6 to retire the bonds shall be deposited to the credit of the general
5-7 revenue fund to be appropriated as provided by law including money
5-8 that comes into the fund after there is sufficient money to retire
5-9 the bonds.
5-10 (f) If, during the existence of the fund or during the
5-11 period any bonds are payable from the fund, the commissioner
5-12 determines that there will not be sufficient money in the fund
5-13 during the following biennium to pay the principal of or interest
5-14 on the bonds that is to come due during the following biennium, the
5-15 comptroller shall transfer to the fund from the first money coming
5-16 into the state treasury not otherwise appropriated by the
5-17 constitution an amount sufficient to pay the obligations. The
5-18 money appropriated shall be used to pay the obligations only if at
5-19 the time the principal or interest become due there is not
5-20 sufficient money in the fund to pay the amount due.
5-21 Sec. 254.016. INVESTMENTS. (a) The commissioner shall give
5-22 timely instruction to the board of the dates on which principal on
5-23 bonds matures and interest becomes payable. The board shall
5-24 administer the fund accordingly.
5-25 (b) Except as provided by Subsection (c) of this section,
5-26 money in the fund that is not immediately committed to paying
5-27 principal of and interest on the bonds, to the purchase of land, or
6-1 to the payment of expenses as provided by Section 254.015 of this
6-2 code may be invested by the board in:
6-3 (1) a direct security repurchase agreement or reverse
6-4 security repurchase agreement made with a state or national bank
6-5 domiciled in this state or with a primary dealer approved by the
6-6 federal reserve system;
6-7 (2) a direct obligation of or obligation the principal
6-8 and interest of which are guaranteed by the United States
6-9 government;
6-10 (3) a direct obligation of or obligation guaranteed by
6-11 the Federal Home Loan Banks, the Federal National Mortgage
6-12 Association, the Federal Farm Credit System, the Student Loan
6-13 Marketing Association, the Federal Home Loan Mortgage Corporation,
6-14 or a successor to one of those organizations;
6-15 (4) a bankers' acceptance that:
6-16 (A) is eligible for purchase by a member of the
6-17 federal reserve system;
6-18 (B) matures in 270 days or less; and
6-19 (C) is issued by a bank that has received the
6-20 highest short-term credit rating by a nationally recognized
6-21 investment rating firm;
6-22 (5) commercial paper that:
6-23 (A) matures in 270 days or less; and
6-24 (B) has received the highest short-term credit
6-25 rating by a nationally recognized investment rating firm;
6-26 (6) a contract that is written by the board in which
6-27 the board grants the purchaser the right to purchase securities in
7-1 the board's marketable securities portfolio at a specified price
7-2 over a specified period and for which the board is paid a fee and
7-3 that specifically prohibits naked-option or uncovered option
7-4 trading;
7-5 (7) an obligation of a state or of an agency, county,
7-6 city, or other political subdivision of a state or a mutual fund
7-7 composed of those obligations;
7-8 (8) an investment instrument, obligation, or other
7-9 evidence of indebtedness the payment of which is directly or
7-10 indirectly guaranteed by the full faith and credit of the United
7-11 States government;
7-12 (9) an investment, account, depository receipt, or
7-13 deposit that is fully:
7-14 (A) insured by the Federal Deposit Insurance
7-15 Corporation or a successor to that organization; or
7-16 (B) secured by a security described by
7-17 Subdivision (2), (3), or (8) of this subsection;
7-18 (10) a collateralized mortgage obligation fully
7-19 secured by securities or mortgages issued or guaranteed by the
7-20 Government National Mortgage Association or any entity identified
7-21 by Subdivision (3) of this subsection;
7-22 (11) a security or evidence of indebtedness issued by
7-23 the Farm Credit System Financial Assistance Corporation, the
7-24 Private Export Funding Corporation, or the Export-Import Bank; and
7-25 (12) any other investment authorized for investment of
7-26 state funds by the state treasurer under Section 404.024,
7-27 Government Code.
8-1 (c) The board may not invest in or purchase obligations of a
8-2 private corporation or other private business entity doing business
8-3 in the Republic of South Africa unless the corporation or other
8-4 entity:
8-5 (1) has:
8-6 (A) adopted the Statement of Principles for
8-7 South Africa as they existed in 1987, as described in the Report on
8-8 the Signatory Companies to the Statement of Principles for South
8-9 Africa published by Arthur D. Little, Inc., Cambridge,
8-10 Massachusetts, and has obtained a performance rating in Category 1
8-11 or 2 of the Statement of Principles for South Africa rating system
8-12 as determined by Arthur D. Little, Inc.; or
8-13 (B) agreed to the Code of Conduct that is
8-14 enforced by the United States Department of State under Section
8-15 208, Comprehensive Anti-Apartheid Act of 1986 (Pub. L. No. 99-440)
8-16 and has received a rating of "Making Satisfactory Progress"; and
8-17 (2) does not supply strategic products or services for
8-18 use by the government, military, or police of the Republic of South
8-19 Africa.
8-20 (d) In this section:
8-21 (1) "Direct security repurchase agreement" means an
8-22 agreement under which the board buys, holds for a specified time,
8-23 and then sells back any of the following securities, obligations,
8-24 or participation certificates:
8-25 (A) a United States government security;
8-26 (B) a direct obligation of or an obligation the
8-27 principal and interest of which are guaranteed by the United States
9-1 government;
9-2 (C) a direct obligation of or an obligation
9-3 guaranteed by the Federal Home Loan Banks, the Federal National
9-4 Mortgage Association, the Federal Farm Credit System, the Student
9-5 Loan Marketing Association, the Federal Home Loan Mortgage
9-6 Corporation, or a successor to one of those organizations; or
9-7 (D) any other investment instrument, obligation,
9-8 or other evidence of indebtedness the payment of which is directly
9-9 or indirectly guaranteed by the full faith and credit of the United
9-10 States government.
9-11 (2) "Doing business in the Republic of South Africa"
9-12 means conducting or performing manufacturing, assembly, or
9-13 warehousing operations in the Republic of South Africa or, in the
9-14 case of a bank or other financial institution, lending money to the
9-15 government of the Republic of South Africa or any of its agencies
9-16 or instrumentalities.
9-17 (3) "Market value" means the fair and reasonable
9-18 prevailing price at which a security is being sold on the open
9-19 market at the time of the appraisement of the security by the
9-20 board.
9-21 (4) "Reverse security repurchase agreement" means an
9-22 agreement under which the board sells and after a specified time
9-23 buys back any of the securities, obligations, or participation
9-24 certificates listed by Subdivision (1) of this subsection.
9-25 (5) "Strategic products or services" means articles
9-26 designated as arms, ammunition, or implements of war as provided by
9-27 22 C.F.R. Part 121 or data processing equipment or computers sold
10-1 for military or police use or for use in connection with
10-2 restriction on travel in the Republic of South Africa by residents
10-3 of that country.
10-4 (Sections 254.017-254.020 reserved for expansion
10-5 SUBCHAPTER C. PURCHASE, SALE, AND OTHER DISTRIBUTION OF LAND
10-6 Sec. 254.021. ELIGIBILITY. To be eligible to purchase land
10-7 under this section, a person, at the time of application, must:
10-8 (1) be a United States citizen;
10-9 (2) have been a resident of this state for five or
10-10 more years immediately preceding the application;
10-11 (3) be a member of a household that has derived at
10-12 least 25 percent of its gross income from a farm or ranch for the
10-13 preceding three years; and
10-14 (4) have a net worth of less than $250,000.
10-15 Sec. 254.022. APPLICATION. (a) To purchase land under this
10-16 chapter, a person must apply to the commissioner.
10-17 (b) As soon as practicable after an application is received
10-18 by the commissioner under Subsection (a) of this section, the
10-19 commissioner shall approve or deny the application and shall notify
10-20 the applicant of the commissioner's decision.
10-21 Sec. 254.023. PURCHASE PAYMENTS. (a) A purchaser must make
10-22 a cash down payment as required by Section 254.024 of this code.
10-23 The balance of the purchase price shall be amortized over a period
10-24 determined by the commissioner not to exceed 30 years, at a rate of
10-25 interest set by the commissioner. The commissioner may set the
10-26 interest rate to provide a margin over the rate paid by the
10-27 commissioner on the department's bonds issued under this chapter.
11-1 The difference between the cost of the money to the commissioner
11-2 and the interest rate charged the purchaser may be used to defray
11-3 the expense of administering the program.
11-4 (b) The purchaser shall pay any installment remaining
11-5 unpaid, together with any premium that the commissioner requires in
11-6 connection with the early payment of an installment under this
11-7 section, on any date that the commissioner provides.
11-8 (c) The commissioner may postpone for good cause the payment
11-9 of an installment of the purchase price or interest on the purchase
11-10 price on terms the commissioner considers proper.
11-11 (d) A delinquent installment bears interest at a rate to be
11-12 determined by the commissioner from the date the installment
11-13 becomes delinquent until the date paid.
11-14 Sec. 254.024. DOWN PAYMENT. (a) A loan under this chapter
11-15 may not exceed $150,000, less the down payment required under this
11-16 subsection. If the purchase price is $150,000 or less, the minimum
11-17 down payment is equal to five percent of the purchase price. If
11-18 the purchase price exceeds $150,000, the minimum down payment is an
11-19 amount equal to the sum of five percent of the purchase price plus
11-20 the amount equal to the difference between the purchase price and
11-21 $150,000.
11-22 (b) The commissioner shall provide by rule for the period
11-23 during which and manner in which the down payment provided for
11-24 under Subsection (a) of this section shall be paid to the
11-25 commissioner.
11-26 (c) If the sale is not consummated, the commissioner shall
11-27 refund the down payment to the purchaser.
12-1 Sec. 254.0245. ESCROW ACCOUNTS. The commissioner may
12-2 require an applicant to make payments, in addition to the down
12-3 payment and principal and interest payments, to be held in trust to
12-4 pay hazard insurance premiums and property taxes that may become
12-5 due. The payments shall be deposited in a special trust fund with
12-6 the state treasurer and shall be used to make the insurance premium
12-7 and property tax payments. The unused balance of the applicant's
12-8 deposit shall be held by the commissioner until maintenance of the
12-9 account is unnecessary and shall then be refunded to the applicant.
12-10 Sec. 254.025. TRANSFER OF PURCHASER'S INTEREST. (a) The
12-11 purchase contract must provide that ownership of the land may not
12-12 be transferred before the entire principal and interest due have
12-13 been paid without the commissioner's express written permission.
12-14 (b) If the purchaser dies or becomes financially
12-15 incapacitated or if the purchaser's interest in land is
12-16 involuntarily transferred by court order or other proceedings,
12-17 including bankruptcy, sheriff or trustee sale, or divorce, the land
12-18 may be conveyed by the purchaser or the purchaser's heirs,
12-19 administrators, executors, or successors in interest by complying
12-20 with the rules adopted by the commissioner and obtaining the
12-21 commissioner's written permission.
12-22 Sec. 254.026. CHANGES IN USE. (a) Before a purchaser may
12-23 use land acquired under this chapter for a purpose other than
12-24 farming or ranching, the purchaser must submit to the commissioner
12-25 an application for approval of the change of use.
12-26 (b) As soon as practicable after an application for a change
12-27 of use is received, the commissioner shall approve or deny the
13-1 application and shall notify the borrower of the commissioner's
13-2 decision.
13-3 (c) The purchase contract must provide that land acquired
13-4 under this chapter may not be used for a purpose other than farming
13-5 or ranching without the approval of the commissioner.
13-6 Sec. 254.027. APPRAISAL. (a) Before the commissioner may
13-7 purchase land under this chapter, the commissioner must have an
13-8 appraisal of the property made to determine its value.
13-9 (b) An appraiser representing the commissioner must be
13-10 qualified to give competent appraisals of land. The commissioner
13-11 may contract with the board to use appraisers employed by the
13-12 board.
13-13 (c) The appraiser shall make a written report to the
13-14 commissioner, in affidavit form, duly sworn to before a notary
13-15 public or other official authorized to administer oaths. The
13-16 report must state:
13-17 (1) the appraised value of the land;
13-18 (2) the name and address of any person contacted
13-19 concerning the valuation of the land;
13-20 (3) that the appraiser has examined the records of the
13-21 county clerk's office concerning the amount paid by the vendor for
13-22 the land;
13-23 (4) that the appraiser has checked past sales of
13-24 adjacent land to aid in determining valuation; and
13-25 (5) that neither the appraiser nor a member of the
13-26 appraiser's family has received a personal benefit from the
13-27 transaction and does not expect to receive a future personal
14-1 benefit from the transaction.
14-2 Sec. 254.028. SWORN REPORT. Before the commissioner may
14-3 purchase land under this chapter, the commissioner must require the
14-4 seller to execute a sworn report to the commissioner that states:
14-5 (1) the date the seller purchased the land;
14-6 (2) the amount the seller paid for the land;
14-7 (3) from whom the seller purchased the land; and
14-8 (4) any improvement made on the land since the seller
14-9 purchased it and the cost of the improvement.
14-10 Sec. 254.029. PAYMENTS TO COMMISSIONER UNDER CERTAIN LEASES.
14-11 If, during a period a person is indebted to the commissioner for
14-12 land purchased under this chapter, the person executes or there
14-13 exists a lease or contract of sale of oil, gas, or other minerals,
14-14 chemicals, hard metals, timber, sand, gravel, or other material
14-15 that covers the land purchased from the commissioner that would
14-16 result in the depletion of the corpus of the land, not less than
14-17 one-half of all bonus money, delay rentals, or royalties received
14-18 as consideration for or payment under the oil, gas, or mineral
14-19 lease and not less than one-half of all money received under a
14-20 lease or contract of sale of other minerals, chemical, hard metals,
14-21 timber, sand, gravel, or other material shall be paid to the
14-22 commissioner by the owner of the lease or contract of sale. The
14-23 commissioner shall apply those payments to the satisfaction of the
14-24 indebtedness.
14-25 Sec. 254.030. DEEDS. (a) As soon as practicable after the
14-26 indebtedness due the state under the contract of sale is paid in
14-27 full, the commissioner or the commissioner's designee shall execute
15-1 a deed under seal to the purchaser of the land or to the last
15-2 assignee whose assignment has been approved by the commissioner.
15-3 (b) This chapter does not prohibit the commissioner from
15-4 accepting full payment for a portion of a tract of land and issuing
15-5 a deed to that portion of the land according to the rules of the
15-6 commissioner.
15-7 (c) A deed issued by the commissioner and executed as
15-8 provided by Subsection (a) of this section is valid whether the
15-9 deed conveys all or only a part of the land contracted to be sold
15-10 to the purchaser.
15-11 (d) If a deed is executed to a deceased grantee or to a
15-12 person other than the legal owner, the deed and the rights conveyed
15-13 inure to the benefit of the legal owner of the purchaser's interest
15-14 in the land.
15-15 Sec. 254.031. GENERAL REQUIREMENT FOR SALE OF LAND. Land
15-16 acquired and subdivided under this chapter shall be offered for
15-17 sale according to rules adopted by the commissioner and shall be
15-18 sold by the commissioner to any person qualified to participate in
15-19 the program under this chapter.
15-20 Sec. 254.032. RIGHTS OF SURVIVING SPOUSE. If an eligible
15-21 applicant dies after filing with the commissioner an application
15-22 and contract of sale to purchase land and before the purchase is
15-23 completed, the surviving spouse of the applicant may complete the
15-24 transaction, subject to the approval of the commissioner.
15-25 Sec. 254.033. NUMBER OF TRACTS PURCHASED. A person may not
15-26 purchase more than one tract of land under this chapter.
15-27 Sec. 254.034. PAYMENT OF BONDS. (a) A series of bonds
16-1 includes all bonds issued and sold in a single transaction as a
16-2 single installment of bonds.
16-3 (b) To the extent consistent with the constitution of this
16-4 state, money attributable to any series of bonds issued and sold by
16-5 the commissioner may be used for the purchase of land. The land
16-6 shall be sold as provided by this chapter for a period ending on
16-7 the date that is eight years after the date on which the series of
16-8 bonds was sold.
16-9 (c) An amount of money necessary to pay interest on the
16-10 bonds issued and sold shall be set aside for that purpose in
16-11 accordance with the resolution or order of the commissioner
16-12 authorizing the issuance and sale of the series of bonds.
16-13 (d) After the end of the eight-year period, until there is
16-14 sufficient money to retire all the bonds, the money shall be set
16-15 aside to retire the bonds issued and sold and to pay interest on
16-16 them, together with any expenses, in accordance with the resolution
16-17 or order authorizing the issuance and sale of the additional bonds.
16-18 Money coming into the fund not necessary to retire the bonds and
16-19 pay interest on them shall be governed as provided by this chapter.
16-20 Sec. 254.035. CONDITIONS OF PURCHASE AND SALE. (a) Before
16-21 making payment for a land purchase, the commissioner must have the
16-22 title to the land examined and obtain a title insurance policy for
16-23 the land. The commissioner may submit the title to the attorney
16-24 general for examination and opinion.
16-25 (b) The commissioner may purchase land that is subject to
16-26 outstanding mineral leases or that has mineral interests
16-27 outstanding, but the title must be otherwise marketable and good.
17-1 (c) Land purchased by the commissioner shall be acquired at
17-2 the lowest price that can be obtained in the opinion of the
17-3 commissioner, taking into consideration the quality, location,
17-4 natural advantages, and improvements of the land. The land shall
17-5 be paid for in cash and shall be clear of any liens. Any land
17-6 purchased becomes part of the fund.
17-7 (d) Except for forfeited land that may be resold by the
17-8 commissioner at less than the purchase price under Subchapter D of
17-9 this chapter, land may not be sold by the commissioner at less than
17-10 the purchase price.
17-11 (e) The commissioner shall sell land using a contract of
17-12 sale and purchase. The contract shall be recorded in the deed
17-13 records of the county in which the land is located.
17-14 (f) The commissioner may specify different terms, consistent
17-15 with this chapter, in each contract entered into with a purchaser.
17-16 (g) Property sold under this chapter may be transferred,
17-17 sold, or conveyed at any time after the entire indebtedness due to
17-18 the state has been paid.
17-19 Sec. 254.036. TERM OF LEASES. (a) A purchaser may not
17-20 lease land purchased under this chapter for a term longer than 10
17-21 years, except:
17-22 (1) a lease for oil, gas, or other minerals may be for
17-23 a term of not longer than 10 years, and as long thereafter as oil,
17-24 gas, or other minerals are produced from the land in commercial
17-25 quantities; and
17-26 (2) a lease for coal and lignite may be for a term of
17-27 not longer than 40 years, and as long thereafter as coal and
18-1 lignite are produced from the land in commercial quantities.
18-2 (b) A lease or a separate instrument to take effect in the
18-3 future may not contain a provision for option or renewal of the
18-4 lease or re-lease of the property for any term that would result in
18-5 a fixed term of the lease that exceeds the maximum fixed term
18-6 authorized under Subsection (a) of this section. A lease or
18-7 instrument that contains an option renewal or re-lease agreement in
18-8 violation of this section is void.
18-9 Sec. 254.037. DEATH OF A PURCHASER. (a) If the purchaser
18-10 of the land under this chapter dies while indebted to the state
18-11 under a contract, the purchaser's rights under this chapter and the
18-12 contract devolve on the purchaser's heirs, devisees, or personal
18-13 representatives under the laws of this state, subject to all
18-14 rights, claims, and charges of the commissioner.
18-15 (b) Default by an heir, devisee, or personal representative
18-16 with respect to a right, claim, or charge of the commissioner has
18-17 the same effect as default by the purchaser before the purchaser's
18-18 death.
18-19 Sec. 254.038. SUBDIVISION. Land acquired by the
18-20 commissioner may be subdivided for sale into tracts of the size the
18-21 commissioner considers advisable.
18-22 Sec. 254.039. UNENCUMBERED TITLE. The commissioner may
18-23 establish a procedure by which a borrower acquiring land with a
18-24 loan under this chapter may obtain title to a portion of the tract
18-25 clear of encumbrances.
18-26 Sec. 254.040. RULES; FEES. (a) The commissioner may adopt
18-27 rules the commissioner considers necessary to administer the
19-1 program or considers in the best interests of the program,
19-2 including rules on program requirements. The board may adopt rules
19-3 it considers necessary to administer the fund or considers in the
19-4 best interests of the fund, including rules on the investment of
19-5 the fund.
19-6 (b) The commissioner may set and collect fees the
19-7 commissioner considers reasonable and necessary to cover the
19-8 expenses of administering the program or considers in the best
19-9 interest of the program. Those fees shall be deposited in the
19-10 state treasury to the credit of a special fund to be known as the
19-11 farm and ranch fee fund.
19-12 (Sections 254.041-254.045 reserved for expansion
19-13 SUBCHAPTER D. FORFEITURE
19-14 Sec. 254.046. FORFEITURE. The commissioner may determine if
19-15 any purchase contract under this chapter is forfeited as provided
19-16 by this subchapter.
19-17 Sec. 254.047. GROUNDS FOR FORFEITURE; NOTICE; CURE. (a) If
19-18 a purchaser of land under this chapter fails to pay a portion of
19-19 the principal or interest due or fails to comply with this chapter,
19-20 a contract entered into under this chapter, or a rule of the
19-21 commissioner, the contract of sale and purchase is subject to
19-22 forfeiture not earlier than the 31st day after the date on which
19-23 written notice of the failure is mailed to the original purchaser
19-24 and the last of any assignees whose assignment has been approved by
19-25 the commissioner. The notice must state the reason the contract of
19-26 sale and purchase is subject to forfeiture and be sent by certified
19-27 mail to the last known address of the original purchaser and the
20-1 last of any approved assignees.
20-2 (b) If the reason for forfeiture is cured within the 30-day
20-3 notice period, the commissioner may not enter an order of
20-4 forfeiture.
20-5 Sec. 254.048. EFFECT OF FORFEITURE. (a) The forfeiture is
20-6 effective at the time the commissioner issues a resolution or order
20-7 declaring the contract of sale and purchase forfeited. At that
20-8 time, the land and all payments previously made are forfeited.
20-9 (b) On forfeiture, the full title to the land, including
20-10 both surface and mineral estates, revest in the fund.
20-11 (c) The commissioner shall recognize and continue in force
20-12 and effect any outstanding valid oil, gas, or mineral lease on
20-13 forfeited land and collect all rentals, royalties, or other amounts
20-14 payable under the lease.
20-15 Sec. 254.049. NOTICE TO PURCHASER AND COUNTY CLERK; VACATION
20-16 OF PREMISES. (a) The commissioner shall mail notice to the county
20-17 clerk of the county in which the land is located that the purchaser
20-18 has forfeited rights to specified land under a contract. The clerk
20-19 shall record the notice free of charge to the commissioner.
20-20 (b) The commissioner shall give notice of a forfeiture by
20-21 certified mail to the original purchaser and to the last of any
20-22 approved assignees. The land forfeited must be vacated not later
20-23 than the 45th day after the date on which the notice required by
20-24 this subsection is mailed.
20-25 Sec. 254.050. SUIT TO ENFORCE FORFEITURE, RECOVER AMOUNTS
20-26 DUE, OR PROTECT RIGHTS. The commissioner, through the attorney
20-27 general, may institute legal proceedings that are necessary to
21-1 enforce a forfeiture, to recover the full amount of any delinquent
21-2 installments, interest, or any penalties due at the time a
21-3 forfeiture occurred, or to protect any other right to the land,
21-4 including collection of deficiencies if the land is resold for less
21-5 than the amount due the state at the time of forfeiture.
21-6 Sec. 254.051. LIABILITY OF PURCHASER AND ASSIGNEE. The
21-7 original purchaser and any subsequent approved assignee are jointly
21-8 and severally liable, but the original purchaser is primarily
21-9 liable for payment of all money due under the original contract of
21-10 sale and purchase.
21-11 Sec. 254.052. REINSTATEMENT OF CONTRACT. (a) The original
21-12 purchaser or any approved assignee is entitled to reinstate a
21-13 contract of sale and purchase of forfeited land at any time before
21-14 the date on which the commissioner orders the land to be advertised
21-15 for resale or for lease for mineral development. After that date,
21-16 the commissioner may approve or deny any request for reinstatement
21-17 of the contract of sale and purchase. The commissioner by rule may
21-18 authorize a designee to approve or deny a request for
21-19 reinstatement.
21-20 (b) The commissioner by rule may establish priorities if
21-21 more than one person requests reinstatement of the same contract.
21-22 (c) Anyone permitted to reinstate a contract must make
21-23 arrangements acceptable to the commissioner for the payment of all
21-24 delinquent installments, penalties, fees, and other costs incident
21-25 to the reinstatement.
21-26 Sec. 254.053. RESALE AFTER FORFEITURE. The commissioner may
21-27 resell forfeited land under terms and conditions and at the time
22-1 and in the manner prescribed by the commissioner's rules. The
22-2 commissioner may reject any and all bids and offers. If a person
22-3 whose bid or offer is accepted by the commissioner subsequently
22-4 refuses to execute a contract of sale or comply with any other
22-5 condition of the sale, the money the person submitted with the bid
22-6 or offer is forfeited and shall be deposited in the state treasury
22-7 to the credit of the fund.
22-8 (Sections 254.054-254.060 reserved for expansion
22-9 SUBCHAPTER E. INSURANCE
22-10 Sec. 254.061. INSURANCE ON IMPROVEMENTS REQUIRED. (a) Each
22-11 purchaser shall carry insurance on the improvements on the property
22-12 under contract of purchase that the commissioner considers
22-13 necessary. A purchaser's failure to carry the required insurance
22-14 subjects the purchaser to forfeiture of rights under the contract
22-15 as provided by Subchapter D of this chapter.
22-16 (b) The commissioner shall adopt rules the commissioner
22-17 considers necessary to enforce this section.
22-18 Sec. 254.062. CREDIT LIFE AND DISABILITY INSURANCE. (a)
22-19 The commissioner may enter into a master contract with one or more
22-20 insurance companies authorized to do business in this state to
22-21 provide:
22-22 (1) group life insurance coverage paying the debt due
22-23 to the state on death of a person purchasing land under the
22-24 program; or
22-25 (2) group disability insurance to pay any loan
22-26 installments that become due and are unpaid because of illness or
22-27 unemployment of a person purchasing land under the program.
23-1 (b) In addition to provisions required by the Insurance Code
23-2 and other applicable law, the master contract must provide that:
23-3 (1) life or disability insurance coverage, as
23-4 applicable, will be offered by the insurer to any purchaser without
23-5 requiring a physical examination; and
23-6 (2) a purchaser may not be denied coverage because the
23-7 purchaser is disabled at the time of application for coverage.
23-8 (c) A policy contract must be approved by the Commissioner
23-9 of Insurance under the Insurance Code and shall express and control
23-10 the contractual relationship between the parties to the contract.
23-11 (d) A person purchasing land under the program may not be
23-12 required to accept an offer of life or disability insurance
23-13 coverage, and refusal by the person to accept an offer of coverage
23-14 is not a ground for the commissioner to refuse to enter into a
23-15 contract of sale and purchase with the person.
23-16 (e) The total insurance coverage under this subchapter for
23-17 any person in the group may not at any time exceed the person's
23-18 indebtedness under this chapter. The total insurance coverage may
23-19 not exceed the amount provided by the master contract.
23-20 (f) The commissioner may collect or provide for collection
23-21 of the premium for insurance coverage in a reasonable manner.
23-22 (g) If a person in the group dies during the term insurance
23-23 coverage is in force, the benefits of the coverage shall be paid to
23-24 the commissioner for credit to the fund, and the indebtedness due
23-25 under this chapter is canceled.
23-26 (h) The master contract may not prohibit cancellation by the
23-27 insurer of the entire contract on reasonable notice to the
24-1 commissioner but must prohibit cancellation of the individual
24-2 coverage except as provided in this section.
24-3 (i) The master contract may provide that coverage terminates
24-4 when a person purchasing land under the program reaches the age of
24-5 65 years. The insurance coverage shall be terminated for any
24-6 person in the group on:
24-7 (1) the satisfaction of the person's indebtedness to
24-8 the commissioner;
24-9 (2) the commissioner's approval of a transfer of
24-10 interest in the land being purchased; or
24-11 (3) failure to make timely payment of the premium to
24-12 be paid for the coverage.
24-13 (j) If coverage is terminated for a member of the group for
24-14 failure to make a timely premium payment, renewal coverage is
24-15 subject to evidence of insurability as required by the insurer and
24-16 to payment of the premiums due plus any penalty that may be
24-17 provided.
24-18 (Sections 254.063-254.070 reserved for expansion
24-19 SUBCHAPTER F. OFFENSES; PENALTIES
24-20 Sec. 254.071. FALSE OR FICTITIOUS WRITTEN STATEMENT. (a) A
24-21 person commits an offense if the person knowingly or intentionally
24-22 makes, publishes, passes, files, or uses any false, fictitious, or
24-23 forged paper, document, contract, affidavit, application,
24-24 assignment, or other written instrument relating to the purchase,
24-25 sale, or resale of land under this chapter or in connection with
24-26 any transaction under this chapter.
24-27 (b) An offense under this section is a felony of the third
25-1 degree.
25-2 Sec. 254.072. FRAUD. (a) A person commits an offense if
25-3 the person defrauds a purchaser of rights or benefits under this
25-4 chapter or uses this chapter to defraud the state by an act of
25-5 fraud, duress, deceit, coercion, or misrepresentation.
25-6 (b) An offense under this section is a felony of the third
25-7 degree.
25-8 SECTION 2. Chapter 163, Natural Resources Code, is repealed.
25-9 SECTION 3. Subchapter F, Chapter 254, Agriculture Code, as
25-10 added by this Act, applies only to an offense committed on or after
25-11 the effective date of this Act. For purposes of this section, an
25-12 offense is committed before the effective date of this Act if any
25-13 element of the offense occurs before the effective date.
25-14 SECTION 4. (a) On the effective date of this Act, the
25-15 powers, duties, and obligations of the Veterans Land Board relating
25-16 to the Farm and Ranch Finance Program, other than administration of
25-17 the farm and ranch program fund, are transferred to the Department
25-18 of Agriculture, and the Veterans Land Board shall transfer all
25-19 property and records relating to the program in its custody to the
25-20 Department of Agriculture.
25-21 (b) On the transfer of all property and records under
25-22 Subsection (a) of this section:
25-23 (1) a rule, form, or policy adopted by the Veterans
25-24 Land Board relating to the Farm and Ranch Finance Program becomes a
25-25 rule, form, or policy of the Department of Agriculture; and
25-26 (2) a contract of sale with the Veterans Land Board
25-27 becomes a contract with the Department of Agriculture.
26-1 SECTION 5. This Act takes effect September 1, 1993.
26-2 SECTION 6. The importance of this legislation and the
26-3 crowded condition of the calendars in both houses create an
26-4 emergency and an imperative public necessity that the
26-5 constitutional rule requiring bills to be read on three several
26-6 days in each house be suspended, and this rule is hereby suspended.