BILL ANALYSIS
C.S.H.B. 946
By: Pitts
4-4-95
Committee Report (Substituted)
BACKGROUND
Often times land buyers are left with the additional expense of
having to pay ad valorem taxes and penalties because the previous
owner did not pay them. Presently, under Subchapter A, Chapter 5,
Section 5.008, the owner is required to give to the purchaser
notice of the condition of the property, however, the owner is not
required to inform the purchaser as to the status of the tax
liability to the property. This bill would add this requirement to
the current form.
PURPOSE
This bill provides that the owner of a fee simple interest be
required to disclose to the purchaser any tax liability on the
property. This information shall be incorporated in the real
estate disclosure form required by Subchapter A, Chapter 5, of the
Property Code.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not expressly
grant any additional rulemaking authority to a state officer,
department, agency or institution.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Subchapter A, Chapter 5, Property Code by adding
as follows:
Sec. 5.010. New Title. OWNER'S DISCLOSURE OF SPECIAL USE
PROPERTY TAX INFORMATION. (a) Requires an owner of a fee simple
interest in real property, whose property is appraised as
agricultural or open-space land, timberland, recreational, park or
scenic-use land, or public access airport property to provide, a
signed disclosure form when selling the property to a purchaser(s).
This section specifies that the disclosure form provide a
description of the property and
and requests that the owner indicate whether the property was
appraised so as to receive any partial or total exemptions from ad
valorem taxation during the previous five years for use as
agricultural or open-space land, timberland, recreational, park, or
scenic-use land or public access airport property. If the owner
has any partial or total exemptions, the form stipulates that an
additional tax may be imposed if the property no longer qualifies
under that exemption. Under a bold type notice, the owner is
advised to notify the county's appraisal district in which the sale
is taking place to ask for any additional information regarding the
property's tax status.
Finally, the disclosure form provides that both the owner and
the purchaser sign and date the document.
(b) Clarifies that this section does not apply to a transfer:
(1) under a court order or foreclosure sale; (2) by a trustee in
bankruptcy; (3) to a purchaser at a foreclosure sale conducted
under a power of sale under a deed of trust or a sale under a
court-ordered foreclosure or a purchaser who has acquired the
property by a deed-in-lieu of foreclosure; (4) by a fiduciary in
the administration of an descendant's estate, guardianship,
conservatorship, or trust; or (5) to or from a governmental entity.
(c) Provides that this notice is not required to be given to
a co-owner with an owner of an undivided interest in the property
or the spouse or an immediate family member of an owner.
(d) Requires the owner to disclose the special use tax status
to the purchaser on or before the effective date of the contract.
Failure to do so makes the seller liable for those additional
taxes, in addition to any penalties and interest from the
appraisal.
(e) Prohibits the liability for the additional taxes from
being merged with the conveyance of the property unless both
parties agree in writing after the notice has been given.
SECTION 2. Effective date of this Act is January 1, 1996.
SECTION 3. Emergency clause.
COMPARISON OF ORIGINAL TO SUBSTITUTE
The major differences between H.B. 946, as introduced and the
committee substitute are as follows:
1. In the substitute, under SECTION 1, the title is clarified
to indicate the purpose to which this section applies and specifies
the owner's disclosure of special use property tax status in the
heading of the disclosure form. In addition, this special use tax
designation to the property is added to subsection (a) in the event
of a contract for sale of property. In Section 1(a), #3 under the
original Disclosure Form has been incorporated under #2 of the
Disclosure Form in the substitute, however, the substitute now
stipulates that the owner must go back five years to show both the
appraisal and exemption on the property.
2. A bold type notice is added under SECTION 1(a) notifying
the buyer of possible additional taxes due on the property if the
answer to #2 was Yes, and advising the buyer to contact the County
Appraisal District for more information.
3. In SECTION 1(b) of the substitute, several technical
corrections have been made. The words "contract for a" was deleted
from the original, as were "or foreclosure sale" under 1(b)(1).
Under 1(b)(3), language was deleted and in its place a foreclosure
stipulation was added. In SECTION 1, (b)(4), the original was
deleted and the subdivisions were renumbered in the substitute.
4. In SECTION 1(d) language was cleaned up to assert the
responsibility on the part of the owner to disclose any special use
tax status information.
5. SECTION 1(e) is added to prohibit the liability for the
additional taxes, penalty and interest from being added to the
conveyance of the property unless both parties agree in writing
after the notice has been given to defer the requirements.
SUMMARY OF COMMITTEE ACTION
The Business and Industry Committee considered H.B. 946 on March
14, 1995. The committee considered three (3) amendments to H.B.
946. All three (3) of those amendments were adopted without
objection. The following person testified in favor of H.B. 946, as
amended: Mikel J. Craig, representing himself. H.B. 946, as
amended, was referred to subcommittee consisting of Representatives
Rhodes-chair, Corte, Solomons.
H.B. 946, as amended, was considered by the subcommittee in a
formal meeting on April 3, 1995. The subcommittee considered a
complete committee substitute for H.B. 946, as amended. There
being no objection, the complete committee substitute was adopted.
The committee substitute to H.B. 946 as amended was reported
favorably to the full committee by a record vote of 2 (two) ayes,
0 (zero) nays, 0 (zero) present-not-voting, 1 (one) absent.
Pursuant to suspension of the 48-hour rule, H.B. 946, as amended
was considered on subcommittee report by the full committee in a
public hearing on April 4, 1995. A complete committee substitute
to H.B. 946, as amended was offered. Without objection, the
complete committee substitute was adopted. The Chair instructed
the staff to incorporate the amendments into the substitute. There
being no objection C.S.H.B. 946 was reported favorably, with the
recommendation that it do pass and be printed, by a record vote of
9 (nine) ayes, 0 (zero) nays, 0 (zero) present-not-voting, 0 (zero)
absent.