BILL ANALYSIS
C.S.S.B. 1032
By: Harris
Jurisprudence
4-19-95
Committee Report (Substituted)
BACKGROUND
Historically, Texans have been able to secure third party financing
to satisfy federal taxes secured by a lien perfected against their
homestead. Federal law provides that a lien will attach to real
estate of the taxpayer, regardless of whether that property is
exempt under state law. Texans in the past have frequently
partitioned their homestead property in divorce proceedings or
separate agreements by transferring the homestead to one spouse or
cotenant and imposing a lien against the entire property to secure
the owelty of partition. This practice was recognized as a valid
means of encumbering the homestead and facilitated the availability
of third party financing.
Recent litigation in state and bankruptcy courts has cast doubt on
the validity of a lien on homestead securing refinancing of federal
tax debt and of an owelty lien on the entire property. Without
clarification of the law on refinancing of federal tax liens,
taxpayers may be unable to pay their tax debt and face the
possibility of the loss of their homestead. Without clarification
of the effect of an agreement on financing of a partition of the
homestead, the agreement in divorce and cotenant partitions to
partition the homestead by sale to one of the owners will not be
adequately secured by a lien on the full homestead; consequently,
the spouse who retains a lien will face further expenses and the
other spouse will not be able to secure third party financing to
satisfy this debt.
PURPOSE
As proposed, C.S.S.B. 1032 authorizes encumbrances to be properly
fixed on homestead property in certain circumstances.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not grant any
additional rulemaking authority to a state officer, institution, or
agency.
SECTION BY SECTION ANALYSIS
ARTICLE 1
SECTION 1.01. Amends Section 41.001(b), Property Code, to
authorize encumbrances to be properly fixed on homestead property
for purchase money, including consideration paid or to be paid for
the purchase of property or an owelty of partition imposed against
the entirety of the property designated as a homestead by a court
order or by written agreement of the parties to the partition,
including a debt of one spouse in favor of the other spouse
resulting from a division or an award of a family homestead in a
divorce proceeding, and taxes on the property including ad valorem
taxes, a federal tax lien resulting from the tax debt of both
spouses, if the homestead is a family homestead, or from the tax
debt of the owner, and a refinance by a third party of ad valorem
taxes or a federal tax lien, among other authorized encumbrances.
ARTICLE 2
SECTION 2.01. Amends Section 41.001(b), Property Code, to
authorize encumbrances to be properly fixed on homestead property
for an owelty of partition imposed against the entirety of the
property designated as a homestead by a court order or by a written
agreement of the parties to the partition, including a debt of one
spouse in favor of the other resulting from a division or an award
of a family homestead in a divorce proceeding or the refinance of
a lien against a homestead, including a federal tax lien resulting
from the tax debt of both spouses, if the homestead is a family
homestead, or from the tax debt of the owner.
SECTION 2.02. Provides that this Act takes effect on the date the
constitutional amendment proposed by S.J.R. 46 takes effect, and on
that date the amendment by this article of Section 41.001(b),
Property Code, supersedes the amendment of that Section by Article
1 of this Act. Provides that if that amendment is not approved by
the voters, this Act has no effect.
ARTICLE 3
SECTION 3.01. Emergency clause.
Effective date: 90 days after adjournment.