BILL ANALYSIS
C.S.S.B. 1387
By: Wentworth
State Affairs
4-11-95
Committee Report (Substituted)
BACKGROUND
Currently, a property owner is authorized to allow another person
to pay the taxes on the owner's property. The person who pays the
taxes is entitled to receive a lien on the property for which the
taxes were paid. Section 32.06, Tax Code, allows a maximum
interest rate of 10 percent on such lien transfers.
PURPOSE
As proposed, C.S.S.B. 1387 raises the maximum interest rate for tax
lien transfers.
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
SECTION 1. Amends Sections 32.06, Tax Code, as follows:
Sec. 32.06. TRANSFER OF TAX LIEN. (a)-(b) Make
nonsubstantive changes.
(c) Provides that the transferee of a tax lien and any
successor in interest is entitled to foreclose the lien in
the manner provided by law for foreclosure of tax liens, or
in a manner specified in Section 51.002, Property Code.
(d) Makes no change.
(e) Prohibits a person from charging a greater rate of
interest than 18 percent, rather than 10, percent a year for
plus any charge that is authorized by Section 32.065 and
agreed to by the owner of the property under that section.
(f) Provides that the holder of a preexisting lien on
property encumbered by a tax lien is entitled to pay the
holder of the tax lien the amount paid for the lien and the
authorized charges, plus interest accrued at the rate set
forth in Subsection (e) and recording and transfer expenses,
and becomes subrogated to all rights in the lien.
(g) Prohibits a suit to foreclose a tax lien transferred
from being instituted within one year from the date on which
the lien is recorded in all counties in which the property
is located, unless the contract between the owner of the
property and the transferee provides otherwise.
(h) Makes no change.
(i) Includes all authorized charges to be recovered among
the charges to which a person whose property is sold as
provided by this section or any person holding a first lien
against the property is entitled. Makes conforming changes.
Sec. 32.065. CONTRACT FOR FORECLOSURE OF TAX LIEN. (a) Sets
forth the provisions to which this section does not abridge
the right of an owner of real property to agree in such
contract. Makes a conforming change.
(b) Sets forth the authorized provisions of a contract
entered into under Subsection (a).
(c) Provides that a transferee of a tax lien is subrogated
to and is entitled to exercise any rights and or remedy of
the transferring taxing unit, including or related to
foreclosure, judicial sale, and the ability to purchase
property.
(d) Prohibits Chapters 5, and 15, and Sections 1.07(d)(1)
and (f), Title 79, V.T.C.S. (Article 5069-1.01 et seq.,
V.T.C.S.) from applying to any transaction covered by this
section. Provides that the transferee of a tax lien under
this section is not required to obtain a license under Title
79, V.T.C.S.
(e) Provides that if in a contract under this section, a
person contracts for, charges, or receives a rate or amount
of interest that exceeds the rate allowed by this section,
the amount of the penalty for which the person is obligated
is determined in the manner provided by Chapter 8, Title 79,
V.T.C.S. (Article 5069-8.01 et seq., V.T.C.S.).
(f) Requires the first written communication by the lender
to its prospective borrower to disclose the possibility that
additional charges or fees may be incurred by the borrower
in connection with the loan or contract.
SECTION 2. Amends Section 34.02, Tax Code, by adding Subsection
(e), to define "taxes."
SECTION 3. Effective date: September 1, 1995.
Makes application of this Act prospective.
SECTION 4. Emergency clause.