By Goodman                                            H.B. No. 2735
       74R6216 DWS-F
                                 A BILL TO BE ENTITLED
    1-1                                AN ACT
    1-2  relating to preparation of certain secondary loan documents by an
    1-3  attorney.
    1-4        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-5        SECTION 1.  Chapter 5, Title 79, Revised Statutes (Article
    1-6  5069-5.01 et seq., Vernon's Texas Civil Statutes), is amended by
    1-7  adding Article 5.04A to read as follows:
    1-8        Art. 5.04A.  DOCUMENT PREPARATION BY ATTORNEY.  (a)  A
    1-9  document that is prepared in connection with a secondary mortgage
   1-10  loan and that affects title to real property may be prepared only
   1-11  by an attorney who is licensed by and resides in this state and who
   1-12  is not an employee of the lender.  For the purposes of this
   1-13  article, "employee" means a person who receives a salary for
   1-14  performing services under the direction of the lender and does not
   1-15  include an independent contractor.
   1-16        (b)  A deed of trust or other security instrument prepared in
   1-17  connection with a secondary mortgage loan must contain a notice of
   1-18  the attorney or law firm that prepared the document.  The notice
   1-19  must be in at least 10-point bold type or its equivalent and must
   1-20  be in the following form with the blanks appropriately filled:
   1-21                                NOTICE
   1-22        Your loan documents have been prepared by the following
   1-23        attorney or law firm:  ______________________________.
   1-24        The   business   address   of   the  attorney  or  firm
    2-1        is _________________________________________.
    2-2        The  telephone  number  of   the   attorney   or   firm
    2-3        is _________________________________________.
    2-4        If you have a question regarding the terms and
    2-5        conditions of this  document,  call  the  following
    2-6        person   at  the  office  of   the   attorney  or
    2-7        firm:  ___________________________.
    2-8        You may call between ___a.m. and ___p.m. on the
    2-9        following days:  ____________________________________ .
   2-10        If you sign this document and you fail to meet the
   2-11        terms and conditions of this document, you may lose
   2-12        your legal ownership rights in your home.  KNOW YOUR
   2-13        RIGHTS AND DUTIES UNDER THE LAW.
   2-14        (c)  A deed of trust or other security instrument that does
   2-15  not contain the notice required by this article is not notice of
   2-16  the security interest created by the document to persons who are
   2-17  not parties to the document, except that if other requirements for
   2-18  the document to be notice are satisfied, the document becomes
   2-19  notice to those persons when a copy of the notice required by this
   2-20  article, signed by the borrower, is recorded with the document.
   2-21        SECTION 2.  This Act applies only to a document executed on
   2-22  or after the effective date of this Act.  A document executed
   2-23  before the effective date of this Act is covered by the law in
   2-24  effect when the document was executed, and the former law is
   2-25  continued in effect for that purpose.
   2-26        SECTION 3.  This Act takes effect September 1, 1995.
   2-27        SECTION 4.  The importance of this legislation and the
    3-1  crowded condition of the calendars in both houses create an
    3-2  emergency and an imperative public necessity that the
    3-3  constitutional rule requiring bills to be read on three several
    3-4  days in each house be suspended, and this rule is hereby suspended.