1-1 By: Wentworth S.B. No. 1387
1-2 (In the Senate - Filed March 13, 1995; March 20, 1995, read
1-3 first time and referred to Committee on State Affairs;
1-4 April 12, 1995, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 9, Nays 4; April 12, 1995,
1-6 sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 1387 By: Wentworth
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to the transfer and enforcement of ad valorem tax liens.
1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12 SECTION 1. Chapter 32, Tax Code, is amended by amending
1-13 Section 32.06 and adding Section 32.065 to read as follows:
1-14 Sec. 32.06. Transfer of Tax Lien. (a) A person may
1-15 authorize another person to pay the taxes imposed by a taxing unit
1-16 on the person's <his> real property by filing with the collector
1-17 for the unit a sworn document stating the authorization, naming the
1-18 other person authorized to pay the taxes, and describing the
1-19 property.
1-20 (b) If a person authorized to pay another's taxes pursuant
1-21 to Subsection (a) <of this section> pays the taxes and any
1-22 penalties and interest imposed, the collector shall issue a tax
1-23 receipt to the person paying the taxes. In addition, the collector
1-24 shall certify on the sworn document that payment of the taxes and
1-25 any penalties and interest on the described property has been made
1-26 by a person other than the person liable for the taxes when imposed
1-27 and that the taxing unit's tax lien is transferred to the person
1-28 paying the taxes. The collector shall attach to the document the
1-29 collector's <his> seal of office and deliver the document to the
1-30 person paying the taxes. The collector shall keep a record of all
1-31 tax liens transferred as provided by this section.
1-32 (c) Except as otherwise provided by this section, the
1-33 transferee of a tax lien and any successor in interest is entitled
1-34 to foreclose the lien:
1-35 (1) in the manner provided by law for foreclosure of
1-36 tax liens; or
1-37 (2) in the manner specified in Section 51.002,
1-38 Property Code.
1-39 (d) To be enforceable, a tax lien transferred as provided by
1-40 this section must be recorded in the deed records of each county in
1-41 which the property encumbered by the lien is located.
1-42 (e) Except as provided by Section 32.065, a <A> person
1-43 holding a tax lien transferred as provided by this section may not
1-44 charge a greater rate of interest than 18 <10> percent a year on
1-45 the taxes, penalties, interest, and recording expenses paid to
1-46 acquire and record the lien, plus any charge that is authorized by
1-47 Section 32.065 and agreed to by the owner of the property under
1-48 that section.
1-49 (f) The holder of a preexisting lien on property encumbered
1-50 by a tax lien transferred as provided by this section is entitled,
1-51 within six months after the date on which the tax lien is recorded
1-52 in all counties in which the property is located, to pay the holder
1-53 of the tax lien the amount paid for the lien and any charge
1-54 previously agreed to and authorized by Section 32.065, plus
1-55 interest accrued at the rate provided by Subsection (e), transfer
1-56 expenses, and recording expenses, and becomes subrogated to all
1-57 rights in the lien.
1-58 (g) A suit to foreclose a tax lien transferred as provided
1-59 by this section may not be instituted within one year from the date
1-60 on which the lien is recorded in all counties in which the property
1-61 is located, unless the contract between the owner of the property
1-62 and the transferee provides otherwise.
1-63 (h) After one year from the date on which a tax lien
1-64 transferred as provided by this section is recorded in all counties
1-65 in which the property is located, the holder of the lien may file
1-66 suit to foreclose the lien unless a contract between the holder of
1-67 the lien and the owner of the property encumbered by the lien
1-68 provides otherwise. If the suit results in foreclosure of the
2-1 lien, the person filing suit is entitled to recover attorney's fees
2-2 in an amount not to exceed 10 percent of the judgment. The
2-3 proceeds of a sale following foreclosure as provided by this
2-4 subsection shall be applied first to the payment of court costs,
2-5 then to payment of the judgment, including accrued interest, and
2-6 then to the payment of any attorney's fees fixed in the judgment.
2-7 Any remaining proceeds shall be paid to other holders of liens on
2-8 the property in the order of their priority and then to the person
2-9 whose property was sold at the tax sale.
2-10 (i) The person whose property is sold as provided by this
2-11 section or any person holding a first lien against the property is
2-12 entitled, within one year after the date the property is sold, to
2-13 redeem the property from the purchaser at the tax sale by paying
2-14 that purchaser <him> the tax sale purchase price, plus all
2-15 authorized charges, costs, and interest accrued on the judgment to
2-16 the date of redemption or 118 <110> percent of the amount of the
2-17 judgment, whichever is less. If a person redeems the property as
2-18 provided by this subsection, the purchaser at the tax sale shall
2-19 deliver a deed to the property to the person redeeming the
2-20 property. If the person who owned the property at the time of
2-21 foreclosure redeems the property, all liens existing on the
2-22 property at the time of the tax sale remain in effect to the extent
2-23 not paid from the sale proceeds.
2-24 Sec. 32.065. CONTRACT FOR FORECLOSURE OF TAX LIEN.
2-25 (a) Section 32.06 <(j) This section> does not abridge the right
2-26 of an owner of real property to enter into a contract for the
2-27 payment of taxes with the holder of a lien on the property,
2-28 including a transferee under Section 32.06 or this section, or
2-29 affect a contract between the owner and holder of a lien for the
2-30 payment of taxes on the property.
2-31 (b) A contract entered into under Subsection (a) may provide
2-32 for:
2-33 (1) a default charge in an amount equal to five cents
2-34 for each dollar of a scheduled installment payment due under the
2-35 tax lien obligation, if any portion of the installment remains
2-36 unpaid for at least 10 days after the date the installment payment
2-37 is due;
2-38 (2) a prepayment penalty if the property owner prepays
2-39 all or part of the tax lien obligation before maturity;
2-40 (3) reasonable, usual, and customary fees or charges
2-41 for a title examination or a title search or for collecting and
2-42 disbursing escrow funds or premiums for title insurance for the
2-43 benefit of the transferee;
2-44 (4) the reasonable fee of an attorney, other than a
2-45 salaried employee of the transferee, charged to the transferee of
2-46 the lien for preparation of a loan document in connection with the
2-47 tax lien obligation;
2-48 (5) a charge prescribed by law that is or will be paid
2-49 to a public official for a determination of the existence of a lien
2-50 or a security interest or for the recordation of a document
2-51 perfecting, releasing, or satisfying the lien or security interest;
2-52 (6) the reasonable fee of a certified appraiser, other
2-53 than a salaried employee of the transferee, for an appraisal of
2-54 real property that is offered as security for the loan;
2-55 (7) the reasonable cost of a credit report;
2-56 (8) the reasonable fee of a registered surveyor, other
2-57 than a salaried employee of the transferee, for a survey of real
2-58 property that is offered as security for the loan;
2-59 (9) a premium paid or received in connection with the
2-60 sale of credit life insurance, credit accident and health
2-61 insurance, or mortgage guaranty insurance, if all or part of the
2-62 benefits are directed to reduce or extinguish the tax lien
2-63 obligation;
2-64 (10) a reasonable charge or fee for collection of the
2-65 tax lien obligation, including an attorney's fee, trustee's fee, or
2-66 another usual fee incurred by a lender that makes loans secured by
2-67 real property;
2-68 (11) a fee not to exceed $25 for the return by a
2-69 depository institution of a dishonored check, negotiated order of
2-70 withdrawal, or share draft offered in full or partial payment of a
3-1 tax lien obligation;
3-2 (12) an event of default;
3-3 (13) notice of acceleration; and
3-4 (14) any other matter that is customarily contracted
3-5 for by a lender that makes loans secured by real property.
3-6 (c) Notwithstanding any other provision of this code, a
3-7 transferee of a tax lien is subrogated to and is entitled to
3-8 exercise any right or remedy possessed by the transferring taxing
3-9 unit, including or related to foreclosure, judicial sale, and the
3-10 ability to purchase property.
3-11 (d) Chapters 5 and 15 and Sections 1.07(d)(1) and (f), Title
3-12 79, Revised Statutes (Article 5069-1.01 et seq., Vernon's Texas
3-13 Civil Statutes), do not apply to a transaction covered by this
3-14 section. The transferee of a tax lien under this section is not
3-15 required to obtain a license under Title 79, Revised Statutes
3-16 (Article 5069-1.01 et seq., Vernon's Texas Civil Statutes).
3-17 (e) If in a contract under this section a person contracts
3-18 for, charges, or receives a rate or amount of interest that exceeds
3-19 the rate or amount allowed by this section, the amount of the
3-20 penalty for which the person is obligated is determined in the
3-21 manner provided by Chapter 8, Title 79, Revised Statutes (Article
3-22 5069-8.01 et seq., Vernon's Texas Civil Statutes).
3-23 (f) The first written communication by the lender to its
3-24 prospective borrower shall disclose the possibility that additional
3-25 charges or fees may be incurred by the borrower in connection with
3-26 the loan or contract under this section.
3-27 SECTION 2. Section 34.02, Tax Code, is amended by adding
3-28 Subsection (e) to read as follows:
3-29 (e) In this section, "taxes" includes a charge, fee, or
3-30 expense that is expressly authorized by Section 32.06 or 32.065.
3-31 SECTION 3. This Act takes effect September 1, 1995. The
3-32 change in law made by this Act applies only to the transfer of a
3-33 tax lien on or after that date. The transfer of a tax lien before
3-34 the effective date of this Act or a tax lien transferred before the
3-35 effective date is covered by the law in effect when the tax lien
3-36 was transferred, and the former law is continued in effect for that
3-37 purpose.
3-38 SECTION 4. The importance of this legislation and the
3-39 crowded condition of the calendars in both houses create an
3-40 emergency and an imperative public necessity that the
3-41 constitutional rule requiring bills to be read on three several
3-42 days in each house be suspended, and this rule is hereby suspended.
3-43 * * * * *