SLC H.B. 1463 75(R)BILL ANALYSIS LAND & RESOURCE MANAGEMENT H.B. 1463 By: Bosse 3-14-97 Committee Report (Unamended) BACKGROUND Prior to 1978, property which had been foreclosed for non-payment of local taxes was offered for sale by the sheriff of the county in which the property was located. Proceeds from the sale of the property were used to satisfy the unpaid tax debt. Lots that were not sold at county tax foreclosure sales became the property of the state. The General Land Office is designated as the agency responsible for the sale of these properties. The General Land Office sells tax foreclosure lots when a potential purchaser makes an offer on the property. Proceeds from these sales are deposited to the Capital Trust Fund. While the sale of these properties has been relatively routine, The Land Office has encountered problems with the sale of properties sold in Bexar County. Bexar County officials contend that a liability for unpaid taxes does not end when the property reverts to state ownership. In fact, purchasers of tax foreclosure property in Bexar County have received sizeable tax bills immediately after transactions are closed. Discussions with officials of Bexar County have been unsuccessful in resolving this issue. PURPOSE The purpose of HB 1463 is to amend the Natural Resources Code to clarify that the purchaser of a tax foreclosure property has clear title to the property, free of any previous tax debt. 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 Section 32.112, Natural Resources Code, SALE OF TAX FORECLOSURE PROPERTY in the following subsections: Subsection (a) states that property placed in the name of the state due to a foreclosure of a tax lien, whether the property was sold, bid off, or otherwise transferred to the state may be sold or leased by the board. The property's sale or lease is free of taxes imposed on the property, penalties, or interest that are due to any taxing unit which was a party to the judgement in the delinquent tax suit. Subsection (b) states that the sale of property by the board under this section gives the purchaser of the property a good and perfect title to the interest in the property. The purchaser is also given the right to the use and possession of the property, subject only to the right of redemption belonging to the person liable for delinquent taxes, a recorded restrictive covenant attached to the land, and a valid easement of record as of the date the property was placed in the name of the state. However, the covenant or the easement must be recorded before January 1 of the year in which the tax lien attached to the property. Subsection (c) states that the board can recover costs incurred from the sale or lease of the property. The balance of the proceeds from the sale or lease shall be deposited in the State Treasury to the credit of the Texas Capital Trust Fund. The board is not required to pay any portion of taxes imposed on the property, penalties, or interest that are due to any taxing unit which was a party to the judgement in the delinquent tax suit. SECTION 2. Emergency clause. Effective date.