SRC-MAX S.B. 573 75(R) BILL ANALYSIS
Senate Research Center S.B. 573
By: Wentworth
State Affairs
4-7-97
As Filed
DIGEST
Currently, a real estate broker may not obtain a lien on real property to
secure the payment of the broker's commission arising from a commercial
real estate transaction. For many years, the brokerage community has
favored a statutory lien in order to secure payment of brokerage
commission obligations. This bill creates a commercial real estate
broker's lien.
PURPOSE
As proposed, S.B. 573 creates a commercial real estate broker's lien.
RULEMAKING AUTHORITY
This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Title 5B, Property Code, by adding Chapter 62, as
follows:
CHAPTER 62. COMMERCIAL REAL ESTATE BROKER'S LIEN
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 62.001. SHORT TITLE: Commercial Real Estate Broker's Lien Act.
Sec. 62.002. Provides that this chapter applies to commercial real
estate. Provides that this chapter does not apply to certain other areas.
Sec. 62.003. DEFINITION. Defines "broker" and "real estate."
SUBCHAPTER B. BROKER'S LIEN
Sec. 62.021. PERSON ENTITLED TO LIEN. Provides that a broker has a lien
on commercial real estate in an amount that the broker is owed under a
written instrument signed by certain persons. Provides that a lien is
available only to the broker named in the signed instrument. Provides
that the lien is not available to an employee or independent contractor of
the broker.
Sec. 62.022. FILING OF NOTICE OF LIEN. Requires a broker claiming a
lien under this chapter to file a notice of lien as provided by Subchapter
C with the county clerk of the county in which the commercial real estate
is located. Requires the county clerk to record the notice of lien in
records kept for that purpose and to index and cross-index the notice of
lien in the names of the broker and the owner. Provides that failure of
the county clerk to properly record or index a filed notice of lien does
not invalidate the lien.
Sec. 62.023. CONTENTS OF NOTICE OF LIEN. Requires the notice of lien to
be signed by the broker or by a person authorized to sign on behalf of the
broker and to contain certain information. Authorizes the broker to
attach to the notice of lien a copy of the applicable written agreement.
Sec. 62.024. NOTICE OF FILING TO OWNER. Requires the broker to mail a
copy of the notice of lien by registered or certified mail to the owner of
record of the commercial real estate or the owner's authorized agent,
except as provided by Subsection (b), not later than the 10th day after
the date the broker files a notice of lien. Provides that service of the
notice is complete when the notice is deposited in the United States mail,
postage prepaid, and addressed to the owner. Provides that the broker is
not required to mail a copy of the notice of the lien under certain
circumstances.
Sec. 62.025. INCEPTION OF BROKER'S LIEN. Provides that a broker's lien
attaches on the date the notice of lien is recorded.
Sec. 62.026. PRIORITY. Provides that a recorded lien, mortgage, or
other encumbrance, including a recorded lien securing revolving credit and
future advances for a construction loan, recorded before the date a
broker's lien is recorded has priority over the broker's lien. Provides
that a mechanic's lien that is recorded after a broker's lien and that
relates back to a date before the date the broker's lien is recorded has
priority over the broker's lien.
SUBCHAPTER C. TIME FOR FILING NOTICE OF LIEN
Sec. 62.041. LIEN BASED ON GENERAL CONTRACT. Requires a broker to
record a notice of lien under certain conditions.
Sec. 62.042. LIEN BASED ON INSTALLMENT CONTRACT. Provides that if a
payment to a broker is owed in installments, a portion of which is due
after the conveyance of the commercial real estate, the broker is to
perform certain functions. Provides that a notice of lien recorded before
the conveyance of commercial real estate for the entire amount owed to the
broker under an installment contract is not enforceable to the extent of
installment payments owed after the conveyance of the real estate.
Sec. 62.043. LIEN BASED ON FUTURE COMMISSIONS. Authorizes the broker to
record the notice of lien any time after the written instrument relating
to a certain commission owed to a broker is executed. Requires a broker
to record a lien for a commission described by this section not later than
the 90th day after the date the events for which the commission is owed
occurs.
Sec. 62.044. LIEN BASED ON LEASE. Requires the broker to record the
notice of lien not later than the 90th day after the date the tenant takes
possession of the leased premises if the lien is claimed based in a lease
contract. Requires the broker to record the notice of the lien before the
date indicated in the notice for the execution of the lease if the owner
of the real estate to be leased provides written notice to the broker
entitled to claim a lien not later than the 10th day before the date the
lease is to be executed informing the broker of the intended execution of
the lease.
Sec. 62.045. LIEN BASED ON FUTURE CONVEYANCE. Requires the broker to
record the notice of lien not later than the 90th day after the date the
conveyance occurs if a broker has a written agreement with a prospective
buyer or tenant.
SUBCHAPTER D. ENFORCEMENT OF LIEN
Sec. 62.061. SUIT TO FORECLOSE LIEN. Authorizes a broker to bring suit
to foreclose a lien in any district court in the county in which the
commercial real estate is located by filing a sworn complaint stating that
the lien has been recorded. Requires a complaint in a suit to be filed
under this section to contain certain information. Requires the broker to
include as a defendant in a suit brought under this subchapter each person
who the broker knows has an interest in the commercial real estate.
Sec. 62.062. STATUTE OF LIMITATIONS. Requires a broker claiming a lien
under this chapter to bring a suit to foreclose the lien on or before the
second anniversary of the date the lien is recorded. Requires a broker
claiming a lien to collect a future commission to bring a suit to
foreclose the lien on or before the second anniversary of the date the
transaction on which the commission is claimed occurs. Requires a broker
claiming a lien on an option to purchase or lease to bring a suit to
foreclose the lien not later than six months after the date of the
conveyance of the commercial real estate under the exercise of the option
to purchase or lease.
Sec. 62.063. ASSESSMENT OF COSTS, FEES, AND INTEREST. Provides that the
prevailing party in a suit brought under this subchapter is entitles to
court costs, attorney's fees, and prejudgements interest.
SUBCHAPTER E. RELEASE OF LIEN
Sec. 62.081. RELEASE OF LIEN. Requires the broker, not later than the
fifth day after the date the broker receives a written request from the
owner of the commercial real estate, to furnish to the owner a release of
indebtedness and any lien claimed to the extent of the indebtedness paid
when the debt that is the basis for a lien is satisfied. Requires the
broker, not later than the 10th day after the date the broker receives a
written request from the owner of the commercial real estate, to furnish
the owner a release of indebtedness and any lien claimed under certain
conditions. Requires a release of lien to be in a form that permits the
instrument to be filed of record.
SUBCHAPTER F. ESCROW OF DISPUTED AMOUNTS
Sec. 62.101. ESCROW ACCOUNT. Requires an escrow account to be
established from the proceeds of the transaction or conveyance in an
amount sufficient to satisfy the lien, if a claim for a lien filed would
prevent the closing of a transaction or conveyance. Prohibits a party
from refusing to close a transaction because of the requirement to
establish an escrow account as provided by this section.
SECTION 2. Effective date: September 1, 1997.
Makes application of this Act prospective.
SECTION 3. Emergency clause.