By Patterson H.B. No. 295
75R1187 DWS-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to permitting an encumbrance to be fixed on a homestead
1-3 for certain extensions of credit; providing a civil penalty.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 41.001(b), Property Code, is amended to
1-6 read as follows:
1-7 (b) Encumbrances may be properly fixed on homestead property
1-8 for:
1-9 (1) purchase money;
1-10 (2) taxes on the property;
1-11 (3) work and material used in constructing
1-12 improvements on the property if contracted for in writing as
1-13 provided by Sections 53.059(a), (b), and (c);
1-14 (4) an owelty of partition imposed against the
1-15 entirety of the property by a court order or by a written agreement
1-16 of the parties to the partition, including a debt of one spouse in
1-17 favor of the other spouse resulting from a division or an award of
1-18 a family homestead in a divorce proceeding; [or]
1-19 (5) the refinance of a lien against a homestead,
1-20 including a federal tax lien resulting from the tax debt of both
1-21 spouses, if the homestead is a family homestead, or from the tax
1-22 debt of the owner; or
1-23 (6) an extension of credit for any other purpose, if
1-24 the extension of credit meets the requirements of Section 41.008.
2-1 SECTION 2. Subchapter A, Chapter 41, Property Code, is
2-2 amended by adding Section 41.008 to read as follows:
2-3 Sec. 41.008. CERTAIN EXTENSIONS OF CREDIT SECURED BY
2-4 HOMESTEAD. (a) An extension of credit under Section 41.001(b)(6)
2-5 must be the only debt secured by the homestead. Any prior debt
2-6 secured by the homestead must be paid in full before the extension
2-7 of credit under Section 41.001(b)(6) or refinanced as part of the
2-8 extension of credit under Section 41.001(b)(6).
2-9 (b) A lender may not require that a person obtain an
2-10 extension of credit under Section 41.001(b)(6) as a condition of
2-11 receiving an extension of credit not secured by the homestead. A
2-12 lender who violates this subsection is liable:
2-13 (1) for a civil penalty not to exceed $10,000 for each
2-14 violation; and
2-15 (2) to the borrower for the borrower's damages, court
2-16 costs, and reasonable attorney's fees.
2-17 (c) The attorney general may sue to collect a civil penalty
2-18 under Subsection (b)(1).
2-19 SECTION 3. This Act takes effect on the date the
2-20 constitutional amendment proposed by J.R. No. , 75th
2-21 Legislature, Regular Session, 1997, takes effect. If that
2-22 amendment is not approved by the voters, this Act has no effect.
2-23 SECTION 4. The importance of this legislation and the
2-24 crowded condition of the calendars in both houses create an
2-25 emergency and an imperative public necessity that the
2-26 constitutional rule requiring bills to be read on three several
2-27 days in each house be suspended, and this rule is hereby suspended.