1-1 By: Pitts, Rhodes, Gutierrez H.B. No. 384 1-2 (Senate Sponsor - Harris) 1-3 (In the Senate - Received from the House April 21, 1997; 1-4 April 22, 1997, read first time and referred to Committee on 1-5 Jurisprudence; April 29, 1997, reported favorably by the following 1-6 vote: Yeas 5, Nays 0; April 29, 1997, sent to printer.) 1-7 A BILL TO BE ENTITLED 1-8 AN ACT 1-9 relating to the disclosure in a contract for the transfer of vacant 1-10 land of certain information, including information concerning the 1-11 imposition of additional taxes on the land. 1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-13 SECTION 1. Subchapter A, Chapter 5, Property Code, is 1-14 amended by adding Section 5.010 to read as follows: 1-15 Sec. 5.010. NOTICE OF ADDITIONAL TAX LIABILITY. (a) A 1-16 person who is the owner of an interest in vacant land and who 1-17 contracts for the transfer of that interest shall include in the 1-18 contract the following bold-faced notice: 1-19 NOTICE REGARDING POSSIBLE LIABILITY FOR ADDITIONAL TAXES 1-20 If for the current ad valorem tax year the taxable value of 1-21 the land that is the subject of this contract is determined by a 1-22 special appraisal method that allows for appraisal of the land at 1-23 less than its market value, the person to whom the land is 1-24 transferred may not be allowed to qualify the land for that special 1-25 appraisal in a subsequent tax year and the land may then be 1-26 appraised at its full market value. In addition, the transfer of 1-27 the land or a subsequent change in the use of the land may result 1-28 in the imposition of an additional tax plus interest as a penalty 1-29 for the transfer or the change in the use of the land. The taxable 1-30 value of the land and the applicable method of appraisal for the 1-31 current tax year is public information and may be obtained from the 1-32 tax appraisal district established for the county in which the land 1-33 is located. 1-34 (b) This section does not apply to a contract for a 1-35 transfer: 1-36 (1) under a court order or foreclosure sale; 1-37 (2) by a trustee in bankruptcy; 1-38 (3) to a mortgagee by a mortgagor or successor in 1-39 interest or to a beneficiary of a deed of trust by a trustor or 1-40 successor in interest; 1-41 (4) by a mortgagee or a beneficiary under a deed of 1-42 trust who has acquired the land at a sale conducted under a power 1-43 of sale under a deed of trust or a sale under a court-ordered 1-44 foreclosure or has acquired the land by a deed in lieu of 1-45 foreclosure; 1-46 (5) by a fiduciary in the course of the administration 1-47 of a decedent's estate, guardianship, conservatorship, or trust; 1-48 (6) of only a mineral interest, leasehold interest, or 1-49 security interest; or 1-50 (7) to or from a governmental entity. 1-51 (c) The notice described by Subsection (a) is not required 1-52 to be included in a contract for transfer of an interest in land if 1-53 every transferee under the contract is: 1-54 (1) a person who is a co-owner with an owner described 1-55 by Subsection (a) of an undivided interest in the land; or 1-56 (2) a spouse or a person in the lineal line of 1-57 consanguinity of an owner described by Subsection (a). 1-58 (d) The notice described by Subsection (a) is not required 1-59 to be given if in a separate paragraph of the contract the contract 1-60 expressly provides for the payment of any additional ad valorem 1-61 taxes and interest that become due as a penalty because of: 1-62 (1) the transfer of the land; or 1-63 (2) a subsequent change in the use of the land. 1-64 (e) If the owner fails to include in the contract the notice 2-1 described by Subsection (a), the person to whom the land is 2-2 transferred is entitled to recover from that owner an amount equal 2-3 to the amount of any additional taxes and interest that the person 2-4 is required to pay as a penalty because of: 2-5 (1) the transfer of the land; or 2-6 (2) a subsequent change in the use of the land that 2-7 occurs before the fifth anniversary of the date of the transfer. 2-8 SECTION 2. This Act takes effect January 1, 1998, and 2-9 applies only to a contract that is executed on or after that date. 2-10 SECTION 3. The importance of this legislation and the 2-11 crowded condition of the calendars in both houses create an 2-12 emergency and an imperative public necessity that the 2-13 constitutional rule requiring bills to be read on three several 2-14 days in each house be suspended, and this rule is hereby suspended. 2-15 * * * * *