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.

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