75R11285 E
By Place H.B. No. 1650
Substitute the following for H.B. No. 1650:
By Rhodes C.S.H.B. No. 1650
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to creating a commercial real estate broker's lien.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Subtitle B, Title 5, Property Code, is amended by
1-5 adding Chapter 62 to read as follows:
1-6 CHAPTER 62. BROKER'S LIEN ON COMMERCIAL REAL ESTATE
1-7 SUBCHAPTER A. GENERAL PROVISIONS
1-8 Sec. 62.001. SHORT TITLE. This chapter may be cited as the
1-9 Broker's Lien on Commercial Real Estate Act.
1-10 Sec. 62.002. APPLICABILITY. This chapter applies only to
1-11 real estate that is commercial real estate on the date the notice
1-12 of lien is filed under this chapter. If real estate is zoned or
1-13 restricted for more than one use, the broker's lien attaches only
1-14 to the commercial portion of the real estate.
1-15 Sec. 62.003. DEFINITIONS. In this chapter:
1-16 (1) "Broker" means a person who:
1-17 (A) is licensed as a real estate broker under
1-18 The Real Estate License Act (Article 6573a, Vernon's Texas Civil
1-19 Statutes) and is not acting as a residential rental locator as
1-20 defined by Section 24, The Real Estate License Act (Article 6573a,
1-21 Vernon's Texas Civil Statutes); or
1-22 (B) is licensed or certified as a real estate
1-23 appraiser under the Texas Appraiser Licensing and Certification Act
1-24 (Article 6573a.2, Vernon's Texas Civil Statutes).
2-1 (2) "Commercial real estate" means all real estate
2-2 except:
2-3 (A) real estate improved with one to four
2-4 residential units;
2-5 (B) a single-family residential unit, including
2-6 a condominium, townhouse, or home in a subdivision, if the unit is
2-7 sold, leased, or otherwise conveyed on a unit-by-unit basis and
2-8 regardless of whether the unit is part of a larger building or
2-9 located on real estate containing more than four residential units;
2-10 (C) real estate that is a person's homestead; or
2-11 (D) real estate that is not improved with a
2-12 structure and is:
2-13 (i) zoned for single-family residential
2-14 use; or
2-15 (ii) restricted for single-family use
2-16 under restrictive covenants that provide that the restrictive
2-17 covenants are to remain in effect for at least 20 years after the
2-18 date the notice of lien is filed and recorded in the county in
2-19 which the real estate is located.
2-20 (3) "Commission" includes a fee or other valuable
2-21 consideration.
2-22 (4) "Commission agreement" means a written instrument
2-23 that:
2-24 (A) entitles a broker to a commission;
2-25 (B) is signed by the person obligated to pay the
2-26 commission or the person's authorized agent;
2-27 (C) references the commission amount or
3-1 describes the formula used to determine the commission amount; and
3-2 (D) contains a description legally sufficient
3-3 for identification of the real estate that is the subject of the
3-4 agreement.
3-5 (5) "Future commission" means a commission based on
3-6 the occurrence of a future event, including a commission for:
3-7 (A) the exercise of an option to expand leased
3-8 premises, renew or extend a lease, or purchase real estate;
3-9 (B) the execution of a new lease;
3-10 (C) the expiration of a period of time; or
3-11 (D) any other future event specified in a
3-12 commission agreement.
3-13 (6) "Real estate" has the meaning assigned by Section
3-14 2, The Real Estate License Act (Article 6573a, Vernon's Texas Civil
3-15 Statutes).
3-16 (Sections 62.004-62.020 reserved for expansion
3-17 SUBCHAPTER B. BROKER'S LIEN
3-18 Sec. 62.021. PERSON ENTITLED TO LIEN. (a) If a broker is
3-19 entitled to a commission under a commission agreement signed by the
3-20 owner of commercial real estate or the owner's authorized agent,
3-21 the broker has a lien on the commercial real estate in the amount
3-22 specified by the commission agreement.
3-23 (b) If a broker is entitled to a commission under a
3-24 commission agreement signed by a prospective buyer of commercial
3-25 real estate or the prospective buyer's authorized agent, the broker
3-26 has a lien on the interest, if any, of the commercial real estate
3-27 that the prospective buyer purchases in the amount specified by the
4-1 commission agreement.
4-2 (c) If a broker is entitled to a commission under a
4-3 commission agreement signed by a prospective tenant of commercial
4-4 real estate or the prospective tenant's authorized agent, the
4-5 broker has a lien on the interest, if any, of the commercial real
4-6 estate that the prospective tenant leases in the amount specified
4-7 by the commission agreement.
4-8 (d) A lien described by this section is available only to
4-9 the broker named in the commission agreement. The lien is not
4-10 available to an employee or independent contractor of the broker.
4-11 (e) The broker's right to claim a lien based on the
4-12 commission agreement must be disclosed in the commission agreement.
4-13 Sec. 62.022. WAIVER OR RELEASE. The waiver of a broker's
4-14 entitlement to a lien under this chapter or the release of a lien
4-15 given for the purpose of releasing a broker's lien before the
4-16 commission is satisfied or forgiven is void.
4-17 Sec. 62.023. FILING OF NOTICE OF LIEN. (a) A broker
4-18 claiming a lien under this chapter must file a notice of lien as
4-19 provided by Subchapter C with the county clerk of the county in
4-20 which the commercial real estate is located.
4-21 (b) The county clerk shall record the notice of lien in
4-22 records kept for that purpose and shall index and cross-index the
4-23 notice of lien in the names of the broker and the owner of the
4-24 interest in the real estate on which the lien is claimed.
4-25 Sec. 62.024. CONTENTS OF NOTICE OF LIEN. The notice of lien
4-26 must be signed by the broker or by a person authorized to sign on
4-27 behalf of the broker and must contain the following:
5-1 (1) a sworn statement of the claim, substantially
5-2 including the commission amount or the formula used to determine
5-3 the commission amount and the date or the occurrence of the event
5-4 when the commission is due;
5-5 (2) the name of the broker and the real estate license
5-6 number of the broker;
5-7 (3) substantially the name of the owner and any other
5-8 person who the broker knows is obligated to pay the commission;
5-9 (4) a description legally sufficient for
5-10 identification of the commercial real estate sought to be charged
5-11 with the lien;
5-12 (5) a description of the interest in the commercial
5-13 real estate sought to be charged with the lien; and
5-14 (6) a copy of the applicable commission agreement.
5-15 Sec. 62.025. NOTICE OF FILING. (a) Except as provided by
5-16 Subsection (c), not later than one business day after the date the
5-17 broker files a notice of lien, the broker shall mail a copy of the
5-18 notice of lien by certified mail, return receipt requested, or
5-19 registered mail to:
5-20 (1) the owner of record of the interest in the
5-21 commercial real estate on which the lien is claimed or the owner's
5-22 authorized agent; and
5-23 (2) the prospective purchaser or tenant and any escrow
5-24 agent named in a contract for the sale or lease of the interest in
5-25 the commercial real estate on which the lien is claimed if:
5-26 (A) a binding written contract for the sale or
5-27 lease of the interest of the commercial real estate on which the
6-1 lien is claimed is in effect between the owner and the prospective
6-2 purchaser or tenant in a transaction that is the basis for the
6-3 commission; and
6-4 (B) the binding written contract in the
6-5 transaction that is the basis for the commission is executed by
6-6 the owner and prospective purchaser or tenant before the date the
6-7 notice of lien is filed.
6-8 (b) Service of the notice under this section is complete
6-9 when the notice is deposited in the United States mail, postage
6-10 prepaid, and addressed to the persons entitled to receive the
6-11 notice under this section.
6-12 Sec. 62.026. INCEPTION OF BROKER'S LIEN. A broker's lien
6-13 attaches to the interest in the commercial real estate owned by the
6-14 person obligated to pay the commission on the date the notice of
6-15 lien is recorded as provided by this chapter. The lien does not
6-16 relate back to the date of the commission agreement. A notice of
6-17 lien for amounts due to the broker under an installment contract or
6-18 under a commission agreement for a future commission is enforceable
6-19 only to the extent that the installment or future commission is
6-20 due.
6-21 Sec. 62.027. PRIORITY. (a) A recorded lien, mortgage, or
6-22 other encumbrance, including a recorded lien securing revolving
6-23 credit and future advances for a construction loan, recorded before
6-24 the date a broker's lien is recorded has priority over the broker's
6-25 lien. A broker's lien against the interest of a person owing the
6-26 commission is not valid or enforceable against a grantee,
6-27 purchaser, lessee, or transferee of an interest in the commercial
7-1 real estate from the person owing the commission if the deed,
7-2 lease, or instrument transferring the interest is recorded before
7-3 the broker's lien is recorded.
7-4 (b) A mechanic's lien that is recorded after a broker's lien
7-5 and that relates back to a date before the date the broker's lien
7-6 is recorded has priority over the broker's lien.
7-7 Sec. 62.028. SUBORDINATION. (a) If the owner of the
7-8 commercial real estate sells the commercial real estate, the
7-9 broker's lien is subordinate to a recorded purchase-money first
7-10 lien authorized by the purchaser if the purchaser:
7-11 (1) executes and files with the county clerk of the
7-12 county in which the broker's lien is filed a memorandum that
7-13 evidences the purchaser's ratification of the broker's lien and the
7-14 purchaser's assumption of the obligation to pay the broker the
7-15 commission as provided by the commission agreement that is the
7-16 basis for the lien; and
7-17 (2) sends the broker, by certified mail, return
7-18 receipt requested, or registered mail, a copy of the recorded
7-19 memorandum required by this subsection.
7-20 (b) If the owner of the commercial real estate refinances a
7-21 recorded first lien secured by the commercial real estate, the
7-22 broker's lien is subordinate to the recorded refinanced first lien,
7-23 regardless of the amount of the first lien after refinancing, if
7-24 the owner:
7-25 (1) executes and files with the county clerk of the
7-26 county in which the broker's lien is filed a memorandum that
7-27 evidences the owner's ratification of the broker's lien and the
8-1 owner's obligation to pay the broker the commission as provided by
8-2 the commission agreement that is the basis for the lien; and
8-3 (2) sends the broker, by certified mail, return
8-4 receipt requested, or registered mail, a copy of the recorded
8-5 memorandum required by this subsection.
8-6 (c) If the owner of the commercial real estate obtains an
8-7 extension of credit secured by the commercial real estate, the
8-8 broker's lien is subordinate to the lien securing the extension of
8-9 credit if, according to the lien documents, the extension of credit
8-10 is made only for the purpose of:
8-11 (1) repairing or renovating the commercial real
8-12 estate; or
8-13 (2) completing construction or providing additional
8-14 improvements as requested by a tenant leasing the commercial real
8-15 estate.
8-16 Sec. 62.029. CHANGE IN USE OF REAL ESTATE. (a) Except as
8-17 provided by Subsection (b), any change in the use of the real
8-18 estate does not affect a broker's lien if the notice of the lien
8-19 was filed when the real estate was commercial real estate.
8-20 (b) The broker's lien is extinguished if:
8-21 (1) not later than the 180th day after the date on
8-22 which the broker's commission is due, the commercial real estate on
8-23 which a broker claims a lien is zoned for single-family use or
8-24 restricted for single-family use under recorded restrictive
8-25 covenants that provide that the restrictive covenants are to remain
8-26 in effect for at least 20 years; and
8-27 (2) the zoning or restrictive covenants for
9-1 single-family use are effective for at least two years after the
9-2 date the commission is due.
9-3 (Sections 62.030-62.040 reserved for expansion
9-4 SUBCHAPTER C. TIME FOR FILING NOTICE OF LIEN
9-5 Sec. 62.041. TIME TO FILE. (a) Except as provided by
9-6 Subsection (b), a broker must record a notice of lien:
9-7 (1) after the commission agreement is signed by the
9-8 person who is obligated to pay the commission or the person's
9-9 authorized agent; and
9-10 (2) before the conveyance of the commercial real
9-11 estate on which the broker is claiming a lien.
9-12 (b) If the lien is based on a lease transaction, the broker
9-13 must record a notice of lien before:
9-14 (1) the 91st day after the date the event for which
9-15 the commission becomes payable occurs; and
9-16 (2) the date that the person who is obligated to pay
9-17 the commission records the future conveyance of the interest in the
9-18 commercial real estate on which the lien is claimed.
9-19 (Sections 62.042-62.060 reserved for expansion
9-20 SUBCHAPTER D. ENFORCEMENT OF LIEN
9-21 Sec. 62.061. SUIT TO FORECLOSE LIEN. (a) A broker may
9-22 bring suit to foreclose a lien in any district court for the county
9-23 in which the commercial real estate is located by filing a sworn
9-24 complaint stating that the notice of lien has been recorded.
9-25 (b) A complaint in a suit filed under this section must
9-26 contain:
9-27 (1) a brief description of the commission agreement
10-1 that is the basis for the lien, including a description of the
10-2 disclosure of the broker's right to the lien contained in the
10-3 commission agreement;
10-4 (2) the date on which the commission agreement was
10-5 executed;
10-6 (3) a description of the services performed by the
10-7 broker;
10-8 (4) the amount due and unpaid;
10-9 (5) a description of the commercial real estate to
10-10 which the lien attaches; and
10-11 (6) other facts necessary for a full understanding of
10-12 the rights of the parties.
10-13 (c) The broker must include as a defendant in a suit brought
10-14 under this subchapter each person whom the broker knows to have an
10-15 interest in the commercial real estate that is subordinate to or
10-16 encumbered by the broker's lien.
10-17 (d) If the broker and a person against whom the broker
10-18 claims a commission use alternative dispute resolution procedures
10-19 to resolve a dispute concerning entitlement to the broker's
10-20 commission, the broker's lien remains valid, and any suit to
10-21 foreclose the lien is stayed until the alternative dispute
10-22 resolution process is completed.
10-23 Sec. 62.062. STATUTE OF LIMITATIONS. (a) Except as
10-24 provided by this section, a broker claiming a lien under this
10-25 chapter must bring a suit to foreclose the lien on or before the
10-26 second anniversary of the date the notice of lien is recorded.
10-27 (b) A broker claiming a lien to collect a future commission
11-1 must bring a suit to foreclose the lien on or before the second
11-2 anniversary of the date on which the commission is due.
11-3 (c) A broker claiming a lien for a commission that is due
11-4 must bring a suit to foreclose the lien not later than the 30th day
11-5 after the date the broker receives a written demand to bring a suit
11-6 to foreclose the lien from the owner of the interest in the
11-7 commercial real estate on which the lien is claimed.
11-8 (d) If a suit to foreclose the lien is not brought within
11-9 the time required by this section, the lien is void.
11-10 (e) A broker claiming a lien to collect a commission must
11-11 bring suit to foreclose the lien on or before:
11-12 (1) the 10th anniversary of the date the lien is
11-13 recorded; or
11-14 (2) the 10th anniversary of the date the broker
11-15 records a subsequent notice of lien as a renewal of the broker's
11-16 entitlement to the lien.
11-17 Sec. 62.063. ASSESSMENT OF COSTS, FEES, AND INTEREST. The
11-18 prevailing party in a suit brought under this subchapter is
11-19 entitled to court costs, reasonable attorney's fees, and
11-20 prejudgment interest.
11-21 (Sections 62.064-62.080 reserved for expansion
11-22 SUBCHAPTER E. RELEASE OF LIEN
11-23 Sec. 62.081. RELEASE OF LIEN. (a) When a debt that is the
11-24 basis for a lien under this chapter is satisfied, the broker shall,
11-25 not later than the fifth day after the date the broker receives a
11-26 written request from the owner of the interest in the commercial
11-27 real estate on which the lien is claimed, furnish to the owner a
12-1 release of indebtedness and any lien claimed to the extent of the
12-2 indebtedness paid.
12-3 (b) When a condition occurs that would preclude the broker
12-4 from receiving compensation under the terms of the commission
12-5 agreement that is the basis for the lien, the broker shall, not
12-6 later than the 10th day after the date the broker receives a
12-7 written request from the owner of the interest in the commercial
12-8 real estate on which the lien is claimed, furnish to the owner a
12-9 release of indebtedness and any lien claimed.
12-10 (c) A release of lien must be in a form that permits the
12-11 instrument to be filed of record.
12-12 (Sections 62.082-62.100 reserved for expansion
12-13 SUBCHAPTER F. ESCROW OF DISPUTED AMOUNTS
12-14 Sec. 62.101. ESCROW ACCOUNT. (a) If a claim for a lien
12-15 described by this chapter is not paid or assumed at the closing of
12-16 a sale, lease, or mortgage of the commercial real estate subject to
12-17 the lien and would prevent the closing of the transaction or
12-18 conveyance, the person named in the notice of lien as obligated to
12-19 pay the commission shall establish an escrow account from the
12-20 proceeds of the transaction or conveyance in an amount sufficient
12-21 to satisfy the lien and related costs for any interpleader action
12-22 brought by the person maintaining the escrow account. Related
12-23 costs for any interpleader action may be deducted from the escrow
12-24 account by the person maintaining the escrow account. If an escrow
12-25 agent is named in the contract on which the transaction or
12-26 conveyance is based, the escrow account shall be established with
12-27 the named escrow agent.
13-1 (b) A party may not refuse to close a transaction because of
13-2 the requirement to establish an escrow account as provided by this
13-3 section provided that the broker executes and delivers a release of
13-4 the broker's lien in a recordable form for the amount of the
13-5 commission that is due.
13-6 (c) The amount held in escrow shall be held in escrow until:
13-7 (1) the rights of the parties claiming the amount in
13-8 escrow are determined by a written agreement of the parties, a
13-9 court of law, or an alternative dispute resolution process agreed
13-10 to by the parties;
13-11 (2) the broker's lien is no longer enforceable; or
13-12 (3) the funds are interpled into a court of competent
13-13 jurisdiction.
13-14 (d) When the escrow account is established under this
13-15 section, the broker's lien against the commercial real estate is
13-16 extinguished and becomes a lien on the proceeds in the escrow
13-17 account.
13-18 SECTION 2. This Act takes effect September 1, 1997. The
13-19 change in law made by this Act applies only to an agreement to
13-20 compensate a licensed real estate broker that is entered into on or
13-21 after the effective date of this Act.
13-22 SECTION 3. The importance of this legislation and the
13-23 crowded condition of the calendars in both houses create an
13-24 emergency and an imperative public necessity that the
13-25 constitutional rule requiring bills to be read on three several
13-26 days in each house be suspended, and this rule is hereby suspended.