By Place                                        H.B. No. 1650

      75R2204 PAM-F                           

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to creating a commercial real estate broker's lien.


 1-4           SECTION 1.  Subtitle B, Title 5, Property Code, is amended by

 1-5     adding Chapter 62 to read as follows:


 1-7                      SUBCHAPTER A.  GENERAL PROVISIONS

 1-8           Sec. 62.001.  SHORT TITLE.  This chapter may be cited as the

 1-9     Commercial Real Estate Broker's Lien Act.

1-10           Sec. 62.002.  (a)  This chapter applies to commercial real

1-11     estate.

1-12           (b)  This chapter does not apply to:

1-13                 (1)  real estate improved with one to four residential

1-14     units;

1-15                 (2)  a single-family residential unit, including a

1-16     condominium, townhouse, or home in a subdivision, if the unit is

1-17     sold, leased, or otherwise conveyed on a unit-by-unit basis and

1-18     regardless of whether the unit is part of a larger building or

1-19     located on real estate  containing more than four residential

1-20     units;

1-21                 (3)  real estate that is not improved with a structure

1-22     and is zoned for single-family residential use; or

1-23                 (4)  real estate that is a person's homestead.

1-24           Sec. 62.003.  DEFINITIONS.  In this chapter:

 2-1                 (1)  "Broker" means a person who is licensed as a real

 2-2     estate broker under The Real Estate License Act (Article 6573a,

 2-3     Vernon's Texas Civil Statutes).

 2-4                 (2)  "Real estate" has the meaning assigned by Section

 2-5     2, The Real Estate License Act (Article 6573a, Vernon's Texas Civil

 2-6     Statutes).

 2-7               (Sections 62.004-62.020 reserved for expansion

 2-8                        SUBCHAPTER B.  BROKER'S LIEN

 2-9           Sec. 62.021.  PERSON ENTITLED TO LIEN.  (a)  A broker has a

2-10     lien on commercial real estate in an amount that the broker is owed

2-11     under a written instrument signed by:

2-12                 (1)  the owner of the commercial real estate or the

2-13     owner's authorized agent; or

2-14                 (2)  a prospective buyer or prospective tenant or that

2-15     person's authorized agent relating to the purchase, lease, or other

2-16     conveyance of an interest in the commercial real estate.

2-17           (b)  A lien described by this section is available only to

2-18     the broker named in the signed instrument.  The lien is not

2-19     available to an employee or independent contractor of the broker.

2-20           Sec. 62.022.  FILING OF NOTICE OF LIEN.  (a)  A broker

2-21     claiming a lien under this chapter must file a notice of lien as

2-22     provided by Subchapter C with the county clerk of the county in

2-23     which the commercial real estate is located.

2-24           (b)  The county clerk shall record the notice of lien in

2-25     records kept for that purpose and shall index and cross-index the

2-26     notice of lien in the names of the broker and the owner.  Failure

2-27     of the county clerk to properly record or index a filed notice of

 3-1     lien does not invalidate the lien.

 3-2           Sec. 62.023.  CONTENTS OF NOTICE OF LIEN.  (a)  The notice of

 3-3     lien must be signed by the broker or by a person authorized to sign

 3-4     on behalf of the broker and must contain substantially:

 3-5                 (1)  a sworn statement of the claim, including the

 3-6     amount;

 3-7                 (2)  the name of the broker and the real estate license

 3-8     number of the broker;

 3-9                 (3)  the name of the owner; and

3-10                 (4)  a description of the commercial real estate sought

3-11     to be charged with the lien.

3-12           (b)  The broker may attach to the notice of lien a copy of

3-13     the applicable written agreement.

3-14           Sec. 62.024.  NOTICE OF FILING TO OWNER.  (a)  Except as

3-15     provided by Subsection (b), not later than the 10th day after the

3-16     date the broker files a notice of lien, the broker shall mail a

3-17     copy of the notice of lien by registered or certified mail to the

3-18     owner of record of the commercial real estate or the owner's

3-19     authorized agent. Service of the notice under this section is

3-20     complete when the notice is deposited in the United States mail,

3-21     postage prepaid, and addressed to the owner.

3-22           (b)  If a notice of lien is recorded within the 10 days

3-23     preceding the date a transaction that would entitle a broker to

3-24     payment occurs, the broker is not required to mail a copy of the

3-25     notice of lien.

3-26           Sec. 62.025.  INCEPTION OF BROKER'S LIEN.  A broker's lien

3-27     attaches on the date the notice of lien is recorded as provided by

 4-1     this chapter.

 4-2           Sec. 62.026.  PRIORITY.  (a)  A recorded lien, mortgage, or

 4-3     other encumbrance, including a recorded lien securing revolving

 4-4     credit and future advances for a construction loan, recorded before

 4-5     the date a broker's lien is recorded has priority over the broker's

 4-6     lien.

 4-7           (b)  A mechanic's lien that is recorded after a broker's lien

 4-8     and that relates back to a date before the date the broker's lien

 4-9     is recorded has priority over the broker's lien.

4-10               (Sections 62.027-62.040 reserved for expansion


4-12           Sec. 62.041.  LIEN BASED ON GENERAL CONTRACT.  Except as

4-13     provided by this subchapter, a broker must record a notice of lien:

4-14                 (1)  after the written instrument that entitles the

4-15     broker to payment is signed; and

4-16                 (2)  before the conveyance of the commercial real

4-17     estate against which the broker is claiming a lien.

4-18           Sec. 62.042.  LIEN BASED ON INSTALLMENT CONTRACT.  (a)  If a

4-19     payment to a broker is owed in installments, a portion of which is

4-20     due after the conveyance of the commercial real estate, the broker:

4-21                 (1)  may record a notice of lien for the installment

4-22     payments due after the conveyance at any time after the conveyance;

4-23     and

4-24                 (2)  must record the notice of lien before the date the

4-25     payment is due.

4-26           (b)  A notice of lien recorded before the conveyance of

4-27     commercial real estate for the entire amount owed to the broker

 5-1     under an installment contract is not enforceable to the extent of

 5-2     installment payments owed after the conveyance of the real estate.

 5-3           Sec. 62.043.  LIEN BASED ON FUTURE COMMISSIONS.  (a)  If a

 5-4     broker is entitled to a commission based on the occurrence of a

 5-5     future event, including a commission owed as the result of the

 5-6     exercise of an option to expand leased premises, renew or extend a

 5-7     lease, or purchase the real estate, the broker may record the

 5-8     notice of lien any time after the written instrument relating to

 5-9     the commission is executed.

5-10           (b)  A broker must record a lien for a commission described

5-11     by this section not later than the 90th day after the date the

5-12     event for which the commission is owed occurs.

5-13           Sec. 62.044.  LIEN BASED ON LEASE.  (a)  Except as provided

5-14     by Subsection (b), if a lien is claimed based on a lease contract,

5-15     the broker must record the notice of lien not later than the 90th

5-16     day after the date the tenant takes possession of the leased

5-17     premises.

5-18           (b)  If the owner of the real estate to be leased provides

5-19     written notice to the broker entitled to claim a lien not later

5-20     than the 10th day before the date the lease is to be executed

5-21     informing the broker of the intended execution of the lease, the

5-22     broker must record the notice of lien before the date indicated in

5-23     the notice for the execution of the lease.

5-24           Sec. 62.045.  LIEN BASED ON FUTURE CONVEYANCE.  If a broker

5-25     has a written agreement with a prospective buyer or tenant, the

5-26     broker must record the notice of lien not later than the 90th day

5-27     after the date the conveyance occurs.

 6-1               (Sections 62.046-62.060 reserved for expansion

 6-2                     SUBCHAPTER D.  ENFORCEMENT OF LIEN

 6-3           Sec. 62.061.  SUIT TO FORECLOSE LIEN.  (a)  A broker may

 6-4     bring suit to foreclose a lien in any district court in the county

 6-5     in which the commercial real estate is located by filing a sworn

 6-6     complaint stating that the lien has been recorded.

 6-7           (b)  A complaint in a suit filed under this section must

 6-8     contain:

 6-9                 (1)  a brief description of the agreement on which the

6-10     lien is based;

6-11                 (2)  the date on which the agreement was executed;

6-12                 (3)  a description of the services performed by the

6-13     broker;

6-14                 (4)  the amount due and unpaid;

6-15                 (5)  a description of the commercial real estate to

6-16     which the lien attaches; and

6-17                 (6)  other facts necessary for a full understanding of

6-18     the rights of the parties.

6-19           (c)  The broker must include as a defendant in a suit brought

6-20     under this subchapter each person who the broker knows has an

6-21     interest in the commercial real estate.

6-22           Sec. 62.062.  STATUTE OF LIMITATIONS.  (a)  Except as

6-23     provided by this section, a broker claiming a lien under this

6-24     chapter must bring a suit to foreclose the lien on or before the

6-25     second anniversary of the date the lien is recorded.

6-26           (b)  A broker claiming a lien to collect a future commission

6-27     must bring a suit to foreclose the lien on or before the second

 7-1     anniversary of the date the transaction on which the commission is

 7-2     claimed occurs.

 7-3           (c)  A broker claiming a lien based on an option to purchase

 7-4     or lease must bring a suit to foreclose the lien not later than six

 7-5     months after the date of the conveyance of the commercial real

 7-6     estate under the exercise of the option to purchase or lease.

 7-7           Sec. 62.063.  ASSESSMENT OF COSTS, FEES, AND INTEREST.  The

 7-8     prevailing party in a suit brought under this subchapter is

 7-9     entitled to court costs, attorney's fees, and prejudgment interest.

7-10               (Sections 62.064-62.080 reserved for expansion

7-11                       SUBCHAPTER E.  RELEASE OF LIEN

7-12           Sec. 62.081.  RELEASE OF LIEN.  (a)  When a debt that is the

7-13     basis for a lien filed under this chapter is satisfied, the broker

7-14     shall, not later than the fifth day after the date the broker

7-15     receives a written request from the owner of the commercial real

7-16     estate, furnish to the owner a release of indebtedness and any lien

7-17     claimed to the extent of the indebtedness paid.

7-18           (b)  When a condition occurs that would preclude the broker

7-19     from receiving compensation under the terms of the written

7-20     agreement on which the lien is based, the broker shall, not later

7-21     than the 10th day after the date the broker receives a written

7-22     request from the owner of the commercial real estate, furnish to

7-23     the owner a release of indebtedness and any lien claimed.

7-24           (c)  A release of lien must be in a form that permits the

7-25     instrument to be filed of record.

 8-1               (Sections 62.082-62.100 reserved for expansion


 8-3           Sec. 62.101.  ESCROW ACCOUNT.  (a)  If a claim for a lien

 8-4     filed as provided by this chapter would prevent the closing of a

 8-5     transaction or conveyance, an escrow account shall be established

 8-6     from the proceeds of the transaction or conveyance in an amount

 8-7     sufficient to satisfy the lien.

 8-8           (b)  A party may not refuse to close a transaction because of

 8-9     the requirement to establish an escrow account as provided by this

8-10     section.

8-11           SECTION 2.  This Act takes effect September 1, 1997.  The

8-12     change in law made by this Act applies only to an agreement to

8-13     compensate a licensed real estate broker that is entered into on or

8-14     after the effective date of this Act.

8-15           SECTION 3.  The importance of this legislation and the

8-16     crowded condition of the calendars in both houses create an

8-17     emergency and an imperative public necessity that the

8-18     constitutional rule requiring bills to be read on three several

8-19     days in each house be suspended, and this rule is hereby suspended.