1-1 AN ACT
1-2 relating to the sale of tax foreclosed property.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 33.54, Tax Code, is amended to read as
1-5 follows:
1-6 Sec. 33.54. LIMITATION ON ACTIONS RELATING TO PROPERTY SOLD
1-7 FOR TAXES. (a) Except as provided by Subsection (b) [of this
1-8 section], an [a cause of] action relating to the title to property
1-9 may not be maintained against the purchaser of the property at a
1-10 tax sale unless the action is commenced:
1-11 (1) before the first anniversary of the date that
1-12 [commences within three years after] the deed executed to the
1-13 purchaser at the tax sale is filed of record; or
1-14 (2) before the second anniversary of the date that the
1-15 deed executed to the purchaser is filed of record, if on the date
1-16 that the suit to collect the delinquent tax was filed the property
1-17 was:
1-18 (A) the residence homestead of the owner; or
1-19 (B) land appraised or eligible to be appraised
1-20 under Subchapter C or D, Chapter 23.
1-21 (b) If a person other than the purchaser at the tax sale or
1-22 the person's [his] successor in interest pays taxes on the property
1-23 during the applicable limitations period and until the commencement
1-24 of an action challenging the validity of the tax sale [three years
2-1 following the date the deed is filed] and that person was not
2-2 served citation in the suit to foreclose the tax lien, that [the
2-3 three-year] limitations period does not apply to that person.
2-4 (c) When actions are barred by this section, the purchaser
2-5 at the tax sale or the purchaser's [his] successor in interest has
2-6 [shall be held to have] full title to the property, precluding all
2-7 other claims.
2-8 SECTION 2. Section 34.05, Tax Code, is amended by amending
2-9 Subsections (b), (c), and (d), and adding Subsections (h) and (i)
2-10 to read as follows:
2-11 (b) Property [Unless the property is] sold pursuant to
2-12 Subsections (c) and (d) of this section[, it] may [not] be sold for
2-13 any [less than the market value specified in the judgment of
2-14 foreclosure or the total] amount [of the judgments against the
2-15 property, whichever is less, without the consent of each taxing
2-16 unit entitled to receive proceeds of the sale under the judgment.
2-17 Joinder of the taxing units in the conveyance of the property
2-18 constitutes consent. The presiding officer of the governing body
2-19 of a taxing unit may consent in behalf of the taxing unit]. This
2-20 subsection does not authorize a sale of property in violation of
2-21 Section 52, Article III, Texas Constitution.
2-22 (c) The taxing unit purchasing the property by resolution of
2-23 its governing body may request the sheriff to sell the property at
2-24 a public sale. If the purchasing taxing unit has not sold the
2-25 property within six months after the date on which the owner's
2-26 right of redemption terminates, any taxing unit that is entitled to
2-27 receive proceeds of the sale by resolution of its governing body
3-1 may request the sheriff in writing to sell the property at a public
3-2 sale. On receipt of a request made under this subsection, the
3-3 sheriff shall sell the property as provided by Subsection (d) of
3-4 this section, unless the property is sold pursuant to Subsection
3-5 (h) or (i) of this section before the date set for the public sale.
3-6 (d) Except as provided by this subsection, all public sales
3-7 requested as provided by Subsection (c) of this section shall be
3-8 conducted in the manner prescribed by the Rules of Civil Procedure
3-9 for the sale of property under execution. The notice of the sale
3-10 must contain a description of the property to be sold, which must
3-11 be a legal description in the case of real property, the number and
3-12 style of the suit under which the property was sold at the tax
3-13 foreclosure sale, and the date of the tax foreclosure sale. [The
3-14 officer conducting the sale shall reject any bid for the property
3-15 if it is his judgment that the amount bid is insufficient. If all
3-16 bids are insufficient, the property shall be readvertised and
3-17 offered for sale again.] The acceptance of a bid by the officer
3-18 conducting the sale is conclusive and binding on the question of
3-19 its sufficiency. An action to set aside the sale on the grounds
3-20 that the bid is insufficient may not be sustained in court, except
3-21 that a taxing unit that participates in distribution of proceeds of
3-22 the sale may file an action within one year after the date of the
3-23 sale to set aside the sale on the grounds of fraud or collusion
3-24 between the officer making the sale and the purchaser.
3-25 (h) In lieu of a sale pursuant to Subsections (c) and (d) of
3-26 this section, the taxing unit that purchased the property may sell
3-27 the property at a private sale. Consent of each taxing unit
4-1 entitled to receive proceeds of the sale under the judgment is not
4-2 required. Property sold under this subsection may not be sold for
4-3 an amount that is less than the lesser of:
4-4 (1) the market value specified in the judgment of
4-5 foreclosure; or
4-6 (2) the total amount of the judgments against the
4-7 property.
4-8 (i) In lieu of a sale pursuant to Subsections (c) and (d) of
4-9 this section, the taxing unit that purchased the property may sell
4-10 the property at a private sale for an amount less than required
4-11 under Subsection (h) of this section with the consent of each
4-12 taxing unit entitled to receive proceeds of the sale under the
4-13 judgment. This subsection does not authorize a sale of property in
4-14 violation of Section 52, Article III, Texas Constitution.
4-15 SECTION 3. Subchapter A, Chapter 34, Tax Code, is amended by
4-16 adding Section 34.051 to read as follows:
4-17 Sec. 34.051. RESALE BY TAXING UNIT FOR THE PURPOSE OF URBAN
4-18 REDEVELOPMENT. (a) A municipality is authorized to resell tax
4-19 foreclosed property for less than the market value specified in the
4-20 judgment of foreclosure or less than the total amount of the
4-21 judgments against the property if consent to the conveyance is
4-22 evidenced by an interlocal agreement between the municipality and
4-23 each taxing unit that is a party to the judgment, provided,
4-24 however, that the interlocal agreement complies with the
4-25 requirements of Subsection (b).
4-26 (b) Any taxing unit may enter into an interlocal agreement
4-27 with the municipality for the resale of tax foreclosed properties
5-1 to be used for a purpose consistent with the municipality's urban
5-2 redevelopment plans. If the tax foreclosed property is resold
5-3 pursuant to this section to be used for a purpose consistent with
5-4 the municipality's urban redevelopment plan, the deed of conveyance
5-5 must refer to or set forth the applicable terms of the urban
5-6 redevelopment plan. Any such interlocal agreement should include
5-7 the following:
5-8 (1) a general statement and goals of the
5-9 municipality's urban redevelopment plans;
5-10 (2) a statement that the interlocal agreement concerns
5-11 only tax foreclosed property that is either vacant or distressed
5-12 and has a tax delinquency of six or more years;
5-13 (3) a statement that the properties will be used only
5-14 for a purpose consistent with an urban redevelopment plan that is
5-15 primarily aimed at providing housing for families of low or
5-16 moderate income;
5-17 (4) a statement that the principal goal of the
5-18 interlocal agreement is to provide an efficient mechanism for
5-19 returning deteriorated or unproductive properties to the tax rolls,
5-20 enhancing the value of ownership to the surrounding properties, and
5-21 improving the safety and quality of life in deteriorating
5-22 neighborhoods; and
5-23 (5) a provision that all properties are sold subject
5-24 to any right of redemption.
5-25 (c) An action attacking the validity of a sale of property
5-26 pursuant to this section may not be instituted after the expiration
5-27 of one year after the date of the sale and then only after the
6-1 unconditional tender into the registry of the court of an amount
6-2 equal to all taxes, penalties, interest, costs, and post-judgment
6-3 interest of all judgments on which the original foreclosure sale
6-4 was based.
6-5 SECTION 4. Subchapter A, Chapter 34, Tax Code, is amended by
6-6 adding Section 34.08 to read as follows:
6-7 Sec. 34.08. CHALLENGE TO VALIDITY OF TAX SALE. (a) A
6-8 person may not commence an action that challenges the validity of a
6-9 tax sale under this chapter unless the person:
6-10 (1) deposits into the registry of the court an amount
6-11 equal to the amount of the delinquent taxes, penalties, and
6-12 interest specified in the judgment of foreclosure obtained against
6-13 the property plus all costs of the tax sale; or
6-14 (2) files an affidavit of inability to pay under Rule
6-15 145, Texas Rules of Civil Procedure.
6-16 (b) A person may not commence an action challenging the
6-17 validity of a tax sale after the time set forth in Section
6-18 33.54(a)(1) or (2), as applicable to the property, against a
6-19 subsequent purchaser for value who acquired the property in
6-20 reliance on the tax sale. The purchaser may conclusively presume
6-21 that the tax sale was valid and shall have full title to the
6-22 property free and clear of the right, title, and interest of any
6-23 person that arose before the tax sale, subject only to recorded
6-24 restrictive covenants and valid easements of record set forth in
6-25 Section 34.01(d) and subject to applicable rights of redemption.
6-26 (c) If a person is not barred from bringing an action
6-27 challenging the validity of a tax sale under Subsection (b) or any
7-1 other provision of this title or applicable law, the person must
7-2 bring an action no later than two years after the cause of action
7-3 accrues to recover real property claimed by another who:
7-4 (1) pays applicable taxes on the real property before
7-5 overdue; and
7-6 (2) claims the property under a registered deed
7-7 executed pursuant to Section 34.01.
7-8 (d) Subsection (c) does not apply to a claim based on a
7-9 forged deed.
7-10 SECTION 5. (a) The changes in law made by Sections 1 and 4
7-11 of this Act apply only to an action that relates to the title to
7-12 property sold for taxes or challenges the validity of a tax sale
7-13 and that is commenced on or after September 1, 1997. An action
7-14 commenced before September 1, 1997, is covered by the law in effect
7-15 when the property was sold, and the former law is continued in
7-16 effect for that purpose.
7-17 (b) The changes in law made by Section 2 of this Act apply
7-18 only to the resale of property by a taxing unit on or after
7-19 September 1, 1997. The resale of property by a taxing unit before
7-20 September 1, 1997, is covered by the law in effect when the
7-21 property was resold, and the former law is continued in effect for
7-22 that purpose.
7-23 SECTION 6. The importance of this legislation and the
7-24 crowded condition of the calendars in both houses create an
7-25 emergency and an imperative public necessity that the
7-26 constitutional rule requiring bills to be read on three several
7-27 days in each house be suspended, and this rule is hereby suspended,
8-1 and that this Act take effect and be in force from and after its
8-2 passage, and it is so enacted.
_______________________________ _______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 3263 was passed by the House on April
29, 1997, by a non-record vote; and that the House concurred in
Senate amendments to H.B. No. 3263 on May 30, 1997, by a non-record
vote.
_______________________________
Chief Clerk of the House
I certify that H.B. No. 3263 was passed by the Senate, with
amendments, on May 22, 1997, by the following vote: Yeas 30, Nays
0.
_______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor