1-1 By: Dutton (Senate Sponsor - Gallegos) H.B. No. 3263
1-2 (In the Senate - Received from the House April 30, 1997;
1-3 May 1, 1997, read first time and referred to Committee on
1-4 Intergovernmental Relations; May 14, 1997, reported adversely, with
1-5 favorable Committee Substitute by the following vote: Yeas 9, Nays
1-6 0; May 14, 1997, sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR H.B. No. 3263 By: Gallegos
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to the sale of tax foreclosed property.
1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12 SECTION 1. Section 33.54, Tax Code, is amended to read as
1-13 follows:
1-14 Sec. 33.54. LIMITATION ON ACTIONS RELATING TO PROPERTY SOLD
1-15 FOR TAXES. (a) Except as provided by Subsection (b) [of this
1-16 section], an [a cause of] action relating to the title to property
1-17 may not be maintained against the purchaser of the property at a
1-18 tax sale unless the action is commenced:
1-19 (1) before the first anniversary of the date that
1-20 [commences within three years after] the deed executed to the
1-21 purchaser at the tax sale is filed of record; or
1-22 (2) before the second anniversary of the date that the
1-23 deed executed to the purchaser is filed of record, if on the date
1-24 that the suit to collect the delinquent tax was filed the property
1-25 was:
1-26 (A) the residence homestead of the owner; or
1-27 (B) land appraised or eligible to be appraised
1-28 under Subchapter C or D, Chapter 23.
1-29 (b) If a person other than the purchaser at the tax sale or
1-30 the person's [his] successor in interest pays taxes on the property
1-31 during the applicable limitations period and until the commencement
1-32 of an action challenging the validity of the tax sale [three years
1-33 following the date the deed is filed] and that person was not
1-34 served citation in the suit to foreclose the tax lien, that [the
1-35 three-year] limitations period does not apply to that person.
1-36 (c) When actions are barred by this section, the purchaser
1-37 at the tax sale or the purchaser's [his] successor in interest has
1-38 [shall be held to have] full title to the property, precluding all
1-39 other claims.
1-40 SECTION 2. Section 34.05, Tax Code, is amended by amending
1-41 Subsections (b), (c), and (d), and adding Subsections (h) and (i)
1-42 to read as follows:
1-43 (b) Property [Unless the property is] sold pursuant to
1-44 Subsections (c) and (d) of this section[, it] may [not] be sold for
1-45 any [less than the market value specified in the judgment of
1-46 foreclosure or the total] amount [of the judgments against the
1-47 property, whichever is less, without the consent of each taxing
1-48 unit entitled to receive proceeds of the sale under the judgment.
1-49 Joinder of the taxing units in the conveyance of the property
1-50 constitutes consent. The presiding officer of the governing body
1-51 of a taxing unit may consent in behalf of the taxing unit]. This
1-52 subsection does not authorize a sale of property in violation of
1-53 Section 52, Article III, Texas Constitution.
1-54 (c) The taxing unit purchasing the property by resolution of
1-55 its governing body may request the sheriff to sell the property at
1-56 a public sale. If the purchasing taxing unit has not sold the
1-57 property within six months after the date on which the owner's
1-58 right of redemption terminates, any taxing unit that is entitled to
1-59 receive proceeds of the sale by resolution of its governing body
1-60 may request the sheriff in writing to sell the property at a public
1-61 sale. On receipt of a request made under this subsection, the
1-62 sheriff shall sell the property as provided by Subsection (d) of
1-63 this section, unless the property is sold pursuant to Subsection
1-64 (h) or (i) of this section before the date set for the public sale.
2-1 (d) Except as provided by this subsection, all public sales
2-2 requested as provided by Subsection (c) of this section shall be
2-3 conducted in the manner prescribed by the Rules of Civil Procedure
2-4 for the sale of property under execution. The notice of the sale
2-5 must contain a description of the property to be sold, which must
2-6 be a legal description in the case of real property, the number and
2-7 style of the suit under which the property was sold at the tax
2-8 foreclosure sale, and the date of the tax foreclosure sale. [The
2-9 officer conducting the sale shall reject any bid for the property
2-10 if it is his judgment that the amount bid is insufficient. If all
2-11 bids are insufficient, the property shall be readvertised and
2-12 offered for sale again.] The acceptance of a bid by the officer
2-13 conducting the sale is conclusive and binding on the question of
2-14 its sufficiency. An action to set aside the sale on the grounds
2-15 that the bid is insufficient may not be sustained in court, except
2-16 that a taxing unit that participates in distribution of proceeds of
2-17 the sale may file an action within one year after the date of the
2-18 sale to set aside the sale on the grounds of fraud or collusion
2-19 between the officer making the sale and the purchaser.
2-20 (h) In lieu of a sale pursuant to Subsections (c) and (d) of
2-21 this section, the taxing unit that purchased the property may sell
2-22 the property at a private sale. Consent of each taxing unit
2-23 entitled to receive proceeds of the sale under the judgment is not
2-24 required. Property sold under this subsection may not be sold for
2-25 an amount that is less than the lesser of:
2-26 (1) the market value specified in the judgment of
2-27 foreclosure; or
2-28 (2) the total amount of the judgments against the
2-29 property.
2-30 (i) In lieu of a sale pursuant to Subsections (c) and (d) of
2-31 this section, the taxing unit that purchased the property may sell
2-32 the property at a private sale for an amount less than required
2-33 under Subsection (h) of this section with the consent of each
2-34 taxing unit entitled to receive proceeds of the sale under the
2-35 judgment. This subsection does not authorize a sale of property in
2-36 violation of Section 52, Article III, Texas Constitution.
2-37 SECTION 3. Subchapter A, Chapter 34, Tax Code, is amended by
2-38 adding Section 34.051 to read as follows:
2-39 Sec. 34.051. RESALE BY TAXING UNIT FOR THE PURPOSE OF URBAN
2-40 REDEVELOPMENT. (a) A municipality is authorized to resell tax
2-41 foreclosed property for less than the market value specified in the
2-42 judgment of foreclosure or less than the total amount of the
2-43 judgments against the property if consent to the conveyance is
2-44 evidenced by an interlocal agreement between the municipality and
2-45 each taxing unit that is a party to the judgment, provided,
2-46 however, that the interlocal agreement complies with the
2-47 requirements of Subsection (b).
2-48 (b) Any taxing unit may enter into an interlocal agreement
2-49 with the municipality for the resale of tax foreclosed properties
2-50 to be used for a purpose consistent with the municipality's urban
2-51 redevelopment plans. Any such interlocal agreement should include
2-52 the following:
2-53 (1) a general statement and goals of the
2-54 municipality's urban redevelopment plans;
2-55 (2) a statement that the interlocal agreement concerns
2-56 only tax foreclosed property that is either vacant or distressed
2-57 and has a tax delinquency of six or more years;
2-58 (3) a statement that the properties will be used only
2-59 for a purpose consistent with an urban redevelopment plan that is
2-60 primarily aimed at providing housing for families of low or
2-61 moderate income;
2-62 (4) a statement that the principal goal of the
2-63 interlocal agreement is to provide an efficient mechanism for
2-64 returning deteriorated or unproductive properties to the tax rolls,
2-65 enhancing the value of ownership to the surrounding properties, and
2-66 improving the safety and quality of life in deteriorating
2-67 neighborhoods; and
2-68 (5) a provision that all properties are sold subject
2-69 to any right of redemption.
3-1 (c) An action attacking the validity of a sale of property
3-2 pursuant to this section may not be instituted after the expiration
3-3 of one year after the date of the sale and then only after the
3-4 unconditional tender into the registry of the court of an amount
3-5 equal to all taxes, penalties, interest, costs, and post-judgment
3-6 interest of all judgments on which the original foreclosure sale
3-7 was based.
3-8 SECTION 4. Subchapter A, Chapter 34, Tax Code, is amended by
3-9 adding Section 34.08 to read as follows:
3-10 Sec. 34.08. CHALLENGE TO VALIDITY OF TAX SALE. (a) A
3-11 person may not commence an action that challenges the validity of a
3-12 tax sale under this chapter unless the person:
3-13 (1) deposits into the registry of the court an amount
3-14 equal to the amount of the delinquent taxes, penalties, and
3-15 interest specified in the judgment of foreclosure obtained against
3-16 the property plus all costs of the tax sale; or
3-17 (2) files an affidavit of inability to pay under Rule
3-18 145, Texas Rules of Civil Procedure.
3-19 (b) A person may not commence an action challenging the
3-20 validity of a tax sale after the time set forth in Section
3-21 33.54(a)(1) or (2), as applicable to the property, against a
3-22 subsequent purchaser for value who acquired the property in
3-23 reliance on the tax sale. The purchaser may conclusively presume
3-24 that the tax sale was valid and shall have full title to the
3-25 property free and clear of the right, title, and interest of any
3-26 person that arose before the tax sale, subject only to recorded
3-27 restrictive covenants and valid easements of record set forth in
3-28 Section 34.01(d) and subject to applicable rights of redemption.
3-29 (c) If a person is not barred from bringing an action
3-30 challenging the validity of a tax sale under Subsection (b) or any
3-31 other provision of this title or applicable law, the person must
3-32 bring an action no later than two years after the cause of action
3-33 accrues to recover real property claimed by another who:
3-34 (1) pays applicable taxes on the real property before
3-35 overdue; and
3-36 (2) claims the property under a registered deed
3-37 executed pursuant to Section 34.01.
3-38 (d) Subsection (c) does not apply to a claim based on a
3-39 forged deed.
3-40 SECTION 5. (a) The changes in law made by Sections 1 and 4
3-41 of this Act apply only to an action that relates to the title to
3-42 property sold for taxes or challenges the validity of a tax sale
3-43 and that is commenced on or after September 1, 1998. An action
3-44 commenced before September 1, 1998, is covered by the law in effect
3-45 when the property was sold, and the former law is continued in
3-46 effect for that purpose.
3-47 (b) The changes in law made by Section 2 of this Act apply
3-48 only to the resale of property by a taxing unit on or after
3-49 September 1, 1998. The resale of property by a taxing unit before
3-50 September 1, 1998, is covered by the law in effect when the
3-51 property was resold, and the former law is continued in effect for
3-52 that purpose.
3-53 SECTION 6. The importance of this legislation and the
3-54 crowded condition of the calendars in both houses create an
3-55 emergency and an imperative public necessity that the
3-56 constitutional rule requiring bills to be read on three several
3-57 days in each house be suspended, and this rule is hereby suspended,
3-58 and that this Act take effect and be in force from and after its
3-59 passage, and it is so enacted.
3-60 * * * * *