By Heflin                                             H.B. No. 3306

         Line and page numbers may not match official copy.

         Bill not drafted by TLC or Senate E&E.

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to penalties and interest, writs, suits, judgment amounts,

 1-3     right of redemption and distribution of proceeds in ad valorem tax

 1-4     matters.

 1-5           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-6           SECTION 1.  Section 31.01(a), Tax Code, is amended to read as

 1-7     follows:

 1-8           (a)  Except as provided by Subsection (f) of this section,

 1-9     the assessor for each taxing unit shall prepare and mail a tax bill

1-10     to each person in whose name the property is listed on the tax roll

1-11     or to his authorized agent.  The assessor shall mail tax bills by

1-12     October 1 or as soon thereafter as practicable.  The assessor shall

1-13     mail to the state agency or institution the tax bill for any

1-14     taxable property owned by the agency or institution.  The agency or

1-15     institution shall pay the taxes from funds appropriated for payment

1-16     of the taxes or, if there are none, from funds appropriated for the

1-17     administration of the agency or institution.  The exterior

1-18     [outside] of the [envelope in which a] tax bill [is sent] must show

1-19     the return address of the taxing unit and must contain, in all

1-20     capital letters, the words "ADDRESS CORRECTION REQUESTED".

1-21           SECTION 2.  Section 32.07, Tax Code, is amended to add

1-22     Subsections (d) through (g) to read as follows:

 2-1           (d)  Any person who receives or collects an ad valorem tax or

 2-2     any money represented to be a tax from another person holds the

 2-3     amount so collected in trust for the benefit of the taxing unit and

 2-4     is liable to the taxing unit for the full amount collected plus any

 2-5     accrued penalties and interest on the amount collected.

 2-6           (e)  With respect to an ad valorem tax or other money subject

 2-7     to the provisions of Subsection (d), an individual who controls or

 2-8     supervises the collection of tax or money from another person, or

 2-9     an individual who controls or supervises the accounting for and

2-10     paying over of the tax or money, and who wilfully fails to pay or

2-11     cause to be paid the tax or money is liable as a responsible

2-12     individual for an amount equal to the tax or money not paid or

2-13     caused to be paid.  The liability imposed by this subsection is in

2-14     addition to any other penalty provided by law.  The dissolution of

2-15     a corporation, association, limited liability company, or

2-16     partnership does not affect a responsible individual's liability

2-17     under this subsection.

2-18           (f)  Venue for suits arising under this section shall be

2-19     governed by Section 33.41(a), Tax Code.

2-20           (g)  In this section:

2-21                 (1)  "Responsible individual" includes an officer,

2-22     manager, director or employee or a corporation, association, or

2-23     limited liability company or a member of a partnership who, as an

2-24     officer, manager, director, employee, or member, is under a duty to

2-25     perform an act with respect to the collection, accounting, or

2-26     payment of a tax or money subject to the provisions of Subsection

2-27     (d).

 3-1                 (2)  "Tax" includes any ad valorem tax or money subject

 3-2     to the provisions of Subsection (d), including the penalty and

 3-3     interest computed by reference to the amount of the tax or money.

 3-4           SECTION 3.  Section 33.01(a) and (c), Tax Code, are amended

 3-5     to read as follows:

 3-6           (a)  A delinquent tax incurs a penalty of six percent of the

 3-7     amount of the tax for the first calendar month it is delinquent

 3-8     plus one percent for each additional month or portion of a month

 3-9     the tax remains unpaid prior to July 1 of the year in which it

3-10     becomes delinquent.  However, a tax delinquent on July 1 incurs a

3-11     total penalty of twelve percent of the amount of the delinquent tax

3-12     without regard to the number of months the tax has been delinquent.

3-13     A delinquent tax continues to incur the penalty provided by this

3-14     subsection as long as the tax remains unpaid, regardless of whether

3-15     a judgment for the delinquent tax has been rendered.

3-16           (c)  A delinquent tax accrues interest at a rate of one

3-17     percent for each month or portion of a month the tax remains

3-18     unpaid.  Interest payable under this section is to compensate the

3-19     taxing unit for revenue lost because of the delinquency.  A

3-20     delinquent tax continues to accrue interest under this subsection

3-21     as long as the tax remains unpaid, regardless of whether a judgment

3-22     for the delinquent tax has been rendered.

3-23           SECTION 4.  Section 4, Article 1.05, Title 79, Revised

3-24     Statutes (Article 5069-1.05, Vernon's Texas Civil Statutes), is

3-25     amended to read as follows:

3-26           Sec. 4.  This article does not apply to a judgment:

3-27                 (1)  in favor of a taxing unit in a suit to collect a

 4-1     delinquent tax under Subchapter C, Chapter 33, Tax Code; or

 4-2                 (2)  that earns interest that is set by Title 2, Tax

 4-3     Code.

 4-4           SECTION 5.  Section 33.02(b), Tax Code, is amended to read as

 4-5     follows:

 4-6           (b)  Interest and penalty accrues as provided by Subsections

 4-7     (a) and (c) of Section 33.01 of this code on the unpaid balance

 4-8     during the period of the agreement.

 4-9           SECTION 6.  Section 33.41, Tax Code, is amended by adding a

4-10     new subsection (d) to read as follows:

4-11           (d)  A suit brought under Subsection (a) against an

4-12     administrator, executor, guardian or any other personal

4-13     representative of an estate that is the subject of a pending

4-14     probate proceeding need not be filed in the court of that probate

4-15     proceeding, but may instead be brought in a court of competent

4-16     jurisdiction of the county in which the tax was imposed.  All

4-17     provisions relative to the presentment of a claim against an estate

4-18     as a prerequisite for judgement shall not be so construed as to

4-19     apply to any claim for delinquent taxes owing to a taxing unit.

4-20     This subsection applies to all such claims for delinquent taxes

4-21     regardless of the nature of the estate or of the manner in which it

4-22     is administered.

4-23           SECTION 7.  Section 33.51, Tax Code, is amended to read as

4-24     follows:

4-25           Sec. 33.51.   If the court orders the foreclosure of a tax

4-26     lien and the sale of real property, the judgment shall provide for

4-27     the issuance by the clerk of said court of a writ of possession to

 5-1     the purchaser at the sale or to the purchaser's [his] assigns no

 5-2     sooner than 20 days following the date on which the purchaser's

 5-3     deed from the sheriff or constable is filed of record [within 20

 5-4     days after the period of redemption expires].

 5-5           SECTION 8.  Section 33.52, Tax Code, is amended by amending

 5-6     Subsections (a) and (b) and adding Subsection (c) to read as

 5-7     follows:

 5-8           (a)  If the court orders the foreclosure of a tax lien and

 5-9     the sale of real property, the judgment may include foreclosure on

5-10     any unpaid tax on the property for the current year [shall order

5-11     that the taxing unit recover from the proceeds of the sale the

5-12     amount of tax on the property for the current tax year prorated to

5-13     the date of the judgment].

5-14           (b)  If the amount of tax for the current tax year has not

5-15     been determined on the date of judgment, the court may [shall]

5-16     order recovery of and foreclosure on the amount of tax imposed on

5-17     the property for the preceding tax year [prorated to the date of

5-18     the judgment].

5-19           (c)  If the judgment does not provide for recovery of taxes

5-20     imposed for the current tax year, or for recovery of estimated

5-21     taxes that cannot then be calculated for the current year, the real

5-22     property is subject to the taxes for the current tax year and to

5-23     the lien that secures those taxes, and any subsequent purchaser

5-24     takes the property subject to those taxes and the tax lien.

5-25           SECTION 9.  Subsections 34.05 (a) and (g), Tax Code, are

5-26     amended to read as follows:

5-27           (a)  If property is sold to a taxing unit that is a party to

 6-1     the judgment, the taxing unit may sell the property at any time and

 6-2     in any manner, except as otherwise required by this section.  All

 6-3     such resales shall be [,] subject to any right of redemption

 6-4     existing at the time of the sale.

 6-5           (g)  Sections 263.001 and 272.001(a), Local Government Code,

 6-6     do not apply to property sold by a taxing unit [in a municipality

 6-7     with a population of 1.5 million or more] under this section.  A

 6-8     taxing unit may however elect to follow the Local Government Code

 6-9     provisions in reselling such property.

6-10           SECTION 10.  Section 34.06(b), Tax Code, is amended to read

6-11     as follows:

6-12           (b)  The purchasing taxing unit shall pay all costs and

6-13     expenses of court and sale and shall distribute the remainder of

6-14     the proceeds to each taxing unit participating in the sale in an

6-15     amount equal to the proportion each participant's taxes, penalties

6-16     and interest bear to the total amount of taxes, penalties and

6-17     interest due all participants in the sale, less any amounts

6-18     previously paid as costs on the property as defined under

6-19     subsection (i) of Section 34.21 of this code [as provided by

6-20     Section 34.02 of this code for distribution of proceeds after

6-21     payment of costs,].

6-22           SECTION 11.  Section 34.21, Tax Code, is amended to read as

6-23     follows:

6-24           Sec. 34.21.  (a)  The owner of real property sold at a tax

6-25     sale to a purchaser other than a taxing unit and that was the

6-26     residence homestead of the owner or that was land designated for

6-27     agricultural use when the suit to collect the tax was filed may

 7-1     redeem the property within two years after the date on which the

 7-2     purchaser's deed is filed for record by paying the purchaser the

 7-3     amount the purchaser bid for the property, the amount of the deed

 7-4     recording fee, and the amount paid by the purchaser as taxes,

 7-5     penalties, interest, and costs on the property, plus a redemption

 7-6     premium of 25 percent of the aggregate total if the property is

 7-7     redeemed during the first year of the redemption period or 50

 7-8     percent of the aggregate total if the property is redeemed during

 7-9     the second year of the redemption period.

7-10           (b)  If property that was the owner's residence homestead or

7-11     was land designated for agricultural use when the suit to collect

7-12     the tax was filed is bid off to a taxing unit under Section 34.01

7-13     (c) and has not been resold by the taxing unit, the owner having a

7-14     right of redemption may redeem the property within two years after

7-15     the date on which the deed of the taxing unit is filed for record

7-16     by paying the taxing unit the amount of the judgment against the

7-17     property or the market value of the property as specified in that

7-18     judgment, whichever is less, plus the amount of the fee for filing

7-19     the taxing unit's deed and the amount expended by the taxing unit

7-20     as costs on the property.

7-21           (c)  If real property that was the owner's residence

7-22     homestead or was land designated for agricultural use when the suit

7-23     to collect the tax was filed has been resold by the taxing unit

7-24     under Section 34.05, the owner of the property having a right of

7-25     redemption may redeem the property within two years after the date

7-26     on which the taxing unit files for record the deed from the sheriff

7-27     or constable by paying the person who purchased the property from

 8-1     the taxing unit the amount the purchaser paid for the property, the

 8-2     amount of the fee for filing the purchaser's deed for record, the

 8-3     amount paid by the purchaser as taxes, penalties, interest and

 8-4     costs on the property, plus a redemption premium of 25 percent of

 8-5     the aggregate total if the property is redeemed in the first year

 8-6     of the redemption period or 50 percent of the aggregate total if

 8-7     the property is redeemed in the second year of the redemption

 8-8     period.

 8-9           (d) [(b)]  The owner of real property sold at a tax sale

8-10     other than property that was the residence homestead of the owner

8-11     or that was land designated for agricultural use when the suit to

8-12     collect the tax was filed [covered by Subsection (a)] may redeem

8-13     the property in the same manner and by paying the same amounts as

8-14     prescribed by Subsections (a), (b) or (c), as applicable, except

8-15     that:

8-16                 (1)  the owner's right of redemption may be exercised

8-17     no later than 180 days following [within six months after] the date

8-18     on which the purchaser's or taxing unit's deed is filed for record

8-19     [by paying the purchaser the amount the purchaser bid for the

8-20     property, the amount of the deed recording fee, and the amount paid

8-21     by the purchaser as taxes, penalties, interest, and costs on the

8-22     property, plus 25 percent of the aggregate total.] and

8-23                 (2)  the redemption premium payable by the owner to a

8-24     purchaser other than a taxing unit shall not exceed 25 percent.

8-25           (e) [(c)]  If the owner of the real property makes an

8-26     affidavit that the owner [he] has made diligent search in the

8-27     county in which the property is located for the purchaser at the

 9-1     tax sale or for the purchaser at resale, and has failed to find

 9-2     that the purchaser [him], that the purchaser [at the sale] is not a

 9-3     resident of the county in which the property is located, that the

 9-4     owner [he] and the purchaser cannot agree on the amount of

 9-5     redemption money due, or that the purchaser refuses to give the

 9-6     owner [him] a quitclaim deed to the property, the owner may redeem

 9-7     the land by paying the required amount as prescribed by this

 9-8     section [Subsection (a) or (b), as applicable,] to the

 9-9     assessor-collector for the county in which the property described

9-10     has been redeemed.  The assessor-collector shall on demand pay the

9-11     money received by the assessor-collector [him] to the purchaser [at

9-12     the tax sale].

9-13           (f) [(d)]  The right of redemption does not grant or reserve

9-14     in the former owner of the real property the right to the use or

9-15     possession of the property, or to receive rents, income, or other

9-16     benefits from the property while the right of redemption exists.

9-17           (g) [(e)]  In this section, "residence homestead" has the

9-18     meaning assigned by Section 11.13.

9-19           (h) [(f)]  In this section, "agricultural use" has the

9-20     meaning assigned by Section 23.51.

9-21           (i)  In this section, "costs" is defined to include all those

9-22     amounts reasonably expended by a purchaser or taxing unit in the

9-23     maintenance, preservation and safekeeping of the property,

9-24     including but not limited to:

9-25                             (i)  insurance against fire, flood and

9-26     other hazards,

9-27                             (ii)  repairs and improvements required by

 10-1    local ordinance, building code, or by the terms of any existing

 10-2    lease of the property, whether written or oral,

 10-3                            (iii)  discharge of mowing, cleaning or

 10-4    demolition liens against the property which secure expenses

 10-5    incurred by a municipality,

 10-6                            (iv)  dues, assessments for maintenance, or

 10-7    liens provided by recorded restrictive covenants affecting the

 10-8    property and payable to a property owner's association, and

 10-9                            (v)  standby fees payable to a water

10-10    district, fresh water supply district, or other municipality as

10-11    authorized by law.

10-12          SECTION 12.  Section 34.23(b), Tax Code, is amended to read

10-13    as follows:

10-14          (b)  Except as provided by Section 34.21(e) of this code, the

10-15    owner of property sold for taxes to a taxing unit may not redeem

10-16    the property from the taxing unit after the property has been

10-17    resold.  [If the owner of property sold for taxes redeems the

10-18    property from the taxing unit after the property has been resold,

10-19    the taxing unit shall pay the purchaser at the resale the amount he

10-20    paid for the property, plus 25 percent of that amount if the

10-21    redemption occurs within one year after the date the property is

10-22    resold or 50 percent of that amount if the redemption occurs more

10-23    than one year after the date the property is resold.  The taxing

10-24    unit shall distribute the redemption proceeds remaining after

10-25    payment of the amount due the purchaser at resale to the taxing

10-26    units adjudged to have tax liens against the property in the

10-27    proportion the amount of each unit's lien bears to the total amount

 11-1    of all liens established in the foreclosure suit.]

 11-2          SECTION 13.  Section 41.11(a), Tax Code, is amended to read

 11-3    as follows:

 11-4          (a)  Not later than the [15th day before the] date the

 11-5    appraisal review board approves the appraisal records as provided

 11-6    by Section 41.12 of this code, the secretary of the board shall

 11-7    deliver written notice to a property owner of any change in the

 11-8    records that is ordered by the board as provided by this subchapter

 11-9    and that will result in an increase in the tax liability of the

11-10    property owner.  An owner who receives a notice as provided by the

11-11    section shall be entitled to protest such action as provided by

11-12    Section 41.44(a)(2).

11-13          SECTION 14.  This Act takes effect January 1, 1998.

11-14          SECTION 15.  The importance of this legislation and the

11-15    crowded condition of the calendars in both houses create an

11-16    emergency and an imperative public necessity that the

11-17    constitutional rule requiring bills to be read on three several

11-18    days in each house be suspended, and this rule is hereby suspended,

11-19    and that this Act take effect and be in force from and after its

11-20    passage, and it is so enacted.