By Heflin                                       H.B. No. 3307

      75R402 JD-D                           

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to tax liens imposed on personal property.

 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-4           SECTION 1.  Subchapter E, Chapter 9, Business & Commerce

 1-5     Code, is amended by adding Section 9.5035 to read as follows:

 1-6           Sec. 9.5035.  SECURED PARTY'S DUTY TO PAY CURRENT AD VALOREM

 1-7     TAXES IMPOSED ON COLLATERAL.  (a)  A secured party that takes

 1-8     possession of collateral after default under Section 9.503 shall:

 1-9                 (1)  notify in writing the chief appraiser of the

1-10     appraisal district established for the county in which the

1-11     collateral is located that:

1-12                       (A)  the debtor has defaulted; and

1-13                       (B)  the secured party has taken possession of

1-14     the collateral; and

1-15                 (2)  if ad valorem taxes have been assessed on the

1-16     collateral and are unpaid, whether or not delinquent:

1-17                       (A)  send a copy of the notice required by

1-18     Subdivision (1) to the collector for the county in which the

1-19     collateral is located; and

1-20                       (B)  remit to that collector an amount equal to

1-21     those unpaid taxes.

1-22           (b)  Each notice and any required remittance under Subsection

1-23     (a) must be sent before the 21st day after the date the secured

1-24     party takes possession of the collateral.

 2-1           (c)  If a secured party fails or refuses to comply with

 2-2     Subsection (a):

 2-3                 (1)  the secured party is personally liable for all

 2-4     unpaid ad valorem taxes on the collateral that were imposed by a

 2-5     taxing unit on or before the date the secured party takes

 2-6     possession of the collateral plus any penalties and interest owed

 2-7     on delinquent taxes relating to the collateral; and

 2-8                 (2)  a taxing unit may enforce an ad valorem tax lien

 2-9     attached to the collateral in favor of the taxing unit against:

2-10                       (A)  the collateral while in the possession of

2-11     the secured party;

2-12                       (B)  any proceeds in the possession of the

2-13     secured party from the disposition of the collateral; and

2-14                       (C)  any cash assets of the secured party.

2-15           (d)  This section does not relieve a debtor from an

2-16     obligation for the payment of ad valorem taxes, delinquent taxes,

2-17     penalties, or interest on the collateral that is imposed on the

2-18     debtor by the Tax Code.

2-19           (e)  In this section, "collector" and "taxing unit" have the

2-20     meanings assigned those terms by Section 1.04, Tax Code.

2-21           SECTION 2.  Section 9.506, Business & Commerce Code, is

2-22     amended to read as follows:

2-23           Sec. 9.506.  DEBTOR'S RIGHT TO REDEEM COLLATERAL.  At any

2-24     time before the secured party has disposed of collateral or entered

2-25     into a contract for its disposition under Section 9.504 or before

2-26     the obligation has been discharged under Section 9.505(b) the

2-27     debtor or any other secured party may unless otherwise agreed in

 3-1     writing after default redeem the collateral by tendering:

 3-2                 (1)  fulfillment of all obligations secured by the

 3-3     collateral as well as the expenses reasonably incurred by the

 3-4     secured party in retaking, holding and preparing the collateral for

 3-5     disposition, in arranging for the sale, and to the extent provided

 3-6     in the agreement and not prohibited by law, his reasonable

 3-7     attorneys' fees and legal expenses; and

 3-8                 (2)  any amount related to the collateral that the

 3-9     secured party remitted to a tax collector as required by Section

3-10     9.5035.

3-11           SECTION 3.  Chapter 31, Tax Code, is amended by adding

3-12     Section 31.13 to read as follows:

3-13           Sec. 31.13.  REMITTANCE TO TAXING UNITS OF AMOUNTS COLLECTED

3-14     FROM CERTAIN SECURED CREDITORS.  (a)  The collector for a county

3-15     who receives money from a secured creditor under Section 9.5035,

3-16     Business & Commerce Code, for the payment of ad valorem taxes

3-17     imposed on collateral shall, before the 91st day after the date the

3-18     money is received, distribute the money to each appropriate taxing

3-19     unit in proportion to the amount of taxes, penalties, and interest

3-20     imposed on the collateral by that taxing unit.

3-21           (b)  To defray the cost of administering this section, a

3-22     collector is entitled to retain any interest that is earned on

3-23     money received from a secured creditor under Section 9.5035,

3-24     Business & Commerce Code.

3-25           SECTION 4.  (a)  This Act takes effect January 1, 1998.

3-26           (b)  The changes in law made by Sections 1 and 2 of this Act

3-27     apply only to a secured creditor who takes possession of collateral

 4-1     after default under Section 9.503, Business & Commerce Code, on or

 4-2     after January 1, 1998.  A secured creditor who took possession of

 4-3     collateral under that section of that code before January 1, 1998,

 4-4     is covered by the law in effect when the creditor took possession

 4-5     of the collateral, and the former law is continued in effect for

 4-6     that purpose.

 4-7           SECTION 5.  The importance of this legislation and the

 4-8     crowded condition of the calendars in both houses create an

 4-9     emergency and an imperative public necessity that the

4-10     constitutional rule requiring bills to be read on three several

4-11     days in each house be suspended, and this rule is hereby suspended.