By Wentworth S.B. No. 573
75R2204 PAM-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to creating a commercial real estate broker's lien.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Subtitle B, Title 5, Property Code, is amended by
1-5 adding Chapter 62 to read as follows:
1-6 CHAPTER 62. COMMERCIAL REAL ESTATE BROKER'S LIEN
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
4-11 SUBCHAPTER C. TIME FOR FILING NOTICE OF LIEN
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
8-2 SUBCHAPTER F. ESCROW OF DISPUTED AMOUNTS
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.