1-1           By:  Harris                                      S.B. No. 754

 1-2           (In the Senate - Filed February 25, 1997; February 27, 1997,

 1-3     read first time and referred to Committee on Jurisprudence;

 1-4     March 18, 1997, reported favorably by the following vote:  Yeas 6,

 1-5     Nays 0; March 18, 1997, sent to printer.)

 1-6                            A BILL TO BE ENTITLED

 1-7                                   AN ACT

 1-8     relating to the statute of limitations applying to a lien on real

 1-9     property.

1-10           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

1-11           SECTION 1.  Section 16.035, Civil Practice and Remedies Code,

1-12     is amended to read as follows:

1-13           Sec. 16.035.  LIEN [DEBT] ON REAL PROPERTY.  (a)  A person

1-14     must bring suit for the recovery of real property under a real

1-15     property lien [debt] or the foreclosure of a real property lien

1-16     [debt] not later than four years after the day the cause of action

1-17     accrues.

1-18           (b)  A sale of real property under a power of sale in a

1-19     mortgage or deed of trust that creates a real property [secures a]

1-20     lien [debt] must be made not later than four years after the day

1-21     the cause of action accrues.

1-22           (c)  The running of the statute of limitations is not

1-23     suspended against a bona fide purchaser for value, a lienholder, or

1-24     a lessee who has no notice or knowledge of the suspension of the

1-25     limitations period and who acquires an interest in the property

1-26     when a cause of action on an outstanding real property lien has

1-27     accrued for [debt is] more than four years [past due], except as

1-28     provided by:

1-29                 (1)  Section 16.062, providing for suspension in the

1-30     event of death; or

1-31                 (2)  Section 16.036, providing for recorded extensions

1-32     of real property liens [lien debts].

1-33           (d)  On the expiration of the four-year limitations period,

1-34     the real property [it is conclusively presumed that a] lien [debt

1-35     has been paid and the lien debt] and a power of sale to enforce the

1-36     real property lien become void [at that time].

1-37           (e)  If a series of notes or obligations or a note or

1-38     obligation payable in installments is secured by a real property

1-39     lien [on real property], the four-year limitations period does not

1-40     begin to run until the maturity date of the last note, obligation,

1-41     or installment.

1-42           (f)  The limitations period under this section is not

1-43     affected by Section 3.118, Business & Commerce Code.

1-44           (g)  In this section, "real property lien" ["lien debt"]

1-45     means:

1-46                 (1)  a superior title retained by a vendor in a deed of

1-47     conveyance or a purchase money note; or

1-48                 (2)  a vendor's lien, a mortgage, a deed of trust, a

1-49     voluntary mechanic's lien, or a voluntary materialman's lien on

1-50     real estate, securing a note or other written obligation.

1-51           SECTION 2.  Section 16.036, Civil Practice and Remedies Code,

1-52     is amended to read as follows:

1-53           Sec. 16.036.  EXTENSION OF REAL PROPERTY LIEN [DEBT].

1-54     (a)  The party or parties primarily liable for a [lien] debt or

1-55     obligation secured by a real property lien, as that term is defined

1-56     in Section 16.035, may suspend the running of the four-year

1-57     limitations period for real property liens [lien debts] through a

1-58     written extension agreement as provided by this section.

1-59           (b)  The limitations period is suspended and the lien remains

1-60     in effect for four years after the extended maturity date of the

1-61     debt or obligation [note] if the extension agreement is:

1-62                 (1)  signed and acknowledged as provided by law for a

1-63     deed conveying real property; and

1-64                 (2)  filed for record in the county clerk's office of

 2-1     the county where the real property is located.

 2-2           (c)  The parties may continue to extend the lien by entering,

 2-3     acknowledging, and recording additional extension agreements.

 2-4           (d)  The maturity date stated in the original instrument or

 2-5     in the date of the recorded renewal and extension is conclusive

 2-6     evidence of the maturity date of the debt or obligation.

 2-7           (e)  The limitations period under this section is not

 2-8     affected by Section 3.118, Business & Commerce Code.

 2-9           SECTION 3.  Section 16.037, Civil Practice and Remedies Code,

2-10     is amended to read as follows:

2-11           Sec. 16.037.  EFFECT OF EXTENSION OF REAL PROPERTY LIEN

2-12     [DEBT] ON THIRD PARTIES.  An extension agreement is void as to a

2-13     bona fide purchaser for value, a lienholder, or a lessee who deals

2-14     with real property affected by a real property lien [debt] without

2-15     actual notice of the agreement and before the agreement is

2-16     acknowledged, filed, and recorded.

2-17           SECTION 4.  Section 3.118, Business & Commerce Code, is

2-18     amended by adding Subsection (h) to read as follows:

2-19           (h)  This section does not apply to an action involving a

2-20     real property lien covered by Section 16.035 or 16.036, Civil

2-21     Practice and Remedies Code.

2-22           SECTION 5.  The importance of this legislation and the

2-23     crowded condition of the calendars in both houses create an

2-24     emergency and an imperative public necessity that the

2-25     constitutional rule requiring bills to be read on three several

2-26     days in each house be suspended, and this rule is hereby suspended,

2-27     and that this Act take effect and be in force from and after its

2-28     passage, and it is so enacted.

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