AN ACT

 1-1     relating to the sale of property for delinquent ad valorem taxes.

 1-2           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-3           SECTION 1.  Section 33.54, Tax Code, is amended to read as

 1-4     follows:

 1-5           Sec. 33.54.  LIMITATION ON ACTIONS RELATING TO PROPERTY SOLD

 1-6     FOR TAXES.  (a)  Except as provided by Subsection (b) [of this

 1-7     section], an [a cause of] action relating to the title to property

 1-8     may not be maintained against the purchaser of the property at a

 1-9     tax sale unless the action is commenced:

1-10                 (1)  before the first anniversary of the date that

1-11     [commences within three years after] the deed executed to the

1-12     purchaser at the tax sale is filed of record; or

1-13                 (2)  before the second anniversary of the date that the

1-14     deed executed to the purchaser is filed of record, if on the date

1-15     that the suit to collect the delinquent tax was filed the property

1-16     was:

1-17                       (A)  the residence homestead of the owner; or

1-18                       (B)  land appraised or eligible to be appraised

1-19     under Subchapter C or D, Chapter 23.

1-20           (b)  If a person other than the purchaser at the tax sale or

1-21     the person's [his] successor in interest pays taxes on the property

1-22     during the applicable limitations period and until the commencement

1-23     of an action challenging the validity of the tax sale [three years

 2-1     following the date the deed is filed] and that person was not

 2-2     served citation in the suit to foreclose the tax lien, that [the

 2-3     three-year] limitations period does not apply to that person.

 2-4           (c)  When actions are barred by this section, the purchaser

 2-5     at the tax sale or the purchaser's [his] successor in interest has

 2-6     [shall be held to have] full title to the property, precluding all

 2-7     other claims.

 2-8           SECTION 2.  Section 34.05, Tax Code, is amended by amending

 2-9     Subsections (b), (c), and (d), and adding Subsections (h) and (i)

2-10     to read as follows:

2-11           (b)  Property [Unless the property is] sold pursuant to

2-12     Subsections (c) and (d) of this section[, it] may [not] be sold for

2-13     any [less than the market value specified in the judgment of

2-14     foreclosure or the total] amount [of the judgments against the

2-15     property, whichever is less, without the consent of each taxing

2-16     unit entitled to receive proceeds of the sale under the judgment.

2-17     Joinder of the taxing units in the conveyance of the property

2-18     constitutes consent.  The presiding officer of the governing body

2-19     of a taxing unit may consent in behalf of the taxing unit].  This

2-20     subsection does not authorize a sale of property in violation of

2-21     Section 52, Article III, Texas Constitution.

2-22           (c)  The taxing unit purchasing the property by resolution of

2-23     its governing body may request the sheriff to sell the property at

2-24     a public sale.  If the purchasing taxing unit has not sold the

2-25     property within six months after the date on which the owner's

 3-1     right of redemption terminates, any taxing unit that is entitled to

 3-2     receive proceeds of the sale by resolution of its governing body

 3-3     may request the sheriff in writing to sell the property at a public

 3-4     sale.  On receipt of a request made under this subsection, the

 3-5     sheriff shall sell the property as provided by Subsection (d) of

 3-6     this section, unless the property is sold pursuant to Subsection

 3-7     (h) or (i) of this section before the date set for the public sale.

 3-8           (d)  Except as provided by this subsection, all public sales

 3-9     requested as provided by Subsection (c) of this section shall be

3-10     conducted in the manner prescribed by the Rules of Civil Procedure

3-11     for the sale of property under execution.  The notice of the sale

3-12     must contain a description of the property to be sold, which must

3-13     be a legal description in the case of real property, the number and

3-14     style of the suit under which the property was sold at the tax

3-15     foreclosure sale, and the date of the tax foreclosure sale.  [The

3-16     officer conducting the sale shall reject any bid for the property

3-17     if it is his judgment that the amount bid is insufficient.  If all

3-18     bids are insufficient, the property shall be readvertised and

3-19     offered for sale again.]  The acceptance of a bid by the officer

3-20     conducting the sale is conclusive and binding on the question of

3-21     its sufficiency.  An action to set aside the sale on the grounds

3-22     that the bid is insufficient may not be sustained in court, except

3-23     that a taxing unit that participates in distribution of proceeds of

3-24     the sale may file an action within one year after the date of the

3-25     sale to set aside the sale on the grounds of fraud or collusion

 4-1     between the officer making the sale and the purchaser.

 4-2           (h)  In lieu of a sale pursuant to Subsections (c) and (d) of

 4-3     this section, the taxing unit that purchased the property may sell

 4-4     the property at a private sale.  Consent of each taxing unit

 4-5     entitled to receive proceeds of the sale under the judgment is not

 4-6     required.  Property sold under this subsection may not be sold for

 4-7     an amount that is less than the lesser of:

 4-8                 (1)  the market value specified in the judgment of

 4-9     foreclosure; or

4-10                 (2)  the total amount of the judgments against the

4-11     property.

4-12           (i)  In lieu of a sale pursuant to Subsections (c) and (d) of

4-13     this section, the taxing unit that purchased the property may sell

4-14     the property at a private sale for an amount less than required

4-15     under Subsection (h) of this section with the consent of each

4-16     taxing unit entitled to receive proceeds of the sale under the

4-17     judgment.  This subsection does not authorize a sale of property in

4-18     violation of Section 52, Article III, Texas Constitution.

4-19           SECTION 3.  Subchapter A, Chapter 34, Tax Code, is amended by

4-20     adding Section 34.08 to read as follows:

4-21           Sec. 34.08.  CHALLENGE TO VALIDITY OF TAX SALE.  (a)  A

4-22     person may not commence an action that challenges the validity of a

4-23     tax sale under this chapter unless the person:

4-24                 (1)  deposits into the registry of the court an amount

4-25     equal to the amount of the delinquent taxes, penalties, and

 5-1     interest specified in the judgment of foreclosure obtained against

 5-2     the property plus all costs of the tax sale; or

 5-3                 (2)  files an affidavit of inability to pay under Rule

 5-4     145, Texas Rules of Civil Procedure.

 5-5           (b)  A person may not commence an action challenging the

 5-6     validity of a tax sale after the time set forth in Section

 5-7     33.54(a)(1) or (2), as applicable to the property, against a

 5-8     subsequent purchaser for value who acquired the property in

 5-9     reliance on the tax sale.  Such purchaser may conclusively presume

5-10     that the tax sale was valid and shall have full title to the

5-11     property free and clear of the right, title, and interest of any

5-12     person that arose before the tax sale, subject only to recorded

5-13     restrictive covenants and valid easements of record set forth in

5-14     Section 34.01(d) and subject to applicable rights of redemption.

5-15           (c)  If a person is not barred from bringing an action

5-16     challenging the validity of a tax sale under Subsection (b) or any

5-17     other provision of this code or applicable law, such person must

5-18     bring an action no later than two years after the cause of action

5-19     accrues to recover real property claimed by another who:  (1) pays

5-20     applicable taxes on the real property before overdue; and

5-21     (2) claims the property under a registered deed executed pursuant

5-22     to Section 34.01.  This subsection does not apply to a claim based

5-23     on a forged deed.

5-24           SECTION 4.  (a)  The changes in law made by Sections 1 and 3

5-25     of this Act apply only to an action that relates to the title to

 6-1     property sold for taxes or challenges the validity of a tax sale

 6-2     and that is commenced on or after September 1, 1997.  An action

 6-3     commenced before September 1, 1997, is covered by the law in effect

 6-4     when the property was sold, and the former law is continued in

 6-5     effect for that purpose.

 6-6           (b)  The changes in law made by Section 2 of this Act apply

 6-7     only to the resale of property by a taxing unit on or after

 6-8     September 1, 1997.  The resale of property by a taxing unit before

 6-9     September 1, 1997, is covered by the law in effect when the

6-10     property was resold, and the former law is continued in effect for

6-11     that purpose.

6-12           SECTION 5.  The importance of this legislation and the

6-13     crowded condition of the calendars in both houses create an

6-14     emergency and an imperative public necessity that the

6-15     constitutional rule requiring bills to be read on three several

6-16     days in each house be suspended, and this rule is hereby suspended,

6-17     and that this Act take effect and be in force from and after its

6-18     passage, and it is so enacted.

         _______________________________     _______________________________

             President of the Senate              Speaker of the House

               I hereby certify that S.B. No. 1249 passed the Senate on

         April 25, 1997, by the following vote:  Yeas 28, Nays 0; and that

         the Senate concurred in House amendment on May 30, 1997, by a

         viva-voce vote.

                                             _______________________________

                                                 Secretary of the Senate

               I hereby certify that S.B. No. 1249 passed the House, with

         amendment, on May 28, 1997, by a non-record vote.

                                             _______________________________

                                                 Chief Clerk of the House

         Approved:

         _______________________________

                     Date

         _______________________________

                   Governor