HBA-TYH, ALS, ATS H.B. 1453 76(R)BILL ANALYSIS


Office of House Bill AnalysisH.B. 1453
By: Smith
Insurance
7/21/1999
Enrolled



BACKGROUND AND PURPOSE 

Prior to the 76the Legislature, under the Tax Code, a homeowner was
entitled to claim a homestead exemption from school ad valorem taxes.  In
addition, any person age 65 years or older was entitled to an additional
exemption from school taxes on a residential homestead.  To receive the
exemption, a person claiming the exemption was required to apply for it by
filing an exemption application form with the chief appraiser for each
appraisal district in which the property subject to the claimed exemption
was located.  After considering the application, the chief appraiser
determined whether to approve or disapprove the application.  Even if the
chief appraiser approved the application, the law required an investigation
if any reason materialized indicating that an exemption previously allowed
should be canceled.  If the chief appraiser discovered that the property
escaped taxes, the exemption was canceled and the school district was
entitled to impose taxes, penalties, and interest on the property or value
that escaped taxation. 

Many times, new homeowners and title companies were unaware of any
improprieties concerning erroneous claims for homestead exemptions.
Nonetheless, if a person purchased a residential homestead encumbered with
delinquent taxes, penalties, and interest due to an invalid exemption, that
person, rather than the former owner, was required to pay since the
delinquent taxes, penalties, and interest were levied against the property,
rather than the owner.  H.B. 1453 allows the commissioner of insurance, for
an owner policy on residential real property issued to a natural person, to
adopt coverages that insure against ad valorem taxes, including penalties
and interest, to be paid with respect to the property for a previous tax
year. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Article 9.07A, Insurance Code, by adding Subsection (f),
to authorize the commissioner of insurance, for an owner policy on
residential real property issued to a natural person, to adopt coverages
that insure against: 

(1) ad valorem taxes, including penalties and interest, to be paid with
respect to the property for a previous tax year and that are delinquent on
the effective date of the policy because of sale, diversion, or change of
use, unless excluded because the insured has actual knowledge of the
delinquent taxes; and 

(2) ad valorem taxes, including penalties and interest, to be paid with
respect to the property for a previous tax year because of an exemption
granted to a previous owner of the property under Section 11.13, Tax Code,
or because of improvements not assessed for a previous tax year, unless
excluded because the insured has actual knowledge of the delinquent taxes.  

SECTION 2.  Effective date: September 1, 1999.

SECTION 3.  Makes application of Subsection (f), Article 9.07A, Insurance
Code, prospective for an owner policy of title insurance that is delivered
or issued for delivery on or after January 1, 2000.  

SECTION 4. Emergency clause.