SRC-JJJ C.S.S.B. 1742 76(R)BILL ANALYSIS


Senate Research CenterC.S.S.B. 1742
By: Harris
Jurisprudence
4/27/1999
Committee Report (Substituted)


DIGEST 

The Texas Property Code is currently silent as to the standing of the buyer
in a foreclosure sale. Case law has held that a foreclosure buyer bids at
his peril at a foreclosure sale and is not a good faith purchaser without
knowledge.  C.S.S.B. 1742 would establish provisions regarding certain
proceedings in a foreclosure action. 

PURPOSE

As proposed, C.S.S.B. 1742 establishes provisions regarding certain
proceedings in a foreclosure action. 

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Chapter 51, Property Code, by adding Section 51.007, as
follows: 

Sec. 51.007.  TRUSTEE UNDER DEED OF TRUST, CONTRACT LIEN OR SECURITY
INSTRUMENT.  Authorizes a trustee named in a suit or proceeding to plead in
the answer that the trustee is not a necessary party by a verified denial
stating the basis for the trustee's reasonable belief that the trustee
under a deed of trust, contract lien, or security.  Sets forth conditions
regarding a verified response setting forth all matters that rebut the
trustee's verified denial.  Requires the trustee to be dismissed from the
suit or proceeding without prejudice, if a party has no objection or fails
to file a timely verified response to the trustee's verified denial.
Requires the matter to be set for hearing if a timely response has been
filed. Requires the court to dismiss the trustee from the suit or
proceeding if it is determined that the trustee is not a necessary party.
Prohibits a dismissal of the trustee from prejudicing a party's right to
seek injunctive relief to prevent the trustee from proceeding with
foreclosure sale.  Prohibits a trustee from being liable for any good faith
error resulting from reliance on any information in law or fact provided by
the mortgagor, mortgagee or their respective attorney, agent,
representative, or other third party. 

SECTION 2.  Effective date: September 1, 1999.
            Makes application of this Act prospective.

SECTION 3.  Emergency clause.
               

SUMMARY OF COMMITTEE CHANGES

SECTION 1.

Amends Section 51.007, Property Code, to add a new heading.  Establishes
provisions regarding a trustee under a deed of trust, contract lien, or
security instrument.  Deletes proposed SECTION 1.  Renumbers subsequent
SECTIONS.