By Goodman H.B. No. 734 76R3098 JMM-F A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to the conversion of separate property to community 1-3 property. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. Chapter 4, Family Code, is amended by adding 1-6 Subchapter C to read as follows: 1-7 SUBCHAPTER C. AGREEMENT TO CONVERT SEPARATE PROPERTY TO 1-8 COMMUNITY PROPERTY 1-9 Sec. 4.201. DEFINITION. In this subchapter, "property" has 1-10 the meaning assigned by Section 4.001. 1-11 Sec. 4.202. AGREEMENT TO CONVERT TO COMMUNITY PROPERTY. At 1-12 any time, spouses may agree that all or part of the separate 1-13 property owned by either or both spouses is converted to community 1-14 property. 1-15 Sec. 4.203. FORMALITIES OF AGREEMENT. (a) An agreement to 1-16 convert separate property to community property: 1-17 (1) must be in writing and: 1-18 (A) be signed by the spouses; 1-19 (B) identify the property being converted; and 1-20 (C) specify that the property is being converted 1-21 to the spouses' community property; and 1-22 (2) is enforceable without consideration. 1-23 (b) The mere transfer of a spouse's separate property to the 1-24 name of the other spouse or to the name of both spouses is not 2-1 sufficient to convert the property to community property under this 2-2 subchapter. 2-3 Sec. 4.204. MANAGEMENT OF CONVERTED PROPERTY. Except as 2-4 specified in the agreement to convert the property and as provided 2-5 by Subchapter B, Chapter 3, and other law, property converted to 2-6 community property under this subchapter is subject to: 2-7 (1) the sole management, control, and disposition of 2-8 the spouse in whose name the property is held; 2-9 (2) the sole management, control, and disposition of 2-10 the spouse who transferred the property if the property is not 2-11 subject to evidence of ownership; 2-12 (3) the joint management, control, and disposition of 2-13 the spouses if the property is held in the name of both spouses; or 2-14 (4) the joint management, control, and disposition of 2-15 the spouses if the property is not subject to evidence of ownership 2-16 and was owned by both spouses before the property was converted to 2-17 community property. 2-18 Sec. 4.205. ENFORCEMENT. (a) An agreement to convert 2-19 property to community property under this subchapter is not 2-20 enforceable if the spouse against whom enforcement is sought proves 2-21 that the spouse did not: 2-22 (1) execute the agreement voluntarily; or 2-23 (2) receive a fair and reasonable disclosure of the 2-24 legal effect of converting the property to community property. 2-25 (b) An agreement that contains the following statement, or 2-26 substantially similar words, in conspicuous print on the same page 2-27 as the signature of the spouses, is rebuttably presumed to provide 3-1 a fair and reasonable disclosure of the legal effect of converting 3-2 property to community property: 3-3 "This instrument changes separate property to community 3-4 property. This may have adverse consequences during marriage and 3-5 on termination of the marriage by death or divorce. For example: 3-6 "Exposure to creditors. If you sign this agreement, 3-7 all or part of the separate property being converted to community 3-8 property may become subject to the liabilities of your spouse. If 3-9 you do not sign this agreement, your separate property is generally 3-10 not subject to the liabilities of your spouse unless you are 3-11 personally liable under another rule of law. 3-12 "Loss of management rights. If you sign this 3-13 agreement, all or part of the separate property being converted to 3-14 community property may become subject to either the joint 3-15 management, control, and disposition of you and your spouse or the 3-16 sole management, control, and disposition of your spouse alone. In 3-17 that event, you will lose your management rights over the property. 3-18 If you do not sign this agreement, you will generally retain those 3-19 rights. 3-20 "Loss of property ownership. If you sign this 3-21 agreement and your marriage is subsequently terminated by the death 3-22 of either spouse or by divorce, all or part of the separate 3-23 property being converted to community property may become the sole 3-24 property of your spouse or your spouse's heirs. If you do not sign 3-25 this agreement, you generally cannot be deprived of ownership of 3-26 your separate property on termination of your marriage, whether by 3-27 death or divorce." 4-1 Sec. 4.206. RIGHTS OF CREDITORS; RECORDING. (a) A 4-2 conversion of separate property to community property does not 4-3 affect the rights of a preexisting creditor of the spouse whose 4-4 separate property is being converted. 4-5 (b) A conversion of separate property to community property 4-6 may be recorded in the deed records of the county in which a spouse 4-7 resides and of the county in which any real property is located. 4-8 (c) A conversion of real property from separate property to 4-9 community property is constructive notice to a good faith purchaser 4-10 for value or a creditor without actual notice only if the agreement 4-11 to convert the property is acknowledged and recorded in the deed 4-12 records of the county in which the real property is located. 4-13 SECTION 2. This Act takes effect January 1, 1999, but only 4-14 if the constitutional amendment proposed by the 76th Legislature, 4-15 Regular Session, 1999, relating to the conversion of separate 4-16 property to community property, is approved by the voters. If the 4-17 proposed constitutional amendment is not approved by the voters, 4-18 this Act has no effect. 4-19 SECTION 3. The importance of this legislation and the 4-20 crowded condition of the calendars in both houses create an 4-21 emergency and an imperative public necessity that the 4-22 constitutional rule requiring bills to be read on three several 4-23 days in each house be suspended, and this rule is hereby suspended.