1-1     By:  Goodman (Senate Sponsor - Harris)                 H.B. No. 734
 1-2           (In the Senate - Received from the House April 28, 1999;
 1-3     April 29, 1999, read first time and referred to Committee on
 1-4     Jurisprudence; May 11, 1999, reported favorably by the following
 1-5     vote:  Yeas 3, Nays 0; May 11, 1999, sent to printer.)
 1-6                            A BILL TO BE ENTITLED
 1-7                                   AN ACT
 1-8     relating to the conversion of separate property to community
 1-9     property.
1-10           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-11           SECTION 1.  Chapter 4, Family Code, is amended by adding
1-12     Subchapter C to read as follows:
1-13          SUBCHAPTER C.  AGREEMENT TO CONVERT SEPARATE PROPERTY TO
1-14                             COMMUNITY PROPERTY
1-15           Sec. 4.201.  DEFINITION.  In this subchapter, "property" has
1-16     the meaning assigned by Section 4.001.
1-17           Sec. 4.202.  AGREEMENT TO CONVERT TO COMMUNITY PROPERTY.  At
1-18     any time, spouses may agree that all or part of the separate
1-19     property owned by either or both spouses is converted to community
1-20     property.
1-21           Sec. 4.203.  FORMALITIES OF AGREEMENT.  (a)  An agreement to
1-22     convert separate property to community property:
1-23                 (1)  must be in writing and:
1-24                       (A)  be signed by the spouses;
1-25                       (B)  identify the property being converted; and
1-26                       (C)  specify that the property is being converted
1-27     to the spouses' community property; and
1-28                 (2)  is enforceable without consideration.
1-29           (b)  The mere transfer of a spouse's separate property to the
1-30     name of the other spouse or to the name of both spouses is not
1-31     sufficient to convert the property to community property under this
1-32     subchapter.
1-33           Sec. 4.204.  MANAGEMENT OF CONVERTED PROPERTY.  Except as
1-34     specified in the agreement to convert the property and as provided
1-35     by Subchapter B, Chapter 3, and other law, property converted to
1-36     community property under this subchapter is subject to:
1-37                 (1)  the sole management, control, and disposition of
1-38     the spouse in whose name the property is held;
1-39                 (2)  the sole management, control, and disposition of
1-40     the spouse who transferred the property if the property is not
1-41     subject to evidence of ownership;
1-42                 (3)  the joint management, control, and disposition of
1-43     the spouses if the property is held in the name of both spouses; or
1-44                 (4)  the joint management, control, and disposition of
1-45     the spouses if the property is not subject to evidence of ownership
1-46     and was owned by both spouses before the property was converted to
1-47     community property.
1-48           Sec. 4.205.  ENFORCEMENT.  (a)  An agreement to convert
1-49     property to community property under this subchapter is not
1-50     enforceable if the spouse against whom enforcement is sought proves
1-51     that the spouse did not:
1-52                 (1)  execute the agreement voluntarily; or
1-53                 (2)  receive a fair and reasonable disclosure of the
1-54     legal effect of converting the property to community property.
1-55           (b)  An agreement that contains the following statement, or
1-56     substantially similar words, prominently displayed in bold-faced
1-57     type, capital letters, or underlined, is rebuttably presumed to
1-58     provide a fair and reasonable disclosure of the legal effect of
1-59     converting property to community property:
1-60           "This instrument changes separate property to community
1-61     property.  This may have adverse consequences during marriage and
1-62     on termination of the marriage by death or divorce. For example:
1-63                 "Exposure to creditors.  If you sign this agreement,
1-64     all or part of the separate property being converted to community
 2-1     property may become subject to the liabilities of your spouse.  If
 2-2     you do not sign this agreement, your separate property is generally
 2-3     not subject to the liabilities of your spouse unless you are
 2-4     personally liable under another rule of law.
 2-5                 "Loss of management rights.  If you sign this
 2-6     agreement, all or part of the separate property being converted to
 2-7     community property may become subject to either the joint
 2-8     management, control, and disposition of you and your spouse or the
 2-9     sole management, control, and disposition of your spouse alone.  In
2-10     that event, you will lose your management rights over the property.
2-11     If you do not sign this agreement, you will generally retain those
2-12     rights.
2-13                 "Loss of property ownership.  If you sign this
2-14     agreement and your marriage is subsequently terminated by the death
2-15     of either spouse or by divorce, all or part of the separate
2-16     property being converted to community property may become the sole
2-17     property of your spouse or your spouse's heirs.  If you do not sign
2-18     this agreement, you generally cannot be deprived of ownership of
2-19     your separate property on termination of your marriage, whether by
2-20     death or divorce."
2-21           Sec. 4.206.  RIGHTS OF CREDITORS;  RECORDING.  (a)  A
2-22     conversion of separate property to community property does not
2-23     affect the rights of a preexisting creditor of the spouse whose
2-24     separate property is being converted.
2-25           (b)  A conversion of separate property to community property
2-26     may be recorded in the deed records of the county in which a spouse
2-27     resides and of the county in which any real property is located.
2-28           (c)  A conversion of real property from separate property to
2-29     community property is constructive notice to a good faith purchaser
2-30     for value or a creditor without actual notice only if the agreement
2-31     to convert the property is acknowledged and recorded in the deed
2-32     records of the county in which the real property is located.
2-33           SECTION 2.  This Act takes effect January 1, 2000, but only
2-34     if the constitutional amendment proposed by the 76th Legislature,
2-35     Regular Session, 1999, relating to the conversion of separate
2-36     property to community property, is approved by the voters.  If the
2-37     proposed constitutional amendment is not approved by the voters,
2-38     this Act has no effect.
2-39           SECTION 3.  The importance of this legislation and the
2-40     crowded condition of the calendars in both houses create an
2-41     emergency and an imperative public necessity that the
2-42     constitutional rule requiring bills to be read on three several
2-43     days in each house be suspended, and this rule is hereby suspended.
2-44                                  * * * * *