By Brimer, Reyna of Bexar, Keel H.B. No. 1052 A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to creating a real estate broker's and appraiser's lien on 1-3 commercial real estate; providing a penalty. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. Subtitle B, Title 5, Property Code, is amended by 1-6 adding Chapter 62 to read as follows: 1-7 CHAPTER 62. BROKER'S AND APPRAISER'S LIEN ON COMMERCIAL 1-8 REAL ESTATE 1-9 SUBCHAPTER A. GENERAL PROVISIONS 1-10 Sec. 62.001. SHORT TITLE. This chapter may be cited as the 1-11 Broker's and Appraiser's Lien on Commercial Real Estate Act. 1-12 Sec. 62.002. APPLICABILITY. This chapter applies only to 1-13 real estate that is commercial real estate on the date the notice 1-14 of lien is filed under this chapter. To reduce the potential 1-15 adverse impact on small businesses, this chapter does not apply to 1-16 commercial property that: 1-17 (1) is the property owner's primary place of business 1-18 or contains fewer than five tenants; and 1-19 (2) is less than 10,000 gross commercial square feet 1-20 or less than 20,000 gross industrial square feet. 1-21 Sec. 62.003. DEFINITIONS. In this chapter: 1-22 (1) "Broker" means a person who: 1-23 (A) is licensed as a real estate broker under 1-24 The Real Estate License Act (Article 6573a, Vernon's Texas Civil 2-1 Statutes) and is not acting as a residential rental locator as 2-2 defined by Section 24, The Real Estate License Act (Article 6573a, 2-3 Vernon's Texas Civil Statutes); or 2-4 (B) is licensed or certified as a real estate 2-5 appraiser under the Texas Appraiser Licensing and Certification Act 2-6 (Article 6573a.2, Vernon's Texas Civil Statutes). 2-7 (2) "Commercial real estate" means all real estate 2-8 except: 2-9 (A) real estate improved with one to four 2-10 residential units; 2-11 (B) a single-family residential unit, including 2-12 a condominium, townhouse, or home in a subdivision, if the unit is 2-13 sold, leased, or otherwise conveyed on a unit-by-unit basis and 2-14 regardless of whether the unit is part of a larger building or 2-15 located on real estate containing more than four residential units; 2-16 (C) real estate that is a person's homestead; 2-17 (D) real estate that is not improved with a 2-18 structure and is: 2-19 (i) zoned for single-family residential 2-20 use; or 2-21 (ii) restricted for single-family use 2-22 under restrictive covenants that will remain in effect for at least 2-23 the next two years; or 2-24 (E) real estate that is primarily used for and 2-25 will continue to be used for farming or ranching. 2-26 (3) "Commission" includes a fee or other valuable 2-27 consideration. 3-1 (4) "Commission agreement" means a written instrument 3-2 that: 3-3 (A) entitles a broker to a commission; 3-4 (B) is signed by the broker or the broker's 3-5 authorized agent and the person obligated to pay the commission or 3-6 that person's authorized agent; 3-7 (C) references the commission amount or 3-8 describes the formula used to determine the commission amount; and 3-9 (D) contains a description legally sufficient 3-10 for identification of the real estate interest that is the subject 3-11 of the agreement if the person obligated to pay the commission is a 3-12 seller or lessor. 3-13 (5) "Deferred commission" means a commission that is 3-14 earned and is not yet payable. 3-15 (6) "Real estate" has the meaning assigned by Section 3-16 2, The Real Estate License Act (Article 6573a, Vernon's Texas Civil 3-17 Statutes). 3-18 Sec. 62.004. PAYABLE COMMISSION AND EARNED COMMISSION. (a) 3-19 A commission is payable at the time provided in the commission 3-20 agreement. If payment of the commission is conditioned on the 3-21 occurrence of an event and that event does not occur, the person 3-22 obligated to pay the commission is not required to pay the 3-23 commission. 3-24 (b) Except as provided by Subsection (c), a commission is 3-25 earned on the earlier of the date that: 3-26 (1) the event described by the commission agreement 3-27 occurs; or 4-1 (2) the person obligated to pay the commission enters 4-2 into a purchase contract or a lease during the period prescribed by 4-3 the commission agreement for all or part of the commercial real 4-4 estate. 4-5 (c) If a broker has earned a commission under a commission 4-6 agreement relating to a lease transaction and the commission 4-7 agreement provides that the broker may receive an additional 4-8 commission when the lease is modified to expand the lease space or 4-9 renewed, the additional commission is earned when: 4-10 (1) the broker performs all the additional services 4-11 relating to the lease modification or renewal expressly prescribed 4-12 by the commission agreement; or 4-13 (2) the broker first earned a commission under the 4-14 commission agreement if the commission agreement does not expressly 4-15 require the broker to perform additional services relating to a 4-16 lease modification or renewal. 4-17 Sec. 62.005. BROKER'S ADDRESS FOR RECEIPT OF NOTICE. A 4-18 seller, lessor, buyer, or tenant shall send any notice required to 4-19 be sent to the broker under this chapter to the broker at: 4-20 (1) the broker's last known address as reflected in 4-21 the person's records; and 4-22 (2) the broker's address as reflected in the records 4-23 of the Texas Real Estate Commission. 4-24 (Sections 62.006-62.020 reserved for expansion) 4-25 SUBCHAPTER B. BROKER'S LIEN 4-26 Sec. 62.021. PERSON ENTITLED TO LIEN. (a) A broker has a 4-27 lien on a seller's or lessor's commercial real estate interest in 5-1 the amount specified by the commission agreement if: 5-2 (1) the broker has earned a commission under a 5-3 commission agreement signed by the seller or lessor of the 5-4 commercial real estate interest or the seller's or lessor's 5-5 authorized agent; and 5-6 (2) a notice of lien is recorded and indexed as 5-7 provided by Section 62.024. 5-8 (b) A broker has a lien on the commercial real estate 5-9 interest purchased by a prospective buyer in the amount specified 5-10 by the commission agreement if: 5-11 (1) the broker has earned a commission under a 5-12 commission agreement signed by the prospective buyer of the 5-13 commercial real estate interest or the prospective buyer's 5-14 authorized agent; and 5-15 (2) a notice of lien is recorded and indexed as 5-16 provided by Section 62.024. 5-17 (c) A broker has a lien on the prospective tenant's 5-18 leasehold interest in commercial real estate in the amount 5-19 specified by the commission agreement if: 5-20 (1) the broker has earned a commission under a 5-21 commission agreement signed by the prospective tenant of the 5-22 commercial real estate interest or the prospective tenant's 5-23 authorized agent; and 5-24 (2) a notice of lien is recorded and indexed as 5-25 provided by Section 62.024. 5-26 (d) A lien described by this section is available only to 5-27 the broker named in the commission agreement. The lien is not 6-1 available to an employee or independent contractor of the broker. 6-2 (e) The broker's right to claim a lien based on the 6-3 commission agreement must be disclosed in the commission agreement. 6-4 Sec. 62.022. WAIVER, RELEASE, OR DISCHARGE OF LIEN; 6-5 ASSUMPTION OF COMMISSION OBLIGATION. (a) Except as provided by 6-6 Subsection (b), the waiver of a broker's right to a lien under this 6-7 chapter, or a release given for the purpose of releasing the 6-8 broker's lien before the commission is satisfied or forgiven, is 6-9 void. 6-10 (b) A broker's entitlement to a lien on the interest of an 6-11 owner or tenant in commercial real estate shall be automatically 6-12 waived if: 6-13 (1) the commission is earned and payable for services 6-14 provided relating to a lease transaction; and 6-15 (2) the commission agreement is included as a 6-16 provision of the lease agreement. 6-17 (c) A lien under this chapter is discharged by: 6-18 (1) a court order discharging the lien; 6-19 (2) paying the commission to the broker named in the 6-20 commission agreement; or 6-21 (3) establishing an escrow account described by 6-22 Subchapter F. 6-23 (d) A person who assumes an owner's or tenant's commercial 6-24 real estate interest is bound by a commission agreement included in 6-25 a lease agreement unless an escrow account is established under 6-26 Subchapter F or a bond is provided under Subchapter G. 6-27 (e) This section does not affect the rights of a mortgagee 7-1 who forecloses on commercial real estate and does not assume the 7-2 lease on which a commission agreement is based. 7-3 Sec. 62.023. AFFIDAVIT IDENTIFYING BROKER. If requested by 7-4 the buyer, the buyer's authorized agent, or the escrow agent for 7-5 the commercial real estate transaction, the seller of commercial 7-6 real estate and the broker representing the seller shall provide to 7-7 the requesting party before the closing of the transaction a 7-8 written affidavit identifying each broker with whom the affiant 7-9 knows or believes the seller or the seller's authorized agent has 7-10 signed a commission agreement. 7-11 Sec. 62.024. FILING OF NOTICE OF LIEN. (a) A broker 7-12 claiming a lien under this chapter may not file a notice of lien 7-13 unless the commission on which the lien is based is earned. 7-14 (b) A broker claiming a lien under this chapter must file a 7-15 notice of lien as provided by Subchapter C with the county clerk of 7-16 the county in which the commercial real estate is located. 7-17 (c) The county clerk shall record the notice of lien in 7-18 records kept for that purpose and shall index and cross-index the 7-19 notice of lien in the names of the broker, each person obligated to 7-20 pay the commission under the commission agreement, and each person 7-21 who has an interest in the commercial real estate if the broker 7-22 claims a lien on that interest. 7-23 Sec. 62.025. CONTENTS OF NOTICE OF LIEN. The notice of lien 7-24 must be signed by the broker or by a person authorized to sign on 7-25 behalf of the broker and must contain the following: 7-26 (1) a sworn statement of the nature and amount of the 7-27 claim, including: 8-1 (A) the commission amount or the formula used to 8-2 determine the commission; 8-3 (B) the type of commission at issue, including a 8-4 deferred commission; and 8-5 (C) the month and year in which the commission 8-6 was earned; 8-7 (2) the name of the broker and the real estate license 8-8 number of the broker; 8-9 (3) the name as reflected in the broker's records of 8-10 any person who the broker believes is obligated to pay the 8-11 commission under the commission agreement; 8-12 (4) the name as reflected in the broker's records of 8-13 any person the broker believes to be an owner of the commercial 8-14 real estate interest on which the lien is claimed; 8-15 (5) a description legally sufficient for 8-16 identification of the commercial real estate interest sought to be 8-17 charged with the lien; 8-18 (6) the name of any broker or other person with whom 8-19 the broker intends to share the commission and the dollar or 8-20 percentage amount to be shared; and 8-21 (7) a copy of the commission agreement. 8-22 Sec. 62.026. NOTICE OF FILING. (a) In this section, 8-23 "business day" means a day other than a Saturday, Sunday, or 8-24 holiday recognized by this state. 8-25 (b) Not later than one business day after the date the 8-26 broker files a notice of lien, the broker shall mail a copy of the 8-27 notice of lien by certified mail, return receipt requested, or 9-1 registered mail to: 9-2 (1) the owner of record of the commercial real estate 9-3 interest on which the lien is claimed or the owner's authorized 9-4 agent; and 9-5 (2) the prospective buyer or tenant and any escrow 9-6 agent named in a contract for the sale or lease of the commercial 9-7 real estate interest on which the lien is claimed if: 9-8 (A) a binding written contract for the sale or 9-9 lease of the commercial real estate interest is in effect between 9-10 the owner and the prospective buyer or tenant in a transaction that 9-11 is the basis for the commission; and 9-12 (B) the binding written contract was executed by 9-13 the owner and the prospective buyer or tenant before the date the 9-14 notice of lien is filed. 9-15 (c) Service of the notice under Subsection (b) is complete 9-16 when the notice is deposited in the United States mail, postage 9-17 prepaid, and addressed to the persons entitled to receive the 9-18 notice under this section. 9-19 (d) If the broker has actual knowledge of the identity of 9-20 the escrow agent named in the contract for the sale or lease of the 9-21 commercial real estate interest on which the broker claims a lien 9-22 or of the escrow agent otherwise closing the sale or lease of the 9-23 commercial real estate interest, the broker, before the first 9-24 business day before the date that the sale or lease is closed, 9-25 shall deliver a file-stamped copy or transmit a facsimile of a 9-26 file-stamped copy of the notice of lien to each escrow agent at the 9-27 office in which the closing of the sale or lease will occur for use 10-1 during the closing of the sale or lease. The broker shall deliver 10-2 the copy or transmit the facsimile directly to the individual 10-3 escrow agent responsible for closing the sale or lease if the 10-4 broker knows that person's name. 10-5 (e) If the escrow agent receives the notice of lien, the 10-6 escrow agent and other parties to the sale or lease may not close 10-7 the transaction unless the lien is released, the funds are held in 10-8 escrow as provided by Subchapter F, or a bond is filed as provided 10-9 by Subchapter G. 10-10 (f) If the broker fails to comply with this section, the 10-11 notice of lien is void. 10-12 Sec. 62.027. INCEPTION OF BROKER'S LIEN. (a) A broker's 10-13 lien attaches to the commercial real estate interest owned by the 10-14 person obligated to pay the commission on the date the notice of 10-15 lien is recorded as provided by this chapter. The lien does not 10-16 relate back to the date of the commission agreement. 10-17 (b) A notice of lien for amounts earned by the broker under 10-18 an installment contract or under a commission agreement for a 10-19 deferred commission is enforceable only to the extent that the 10-20 installment or commission has become payable. 10-21 Sec. 62.028. PRIORITY. (a) A recorded lien, mortgage, or 10-22 other encumbrance on commercial real estate, including a recorded 10-23 lien securing revolving credit and future advances for a loan, 10-24 recorded before the date a broker's lien is recorded has priority 10-25 over the broker's lien. 10-26 (b) A broker's lien on the commercial real estate interest 10-27 of a person obligated to pay a commission is not valid or 11-1 enforceable against a grantee, buyer, lessee, or transferee of the 11-2 interest of the person obligated to pay the commission if the deed, 11-3 lease, or instrument transferring the interest is recorded before 11-4 the notice of the broker's lien is recorded. 11-5 (c) A purchase-money mortgage lien executed by the buyer of 11-6 the commercial real estate interest has priority over a broker's 11-7 lien claimed against the prospective buyer for the commission owed 11-8 by that buyer. 11-9 (d) A mechanic's lien that is recorded after a broker's lien 11-10 and that relates back to a date before the date the broker's lien 11-11 is recorded has priority over the broker's lien. 11-12 Sec. 62.029. SUBORDINATION. (a) If the person obligated to 11-13 pay the commission sells that person's commercial real estate 11-14 interest, the broker's lien is subordinate to a recorded 11-15 purchase-money first lien authorized by the buyer if the buyer: 11-16 (1) executes and files with the county clerk of the 11-17 county in which the broker's lien is filed a memorandum that 11-18 evidences the buyer's ratification of the broker's lien and the 11-19 buyer's assumption of the obligation to pay the broker the 11-20 commission as provided by the commission agreement that is the 11-21 basis for the lien; and 11-22 (2) sends the broker, by certified mail, return 11-23 receipt requested, or registered mail, a copy of the recorded 11-24 memorandum required by this subsection. 11-25 (b) If the person obligated to pay the commission refinances 11-26 a recorded first lien secured by that person's commercial real 11-27 estate interest, the broker's lien is subordinate to the recorded 12-1 refinanced first lien, regardless of the amount of the first lien 12-2 after refinancing, if the person obligated to pay the commission: 12-3 (1) executes and files with the county clerk of the 12-4 county in which the broker's lien is filed a memorandum that 12-5 evidences the person's ratification of the broker's lien and the 12-6 person's obligation to pay the broker the commission as provided by 12-7 the commission agreement that is the basis for the lien; and 12-8 (2) sends the broker, by certified mail, return 12-9 receipt requested, or registered mail, a copy of the recorded 12-10 memorandum required by this subsection. 12-11 (c) If the person obligated to pay the commission obtains an 12-12 extension of credit secured by that person's commercial real estate 12-13 interest, the broker's lien is subordinate to the lien securing the 12-14 extension of credit if, according to the lien documents, the 12-15 extension of credit is made only for the purpose of: 12-16 (1) repairing or renovating the commercial real 12-17 estate; or 12-18 (2) completing construction or providing additional 12-19 improvements on the commercial real estate. 12-20 (d) If the person obligated to pay the commission furnishes 12-21 a subordination agreement as provided by this section to be 12-22 executed by the broker, the broker must: 12-23 (1) execute and acknowledge the subordination 12-24 agreement before a notary public; and 12-25 (2) return the subordination agreement to the person 12-26 not later than the seventh day after the date the broker receives 12-27 the subordination agreement and other documents the broker 13-1 reasonably requests in order to determine that the subordination 13-2 agreement complies with this section. 13-3 Sec. 62.030. MIXED-USE REAL ESTATE. If real estate is zoned 13-4 or restricted for more than one use, the broker's lien attaches 13-5 only to the portions of the real estate that constitute commercial 13-6 real estate. 13-7 Sec. 62.031. CHANGE IN USE OF REAL ESTATE. (a) Except as 13-8 provided by Subsection (b), any change in the use of the real 13-9 estate does not affect a broker's lien if the notice of the lien 13-10 was filed when the real estate was commercial real estate. 13-11 (b) The broker's lien is extinguished if: 13-12 (1) not later than the 360th day after the date on 13-13 which the broker's commission is payable, the commercial real 13-14 estate interest on which a broker claims a lien is zoned for 13-15 single-family use or restricted for single-family use under 13-16 recorded restrictive covenants; and 13-17 (2) the zoning ordinances or restrictive covenants for 13-18 single-family use are in effect until at least the second 13-19 anniversary of the date the commission is payable. 13-20 (Sections 62.032-62.040 reserved for expansion 13-21 SUBCHAPTER C. TIME FOR FILING NOTICE OF LIEN 13-22 Sec. 62.041. TIME TO FILE. (a) If a broker has earned a 13-23 commission under a commission agreement signed by a seller or the 13-24 seller's authorized agent, a broker must record a notice of lien: 13-25 (1) after the commission is earned; and 13-26 (2) before the conveyance of the commercial real 13-27 estate interest on which the broker is claiming a lien. 14-1 (b) If a broker has earned a commission under a commission 14-2 agreement signed by a prospective buyer or a prospective buyer's 14-3 authorized agent, the broker must record a notice of lien: 14-4 (1) after the buyer acquires legal title to the 14-5 commercial real estate interest on which the broker is claiming a 14-6 lien; and 14-7 (2) before the buyer conveys the buyer's commercial 14-8 real estate interest on which the broker is claiming a lien. 14-9 (c) If the lien is based on a lease transaction, the broker 14-10 must record a notice of lien after the commission is earned and 14-11 before the earlier of: 14-12 (1) the 91st day after the date the event for which 14-13 the commission becomes payable occurs; or 14-14 (2) the date the person obligated to pay the 14-15 commission records a conveyance of that person's commercial real 14-16 estate interest after executing the lease agreement relating to the 14-17 lease transaction for which the lien is claimed. 14-18 (d) If a notice of lien is not filed within the time 14-19 required by this section, the lien is void. 14-20 (Sections 62.042-62.060 reserved for expansion 14-21 SUBCHAPTER D. ENFORCEMENT OF LIEN 14-22 Sec. 62.061. SUIT TO FORECLOSE LIEN. (a) A broker may not 14-23 bring a suit to foreclose a lien under this chapter unless the 14-24 commission is earned and payable. A broker may bring a suit to 14-25 foreclose a lien in any district court for the county in which the 14-26 commercial real estate is located by filing a sworn complaint 14-27 stating that the notice of lien has been recorded. 15-1 (b) A complaint in a suit filed under this section must 15-2 contain: 15-3 (1) a brief description of the commission agreement 15-4 that is the basis for the lien, including: 15-5 (A) a description of the disclosure of the 15-6 broker's right to the lien contained in the commission agreement; 15-7 (B) the date on which the commission agreement 15-8 was executed; 15-9 (C) the event for which a commission is 15-10 considered to be earned; and 15-11 (D) the event for which a commission is 15-12 considered to be payable; 15-13 (2) a description of the services performed by the 15-14 broker; 15-15 (3) the amount of the payable commission that is 15-16 unpaid; 15-17 (4) a description of the commercial real estate to 15-18 which the lien attaches; and 15-19 (5) other facts necessary for a full understanding of 15-20 the rights of the parties. 15-21 (c) The broker must include as a defendant in a suit brought 15-22 under this subchapter each person the broker believes to have an 15-23 interest in the commercial real estate that is subordinate to or 15-24 encumbered by the broker's lien. 15-25 (d) If the broker and a person against whom the broker 15-26 claims a commission use alternative dispute resolution procedures 15-27 to resolve a dispute concerning entitlement to the broker's 16-1 commission, the broker's lien remains valid, and any suit to 16-2 foreclose the lien is stayed until the alternative dispute 16-3 resolution process is completed. 16-4 Sec. 62.062. STATUTE OF LIMITATIONS. (a) Except as 16-5 provided by this section, a broker claiming a lien under this 16-6 chapter must bring a suit to foreclose the lien on or before the 16-7 second anniversary of the date the notice of lien is recorded. 16-8 (b) A broker claiming a lien to collect a deferred 16-9 commission must bring a suit to foreclose the lien on or before the 16-10 earlier of: 16-11 (1) the second anniversary of the date on which the 16-12 commission is payable; or 16-13 (2) the 10th anniversary of the date the lien is 16-14 recorded or the 10th anniversary of the date the broker records a 16-15 subsequent notice of the lien as a renewal of the broker's right to 16-16 the lien, whichever date is later. 16-17 (c) A renewal of a notice of lien must state that it is a 16-18 renewal of the broker's lien and must be recorded after the ninth 16-19 anniversary after the date the original notice of lien or last 16-20 renewal notice is recorded and on or before the 10th anniversary of 16-21 the date the original notice of lien or last renewal notice is 16-22 recorded. 16-23 (d) A broker claiming a lien for a commission that is 16-24 payable must bring a suit to foreclose the lien not later than the 16-25 30th day after the date the broker receives a written demand to 16-26 bring a suit to foreclose the lien from the owner of the commercial 16-27 real estate interest on which the lien is claimed. 17-1 (e) If a suit to foreclose the lien is not brought within 17-2 the period prescribed by this section, the lien is void. 17-3 Sec. 62.063. ASSESSMENT OF COSTS, FEES, AND INTEREST. The 17-4 prevailing party in a suit brought under this subchapter is 17-5 entitled to court costs, reasonable attorney's fees, and 17-6 prejudgment interest. 17-7 (Sections 62.064-62.080 reserved for expansion 17-8 SUBCHAPTER E. RELEASE OF LIEN 17-9 Sec. 62.081. RELEASE OF LIEN. (a) Not later than the fifth 17-10 day after the date a broker receives a written request from the 17-11 owner of a commercial real estate interest on which a lien is 17-12 claimed, the broker shall furnish to the owner a release of 17-13 indebtedness and any lien claimed if: 17-14 (1) the debt that is the basis for the lien is 17-15 satisfied; or 17-16 (2) the lien is discharged under Section 62.022, 17-17 rendered void under Section 62.026 or 62.062, or extinguished under 17-18 Section 62.031. 17-19 (b) When a condition occurs that would preclude the broker 17-20 from receiving a commission under the terms of the commission 17-21 agreement that is the basis for the lien, the broker shall, not 17-22 later than the 10th day after the date the broker receives a 17-23 written request from the owner of the commercial real estate 17-24 interest on which the lien is claimed, furnish to the owner a 17-25 release of indebtedness and any lien claimed. 17-26 (c) A release of lien must be in a form that permits the 17-27 instrument to be filed of record. 18-1 (Sections 62.082-62.100 reserved for expansion 18-2 SUBCHAPTER F. ESCROW OF DISPUTED AMOUNTS 18-3 Sec. 62.101. ESCROW ACCOUNT. If a claim for a lien under a 18-4 recorded notice of lien is not paid or assumed at the closing of a 18-5 sale, lease, or mortgage of the commercial real estate interest 18-6 subject to the lien and would prevent the closing of the 18-7 transaction or conveyance, any person named in the notice of lien 18-8 as obligated to pay the commission shall, on the date of the 18-9 closing: 18-10 (1) establish an escrow account from any net proceeds 18-11 of the transaction or conveyance in an amount equal to the amount 18-12 sufficient to satisfy the lien plus 15 percent of that amount; or 18-13 (2) file a bond to indemnify against the lien as 18-14 provided by Subchapter G. 18-15 Sec. 62.102. NAMED ESCROW AGENT. If an escrow agent is 18-16 named in the contract on which the transaction or conveyance is 18-17 based, the escrow account shall be established with the named 18-18 escrow agent. 18-19 Sec. 62.103. COSTS OF INTERPLEADER. Related costs for any 18-20 interpleader action may be deducted from the escrow account by the 18-21 person maintaining the escrow account. 18-22 Sec. 62.104. REFUSAL TO ESTABLISH ESCROW ACCOUNT OR BOND. 18-23 (a) A party may not refuse to close a transaction because of the 18-24 requirement to establish an escrow account or bond as provided by 18-25 Section 62.101 if: 18-26 (1) the broker provides a copy of the notice of lien 18-27 that complies with Sections 62.025 and 62.026; 19-1 (2) sufficient proceeds will result from the proposed 19-2 transaction for the payment of the commission and costs of the 19-3 interpleader; and 19-4 (3) the broker executes and delivers a full release 19-5 of the broker's lien in a recordable form. 19-6 (b) A prospective buyer of a commercial real estate interest 19-7 may not refuse to close the purchase solely because a broker's lien 19-8 is filed after the date a title commitment or abstract of title 19-9 relating to the interest is issued if an escrow account is 19-10 established as provided by this subchapter or a bond is filed as 19-11 provided by Subchapter G. 19-12 Sec. 62.105. TERM OF ESCROW ACCOUNT. The amount held in 19-13 escrow shall be held in escrow until: 19-14 (1) the rights of the parties claiming the amount in 19-15 escrow are determined by a written agreement of the parties, a 19-16 court order, or an alternative dispute resolution process agreed to 19-17 by the parties; 19-18 (2) the broker's lien is no longer enforceable; or 19-19 (3) the funds are interpled into a district court for 19-20 the county in which the commercial real estate is located. 19-21 Sec. 62.106. EXTINGUISHMENT OF LIEN UPON ESCROW. When the 19-22 escrow account is established under this section, the broker's lien 19-23 against the commercial real estate is extinguished and becomes a 19-24 lien on the proceeds in the escrow account. 19-25 (Sections 62.107-62.120 reserved for expansion 19-26 SUBCHAPTER G. BOND TO INDEMNIFY AGAINST LIEN 19-27 Sec. 62.121. BOND. (a) If a lien is fixed or is attempted 20-1 to be fixed by a recorded instrument under this chapter, any 20-2 person may file a bond to indemnify against the lien. 20-3 (b) The bond shall be filed with the county clerk of the 20-4 county in which the commercial real estate subject to the lien is 20-5 located. 20-6 Sec. 62.122. BOND REQUIREMENTS. The bond must: 20-7 (1) describe the commercial real estate on which the 20-8 lien is claimed; 20-9 (2) refer to the lien claimed in a manner sufficient 20-10 to identify it; 20-11 (3) be in an amount that is double the amount of the 20-12 lien referred to in the bond as of the date of execution of the 20-13 bond by the surety, unless the total amount claimed in the lien 20-14 exceeds $40,000, in which case the bond must be in an amount that 20-15 is 1-1/2 times the amount of the lien; 20-16 (4) be payable to the party claiming the lien; 20-17 (5) be executed by: 20-18 (A) the party filing the bond as principal; and 20-19 (B) a corporate surety licensed by this state to 20-20 execute the bond as surety; 20-21 (6) be conditioned substantially that the principal 20-22 and sureties will pay the named obligees or their assignees the 20-23 amount that the named obligees would have been entitled to recover 20-24 if their claim had been proved to be valid and enforceable liens on 20-25 the commercial real estate; and 20-26 (7) identify the last known mailing address of the 20-27 person claiming the lien. 21-1 Sec. 62.123. NOTICE OF BOND. (a) After the bond is filed, 21-2 the county clerk shall issue notice of the bond to all named 21-3 obligees. 21-4 (b) A copy of the bond must be attached to the notice. 21-5 (c) The notice must be served on each obligee by mailing a 21-6 copy of the notice and the bond to the obligee by certified mail, 21-7 return receipt requested, addressed to the claimant at the address 21-8 stated in the bond for the obligee. 21-9 Sec. 62.124. RECORDING OF BOND AND NOTICE. (a) The county 21-10 clerk shall record the bond, the notice, and a certificate of 21-11 mailing in the real property records. 21-12 (b) In acquiring an interest in or insuring title to the 21-13 commercial real estate, a buyer, insurer of title, or lender may 21-14 rely on and is absolutely protected by the record of the bond and 21-15 the notice to the same extent as if the lien claimant had filed a 21-16 release of lien in the real property records. 21-17 Sec. 62.125. ACTION ON BOND. (a) A party making or holding 21-18 a lien claim may not sue on the bond later than the last date on 21-19 which a person may bring a suit to foreclose the lien under Section 21-20 62.062. 21-21 (b) The bond is not exhausted by one action against it. 21-22 Each named obligee or assignee of an obligee may maintain a 21-23 separate suit on the bond in any district court for the county in 21-24 which the commercial real estate is located. 21-25 (Sections 62.126-62.140 reserved for expansion 21-26 SUBCHAPTER H. REMEDIES 21-27 Sec. 62.141. OWNER OR TENANT'S REMEDIES. (a) An owner or 22-1 tenant may file suit against a broker under this chapter. 22-2 (b) In an action filed under this section, the court shall 22-3 discharge a broker's lien if the broker: 22-4 (1) failed to mail a copy of the notice of lien within 22-5 the period prescribed by Section 62.026; 22-6 (2) failed to execute, acknowledge, and return a 22-7 subordination agreement within the period prescribed by Section 22-8 62.029(d); 22-9 (3) failed to record the notice of lien within the 22-10 period prescribed by Section 62.041; or 22-11 (4) failed to release a lien within the period 22-12 prescribed by Section 62.081. 22-13 (c) A broker is liable to an owner or tenant for damages as 22-14 provided by Subsection (d) if: 22-15 (1) the broker recorded a lien on the commercial real 22-16 estate interest of the owner or tenant; 22-17 (2) the broker failed to: 22-18 (A) execute, acknowledge, and return a 22-19 subordination agreement within the period prescribed by Section 22-20 62.029(d); or 22-21 (B) release a lien within the period prescribed 22-22 by Section 62.081; 22-23 (3) the owner or tenant mailed to the broker by 22-24 certified mail, return receipt requested, a copy of this section 22-25 and a notice requesting the owner to execute, acknowledge, and 22-26 return the subordination agreement or release the lien not later 22-27 than the 10th day after the date the broker receives the notice; 23-1 and 23-2 (4) the broker failed to comply with the owner's or 23-3 tenant's written notice within the prescribed period. 23-4 (d) If the court finds that a broker is liable to an owner 23-5 or tenant under Subsection (c), the court may award the owner or 23-6 tenant: 23-7 (1) actual damages, including attorney's fees and 23-8 court costs, incurred by the owner or tenant that are proximately 23-9 caused by the broker's failure to execute, acknowledge, and return 23-10 the subordination agreement or release the lien; and 23-11 (2) a civil penalty in an amount equal to three times 23-12 the amount of the claimed commission if the court finds that the 23-13 broker acted with gross negligence or acted in bad faith in 23-14 violation of The Real Estate License Act (Article 6573a, Vernon's 23-15 Texas Civil Statutes). 23-16 (e) An individual broker who was the designated officer of a 23-17 corporate or partnership broker at the time the corporate or 23-18 partnership broker violated this chapter is liable for any 23-19 unsatisfied damages or civil penalties awarded under Subsection (d) 23-20 if the individual broker was named as a defendant in an action 23-21 filed under this section. 23-22 (f) This section does not prevent: 23-23 (1) a person from filing a complaint with the Texas 23-24 Real Estate Commission against a broker who fails to comply with 23-25 this chapter; or 23-26 (2) the Texas Real Estate Commission at any time from 23-27 investigating or initiating a disciplinary proceeding against a 24-1 broker who fails to comply with this chapter. 24-2 Sec. 62.142. BROKER'S REMEDIES. (a) A broker may file suit 24-3 against an owner or tenant to enforce a commission agreement. 24-4 (b) If the court finds that the broker waived the right to 24-5 file a lien under Section 62.022 and that the owner or tenant 24-6 violated the commission agreement, the court may award to the 24-7 broker: 24-8 (1) actual damages, including attorney's fees and 24-9 court costs, that are proximately caused by the owner's or tenant's 24-10 failure to comply with the commission agreement; and 24-11 (2) a civil penalty in an amount equal to three times 24-12 the amount of the claimed commission if the court finds that the 24-13 owner or tenant acted with gross negligence or in bad faith. 24-14 SECTION 2. This Act takes effect September 1, 1999. The 24-15 change in law made by this Act applies only to an agreement to 24-16 compensate a licensed real estate broker or appraiser that is 24-17 entered into on or after the effective date of this Act. 24-18 SECTION 3. The importance of this legislation and the 24-19 crowded condition of the calendars in both houses create an 24-20 emergency and an imperative public necessity that the 24-21 constitutional rule requiring bills to be read on three several 24-22 days in each house be suspended, and this rule is hereby suspended.