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. (a) This chapter applies only
1-13 to real estate that is commercial real estate on the date the
1-14 notice of lien is filed under this chapter.
1-15 (b) This chapter does not apply to:
1-16 (1) a transaction involving a claim for a commission
1-17 of $2,500 or less in the aggregate; or
1-18 (2) a transaction for the sale of commercial real
1-19 estate involving a claim for a commission of $5,000 or less in the
1-20 aggregate if the commercial real estate:
1-21 (A) is the principal place of business of the
1-22 record title owner;
1-23 (B) is occupied by more than one and fewer than
1-24 five tenants; and
2-1 (C) is improved with 7,500 square feet or less
2-2 of total gross building area.
2-3 Sec. 62.003. DEFINITIONS. In this chapter:
2-4 (1) "Broker" means a person who:
2-5 (A) is licensed as a real estate broker under
2-6 The Real Estate License Act (Article 6573a, Vernon's Texas Civil
2-7 Statutes) and is not acting as a residential rental locator as
2-8 defined by Section 24, The Real Estate License Act (Article 6573a,
2-9 Vernon's Texas Civil Statutes); or
2-10 (B) is licensed or certified as a real estate
2-11 appraiser under the Texas Appraiser Licensing and Certification Act
2-12 (Article 6573a.2, Vernon's Texas Civil Statutes).
2-13 (2) "Commercial real estate" means all real estate
2-14 except:
2-15 (A) real estate improved with one to four
2-16 residential units;
2-17 (B) a single-family residential unit, including
2-18 a condominium, townhouse, or home in a subdivision, if the unit is
2-19 sold, leased, or otherwise conveyed on a unit-by-unit basis and
2-20 regardless of whether the unit is part of a larger building or
2-21 located on real estate containing more than four residential units;
2-22 (C) real estate that is or includes on the real
2-23 estate a person's homestead;
2-24 (D) real estate that is not improved with a
2-25 structure and is:
2-26 (i) zoned for single-family residential
2-27 use; or
3-1 (ii) restricted for single-family use
3-2 under restrictive covenants that will remain in effect for at least
3-3 the next two years; or
3-4 (E) real estate that:
3-5 (i) is primarily used for farming and
3-6 ranching purposes;
3-7 (ii) will continue to be used primarily
3-8 for farming and ranching purposes; and
3-9 (iii) is located more than three miles
3-10 from the corporate boundaries of any municipality.
3-11 (3) "Commission" includes a fee or other valuable
3-12 consideration.
3-13 (4) "Commission agreement" means a written instrument
3-14 that:
3-15 (A) entitles a broker to a commission;
3-16 (B) is signed by the person obligated to pay the
3-17 commission or that person's authorized agent;
3-18 (C) references the commission amount or
3-19 describes the formula used to determine the commission amount; and
3-20 (D) contains a description legally sufficient
3-21 for identification of the real estate interest that is the subject
3-22 of the agreement if the person obligated to pay the commission is a
3-23 seller or lessor.
3-24 (5) "Deferred commission" means a commission that is
3-25 earned and is not yet payable.
3-26 (6) "Real estate" has the meaning assigned by Section
3-27 2, The Real Estate License Act (Article 6573a, Vernon's Texas Civil
4-1 Statutes).
4-2 Sec. 62.004. PAYABLE COMMISSION AND EARNED COMMISSION. (a)
4-3 A commission is payable at the time provided in the commission
4-4 agreement. If payment of the commission is conditioned on the
4-5 occurrence of an event and that event does not occur, the person
4-6 obligated to pay the commission is not required to pay the
4-7 commission.
4-8 (b) Except as provided by Subsection (c), a commission is
4-9 earned on the earlier of the date that:
4-10 (1) an event occurs that, under the commission
4-11 agreement, defines when the commission is earned; or
4-12 (2) the person obligated to pay the commission enters
4-13 into a purchase contract or a lease during the period prescribed by
4-14 the commission agreement for all or part of the commercial real
4-15 estate if the purchase contract or lease is contemplated by the
4-16 commission agreement and if the parties to the purchase contract or
4-17 lease are contemplated by the commission agreement.
4-18 (c) If a broker has earned a commission under a commission
4-19 agreement relating to a lease transaction and the commission
4-20 agreement provides that the broker may receive an additional
4-21 commission when the lease is modified to expand the lease space or
4-22 renewed, the additional commission is earned when:
4-23 (1) the broker performs all the additional services
4-24 relating to the lease modification or renewal expressly prescribed
4-25 by the commission agreement; or
4-26 (2) the broker first earned a commission under the
4-27 commission agreement if the commission agreement does not expressly
5-1 require the broker to perform additional services relating to a
5-2 lease modification or renewal.
5-3 Sec. 62.005. BROKER'S ADDRESS FOR RECEIPT OF NOTICE. A
5-4 seller, lessor, buyer, or tenant shall send any notice required to
5-5 be sent to the broker under this chapter to the broker:
5-6 (1) at the broker's address as reflected in the
5-7 records of the Texas Real Estate Commission; and
5-8 (2) at the broker's last address that the broker
5-9 furnished the seller, lessor, buyer, or tenant by certified mail,
5-10 return receipt requested, if the broker's license is expired.
5-11 (Sections 62.006-62.020 reserved for expansion)
5-12 SUBCHAPTER B. BROKER'S LIEN
5-13 Sec. 62.021. PERSON ENTITLED TO LIEN. (a) A broker has a
5-14 lien on a seller's or lessor's commercial real estate interest in
5-15 the amount specified by the commission agreement if:
5-16 (1) the broker has earned a commission under a
5-17 commission agreement signed by the seller or lessor of the
5-18 commercial real estate interest or the seller's or lessor's
5-19 authorized agent; and
5-20 (2) a notice of lien is recorded and indexed as
5-21 provided by Section 62.024.
5-22 (b) A broker has a lien on the commercial real estate
5-23 interest purchased by a prospective buyer in the amount specified
5-24 by the commission agreement if:
5-25 (1) the broker has earned a commission under a
5-26 commission agreement signed by the prospective buyer of the
5-27 commercial real estate interest or the prospective buyer's
6-1 authorized agent; and
6-2 (2) a notice of lien is recorded and indexed as
6-3 provided by Section 62.024.
6-4 (c) A broker has a lien on the leasehold interest in the
6-5 commercial real estate that a prospective tenant leases in the
6-6 amount specified by the commission agreement if:
6-7 (1) the broker has earned a commission under a
6-8 commission agreement signed by the prospective tenant of the
6-9 commercial real estate interest or the prospective tenant's
6-10 authorized agent; and
6-11 (2) a notice of lien is recorded and indexed as
6-12 provided by Section 62.024.
6-13 (d) A lien described by this section is available only to
6-14 the broker named in the commission agreement. The lien is not
6-15 available to an employee or independent contractor of the broker.
6-16 (e) The broker's right to claim a lien based on the
6-17 commission agreement must be disclosed in the commission agreement.
6-18 Sec. 62.022. WAIVER, RELEASE, OR DISCHARGE OF LIEN;
6-19 ASSUMPTION OF COMMISSION OBLIGATION. (a) Except as provided by
6-20 Subsection (b), the waiver of a broker's right to a lien under this
6-21 chapter, or a release given for the purpose of releasing the
6-22 broker's lien before the commission is satisfied or forgiven, is
6-23 void.
6-24 (b) A broker's entitlement to a lien on the interest of an
6-25 owner or tenant in commercial real estate shall be automatically
6-26 waived if:
6-27 (1) the commission is earned and payable for services
7-1 provided relating to a lease transaction; and
7-2 (2) the commission agreement is included as a
7-3 provision of the lease agreement.
7-4 (c) A lien under this chapter is discharged by:
7-5 (1) a court order discharging the lien;
7-6 (2) paying the commission to the broker named in the
7-7 commission agreement; or
7-8 (3) establishing an escrow account described by
7-9 Subchapter F.
7-10 (d) A person who assumes an owner's or tenant's commercial
7-11 real estate interest is bound by a commission agreement included in
7-12 a lease agreement unless an escrow account is established under
7-13 Subchapter F or a bond is provided under Subchapter G.
7-14 (e) This section does not affect the rights of a mortgagee
7-15 who forecloses on commercial real estate and does not assume the
7-16 lease on which a commission agreement is based.
7-17 Sec. 62.023. AFFIDAVIT IDENTIFYING BROKER. If requested by
7-18 the buyer, the buyer's authorized agent, or the escrow agent for
7-19 the commercial real estate transaction, the seller of commercial
7-20 real estate and the broker representing the seller shall provide to
7-21 the requesting party before the closing of the transaction a
7-22 written affidavit identifying each broker with whom the affiant
7-23 knows or believes the seller or the seller's authorized agent has
7-24 signed a commission agreement under which a commission is claimed
7-25 or earned and has not been paid.
7-26 Sec. 62.024. FILING OF NOTICE OF LIEN. (a) A broker
7-27 claiming a lien under this chapter may not file a notice of lien
8-1 unless the commission on which the lien is based is earned.
8-2 (b) A broker claiming a lien under this chapter must file a
8-3 notice of lien as provided by Subchapter C with the county clerk of
8-4 the county in which the commercial real estate is located.
8-5 (c) The county clerk shall record the notice of lien in
8-6 records kept for that purpose and shall index and cross-index the
8-7 notice of lien in the names of the broker, each person obligated to
8-8 pay the commission under the commission agreement, and each person
8-9 who owns an interest in the commercial real estate if the broker
8-10 claims a lien on that interest.
8-11 Sec. 62.025. CONTENTS OF NOTICE OF LIEN. The notice of lien
8-12 must be signed by the broker or by a person authorized to sign on
8-13 behalf of the broker and must contain the following:
8-14 (1) a sworn statement of the nature and amount of the
8-15 claim, including:
8-16 (A) the commission amount or the formula used to
8-17 determine the commission;
8-18 (B) the type of commission at issue, including a
8-19 deferred commission; and
8-20 (C) the month and year in which the commission
8-21 was earned;
8-22 (2) the name of the broker and the real estate license
8-23 number of the broker;
8-24 (3) the name as reflected in the broker's records of
8-25 any person who the broker believes is obligated to pay the
8-26 commission under the commission agreement;
8-27 (4) the name as reflected in the broker's records of
9-1 any person the broker believes to be an owner of the commercial
9-2 real estate interest on which the lien is claimed;
9-3 (5) a description legally sufficient for
9-4 identification of the commercial real estate interest sought to be
9-5 charged with the lien;
9-6 (6) the name of any cooperating broker or principal in
9-7 the transaction with whom the broker intends to share the
9-8 commission and the dollar or percentage amount to be shared; and
9-9 (7) a copy of the commission agreement on which the
9-10 lien is based.
9-11 Sec. 62.026. NOTICE OF FILING. (a) In this section,
9-12 "business day" means a day other than a Saturday, Sunday, or
9-13 holiday recognized by this state.
9-14 (b) Not later than one business day after the date the
9-15 broker files a notice of lien, the broker shall mail a copy of the
9-16 notice of lien by certified mail, return receipt requested, or
9-17 registered mail to:
9-18 (1) the owner of record of the commercial real estate
9-19 interest on which the lien is claimed or the owner's authorized
9-20 agent; and
9-21 (2) the prospective buyer or tenant and any escrow
9-22 agent named in a contract for the sale or lease of the commercial
9-23 real estate interest on which the lien is claimed if:
9-24 (A) a binding written contract for the sale or
9-25 lease of the commercial real estate interest is in effect between
9-26 the owner and the prospective buyer or tenant in a transaction that
9-27 is the basis for the commission; and
10-1 (B) the binding written contract was executed by
10-2 the owner and the prospective buyer or tenant before the date the
10-3 notice of lien is filed.
10-4 (c) Service of the notice under Subsection (b) is complete
10-5 when the notice is deposited in the United States mail, postage
10-6 prepaid, and addressed to the persons entitled to receive the
10-7 notice under this section.
10-8 (d) If the broker has actual knowledge of the identity of
10-9 the escrow agent named in the contract for the sale or lease of the
10-10 commercial real estate interest on which the broker claims a lien
10-11 or of the escrow agent otherwise closing the sale or lease of the
10-12 commercial real estate interest, the broker, before the first
10-13 business day before the date that the sale or lease is closed on
10-14 commercial real estate for which a notice of lien is filed, shall
10-15 deliver a file-stamped copy or transmit a facsimile of a
10-16 file-stamped copy of the notice of lien to each escrow agent at the
10-17 office in which the closing of the sale or lease will occur for use
10-18 during the closing of the sale or lease. The broker shall deliver
10-19 the copy or transmit the facsimile directly to the individual
10-20 escrow agent responsible for closing the sale or lease if the
10-21 broker knows that person's name.
10-22 (e) If the escrow agent receives the notice of lien, the
10-23 escrow agent and other parties to the sale or lease may not close
10-24 the transaction unless the lien is released, the prospective buyer
10-25 or tenant purchases or leases the property subject to the lien, the
10-26 funds are held in escrow as provided by Subchapter F, or a bond is
10-27 filed as provided by Subchapter G.
11-1 (f) If the broker fails to comply with this section, the
11-2 notice of lien is void.
11-3 Sec. 62.027. INCEPTION OF BROKER'S LIEN. (a) A broker's
11-4 lien attaches to the commercial real estate interest owned by the
11-5 person obligated to pay the commission on the date the notice of
11-6 lien is recorded as provided by this chapter. The lien does not
11-7 relate back to the date of the commission agreement.
11-8 (b) A notice of lien for amounts earned by the broker under
11-9 an installment contract or under a commission agreement for a
11-10 deferred commission is enforceable only to the extent that the
11-11 installment or commission has become payable.
11-12 Sec. 62.028. PRIORITY. (a) A recorded lien, mortgage, or
11-13 other encumbrance on commercial real estate, including a recorded
11-14 lien securing revolving credit and future advances for a loan,
11-15 recorded before the date a broker's lien is recorded has priority
11-16 over the broker's lien.
11-17 (b) A broker's lien on the commercial real estate interest
11-18 of a person obligated to pay a commission is not valid or
11-19 enforceable against a grantee, buyer, lessee, or transferee of the
11-20 interest of the person obligated to pay the commission if the deed,
11-21 lease, or instrument transferring the interest is recorded before
11-22 the notice of the broker's lien is recorded.
11-23 (c) A purchase-money mortgage lien executed by the buyer of
11-24 the commercial real estate interest has priority over a broker's
11-25 lien claimed for the commission owed by the buyer against the
11-26 commercial real estate interest purchased by the buyer.
11-27 (d) A mechanic's lien that is recorded after a broker's lien
12-1 and that relates back to a date before the date the broker's lien
12-2 is recorded has priority over the broker's lien.
12-3 Sec. 62.029. SUBORDINATION. (a) If the person obligated to
12-4 pay the commission sells that person's commercial real estate
12-5 interest, the broker's lien is subordinate to a recorded
12-6 purchase-money first lien authorized by the buyer if the buyer:
12-7 (1) executes and files with the county clerk of the
12-8 county in which the broker's lien is filed a memorandum that
12-9 evidences the buyer's acknowledgment of the existence of the
12-10 broker's lien; and
12-11 (2) sends the broker, by certified mail, return
12-12 receipt requested, or registered mail, a copy of the recorded
12-13 memorandum required by this subsection.
12-14 (b) If the person obligated to pay the commission refinances
12-15 a recorded first lien secured by that person's commercial real
12-16 estate interest, the broker's lien is subordinate to the recorded
12-17 refinanced first lien, regardless of the amount of the first lien
12-18 after refinancing, if the person obligated to pay the commission:
12-19 (1) executes and files with the county clerk of the
12-20 county in which the broker's lien is filed a memorandum that
12-21 evidences the person's acknowledgment of the existence of the
12-22 broker's lien; and
12-23 (2) sends the broker, by certified mail, return
12-24 receipt requested, or registered mail, a copy of the recorded
12-25 memorandum required by this subsection.
12-26 (c) If the person obligated to pay the commission obtains an
12-27 extension of credit secured by that person's commercial real estate
13-1 interest, the broker's lien is subordinate to the lien securing the
13-2 extension of credit if, according to the loan documents, the
13-3 extension of credit is made only for the purpose of:
13-4 (1) repairing or renovating the commercial real
13-5 estate; or
13-6 (2) completing construction or providing additional
13-7 improvements on the commercial real estate.
13-8 (d) If the person obligated to pay the commission furnishes
13-9 a subordination agreement as provided by this section to be
13-10 executed by the broker, the broker must:
13-11 (1) execute and acknowledge the subordination
13-12 agreement before a notary public; and
13-13 (2) return the subordination agreement to the person
13-14 not later than the seventh day after the date the broker receives
13-15 the subordination agreement and other documents the broker
13-16 reasonably requests in order to determine that the subordination
13-17 agreement complies with this section.
13-18 Sec. 62.030. MIXED-USE REAL ESTATE. If real estate is zoned
13-19 or restricted for more than one use, the broker's lien attaches
13-20 only to the portions of the real estate that constitute commercial
13-21 real estate.
13-22 Sec. 62.031. CHANGE IN USE OF REAL ESTATE. (a) Except as
13-23 provided by Subsection (b), any change in the use of the real
13-24 estate does not affect a broker's lien if the notice of the lien
13-25 was filed when the real estate was commercial real estate.
13-26 (b) The broker's lien is extinguished if:
13-27 (1) not later than the 360th day after the date on
14-1 which the broker's commission is payable, the commercial real
14-2 estate interest on which a broker claims a lien is zoned for
14-3 single-family use or restricted for single-family use under
14-4 recorded restrictive covenants; and
14-5 (2) the zoning ordinances or restrictive covenants for
14-6 single-family use are in effect until at least the second
14-7 anniversary of the date the commission is payable.
14-8 (Sections 62.032-62.040 reserved for expansion
14-9 SUBCHAPTER C. TIME FOR FILING NOTICE OF LIEN
14-10 Sec. 62.041. TIME TO FILE. (a) If a broker has earned a
14-11 commission under a commission agreement signed by a seller or the
14-12 seller's authorized agent, a broker must record a notice of lien:
14-13 (1) after the commission is earned; and
14-14 (2) before the conveyance of the commercial real
14-15 estate interest on which the broker is claiming a lien.
14-16 (b) If a broker has earned a commission under a commission
14-17 agreement signed by a prospective buyer or a prospective buyer's
14-18 authorized agent, the broker must record a notice of lien:
14-19 (1) after the buyer acquires legal title to the
14-20 commercial real estate interest on which the broker is claiming a
14-21 lien; and
14-22 (2) before the buyer conveys the buyer's commercial
14-23 real estate interest on which the broker is claiming a lien.
14-24 (c) If the lien is based on a lease transaction, the broker
14-25 must record a notice of lien after the commission is earned and
14-26 before the earlier of:
14-27 (1) the 91st day after the date the event for which
15-1 the commission becomes payable occurs; or
15-2 (2) the date the person obligated to pay the
15-3 commission records a subsequent conveyance of that person's
15-4 commercial real estate interest after executing the lease agreement
15-5 relating to the lease transaction for which the lien is claimed.
15-6 (d) If a notice of lien is not filed within the time
15-7 required by this section, the lien is void.
15-8 (Sections 62.042-62.060 reserved for expansion
15-9 SUBCHAPTER D. ENFORCEMENT OF LIEN
15-10 Sec. 62.061. SUIT TO FORECLOSE LIEN. (a) A broker may not
15-11 bring a suit to foreclose a lien under this chapter unless the
15-12 commission is earned and payable. A broker may bring a suit to
15-13 foreclose a lien in any district court for the county in which the
15-14 commercial real estate is located by filing a sworn complaint
15-15 stating that the notice of lien has been recorded.
15-16 (b) A complaint in a suit filed under this section must
15-17 contain:
15-18 (1) a brief description of the commission agreement
15-19 that is the basis for the lien, including:
15-20 (A) a description of the disclosure of the
15-21 broker's right to the lien contained in the commission agreement;
15-22 (B) the date on which the commission agreement
15-23 was executed;
15-24 (C) the event for which a commission is
15-25 considered to be earned; and
15-26 (D) the event for which a commission is
15-27 considered to be payable;
16-1 (2) a description of the services performed by the
16-2 broker;
16-3 (3) the amount of the payable commission that is
16-4 unpaid;
16-5 (4) a description of the commercial real estate to
16-6 which the lien attaches; and
16-7 (5) other facts necessary for a full understanding of
16-8 the rights of the parties.
16-9 (c) The broker must include as a defendant in a suit brought
16-10 under this subchapter each person the broker believes to have an
16-11 interest in the commercial real estate that is subordinate to or
16-12 encumbered by the broker's lien.
16-13 (d) If the broker and a person against whom the broker
16-14 claims a commission use alternative dispute resolution procedures
16-15 to resolve a dispute concerning entitlement to the broker's
16-16 commission, the broker's lien remains valid, and any suit to
16-17 foreclose the lien is stayed until the alternative dispute
16-18 resolution process is completed.
16-19 Sec. 62.062. STATUTE OF LIMITATIONS. (a) Except as
16-20 provided by this section, a broker claiming a lien under this
16-21 chapter must bring a suit to foreclose the lien on or before the
16-22 second anniversary of the date the notice of lien is recorded.
16-23 (b) A broker claiming a lien to collect a deferred
16-24 commission must bring a suit to foreclose the lien on or before the
16-25 earlier of:
16-26 (1) the second anniversary of the date on which the
16-27 commission is payable; or
17-1 (2) the 10th anniversary of the date the lien is
17-2 recorded or the 10th anniversary of the date the broker records a
17-3 subsequent notice of the lien as a renewal of the broker's right to
17-4 the lien, whichever date is later.
17-5 (c) A renewal of a notice of lien must state that it is a
17-6 renewal of the broker's lien and must be recorded after the ninth
17-7 anniversary after the date the original notice of lien or last
17-8 renewal notice is recorded and on or before the 10th anniversary of
17-9 the date the original notice of lien or last renewal notice is
17-10 recorded.
17-11 (d) A broker claiming a lien for a commission that is
17-12 payable must bring a suit to foreclose the lien not later than the
17-13 30th day after the date the broker receives a written demand to
17-14 bring a suit to foreclose the lien from the owner of the commercial
17-15 real estate interest on which the lien is claimed.
17-16 (e) If a suit to foreclose the lien is not brought within
17-17 the period prescribed by this section, the lien is void.
17-18 Sec. 62.063. ASSESSMENT OF COSTS, FEES, AND INTEREST. The
17-19 prevailing party in a suit brought under this subchapter is
17-20 entitled to court costs, reasonable attorney's fees, and
17-21 prejudgment interest from the date the commission becomes payable
17-22 or the date the damage accrues.
17-23 (Sections 62.064-62.080 reserved for expansion
17-24 SUBCHAPTER E. RELEASE OF LIEN
17-25 Sec. 62.081. RELEASE OF LIEN. (a) Not later than the fifth
17-26 day after the date a broker receives a written request from the
17-27 owner of a commercial real estate interest on which a lien is
18-1 claimed, the broker shall furnish to the owner a release of
18-2 indebtedness and any lien claimed if:
18-3 (1) the debt that is the basis for the lien is
18-4 satisfied; or
18-5 (2) the lien is discharged under Section 62.022,
18-6 rendered void under Section 62.026 or 62.062, or extinguished under
18-7 Section 62.031.
18-8 (b) When a condition occurs that would preclude the broker
18-9 from receiving a commission under the terms of the commission
18-10 agreement that is the basis for the lien, the broker shall, not
18-11 later than the 10th day after the date the broker receives a
18-12 written request from the owner of the commercial real estate
18-13 interest on which the lien is claimed, furnish to the owner a
18-14 release of indebtedness and any lien claimed.
18-15 (c) Not later than the 10th day after the date a broker
18-16 receives a written request for the release of the broker's lien
18-17 from the escrow agent responsible for closing the purchase and
18-18 sale of a commercial real estate interest on which the lien is
18-19 claimed, the broker shall furnish to the escrow agent a release of
18-20 indebtedness and any lien claimed if:
18-21 (1) the commercial real estate interest to which the
18-22 lien attaches is subject to a contract for purchase and sale;
18-23 (2) the release of indebtedness and any lien claimed
18-24 is conditioned on the closing of the transaction; and
18-25 (3) the broker would otherwise be obligated to release
18-26 the indebtedness and any lien claimed under Subsection (a) or (b)
18-27 on the closing of the transaction.
19-1 (d) A release of lien must be in a form that permits the
19-2 instrument to be filed of record.
19-3 (Sections 62.082-62.100 reserved for expansion
19-4 SUBCHAPTER F. ESCROW OF DISPUTED AMOUNTS
19-5 Sec. 62.101. ESCROW ACCOUNT. If a claim for a lien under a
19-6 recorded notice of lien is not paid or assumed at the closing of a
19-7 sale, lease, or mortgage of the commercial real estate interest
19-8 subject to the lien and would prevent the closing of the
19-9 transaction or conveyance or if a claim for a lien under a recorded
19-10 notice of lien does not survive the closing, any person named in
19-11 the notice of lien as obligated to pay the commission shall, on the
19-12 date of the closing:
19-13 (1) establish an escrow account from any net proceeds
19-14 of the transaction or conveyance in an amount equal to the amount
19-15 sufficient to satisfy the lien plus 15 percent of that amount; or
19-16 (2) file a bond to indemnify against the lien as
19-17 provided by Subchapter G.
19-18 Sec. 62.102. NAMED ESCROW AGENT. If an escrow agent is
19-19 named in the contract on which the transaction or conveyance is
19-20 based, the escrow account shall be established with the named
19-21 escrow agent.
19-22 Sec. 62.103. COSTS OF INTERPLEADER. Related costs for any
19-23 interpleader action may be deducted from the escrow account by the
19-24 person maintaining the escrow account.
19-25 Sec. 62.104. REFUSAL TO ESTABLISH ESCROW ACCOUNT OR BOND.
19-26 (a) A party may not refuse to close a transaction because of the
19-27 requirement to establish an escrow account or bond as provided by
20-1 Section 62.101 if:
20-2 (1) the broker provides a copy of the notice of lien
20-3 that complies with Sections 62.025 and 62.026;
20-4 (2) sufficient proceeds will result from the proposed
20-5 transaction for the payment of the commission and costs of the
20-6 interpleader; and
20-7 (3) the broker executes and delivers a full release
20-8 of the broker's lien in a recordable form.
20-9 (b) A prospective buyer of a commercial real estate interest
20-10 may not refuse to close the purchase solely because a broker's lien
20-11 is filed after the date a title commitment or abstract of title
20-12 relating to the interest is issued if an escrow account is
20-13 established as provided by this subchapter or a bond is filed as
20-14 provided by Subchapter G.
20-15 Sec. 62.105. TERM OF ESCROW ACCOUNT. The amount held in
20-16 escrow shall be held in escrow until:
20-17 (1) the rights of the parties claiming the amount in
20-18 escrow are determined by a written agreement of the parties, a
20-19 court order, or an alternative dispute resolution process agreed to
20-20 by the parties;
20-21 (2) the broker's lien is no longer enforceable; or
20-22 (3) the funds are interpled into a district court for
20-23 the county in which the commercial real estate is located.
20-24 Sec. 62.106. EXTINGUISHMENT OF LIEN UPON ESCROW. When the
20-25 escrow account is established under this subchapter, the broker's
20-26 lien against the commercial real estate is extinguished and becomes
20-27 a lien on the proceeds in the escrow account.
21-1 (Sections 62.107-62.120 reserved for expansion
21-2 SUBCHAPTER G. BOND TO INDEMNIFY AGAINST LIEN
21-3 Sec. 62.121. BOND. (a) If a lien is fixed or is attempted
21-4 to be fixed by a recorded instrument under this chapter, any
21-5 person may file a bond to indemnify against the lien.
21-6 (b) The bond shall be filed with the county clerk of the
21-7 county in which the commercial real estate subject to the lien is
21-8 located.
21-9 Sec. 62.122. BOND REQUIREMENTS. The bond must:
21-10 (1) describe the commercial real estate on which the
21-11 lien is claimed;
21-12 (2) refer to the lien claimed in a manner sufficient
21-13 to identify it;
21-14 (3) be in an amount that is double the amount of the
21-15 lien referred to in the bond as of the date of execution of the
21-16 bond by the surety, unless the total amount claimed in the lien
21-17 exceeds $40,000, in which case the bond must be in an amount that
21-18 is 1-1/2 times the amount of the lien;
21-19 (4) be payable to the party claiming the lien;
21-20 (5) be executed by:
21-21 (A) the party filing the bond as principal; and
21-22 (B) a corporate surety licensed by this state to
21-23 execute the bond as surety;
21-24 (6) be conditioned substantially that the principal
21-25 and sureties will pay the named obligees or their assignees the
21-26 amount that the named obligees would have been entitled to recover
21-27 if their claim had been proved to be valid and enforceable liens on
22-1 the commercial real estate; and
22-2 (7) identify the last known mailing address of the
22-3 person claiming the lien.
22-4 Sec. 62.123. NOTICE OF BOND. (a) After the bond is filed,
22-5 the county clerk shall issue notice of the bond to all named
22-6 obligees.
22-7 (b) A copy of the bond must be attached to the notice.
22-8 (c) The notice must be served on each obligee by mailing a
22-9 copy of the notice and the bond to the obligee by certified mail,
22-10 return receipt requested, addressed to the claimant at the address
22-11 stated in the bond for the obligee.
22-12 Sec. 62.124. RECORDING OF BOND AND NOTICE. (a) The county
22-13 clerk shall record the bond, the notice, and a certificate of
22-14 mailing in the real property records.
22-15 (b) In acquiring an interest in or insuring title to the
22-16 commercial real estate, a buyer, insurer of title, or lender may
22-17 rely on and is absolutely protected by the record of the bond and
22-18 the notice to the same extent as if the lien claimant had filed a
22-19 release of lien in the real property records.
22-20 Sec. 62.125. ACTION ON BOND. (a) A party making or holding
22-21 a lien claim may not sue on the bond later than the last date on
22-22 which a person may bring a suit to foreclose the lien under Section
22-23 62.062.
22-24 (b) The bond is not exhausted by one action against it.
22-25 Each named obligee or assignee of an obligee may maintain a
22-26 separate suit on the bond in any district court for the county in
22-27 which the commercial real estate is located.
23-1 (Sections 62.126-62.140 reserved for expansion
23-2 SUBCHAPTER H. REMEDIES
23-3 Sec. 62.141. OWNER'S OR TENANT'S REMEDIES. (a) An owner or
23-4 tenant may file suit against a broker under this chapter.
23-5 (b) In an action filed under this section, the court shall
23-6 discharge a broker's lien if the broker:
23-7 (1) failed to mail a copy of the notice of lien within
23-8 the period prescribed by Section 62.026;
23-9 (2) failed to execute, acknowledge, and return a
23-10 subordination agreement within the period prescribed by Section
23-11 62.029(d);
23-12 (3) failed to record the notice of lien within the
23-13 period prescribed by Section 62.041; or
23-14 (4) failed to release a lien within the period
23-15 prescribed by Section 62.081.
23-16 (c) A broker is liable to an owner or tenant for damages as
23-17 provided by Subsection (d) if:
23-18 (1) the broker recorded a lien on the commercial real
23-19 estate interest of the owner or tenant;
23-20 (2) the broker failed to:
23-21 (A) execute, acknowledge, and return a
23-22 subordination agreement within the period prescribed by Section
23-23 62.029(d); or
23-24 (B) release a lien within the period prescribed
23-25 by Section 62.081;
23-26 (3) the owner, tenant, or escrow agent mailed to the
23-27 broker by certified mail, return receipt requested, a copy of this
24-1 section and a notice requesting the broker to execute, acknowledge,
24-2 and return the subordination agreement or release the lien not
24-3 later than the 10th day after the date the broker receives the
24-4 notice; and
24-5 (4) the broker failed to comply with the owner's,
24-6 tenant's, or escrow agent's written notice within the prescribed
24-7 period.
24-8 (d) If the court finds that a broker is liable to an owner
24-9 or tenant under Subsection (c), the court may award the owner or
24-10 tenant:
24-11 (1) actual damages, including attorney's fees and
24-12 court costs, incurred by the owner or tenant that are proximately
24-13 caused by the broker's failure to execute, acknowledge, and return
24-14 the subordination agreement or release the lien; and
24-15 (2) a civil penalty in an amount not to exceed three
24-16 times the amount of the claimed commission if the court finds that
24-17 the broker acted with gross negligence or acted in bad faith in
24-18 violation of The Real Estate License Act (Article 6573a, Vernon's
24-19 Texas Civil Statutes).
24-20 (e) This section does not prevent:
24-21 (1) a person from filing a complaint with the Texas
24-22 Real Estate Commission against a broker who fails to comply with
24-23 this chapter; or
24-24 (2) the Texas Real Estate Commission at any time from
24-25 investigating or initiating a disciplinary proceeding against a
24-26 broker who fails to comply with this chapter.
24-27 Sec. 62.142. BROKER'S REMEDIES. (a) A broker may file suit
25-1 against an owner or tenant to enforce a commission agreement.
25-2 (b) If the court finds that the broker waived the right to
25-3 file a lien under Section 62.022 and that the owner or tenant
25-4 violated the commission agreement, the court may award to the
25-5 broker:
25-6 (1) actual damages, including attorney's fees and
25-7 court costs, that are proximately caused by the owner's or tenant's
25-8 failure to comply with the commission agreement; and
25-9 (2) a civil penalty in an amount not to exceed three
25-10 times the amount of the claimed commission if the court finds that
25-11 the owner or tenant acted with gross negligence or in bad faith.
25-12 SECTION 2. The change in law made by Chapter 62, Property
25-13 Code, as added by this Act, applies only to an agreement to
25-14 compensate a licensed real estate broker or appraiser that is
25-15 entered into on or after the effective date of this Act.
_______________________________ _______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 1052 was passed by the House on April
27, 1999, by a non-record vote; and that the House concurred in
Senate amendments to H.B. No. 1052 on May 27, 1999, by a non-record
vote.
_______________________________
Chief Clerk of the House
I certify that H.B. No. 1052 was passed by the Senate, with
amendments, on May 24, 1999, by a viva-voce vote.
_______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor