76R11696 PAM-F
By Solomons H.J.R. No. 73
Substitute the following for H.J.R. No. 73:
By Solomons C.S.H.J.R. No. 73
A JOINT RESOLUTION
1-1 proposing a constitutional amendment prescribing requirements for
1-2 imposing a lien for work and material used in the construction,
1-3 repair, or renovation of improvements on residential homestead
1-4 property.
1-5 BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Section 50(a), Article XVI, Texas Constitution,
1-7 is amended to read as follows:
1-8 (a) The homestead of a family, or of a single adult person,
1-9 shall be, and is hereby protected from forced sale, for the payment
1-10 of all debts except for:
1-11 (1) the purchase money thereof, or a part of such
1-12 purchase money;
1-13 (2) the taxes due thereon;
1-14 (3) an owelty of partition imposed against the
1-15 entirety of the property by a court order or by a written agreement
1-16 of the parties to the partition, including a debt of one spouse in
1-17 favor of the other spouse resulting from a division or an award of
1-18 a family homestead in a divorce proceeding;
1-19 (4) the refinance of a lien against a homestead,
1-20 including a federal tax lien resulting from the tax debt of both
1-21 spouses, if the homestead is a family homestead, or from the tax
1-22 debt of the owner;
1-23 (5) work and material used in constructing [new]
1-24 improvements thereon[, if contracted for in writing, or work and
2-1 material used to repair or renovate existing improvements thereon]
2-2 if:
2-3 (A) the work and material are contracted for in
2-4 writing, with the consent of both spouses, in the case of a family
2-5 homestead, given in the same manner as is required in making a sale
2-6 and conveyance of the homestead; and
2-7 (B) the contract provides that the owner may
2-8 rescind the contract under terms prescribed by law if the contract
2-9 is a contract for [the] work and material used to repair or
2-10 renovate existing residential homestead improvements and the
2-11 contract is executed at the residential homestead property [is not
2-12 executed by the owner or the owner's spouse before the 12th day
2-13 after the owner makes written application for any extension of
2-14 credit for the work and material, unless the work and material are
2-15 necessary to complete immediate repairs to conditions on the
2-16 homestead property that materially affect the health or safety of
2-17 the owner or person residing in the homestead and the owner of the
2-18 homestead acknowledges such in writing];
2-19 [(C) the contract for the work and material
2-20 expressly provides that the owner may rescind the contract without
2-21 penalty or charge within three days after the execution of the
2-22 contract by all parties, unless the work and material are necessary
2-23 to complete immediate repairs to conditions on the homestead
2-24 property that materially affect the health or safety of the owner
2-25 or person residing in the homestead and the owner of the homestead
2-26 acknowledges such in writing; and]
2-27 [(D) the contract for the work and material is
3-1 executed by the owner and the owner's spouse only at the office of
3-2 a third-party lender making an extension of credit for the work and
3-3 material, an attorney at law, or a title company;]
3-4 (6) an extension of credit that:
3-5 (A) is secured by a voluntary lien on the
3-6 homestead created under a written agreement with the consent of
3-7 each owner and each owner's spouse;
3-8 (B) is of a principal amount that when added to
3-9 the aggregate total of the outstanding principal balances of all
3-10 other indebtedness secured by valid encumbrances of record against
3-11 the homestead does not exceed 80 percent of the fair market value
3-12 of the homestead on the date the extension of credit is made;
3-13 (C) is without recourse for personal liability
3-14 against each owner and the spouse of each owner, unless the owner
3-15 or spouse obtained the extension of credit by actual fraud;
3-16 (D) is secured by a lien that may be foreclosed
3-17 upon only by a court order;
3-18 (E) does not require the owner or the owner's
3-19 spouse to pay, in addition to any interest, fees to any person that
3-20 are necessary to originate, evaluate, maintain, record, insure, or
3-21 service the extension of credit that exceed, in the aggregate,
3-22 three percent of the original principal amount of the extension of
3-23 credit;
3-24 (F) is not a form of open-end account that may
3-25 be debited from time to time or under which credit may be extended
3-26 from time to time;
3-27 (G) is payable in advance without penalty or
4-1 other charge;
4-2 (H) is not secured by any additional real or
4-3 personal property other than the homestead;
4-4 (I) is not secured by homestead property
4-5 designated for agricultural use as provided by statutes governing
4-6 property tax, unless such homestead property is used primarily for
4-7 the production of milk;
4-8 (J) may not be accelerated because of a decrease
4-9 in the market value of the homestead or because of the owner's
4-10 default under other indebtedness not secured by a prior valid
4-11 encumbrance against the homestead;
4-12 (K) is the only debt secured by the homestead at
4-13 the time the extension of credit is made unless the other debt was
4-14 made for a purpose described by Subsections (a)(1)-(a)(5) of this
4-15 section;
4-16 (L) is scheduled to be repaid in substantially
4-17 equal successive monthly installments beginning no later than two
4-18 months from the date the extension of credit is made, each of which
4-19 equals or exceeds the amount of accrued interest as of the date of
4-20 the scheduled installment;
4-21 (M) is closed not before:
4-22 (i) the 12th day after the later of the
4-23 date that the owner of the homestead submits an application to the
4-24 lender for the extension of credit or the date that the lender
4-25 provides the owner a copy of the notice prescribed by Subsection
4-26 (g) of this section; and
4-27 (ii) the first anniversary of the closing
5-1 date of any other extension of credit described by Subsection
5-2 (a)(6) of this section secured by the same homestead property;
5-3 (N) is closed only at the office of the lender,
5-4 an attorney at law, or a title company;
5-5 (O) permits a lender to contract for and receive
5-6 any fixed or variable rate of interest authorized under statute;
5-7 (P) is made by one of the following that has not
5-8 been found by a federal regulatory agency to have engaged in the
5-9 practice of refusing to make loans because the applicants for the
5-10 loans reside or the property proposed to secure the loans is
5-11 located in a certain area:
5-12 (i) a bank, savings and loan association,
5-13 savings bank, or credit union doing business under the laws of this
5-14 state or the United States;
5-15 (ii) a federally chartered lending
5-16 instrumentality or a person approved as a mortgagee by the United
5-17 States government to make federally insured loans;
5-18 (iii) a person licensed to make regulated
5-19 loans, as provided by statute of this state;
5-20 (iv) a person who sold the homestead
5-21 property to the current owner and who provided all or part of the
5-22 financing for the purchase; or
5-23 (v) a person who is related to the
5-24 homestead property owner within the second degree of affinity or
5-25 consanguinity; and
5-26 (Q) is made on the condition that:
5-27 (i) the owner of the homestead is not
6-1 required to apply the proceeds of the extension of credit to repay
6-2 another debt except debt secured by the homestead or debt to
6-3 another lender;
6-4 (ii) the owner of the homestead not assign
6-5 wages as security for the extension of credit;
6-6 (iii) the owner of the homestead not sign
6-7 any instrument in which blanks are left to be filled in;
6-8 (iv) the owner of the homestead not sign a
6-9 confession of judgment or power of attorney to the lender or to a
6-10 third person to confess judgment or to appear for the owner in a
6-11 judicial proceeding;
6-12 (v) the lender, at the time the extension
6-13 of credit is made, provide the owner of the homestead a copy of all
6-14 documents signed by the owner related to the extension of credit;
6-15 (vi) the security instruments securing the
6-16 extension of credit contain a disclosure that the extension of
6-17 credit is the type of credit defined by Section 50(a)(6), Article
6-18 XVI, Texas Constitution;
6-19 (vii) within a reasonable time after
6-20 termination and full payment of the extension of credit, the lender
6-21 cancel and return the promissory note to the owner of the homestead
6-22 and give the owner, in recordable form, a release of the lien
6-23 securing the extension of credit or a copy of an endorsement and
6-24 assignment of the lien to a lender that is refinancing the
6-25 extension of credit;
6-26 (viii) the owner of the homestead and any
6-27 spouse of the owner may, within three days after the extension of
7-1 credit is made, rescind the extension of credit without penalty or
7-2 charge;
7-3 (ix) the owner of the homestead and the
7-4 lender sign a written acknowledgment as to the fair market value of
7-5 the homestead property on the date the extension of credit is made;
7-6 and
7-7 (x) the lender or any holder of the note
7-8 for the extension of credit shall forfeit all principal and
7-9 interest of the extension of credit if the lender or holder fails
7-10 to comply with the lender's or holder's obligations under the
7-11 extension of credit within a reasonable time after the lender or
7-12 holder is notified by the borrower of the lender's failure to
7-13 comply; or
7-14 (7) a reverse mortgage.
7-15 SECTION 2. The following temporary provision is added to the
7-16 Texas Constitution:
7-17 TEMPORARY PROVISION. (a) This temporary provision applies
7-18 to the constitutional amendment proposed by the 76th Legislature,
7-19 Regular Session, 1999, prescribing requirements for imposing a lien
7-20 for work and material used in the construction, repair, or
7-21 renovation of improvements on residential homestead property.
7-22 (b) The constitutional amendment takes effect January 1,
7-23 2000.
7-24 (c) This temporary provision expires January 2, 2000.
7-25 SECTION 3. This proposed constitutional amendment shall be
7-26 submitted to the voters at an election to be held November 2, 1999.
7-27 The ballot shall be printed to permit voting for or against the
8-1 proposition: "The constitutional amendment prescribing requirements
8-2 for imposing a lien for work and material used in the construction,
8-3 repair, or renovation of improvements on residential homestead
8-4 property."