By Solomons H.J.R. No. 73
76R8849 PAM-F
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 homestead property.
1-4 BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 50(a), Article XVI, Texas Constitution,
1-6 is amended to read as follows:
1-7 (a) The homestead of a family, or of a single adult person,
1-8 shall be, and is hereby protected from forced sale, for the payment
1-9 of all debts except for:
1-10 (1) the purchase money thereof, or a part of such
1-11 purchase money;
1-12 (2) the taxes due thereon;
1-13 (3) an owelty of partition imposed against the
1-14 entirety of the property by a court order or by a written agreement
1-15 of the parties to the partition, including a debt of one spouse in
1-16 favor of the other spouse resulting from a division or an award of
1-17 a family homestead in a divorce proceeding;
1-18 (4) the refinance of a lien against a homestead,
1-19 including a federal tax lien resulting from the tax debt of both
1-20 spouses, if the homestead is a family homestead, or from the tax
1-21 debt of the owner;
1-22 (5) work and material used in constructing [new]
1-23 improvements thereon[, if contracted for in writing, or work and
1-24 material used to repair or renovate existing improvements thereon]
2-1 if:
2-2 (A) the work and material are contracted for in
2-3 writing, with the consent of both spouses, in the case of a family
2-4 homestead, given in the same manner as is required in making a sale
2-5 and conveyance of the homestead; and
2-6 (B) the contract provides that the owner may
2-7 rescind the contract under terms prescribed by law if the contract
2-8 is a contract for [the] work and material used to repair or
2-9 renovate existing homestead improvements and the contract is
2-10 executed at the homestead property [is not executed by the owner or
2-11 the owner's spouse before the 12th day after the owner makes
2-12 written application for any extension of credit for the work and
2-13 material, unless the work and material are necessary to complete
2-14 immediate repairs to conditions on the homestead property that
2-15 materially affect the health or safety of the owner or person
2-16 residing in the homestead and the owner of the homestead
2-17 acknowledges such in writing];
2-18 [(C) the contract for the work and material
2-19 expressly provides that the owner may rescind the contract without
2-20 penalty or charge within three days after the execution of the
2-21 contract by all parties, unless the work and material are necessary
2-22 to complete immediate repairs to conditions on the homestead
2-23 property that materially affect the health or safety of the owner
2-24 or person residing in the homestead and the owner of the homestead
2-25 acknowledges such in writing; and]
2-26 [(D) the contract for the work and material is
2-27 executed by the owner and the owner's spouse only at the office of
3-1 a third-party lender making an extension of credit for the work and
3-2 material, an attorney at law, or a title company;]
3-3 (6) an extension of credit that:
3-4 (A) is secured by a voluntary lien on the
3-5 homestead created under a written agreement with the consent of
3-6 each owner and each owner's spouse;
3-7 (B) is of a principal amount that when added to
3-8 the aggregate total of the outstanding principal balances of all
3-9 other indebtedness secured by valid encumbrances of record against
3-10 the homestead does not exceed 80 percent of the fair market value
3-11 of the homestead on the date the extension of credit is made;
3-12 (C) is without recourse for personal liability
3-13 against each owner and the spouse of each owner, unless the owner
3-14 or spouse obtained the extension of credit by actual fraud;
3-15 (D) is secured by a lien that may be foreclosed
3-16 upon only by a court order;
3-17 (E) does not require the owner or the owner's
3-18 spouse to pay, in addition to any interest, fees to any person that
3-19 are necessary to originate, evaluate, maintain, record, insure, or
3-20 service the extension of credit that exceed, in the aggregate,
3-21 three percent of the original principal amount of the extension of
3-22 credit;
3-23 (F) is not a form of open-end account that may
3-24 be debited from time to time or under which credit may be extended
3-25 from time to time;
3-26 (G) is payable in advance without penalty or
3-27 other charge;
4-1 (H) is not secured by any additional real or
4-2 personal property other than the homestead;
4-3 (I) is not secured by homestead property
4-4 designated for agricultural use as provided by statutes governing
4-5 property tax, unless such homestead property is used primarily for
4-6 the production of milk;
4-7 (J) may not be accelerated because of a decrease
4-8 in the market value of the homestead or because of the owner's
4-9 default under other indebtedness not secured by a prior valid
4-10 encumbrance against the homestead;
4-11 (K) is the only debt secured by the homestead at
4-12 the time the extension of credit is made unless the other debt was
4-13 made for a purpose described by Subsections (a)(1)-(a)(5) of this
4-14 section;
4-15 (L) is scheduled to be repaid in substantially
4-16 equal successive monthly installments beginning no later than two
4-17 months from the date the extension of credit is made, each of which
4-18 equals or exceeds the amount of accrued interest as of the date of
4-19 the scheduled installment;
4-20 (M) is closed not before:
4-21 (i) the 12th day after the later of the
4-22 date that the owner of the homestead submits an application to the
4-23 lender for the extension of credit or the date that the lender
4-24 provides the owner a copy of the notice prescribed by Subsection
4-25 (g) of this section; and
4-26 (ii) the first anniversary of the closing
4-27 date of any other extension of credit described by Subsection
5-1 (a)(6) of this section secured by the same homestead property;
5-2 (N) is closed only at the office of the lender,
5-3 an attorney at law, or a title company;
5-4 (O) permits a lender to contract for and receive
5-5 any fixed or variable rate of interest authorized under statute;
5-6 (P) is made by one of the following that has not
5-7 been found by a federal regulatory agency to have engaged in the
5-8 practice of refusing to make loans because the applicants for the
5-9 loans reside or the property proposed to secure the loans is
5-10 located in a certain area:
5-11 (i) a bank, savings and loan association,
5-12 savings bank, or credit union doing business under the laws of this
5-13 state or the United States;
5-14 (ii) a federally chartered lending
5-15 instrumentality or a person approved as a mortgagee by the United
5-16 States government to make federally insured loans;
5-17 (iii) a person licensed to make regulated
5-18 loans, as provided by statute of this state;
5-19 (iv) a person who sold the homestead
5-20 property to the current owner and who provided all or part of the
5-21 financing for the purchase; or
5-22 (v) a person who is related to the
5-23 homestead property owner within the second degree of affinity or
5-24 consanguinity; and
5-25 (Q) is made on the condition that:
5-26 (i) the owner of the homestead is not
5-27 required to apply the proceeds of the extension of credit to repay
6-1 another debt except debt secured by the homestead or debt to
6-2 another lender;
6-3 (ii) the owner of the homestead not assign
6-4 wages as security for the extension of credit;
6-5 (iii) the owner of the homestead not sign
6-6 any instrument in which blanks are left to be filled in;
6-7 (iv) the owner of the homestead not sign a
6-8 confession of judgment or power of attorney to the lender or to a
6-9 third person to confess judgment or to appear for the owner in a
6-10 judicial proceeding;
6-11 (v) the lender, at the time the extension
6-12 of credit is made, provide the owner of the homestead a copy of all
6-13 documents signed by the owner related to the extension of credit;
6-14 (vi) the security instruments securing the
6-15 extension of credit contain a disclosure that the extension of
6-16 credit is the type of credit defined by Section 50(a)(6), Article
6-17 XVI, Texas Constitution;
6-18 (vii) within a reasonable time after
6-19 termination and full payment of the extension of credit, the lender
6-20 cancel and return the promissory note to the owner of the homestead
6-21 and give the owner, in recordable form, a release of the lien
6-22 securing the extension of credit or a copy of an endorsement and
6-23 assignment of the lien to a lender that is refinancing the
6-24 extension of credit;
6-25 (viii) the owner of the homestead and any
6-26 spouse of the owner may, within three days after the extension of
6-27 credit is made, rescind the extension of credit without penalty or
7-1 charge;
7-2 (ix) the owner of the homestead and the
7-3 lender sign a written acknowledgment as to the fair market value of
7-4 the homestead property on the date the extension of credit is made;
7-5 and
7-6 (x) the lender or any holder of the note
7-7 for the extension of credit shall forfeit all principal and
7-8 interest of the extension of credit if the lender or holder fails
7-9 to comply with the lender's or holder's obligations under the
7-10 extension of credit within a reasonable time after the lender or
7-11 holder is notified by the borrower of the lender's failure to
7-12 comply; or
7-13 (7) a reverse mortgage.
7-14 SECTION 2. The following temporary provision is added to the
7-15 Texas Constitution:
7-16 TEMPORARY PROVISION. (a) This temporary provision applies
7-17 to the constitutional amendment proposed by the 76th Legislature,
7-18 Regular Session, 1999, prescribing requirements for imposing a lien
7-19 for work and material used in the construction, repair, or
7-20 renovation of improvements on homestead property.
7-21 (b) The constitutional amendment takes effect January 1,
7-22 2000.
7-23 (c) This temporary provision expires January 2, 2000.
7-24 SECTION 3. This proposed constitutional amendment shall be
7-25 submitted to the voters at an election to be held November 2, 1999.
7-26 The ballot shall be printed to permit voting for or against the
7-27 proposition: "The constitutional amendment prescribing requirements
8-1 for imposing a lien for work and material used in the construction,
8-2 repair, or renovation of improvements on homestead property."
8-3