By: Nixon S.B. No. 378 99S0226/1 A BILL TO BE ENTITLED AN ACT 1-1 relating to the payment of judgment against an undivided interest 1-2 in real property. 1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-4 SECTION 1. Chapter 31, Civil Practice and Remedies Code, is 1-5 amended by adding Section 31.009 to read as follows: 1-6 Sec. 31.009. PAYMENT OF JUDGMENT AGAINST UNDIVIDED INTEREST 1-7 IN REAL PROPERTY. (a) This section applies only if: 1-8 (1) the owner of an undivided interest in real 1-9 property, alone or with the other owners of the real property, is 1-10 selling and conveying title to the real property or the undivided 1-11 interest in the real property to another person under a written 1-12 contract and the consideration under the contract is money, secured 1-13 loans assumed or existing on the real property, or both money and 1-14 secured loans; 1-15 (2) the interest of the owner is subject to an 1-16 abstract of judgment or judgment lien or the abstract of judgment 1-17 or judgment lien names that person as the judgment debtor; 1-18 (3) the interest of the owner which is subject to the 1-19 abstract of judgment or judgment lien that attaches to the interest 1-20 or that names the owner as the judgment debtor does not exceed a 50 1-21 percent undivided interest in the real property; and 1-22 (4) the abstract of judgment or judgment lien does not 1-23 name the owner of any other undivided interest in the real property 1-24 as a judgment debtor and does not purport to attach to the interest 2-1 of the owner of any other undivided interest in the real property. 2-2 (b) Before the owner of the undivided interest is entitled 2-3 to pay for a partial release of the judgment to a court under 2-4 Subsection (d), the owner must send a letter notifying the judgment 2-5 creditor of the judgment by registered or certified mail, return 2-6 receipt requested, to: 2-7 (1) the judgment creditor's last known address; 2-8 (2) the address appearing in the judgment creditor's 2-9 pleadings or other court records, if different from the judgment 2-10 creditor's last known address; 2-11 (3) the address of the judgment creditor's last 2-12 attorney as shown in the judgment creditor's pleadings or other 2-13 court record; and 2-14 (4) the address of the judgment creditor's last 2-15 attorney as shown in the records of the State Bar of Texas, if that 2-16 address is different from the address shown in the judgment 2-17 creditor's pleadings or other court record. 2-18 (c) The letter must include: 2-19 (1) the legal description of the real property; 2-20 (2) the percentage, fraction, or amount of undivided 2-21 interest in the real property owned or claimed by the owner as 2-22 evidenced by a copy of a title report, title commitment, deed, or 2-23 other written evidence of title; 2-24 (3) a copy of the written contract to sell the real 2-25 property or the undivided interest of the owner; 2-26 (4) a statement of the total sales price of the 3-1 undivided interest of the owner or proportionate share of the sales 3-2 price of the real property equivalent to the undivided interest of 3-3 the owner in the real property if sold in conjunction with other 3-4 owners of the real property, without reduction for: 3-5 (A) any costs, expenses, debts, or other amounts 3-6 paid by or on behalf of the owner; and 3-7 (B) any offset; 3-8 (5) an affidavit in the letter or included with the 3-9 letter stating that the written contract is a bona fide sale; and 3-10 (6) an offer to pay by cash, wire of funds, or 3-11 cashier's check the sales price of the undivided interest of the 3-12 owner or proportionate share of the sales price of the real 3-13 property equivalent to the undivided interest of the owner in the 3-14 real property if sold in conjunction with other owners of the real 3-15 property in return for a release of the abstract of judgment or 3-16 judgment lien as to the undivided interest of the owner in the real 3-17 property. 3-18 (d) If the judgment creditor does not respond to the letter 3-19 by furnishing a release of the abstract of judgment or judgment 3-20 lien as to the undivided interest of the owner on or before the 3-21 15th day after the date on which the letter was sent, the owner of 3-22 the undivided interest in the real property may file with the court 3-23 that rendered the judgment: 3-24 (1) an affidavit stating that: 3-25 (A) the owner has complied with this section and 3-26 is entitled to a release of the abstract of judgment or judgment 4-1 lien as to the undivided interest of the owner in the real 4-2 property; 4-3 (B) the owner provided the letter and offered 4-4 payment of the sales price of the undivided interest of the owner, 4-5 without reduction for any costs, expenses, debts, or other amounts 4-6 paid by or on behalf of the owner and without reduction for any 4-7 offset; and 4-8 (C) the judgment creditor has not responded to 4-9 the letter by furnishing a release; 4-10 (2) a copy of the written contract to sell the real 4-11 property or undivided interest of the owner in the real property; 4-12 (3) a copy of the letter sent under this section and 4-13 any document included with the letter; 4-14 (4) payment of the amount of the sales price of the 4-15 undivided interest of the owner or proportionate share of the sales 4-16 price of the real property equivalent to the undivided interest of 4-17 the owner in the real property if sold in conjunction with other 4-18 owners of the real property; 4-19 (5) any written correspondence received from the 4-20 judgment creditor or the attorney of the judgment creditor in 4-21 response to the letter; and 4-22 (6) a copy of the deed executed or to be executed by 4-23 the owner of the undivided interest in the real property under the 4-24 written contract. 4-25 (e) The owner of the undivided interest in the real property 4-26 shall send a copy of the affidavit under Subsection (d) by 5-1 registered or certified mail, return receipt requested, to the 5-2 judgment creditor and judgment creditor's last attorney as shown in 5-3 the judgment creditor's pleadings or other court record at the 5-4 addresses listed in Subsection (b) before the sixth day after the 5-5 date the affidavit is filed with the court. 5-6 (f) The owner of the undivided interest in the real property 5-7 shall prepare a recordable release of the abstract of judgment or 5-8 judgment lien as to the undivided interest of the owner in the real 5-9 property. The release must state that "THIS PARTIAL RELEASE OF 5-10 ABSTRACT OF JUDGMENT OR JUDGMENT LIEN SHALL NOT BE EFFECTIVE SO 5-11 LONG AS (NAME OF OWNER OF UNDIVIDED INTEREST IN REAL PROPERTY) HAS 5-12 RECORD TITLE TO AN INTEREST IN THE REAL PROPERTY DESCRIBED IN THIS 5-13 RELEASE, BUT SHALL AUTOMATICALLY CONSTITUTE A RELEASE OF THE 5-14 ABSTRACT OF JUDGMENT OR JUDGMENT LIEN ON CONVEYANCE BY THE 5-15 PERSON OF THAT PERSON'S INTEREST IN THE REAL PROPERTY TO 5-16 (NAME OF PURCHASER OR PURCHASERS UNDER THE WRITTEN CONTRACT)." The 5-17 judge or clerk of the court shall execute the release of the 5-18 abstract of judgment or judgment lien on behalf of the creditor and 5-19 issue the release to the owner of the undivided interest in the 5-20 real property on or after the 15th day after the date the owner 5-21 files the affidavit with the court and before the 31st day after 5-22 the date the owner files the affidavit with the court, unless the 5-23 judge determines that the owner of the undivided interest in real 5-24 property is not entitled to a release under this section. The 5-25 release must state the cause number, the court, the parties, the 5-26 date of judgment, the amount of the judgment, the amount paid to 6-1 the court, the date of the partial release, and the undivided 6-2 interest of the owner and the description of the real property. 6-3 (g) The court shall hold the amount paid to it by the owner 6-4 of the undivided interest in the real property and interest earned 6-5 on that amount in trust for the judgment creditor. The clerk of 6-6 the court shall deposit the trust funds and any interest earned by 6-7 the funds in the clerk's trust fund account. The clerk shall pay 6-8 the funds and any interest earned by the funds to the judgment 6-9 creditor or to the successors to the rights of the judgment 6-10 creditor. The clerk may presume that the funds are payable to the 6-11 judgment creditor unless the clerk is furnished with a written 6-12 assignment of the judgment. Funds held in the clerk's trust fund 6-13 account in accordance with this section are subject to escheat 6-14 under Chapter 72, Property Code. 6-15 (h) A purchaser or lender for value may conclusively rely on 6-16 the partial release of abstract of judgment or judgment lien and 6-17 take title to the undivided interest of the owner free and clear of 6-18 the abstract of judgment or judgment lien. The purchaser or lender 6-19 may not be required to determine whether the owner of the undivided 6-20 interest in real property has complied with this section. 6-21 (i) In this section, "judgment creditor" means a party in 6-22 whose favor a judgment has been rendered, whether a plaintiff, 6-23 counterclaimant, cross-claimant, third-party plaintiff, or other 6-24 judgment creditor. 6-25 SECTION 2. (a) This Act takes effect September 1, 1999. 6-26 (b) This Act applies to the payment of judgments against 7-1 undivided interests in real property rendered before, on, or after 7-2 the effective date of this Act for which notice is given under 7-3 Subsection (b), Section 31.009, Civil Practice and Remedies Code, 7-4 as added by this Act, on or after the effective date of this Act. 7-5 SECTION 3. The importance of this legislation and the 7-6 crowded condition of the calendars in both houses create an 7-7 emergency and an imperative public necessity that the 7-8 constitutional rule requiring bills to be read on three several 7-9 days in each house be suspended, and this rule is hereby suspended.