1-1 By: Nixon S.B. No. 378 1-2 (In the Senate - Filed February 2, 1999; February 4, 1999, 1-3 read first time and referred to Committee on Jurisprudence; 1-4 April 27, 1999, reported favorably by the following vote: Yeas 4, 1-5 Nays 0; April 27, 1999, sent to printer.) 1-6 A BILL TO BE ENTITLED 1-7 AN ACT 1-8 relating to the payment of judgment against an undivided interest 1-9 in real property. 1-10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-11 SECTION 1. Chapter 31, Civil Practice and Remedies Code, is 1-12 amended by adding Section 31.009 to read as follows: 1-13 Sec. 31.009. PAYMENT OF JUDGMENT AGAINST UNDIVIDED INTEREST 1-14 IN REAL PROPERTY. (a) This section applies only if: 1-15 (1) the owner of an undivided interest in real 1-16 property, alone or with the other owners of the real property, is 1-17 selling and conveying title to the real property or the undivided 1-18 interest in the real property to another person under a written 1-19 contract and the consideration under the contract is money, secured 1-20 loans assumed or existing on the real property, or both money and 1-21 secured loans; 1-22 (2) the interest of the owner is subject to an 1-23 abstract of judgment or judgment lien or the abstract of judgment 1-24 or judgment lien names that person as the judgment debtor; 1-25 (3) the interest of the owner which is subject to the 1-26 abstract of judgment or judgment lien that attaches to the interest 1-27 or that names the owner as the judgment debtor does not exceed a 50 1-28 percent undivided interest in the real property; and 1-29 (4) the abstract of judgment or judgment lien does not 1-30 name the owner of any other undivided interest in the real property 1-31 as a judgment debtor and does not purport to attach to the interest 1-32 of the owner of any other undivided interest in the real property. 1-33 (b) Before the owner of the undivided interest is entitled 1-34 to pay for a partial release of the judgment to a court under 1-35 Subsection (d), the owner must send a letter notifying the judgment 1-36 creditor of the judgment by registered or certified mail, return 1-37 receipt requested, to: 1-38 (1) the judgment creditor's last known address; 1-39 (2) the address appearing in the judgment creditor's 1-40 pleadings or other court records, if different from the judgment 1-41 creditor's last known address; 1-42 (3) the address of the judgment creditor's last 1-43 attorney as shown in the judgment creditor's pleadings or other 1-44 court record; and 1-45 (4) the address of the judgment creditor's last 1-46 attorney as shown in the records of the State Bar of Texas, if that 1-47 address is different from the address shown in the judgment 1-48 creditor's pleadings or other court record. 1-49 (c) The letter must include: 1-50 (1) the legal description of the real property; 1-51 (2) the percentage, fraction, or amount of undivided 1-52 interest in the real property owned or claimed by the owner as 1-53 evidenced by a copy of a title report, title commitment, deed, or 1-54 other written evidence of title; 1-55 (3) a copy of the written contract to sell the real 1-56 property or the undivided interest of the owner; 1-57 (4) a statement of the total sales price of the 1-58 undivided interest of the owner or proportionate share of the sales 1-59 price of the real property equivalent to the undivided interest of 1-60 the owner in the real property if sold in conjunction with other 1-61 owners of the real property, without reduction for: 1-62 (A) any costs, expenses, debts, or other amounts 1-63 paid by or on behalf of the owner; and 1-64 (B) any offset; 2-1 (5) an affidavit in the letter or included with the 2-2 letter stating that the written contract is a bona fide sale; and 2-3 (6) an offer to pay by cash, wire of funds, or 2-4 cashier's check the sales price of the undivided interest of the 2-5 owner or proportionate share of the sales price of the real 2-6 property equivalent to the undivided interest of the owner in the 2-7 real property if sold in conjunction with other owners of the real 2-8 property in return for a release of the abstract of judgment or 2-9 judgment lien as to the undivided interest of the owner in the real 2-10 property. 2-11 (d) If the judgment creditor does not respond to the letter 2-12 by furnishing a release of the abstract of judgment or judgment 2-13 lien as to the undivided interest of the owner on or before the 2-14 15th day after the date on which the letter was sent, the owner of 2-15 the undivided interest in the real property may file with the court 2-16 that rendered the judgment: 2-17 (1) an affidavit stating that: 2-18 (A) the owner has complied with this section and 2-19 is entitled to a release of the abstract of judgment or judgment 2-20 lien as to the undivided interest of the owner in the real 2-21 property; 2-22 (B) the owner provided the letter and offered 2-23 payment of the sales price of the undivided interest of the owner, 2-24 without reduction for any costs, expenses, debts, or other amounts 2-25 paid by or on behalf of the owner and without reduction for any 2-26 offset; and 2-27 (C) the judgment creditor has not responded to 2-28 the letter by furnishing a release; 2-29 (2) a copy of the written contract to sell the real 2-30 property or undivided interest of the owner in the real property; 2-31 (3) a copy of the letter sent under this section and 2-32 any document included with the letter; 2-33 (4) payment of the amount of the sales price of the 2-34 undivided interest of the owner or proportionate share of the sales 2-35 price of the real property equivalent to the undivided interest of 2-36 the owner in the real property if sold in conjunction with other 2-37 owners of the real property; 2-38 (5) any written correspondence received from the 2-39 judgment creditor or the attorney of the judgment creditor in 2-40 response to the letter; and 2-41 (6) a copy of the deed executed or to be executed by 2-42 the owner of the undivided interest in the real property under the 2-43 written contract. 2-44 (e) The owner of the undivided interest in the real property 2-45 shall send a copy of the affidavit under Subsection (d) by 2-46 registered or certified mail, return receipt requested, to the 2-47 judgment creditor and judgment creditor's last attorney as shown in 2-48 the judgment creditor's pleadings or other court record at the 2-49 addresses listed in Subsection (b) before the sixth day after the 2-50 date the affidavit is filed with the court. 2-51 (f) The owner of the undivided interest in the real property 2-52 shall prepare a recordable release of the abstract of judgment or 2-53 judgment lien as to the undivided interest of the owner in the real 2-54 property. The release must state that "THIS PARTIAL RELEASE OF 2-55 ABSTRACT OF JUDGMENT OR JUDGMENT LIEN SHALL NOT BE EFFECTIVE SO 2-56 LONG AS (NAME OF OWNER OF UNDIVIDED INTEREST IN REAL PROPERTY) HAS 2-57 RECORD TITLE TO AN INTEREST IN THE REAL PROPERTY DESCRIBED IN THIS 2-58 RELEASE, BUT SHALL AUTOMATICALLY CONSTITUTE A RELEASE OF THE 2-59 ABSTRACT OF JUDGMENT OR JUDGMENT LIEN ON CONVEYANCE BY THE 2-60 PERSON OF THAT PERSON'S INTEREST IN THE REAL PROPERTY TO 2-61 (NAME OF PURCHASER OR PURCHASERS UNDER THE WRITTEN CONTRACT)." The 2-62 judge or clerk of the court shall execute the release of the 2-63 abstract of judgment or judgment lien on behalf of the creditor and 2-64 issue the release to the owner of the undivided interest in the 2-65 real property on or after the 15th day after the date the owner 2-66 files the affidavit with the court and before the 31st day after 2-67 the date the owner files the affidavit with the court, unless the 2-68 judge determines that the owner of the undivided interest in real 2-69 property is not entitled to a release under this section. The 3-1 release must state the cause number, the court, the parties, the 3-2 date of judgment, the amount of the judgment, the amount paid to 3-3 the court, the date of the partial release, and the undivided 3-4 interest of the owner and the description of the real property. 3-5 (g) The court shall hold the amount paid to it by the owner 3-6 of the undivided interest in the real property and interest earned 3-7 on that amount in trust for the judgment creditor. The clerk of 3-8 the court shall deposit the trust funds and any interest earned by 3-9 the funds in the clerk's trust fund account. The clerk shall pay 3-10 the funds and any interest earned by the funds to the judgment 3-11 creditor or to the successors to the rights of the judgment 3-12 creditor. The clerk may presume that the funds are payable to the 3-13 judgment creditor unless the clerk is furnished with a written 3-14 assignment of the judgment. Funds held in the clerk's trust fund 3-15 account in accordance with this section are subject to escheat 3-16 under Chapter 72, Property Code. 3-17 (h) A purchaser or lender for value may conclusively rely on 3-18 the partial release of abstract of judgment or judgment lien and 3-19 take title to the undivided interest of the owner free and clear of 3-20 the abstract of judgment or judgment lien. The purchaser or lender 3-21 may not be required to determine whether the owner of the undivided 3-22 interest in real property has complied with this section. 3-23 (i) In this section, "judgment creditor" means a party in 3-24 whose favor a judgment has been rendered, whether a plaintiff, 3-25 counterclaimant, cross-claimant, third-party plaintiff, or other 3-26 judgment creditor. 3-27 SECTION 2. (a) This Act takes effect September 1, 1999. 3-28 (b) This Act applies to the payment of judgments against 3-29 undivided interests in real property rendered before, on, or after 3-30 the effective date of this Act for which notice is given under 3-31 Subsection (b), Section 31.009, Civil Practice and Remedies Code, 3-32 as added by this Act, on or after the effective date of this Act. 3-33 SECTION 3. The importance of this legislation and the 3-34 crowded condition of the calendars in both houses create an 3-35 emergency and an imperative public necessity that the 3-36 constitutional rule requiring bills to be read on three several 3-37 days in each house be suspended, and this rule is hereby suspended. 3-38 * * * * *