By: Harris S.B. No. 1742
Line and page numbers may not match official copy.
Bill not drafted by TLC or Senate E&E.
A BILL TO BE ENTITLED
AN ACT
1-1 relating to certain proceedings in a foreclosure action.
1-2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-3 SECTION 1. Section 51.002, Property Code, is amended to read
1-4 as follows:
1-5 (a) A sale of real property under a power of sale conferred
1-6 by a deed of trust, security instrument or other contract lien must
1-7 be a public sale at auction held between 10 a.m. and 4 p.m. of the
1-8 first Tuesday of a month. The sale must take place at the county
1-9 courthouse in the county in which the land is located, or if the
1-10 property is located in more than one county, the sale may be made
1-11 at the courthouse in any county in which the property is located.
1-12 The commissioners court shall designate the area at the courthouse
1-13 where the sales are to take place and shall record the designation
1-14 in the real property records of the county. The sale must occur in
1-15 the designated area. If no area is designated by the commissioners
1-16 court, the notice of sale must designate the area at the courthouse
1-17 where the sale covered by that notice is to take place, and the
1-18 sale must occur in that area.
1-19 (b) Notice of the sale, which must include a statement of
1-20 the earliest time at which the sale will begin, must be given at
1-21 least 21 days before the date of the sale:
1-22 (1) by posting at the courthouse door of each county
2-1 in which the property is located a written notice designating the
2-2 county in which the property will be sold;
2-3 (2) by filing in the office of the county clerk of
2-4 each county in which the property is located a copy of the notice
2-5 posted under Subdivision (1); and
2-6 (3) by the mortgagee or its attorney, agent or
2-7 representative serving written notice of the foreclosure sale by
2-8 certified mail on each mortgagor [holder of the debt to which the
2-9 power of sale is related serving written notice of the sale by
2-10 certified mail on each debtor] who, according to the records of the
2-11 holder of the mortgagee [debt], is obligated to pay the debt.
2-12 (c) The sale must begin at the time stated in the notice of
2-13 sale or not later than three hours after that time.
2-14 (d) Notwithstanding any agreement to the contrary, the
2-15 mortgagee or its attorney, agent or representative shall serve a
2-16 mortgagor [the holder of the debt shall serve a debtor] in default
2-17 under the terms of the note secured by a deed of trust, security
2-18 instrument or other contract lien on real property used as the
2-19 mortgagor's [debtor's] residence with written notice by certified
2-20 mail stating that the mortgagor [debtor] is in default [under the deed
2-21 of trust or other contract lien] and giving the debtor at least 20
2-22 days to cure the default before notice of sale can be given under
2-23 Subsection (b). [The entire calendar day on which the notice
2-24 required by this subsection is given, regardless of the time of day
2-25 at which the notice is given, is included in computing the 20-day
2-26 notice period required by this subsection, and the entire calendar
3-1 day on which notice of sale is given under Subsection (b) is
3-2 excluded in computing the 20-day notice period.]
3-3 (e) Service of a notice under this section by certified mail
3-4 is complete when the notice is deposited in the United States mail,
3-5 postage prepaid and addressed to the mortgagor at the property
3-6 securing the debt, unless the mortgagee has received, at least 20
3-7 days before a foreclosure notice is served, a written notice from
3-8 mortgagor designating a different address for mortgagor for
3-9 purposes of notice under the terms of the security instrument. One
3-10 notice may be mailed to all mortgagors residing at the same
3-11 address. [debtor at the debtor's last known address as shown by the
3-12 records of the holder of the debt.] The affidavit of a person
3-13 knowledgeable of the facts to the effect that service was completed
3-14 is prima facie evidence of service.
3-15 (f) Each county clerk shall keep all notices filed under
3-16 Subdivision (2) of Subsection (b) in a convenient file that is
3-17 available to the public for examination during normal business
3-18 hours. The clerk may dispose of the notices after the date of sale
3-19 specified in the notice has passed. The clerk shall receive a fee
3-20 of $2 for each notice filed.
3-21 (g) The entire calendar day on which any foreclosure notice
3-22 [the notice of sale] is given, regardless of the time of day at which
3-23 the notice is given, is included in computing any foreclosure [the
3-24 21-day] notice period required, except that [by Subsection (b) and]
3-25 the entire calendar day of the foreclosure sale is excluded.
3-26 (h) After acceleration of the maturity of the debt, a
4-1 foreclosure sale shall be discontinued if at least 5 days before
4-2 the scheduled sale date the mortgagee receives (1) all sums and
4-3 advances then due under the terms of the note and security
4-4 instrument as if acceleration had not occurred; and (2) payment of
4-5 all collection costs, expenses and advances permitted upon
4-6 mortgagor's default under the terms of the note and security
4-7 instrument; and (3) the mortgagor timely cures any other default
4-8 under the terms of the note and security instrument. Otherwise,
4-9 after acceleration, only payment of the matured amount due under
4-10 the note and security instrument, including all collection costs,
4-11 expenses and advances permitted upon mortgagor's default, will cure
4-12 the default and prevent the scheduled foreclosure. Upon the cure
4-13 of a default, any prior acceleration is canceled and the note and
4-14 security instrument remain enforceable.
4-15 (i) The sale of any real property and improvements at a
4-16 foreclosure sale is "as is" without any implied representations or
4-17 warranties. A purchaser obtains only such title as the trustee had
4-18 actual authority to convey and is not a good faith purchaser for
4-19 value without notice. Upon actual notice of any fact indicating
4-20 the trustee did not have authority to convey the foreclosed
4-21 property, the trustee shall file within sixty days of receipt of
4-22 such notice a rescission canceling the trustee's deed in the
4-23 official real property records of the county where the property is
4-24 located.
4-25 (j) A mortgagee may appoint by power of attorney or
4-26 resolution an individual residing in Texas or a law firm composed
5-1 of Texas licensed attorneys to select one or more substitute
5-2 trustees for all security instruments for which mortgagee has the
5-3 power to appoint a substitute trustee, by filing such instrument in
5-4 the real property records of the county where the security
5-5 instrument is filed or the secured property is located. The power
5-6 of attorney or resolution must give the name, street address and
5-7 phone number of the Texas resident or law firm designated to select
5-8 the successor or substitute trustee on mortgagees' behalf. A
5-9 notice of sale required by Subsection (b) shall contain the volume
5-10 and page, clerk's file number or other real property record's
5-11 identification number where the power of attorney or resolution is
5-12 filed and the name, street address and phone number of the
5-13 individual or law firm which the mortgagee has authorized to
5-14 appoint one or more substitute trustees. The substitute trustee,
5-15 whether one or more, who is appointed to exercise the powers of the
5-16 trustee in the security instrument, must be identified by name,
5-17 street address and phone number in the notice required by
5-18 Subsection (b).
5-19 SECTION 2. Chapter 51, Property Code, is amended by adding
5-20 Section 51.007 to read as follows:
5-21 Sec. 51.007. TRUSTEE UNDER SECURITY INSTRUMENT. (a) A
5-22 trustee named in a suit or proceeding related to a foreclosure may
5-23 file a verified objection to being named as a party by stating the
5-24 basis for the trustee's reasonable belief that the trustee was
5-25 named solely in the capacity as a trustee and not for any wrongful
5-26 act or omission in the performance of the trustee's duties.
6-1 (b) Within twenty-one days after the filing date of the
6-2 trustee's objection, each party to the suit or proceeding shall
6-3 file a verified response setting forth the party's factual basis
6-4 for belief that the trustee was named as a party for reasons other
6-5 than in the capacity as trustee.
6-6 (c) In the event a response to the trustee's objection is
6-7 not properly or timely filed, the trustee shall be dismissed as to
6-8 each non-responding party's claims in the suit or proceeding and
6-9 the trustee shall not be subject to any monetary award for damages,
6-10 attorneys' fees or costs as to that party.
6-11 (d) In the event a proper response to the trustee's
6-12 objection is filed, a hearing date shall be obtained by the
6-13 trustee. Based upon a preponderance of the credible evidence
6-14 presented, the court shall dismiss the trustee from the suit or
6-15 proceeding without prejudice if the court determines the trustee
6-16 was named as a party solely in the capacity as trustee.
6-17 (e) A trustee shall incur no liability for any good faith
6-18 error resulting from reliance on any information provided by the
6-19 mortgagor, mortgagee or their respective attorney, agent,
6-20 representative or other third party.
6-21 SECTION 3. (a) This Act takes effect September 1, 1999.
6-22 (b) The changes in law made by this Act apply only to
6-23 foreclosure actions instituted on or after the effective date of
6-24 this Act.
6-25 SECTION 4. The importance of this legislation and the
6-26 crowded condition of the calendars in both houses create an
7-1 emergency and an imperative public necessity that the
7-2 constitutional rule requiring bills to be read on three several
7-3 days in each house be suspended, and this rule is hereby suspended.