SRC-BWC S.B. 1835 77(R)   BILL ANALYSIS


Senate Research Center   S.B. 1835
77R15055 PAM-DBy: Lindsay
Intergovernmental Relations
5/3/2001
As Filed


DIGEST AND PURPOSE 

Current law exempts homesteads from seizure for the claims of creditors
except for encumbrances that are properly fixed on homestead property for
purchase money, taxes on property, work and material used in construction
improvements, owelty of partition against the property, and the refinance
of a lien against a homestead, including federal tax liens.  While it is
not legal to place a lien on a homestead for assessment fees, some
homeowners associations are circumventing the law by acquiring the right to
place a lien on a homestead for assessment fees by having a contract for
lien included in the deed restriction.  S.B. 1835 provides for an
encumbrance to be properly fixed on homestead property for property owners'
association fees and that the encumbrance may be collected at the time the
property is transferred.  

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a
state officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Sections 41.001(a) and (b), Property Code, to provide
that a homestead and one or more lots used for a place of burial of dead
are exempt from seizure for the claims of creditors except for encumbrances
described by this section, rather than properly fixed on homestead
property. Provides that a homestead is not exempt from seizure as provided
by this section for encumbrances that are, rather than authorizes
encumbrances to be, properly fixed on homestead property under certain
circumstances.   

SECTION 2.  Amends Chapter 41A, Property Code, by adding Section 41.0011,
as follows: 

Sec. 41.0011.  CERTAIN ENCUMBRANCES FIXED ON HOMESTEAD EXEMPT FROM SEIZURE.
Defines "property owners' association."  Provides that an obligation to pay
property owners' association fees for maintenance and ownership of common
facilities and services is a debt for which an encumbrance may be properly
fixed on homestead property. Provides that homestead property is exempt
from seizure for the claims of creditors for an encumbrance described by
this section.  Authorizes a property owners' association to collect on an
encumbrance described by this section properly fixed on homestead property
at the time the homestead property is transferred.  Provides that Section
41.001(c) does not apply to a claim of a property owners' association under
this section. 

SECTION 3.  Effective date: January 1, 2002, but only if the constitutional
amendment proposed by the 77th Legislature, Regular Session, 2001,
permitting an encumbrance to be fixed on homestead property for an
obligation to pay certain property owners' association fees without
permitting the forced sale of the homestead, takes effect.  Provides that
if that amendment is not approved by the voters, this Act has no effect.