By Duncan S.B. No. 626
77R2449 KEL-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to liens on certain property related to certain criminal
1-3 offenses and the effect of forfeiture of that property.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Article 59.01, Code of Criminal Procedure, is
1-6 amended by adding Subdivisions (9)-(11) to read as follows:
1-7 (9) "Depository account" means the obligation of a
1-8 regulated financial institution to pay the account owner under a
1-9 written agreement, including a checking account, savings account,
1-10 money market account, time deposit, NOW account, or certificate of
1-11 deposit.
1-12 (10) "Primary state or federal financial institution
1-13 regulator" means the state or federal regulatory agency that
1-14 chartered and comprehensively regulates a regulated financial
1-15 institution.
1-16 (11) "Regulated financial institution" means a
1-17 depository institution chartered by a state or federal government,
1-18 the deposits of which are insured by the Federal Deposit Insurance
1-19 Corporation or the National Credit Union Administration.
1-20 SECTION 2. Articles 59.02(c)-(g), Code of Criminal Procedure,
1-21 are amended to read as follows:
1-22 (c) An owner or interest holder's interest in property may
1-23 not be forfeited under this chapter if the owner or interest
1-24 holder:
2-1 (1) acquired and perfected the interest before the
2-2 seizure [or during the act or omission giving rise to forfeiture]
2-3 or, if the property is real property, [he] acquired an ownership
2-4 interest, security interest, or lien interest before a lis pendens
2-5 notice was filed under Article 59.04(g) of this code; and
2-6 (2) did not know or should not reasonably have known
2-7 of the act or omission giving rise to the forfeiture or that it was
2-8 likely to occur at or before the time of acquiring and perfecting
2-9 the interest or, if the property is real property, at or before the
2-10 time of acquiring the ownership interest, security interest, or
2-11 lien interest.
2-12 (d) Notwithstanding any other law, if property is seized
2-13 from the possession of an interest holder who asserts a possessory
2-14 lien interest in the property under applicable law, the interest
2-15 holder's lien remains in effect during the pendency of proceedings
2-16 under this chapter as if possession of the property had remained
2-17 with the interest holder.
2-18 (e) On motion by any party or on the motion of the court,
2-19 after notice in the manner provided by Article 59.04 of this code
2-20 to all known owners and interest holders of property subject to
2-21 forfeiture under this chapter, and after a hearing on the matter,
2-22 the court may make appropriate orders to preserve and maintain the
2-23 value of the property until a final disposition of the property is
2-24 made under this chapter, including the sale of the property if that
2-25 is the only method by which the value of the property may be
2-26 preserved until final disposition.
2-27 (f) [(e)] Any property that is contraband and has been
3-1 seized by the institutional division of the Texas Department of
3-2 Criminal Justice shall be forfeited to the institutional division
3-3 under the same rules and conditions as for other forfeitures.
3-4 (g) [(f)] An individual, firm, corporation, or other entity
3-5 insured under a policy of title insurance may not assert a claim or
3-6 cause of action on or because of the policy if the claim or cause
3-7 of action is based on forfeiture under this chapter and, at or
3-8 before the time of acquiring the ownership of real property,
3-9 security interest in real property, or lien interest against real
3-10 property, the insured knew or reasonably should have known of the
3-11 act or omission giving rise to the forfeiture or that the act or
3-12 omission was likely to occur.
3-13 (h) [(g)] The forfeiture provisions of this chapter apply to
3-14 contraband as defined by Article 59.01(2)(B)(iv) of this code only
3-15 in a municipality with a population of 250,000 or more.
3-16 SECTION 3. Article 59.03(a), Code of Criminal Procedure, is
3-17 amended to read as follows:
3-18 (a) Property subject to forfeiture under this chapter, other
3-19 than property described by Article 59.12 of this code, may be
3-20 seized by any peace officer under authority of a search warrant.
3-21 SECTION 4. Article 59.04(b), Code of Criminal Procedure, is
3-22 amended to read as follows:
3-23 (b) A forfeiture proceeding commences under this chapter
3-24 when the attorney representing the state files a notice of the
3-25 seizure and intended forfeiture in the name of the state with the
3-26 clerk of the district court in the county in which the seizure is
3-27 made. The attorney representing the state must attach to the
4-1 notice the peace officer's sworn statement under Article 59.03 of
4-2 this code or, if the property has been seized under Article 59.12
4-3 of this code, the statement of the terms and amount of the
4-4 depository account or inventory of assets provided by the regulated
4-5 financial institution to the attorney representing the state.
4-6 Except as provided by Subsection (c) of this article, the attorney
4-7 representing the state shall cause certified copies of the notice
4-8 to be served on the following persons in the same manner as
4-9 provided for the service of process by citation in civil cases:
4-10 (1) the owner of the property; and
4-11 (2) any interest holder in the property.
4-12 SECTION 5. Chapter 59, Code of Criminal Procedure, is amended
4-13 by adding Articles 59.12-59.14 to read as follows:
4-14 Art. 59.12. SEIZURE OF ACCOUNTS AND ASSETS AT REGULATED
4-15 FINANCIAL INSTITUTION. (a) This article applies to property
4-16 consisting of a depository account in a regulated financial
4-17 institution or assets held by a regulated financial institution as
4-18 security for an obligation owed to the regulated financial
4-19 institution.
4-20 (b) A regulated financial institution is not required to pay
4-21 an account or tender assets held as security for an obligation owed
4-22 to the institution until the time has expired for an appeal from a
4-23 decision of the court relating to the forfeiture of accounts or
4-24 assets under Article 59.05. The account or assets are
4-25 constructively seized at the time a seizure warrant issued under
4-26 Chapter 18 is served on the regulated financial institution. The
4-27 regulated financial institution shall preserve and maintain the
5-1 account or assets pending entry of a final judgment of forfeiture.
5-2 (c) Immediately on service of the seizure warrant, the
5-3 regulated financial institution shall take action as necessary to
5-4 freeze the account or assets and shall provide evidence of the
5-5 terms and amount of the account or a detailed inventory of the
5-6 assets to the attorney representing the state. Except as otherwise
5-7 provided by this article, a transaction involving an account or
5-8 assets, other than the deposit or reinvestment of interest,
5-9 dividends, or other normally recurring payments on the account or
5-10 assets that do not involve distribution of proceeds to the owner,
5-11 is not authorized unless approved by the court that issued the
5-12 seizure warrant or, if a forfeiture action has been instituted, the
5-13 court in which that action is pending.
5-14 (d) Notwithstanding any other provision of this chapter,
5-15 assets subject to diminution in value may be liquidated without
5-16 court action by agreement between the regulated financial
5-17 institution and the attorney representing the state. If agreement
5-18 cannot be reached, the court, on motion, may order liquidation if
5-19 liquidation is consistent with the terms of the security agreement
5-20 between the regulated financial institution and the property owner.
5-21 (e) Any accrual to the value of the account or assets during
5-22 the pendency of the forfeiture proceedings is subject to the
5-23 procedures for the disbursement of interest under Article 59.08.
5-24 (f) If the regulated financial institution fails to comply
5-25 with the obligations imposed by this article to freeze and preserve
5-26 the account or assets constructively seized, and as a result cannot
5-27 comply with the court's forfeiture order, the court may order the
6-1 regulated financial institution to pay damages in an amount not to
6-2 exceed two times the actual loss caused by the regulated financial
6-3 institution's failure to comply.
6-4 (g) A regulated financial institution that complies with
6-5 this article is not liable in damages to the owner of a seized
6-6 account or asset.
6-7 (h) This article does not impair the right of the state to
6-8 obtain possession of physical evidence.
6-9 Art. 59.13. DISCLOSURE OF INFORMATION RELATING TO ACCOUNTS
6-10 AND ASSETS AT REGULATED FINANCIAL INSTITUTION. (a) The attorney
6-11 representing the state may disclose information to the primary
6-12 state or federal financial institution regulator, including grand
6-13 jury information or otherwise confidential information, relating to
6-14 any action contemplated or brought under this chapter that involves
6-15 property consisting of a depository account in a regulated
6-16 financial institution or assets held by a regulated financial
6-17 institution as security for an obligation owed to a regulated
6-18 financial institution.
6-19 (b) A primary state or federal financial institution
6-20 regulator shall keep confidential any information provided by the
6-21 attorney representing the state under Subsection (a). The sharing
6-22 of information under Subsection (a) is not considered a waiver of
6-23 any privilege or claim of confidentiality.
6-24 Art. 59.14. NOTICE TO PRIMARY STATE AND FEDERAL FINANCIAL
6-25 INSTITUTION REGULATORS. (a) The attorney representing the state
6-26 shall notify the primary state or federal financial institution
6-27 regulator before taking any action under this chapter that may have
7-1 a substantial adverse effect on a regulated financial institution.
7-2 (b) An action may have a substantial adverse effect for
7-3 purposes of Subsection (a) if the amount involved is the lesser of
7-4 $1 million or an amount equal to one-half percent of the regulated
7-5 financial institution's total assets as determined by its most
7-6 recently published quarterly report of condition.
7-7 (c) A primary state or federal financial institution
7-8 regulator shall keep confidential any information provided by the
7-9 attorney representing the state under Subsection (a).
7-10 (d) The provision of notice under Subsection (a) is not
7-11 considered a waiver of any privilege or claim of confidentiality.
7-12 SECTION 6. Section 34.02, Penal Code, is amended by adding
7-13 Subsection (f) to read as follows:
7-14 (f) It is an exception to the application of this section
7-15 that the transaction was, under Chapter 62, Code of Criminal
7-16 Procedure, an assertion by an owner or interest holder of interest
7-17 in seized property or opposition by an owner or interest holder to
7-18 the nature of property as proceeds of criminal activity or
7-19 contraband.
7-20 SECTION 7. (a) The change in law made by Sections 1-5 of
7-21 this Act applies only to a forfeiture proceeding that commences on
7-22 or after the effective date of this Act. A forfeiture proceeding
7-23 that commences before the effective date of this Act is covered by
7-24 the law in effect when the proceeding commenced, and the former law
7-25 is continued in effect for that purpose.
7-26 (b) The change in law made by Section 6 of this Act applies
7-27 only to an offense committed before the effective date of this Act.
8-1 For purposes of this subsection, an offense is committed before the
8-2 effective date of this Act if any element of the offense occurs
8-3 before that date.
8-4 SECTION 8. This Act takes effect September 1, 2001.