By Duncan S.B. No. 779
77R2483 JMG-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the creation of an agricultural lien.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Chapter 70, Property Code, is amended by adding
1-5 Subchapter E to read as follows:
1-6 SUBCHAPTER E. AGRICULTURAL LIENS
1-7 Sec. 70.401. DEFINITIONS. In this subchapter:
1-8 (1) "Agricultural product" includes:
1-9 (A) an agricultural, horticultural,
1-10 viticultural, or vegetable product, either in its natural or
1-11 processed state, that has been produced or processed in this state,
1-12 including:
1-13 (i) mint oil;
1-14 (ii) a Christmas tree;
1-15 (iii) nuts;
1-16 (iv) dairy products;
1-17 (v) animals used for human consumption;
1-18 and
1-19 (vi) any grain or commodity for which
1-20 standards are established by the department;
1-21 (B) bees and honey; and
1-22 (C) hay or straw baled and prepared for market.
1-23 (2) "Agricultural producer" means a person who is
1-24 engaged in the business of growing, producing, or harvesting an
2-1 agricultural product for market or for delivery or transfer to
2-2 another person who owns the agricultural product. The term
2-3 includes:
2-4 (A) a landowner, grower, landlord, tenant, or
2-5 sharecropper or other person who receives a share of the product;
2-6 and
2-7 (B) a person who performs labor, supplies
2-8 materials, or provides services on farmland, or on a range, ranch,
2-9 or orchard, or in that person's place of business to aid the
2-10 growing or harvesting of a crop or the raising of animals.
2-11 (3) "Growing or harvesting" includes tilling, sowing,
2-12 planting, cultivating, irrigating, pruning, thinning, fertilizing,
2-13 spraying, dusting, cutting, harvesting, stripping, packing,
2-14 reaping, threshing, gathering, transporting, securing, or otherwise
2-15 performing or furnishing labor, service, or materials to aid the
2-16 production of an agricultural product.
2-17 (4) "Inventory" means all agricultural products
2-18 purchased or received from agricultural producers, regardless of
2-19 whether in bulk lots or in blended or packaged form. The term does
2-20 not include the equipment or supplies of the person holding or
2-21 owning the agricultural product.
2-22 Sec. 70.402. LIEN CREATED. An agricultural producer who,
2-23 under an agreement, is to receive consideration for producing,
2-24 growing, or harvesting an agricultural product has a lien for the
2-25 amount owed under the agreement, or for the reasonable value of the
2-26 product on the date of transfer or delivery if there is no
2-27 agreement, on:
3-1 (1) the agricultural product if the product is
3-2 delivered or transferred by an agricultural producer to a purchaser
3-3 of the product or the purchaser's representative;
3-4 (2) the inventory of a purchaser of the agricultural
3-5 product or the purchaser's representative;
3-6 (3) the proceeds received by a purchaser from selling
3-7 the product or inventory to a third party;
3-8 (4) all accounts receivable of the purchaser from the
3-9 sale of the products to a third party if the agricultural products
3-10 transferred or delivered are animals used for human consumption;
3-11 and
3-12 (5) money of the purchaser deposited in a bank.
3-13 Sec. 70.403. WHEN LIEN ATTACHES. A lien created under this
3-14 subchapter attaches to the property described by Section 70.402 on
3-15 the date on which physical possession of the agricultural product
3-16 is delivered or transferred by the agricultural producer to the
3-17 purchaser or the purchaser's agent. If the agricultural producer
3-18 delivers or transfers agricultural products for cleaning or storage
3-19 to a person other than the purchaser, the lien attaches at the
3-20 first time when the agricultural product is both sold and
3-21 physically delivered to the purchaser or the purchaser's agent.
3-22 Sec. 70.404. PERFECTING LIEN. An agricultural producer is
3-23 not required to file notice to perfect a lien created under this
3-24 subchapter.
3-25 Sec. 70.405. DURATION OF LIEN; NOTICE OF LIEN. (a) Except
3-26 as provided by Subsection (b), a lien created under this subchapter
3-27 expires on the first anniversary of the date of attachment.
4-1 (b) A lien created under this subchapter is extended for a
4-2 period of one year if an affidavit and a written notice of lien, on
4-3 a form prescribed by the secretary of state, are filed with the
4-4 secretary of state by the agricultural producer before the date the
4-5 lien is to expire under Subsection (a). The notice of lien must:
4-6 (1) specify the amount claimed by the agricultural
4-7 producer after deducting all credits and offsets;
4-8 (2) specify the name, address, and signature of the
4-9 agricultural producer claiming the lien;
4-10 (3) specify the name and address of the person who
4-11 purchased the agricultural product from an agricultural producer;
4-12 (4) describe the agricultural product delivered or
4-13 transferred by the producer sufficient to identify the basis for
4-14 the lien;
4-15 (5) specify the date on which payment to the producer
4-16 was due; and
4-17 (6) contain any other information as required by the
4-18 secretary of state.
4-19 Sec. 70.406. PRIORITY OF LIEN. (a) A lien under this
4-20 subchapter is superior to all other liens on the same property,
4-21 regardless of when the creditor's lien or security interest
4-22 attaches to property described by Section 70.402. All liens
4-23 created under this subchapter, regardless of the date of attachment
4-24 or date of notice of lien, are of equal priority and payable pro
4-25 rata in proportion to the size of the lien.
4-26 (b) This section does not prohibit an unequal pro rata
4-27 recovery between agricultural producers if the inequality results
5-1 from a lien on accounts receivable.
5-2 Sec. 70.407. DISCHARGE OF LIEN. A lien created under this
5-3 subchapter is discharged when the lienholder receives full payment
5-4 for the agricultural product. If payment is received in the form of
5-5 a negotiable instrument, full payment is received when the
5-6 negotiable instrument clears all financial institutions.
5-7 Sec. 70.408. FILING NOTICE OF DISCHARGE. (a) If a notice of
5-8 lien is filed under Section 70.405(b) for extension of a lien and
5-9 the lienholder subsequently receives full payment, the lienholder
5-10 shall file with the secretary of state a notice of discharge,
5-11 signed by the lienholder, stating that full payment has been
5-12 received and that the lien is discharged.
5-13 (b) If a lienholder who has filed a notice of lien and
5-14 subsequently received full payment does not file a notice of
5-15 discharge of the lien not later than the 30th day after receiving a
5-16 written request to discharge the lien, the lienholder is liable to
5-17 the purchaser of the agricultural product for damages in the amount
5-18 of $300.
5-19 Sec. 70.409. FORM OF FILING WITH SECRETARY OF STATE; FEES.
5-20 (a) The secretary of state shall prescribe the forms necessary for
5-21 filing a notice of lien and notice of discharge under this
5-22 subchapter.
5-23 (b) The lienholder must submit to the secretary of state a
5-24 $10 fee for filing a notice of lien under Section 70.405. The
5-25 secretary of state may not charge a fee for filing a notice of
5-26 discharge under Section 70.408.
5-27 Sec. 70.410. JOINDER OF ACTIONS. Persons claiming a lien
6-1 against the same property under this chapter may join in the same
6-2 action, and if separate actions are commenced, the court may
6-3 consolidate them.
6-4 Sec. 70.411. RECOVERY OF COSTS. (a) An agricultural
6-5 producer who prevails in an action brought to enforce a lien
6-6 created under this subchapter is entitled to recover:
6-7 (1) reasonable and necessary attorney's fees and court
6-8 costs; and
6-9 (2) interest on funds subject to the lien at the
6-10 judgment interest rate set out by Subsection (b) for the period
6-11 beginning on the date the lien attaches and ending on the date of
6-12 payment.
6-13 (b) The judgment interest rate is:
6-14 (1) the auction rate quoted on a discount basis for
6-15 52-week treasury bills issued by the United States government as
6-16 most recently published by the Federal Reserve Board before the
6-17 date of computation;
6-18 (2) 10 percent a year if the auction rate described by
6-19 Subdivision (1) is less than 10 percent; or
6-20 (3) 20 percent a year if the auction rate described by
6-21 Subdivision (1) is more than 20 percent.
6-22 Sec. 70.412. WAIVER OF CERTAIN RIGHTS PROHIBITED. An
6-23 agreement by an agricultural producer to waive the producer's right
6-24 to file notice of a lien or to seek a remedy provided by this
6-25 subchapter is void.
6-26 Sec. 70.413. CONFLICT OF LAW. To the extent of any conflict
6-27 between this subchapter and Chapter 9, Business & Commerce Code,
7-1 Chapter 128, Agriculture Code, or any other law, this subchapter
7-2 prevails.
7-3 SECTION 2. This Act takes effect September 1, 2001, and
7-4 applies only to an agreement to grow, produce, or harvest
7-5 agricultural products entered into on or after the effective date
7-6 of this Act. An agreement to grow, produce, or harvest agricultural
7-7 products entered into before the effective date of this Act is
7-8 governed by the law in effect immediately before the effective date
7-9 of this Act, and that law is continued in effect for that purpose.