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78R2645 KCR-F

By:  West                                                         H.B. No. 3077



A BILL TO BE ENTITLED

AN ACT

relating to the foreclosure of certain liens on property located in 
a residential subdivision.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Section 209.009, Property Code, is amended to 
read as follows:   
	Sec. 209.009.  FORECLOSURE SALE PROHIBITED IN CERTAIN 
CIRCUMSTANCES.  A property owners' association may not foreclose a 
property owners' association's assessment lien if the debt securing 
the lien consists solely of:
		(1)  fines assessed by the association; [or]                 
		(2)  attorney's fees incurred by the association solely 
associated with fines assessed by the association;
		(3)  a submetered utility billing that is separate from 
a regular or special assessment; or
		(4)  attorney's fees incurred by the association solely 
associated with a submetered utility billing that is separate from 
a regular or special assessment.
	SECTION 2.  Section 209.010, Property Code, is amended by 
adding Subsections (e) and (f) to read as follows:
	(e)  A property owner's association that conducts a 
foreclosure sale of an owner's lot must send all notices required to 
be sent to the lot owner to any other holder of a lien on the lot 
whose lien was filed before the property owners' association's 
assessment lien was filed.
	(f)  A notice sent to a lienholder under Subsection (e) must 
be sent to the lienholder on the same date and in the same manner as 
the notice is sent to the lot owner.
	SECTION 3.  The heading to Section 209.011, Property Code, 
is amended to read as follows:
	Sec. 209.011.  LOT OWNER'S RIGHT OF REDEMPTION AFTER 
FORECLOSURE.     
	SECTION 4.  Chapter 209, Property Code, is amended by adding 
Section 209.012 to read as follows:
	Sec. 209.012.  OTHER LIENHOLDER'S RIGHT OF REDEMPTION OR 
FORECLOSURE AFTER FORECLOSURE BY PROPERTY OWNERS' ASSOCIATION.  (a)  
This section applies only to a lienholder described by Section 
209.010(e).
	(b)  A lienholder who receives notice of a foreclosure sale 
brought by a property owners' association must exercise the rights 
granted to the lienholder by this section not later than the 180th 
day after the date the association mails written notice of the sale 
to the lienholder under Section 209.010(e).  A lienholder who fails 
to act in accordance with this section waives the lienholder's 
interest in the lot that is the subject of the foreclosure sale 
brought by a property owners' association under this chapter.
	(c)  After receiving notice of a foreclosure sale under 
Section 209.010(e), a lienholder may:
		(1)  redeem the owner's lot by paying the assessment 
lien filed by the property owners' association and allow the lot 
owner to maintain possession of the lot; or
		(2)  foreclose on the lienholder's lien.                               
	(d)  If a lienholder redeems the lot owner's lot under 
Subsection (c)(1) or forecloses on the lienholder's lien under 
Subsection (c)(2), the foreclosing lienholder:
		(1)  must pay to the association:                                      
			(A)  all amounts due the association at the time 
of the foreclosure sale less the foreclosure sales price received 
by the association from the purchaser;
			(B)  interest from the date of the foreclosure 
sale through the date of redemption on all amounts owed the 
association at the rate stated in the dedicatory instruments for 
delinquent assessments or, if no rate is stated, at an annual 
interest rate of 10 percent;
			(C)  costs incurred by the association in 
foreclosing the lien and conveying the property to the redeeming 
lot owner, including reasonable attorney's fees;
			(D)  any unpaid assessments levied against the 
property by the association after the date of the foreclosure sale;
			(E)  taxable costs incurred in a proceeding 
brought under Subsection (a); and
			(F)  costs incurred by the association to improve 
or maintain the lot from the date of foreclosure of the 
association's assessment lien through the date of redemption or 
foreclosure by the foreclosing lienholder; and
		(2)  must pay to the person who purchased the property 
at the foreclosure sale:
			(A)  any assessments levied against the property 
by the association after the date of the foreclosure sale and paid 
by the purchaser;
			(B)  the purchase price paid by the purchaser at 
the foreclosure sale;
			(C)  the amount of the deed recording fee;                            
			(D)  the amount paid by the purchaser as ad 
valorem taxes, penalties, and interest on the property after the 
date of the foreclosure sale;
			(E)  taxable costs incurred in a proceeding 
brought under Subsection (a); and
			(F)  costs incurred by the purchaser to improve or 
maintain the lot from the date of foreclosure of the association's 
assessment lien through the date of redemption or foreclosure by 
the foreclosing lienholder.
	(e)  If a lienholder redeems the owner's lot under Subsection 
(c)(1), the lienholder may add any amounts paid under Subsection 
(d) to the total amount due to be paid by the lot owner under the 
instrument giving rise to the lienholder's lien.
	SECTION 5.  This Act takes effect September 1, 2003, and 
applies only to a foreclosure sale brought by a property owners' 
association on or after that date.  A foreclosure sale brought by a 
property owners' association before the effective date of this Act 
is governed by the law in effect at the time the foreclosure sale is 
brought, and the former law is continued in effect for that purpose.