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79R6226 JD-F
By: Paxton H.B. No. 2220
A BILL TO BE ENTITLED
AN ACT
relating to the sale of ad valorem tax liens and contracts for
foreclosure of ad valorem tax liens.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 32.06, Tax Code, is amended to read as
follows:
Sec. 32.06. TRANSFER OF TAX LIEN. (a) In this section:
(1) "Mortgage servicer" has the meaning assigned by
Section 51.0001, Property Code.
(2) "Transferee" means a person authorized to pay the
taxes of another.
(a-1) A person may authorize another person to pay the taxes
imposed by a taxing unit on the person's real property by filing
with the collector for the unit a sworn document stating:
(1) the authorization;
(2) the name and street address of the transferee[,
naming the other person] authorized to pay the taxes of the property
owner;
(3) a description of[, and describing] the property by
street address, if applicable, and legal description;
(4) the name and address of any mortgage servicer
currently collecting payments for a debt secured by a recorded
security instrument encumbering the property; and
(5) whether the property owner will enter into a
contract with the transferee for the payment of the taxes that will
be secured by a lien on the property.
(b) If a transferee [person] authorized to pay a property
owner's [another's] taxes pursuant to Subsection (a) pays the taxes
and any penalties and interest imposed, the collector shall issue a
tax receipt to that transferee [the person paying the taxes]. In
addition, the collector shall certify on the sworn document that
payment of the taxes and any penalties and interest on the described
property has been made by the transferee on behalf of the property
owner [a person other than the person] liable for the taxes when
imposed and that the taxing unit's tax lien is transferred to that
transferee [the person paying the taxes]. The collector shall
attach to the sworn document the collector's seal of office and
deliver the sworn document, a tax receipt, and the affidavit
attesting to the transfer of the tax lien to the transferee [person
paying the taxes]. The sworn document, tax receipt, and affidavit
attesting to the transfer of the tax lien may be combined into one
document. The collector shall keep a record of all tax liens
transferred as provided by this section, indexed by the name of the
transferee and the property owner whose taxes were paid by the
transferee.
(c) Except as otherwise provided by this section, the
transferee of a tax lien and any successor in interest is entitled
to foreclose the lien:
(1) in the manner provided by law for foreclosure of
tax liens; or
(2) in the manner specified in Section 51.002,
Property Code, and Section 32.065 of this code, if the property
owner and the transferee enter into a contract that is secured by a
lien on the property.
(d) To be enforceable, a tax lien transferred as provided by
this section must be recorded with the sworn statement, tax
receipt, and affidavit attesting to the transfer of the tax lien as
described in Subsection (b) in the deed records of each county in
which the property encumbered by the lien is located.
(e) A transferee [person] holding a tax lien transferred as
provided by this section may not charge a greater rate of interest
than 18 percent a year on the taxes, penalties, and interest paid to
a taxing unit as shown on the tax receipt, plus any [and] recording
expenses paid to [acquire and] record the lien.
(f) Before a foreclosure as provided by Subsection (c), the
mortgage servicer [The holder] of a preexisting lien on property
encumbered by a tax lien transferred as provided by Subsection (b)
[this section] is entitled[, within six months after the date on
which the tax lien is recorded in all counties in which the property
is located,] to obtain a release of the transferred tax lien by
paying [pay] the transferee [holder] of the tax lien an amount equal
to:
(1) the amount paid to the taxing unit for the lien as
shown on the recorded tax receipt, plus interest accrued at the rate
provided by Subsection (e) and recording expenses;
(2) a redemption premium of $500 or an amount equal to
six percent per year of the amount described by Subdivision (1),
whichever is less;[,] and
(3) any cost described by Section 34.21(g)(2) and paid
by the transferee that is itemized in writing as required by Section
34.21(i).
(g) A mortgage servicer who redeems a transferred tax lien
becomes subrogated to all rights in the lien. If a mortgage
servicer makes an affidavit stating that after a diligent search
the transferee of the tax lien cannot be found, that the transferee
and the mortgagee or mortgage servicer cannot agree on the
redemption amount, or that the transferee refuses to give the
mortgagee or mortgage servicer a payoff or release, the mortgagee
or mortgage servicer may redeem the transferred tax lien by paying
the appropriate amount prescribed by Subsection (f) to the
collector issuing the transfer of lien. The collector who receives
the payment shall give the mortgagee or mortgage servicer a signed
receipt witnessed by two persons. The signed receipt, when
recorded, is notice to all persons that the transferred tax lien has
been redeemed. A bona fide purchaser for value may conclusively
rely on the receipt as evidence of a valid redemption of the
transferred tax lien. The collector on demand shall pay the money
received from the mortgage servicer to the transferee or shall
interplead the money into the registry of a district court for the
county in which property is located. The collector may impose and
collect a fee to be paid by the mortgage servicer that is reasonably
related to the expense incurred by the collector in processing the
payment paid to the transferee. The amount of the fee may not
exceed five percent of the amount paid by the mortgage servicer to
redeem the property or $500, whichever is greater. If the collector
interpleads the money into the registry of the court, the collector
is entitled to reasonable fees, including attorney's fees, and
costs, as determined by the court.
(h) [(g)] A foreclosure of [suit to foreclose] a tax lien
transferred as provided by this section may not be instituted
within one year from the date on which the lien is recorded in all
counties in which the property is located[, unless the contract
between the owner of the property and the transferee provides
otherwise].
(i) [(h)] After one year from the date on which a tax lien
transferred as provided by this section is recorded in all counties
in which the property is located, the transferee [holder] of the
lien may [file suit to] foreclose the lien in the manner provided by
Subsection (c) [unless a contract between the holder of the lien and
the owner of the property encumbered by the lien provides
otherwise]. If a foreclosure [the] suit results in foreclosure of
the lien, the transferee [person filing suit] is entitled to
recover attorney's fees in an amount not to exceed 10 percent of the
judgment. The proceeds of a sale following foreclosure as provided
by this subsection shall be applied first to the payment of court
costs, then to payment of the judgment, including accrued interest,
and then to the payment of any attorney's fees fixed in the
judgment. Any remaining proceeds shall be paid to other holders of
liens on the property in the order of their priority and then to the
person whose property was sold at the tax sale.
(j) [(i)] The person whose property is sold as provided by
Subsection (c) [this section] or the mortgage servicer of [any
person holding] a first lien against the property at that time is
entitled, within one year after the date the property is sold, to
redeem the property from the purchaser at the tax sale by paying
that purchaser the tax sale purchase price, plus a redemption
premium amount calculated at the rate of 18 percent per year of the
purchase price from the date of sale [costs, and interest accrued on
the judgment] to the date of redemption, plus any costs described by
Section 34.21(g)(2), itemized in writing as required by Section
34.21(i), and paid by the transferee [or 118 percent of the amount
of the judgment, whichever is less]. If a person redeems the
property as provided by this subsection, the purchaser at the tax
sale shall deliver a deed to the property to the person redeeming
the property. If at the time of foreclosure, the person who owned
the property or the mortgage servicer of a lien secured by the
property [at the time of foreclosure] redeems the property, all
liens existing on the property at the time of the tax sale remain in
effect to the extent not paid from the sale proceeds.
SECTION 2. Section 32.065, Tax Code, is amended by amending
Subsections (a)-(c) and (f) and adding Subsection (g) to read as
follows:
(a) Section 32.06 does not abridge the right of an owner of
real property to enter into a contract for the payment of taxes
[with the holder of a lien on the property, including a transferee
under Section 32.06 or this section, or affect a contract between
the owner and holder of a lien for the payment of taxes on the
property].
(b) Notwithstanding any agreement to the contrary, a [A]
contract entered into under Subsection (a) between a transferee and
the property owner under Section 32.06 that is secured by a lien on
the property shall [may] provide for a power of sale and foreclosure
under Chapter 51, Property Code, and:
(1) an event of default; [and]
(2) notice of acceleration;
(3) recording of the contract and security instrument
in each county in which the property is located;
(4) an affidavit describing the amount paid to the
taxing unit and a description and the amount of each fee, cost, or
expense charged to or paid by the owner of the property under the
contract or security instrument secured by the owner's property;
(5) requiring the transferee to serve foreclosure
notices on the property owner at the property owner's last known
address in the manner required by Sections 51.002(b), (d), and (e),
Property Code, or by a commercially reasonable delivery service
that maintains verifiable records of deliveries for at least five
years from the date of delivery; and
(6) requiring at the time the foreclosure notices
required by Subdivision (5) are served on the property owner, the
transferee shall serve a copy of the foreclosure notices in the same
manner on the mortgage servicer of any recorded real property lien
encumbering the property with a separate notice that includes a
statement addressed to the mortgage servicer that contains a
disclosure printed in 14-point boldfaced type or 14-point uppercase
typewritten letters that reads substantially as follows:
"THE SECURITY INTEREST RECORDED IN (NAME OF COUNTY),
TEXAS, AT (THE DATE AND VOLUME AND PAGE NUMBER, FILM
CODE NUMBER, OR COUNTY CLERK FILE NUMBER OF THE
MORTGAGOR'S SECURITY INSTRUMENT OR CONTRACT) SECURED
BY THE PROPERTY COMMONLY KNOWN AS (STREET ADDRESS OF
PROPERTY) AND (LEGAL DESCRIPTION OF PROPERTY) EXECUTED
BY (NAME OF CURRENT MORTGAGEE'S MORTGAGOR) MAY BE
EXTINGUISHED BY THE FORECLOSURE INDICATED IN THE
ATTACHED NOTICE THAT WAS SENT TO (PROPERTY OWNER'S
NAME) BY (TRANSFEREE'S NAME) WHO MAY BE CONTACTED
BETWEEN 9 A.M. AND 3 P.M. CENTRAL STANDARD TIME AT
(TRANSFEREE'S STREET AND MAILING ADDRESS AND TELEPHONE
NUMBER, FAX NUMBER, OR EMAIL ADDRESS). YOU ARE ADVISED
THAT UNDER CERTAIN CONDITIONS THE LIEN SOUGHT TO BE
FORECLOSED MAY BE REDEEMED UNDER THE PROVISIONS OF
SECTION 32.06, TAX CODE."
(c) Except as provided by Section 32.06 and
[Notwithstanding any other provision of] this section [code], a
transferee of a tax lien is subrogated to and is entitled to
exercise any right or remedy possessed by the transferring taxing
unit, including or related to foreclosure or judicial sale.
(f) The first written communication by the transferee
[lender] to the transferee's [its] prospective borrower shall
disclose each type and the amount [types] of possible additional
charges or fees that may be incurred by the borrower in connection
with the loan or contract under this section or in any subsequent
foreclosure.
(g) An affidavit of the transferee executed after
foreclosure of a tax lien that recites compliance with the terms of
Section 32.06 and this section and is recorded in each county in
which the property is located:
(1) is prima facie evidence of compliance with Section
32.06 and this section; and
(2) may be relied on conclusively by a bona fide
purchaser for value without notice of any failure to comply.
SECTION 3. This Act takes effect September 1, 2005.