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A BILL TO BE ENTITLED
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AN ACT
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relating to ad valorem tax lien transfers. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 32.06, Tax Code, is amended by amending |
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Subsections (a-1), (a-2), (a-3), (b), (c), (d), (f), (g), (i), (j), |
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and (k) and adding Subsections (a-4), (b-1), (c-1), (d-1), and |
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(k-1) to read as follows: |
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(a-1) A person may authorize another person to pay the |
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[delinquent] taxes imposed by a taxing unit on the person's real |
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property by filing with the collector for the unit a sworn document |
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stating: |
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(1) the authorization; |
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(2) the name and street address of the transferee |
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authorized to pay the taxes of the property owner; and |
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(3) a description of the property by street address, |
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if applicable, and legal description. |
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(a-2) A [After a] tax lien may be [is] transferred to the |
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person who pays the taxes on behalf of the property owner under the |
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authorization for: |
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(1) taxes that are delinquent at the time of payment; |
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or |
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(2) taxes that are not delinquent at the time of |
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payment if: |
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(A) the property is not subject to a recorded |
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mortgage lien; |
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(B) a tax lien transfer authorized by the |
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property owner has been executed and recorded for one or more prior |
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years on the same property; or |
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(C) the property owner has executed an |
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authorization consenting to a transfer of the tax liens for both the |
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taxes on the property that are not delinquent and taxes on the |
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property that are delinquent[, taxes on the property that become
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due in subsequent tax years may be transferred before the
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delinquency date in the manner provided by Subsection (a-1)]. |
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(a-3) If the property owner has executed an authorization |
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under Section (a-2)(2)(C) consenting to a transfer of the tax liens |
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for both the taxes on the property that are not delinquent and taxes |
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on the property that are delinquent, the collector shall certify in |
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one document the transfer of the liens for all the taxes. |
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(a-4) The Finance Commission of Texas shall: |
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(1) prescribe the form and content of an appropriate |
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disclosure statement to be provided to a property owner before the |
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execution of a tax lien transfer; |
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(2) adopt rules relating to the reasonableness of |
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closing costs, fees, and other charges permitted under this |
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section; and |
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(3) adopt rules relating to the prohibition of |
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deceptive practices that, to a homeowner's detriment, take |
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advantage of the lack of knowledge, ability, experience, or |
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capacity of the homeowner [A tax lien may be transferred before the
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delinquency date in the manner provided by Subsection (a-1) only if
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the real property is not subject to a lien other than the tax lien]. |
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(b) If a transferee authorized to pay a property owner's |
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taxes pursuant to Subsection (a-1) pays the taxes and any penalties |
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and interest imposed, the collector shall issue a tax receipt to |
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that transferee. In addition, the collector or a person designated |
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by the collector shall certify [on the sworn document] that |
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[payment of] the taxes and any penalties and interest on the subject |
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[described] property and collection costs have [has] been paid |
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[made] by the transferee on behalf of the property owner [liable for
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the taxes when imposed] and that the taxing unit's tax lien is |
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transferred to that transferee. The collector shall attach to the |
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certified statement [sworn document] the collector's seal of office |
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or sign the statement [document] before a notary public and deliver |
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[the sworn document,] a tax receipt[,] and the statement |
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[affidavit] attesting to the transfer of the tax lien to the |
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transferee within 30 days. The [sworn document,] tax receipt[,] |
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and statement [affidavit attesting to the transfer of the tax lien] |
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may be combined into one document. The collector shall |
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[conspicuously] identify in a discrete field in the applicable |
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property owner's [taxpayer's] account the date of the transfer of a |
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tax lien transferred under this section. When a tax lien is |
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released, the transferee shall file a release with the county clerk |
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of each county in which the property encumbered by the lien is |
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located for recordation by the clerk and send a copy to the |
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collector. The transferee may charge the property owner a |
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reasonable fee for filing the release. |
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(b-1) Not later than the 10th business day after the date |
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the certified statement is received by the transferee, the |
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transferee shall send by certified mail a copy of the sworn document |
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described by Subsection (a-1) to each holder of a recorded first |
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lien encumbering the property. The copy must be sent, as |
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applicable, to the address shown on the most recent payment |
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invoice, statement, or payment coupon provided by the mortgage |
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servicer to the property owner, or the address of the holder of a |
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recorded first lien as shown in the real property records. |
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(c) Except as otherwise provided by this section, the |
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transferee of a tax lien and any successor in interest is entitled |
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to foreclose the lien: |
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(1) in the manner provided by law for foreclosure of |
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tax liens; or |
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(2) in the manner specified in Section 51.002, |
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Property Code, and Section 32.065, after the transferee or a |
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successor in interest obtains a court order for foreclosure under |
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Rule 736, Texas Rules of Civil Procedure, except as provided by |
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Subsection (c-1) of this section [of this code], if the property |
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owner and the transferee enter into a contract that is secured by a |
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lien on the property. |
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(c-1) If a transferee seeks to foreclose a tax lien on the |
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property under Subsection (c)(2): |
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(1) the application for the foreclosure must: |
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(A) allege that the lien is an ad valorem tax lien |
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instead of a lien created under Section 50, Article XVI, Texas |
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Constitution; |
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(B) state that the applicant does not seek a |
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court order required by Section 50, Article XVI, Texas |
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Constitution; |
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(C) state that the transferee has provided notice |
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to cure the default and notice of intent to accelerate to the |
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property owner, and notice of acceleration of the maturity of the |
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debt to the property owner, any recorded mortgage servicer, and |
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each holder of a recorded lien on the property in the manner |
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required for notice to a debtor under Section 51.002, Property |
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Code; |
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(D) state the applicant has confirmed with the |
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chief appraiser for the appraisal district in which the property is |
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located that the homeowner has not filed an affidavit of deferral |
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under Section 33.06, Tax Code; and |
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(E) verify the application; and |
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(2) the holder of a recorded preexisting lien must be |
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provided at least 60 days' notice before the date of the proposed |
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foreclosure, and notwithstanding any contractual agreement with |
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the property owner is entitled to payoff information to the |
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greatest extent permitted by 15 U.S.C. Section 6802 and 12 C.F.R. |
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Part 216. |
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(d) A transferee shall record [To be enforceable,] a tax |
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lien transferred as provided by this section [must be recorded] |
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with the [sworn] statement [and affidavit] attesting to the |
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transfer of the tax lien as described by [in] Subsection (b) in the |
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deed records of each county in which the property encumbered by the |
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lien is located. |
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(d-1) A right of rescission described by 12 C.F.R. Section |
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226.23 applies to a tax lien transfer under this section. |
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(f) The holder of a loan secured by a transferred tax lien |
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that is delinquent for 90 consecutive days must send a notice of the |
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delinquency by certified mail on or before the 120th day of |
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delinquency or, if the 120th day is not a business day, on the next |
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business day after the 120th day of delinquency, to any holder of a |
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recorded preexisting lien on the property. The mortgage servicer |
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of a recorded preexisting lien on property encumbered by a tax lien |
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transferred as provided by Subsection (b) may [is entitled, within
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six months after the date on which the tax lien is recorded in all
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counties in which the property is located, to] obtain a release of |
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the transferred tax lien by paying the transferee of the tax lien |
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the amount owed under the contract between the property owner and |
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the transferee, if the tax lien has not been reinstated or |
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foreclosed. This right does not affect a right of redemption in a |
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foreclosure proceeding described by Subsection (k) or (k-1). A |
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transferee may charge a reasonable fee for a payoff statement that |
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is requested after an initial payoff statement is provided. To be |
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valid, the payoff statement must meet the requirements of a payoff |
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statement defined by Section 12.017, Property Code, and must be |
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provided, upon request, to any holder of a recorded preexisting |
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lien on the property, notwithstanding any contractual agreement |
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with the property owner, to the greatest extent permitted by 15 |
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U.S.C. Section 6802 and 12 C.F.R. Part 216. |
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(g) Failure to comply with Subsection (b-1), (c-1)(2), or |
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(f) does not invalidate a tax lien under this chapter, a contract |
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lien, or a deed of trust [At any time after the end of the six-month
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period specified by Subsection (f) and before a notice of
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foreclosure of the transferred tax lien is sent, the transferee of
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the tax lien or the holder of the tax lien may require the property
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owner to provide written authorization and pay a reasonable fee
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before providing information regarding the current balance owed by
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the property owner to the transferee or the holder of the tax lien]. |
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(i) A foreclosure of a tax lien transferred as provided by |
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this section may not be instituted within one year from the date on |
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which the lien is recorded in all counties in which the property is |
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located, unless the contract between the owner of the property and |
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the transferee provides otherwise. [The transferee of a tax lien or
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any successor in interest must notify the holders of all recorded
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liens on the property before foreclosure in the same manner and
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within the same time frame as the transferee must notify the owner
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of the property under Section 51.002, Property Code.] |
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(j) After one year from the date on which a tax lien |
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transferred as provided by this section is recorded in all counties |
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in which the property is located, the transferee of the lien may |
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foreclose the lien in the manner provided by Subsection (c) unless a |
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contract between the holder of the lien and the owner of the |
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property encumbered by the lien provides otherwise. If a |
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foreclosure suit under Subsection (c)(1) results in foreclosure of |
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the lien, the transferee is entitled to recover attorney's fees in |
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an amount not to exceed 10 percent of the judgment. The proceeds of |
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a sale following a foreclosure suit under Subsection (c)(1) |
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[judicial foreclosure as provided by this subsection] shall be |
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applied first to the payment of court costs, then to payment of the |
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judgment, including accrued interest, and then to the payment of |
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any attorney's fees fixed in the judgment. Any remaining proceeds |
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shall be paid to other holders of liens on the property in the order |
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of their priority and then to the person whose property was sold at |
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the tax sale. |
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(k) Beginning on the date the foreclosure deed is recorded, |
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the person whose property is sold as provided by Subsection (c) or |
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the mortgage servicer of a prior recorded lien against the property |
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is entitled to redeem the foreclosed property from the purchaser or |
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the purchaser's successor by paying the purchaser or successor: |
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(1) 125 percent of the purchase price during the first |
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year of the redemption period or 150 percent of the purchase price |
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during the second year of the redemption period with cash or cash |
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equivalent funds; and |
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(2) the amount reasonably spent by the purchaser in |
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connection with the property as costs within the meaning of Section |
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34.21(g) and the legal judgment rate of return on that amount. |
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(k-1) The right of redemption provided by Subsection (k) may |
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be exercised on or before the second anniversary of the date on |
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which the purchaser's deed is filed of record if the property sold |
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was the residence homestead of the owner, was land designated for |
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agricultural use, or was a mineral interest. For any other |
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property, the right of redemption must be exercised not later than |
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the 180th day after the date on which the purchaser's deed is filed |
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of record. If a person redeems the property as provided by |
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Subsection (k) and this subsection, the purchaser at the tax sale or |
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the purchaser's successor shall deliver a deed without warranty to |
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the property to the person redeeming the property. If the person |
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who owned the property at the time of foreclosure redeems the |
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property, all liens existing on the property at the time of the tax |
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sale remain in effect to the extent not paid from the sale proceeds. |
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SECTION 2. Subsections (b), (c), and (d), Section 32.065, |
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Tax Code, are amended to read as follows: |
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(b) Notwithstanding any agreement to the contrary, a |
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contract entered into under Subsection (a) between a transferee and |
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the property owner under Section 32.06 that is secured by a priority |
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lien on the property shall provide for a power of sale and |
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foreclosure in the manner provided by Section 32.06(c)(2) [under
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Chapter 51, Property Code,] and: |
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(1) an event of default; |
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(2) notice of acceleration; |
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(3) recording of the deed of trust or other instrument |
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securing the contract entered into under Subsection (a) in each |
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county in which the property is located; |
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(4) recording of the sworn document and affidavit |
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attesting to the transfer of the tax lien; |
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(5) requiring the transferee to serve foreclosure |
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notices on the property owner at the property owner's last known |
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address in the manner provided [required] by Section 32.06(c)(2) |
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[Sections 51.002(b), (d), and (e), Property Code,] or by a |
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commercially reasonable delivery service that maintains verifiable |
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records of deliveries for at least five years from the date of |
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delivery; and |
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(6) requiring that notice under Section 32.06(c-1)(2) |
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include, [at the time the foreclosure notices required by
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Subdivision (5) are served on the property owner, the transferee to
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serve a copy of the notice of sale in the same manner on the mortgage
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servicer or the holder of all recorded real property liens
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encumbering the property that includes] on the first page, in |
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14-point boldfaced type or 14-point uppercase typewritten letters, |
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a statement that reads substantially as follows: "PURSUANT TO |
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TEXAS TAX CODE SECTION 32.06, THE FORECLOSURE SALE REFERRED TO IN |
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THIS DOCUMENT IS A FORECLOSURE OF A SUPERIOR TRANSFER TAX LIEN |
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SUBJECT TO RIGHT OF REDEMPTION UNDER CERTAIN CONDITIONS. [THE
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FORECLOSURE IS SCHEDULED TO OCCUR ON THE (DATE).] |
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(c) Notwithstanding any other provision of this code, a |
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transferee of a tax lien or the transferee's assignee is subrogated |
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to and is entitled to exercise any right or remedy possessed by the |
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transferring taxing unit, including or related to foreclosure or |
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judicial sale, but is prohibited from exercising a remedy of |
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foreclosure or judicial sale where the transferring taxing unit |
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would be prohibited from foreclosure or judicial sale. |
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(d) Chapters 342 and 346, Finance Code, and the provisions |
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of Chapter 343, Finance Code, other than Sections 343.203 and |
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343.205, do not apply to a transaction covered by this section. The |
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transferee of a tax lien under this section is not required to |
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obtain a license under Title 4, Finance Code. |
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SECTION 3. Section 32.065(b-1), Tax Code, is repealed. |
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SECTION 4. Subsection (g), Section 32.065, Tax Code, as |
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added by Chapter 406, Acts of the 79th Legislature, Regular |
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Session, 2005, is repealed. |
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SECTION 5. (a) The change in law made by this Act applies |
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only to the transfer of an ad valorem tax lien that occurs on or |
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after the effective date of this Act. A transfer of an ad valorem |
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tax lien that occurs before the effective date of this Act is |
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covered by the law in effect at the time the transfer occurred, and |
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the former law is continued in effect for that purpose. |
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(b) The change in law made by this Act to Sections 32.06 and |
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32.065, Tax Code, applies to all foreclosures under those sections |
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that occur on or after the effective date of this Act, other than a |
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foreclosure under a transferred ad valorem tax lien that was |
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transferred before the effective date of this Act pursuant to a |
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contract that provided for specific foreclosure procedures under |
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the law in effect at the time the contract was executed. A |
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foreclosure under a transferred ad valorem tax lien that was |
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transferred before the effective date of this Act pursuant to a |
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contract that provided for specific foreclosure procedures under |
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the law in effect at the time the contract was executed is governed |
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by the law in effect at the time the contract was executed, and the |
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former law is continued in effect for that purpose. |
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SECTION 6. This Act takes effect September 1, 2007. |