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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), (b), (c), (d), (f), (i), and (k) and |
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adding Subsections (c-1) and (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; or |
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(B) a tax lien transfer to the same person for one |
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or more prior years on the same property has been executed and |
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recorded [, taxes on the property that become due in subsequent tax
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years may be transferred before the delinquency date in the manner
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provided by Subsection (a-1)]. |
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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[,] and |
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statement [affidavit attesting to the transfer of the tax lien] may |
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be combined into one document. The collector shall [conspicuously] |
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identify in a discrete field in the applicable property owner's |
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[taxpayer's] account the date of the transfer of a tax lien |
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transferred under this section. When a tax lien is released, the |
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transferee shall file a release with the collector for recordation |
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by the collector. The transferee may charge the property owner a |
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reasonable fee for filing the release. |
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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 Rule 736, Texas Rules of |
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Civil Procedure, except as provided by Subsection (c-1) of this |
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section [Section 51.002, Property Code,] and Section 32.065 [of
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this code], if the property owner and the transferee enter into a |
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contract that is secured by a 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; and |
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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; and |
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(2) the holder of a preexisting lien must be provided |
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at least 60 days' notice before the date of the proposed transfer. |
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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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(f) When a loan secured by a transferred tax lien is 120 days |
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delinquent, a notice of the delinquency must be sent by certified |
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mail by the holder of the loan on the 120th day of delinquency or, if |
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that day is not a working day, on the next working day to any holder |
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of a preexisting lien on the property. The mortgage servicer of a |
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preexisting lien on property encumbered by a tax lien transferred |
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as provided by Subsection (b) is entitled, within six months after |
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the date on which the notice is sent [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. This right of redemption does not affect a right of |
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redemption in a foreclosure proceeding described by Subsection (k) |
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or (k-1). A transferee may charge a reasonable fee for a payoff |
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statement that is requested after an initial payoff statement is |
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provided. To be valid, the payoff statement must meet the |
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requirements of a payoff statement defined by Section 12.017, |
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Property Code. |
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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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(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. Sections 32.065(b) and (d), Tax Code, are |
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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 required by Section 32.06(c)(2) [Sections
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51.002(b), (d), and (e), Property Code,] or by a commercially |
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reasonable delivery service that maintains verifiable records of |
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deliveries for at least five years from the date of delivery; [and] |
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(6) requiring, at the time the foreclosure notices |
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required by Subdivision (5) are served on the property owner, the |
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transferee to serve a copy of the notice of sale in the same manner |
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on the mortgage servicer or the holder of all recorded real property |
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liens 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 TEXAS |
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TAX CODE SECTION 32.06, THE FORECLOSURE SALE REFERRED TO IN THIS |
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DOCUMENT IS A SUPERIOR TRANSFER TAX LIEN SUBJECT TO RIGHT OF |
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REDEMPTION UNDER CERTAIN CONDITIONS. THE FORECLOSURE IS SCHEDULED |
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TO OCCUR ON THE (DATE)."; and |
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(7) requiring that a contract entered into under |
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Subsection (a) between a transferee and the property owner under |
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Section 32.06 include, in 14-point boldfaced type or 14-point |
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uppercase typewritten letters, a statement that reads |
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substantially as follows: "IF YOU HAVE A FIRST LIEN MORTGAGE |
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PREVIOUSLY RECORDED ON THE PROPERTY SUBJECT TO THIS CONTRACT, |
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FAILURE TO PAY YOUR TAXES ON THE PROPERTY AND ENTERING INTO THIS |
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CONTRACT MAY CONSTITUTE A DEFAULT UNDER THE TERMS OF YOUR |
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MORTGAGE." |
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(d) Chapters 342, 343, and 346, Finance Code, do not apply |
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to a transaction covered by this section. The transferee of a tax |
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lien under this section is not required to obtain a license under |
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Title 4, Finance Code. |
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SECTION 3. The following statutes are repealed: |
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(1) Section 32.06(a-3), Tax Code; and |
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(2) Section 32.065(g), Tax Code, as added by Chapter |
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406, Acts of the 79th Legislature, Regular Session, 2005. |
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SECTION 4. (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 5. This Act takes effect September 1, 2007. |