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A BILL TO BE ENTITLED
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AN ACT
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relating to the transfer of ad valorem tax liens. |
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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), (d), (e), (f), and (j), and by adding |
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Subsections (b-1), (b-2), (e-1), and (e-2) 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; and |
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(4) an itemization of all amounts charged in |
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connection with the authorization or with any contract relating to |
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the transfer of the tax lien. |
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(b-1) Not later than the 12th day before the date a property |
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owner executes a sworn document described by Subsection (a-1), the |
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proposed transferee shall provide the property owner a disclosure |
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statement that complies with the requirements established by the |
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Department of Savings and Mortgage Lending. |
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(b-2) No later than the 10th day after the date the sworn |
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document described by Subsection (a-1) has been filed with the |
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collector, the transferee of the tax lien shall provide a copy of |
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the sworn document to any mortgage servicer and to each holder of a |
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recorded lien encumbering the property by certified mail, return |
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receipt requested. The copy must be sent to the address shown on |
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the most recent payment invoice, statement, or payment coupon |
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provided by a mortgage servicer to the property owner, or the |
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address in the real property records of the holder of a recorded |
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lien, as applicable. The outside of the envelope containing the |
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notice must also bear the following words in at least 14-point |
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boldfaced type: "THE ADDRESSEE MAY WISH TO REFER THIS MATTER TO AN |
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ATTORNEY FOR IMMEDIATE REVIEW." If the notice required by this |
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subsection is not sent in compliance with this subsection, the |
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transferred lien is subordinate to all previously recorded liens |
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encumbering the property. |
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(d) To be enforceable, a tax lien transferred as provided by |
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this section must be recorded with the sworn document described by |
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Subsection (a-1) and the sworn statement and affidavit attesting to |
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the transfer of the tax lien as described by [in] Subsection (b) in |
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the deed records of each county in which the property encumbered by |
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the lien is located. |
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(e) A transferee holding a tax lien transferred as provided |
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by this section may not charge a greater rate of interest than 18 |
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percent a year on the funds advanced. Funds advanced are limited to |
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the taxes, penalties, interest, and collection costs paid as shown |
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on the tax receipt, expenses paid to record the lien, plus |
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reasonable closing costs. No other amounts may be charged by the |
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transferee at or before closing. For purposes of this subsection, |
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reasonable closing costs are limited to the following: |
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(1) reasonable fees for: |
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(A) title examination and preparation of an |
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abstract of title by: |
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(i) an attorney who is not an employee of |
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the transferee; or |
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(ii) a title company or property search |
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company authorized to do business in this state; and |
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(B) premiums or fees for title insurance or title |
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search for the benefit of the transferee; |
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(2) reasonable fees charged to the transferee by an |
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attorney who is not a salaried employee of the transferee for |
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preparation of the documents in connection with the transfer if the |
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fees are evidenced by a statement for services rendered; |
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(3) charges prescribed by law that are paid to public |
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officials for determining the existence of a security interest or |
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for perfecting, releasing, or satisfying a security interest; |
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(4) reasonable fees for an appraisal of real property |
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offered as security for the transfer prepared by an appraiser who is |
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not a salaried employee of the transferee; |
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(5) the reasonable cost of a credit report; |
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(6) reasonable fees for a survey of real property |
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offered as security for the transfer prepared by a registered |
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surveyor who is not a salaried employee of the transferee; |
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(7) the premiums received in connection with the sale |
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of optional credit life insurance, credit accident and health |
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insurance, or other insurance that protects the transferee against |
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default by the property owner, the benefits of which are applied in |
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whole or in part to reduce or extinguish the balance of the transfer |
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indebtedness; and |
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(8) an administrative fee in an amount not to exceed |
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$25 for a loan of more than $1,000 or $20 for a loan of $1,000 or |
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less. |
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(e-1) A contract between a property owner and a transferee |
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holding a tax lien transferred as provided by this section: |
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(1) may include: |
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(A) a late payment fee that may not exceed the |
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lesser of five percent of the payment or $5, if a payment by the |
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property owner remains unpaid for more than 10 days after the date |
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the payment is due; and |
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(B) a fee for a dishonored check, subject to |
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Section 3.506, Business & Commerce Code; and |
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(2) may not include a prepayment penalty. |
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(e-2) Only one late payment fee may be collected under |
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Subsection (e-1) in connection with a single payment regardless of |
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the duration of the default. |
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(f) The mortgage servicer or holder of a preexisting lien on |
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property encumbered by a tax lien transferred as provided by |
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Subsection (b) is entitled, within six months after the date on |
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which the tax lien transfer is recorded in all counties in which the |
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property is located, to obtain a release of the transferred tax lien |
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by paying the transferee of the tax lien the amount owed under the |
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contract between the property owner and the transferee. 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. The |
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transferee is required to provide payoff information, |
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notwithstanding any contrary contractual agreement with the |
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property owner, to the greatest extent permitted by 15 U.S.C. |
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Section 6802 and 12 C.F.R. Part 216. |
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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 that the transferee may |
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foreclose the lien only after more than one year from that date |
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[otherwise]. If a foreclosure suit results in foreclosure of the |
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lien, the transferee is entitled to recover attorney's fees in an |
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amount not to exceed 10 percent of the judgment. The proceeds of a |
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sale following a judicial foreclosure as provided by this |
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subsection shall be applied first to the payment of court costs, |
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then to payment of the judgment, including accrued interest, and |
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then to the payment of any attorney's fees fixed in the judgment. |
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Any remaining proceeds shall be paid to other holders of liens on |
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the property in the order of their priority and then to the person |
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whose property was sold at the tax sale. |
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SECTION 2. Section 32.065(b), Tax Code, is amended to read |
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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 is subject to each requirement of Section 32.06 |
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other than a requirement relating to judicial foreclosure, and |
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shall provide for a power of sale and foreclosure under Chapter 51, |
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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 contract in each county in which |
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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 Sections 51.002(b), (d), and (e), |
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Property Code, or by a commercially reasonable delivery service |
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that maintains verifiable records of deliveries for at least five |
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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 and [or] the holder of all recorded real |
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property liens encumbering the property that includes on the first |
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page, in 14-point boldfaced type or 14-point uppercase typewritten |
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letters, a statement that reads substantially as follows: |
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"PURSUANT TO TEXAS TAX CODE SECTION 32.06, THE FORECLOSURE |
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SALE REFERRED TO IN THIS DOCUMENT IS 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)." The outside of the |
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envelope containing the notice must also bear the following words |
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in at least 14-point boldfaced type: "THE ADDRESSEE MAY WISH TO |
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REFER THIS MATTER TO AN ATTORNEY FOR IMMEDIATE REVIEW." |
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SECTION 3. Chapter 13, Finance Code, is amended by adding |
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Section 13.0075 to read as follows: |
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Sec. 13.0075. AD VALOREM TAX LIEN TRANSFER DISCLOSURE |
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STATEMENT. The commissioner by rule shall establish the form and |
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contents of the disclosure statement required by Section |
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32.06(b-1), Tax Code. The disclosure statement must be designed so |
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that the statement: |
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(1) specifies the amount of each fee or charge the |
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proposed transferee of the tax lien will charge in connection with |
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the transfer of the tax lien or any contract under Section 32.065, |
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Tax Code; |
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(2) conspicuously warns the property owner that |
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entering into the tax lien transfer transaction may violate an |
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agreement relating to an existing lien encumbering the property, |
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which will permit the holder of the lien, without the property |
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owner's consent, to pay off the loan obtained for payment of taxes |
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to eliminate the tax lien or to foreclose the property; |
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(3) advises the property owner that a holder of an |
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existing lien, if requested, may agree to pay unpaid taxes on the |
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property and charge a lower interest rate or establish an escrow |
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arrangement and charge no interest; |
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(4) informs the property owner that if the owner has |
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any questions about the proposed transfer, or if the property owner |
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has any complaints or questions about the proposed transferee, the |
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owner may contact the Department of Savings and Mortgage Lending; |
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and |
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(5) provides a Department of Savings and Mortgage |
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Lending toll-free telephone number and contact information for the |
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department. |
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SECTION 4. Section 32.065(g), Tax Code, as added by Chapter |
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406, Acts of the 79th Legislature, Regular Session, 2005, is |
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repealed. |
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SECTION 5. (a) As soon as practicable after the effective |
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date of this Act, the savings and loan commissioner by rule shall |
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prescribe the form and contents of the disclosure statement |
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required by Section 32.06, Tax Code, as amended by this Act. |
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(b) The changes in law made by this Act to Section 32.06, Tax |
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Code, that relate to the disclosure statement required by that |
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section may not be enforced until the savings and loan commissioner |
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has complied with Subsection (a) of this section and the rules |
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adopted under Subsection (a) of this section take effect. |
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SECTION 6. This Act takes effect September 1, 2007. |