80R7868 JPL-F

By: Orr H.B. No. 3387

A BILL TO BE ENTITLED

AN ACT

relating to the transfer 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 by amending Subsections (a-1), (d), (e), (f), and (j), and by adding Subsections (b-1), (b-2), (e-1), and (e-2) to read as follows:

(a-1) A person may authorize another person to pay the delinquent 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 authorized to pay the taxes of the property owner; [and]

(3) a description of the property by street address, if applicable, and legal description; and

(4) an itemization of all amounts charged in connection with the authorization or with any contract relating to the transfer of the tax lien.

(b-1) Not later than the 12th day before the date a property owner executes a sworn document described by Subsection (a-1), the proposed transferee shall provide the property owner a disclosure statement that complies with the requirements established by the Department of Savings and Mortgage Lending.

(b-2) No later than the 10th day after the date the sworn document described by Subsection (a-1) has been filed with the collector, the transferee of the tax lien shall provide a copy of the sworn document to any mortgage servicer and to each holder of a recorded lien encumbering the property by certified mail, return receipt requested. The copy must be sent to the address shown on the most recent payment invoice, statement, or payment coupon provided by a mortgage servicer to the property owner, or the address in the real property records of the holder of a recorded lien, as applicable. The outside of the envelope containing the notice must also bear the following words in at least 14-point boldfaced type: "THE ADDRESSEE MAY WISH TO REFER THIS MATTER TO AN ATTORNEY FOR IMMEDIATE REVIEW." If the notice required by this subsection is not sent in compliance with this subsection, the transferred lien is subordinate to all previously recorded liens encumbering the property.

(d) To be enforceable, a tax lien transferred as provided by this section must be recorded with the sworn document described by Subsection (a-1) and the sworn statement and affidavit attesting to the transfer of the tax lien as described by [in] Subsection (b) in the deed records of each county in which the property encumbered by the lien is located.

(e) A transferee 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 funds advanced. Funds advanced are limited to the taxes, penalties, interest, and collection costs paid as shown on the tax receipt, expenses paid to record the lien, plus reasonable closing costs. No other amounts may be charged by the transferee at or before closing. For purposes of this subsection, reasonable closing costs are limited to the following:

(1) reasonable fees for:

(A) title examination and preparation of an abstract of title by:

(i) an attorney who is not an employee of the transferee; or

(ii) a title company or property search company authorized to do business in this state; and

(B) premiums or fees for title insurance or title search for the benefit of the transferee;

(2) reasonable fees charged to the transferee by an attorney who is not a salaried employee of the transferee for preparation of the documents in connection with the transfer if the fees are evidenced by a statement for services rendered;

(3) charges prescribed by law that are paid to public officials for determining the existence of a security interest or for perfecting, releasing, or satisfying a security interest;

(4) reasonable fees for an appraisal of real property offered as security for the transfer prepared by an appraiser who is not a salaried employee of the transferee;

(5) the reasonable cost of a credit report;

(6) reasonable fees for a survey of real property offered as security for the transfer prepared by a registered surveyor who is not a salaried employee of the transferee;

(7) the premiums received in connection with the sale of optional credit life insurance, credit accident and health insurance, or other insurance that protects the transferee against default by the property owner, the benefits of which are applied in whole or in part to reduce or extinguish the balance of the transfer indebtedness; and

(8) an administrative fee in an amount not to exceed $25 for a loan of more than $1,000 or $20 for a loan of $1,000 or less.

(e-1) A contract between a property owner and a transferee holding a tax lien transferred as provided by this section:

(1) may include:

(A) a late payment fee that may not exceed the lesser of five percent of the payment or $5, if a payment by the property owner remains unpaid for more than 10 days after the date the payment is due; and

(B) a fee for a dishonored check, subject to Section 3.506, Business & Commerce Code; and

(2) may not include a prepayment penalty.

(e-2) Only one late payment fee may be collected under Subsection (e-1) in connection with a single payment regardless of the duration of the default.

(f) The mortgage servicer or holder of a preexisting lien on property encumbered by a tax lien transferred as provided by Subsection (b) is entitled, within six months after the date on which the tax lien transfer is recorded in all counties in which the property is located, to obtain a release of the transferred tax lien by paying the transferee of the tax lien the amount owed under the contract between the property owner and the transferee. A transferee may charge a reasonable fee for a payoff statement that is requested after an initial payoff statement is provided. The transferee is required to provide payoff information, notwithstanding any contrary contractual agreement with the property owner, to the greatest extent permitted by 15 U.S.C. Section 6802 and 12 C.F.R. Part 216.

(j) 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 of the lien may 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 that the transferee may foreclose the lien only after more than one year from that date [otherwise]. If a foreclosure suit results in foreclosure of the lien, the transferee is entitled to recover attorney's fees in an amount not to exceed 10 percent of the judgment. The proceeds of a sale following a judicial 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.

SECTION 2. Section 32.065(b), Tax Code, is amended to read as follows:

(b) Notwithstanding any agreement to the contrary, a contract entered into under Subsection (a) between a transferee and the property owner under Section 32.06 that is secured by a priority lien on the property is subject to each requirement of Section 32.06 other than a requirement relating to judicial foreclosure, and shall provide for a power of sale and foreclosure under Chapter 51, Property Code, and:

(1) an event of default;

(2) notice of acceleration;

(3) recording of the contract in each county in which the property is located;

(4) recording of the sworn document and affidavit attesting to the transfer of the tax lien;

(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 to serve a copy of the notice of sale in the same manner on the mortgage servicer and [or] the holder of all recorded real property liens encumbering the property that includes on the first page, in 14-point boldfaced type or 14-point uppercase typewritten letters, a statement that reads substantially as follows:

"PURSUANT TO TEXAS TAX CODE SECTION 32.06, THE FORECLOSURE SALE REFERRED TO IN THIS DOCUMENT IS A [SUPERIOR] TRANSFER TAX LIEN SUBJECT TO RIGHT OF REDEMPTION UNDER CERTAIN CONDITIONS. THE FORECLOSURE IS SCHEDULED TO OCCUR ON THE (DATE)." The outside of the envelope containing the notice must also bear the following words in at least 14-point boldfaced type: "THE ADDRESSEE MAY WISH TO REFER THIS MATTER TO AN ATTORNEY FOR IMMEDIATE REVIEW."

SECTION 3. Chapter 13, Finance Code, is amended by adding Section 13.0075 to read as follows:

Sec. 13.0075. AD VALOREM TAX LIEN TRANSFER DISCLOSURE STATEMENT. The commissioner by rule shall establish the form and contents of the disclosure statement required by Section 32.06(b-1), Tax Code. The disclosure statement must be designed so that the statement:

(1) specifies the amount of each fee or charge the proposed transferee of the tax lien will charge in connection with the transfer of the tax lien or any contract under Section 32.065, Tax Code;

(2) conspicuously warns the property owner that entering into the tax lien transfer transaction may violate an agreement relating to an existing lien encumbering the property, which will permit the holder of the lien, without the property owner's consent, to pay off the loan obtained for payment of taxes to eliminate the tax lien or to foreclose the property;

(3) advises the property owner that a holder of an existing lien, if requested, may agree to pay unpaid taxes on the property and charge a lower interest rate or establish an escrow arrangement and charge no interest;

(4) informs the property owner that if the owner has any questions about the proposed transfer, or if the property owner has any complaints or questions about the proposed transferee, the owner may contact the Department of Savings and Mortgage Lending; and

(5) provides a Department of Savings and Mortgage Lending toll-free telephone number and contact information for the department.

SECTION 4. Section 32.065(g), Tax Code, as added by Chapter 406, Acts of the 79th Legislature, Regular Session, 2005, is repealed.

SECTION 5. (a) As soon as practicable after the effective date of this Act, the savings and loan commissioner by rule shall prescribe the form and contents of the disclosure statement required by Section 32.06, Tax Code, as amended by this Act.

(b) The changes in law made by this Act to Section 32.06, Tax Code, that relate to the disclosure statement required by that section may not be enforced until the savings and loan commissioner has complied with Subsection (a) of this section and the rules adopted under Subsection (a) of this section take effect.

SECTION 6. This Act takes effect September 1, 2007.