By: Ellis  S.B. No. 1757
         (In the Senate - Filed March 9, 2007; March 21, 2007, read
  first time and referred to Committee on Intergovernmental
  Relations; April 23, 2007, reported adversely, with favorable
  Committee Substitute by the following vote:  Yeas 3, Nays 0;
  April 23, 2007, sent to printer.)
 
  COMMITTEE SUBSTITUTE FOR S.B. No. 1757 By:  Patrick
 
 
A BILL TO BE ENTITLED
 
AN ACT
 
  relating to certain real property transactions involving certain
  land banks.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subsection (a), Section 379D.010, Local
  Government Code, is amended to read as follows:
         (a)  The land bank shall impose deed restrictions with
  appropriate terms and conditions on property sold to qualified
  participating developers and eligible adjacent property owners
  that require:
               (1)  the development and sale or rental of the property
  to low income households, if the property is sold to a qualified
  participating developer; or
               (2)  the use of the property to be consistent and
  compatible with the residential character of the neighborhood and
  any applicable standards for use adopted by the land bank, if the
  property is sold to an eligible adjacent property owner.
         SECTION 2.  Section 379D.011, Local Government Code, is
  amended to read as follows:
         Sec. 379D.011.  RIGHT OF FIRST REFUSAL IN ELIGIBLE ADJACENT
  PROPERTY OWNERS; CONDITIONS OF PURCHASE.  (a)  Property acquired by
  the land bank shall be offered for sale, at fair market value as
  determined by the appraisal district in which the property is
  located, to eligible adjacent property owners under a right of
  first refusal on terms and conditions developed by the land bank
  that are consistent with this chapter.
         (b)  To be eligible to exercise a right of first refusal
  under this section, an owner of property adjacent to property
  acquired by the land bank:
               (1)  must have owned and continuously occupied that
  property for at least the five preceding years as that person's
  principal residence; and
               (2)  must meet any eligibility requirements adopted by
  the land bank.
         (c)  An adjacent property owner who purchases property under
  this section may not lease, sell, or otherwise transfer the
  property to another party before the 10th anniversary of the date
  the adjacent property owner purchases the property.  This
  prohibition does not apply to a transfer of property, as allowed by
  policies adopted by the land bank:
               (1)  to a family member of the adjacent property owner;
  or
               (2)  in the case of the death of the adjacent property
  owner.
         SECTION 3.  Chapter 379D, Local Government Code, is amended
  by adding Section 379D.015 to read as follows:
         Sec. 379D.015.  EFFECT OF SALE TO LAND BANK OR SUBSEQUENT
  PURCHASERS OR LENDERS FOR VALUE; LIMITATION ON CERTAIN CAUSES OF
  ACTION.  After the first anniversary of a sale of property to a land
  bank under this chapter:
               (1)  a third party, other than a qualified
  participating developer or eligible adjacent property owner who
  purchased the property from the land bank under this chapter or a
  person with a cause of action based on a right, title, interest, or
  other claim described by Subdivision (2)(A)(ii), may not bring a
  cause of action to set aside or otherwise challenge the sale of the
  property to the land bank, including a cause of action that is
  brought against:
                     (A)  a qualified participating developer or
  eligible adjacent property owner who purchases property from the
  land bank under Section 379D.009 or 379D.011, as applicable; or
                     (B)  any other subsequent purchaser for value or
  lender for value; and
               (2)  a qualified participating developer or eligible
  adjacent property owner who purchases property from a land bank
  under this chapter or any other subsequent purchaser for value or,
  if applicable, a lender for a developer, owner, or purchaser
  described by this subdivision or any other subsequent lender for
  value:
                     (A)  has, with the following characteristics, a
  full title to the property:
                           (i)  except as provided by Subparagraph
  (ii), the title is not subject to any right, title, interest, or
  other claim a person acquired in the property before or after the
  sale of the property to the land bank, including a right of first
  refusal, right of second refusal, and any other right, title,
  interest, or other claim provided by this chapter, other than the
  right of reverter provided by Section 379D.009(d); and
                           (ii)  the title is subject only to:
                                 (a)  the recorded restrictive
  covenants, liens, and valid easements of record described by
  Section 34.01(n), Tax Code;
                                 (b)  any rights of redemption
  applicable to the property;
                                 (c)  any cause of action to impeach the
  property deed based on a claim of fraud;
                                 (d)  the right of reverter provided by
  Section 379D.009(d) and the recorded deed restrictions described by
  Section 379D.010; and
                                 (e)  any right, title, interest, or
  other claim with respect to the property that arose after the sale
  of the property to the land bank under a law other than this
  chapter; and
                     (B)  may conclusively presume that:
                           (i)  the sale of the property to the land
  bank under this chapter was valid; and
                           (ii)  a mortgage on or a subsequent sale of
  the property complies with this chapter and is subject only to a
  right, title, interest, or other claim provided by Paragraph
  (A)(ii).
         SECTION 4.  Section 379D.015, Local Government Code, as
  added by this Act, applies only to a cause of action that accrues on
  or after the effective date of this Act and concerns property that
  is first purchased by a land bank under Section 379D.015, Local
  Government Code, on or after the effective date of this Act.
         SECTION 5.  This Act takes effect September 1, 2007.
 
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