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A BILL TO BE ENTITLED
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AN ACT
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relating to notice of dragnet clauses in deeds of trust. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Title 8, Business & Commerce Code, is amended by |
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adding Chapter 262 to read as follows: |
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CHAPTER 262. DEEDS OF TRUST |
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Sec. 262.001. NOTICE TO CERTAIN THIRD PARTIES OF DRAGNET |
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CLAUSE AND RELATED INDEBTEDNESS. (a) If, after the closing date of |
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a loan secured by a deed of trust, a person agrees to become |
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obligated as a debtor or guarantor on the loan, the mortgagee must |
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provide the person, before the person becomes obligated, written |
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notice of: |
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(1) any provision in the deed of trust that could cause |
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the deed of trust to secure any indebtedness that: |
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(A) was owed before the deed of trust was |
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executed; or |
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(B) became owed after the deed of trust was |
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executed; and |
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(2) all indebtedness secured by the deed of trust at |
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the time the person becomes obligated, including any indebtedness |
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that: |
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(A) was owed before the deed of trust was |
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executed; or |
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(B) became owed after the deed of trust was |
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executed. |
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(b) If a mortgagee assigns or otherwise transfers all or |
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part of the mortgagee's interest in a loan that contains a provision |
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described by Subsection (a)(1) after a person entitled to notice |
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under Subsection (a) has become obligated on the loan, the assignee |
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mortgagee or other transferee must, prior to the assignment or |
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other transfer or, if prior notice is not practicable, not later |
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than the 15th day after the date of the assignment or transfer, |
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provide to the person notice that reflects all indebtedness that is |
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or will be secured by the deed of trust at the time the interest in |
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the loan is assigned or otherwise transferred to the assignee |
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mortgagee or transferee. |
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(c) If a person fails to give a notice required by this |
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section: |
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(1) the obligations on the loan of the person entitled |
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to the notice are voidable; and |
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(2) the person entitled to the notice is entitled to |
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the refund of all payments made by the person on the loan to the |
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mortgagee, or any subsequent assignee or transferee, who failed to |
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provide the notice and is entitled to interest on those payments. |
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SECTION 2. Chapter 262, Business & Commerce Code, as added |
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by this Act, applies only to a loan closed on or after the effective |
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date of this Act. A loan closed before the effective date of this |
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Act is governed by the law in effect when the loan was closed, and |
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that law is continued in effect for that purpose. |
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SECTION 3. This Act takes effect September 1, 2009. |