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A BILL TO BE ENTITLED
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AN ACT
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relating to enforcement of a lien against certain decedents' |
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interests in real property. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subtitle C, Title 2, Estates Code, as effective |
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January 1, 2014, is amended by adding Chapter 125 to read as |
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follows: |
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CHAPTER 125. ENFORCEMENT OF LIEN AGAINST CERTAIN DECEDENTS' |
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INTERESTS IN REAL PROPERTY |
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SUBCHAPTER A. GENERAL PROVISIONS |
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Sec. 125.001. DEFINITIONS. In this chapter, "mortgage |
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servicer," "mortgagee," "mortgagor," and "security instrument" |
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have the meanings assigned by Section 51.0001, Property Code. |
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Sec. 125.002. APPLICABILITY OF CHAPTER; CONFLICT WITH OTHER |
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LAW. (a) This chapter applies only to foreclosure of a lien on real |
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property in which a decedent had an interest if the decedent was the |
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mortgagor of the security instrument creating the lien and an |
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obligor of the debt secured by the lien. |
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(b) To the extent of a conflict between this chapter and |
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another provision of this title, Rule 736, Texas Rules of Civil |
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Procedure, or Chapter 51, Property Code, this chapter controls. |
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SUBCHAPTER B. FORECLOSURE OF LIEN |
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Sec. 125.051. PROCEDURE PRIOR TO FORECLOSURE. (a) If a |
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debt that is secured by a decedent's interest in real property under |
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a security instrument is in default and no probate proceeding has |
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been commenced, the mortgagee or mortgage servicer may proceed with |
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foreclosure of the lien on the real property in accordance with this |
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section. |
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(b) Foreclosure of a lien on real property under this |
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section may not be initiated earlier than the 180th day after the |
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date of the decedent's death. |
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(c) Foreclosure of a lien on real property under this |
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section is considered an election by the mortgagee to have the claim |
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allowed, approved, and fixed as a preferred debt and lien claim |
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against the decedent's interest in the real property securing the |
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debt and paid according to the terms of the contract that secured |
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the lien. No further claim for the debt may be made by the mortgagee |
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against any other assets of the decedent's estate. |
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(d) The mortgagee or mortgage servicer, concurrently with |
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obtaining a judgment declaring heirship under Chapter 202, must: |
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(1) obtain a court order under Rule 736, Texas Rules of |
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Civil Procedure, allowing the mortgagee or mortgage servicer to |
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proceed with foreclosure of the lien under Chapter 51, Property |
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Code, and the terms of the security instrument; and |
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(2) give notice in accordance with Subchapter C. |
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Sec. 125.052. EFFECT OF FORECLOSURE. A deed given pursuant |
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to a foreclosure of a lien on real property in accordance with this |
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chapter divests all persons receiving notice under Subchapter C of |
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any right or title to or interest in the decedent's interest in the |
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real property. |
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SUBCHAPTER C. NOTICE AND OTHER REQUIREMENTS |
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Sec. 125.101. NOTICE. (a) For purposes of Section |
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51.002(b), Property Code, a mortgagee or mortgage servicer |
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foreclosing a lien under this chapter must send notice of sale to: |
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(1) each surviving obligor of the debt secured by the |
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real property or surviving mortgagor of the security instrument |
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encumbering the real property, sent to: |
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(A) the street address of the property subject to |
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the foreclosure; and |
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(B) the last known address in the records of the |
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mortgagee or mortgage servicer identified by the decedent |
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mortgagor, surviving mortgagor, or surviving obligor as an address |
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for notice; |
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(2) the decedent, with the notation "Decedent," sent |
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to the street address of the property subject to the foreclosure; |
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(3) the surviving spouse of the mortgagor, if any; |
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(4) each heir of the decedent named in the judgment |
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obtained under Chapter 202, sent to the heir's last known address; |
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(5) the "Occupant," sent to the street address of the |
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property subject to the foreclosure; and |
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(6) if an heir is a minor child or otherwise under a |
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legal disability, the person who is a natural guardian, a guardian, |
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or, if known to the mortgagee or mortgage servicer, an agent or |
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attorney in fact under a power of attorney signed by the heir, sent |
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to the person's last known address. |
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(b) The mortgagee or mortgage servicer shall mail a notice |
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required under Subsection (a) both by regular mail and by |
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registered or certified mail. |
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(c) If the name, last known address, or whereabouts of the |
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surviving spouse or an heir of a decedent or other person to whom |
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notice is required to be given under this section are unknown, the |
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mortgagee or mortgage servicer shall describe to the court by |
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affidavit the due diligence exercised by the person to find or |
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locate the whereabouts of the spouse, heir, or other person for |
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purposes of providing notice under this section and the court shall |
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determine whether citation by publication is necessary. |
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Sec. 125.102. CONTENTS OF APPLICATION FOR RULE 736 ORDER. |
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An application pursuant to this chapter for a court order under Rule |
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736, Texas Rules of Civil Procedure, must: |
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(1) substantially comply with the requirements of Rule |
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736.1; and |
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(2) contain an estimate of the "fair market value" of |
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the property prepared not earlier than the 120th day before the date |
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the application is filed and supported by documentation as to fair |
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market value. |
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Sec. 125.103. CONTENTS OF ORDER. An order allowing the |
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mortgagee or mortgage servicer to proceed with the foreclosure of a |
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lien under this chapter must: |
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(1) describe the material facts establishing the basis |
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for foreclosure; |
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(2) describe the real property to be foreclosed by the |
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property's commonly known mailing address and legal description; |
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(3) contain the name and last known address of each |
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person who is to receive the notice under this subchapter; and |
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(4) contain the recording or indexing information of |
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the security instrument to be foreclosed. |
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Sec. 125.104. ATTACHMENT OF ORDER TO TRUSTEE'S DEED. A |
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conformed copy of the court order obtained under Rule 736, Texas |
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Rules of Civil Procedure, pursuant to this chapter must be attached |
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to the trustee's or substitute trustee's deed when recorded in the |
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real property records. |
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SUBCHAPTER D. DISPOSITION OF EXCESS PROCEEDS OF FORECLOSURE SALE |
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Sec. 125.151. PAYMENT OF EXCESS PROCEEDS INTO COURT |
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REGISTRY. Not later than the 90th day after the date of a |
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foreclosure sale conducted pursuant to this chapter, the trustee or |
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substitute trustee shall pay into the court registry any proceeds |
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of the foreclosure sale remaining after the payment of: |
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(1) the costs of the foreclosure; |
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(2) any trustee fees or attorney's fees permitted |
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under a security instrument evidencing a lien foreclosed under this |
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chapter; and |
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(3) the debt owed to any lienholder who obtained an |
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order under this chapter in the order of priority of those liens. |
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Sec. 125.152. WITHDRAWAL FROM COURT REGISTRY. Excess |
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proceeds paid into a court registry as required by Section 125.151 |
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may be withdrawn as follows: |
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(1) the personal representative of the decedent's |
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estate may withdraw the excess proceeds to be administered as a part |
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of the decedent's estate; or |
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(2) if no person is serving as personal representative |
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of the decedent's estate, the decedent's heirs named in a judgment |
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in a proceeding to declare heirship under Chapter 202 may withdraw |
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the excess proceeds on the earlier of: |
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(A) the expiration of the fourth anniversary of |
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the date of the decedent's death; or |
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(B) the date of entry of an order of no |
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administration under Chapter 451. |
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Sec. 125.153. PAYMENT TO COMPTROLLER. If any money paid |
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into the court registry under this subchapter remains on deposit |
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with the court four years and six months after the date of the |
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decedent's death, the court shall order the remaining amount to be |
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paid to the comptroller in accordance with Chapter 551. |
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SECTION 2. Chapter 125, Estates Code, as added by this Act, |
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applies only to the estate of a decedent who dies on or after the |
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effective date of this Act. The estate of a decedent who dies |
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before the effective date of this Act is governed by the law in |
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effect on the date of the decedent's death, and the former law is |
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continued in effect for that purpose. |
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SECTION 3. This Act takes effect January 1, 2014. |
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