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A BILL TO BE ENTITLED
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AN ACT
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relating to the rescission of nonjudicial foreclosure sales. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Chapter 51, Property Code, is amended by adding |
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Section 51.016 to read as follows: |
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Sec. 51.016. RESCISSION OF NONJUDICIAL FORECLOSURE SALES. |
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(a) This section applies only to a nonjudicial foreclosure sale |
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conducted under Section 51.002. |
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(b) Not later than the 60th day after the date of a |
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foreclosure sale, a mortgagee, trustee, or substitute trustee may |
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rescind the sale under this section if: |
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(1) the statutory requirements for the sale were not |
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satisfied; |
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(2) the default leading to the sale was cured before |
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the sale; |
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(3) a receivership or dependent probate |
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administration involving the property was pending at the time of |
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sale; |
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(4) a condition specified in the conditions of sale |
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prescribed by the trustee or substitute trustee before the sale and |
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made available in writing to prospective bidders at the sale was not |
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met; |
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(5) the mortgagee or mortgage servicer and the debtor |
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agreed before the sale to cancel the sale based on an enforceable |
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written agreement by the debtor to cure the default; or |
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(6) at the time of the sale, a court-ordered or |
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automatic stay of the sale imposed in a bankruptcy case filed by a |
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person with an interest in the property was in effect. |
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(c) If the trustee's or substitute trustee's deed has not |
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been recorded in the deed records of a county in which all or part of |
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the property is located, the foreclosure sale may be rescinded |
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under this section by serving a written notice of rescission that |
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describes the reason for the rescission on: |
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(1) the purchaser, if the mortgagee is not the |
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purchaser; and |
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(2) each debtor who, according to the records of the |
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mortgage servicer of the debt, is obligated to pay the debt. |
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(d) A notice required by Subsection (c) must be served by |
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certified mail. Service of the notice is complete when the notice is |
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deposited in the United States mail, postage prepaid and addressed |
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to the purchaser or debtor, as applicable, at the purchaser's or |
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debtor's last known address, as applicable. The affidavit of a |
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person knowledgeable of the facts to the effect that service was |
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completed is prima facie evidence of service. |
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(e) If the trustee's or substitute trustee's deed has been |
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recorded in the deed records of a county in which all or part of the |
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property is located, the foreclosure sale may be rescinded under |
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this section by: |
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(1) serving notices of rescission as prescribed by |
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Subsections (c) and (d); and |
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(2) recording a copy of each notice in the deed records |
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of each county in which the deed was recorded. |
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(f) Not later than the seventh business day after the date a |
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foreclosure sale is rescinded under this section, the mortgagee |
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shall return to the purchaser the amount of the bid paid by the |
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purchaser for the property at the sale. The debtor shall return to |
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the mortgagee the amount of any excess proceeds received by the |
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debtor from the sale. |
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(g) The rescission of a foreclosure sale under this section |
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restores the mortgagee and the debtor to their respective title, |
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rights, and obligations under any instrument relating to the |
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foreclosed property that existed immediately before the sale |
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occurred. |
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(h) A civil action challenging the effectiveness of a |
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rescission under this section may not be filed after the 90th day |
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after the date the notices of rescission required by this section |
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are served. This subsection does not affect the limitations period |
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for an action claiming damages resulting from the rescission. |
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(i) If the foreclosure sale is rescinded under this section |
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for a reason listed in Subsection (b), other than a stay described |
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by Subsection (b)(6), the court in a civil action filed by the |
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purchaser challenging the effectiveness of the rescission or |
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claiming damages resulting from the rescission may only award as |
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damages to the purchaser the amount of the bid paid for the property |
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by the purchaser at the sale that has not been refunded to the |
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purchaser, plus interest on that amount at the rate of 10 percent |
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per year. Notwithstanding any other law, the court may not order |
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specific performance of the sale as a remedy for the purchaser. |
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Interest awarded under this subsection ceases to accrue on the |
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fourth day after the date the mortgagee deposits the amount of the |
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damages awarded in the United States mail or with a courier for |
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delivery to the purchaser. |
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(j) If a foreclosure sale is rescinded under this section |
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for a reason provided by Subsection (b)(6), the court in a civil |
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action filed by the purchaser challenging the effectiveness of the |
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rescission or claiming damages resulting from the rescission may |
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only award as damages to the purchaser the amount of the bid paid |
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for the property by the purchaser at the sale that has not been |
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refunded to the purchaser. |
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SECTION 2. The changes in law made by this Act apply only to |
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a foreclosure sale that occurs on or after the effective date of |
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this Act. A foreclosure sale that occurred before the effective |
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date of this Act is governed by the law applicable to the |
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foreclosure sale immediately before the effective date of this Act, |
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and that law is continued in effect for that purpose. |
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SECTION 3. This Act takes effect September 1, 2015. |