84R6857 NC-F

By: Oliveira H.B. No. 2069

A BILL TO BE ENTITLED

AN ACT

relating to the administration of foreclosure sales of real property.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 1802.001, Occupations Code, is amended by adding Subdivision (9-a) to read as follows:

(9-a) "Mortgage servicer," "mortgagee," "security instrument," "substitute trustee," and "trustee" have the meanings assigned by Section 51.0001, Property Code.

SECTION 2. Section 1802.002(a), Occupations Code, is amended to read as follows:

(a) This chapter does not apply to:

(1) a sale conducted by order of a United States court under Title 11, United States Code;

(2) a sale conducted by an employee of the United States, this state, or a political subdivision of this state in the course and scope of employment;

(3) a sale conducted by a charitable, religious, or civic organization, including an organization having a tax exempt status under Section 501(c), Internal Revenue Code of 1986, or organized as a nonprofit entity, if the person organizing, arranging, or conducting the auction receives no compensation;

(4) a sale conducted by any person of the person's property if the person is not engaged in the business of selling property at auction on a recurring basis;

(5) a foreclosure sale of real property personally conducted by a trustee or substitute trustee under a security instrument, if the trustee or substitute trustee:

(A) is an attorney or an employee of the mortgagee or the mortgage servicer;

(B) has entered into a written agreement with an attorney to administer and perform the functions of the trustee or substitute trustee under the security instrument and Chapter 51, Property Code, other than the advertising and conducting of the auction; or

(C) is employed by an auction company to conduct the auction, if the auction company has entered into a written agreement with an attorney to administer and perform the functions of the trustee or substitute trustee under the security instrument and Chapter 51, Property Code, other than the advertising and conducting of the auction [under a deed of trust];

(6) a foreclosure sale of personal property personally conducted by:

(A) a person who holds a security interest in the property, including a mortgage; or

(B) an employee or agent of a person described by Paragraph (A) acting in the course and scope of employment, if:

(i) the employee or agent is not otherwise engaged in the auction business; and

(ii) all property for sale in the auction is subject to a security agreement;

(7) a sale conducted by sealed bid without the option of increasing or decreasing the amount of a bid;

(8) an auction conducted only for student training purposes as part of a course of study approved by the department;

(9) an auction conducted by a posted stockyard or market agency as defined by the federal Packers and Stockyards Act (7 U.S.C. Section 181 et seq.), as amended;

(10) an auction of livestock conducted by a nonprofit livestock trade association chartered in this state, if the auction involves only the sale of livestock owned by members of the trade association;

(11) an auction conducted by a charitable or nonprofit organization chartered in this state, if the auction:

(A) is part of a fair that is organized under state, county, or municipal authority; and

(B) involves only the sale of property owned by the organization's members; or

(12) a sale or auction conducted outside of this state.

SECTION 3. Subtitle B, Title 5, Property Code, is amended by adding Chapter 51A to read as follows:

CHAPTER 51A. FORECLOSURE SALES OF RESIDENTIAL REAL PROPERTY

Sec. 51A.001. DEFINITIONS. In this chapter:

(1) "Auction company" has the meaning assigned by Section 1802.001, Occupations Code.

(2) "Mortgage servicer," "mortgagee," "security instrument," "substitute trustee," and "trustee" have the meanings assigned by Section 51.0001.

(3) "Proceeds of sale" means the sale price for a property received at a foreclosure sale conducted by a trustee or substitute trustee.

(4) "Residential real property" means:

(A) a single-family house;

(B) a duplex, triplex, or quadraplex; or

(C) a unit in a multi-unit residential structure in which title to an individual unit is transferred to the owner of the unit under a condominium or cooperative system.

Sec. 51A.002. APPLICABILITY. This chapter applies only to a foreclosure sale of residential real property conducted under a security instrument and Section 51.002.

Sec. 51A.003. ADMINISTRATION OF FORECLOSURE SALES. (a) A foreclosure sale must be conducted by an individual who is a trustee or substitute trustee authorized or appointed to exercise the power of sale under a security instrument.

(b) Except as provided by Subsection (c), a trustee or substitute trustee may enter into a written agreement with:

(1) an attorney to administer or perform any of the trustee's or substitute trustee's functions or responsibilities under a security instrument; or

(2) an auction company to arrange, manage, sponsor, or advertise a foreclosure sale.

(c) A trustee or substitute trustee may not delegate the performance of the public sale at auction of the property to any person who is not a trustee or substitute trustee authorized or appointed to exercise the power of sale under the security instrument.

Sec. 51A.004. NOTICE OF SALE. The preparation and mailing of a notice of sale required by Section 51.002 does not constitute the practice of law.

Sec. 51A.005. INFORMATION FROM BIDDERS. (a) A trustee or substitute trustee or an attorney or auction company that is administering or managing a foreclosure sale at public auction may request that bidders:

(1) register for the sale; or

(2) provide or display to the trustee, substitute trustee, attorney, or auction company the following information:

(A) the name, address, telephone number, and e-mail address of each individual tendering or who will tender the sale price for a winning bid;

(B) if the bidder is acting on behalf of another individual or organization, the name, address, telephone number, and e-mail address of the individual or organization and the name of a contact person for the organization;

(C) the name and address of any person to be identified as the grantee in a trustee's or substitute trustee's deed;

(D) for a winning bid, the purchaser's tax identification number;

(E) a government-issued photo identification to confirm the identity of each individual tendering funds for a winning bid; and

(F) any other information reasonably needed to complete the trustee's or substitute trustee's duties and functions concerning the sale.

(b) A trustee, substitute trustee, attorney, or auction company that requests a bidder to provide or display information described by Subsection (a) before the sale may not refuse to allow the bidder to bid if the bidder does not provide or display the information before the sale.

(c) A trustee or substitute trustee may require a winning bidder at a foreclosure sale to provide or display the information described by Subsection (a) at the time the trustee or substitute trustee completes the sale. If a bidder fails or refuses to provide the information, the trustee or substitute trustee may:

(1) decline to complete the transaction;

(2) hold another auction; and

(3) sell the property to another bidder.

(d) Personal information obtained from a bidder in connection with a foreclosure sale may not be sold or transferred by a trustee, substitute trustee, attorney, or auction company without the written informed consent of the bidder. The consent may not be a condition of sale.

Sec. 51A.006. PURCHASER'S RECEIPT AND DEED. (a) After the foreclosure sale, the trustee or substitute trustee shall:

(1) provide the winning bidder with:

(A) a purchaser's receipt for the proceeds of sale; and

(B) a written copy of the conditions of sale announced before bidding was opened for the first sale of the day held by the trustee or substitute trustee; and

(2) except as provided by Subsection (b), within a reasonable time:

(A) deliver the deed to the winning bidder; or

(B) file the deed for recording.

(b) If the foreclosure sale is disputed, the trustee or substitute trustee may withhold the delivery or recording of the deed while an action challenging the sale is pending in court.

Sec. 51A.007. PROCEEDS OF SALE. (a) Proceeds of sale received in the form of checks or currency must be maintained in a separate account until distributed to persons entitled to the proceeds.

(b) The trustee or substitute trustee shall make reasonable attempts to identify and locate the persons entitled to all or any part of the proceeds of sale.

(c) A trustee or substitute trustee, or an attorney or auction company acting under Section 51A.003, may make payments from the proceeds of sale at any time.

(d) A person who accepts proceeds of sale tendered and distributed by a trustee or substitute trustee takes the funds in full satisfaction of claims for the proceeds of sale.

Sec. 51A.008. EXPENSES PAID FROM PROCEEDS OF SALE. (a) A trustee or substitute trustee may be paid the trustee's or substitute trustee's expenses for the sale from the proceeds of sale, including:

(1) a trustee's or substitute trustee's fee of not more than 2.5 percent of the proceeds of sale or the amount specified in the security instrument;

(2) the actual costs of title evidence and records searches incurred to identify parties legally entitled to the proceeds of sale; and

(3) reasonable attorney's fees and costs incurred to identify persons legally entitled to the proceeds of sale.

(b) A fee is:

(1) considered earned at the time of sale; and

(2) conclusively presumed to be reasonable if the fee:

(A) is not more than 2.5 percent of the proceeds of sale, for a trustee's or substitute trustee's fee; or

(B) is not more than 1.5 percent of the proceeds of sale, for an attorney's fee under Subsection (a)(3).

(c) A trustee or substitute trustee or an attorney who prevails in a suit concerning a foreclosure sale of residential real property conducted by the trustee or substitute trustee is entitled to recover reasonable attorney's fees necessary to defend the action, which may be paid from the excess proceeds of sale, if any.

SECTION 4. (a) Section 1802.002, Occupations Code, as amended by this Act, applies only to a foreclosure sale conducted on or after the effective date of this Act. A foreclosure sale conducted before the effective date of this Act is governed by the law applicable to the foreclosure sale immediately before the effective date of this Act, and that law is continued in effect for that purpose.

(b) Chapter 51A, Property Code, as added by this Act, applies only to a foreclosure sale for which the notice of sale is given under Section 51.002, Property Code, on or after the effective date of this Act.

SECTION 5. This Act takes effect September 1, 2015.