85R2214 CJC-D

By: Dutton H.B. No. 1833

A BILL TO BE ENTITLED

AN ACT

relating to the exemption of real property from ad valorem taxation during the period between the issuance of a judgment foreclosing a tax lien on the property and the sale of the property at a tax sale conducted under that judgment or the payment by the property owner of that judgment before the sale, as applicable.

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

SECTION 1. Subchapter B, Chapter 11, Tax Code, is amended by adding Section 11.281 to read as follows:

Sec. 11.281. PROPERTY SUBJECT TO FORECLOSURE JUDGMENT. (a) Property is exempt from taxation by a taxing unit during the period of time beginning on the date a judgment foreclosing a tax lien on the property is entered and ending:

(1) on the date the property is sold to a purchaser or bid off to a taxing unit at a tax sale conducted under that judgment; or

(2) if the property owner pays the amount of the judgment before the property is sold or bid off, on the date the owner pays the judgment.

(b) If the property owner pays the amount of the judgment before the property is sold or redeems the property in the manner provided by Section 34.21, a penalty is imposed on the property in an amount equal to the amount of the taxes that would have been imposed on the property during the period of time the property was exempted from taxation under Subsection (a), plus interest at an annual rate of seven percent calculated from the dates on which the taxes would have become due. A tax lien attaches to the property on the date the property owner pays the judgment or redeems the property, as applicable, to secure payment of the penalty and interest imposed under this subsection. The lien exists in favor of all taxing units for which the penalty is imposed.

SECTION 2. Section 11.43(a), Tax Code, is amended to read as follows:

(a) To receive an exemption, a person claiming the exemption, other than an exemption authorized by Section 11.11, 11.12, 11.14, 11.145, 11.146, 11.15, 11.16, 11.161, [or] 11.25, or 11.281 [of this code], must apply for the exemption. To apply for an exemption, a person must file an exemption application form with the chief appraiser for each appraisal district in which the property subject to the claimed exemption has situs.

SECTION 3. Section 33.52(d), Tax Code, is amended to read as follows:

(d) Except as provided by Section 11.281 [34.05(k)], a taxing unit's claim for taxes that become delinquent after the date of the judgment is not affected by the entry of the judgment or a tax sale conducted under that judgment. Those taxes may be collected by any remedy provided by this title.

SECTION 4. Section 34.01(l), Tax Code, is amended to read as follows:

(l) Notwithstanding that property is bid off to a taxing unit under this section, a taxing unit that established a tax lien in the suit may continue to enforce collection of any amount for which a former owner of the property is liable to the taxing unit[, including any post-judgment taxes, penalties, and interest,] in any other manner provided by law.

SECTION 5. Sections 34.05(j) and (k), Tax Code, are amended to read as follows:

(j) In lieu of a sale pursuant to Subsections (c) and (d), the taxing unit that purchased the property may sell the property at a private sale for an amount equal to or greater than its market value, as shown by the most recent certified appraisal roll, if:

(1) the [sum of the] amount of the judgment [plus post-judgment taxes, penalties, and interest] owing against the property exceeds the market value of the property; and

(2) each taxing unit entitled to receive proceeds of the sale consents to the sale for that amount.

(k) A sale under Subsection (j) discharges and extinguishes all liens foreclosed by the judgment [and, with the exception of the prorated tax for the current year that is assessed under Section 26.10, the liens for post-judgment taxes that accrued from the date of judgment until the date the taxing unit purchased the property]. The presiding officer of a taxing unit selling real property under Subsection (j) shall execute a deed to the property conveying to the purchaser the right, title, and interest acquired or held by each taxing unit that was a party to the judgment foreclosing tax liens on the property. The conveyance is subject to any remaining right of redemption at the time of the sale and to the purchaser's obligation to pay the prorated taxes for the current year as provided by Section 26.10. The deed must recite that the liens foreclosed by the judgment [and the post-judgment tax liens] are discharged and extinguished by virtue of the conveyance.

SECTION 6. The changes in law made by this Act apply only to an ad valorem tax year that begins on or after January 1, 2018.

SECTION 7. This Act takes effect January 1, 2018, but only if the constitutional amendment proposed by the 85th Legislature, Regular Session, 2017, authorizing the legislature to exempt real property from ad valorem taxation during the period between the issuance of a judgment foreclosing a tax lien on the property and the sale of the property at a tax sale conducted under that judgment or the payment by the property owner of that judgment before the sale, as applicable, is approved by the voters. If that constitutional amendment is not approved by the voters, this Act has no effect.