H.B. No. 3063
 
 
 
 
AN ACT
  relating to agricultural liens.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 70.401, Property Code, is amended by
  amending Subdivision (4) and adding Subdivisions (5), (6), (7), and
  (8) to read as follows:
               (4)  "Company-owned crop" means an agricultural crop:
                     (A)  that is in the possession of a warehouse or
  contract purchaser located in this state and for which the
  agricultural producer has received full payment;
                     (B)  that is not an open storage crop; or
                     (C)  for which the warehouse or the contract
  purchaser tenders payment and the agricultural producer, without
  coercion, defers payment.
               (5)  "Contract purchaser" means a person who has agreed
  under a contract to purchase an agricultural crop or otherwise pay
  the agricultural producer for growing, producing, or harvesting the
  agricultural crop.  The term includes [does not include] a person
  who, as to the transaction in question, is licensed and bonded under
  Chapter 14, Agriculture Code, or the United States Warehouse Act (7
  U.S.C. Section 241 et seq.).
               (6)  "Open storage crop" means an agricultural crop
  that:
                     (A)  an agricultural producer delivers or
  transfers to:
                           (i)  a warehouse for storage; or
                           (ii)  a contract purchaser located in this
  state;
                     (B)  is not covered by a warehouse receipt; and
                     (C)  is not owned by the lessee, owner, or
  operator of the warehouse in which the crop is stored or the
  contract purchaser to which the crop is delivered or transferred.
               (7)  "Secured lender" means a person that:
                     (A)  has loaned money to a warehouse or a contract
  purchaser; and
                     (B)  holds a perfected secured lien against a
  company-owned crop.
               (8)  "Warehouse" means a facility that stores or
  handles any agricultural crop after the crop is harvested,
  including a facility operated by a person who, as to the transaction
  in question, is licensed and bonded under Chapter 14, Agriculture
  Code, or the United States Warehouse Act (7 U.S.C. Section 241 et
  seq.).  The term includes a person engaged in the business of
  operating a warehouse.
         SECTION 2.  Section 70.402, Property Code, is amended to
  read as follows:
         Sec. 70.402.  LIEN CREATED. (a)  An agricultural producer
  who, under a contract with a contract purchaser, is to receive
  consideration for selling an agricultural crop grown, produced, or
  harvested by the producer has a lien against that crop for the
  amount owed under the contract, or for the market [reasonable]
  value of the crop on the date of transfer or delivery if there is no
  agreement concerning the amount owed under the contract.
         (b)  An agricultural producer who delivers or transfers an
  agricultural crop grown, produced, or harvested by the producer to
  a warehouse has a lien against that agricultural crop for the market
  value of the agricultural crop:
               (1)  on the date of delivery or transfer; or
               (2)  if there is to be a series of deliveries to the
  warehouse, on the date of the first delivery of the agricultural
  crop to the warehouse.
         (c)  A lien created under this subchapter is on every
  agricultural crop, either in raw or processed form, that has been
  transferred or delivered by the agricultural producer and is in the
  possession of the warehouse or the contract purchaser, and if the
  warehouse or the contract purchaser sells all or part of the crop,
  on the proceeds of the sale.  If an open storage [the agricultural]
  crop is commingled with a company-owned crop by a warehouse or a
  contract purchaser after the crop has been transferred or
  delivered, a lien created under this subchapter applies only to
  that portion of the agricultural crop in the possession of the
  warehouse or the contract purchaser [purchaser's inventory] in an
  amount that is equal to the amount of the crop transferred or
  delivered by the agricultural producer.
         (d) [(c)]  For purposes of this subchapter, an agricultural
  crop or processed form of an agricultural crop deposited by a
  contract purchaser with a warehouse, whether or not a warehouse
  receipt is given as security, is considered to be in the possession
  of the contract purchaser and subject to the lien created by this
  subchapter.
         SECTION 3.  Section 70.403, Property Code, is amended to
  read as follows:
         Sec. 70.403.  WHEN LIEN ATTACHES.  A lien created under this
  subchapter attaches on the date on which physical possession of the
  agricultural crop is delivered or transferred by the agricultural
  producer to the warehouse or to the contract purchaser or the
  purchaser's agent, or if there is to be a series of deliveries [to
  the contract purchaser or purchaser's agent], on the date of the
  first delivery of the agricultural crop [to the contract purchaser
  or purchaser's agent].
         SECTION 4.  Section 70.404, Property Code, is amended to
  read as follows:
         Sec. 70.404.  APPLICABILITY OF OTHER LAW; EFFECT ON OTHER
  LAW.  (a) Except as provided by Section 70.4045 of this code,
  Chapter 9, Business & Commerce Code, including applicable filing
  and perfection requirements, applies to a lien created under this
  subchapter.
         (b)  Except as provided by Subsection (c), to the extent of a
  conflict, this subchapter controls over any other law.
         (c)  This subchapter does not abridge the protections
  afforded by any applicable law, including:
               (1)  Chapter 14, Agriculture Code;
               (2)  Chapter 7, Business & Commerce Code;
               (3)  the United States Warehouse Act (7 U.S.C. Section
  241 et seq.); or
               (4)  common law, including the law of bailment.
         SECTION 5.  Section 70.4045, Property Code, is amended to
  read as follows:
         Sec. 70.4045.  PERFECTION AND PRIORITY OF AGRICULTURAL LIEN
  ON CROPS.  (a)  Notwithstanding Chapter 9, Business & Commerce Code,
  a lien created under this subchapter is perfected at the time the
  lien attaches under Section 70.403 and continues to be perfected if
  a financing statement covering the agricultural crop is filed on or
  before the 90th day after the date:
               (1)  the physical possession of the crop is delivered
  or transferred by the agricultural producer to the warehouse or the
  contract purchaser or the purchaser's agent, if there is only one
  delivery [under the contract]; or
               (2)  of the last delivery of the crop to the warehouse
  or the contract purchaser or the purchaser's agent, if there is a
  series of deliveries [under the contract].
         (b)  If a financing statement covering the agricultural crop
  is not filed within the time prescribed by Subsection (a)(1) or (2),
  as applicable, the lien is considered unperfected [on the date the
  lien attached until the date the financing statement is filed or the
  lien is perfected under Chapter 9, Business & Commerce Code].
         (c)  Notwithstanding Chapter 9, Business & Commerce Code,
  and except as provided by Subsection (d), a lien created and
  perfected under this subchapter has priority over a conflicting
  security interest in or lien on the agricultural crop or the
  proceeds from the sale of the crop created by the warehouse or the
  contract purchaser in favor of a third party, [other than a cotton
  ginner's lien created under Section 70.003(d),] regardless of the
  date the security interest or lien created by the warehouse or the
  contract purchaser attached.  This subsection does not affect:
               (1)  the validity or priority of a security interest or
  lien:
                     (A)  created and perfected to secure a loan
  directly to the agricultural producer; or
                     (B)  created and perfected under Chapter 9,
  Business & Commerce Code, to secure a loan to a warehouse or a
  contract purchaser on a company-owned crop in favor of a secured
  lender;
               (2)  the validity or priority of a cotton ginner's lien
  created under Section 70.003(d); or
               (3)  the rights of a holder of a negotiable warehouse
  receipt.
         (d)  Subsection (c) does not apply to a contract purchaser
  who purchases an agricultural crop from an agricultural producer
  under a marketing contract created under:
               (1)  Section 52.016, Agriculture Code; or
               (2)  regulations adopted by the United States
  Department of Agriculture under Title 7 of the United States Code.
         SECTION 6.  Section 70.406(a), Property Code, is amended to
  read as follows:
         (a)  A buyer in ordinary course of business of an
  agricultural crop, including a person who buys any portion of an
  agricultural crop from a warehouse or a contract purchaser, whether
  or not the agricultural crop has been commingled, takes the
  agricultural crop free of a lien created under this subchapter, and
  the lien created by this subchapter does not pass to any subsequent
  claimant of the agricultural crop.
         SECTION 7.  Section 70.407(a), Property Code, is amended to
  read as follows:
         (a)  A lien created under this subchapter is discharged when:
               (1)  the lienholder receives full payment for the
  agricultural crop; or
               (2)  payment is tendered by the warehouse or the 
  contract purchaser, as applicable, and the lienholder, without
  coercion, defers payment.
         SECTION 8.  Section 70.410, Property Code, is amended to
  read as follows:
         Sec. 70.410.  WAIVER OF CERTAIN RIGHTS PROHIBITED. An
  agricultural producer's agreement with a warehouse or a contract
  purchaser to waive the producer's right to seek a remedy provided by
  this subchapter is void.
         SECTION 9.  The changes in law made by this Act apply only to
  an agricultural producer who delivers or transfers an agricultural
  crop grown, produced, or harvested by the producer to a warehouse or
  a contract purchaser on or after the effective date of this Act. An
  agricultural producer who delivers or transfers an agricultural
  crop grown, produced, or harvested by the producer to a warehouse or
  a contract purchaser before the effective date of this Act is
  governed by the law as it existed immediately before that date, and
  that law is continued in effect for that purpose.
         SECTION 10.  This Act takes effect September 1, 2017.
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
 
         I certify that H.B. No. 3063 was passed by the House on May 3,
  2017, by the following vote:  Yeas 143, Nays 4, 1 present, not
  voting.
 
  ______________________________
  Chief Clerk of the House   
 
 
         I certify that H.B. No. 3063 was passed by the Senate on May
  19, 2017, by the following vote:  Yeas 31, Nays 0.
 
  ______________________________
  Secretary of the Senate    
  APPROVED:  _____________________
                     Date          
   
            _____________________
                   Governor