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A BILL TO BE ENTITLED
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AN ACT
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relating to the public sale of real property under a power of sale |
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in a security instrument. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Title 2, Business & Commerce Code, is amended by |
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adding Chapter 22 to read as follows: |
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CHAPTER 22. PUBLIC SALE OF RESIDENTIAL REAL PROPERTY UNDER POWER OF |
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SALE |
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Sec. 22.001. DEFINITIONS. In this chapter: |
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(1) "Auction company" has the meaning assigned by |
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Section 1802.001, Occupations Code. |
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(2) "Residential real property" means: |
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(A) a single-family house; |
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(B) a duplex, triplex, or quadraplex; or |
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(C) a unit in a multiunit residential structure |
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in which title to an individual unit is transferred to the owner of |
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the unit under a condominium or cooperative system. |
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(3) "Security instrument," "substitute trustee," and |
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"trustee" have the meanings assigned by Section 51.0001, Property |
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Code. |
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Sec. 22.002. APPLICABILITY. This chapter applies only to a |
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public sale of residential real property conducted under a power of |
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sale in a security instrument. |
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Sec. 22.003. CONTRACTS CONCERNING SALE. A trustee or |
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substitute trustee conducting a sale to which this chapter applies |
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may contract with: |
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(1) an attorney to advise the trustee or substitute |
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trustee or to administer or perform any of the trustee's or |
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substitute trustee's functions or responsibilities under a |
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security instrument or this chapter; or |
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(2) an auction company to arrange, manage, sponsor, or |
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advertise a public sale. |
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Sec. 22.004. INFORMATION FROM WINNING BIDDER. (a) A |
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winning bidder at a sale, other than the foreclosing mortgagee or |
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mortgage servicer, shall provide the following information to the |
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trustee or substitute trustee at the time the trustee or substitute |
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trustee completes the sale: |
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(1) the name, address, telephone number, and e-mail |
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address of the bidder and of each individual tendering or who will |
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tender the sale price for the winning bid; |
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(2) if the bidder is acting on behalf of another |
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individual or organization, the name, address, telephone number, |
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and e-mail address of the individual or organization and the name of |
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a contact person for the organization; |
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(3) the name and address of any person to be identified |
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as the grantee in a trustee's or substitute trustee's deed; |
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(4) the purchaser's tax identification number; |
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(5) a government-issued photo identification to |
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confirm the identity of each individual tendering funds for the |
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winning bid; and |
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(6) any other information reasonably needed to |
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complete the trustee's or substitute trustee's duties and functions |
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concerning the sale. |
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(b) If a winning bidder required to provide information |
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under Subsection (a) fails or refuses to provide the information, |
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the trustee or substitute trustee may decline to complete the |
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transaction or deliver a deed. |
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Sec. 22.005. RECEIPT AND DEED. The trustee or substitute |
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trustee shall: |
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(1) provide the winning bidder with a receipt for the |
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sale proceeds tendered; and |
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(2) except when prohibited by law, within a reasonable |
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time: |
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(A) deliver the deed to the winning bidder; or |
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(B) file the deed for recording. |
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Sec. 22.006. SALE PROCEEDS. (a) The trustee or substitute |
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trustee shall ensure that funds received at the sale are maintained |
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in a separate account until distributed. The trustee or substitute |
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trustee shall cause to be maintained a written record of deposits to |
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and disbursements from the account. |
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(b) The trustee or substitute trustee shall make reasonable |
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attempts to identify and locate the persons entitled to all or any |
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part of the sale proceeds. |
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(c) In connection with the sale and related post-sale |
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actions to identify persons with legal claims to sale proceeds, |
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determine the priority of any claims, and distribute proceeds to |
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pay claims, a trustee or substitute trustee may receive: |
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(1) reasonable actual costs incurred, including costs |
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for evidence of title; |
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(2) a reasonable trustee's or substitute trustee's |
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fee; and |
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(3) reasonable trustee's or substitute trustee's |
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attorney's fees. |
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(d) A fee described by Subsection (c): |
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(1) is considered earned at the time of the sale; |
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(2) may be paid from sale proceeds in excess of the |
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payoff of the lien being foreclosed; and |
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(3) is conclusively presumed to be reasonable if the |
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fee: |
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(A) is not more than the lesser of 2.5 percent of |
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the sale proceeds or $5,000, for a trustee's or substitute trustee's |
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fee; or |
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(B) is not more than 1.5 percent of the sale |
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proceeds, for trustee's or substitute trustee's attorney's fees |
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incurred to identify persons with legal claims to sale proceeds and |
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determine the priority of the claims. |
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(e) A trustee or substitute trustee who prevails in a suit |
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based on a claim that relates to the sale and that is found by a |
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court to be groundless in fact or in law is entitled to recover |
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reasonable attorney's fees necessary to defend against the claim, |
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which may be paid from the excess sale proceeds, if any. |
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(f) Nothing in this section precludes the filing of an |
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interpleader action or the depositing of funds in a court registry. |
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SECTION 2. Section 1802.001, Occupations Code, is amended |
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by adding Subdivision (14) to read as follows: |
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(14) "Security instrument," "substitute trustee," and |
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"trustee" have the meanings assigned by Section 51.0001, Property |
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Code. |
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SECTION 3. Section 1802.002(a), Occupations Code, as |
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amended by Chapters 777 (H.B. 2481) and 1230 (S.B. 1982), Acts of |
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the 84th Legislature, Regular Session, 2015, is reenacted and |
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amended to read as follows: |
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(a) This chapter does not apply to: |
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(1) a sale conducted by order of a United States court |
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under Title 11, United States Code; |
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(2) a sale conducted by an employee of the United |
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States, this state, or a political subdivision of this state in the |
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course and scope of employment; |
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(3) a sale conducted by a charitable, religious, or |
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civic organization, including an organization having a tax exempt |
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status under Section 501(c), Internal Revenue Code of 1986, or |
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organized as a nonprofit entity, if the person organizing, |
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arranging, or conducting the auction receives no compensation; |
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(4) a foreclosure auction involving the sale of real |
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property personally conducted by a trustee or substitute trustee |
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under a security instrument [under a deed of trust]; |
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(5) a foreclosure sale of personal property personally |
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conducted by: |
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(A) a person who holds a security interest in the |
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property, including a mortgage; or |
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(B) an employee or agent of a person described by |
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Paragraph (A) acting in the course and scope of employment, if: |
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(i) the employee or agent is not otherwise |
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engaged in the auction business; and |
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(ii) all property for sale in the auction is |
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subject to a security agreement; |
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(6) a sale conducted by sealed bid without the option |
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of increasing or decreasing the amount of a bid; |
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(7) an auction conducted only for student training |
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purposes as part of a course of study approved by the department; |
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(8) an auction conducted by a posted stockyard or |
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market agency as defined by the federal Packers and Stockyards Act |
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(7 U.S.C. Section 181 et seq.), as amended; |
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(9) an auction of livestock conducted by a nonprofit |
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livestock trade association chartered in this state, if the auction |
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involves only the sale of livestock owned by members of the trade |
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association; |
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(10) an auction conducted by a charitable or nonprofit |
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organization chartered in this state, if the auction: |
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(A) is part of a fair that is organized under |
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state, county, or municipal authority; and |
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(B) involves only the sale of property owned by |
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the organization's members; |
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(11) a sale or auction conducted by an auctioneer |
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while the auctioneer is physically located outside of this state; |
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(12) a sale of motor vehicles at auction by a person |
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licensed under Chapter 2301 or 2302; |
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(13) a sale of motor vehicles at auction by a person |
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who holds a wholesale motor vehicle auction general distinguishing |
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number or an independent motor vehicle general distinguishing |
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number issued by the Texas Department of Motor Vehicles; or |
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(14) an auction of property through the Internet. |
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SECTION 4. The changes in law made by this Act apply only to |
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a sale for which the notice of sale is given under Section 51.002, |
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Property Code, on or after the effective date of this Act. A sale |
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for which the notice of sale is given before the effective date of |
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this Act is governed by the law applicable to the foreclosure sale |
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immediately before the effective date of this Act, and that law is |
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continued in effect for that purpose. |
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SECTION 5. To the extent of any conflict, this Act prevails |
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over another Act of the 85th Legislature, Regular Session, 2017, |
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relating to nonsubstantive additions to and corrections in enacted |
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codes. |
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SECTION 6. This Act takes effect September 1, 2017. |