S.B. No. 1520
AN ACT
relating to ad valorem tax lien transfers.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 32.06, Tax Code, is amended by amending
Subsections (a-1), (a-2), (a-3), (b), (c), (d), (f), (i), and (k)
and adding Subsections (a-4), (b-1), (c-1), (d-1), (f-1), (f-2),
(f-3), (f-4), and (k-1) to read as follows:
(a-1) A person may authorize another person to pay the
[delinquent] taxes imposed by a taxing unit on the person’s real
property by filing with the collector for the unit a sworn document
stating:
(1) the authorization;
(2) the name and street address of the transferee
authorized to pay the taxes of the property owner; [and]
(3) a description of the property by street address,
if applicable, and legal description; and
(4) notice has been given to the property owner that if
they are age 65 or disabled, they may be eligible for a tax deferral
under Section 33.06.
(a-2) A [After a] tax lien may be [is] transferred to the
person who pays the taxes on behalf of the property owner under the
authorization for:
(1) taxes that are delinquent at the time of payment;
or
(2) taxes that are not delinquent at the time of
payment if:
(A) the property is not subject to a recorded
mortgage lien; or
(B) a tax lien transfer authorized by the
property owner has been executed and recorded for one or more prior
years on the same property and the property owner has executed an
authorization consenting to a transfer of the tax liens for both the
taxes on the property that are not delinquent and taxes on the
property that are delinquent[, taxes on the property that become
due in subsequent tax years may be transferred before the
delinquency date] in the manner provided by Subsection (a-1).
(a-3) If the property owner has executed an authorization
under Subsection (a-2)(2)(B) consenting to a transfer of the tax
liens for both the taxes on the property that are not delinquent and
taxes on the property that are delinquent, the collector shall
certify in one document the transfer of the liens for all the taxes.
(a-4) The Finance Commission of Texas shall:
(1) prescribe the form and content of an appropriate
disclosure statement to be provided to a property owner before the
execution of a tax lien transfer; and
(2) adopt rules relating to the reasonableness of
closing costs, fees, and other charges permitted under this section
[A tax lien may be transferred before the delinquency date in the
manner provided by Subsection (a-1) only if the real property is not
subject to a lien other than the tax lien].
(b) If a transferee authorized to pay a property owner’s
taxes pursuant to Subsection (a-1) pays the taxes and any penalties
and interest imposed, the collector shall issue a tax receipt to
that transferee. In addition, the collector or a person designated
by the collector shall certify [on the sworn document] that
[payment of] the taxes and any penalties and interest on the subject
[described] property and collection costs have [has] been paid
[made] by the transferee on behalf of the property owner [liable for
the taxes when imposed] and that the taxing unit’s tax lien is
transferred to that transferee. The collector shall attach to the
certified statement [sworn document] the collector’s seal of office
or sign the statement [document] before a notary public and deliver
[the sworn document,] a tax receipt[,] and the statement
[affidavit] attesting to the transfer of the tax lien to the
transferee within 30 days. The [sworn document,] tax receipt[,]
and statement [affidavit attesting to the transfer of the tax lien]
may be combined into one document. The collector shall
[conspicuously] identify in a discrete field in the applicable
property owner’s [taxpayer’s] account the date of the transfer of a
tax lien transferred under this section. When a tax lien is
released, the transferee shall file a release with the county clerk
of each county in which the property encumbered by the lien is
located for recordation by the clerk and send a copy to the
collector. The transferee may charge the property owner a
reasonable fee for filing the release.
(b-1) Not later than the 10th business day after the date
the certified statement is received by the transferee, the
transferee shall send by certified mail a copy of the sworn document
described by Subsection (a-1) to any mortgage servicer and to each
holder of a recorded first lien encumbering the property. The copy
must be sent, as applicable, to the address shown on the most recent
payment invoice, statement, or payment coupon provided by the
mortgage servicer to the property owner, or the address of the
holder of a recorded first lien as shown in the real property
records.
(c) Except as otherwise provided by this section, the
transferee of a tax lien and any successor in interest is entitled
to foreclose the lien:
(1) in the manner provided by law for foreclosure of
tax liens; or
(2) in the manner specified in Section 51.002,
Property Code, and Section 32.065, after the transferee or a
successor in interest obtains a court order for foreclosure under
Rule 736, Texas Rules of Civil Procedure, except as provided by
Subsection (c-1) of this section [of this code], if the property
owner and the transferee enter into a contract that is secured by a
lien on the property.
(c-1) If a transferee seeks to foreclose a tax lien on the
property under Subsection (c)(2):
(1) the application for the foreclosure must be served
on and name as parties the owner of the property and the holder of
any recorded preexisting first lien on the property and must:
(A) allege that the lien is an ad valorem tax lien
instead of a lien created under Section 50, Article XVI, Texas
Constitution;
(B) state that the applicant does not seek a
court order required by Section 50, Article XVI, Texas
Constitution;
(C) state that the transferee has provided notice
to cure the default, notice of intent to accelerate, and notice of
acceleration of the maturity of the debt to the property owner and
each holder of a recorded first lien on the property in the manner
required for notice to a debtor under Section 51.002, Property
Code; and
(D) confirm that the property owner has not
requested a deferral of taxes authorized by Section 33.06; and
(2) the holder of a recorded preexisting lien must be
provided at least 60 days’ notice before the date of the proposed
foreclosure.
(d) A transferee shall record [To be enforceable,] a tax
lien transferred as provided by this section [must be recorded]
with the [sworn] statement [and affidavit] attesting to the
transfer of the tax lien as described by [in] Subsection (b) in the
deed records of each county in which the property encumbered by the
lien is located.
(d-1) A right of rescission described by 12 C.F.R. Section
226.23 applies to a tax lien transfer under this section.
(f) The holder of a loan secured by a transferred tax lien
that is delinquent for 90 consecutive days must send a notice of the
delinquency by certified mail on or before the 120th day of
delinquency or, if the 120th day is not a business day, on the next
business day after the 120th day of delinquency, to any holder of a
recorded preexisting lien on the property. The holder or mortgage
servicer of a recorded preexisting lien on property encumbered by a
tax lien transferred as provided by Subsection (b) is entitled,
within six months after the date on which the notice is sent [tax
lien is recorded in all counties in which the property is located],
to obtain a release of the transferred tax lien by paying the
transferee of the tax lien the amount owed under the contract
between the property owner and the transferee.
(f-1) If an obligation secured by a preexisting first lien
on the property is delinquent for at least 90 consecutive days and
the obligation has been referred to a collection specialist, the
mortgage servicer or the holder of the first lien may send a notice
of the delinquency to the transferee of a tax lien. The mortgage
servicer or the first lienholder is entitled, within six months
after the date on which that notice is sent, to obtain a release of
the transferred tax lien by paying the transferee of the tax lien
the amount owed under the contract between the property owner and
the transferee. The Finance Commission of Texas by rule shall
prescribe the form and content of the notice under this subsection.
(f-2) The rights granted by Subsections (f) and (f-1) do not
affect a right of redemption in a foreclosure proceeding described
by Subsection (k) or (k-1).
(f-3) Notwithstanding any contractual agreement with the
property owner, the transferee of a tax lien must provide the payoff
information required by this section to the greatest extent
permitted by 15 U.S.C. Section 6802 and 12 C.F.R. Part 216. The
payoff statement must meet the requirements of a payoff statement
defined by Section 12.017, Property Code. A transferee may charge a
reasonable fee for a payoff statement that is requested after an
initial payoff statement is provided.
(f-4) Failure to comply with Subsection (b-1), (f), or (f-1)
does not invalidate a tax lien under this chapter, a contract lien,
or a deed of trust.
(i) A foreclosure of a tax lien transferred as provided by
this section may not be instituted within one year from the date on
which the lien is recorded in all counties in which the property is
located, unless the contract between the owner of the property and
the transferee provides otherwise. [The transferee of a tax lien or
any successor in interest must notify the holders of all recorded
liens on the property before foreclosure in the same manner and
within the same time frame as the transferee must notify the owner
of the property under Section 51.002, Property Code.]
(k) Beginning on the date the foreclosure deed is recorded,
the person whose property is sold as provided by Subsection (c) or
the mortgage servicer of a prior recorded lien against the property
is entitled to redeem the foreclosed property from the purchaser or
the purchaser’s successor by paying the purchaser or successor:
(1) 125 percent of the purchase price during the first
year of the redemption period or 150 percent of the purchase price
during the second year of the redemption period with cash or cash
equivalent funds; and
(2) the amount reasonably spent by the purchaser in
connection with the property as costs within the meaning of Section
34.21(g) and the legal judgment rate of return on that amount.
(k-1) The right of redemption provided by Subsection (k) may
be exercised on or before the second anniversary of the date on
which the purchaser’s deed is filed of record if the property sold
was the residence homestead of the owner, was land designated for
agricultural use, or was a mineral interest. For any other
property, the right of redemption must be exercised not later than
the 180th day after the date on which the purchaser’s deed is filed
of record. If a person redeems the property as provided by
Subsection (k) and this subsection, the purchaser at the tax sale or
the purchaser’s successor shall deliver a deed without warranty to
the property to the person redeeming the property. If the person
who owned the property at the time of foreclosure redeems the
property, all liens existing on the property at the time of the tax
sale remain in effect to the extent not paid from the sale proceeds.
SECTION 2. Subsections (b), (c), and (d), Section 32.065,
Tax Code, are amended to read as follows:
(b) Notwithstanding any agreement to the contrary, a
contract entered into under Subsection (a) between a transferee and
the property owner under Section 32.06 that is secured by a priority
lien on the property shall provide for a power of sale and
foreclosure in the manner provided by Section 32.06(c)(2) [under
Chapter 51, Property Code,] and:
(1) an event of default;
(2) notice of acceleration;
(3) recording of the deed of trust or other instrument
securing the contract entered into under Subsection (a) in each
county in which the property is located;
(4) recording of the sworn document and affidavit
attesting to the transfer of the tax lien;
(5) requiring the transferee to serve foreclosure
notices on the property owner at the property owner’s last known
address in the manner provided [required] by Section 32.06(c)(2)
[Sections 51.002(b), (d), and (e), Property Code,] or by a
commercially reasonable delivery service that maintains verifiable
records of deliveries for at least five years from the date of
delivery; and
(6) requiring, at the time the foreclosure notices
required by Subdivision (5) are served on the property owner, the
transferee to serve a copy of the notice of sale in the same manner
on the mortgage servicer or the holder of all recorded real property
liens encumbering the property that includes on the first page, in
14-point boldfaced type or 14-point uppercase typewritten letters,
a statement that reads substantially as follows: “PURSUANT TO
TEXAS TAX CODE SECTION 32.06, THE FORECLOSURE SALE REFERRED TO IN
THIS DOCUMENT IS A SUPERIOR TRANSFER TAX LIEN SUBJECT TO RIGHT OF
REDEMPTION UNDER CERTAIN CONDITIONS. THE FORECLOSURE IS SCHEDULED
TO OCCUR ON THE (DATE).”
(c) Notwithstanding any other provision of this code, a
transferee of a tax lien or the transferee’s assignee is subrogated
to and is entitled to exercise any right or remedy possessed by the
transferring taxing unit, including or related to foreclosure or
judicial sale, but is prohibited from exercising a remedy of
foreclosure or judicial sale where the transferring taxing unit
would be prohibited from foreclosure or judicial sale.
(d) Chapters 342 and 346, Finance Code, and the provisions
of Chapter 343, Finance Code, other than Sections 343.203 and
343.205, do not apply to a transaction covered by this section. The
transferee of a tax lien under this section is not required to
obtain a license under Title 4, Finance Code.
SECTION 3. Subsection (g), Section 32.065, Tax Code, as
added by Chapter 406, Acts of the 79th Legislature, Regular
Session, 2005, is repealed.
SECTION 4. (a) The change in law made by this Act applies
only to the transfer of an ad valorem tax lien that occurs on or
after the effective date of this Act. A transfer of an ad valorem
tax lien that occurs before the effective date of this Act is
covered by the law in effect at the time the transfer occurred, and
the former law is continued in effect for that purpose.
(b) The change in law made by this Act to Sections 32.06 and
32.065, Tax Code, applies to all foreclosures under those sections
that occur on or after the effective date of this Act, other than a
foreclosure under a transferred ad valorem tax lien that was
transferred before the effective date of this Act pursuant to a
contract that provided for specific foreclosure procedures under
the law in effect at the time the contract was executed. A
foreclosure under a transferred ad valorem tax lien that was
transferred before the effective date of this Act pursuant to a
contract that provided for specific foreclosure procedures under
the law in effect at the time the contract was executed is governed
by the law in effect at the time the contract was executed, and the
former law is continued in effect for that purpose.
SECTION 5. This Act takes effect September 1, 2007.
______________________________ ______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 1520 passed the Senate on
May 3, 2007, by the following vote: Yeas 30, Nays 0;
May 21, 2007, Senate refused to concur in House amendments and
requested appointment of Conference Committee; May 22, 2007, House
granted request of the Senate; May 25, 2007, Senate adopted
Conference Committee Report by the following vote: Yeas 30,
Nays 0.
______________________________
Secretary of the Senate
I hereby certify that S.B. No. 1520 passed the House, with
amendments, on May 16, 2007, by the following vote: Yeas 146,
Nays 0, one present not voting; May 22, 2007, House granted request
of the Senate for appointment of Conference Committee;
May 25, 2007, House adopted Conference Committee Report by the
following vote: Yeas 142, Nays 0, one present not voting.
______________________________
Chief Clerk of the House
Approved:
______________________________
Date
______________________________
Governor
