Bill Text: TX HB3803 | 2017-2018 | 85th Legislature | Enrolled
Bill Title: Relating to certain authorized investments for domestic life, health, and accident insurers.
Spectrum: Bipartisan Bill
Status: (Passed) 2017-06-15 - Effective on 9/1/17 [HB3803 Detail]
Download: Texas-2017-HB3803-Enrolled.html
H.B. No. 3803 |
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relating to certain authorized investments for domestic life, | ||
health, and accident insurers. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Section 425.118, Insurance Code, is amended by | ||
amending Subsections (c), (d), and (e) and adding Subsections (d-1) | ||
and (e-1) to read as follows: | ||
(c) The term of an obligation secured by a first lien on a | ||
leasehold estate in real property may not, as of the date the | ||
obligation is acquired, exceed a period equal to four-fifths of the | ||
unexpired term of the leasehold estate, including any renewal | ||
options exercisable by the lessee, and the obligation must fully | ||
amortize during that period. The term of the leasehold estate, | ||
including any renewal options exercisable by the lessee, may not | ||
expire sooner than the 10th anniversary of the expiration date of | ||
the term of the obligation. | ||
(d) An obligation secured by a first lien on a leasehold | ||
estate in real property must be payable in one or more installments | ||
of an amount or amounts sufficient to ensure that, at any time | ||
during [ |
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the obligation, the principal balance on the obligation is not | ||
greater than the principal balance would have been if the | ||
obligation had been amortized over the original term of the | ||
obligation in equal monthly, quarterly, semiannual, or annual | ||
payments of principal and interest with payments of interest only | ||
for the first five years of the original term of the obligation. | ||
(d-1) Subsection (d) does not apply to an obligation secured | ||
by a first lien on a leasehold estate in real property if: | ||
(1) the amount of the obligation does not, as of the | ||
date the obligation is acquired, exceed 75 percent of the value of | ||
the leasehold estate; | ||
(2) the lease agreement provides that the fee simple | ||
estate in the real property transfers automatically to the lessee | ||
on or before the expiration of the term of the leasehold estate, | ||
including any renewal options exercisable by the lessee; or | ||
(3) the lease agreement provides that the lessee has | ||
an option to purchase the fee simple estate in the real property on | ||
or before the expiration of the term of the leasehold estate, | ||
including any renewal options exercisable by the lessee, for an | ||
amount that is less than 10 percent of the appraised value of the | ||
real property, and the insurance company has a contractual right if | ||
the lessee does not exercise that option to acquire the fee simple | ||
estate in the real property for that same amount, by assignment from | ||
the lessee or otherwise. | ||
(e) Except as provided by Subsection (e-1), if [ |
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of the value of buildings is to be included in the value of real | ||
property or a leasehold estate in real property to secure an | ||
obligation under this section: | ||
(1) the buildings must be covered by adequate property | ||
insurance, including fire and extended coverage insurance, issued | ||
by: | ||
(A) an insurer authorized to engage in business | ||
in this state; or | ||
(B) an insurer recognized as acceptable to issue | ||
that coverage by the insurance regulatory official of the state in | ||
which the real property is located; | ||
(2) the amount of insurance provided by one or more | ||
policies may not be less than the lesser of: | ||
(A) the unpaid balance of the obligation; or | ||
(B) the insurable value of the buildings; and | ||
(3) the loss clause under each policy must be payable | ||
to the insurance company as the company's interest may appear. | ||
(e-1) The property insurance otherwise required under | ||
Subsection (e) is not required if the borrower maintains a net worth | ||
as indicated in the borrower's audited financial statements for the | ||
most recent fiscal year of at least the greater of five times the | ||
amount of the indebtedness or $100 million and: | ||
(1) the insurance company has recourse against the | ||
borrower or the borrower's guarantor; or | ||
(2) for an obligation secured by a leasehold estate: | ||
(A) the tenant assigned the lease to the | ||
insurance company; and | ||
(B) the lease agreement is in writing and | ||
provides that if a building on the property is damaged or destroyed, | ||
the tenant or the tenant's guarantor is obligated to rebuild or | ||
restore the damaged or destroyed building to the building's | ||
condition immediately before the damage or destruction occurred or | ||
compensate the owner for the loss arising from the damage or | ||
destruction. | ||
SECTION 2. Section 425.118, Insurance Code, as amended by | ||
this Act, applies only to an investment made on or after the | ||
effective date of this Act. An investment made 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 3. This Act takes effect September 1, 2017. | ||
______________________________ | ______________________________ | |
President of the Senate | Speaker of the House | |
I certify that H.B. No. 3803 was passed by the House on May 2, | ||
2017, by the following vote: Yeas 145, Nays 0, 1 present, not | ||
voting. | ||
______________________________ | ||
Chief Clerk of the House | ||
I certify that H.B. No. 3803 was passed by the Senate on May | ||
19, 2017, by the following vote: Yeas 31, Nays 0. | ||
______________________________ | ||
Secretary of the Senate | ||
APPROVED: _____________________ | ||
Date | ||
_____________________ | ||
Governor |