Bill Text: TX SB1449 | 2013-2014 | 83rd Legislature | Introduced

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Bill Title: Relating to the transfer of an ad valorem tax lien

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2013-03-18 - Referred to Intergovernmental Relations [SB1449 Detail]

Download: Texas-2013-SB1449-Introduced.html

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By: Hinojosa S.B. No. 1449

A BILL TO BE ENTITLED
AN ACT
relating to the transfer of an ad valorem tax lien
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The heading to Chapter 351, Finance Code is
amended to read as follows:
CHAPTER 351. PROPERTY TAX LENDERS AND ASSOCIATED LIENS
SECTION 2. Section 351.002, Finance Code, is amended to
read as follows:
Sec. 351.002. DEFINITIONS. In this chapter:
(1)"Lienholder" means the holder of a lien created
in favor of a property tax lender as provided by Section
32.06(a-2), Tax Code, including a successor in interest.
(2) "Property tax lender" means a person that
engages in activity requiring a license under Section 351.051. The
term does not include:
(A) a person who is sponsored by a licensed
property tax lender to assist with or perform the acts of a property
tax lender; or
(B) a person who performs only clerical functions
such as delivering a loan application to a property tax lender,
gathering or requesting information related to a property tax loan
application on behalf of the prospective borrower or property tax
lender, word processing, sending correspondence, or assembling
files.
(3) "Property tax loan" means an advance of money:
(A) [in connection with a transfer of lien under
Section 32.06, Tax Code, or a contract under Section 32.065 32.06,
Tax Code;]
(B) in connection with a contract between a
lender and a property owner under which the lender [which the person
making the transfer] arranges for the payment, with the [a]
property owner's written consent, of property taxes and related
closing costs on behalf of the property owner in accordance with
Section 32.06, Tax Code; and
(B) [(C)] that is secured by a [special] lien
against the property created in favor of the lender under Section
32.06, Tax Code [transferred from a taxing unit to the property tax
lender and which may be further secured by the lien or security
interest created by a deed of trust, security deed, or other
security instrument].
SECTION 3. Sections 351.0021(a), (c), and (d), Finance
Code, are amended to read as follows:
(a) The contract between a property tax lender and a
property owner may require the property owner to pay the following
costs after closing:
(1) a reasonable fee for filing the release of a [tax]
lien authorized under Section 32.06(b), Tax Code;
(2) a reasonable fee for a payoff statement authorized
under Section 32.06(f-3), Tax Code;
(3) a reasonable fee for providing information
regarding the current balance owed by the property owner authorized
under Section 32.06(g), Tax Code;
(4) reasonable and necessary attorney's fees,
recording fees, and court costs for actions that are legally
required to respond to a suit filed under Chapter 33, Tax Code, or
to perform a foreclosure, including fees required to be paid to an
official and fees for an attorney ad litem;
(5) to the extent permitted by the United States
Bankruptcy Code, attorney's fees and court costs for services
performed after the property owner files a voluntary bankruptcy
petition;
(6) a reasonable fee for title examination and
preparation of an abstract of title by an attorney, a title company,
or a property search company authorized to do business in this
state;
(7) a processing fee for insufficient funds, as
authorized under Section 3.506, Business & Commerce Code;
(8) a fee for collateral protection insurance, as
authorized under Chapter 307;
(9) a prepayment penalty, unless the loan [lien
transferred] is made in connection with on residential property
owned and used by the property owner for personal, family, or
household purposes;
(10) recording expenses incurred in connection with a
modification necessary to preserve a borrower's ability to avoid a
foreclosure proceeding; and
(11) fees for copies of transaction documents
requested by the property owner.
(c) A property tax lender or any successor in interest may
not [charge]:
(1) after closing, charge any fee, other than
interest, [after closing] in connection with the loan [transfer of
a tax lien] unless the fee is expressly authorized under this
section; or
(2) charge any interest that is not expressly
authorized under Section 32.06, Tax Code.
(d) Except for charges authorized under Subsections (a)(1),
(2), (3), (9), and (11), any amount charged by a lienholder
[property tax lender] after closing must be for services performed
by a person that is not an employee of the lienholder [property tax
lender].
SECTION 4. Section 351.003, Finance Code, is amended to
read as follows:
Sec. 351.003. SECONDARY MARKET TRANSACTIONS. (a)
Except as provided by Subsection (b), this [This] chapter does not
prohibit a lienholder [property tax lender] from receiving
compensation from a party other than the property tax loan
applicant for the sale, transfer, assignment, or release of rights
on the closing of a property tax loan transaction.
(b) A lienholder may not sell, transfer, assign a lien
created in favor of a property tax lender under Section 32.06, Tax
Code, to a person who is not licensed under Section 351.051, or
exempt from licensure under Section 351.051(c).
SECTION 5. Section 351.005, Finance Code, is amended to
read as follows:
Sec. 351.005. APPLICATION OF TAX CODE. This chapter does
not affect the application of Section 32.06 [or 32.065], Tax Code.
SECTION 6. Section 351.006(a), Finance Code, is amended to
read as follows:
(a) In addition to any other applicable enforcement
provisions, Subchapters E, F, and G, Chapter 14, apply to a
violation of this chapter or Section 32.06 [or 32.065], Tax Code, in
connection with property tax loans.
SECTION 7. Section 351.007, Finance Code, is amended to
read as follows:
Sec. 351.007. RULES. The finance commission may adopt
rules to ensure compliance with this chapter and Section [Sections]
32.06 [and 32.065], Tax Code.
SECTION 8. Sections 351.008(a) and (c), Finance Code, are
amended to read as follows:
(a) The commissioner or the commissioner's representative
shall, at the times the commissioner or the representative
considers necessary:
(1) examine each place of business of each property
tax lender; and
(2) investigate the lender's transactions, including
loans, and records, including books, accounts, papers, and
correspondence, to the extent the transactions and records pertain
to the business regulated under this chapter and Section [Sections]
32.06 [and 32.065], Tax Code.
(c) During an examination, the commissioner or the
commissioner's representative may administer oaths and examine any
person under oath on any subject pertinent to a matter that the
commissioner or the representative is authorized or required to
consider, investigate, or secure information about under this
chapter or Section 32.06 [or 32.065], Tax Code.
SECTION 9. Section 351.009(a), Finance Code, is amended to
read as follows:
(a) To discover a violation of this chapter or Section 32.06
[or 32.065], Tax Code, or to obtain information required under this
chapter or Section 32.06 [or 32.065], Tax Code, the commissioner or
the commissioner's representative may investigate the records,
including books, accounts, papers, and correspondence, of a person,
including a property tax lender, who the commissioner or the
representative has reasonable cause to believe is violating this
chapter or Section 32.06 [or 32.065], Tax Code, regardless of
whether the person claims to not be subject to this chapter or
Section 32.06 [or 32.065], Tax Code.
SECTION 10. Section 351.051, Finance Code, is amended by
amending Subsections (a) and (c) to read as follows:
(a) A person must hold a license issued under this chapter
to:
(1) engage in the business of making, transacting, or
negotiating property tax loans; or
(2) contract for, charge, or receive, directly or
indirectly, in connection with a property tax loan subject to this
chapter, a charge, including interest, compensation, including
compensation received for a transaction described by 351.003(a),
consideration, or another expense, authorized under this chapter or
Chapter 32, Tax Code.
(c) Except as provided by Sections 351.003, this [This]
chapter does not apply to:
(1) any of the following entities or an employee of any
of the following entities, if the employee is acting for the benefit
of the employer:
(A) a bank, savings bank, or savings and loan
association, or a subsidiary or an affiliate of a bank, savings
bank, or savings and loan association; or
(B) a state or federal credit union, or a
subsidiary, affiliate, or credit union service organization of a
state or federal credit union; or
(2) an individual whose only activity that would
otherwise require licensure under Subsection (a) consists of [who]:
(A)making [makes] a property tax loan from the
individual's own funds to a spouse, former spouse, or persons in the
lineal line of consanguinity of the individual lending the money;
or
(B)making [makes] five or fewer property tax loans
in any consecutive 12-month period from the individual's own funds.
SECTION 11. Section 351.054, Finance Code, is amended to
read as follows:
Sec. 351.054. NOTICE TO TAXING UNIT. (a) A property tax
lender [transferee of a tax lien] must include with the sworn
document executed by the borrower and delivered to [filed with] the
collector of a taxing unit under Section 32.06(a-1), Tax Code, the
information required by this section.
(b) If the property tax lender [transferee] is licensed
under this chapter, the lender [transferee] shall include with the
filing the licensee's license number assigned by the commissioner.
(c) If the property tax lender [transferee] is exempt from
this chapter under Section 351.051(c)(1), the lender [transferee]
shall include with the filing an affidavit stating the entity's
type of organization that qualifies it for the exemption, any
charter number assigned by the governmental authority that issued
the entity's charter, and the address of the entity's main office.
(d) If the property tax lender [transferee] is exempt from
this chapter under Section 351.051(c)(2), the lender [transferee]
shall include a certificate issued by the commissioner indicating
the entity's exemption. The commissioner shall establish
procedures for issuance of a certificate under this subsection,
application requirements, and requirements regarding information
that must be submitted with an application.
SECTION 12. Section 351.156, Finance Code, is amended to
read as follows:
Sec. 351.156. LICENSE SUSPENSION OR REVOCATION. After
notice and a hearing the commissioner may suspend or revoke a
license if the commissioner finds that:
(1) the license holder failed to pay the annual
license fee, an examination fee, an investigation fee, or another
charge imposed by the commissioner under this chapter;
(2) the license holder, knowingly or without the
exercise of due care, violated this chapter or Section 32.06 [or
32.065], Tax Code, or a rule adopted or an order issued under this
chapter or Section 32.06 [or 32.065], Tax Code;
(3) a fact or condition exists that, if it had existed
or had been known to exist at the time of the original application
for the license, clearly would have justified the commissioner's
denial of the application; or
(4) the license holder has failed to ensure that an
individual acting as a residential mortgage loan originator, as
defined by Section 180.002, in the making, transacting, or
negotiating of a property tax loan for a principal dwelling is
licensed under this chapter in accordance with Section 351.0515.
SECTION 13. The heading to Section 32.06, Tax Code, is
amended to read as follows:
Sec. 32.06. PROPERTY TAX LOANS; ATTACHMENT OF [TRANSFER OF
TAX] LIEN
SECTION 14. Sections 32.06,(a),(a-1), (a-2), (a-3), (a-4),
(b), (b-1), (c), (d), (d-1), (e), (e-1), (e-2), (f), (f-1), (f-3),
(f-4), (g), (h), (i), (j), and (k-1), Tax Code, are amended to read
as follows:
(a) In this section, "mortgage servicer" :
[(1) "Mortgage servicer"] has the meaning assigned by
Section 51.0001, Property Code.
[(2) "Transferee" means a person authorized to pay the
taxes of another]
(a-1) A [person] property owner may authorize another
person to pay the taxes imposed by a taxing unit on the [person's]
owner's real property by executing and delivering to [filing with]
the collector for the taxing unit:
(1) a sworn document stating:
(A) the authorization for payment of the taxes;
(B) the name and street address of the person
[transferee] authorized to pay the taxes of the property owner;
(C) a description of the property by street
address, if applicable, and legal description;
(D) that notice has been given to the property
owner that if the property owner is age 65 or disabled, the property
owner may be eligible for a tax deferral under Section 33.06; and
(2) the information required by Section 351.054,
Finance Code.
(a-2) A [tax] lien on the property is created in favor of
[may be transferred to] the person who pays the taxes on behalf of
the property owner under the terms of a loan contract and execution
and delivery of the authorization under Subsection (a-1) for:
(1) taxes that are delinquent at the time of payment;
or
(2) taxes that are due but 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 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's
certification under Subsection (b) may be in one document.]
[(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
closing [execution] of a [tax lien transfer] property tax loan;
(2) adopt rules relating to the reasonableness of
closing costs, fees, and other charges permitted under this
section; and
(3) by rule prescribe the form and content of the sworn
document under Subsection (a-1) and the certified statement under
Subsection (b).
(a-4) A contract between a person and a property owner that
purports to authorize payment of taxes that are not delinquent or
due at the time of the authorization, or that lacks the
authorization described by Subsection (a-1), is void.
(b) When a person [If a transferee] authorized to pay a
property owner's taxes under [pursuant to] Subsection (a-1) pays
the taxes and any penalties, [and] interest, and collection costs
imposed, the collector shall issue a tax receipt to the person who
pays the taxes [that transferee]. In addition, the collector or a
person designated by the collector shall certify that the taxes and
any penalties, [and] interest, and collection costs on the subject
property [and collection costs] have been paid [by the transferee
on behalf of the property owner and that the taxing unit's tax lien
is transferred to that transferee]. The collector shall attach to
the certified statement the collector's seal of office or sign the
statement before a notary public and deliver the certified
statement and the [a] tax receipt [and the statement attesting to
the transfer of the tax lien] to the [transferee] person within 30
days. The tax receipt and statement may be combined into one
document. [The collector shall identify in a discrete field in the
applicable property owner's account the date of the transfer of a
tax lien transferred under this section.] When a [tax] lien
created in favor of a lender under Subsection (a-2) is released, the
holder of the lien [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 holder of the lien [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
property tax lender [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) A holder of a lien created in favor of a property tax
lender under Subsection (a-2) [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 judicial
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, if the property owner and the
transferee enter into a contract that is secured by a lien on the
property].
(d) A holder of the lien arising under Subsection (a-2)
[transferee] shall record the [a tax] lien [transferred as provided
by this section] with the certified statement [attesting to the
transfer of the tax lien] as described by Subsection (b) in the deed
records of each county in which the property encumbered by the lien
is located. The lien is subordinate to any prior recorded
encumbrance.
(d-1) A right of rescission described by 12 C.F.R. Section
226.23 applies to a loan for the payment of a property owner's taxes
described by Subsection (a-2) that is made in connection with
[transfer under this section of a tax lien on] residential property
owned and used by the property owner for personal, family, or
household purposes.
(e) A person [transferee] holding a [tax] lien arising under
Subsection (a-2) [transferred as provided by this section] may not
charge a greater rate of interest than 18 percent a year on the
funds advanced. Funds advanced are limited to the taxes,
penalties, interest, and collection costs paid as shown on the tax
receipt, expenses paid to record the lien, plus reasonable closing
costs.
(e-1) A person [transferee of a tax lien] may not charge a
fee for any expenses arising after the closing of the property tax
loan, including collection costs, except for:
(1) interest expressly authorized under this section;
(2) the fees for filing the release of the [tax] lien
under Subsection (b);
(3) the fee for providing a payoff statement under
Subsection (f-3);
(4) the fee for providing information regarding the
current balance owed by the property owner under Subsection (g);
and
(5) the fees expressly authorized under Section
351.0021, Finance Code.
(e-2) A property tax loan [The] contract between a property
tax lender and a [the] property owner [and the transferee] may
provide for interest for default, in addition to the interest
permitted under Subsection (e), if any part of the installment
remains unpaid after the 10th day after the date the installment is
due, including Sundays and holidays. If the lien [transferred] is
on residential property owned and used by the property owner for
personal, family, or household purposes, the interest may not
exceed five cents for each $1 of a scheduled installment.
(f) The holder of a loan secured by a [transferred tax] lien
created under Subsection (a-2) 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 created
under Subsection (a-2) [transferred as provided by Subsection (b)]
is entitled, within six months after the date on which the notice is
sent, to obtain a release of the [transferred tax] lien by paying
[the transferee of the tax lien] the balance [amount] owed by the
property owner under the property tax loan 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 holder of a loan secured by a lien created
under Subsection (a-2) [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 holder of the lien the
balance [transferee of the tax lien the amount] owed by the property
owner under the property tax loan 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-3) Notwithstanding any contractual agreement with the
property owner, the holder of a loan secured by a lien created under
Subsection (a-2) [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. The holder [A
transferee] may charge a reasonable fee for a payoff statement that
is requested after an initial payoff statement is
provided. However, the holder [a transferee] is not required to
release payoff information pursuant to a notice under Subsection
(f-1) unless the notice contains the information prescribed by the
Finance Commission of Texas.
(f-4) Failure to comply with Subsection (b-1), (f), or (f-1)
does not invalidate a [tax] lien arising under Subsection (a-2)
[this chapter, a contract lien, or a deed of trust].
(g) At any time after the end of the six-month period
specified by Subsection (f) and before a notice of foreclosure of
the [transferred tax] lien is sent, [the transferee of the tax lien
or] the holder of the [tax] lien may require the property owner to
provide written authorization and pay a reasonable fee before
providing information regarding the current balance owed by the
property owner to the [transferee or the] holder of the [tax] lien.
(h) A mortgage servicer who pays a property tax loan secured
by a lien created under Subsection (a-2) [a transferred tax lien]
becomes subrogated to all rights in the lien.
(i) A judicial [Except as provided by Section 33.445, a]
foreclosure of a [tax] lien created under subsection (a-2)
[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.
(j) After one year from the date on which a [tax] lien
created under Subsection (a-2) [transferred as provided by this
section] is recorded in all counties in which the property is
located, the holder [transferee] of the lien may foreclose the lien
in the manner provided by Subsection (c) unless the [a] contract
between the holder of the lien and the owner of the property
encumbered by the lien provides otherwise. The proceeds of a sale
following a judicial foreclosure as provided by this subsection
shall be applied first to the payment of court costs, then to
payment of the judgment, including accrued interest, and then to
the payment of any attorney's fees fixed in the judgment. Any
remaining proceeds shall be paid to other holders of liens on the
property in the order of their priority and then to the person whose
property was sold at the [tax] foreclosure sale.
(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
foreclosure [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 foreclosure [tax] sale remain in effect
to the extent not paid from the sale proceeds.
SECTION 15. The following provisions are repealed:
Sections 32.06(c-1), 32.065, 33.445, 34.02(e), and Section
34.021, Tax Code.
SECTION 16. The changes in law made by this Act to Section
32.06, Tax Code, do not apply to the transfer of an ad valorem tax
lien that occurs before the effective date of this Act. An ad
valorem tax lien transferred under 32.06, Tax Code, before the
effective date of this Act is governed by the law in effect
immediately before the effective date of this Act, and that law is
continued in effect for that purpose.
SECTION 17. The repeal of Section 32.065, Tax Code, by this
Act, does not affect a contract entered into under that section
before the effective date of this Act, and that section is continued
in effect for that purpose.
SECTION 18. The repeal of Section 33.445, Tax Code, by this
Act, does not affect the joinder of a transferee in a foreclosure
suit resulting from a tax lien transfer before the effective date of
this Act, and that section is continued in effect for that purpose.
SECTION 19. The repeal of Section 34.021, Tax Code, by this
Act, does not affect the distribution of excess proceeds for a
foreclosure of a tax lien under Rule 736 of the Texas Rules of Civil
Procedure before the effective date of this Act, and that section is
continued in effect for that purpose.
SECTION 20. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect on September 1, 2013.