81R9042 KFF-D
By: Thibaut H.B. No. 3083
A BILL TO BE ENTITLED
AN ACT
relating to notice of dragnet clauses in deeds of trust.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Title 8, Business & Commerce Code, is amended by
adding Chapter 262 to read as follows:
CHAPTER 262. DEEDS OF TRUST
Sec. 262.001. NOTICE TO CERTAIN THIRD PARTIES OF DRAGNET
CLAUSE AND RELATED INDEBTEDNESS. (a) If, after the closing date of
a loan secured by a deed of trust, a person agrees to become
obligated as a debtor or guarantor on the loan, the mortgagee must
provide the person, before the person becomes obligated, written
notice of:
(1) any provision in the deed of trust that could cause
the deed of trust to secure any indebtedness that:
(A) was owed before the deed of trust was
executed; or
(B) became owed after the deed of trust was
executed; and
(2) all indebtedness secured by the deed of trust at
the time the person becomes obligated, including any indebtedness
that:
(A) was owed before the deed of trust was
executed; or
(B) became owed after the deed of trust was
executed.
(b) If a mortgagee assigns or otherwise transfers all or
part of the mortgagee's interest in a loan that contains a provision
described by Subsection (a)(1) after a person entitled to notice
under Subsection (a) has become obligated on the loan, the assignee
mortgagee or other transferee must, prior to the assignment or
other transfer or, if prior notice is not practicable, not later
than the 15th day after the date of the assignment or transfer,
provide to the person notice that reflects all indebtedness that is
or will be secured by the deed of trust at the time the interest in
the loan is assigned or otherwise transferred to the assignee
mortgagee or transferee.
(c) If a person fails to give a notice required by this
section:
(1) the obligations on the loan of the person entitled
to the notice are voidable; and
(2) the person entitled to the notice is entitled to
the refund of all payments made by the person on the loan to the
mortgagee, or any subsequent assignee or transferee, who failed to
provide the notice and is entitled to interest on those payments.
SECTION 2. Chapter 262, Business & Commerce Code, as added
by this Act, applies only to a loan closed on or after the effective
date of this Act. A loan closed before the effective date of this
Act is governed by the law in effect when the loan was closed, and
that law is continued in effect for that purpose.
SECTION 3. This Act takes effect September 1, 2009.