By: Rodriguez (Senate Sponsor - Carona) H.B. No. 406
(In the Senate - Received from the House April 27, 2009;
April 27, 2009, read first time and referred to Committee on
Finance; May 12, 2009, reported favorably by the following vote:
Yeas 9, Nays 0; May 12, 2009, sent to printer.)
A BILL TO BE ENTITLED
AN ACT
relating to the disposition of excess proceeds of a tax sale of real
property or foreclosure of a tax lien on real property.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter A, Chapter 34, Tax Code, is amended by
adding Section 34.021 to read as follows:
Sec. 34.021. DISTRIBUTION OF EXCESS PROCEEDS IN OTHER TAX
FORECLOSURE PROCEEDINGS. A person conducting a sale for the
foreclosure of a tax lien under Rule 736 of the Texas Rules of Civil
Procedure shall, within 10 days of the sale, pay any excess proceeds
after payment of all amounts due all participants in the sale to the
clerk of the court that issued the order authorizing the sale. The
excess proceeds from such a sale shall be handled according to
Sections 34.03 and 34.04 of this code.
SECTION 2. Section 34.04, Tax Code, is amended by amending
Subsections (c), (e), (f), (g), (h), and (i) and adding Subsections
(c-1) and (j) to read as follows:
(c) At the hearing the court shall order that the proceeds
be paid according to the following priorities to each party that
establishes its claim to the proceeds:
(1) to the tax sale purchaser if the tax sale has been
adjudged to be void and the purchaser has prevailed in an action
against the taxing units under Section 34.07(d) by final judgment;
(2) to a taxing unit for any taxes, penalties, or
interest that have become due or delinquent on the subject property
subsequent to the date of the judgment or that were omitted from the
judgment by accident or mistake;
(3) to any other lienholder, consensual or otherwise,
for the amount due under a lien, in accordance with the priorities
established by applicable law;
(4) to a taxing unit for any unpaid taxes, penalties,
interest, or other amounts adjudged due under the judgment that
were not satisfied from the proceeds from the tax sale; and
(5) to each former owner of the property, as the
interest of each may appear, provided that the former owner:
(A) was a defendant in the judgment;
(B) is related within the third degree by
consanguinity or affinity to a former owner that was a defendant in
the judgment; or
(C) acquired by will or intestate succession the
interest in the property of a former owner that was a defendant in
the judgment.
(c-1) Except as provided by Subsections (c)(5)(B) and (C), a
former owner of the property that acquired an interest in the
property after the date of the judgment may not establish a claim to
the proceeds. For purposes of this subsection, a former owner of
the property is considered to have acquired an interest in the
property after the date of the judgment if the deed by which the
former owner acquired the interest was recorded in the real
property records of the county in which the property is located
after the date of the judgment.
(e) An [an] order under this section directing that all or
part of the excess proceeds be paid to a party is appealable.
(f) A person may not take an assignment or other transfer of
an owner's claim to excess proceeds unless:
(1) the assignment or transfer is taken on or after the
36th day after the date the excess proceeds are deposited in the
registry of the court;
(2) the assignment or transfer is in writing and
signed by the assignor or transferor; [and]
(3) the assignment or transfer is not the result of an
in-person or telephone solicitation;
(4) the assignee or transferee pays the assignor or
transferor on the date of the assignment or transfer an amount equal
to at least 80 percent of the amount of the assignor's or
transferor's claim to the excess proceeds; and
(5) the assignment or transfer document contains a
sworn statement by the assignor or transferor affirming:
(A) that the assignment or transfer was given
voluntarily;
(B) the date on which the assignment or transfer
was made and that the date was not earlier than the 36th day after
the date the excess proceeds were deposited in the registry of the
court;
(C) that the assignor or transferor has received
the notice from the clerk required by Section 34.03;
(D) the nature and specific amount of
consideration given for the assignment or transfer;
(E) the circumstances under which the excess
proceeds are in the registry of the court;
(F) the amount of the claim to excess proceeds in
the registry of the court;
(G) that the assignor or transferor has made no
other assignments or transfers of the assignor's or transferor's
claim to the excess proceeds; [and]
(H) that the assignor or transferor knows that
the assignor or transferor may retain counsel; and
(I) that the consideration was paid in full on
the date of the assignment or transfer and that the consideration
paid was an amount equal to at least 80 percent of the amount of the
assignor's or transferor's claim to the excess proceeds.
(g) An assignee or transferee who obtains excess proceeds
without complying with Subsection (f) is liable to the assignor or
transferor for the amount of excess proceeds obtained plus
attorney's fees and expenses. An assignee or transferee who
attempts to obtain excess proceeds without complying with
Subsection (f) is liable to the assignor or transferor for
attorney's fees and expenses.
(h) An assignee or transferee who files a petition setting
forth a claim to excess proceeds must attach a copy of the
assignment or transfer document and produce the original of the
assignment or transfer document in court at the hearing on the
petition. If the original assignment or transfer document is lost,
the assignee or transferee must obtain the presence of the assignor
or transferor to testify at the hearing. In addition, the assignee
or transferee must produce at the hearing the original of any
evidence verifying the payment of the consideration given for the
assignment or transfer. If the original of any evidence of the
payment is lost or if the payment was in cash, the assignee or
transferee must obtain the presence of the assignor or transferor
to testify at the hearing.
(i) A fee charged by an attorney to obtain excess proceeds
for an owner may not be greater than 25 percent of the amount
obtained or $1,000, whichever is less. A person who is not an
attorney may not charge a fee to obtain excess proceeds for an
owner.
(j) The amount of the excess proceeds the court may order be
paid to an assignee or transferee may not exceed 125 percent of the
amount the assignee or transferee paid the assignor or transferor
on the date of the assignment or transfer.
SECTION 3. The change in law made by this Act applies to the
disposition of excess proceeds of a tax sale paid to the clerk of
the court that issued the warrant or order of sale regardless of the
date on which the warrant or order of sale was issued, the tax sale
was conducted, or the proceeds were paid to the clerk.
SECTION 4. This Act takes effect September 1, 2009.
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