Texas Senate Bill SB2147

Texas 2009 - 81st Regular

Caption

Relating to the priority of transferred tax liens.

Impact

The implications of this bill are notable, particularly for property owners who are facing tax liens that may be transferred to new creditors. Under the revised rules, once a tax lien is transferred, it becomes subordinate to other existing claims. This change is anticipated to influence the behavior of credit markets and the strategies employed by property associations seeking to recover debts associated with property maintenance assessments. Stakeholders, including financial institutions and property associations, may need to reassess their approaches to managing liens and debts given this legislative change.

Summary

Senate Bill 2147 amends the Texas Tax Code concerning the priority of transferred tax liens. This legislation presents a modification to Section 32.05 of the Tax Code, affecting how tax liens interact with other encumbrances and claims on property. The primary change introduced by SB2147 is that, upon transfer of a tax lien, the priority of that lien is diminished compared to other debts, liens, or future interests that had been established prior to its attachment. This is a significant alteration, as tax liens typically maintain high priority in the context of property claims.

Contention

While the bill aims to clarify the hierarchy of claims concerning tax liens, it may also introduce points of contention among creditors and property owners. Opposition could stem from concerns that reducing the priority of tax liens upon transfer might complicate the recovery process for creditors, particularly those who rely on the security of liens as a means of ensuring debt repayment. Furthermore, property associations and homeowners could argue that this could negatively affect their ability to maintain sustainable financial practices and secure funding for communal services due to increased risks associated with the recovery of unpaid assessments.