Texas 2009 - 81st Regular

Texas Senate Bill SB979 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	81R5932 AJA-F
2	2	By: Lucio S.B. No. 979
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to foreclosure sales of residential real property;
8	8	providing a penalty.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Subchapter B, Chapter 402, Government Code, is
11	11	amended by adding Section 402.035 to read as follows:
12	12	Sec. 402.035. RESIDENTIAL PROPERTY FORECLOSURE NOTICE. (a)
13	13	The attorney general, in consultation with interested stakeholders
14	14	as the attorney general considers appropriate, shall prescribe the
15	15	form and content of the written notice that must be sent by a
16	16	mortgage servicer to a debtor under Sections 51.002 and 51.0022,
17	17	Property Code.
18	18	(b) The notice must:
19	19	(1) be written in plain language in English and
20	20	Spanish;
21	21	(2) be entitled "Rights of Homeowners or Tenants of
22	22	Homeowners Facing Foreclosure" or the Spanish equivalent of that
23	23	title, as applicable; and
24	24	(3) include:
25	25	(A) an explanation of foreclosure, including a
26	26	description of the various processes of foreclosure of a mortgage
27	27	lien on residential property as applicable to each type of mortgage
28	28	lien;
29	29	(B) a statement that state law requires that the
30	30	debtor in default under a residential mortgage lien be given at
31	31	least 45 days to cure the default;
32	32	(C) a description of the handling of payments
33	33	made after the time for cure has expired;
34	34	(D) the debtor's right to the return of payments
35	35	in certain circumstances;
36	36	(E) a statement that the debtor and the public
37	37	must be given at least 21 days' notice of the foreclosure sale and
38	38	that a foreclosure sale may occur only on the first Tuesday of a
39	39	month;
40	40	(F) a description of the options available to the
41	41	debtor in default to prevent the foreclosure;
42	42	(G) a description of and warning against typical
43	43	activities that may be encountered by the debtor in connection with
44	44	the foreclosure, including any unconscionable actions or courses of
45	45	action under Subchapter E, Chapter 17, Business & Commerce Code;
46	46	(H) a description of the rights and remedies of a
47	47	tenant whose landlord loses the property to foreclosure, including
48	48	a tenant's right to credit a security deposit toward rent under
49	49	certain circumstances and to withhold rent from a landlord during
50	50	and after the foreclosure process; and
51	51	(I) a description of and contact information for
52	52	resources available to the debtor to assist in preventing the
53	53	foreclosure or in filing an action concerning the foreclosure
54	54	process or the lien being foreclosed, including local bar
55	55	associations, the State Bar of Texas, and nonprofit legal
56	56	assistance programs.
57	57	(c) The attorney general shall update the notice prescribed
58	58	under this section at least annually and maintain the most current
59	59	version of the notice on the attorney general's Internet website.
60	60	SECTION 2. Section 24.005(b), Property Code, is amended to
61	61	read as follows:
62	62	(b) If the occupant is a tenant at will or by sufferance, the
63	63	landlord must give the tenant at least three days' written notice to
64	64	vacate before the landlord files a forcible detainer suit unless
65	65	the parties have contracted for a shorter or longer notice period in
66	66	a written lease or agreement. If a building is purchased at a tax
67	67	foreclosure sale or a trustee's foreclosure sale under a lien
68	68	superior to the tenant's lease and the tenant timely pays rent and
69	69	is not otherwise in default under the tenant's lease after
70	70	foreclosure, the purchaser must give a residential tenant of the
71	71	building at least 90 [30] days' written notice to vacate and must
72	72	otherwise comply with Section 51.011 [if the purchaser chooses not
73	73	to continue the lease. The tenant is considered to timely pay the
74	74	rent under this subsection if, during the month of the foreclosure
75	75	sale, the tenant pays the rent for that month to the landlord before
76	76	receiving any notice that a foreclosure sale is scheduled during
77	77	the month or pays the rent for that month to the foreclosing
78	78	lienholder or the purchaser at foreclosure not later than the fifth
79	79	day after the date of receipt of a written notice of the name and
80	80	address of the purchaser that requests payment. Before a
81	81	foreclosure sale, a foreclosing lienholder may give written notice
82	82	to a tenant stating that a foreclosure notice has been given to the
83	83	landlord or owner of the property and specifying the date of the
84	84	foreclosure].
85	85	SECTION 3. Section 51.002, Property Code, is amended by
86	86	amending Subsection (d) and adding Subsections (d-1) and (d-2) to
87	87	read as follows:
88	88	(d) Notwithstanding any agreement to the contrary, the
89	89	mortgage servicer of the debt shall serve a debtor in default under
90	90	a deed of trust or other contract lien on residential real property
91	91	[used as the debtor's residence] with written notice by certified
92	92	mail, and first class regular mail, addressed to the debtor at the
93	93	debtor's last known address stating that the debtor is in default
94	94	under the deed of trust or other contract lien and giving the debtor
95	95	at least 45 [20] days to cure the default before notice of sale can
96	96	be given under Subsection (b). The entire calendar day on which the
97	97	notice required by this subsection is given, regardless of the time
98	98	of day at which the notice is given, is included in computing the
99	99	45-day [20-day] notice period required by this subsection, and the
100	100	entire calendar day on which notice of sale is given under
101	101	Subsection (b) is excluded in computing the 45-day [20-day] notice
102	102	period.
103	103	(d-1) In addition to the notice of sale sent by certified
104	104	mail under Subsection (b)(3), the mortgage servicer must send the
105	105	notice of sale by first class regular mail addressed to the debtor
106	106	at the debtor's last known address and by first class regular mail
107	107	sent to the property's physical address and addressed to
108	108	"Occupant."
109	109	(d-2) The mortgage servicer must include with each notice
110	110	sent by regular or certified mail under Subsection (b)(3), (d), or
111	111	(d-1) a copy of the notice prescribed by the attorney general under
112	112	Section 402.035, Government Code.
113	113	SECTION 4. Chapter 51, Property Code, is amended by adding
114	114	Sections 51.0022, 51.010, 51.011, and 51.012 to read as follows:
115	115	Sec. 51.0022. RETURN OF CERTAIN PAYMENTS; PROVISION OF
116	116	CERTAIN NOTICE. (a) Before giving a notice of sale under Section
117	117	51.002(b), a mortgage servicer must return to the debtor any
118	118	payments received from the debtor after the last notice of default
119	119	was sent to the debtor under Section 51.002(d).
120	120	(b) If the mortgage servicer receives a payment from the
121	121	debtor after giving notice of sale under Section 51.002(b), and the
122	122	foreclosure sale occurs on the date in the notice of sale, the
123	123	mortgage servicer shall return those payments on or before the 10th
124	124	day after the date of the sale.
125	125	(c) A payment returned under this section by mail must
126	126	include a copy of the notice prescribed by the attorney general
127	127	under Section 402.035, Government Code. If a payment is returned
128	128	under this section by electronic means, the mortgage servicer shall
129	129	mail a notice of the payment's return to the debtor by first class
130	130	regular mail with a copy of the notice prescribed by the attorney
131	131	general under Section 402.035, Government Code.
132	132	(d) This section applies only to a lien on residential real
133	133	property occupied by the debtor as the debtor's homestead.
134	134	Sec. 51.010. JUDICIAL FORECLOSURE REQUIRED FOR CERTAIN
135	135	DEBTS. (a) A deed of trust or other contract lien on residential
136	136	real property occupied by the debtor as the debtor's homestead may
137	137	not be foreclosed and a power of sale under the contract may not be
138	138	exercised without a court judgment foreclosing the lien and
139	139	ordering the sale of the property by a sheriff or constable if the
140	140	debt in default:
141	141	(1) had an annual percentage rate, as defined by the
142	142	federal Truth in Lending Act (15 U.S.C. Section 1601 et seq.), that
143	143	was at least three percentage points more than the prime rate as
144	144	published by the Wall Street Journal two weeks before the date the
145	145	debt was incurred;
146	146	(2) allows the contract interest rate to increase:
147	147	(A) by more than two percentage points in any
148	148	one-year period; or
149	149	(B) more often than once a year;
150	150	(3) has a universal default provision that allows for
151	151	a change in the interest rate when there is:
152	152	(A) a default by the debtor on any obligation to
153	153	the lender or any other lender; or
154	154	(B) a decrease in the debtor's credit score;
155	155	(4) has a prepayment penalty;
156	156	(5) allows negative amortization;
157	157	(6) provides for a scheduled payment that is more than
158	158	twice as large as the average of earlier scheduled monthly
159	159	payments; or
160	160	(7) allows for the payment of interest only.
161	161	(b) This section does not apply to an interim construction
162	162	loan.
163	163	Sec. 51.011. TENANT'S TIME TO VACATE; PAYMENT OF RENT. (a)
164	164	A person who purchases residential real property at a foreclosure
165	165	sale under this chapter and gives a notice to vacate under Section
166	166	24.005 to a tenant who occupies the property at the time of the
167	167	foreclosure sale under a lease agreement entered into after the
168	168	date the lien that was the subject of the foreclosure sale attached
169	169	to the property may not require the tenant to vacate the property
170	170	before the 90th day after the date the notice is sent.
171	171	(b) Except as provided by Subsection (c), on a written
172	172	demand by the purchaser, a tenant described by Subsection (a) must
173	173	pay rent to the purchaser of the property as required by the lease
174	174	agreement that applied to the tenant on the date of the foreclosure
175	175	sale and otherwise comply with the terms of that lease.
176	176	(c) A tenant who, before the foreclosure sale, has paid rent
177	177	for a rental period that includes the date of the foreclosure sale
178	178	is not required to pay rent to the purchaser until rent for the
179	179	first rental period commencing after the foreclosure sale is due.
180	180	(d) Unless the purchaser acknowledges and delivers in
181	181	writing a statement that the new owner is responsible for the
182	182	tenant's security deposit and specifying the exact dollar amount of
183	183	the deposit, the tenant is entitled to credit the security deposit
184	184	toward the rent owed the purchaser without the necessity of
185	185	judicial action.
186	186	Sec. 51.012. WAIVER. A provision of a contract, agreement,
187	187	or other document that purports to waive a right of a debtor or
188	188	exempt a mortgage servicer, mortgagee, trustee, substitute
189	189	trustee, or government official from a duty under this chapter is
190	190	void.
191	191	SECTION 5. Subchapter A, Chapter 92, Property Code, is
192	192	amended by adding Section 92.021 to read as follows:
193	193	Sec. 92.021. WITHHOLDING OF RENT ON NOTICE OF FORECLOSURE.
194	194	(a) Notwithstanding any other law or a provision of a lease
195	195	agreement, if a tenant receives written notice that the leased
196	196	premises are subject to a foreclosure sale, the tenant is
197	197	authorized to withhold the payment of rent without any adverse
198	198	action, penalty, fee, or charge until:
199	199	(1) the property is purchased at a foreclosure sale;
200	200	or
201	201	(2) the default giving rise to the foreclosure sale
202	202	has been cured, the sale has been canceled, the tenant has been
203	203	given at least 10 days' notice and proof of the cure and
204	204	cancellation, and the tenant has been provided a method to confirm
205	205	the facts directly with the lienholder who initiated the
206	206	foreclosure sale.
207	207	(b) A landlord who violates this section or threatens to
208	208	violate this section is liable to the tenant for:
209	209	(1) actual damages;
210	210	(2) a civil penalty of three times the monthly rent;
211	211	and
212	212	(3) reasonable attorney's fees.
213	213	(c) A landlord who violates this section or threatens to
214	214	violate this section commits an offense. An offense under this
215	215	subsection is a Class A misdemeanor.
216	216	SECTION 6. (a) Not later than November 1, 2009, the attorney
217	217	general shall prescribe the form and content of the notice under
218	218	Section 402.035, Government Code, as added by this Act.
219	219	(b) Section 24.005(b), Property Code, as amended by this
220	220	Act, and Section 51.011, Property Code, as added by this Act, apply
221	221	only to a notice to vacate residential real property purchased at a
222	222	foreclosure sale on or after the effective date of this Act. Notice
223	223	to vacate residential real property purchased at a foreclosure sale
224	224	before the effective date of this Act is governed by the law in
225	225	effect immediately before the effective date of this Act, and that
226	226	law is continued in effect for that purpose.
227	227	(c) Except as provided by this section, Chapter 51, Property
228	228	Code, as amended by this Act, applies only to a sale of residential
229	229	real property in which notice of default under Section 51.002,
230	230	Property Code, is provided on or after December 1, 2009. A sale in
231	231	which notice of default is provided before December 1, 2009, is
232	232	subject to the law in effect immediately before the effective date
233	233	of this Act, and that law is continued in effect for that purpose.
234	234	(d) Section 92.021, Property Code, as added by this Act,
235	235	applies only to a lease agreement entered into or renewed on or
236	236	after the effective date of this Act. A lease agreement entered
237	237	into or renewed before the effective date of this Act is governed by
238	238	the law in effect immediately before the effective date of this Act,
239	239	and that law is continued in effect for that purpose.
240	240	SECTION 7. This Act takes effect September 1, 2009.