82R22722 MXM-F
By: Keffer H.B. No. 1729
Substitute the following for H.B. No. 1729:
By: Cook C.S.H.B. No. 1729
A BILL TO BE ENTITLED
AN ACT
relating to the sale of surplus leased land by a governmental entity
to a private party.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle F, Title 10, Government Code, is
amended by adding Chapter 2267 to read as follows:
CHAPTER 2267. SALE OF LEASED LAND BY GOVERNMENTAL ENTITIES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2267.001. DEFINITIONS. In this chapter:
(1) "Bulk purchaser" means any person, including
successors in interest, heirs, or assigns, that acquires a leased
tract, wholly or partly, from a governmental entity in accordance
with Subchapter C. The term does not include a lessee who acquires
an individual leased tract under Section 2267.051 or Subchapter D.
(2) "Bulk sale" means a sale to a bulk purchaser of
multiple leased tracts, wholly or partly, from a governmental
entity in accordance with Subchapter C. The term does not include a
sale to a lessee who acquires an individual leased tract under
Section 2267.051 or Subchapter D.
(3) "Closing date" means the date on which the
governmental entity transfers its interest in the leased tract,
wholly or partly, to a bulk purchaser. There may be multiple
closing dates if the leased tract is sold in portions.
(4) "Consumer price index" means the consumer price
index for Housing, Dallas-Fort Worth, TX area, Series Id:
CUURA316SAH, Base Period: 1982-84 = 100, as published by the Bureau
of Labor Statistics of the United States Department of Labor, or its
equivalent if the series is discontinued.
(5) "Leased tract" means all or any portion of
government land that is:
(A) leased by a governmental entity before
application of this chapter; and
(B) subject to this chapter under Section
2267.003.
(6) "Lessee" means a person that leases a leased tract
under a residential or commercial lease from a governmental entity.
The term includes the lessee's heirs, successors, and assigns.
Sec. 2267.002. APPLICABILITY TO ALL GOVERNMENTAL ENTITIES.
This chapter applies to this state and each political subdivision
of this state, including a municipality, a county, a river
authority or other water district, a state agency, and any other
governmental entity of this state.
Sec. 2267.003. APPLICABILITY ONLY TO SURPLUS PROPERTY.
This chapter applies only to a leased tract:
(1) that is owned by, and designated as surplus
property by, a governmental entity; and
(2) that the governmental entity elects to sell under
this chapter.
Sec. 2267.004. OPTIONS CUMULATIVE. The options provided by
this chapter are in addition to and not instead of any other lease
or sale of surplus property options that a governmental entity
otherwise has.
Sec. 2267.005. CONTINUING APPLICABILITY OF PROVISIONS. A
provision of this chapter that applies to the lessee of a leased
tract under this chapter applies to any subsequent owner of the
leased tract.
Sec. 2267.006. PLATTING LAW INAPPLICABLE. A sale of the
leased tract under this chapter is not subject to Chapter 212 or
232, Local Government Code, or any other platting requirement.
Sec. 2267.007. NONAPPLICABILITY OF CERTAIN OTHER LAWS. The
following laws do not apply to the sale of an individual leased
tract or bulk sale under this chapter:
(1) Chapter 180, Finance Code;
(2) Chapter 272, Local Government Code;
(3) Chapter 31, Natural Resources Code;
(4) Section 8502.013, Special District Local Laws
Code; and
(5) Section 49.226, Water Code.
[Sections 2267.008-2267.050 reserved for expansion]
SUBCHAPTER B. SALE OF LEASED LAND BY GOVERNMENTAL ENTITY DIRECTLY
TO INDIVIDUAL WHO IS LEASING LAND FROM GOVERNMENTAL ENTITY
Sec. 2267.051. SALE OF LEASED LAND TO PERSON LEASING LAND
FOR FAIR MARKET VALUE. A governmental entity may, without notice or
the solicitation of bids, sell land it owns to the lessee for not
less than the fair market value of the unencumbered fee simple
estate as determined under Section 2267.052.
Sec. 2267.052. APPRAISALS. (a) An appraiser hired under
this section must be:
(1) disinterested; and
(2) a licensed appraiser under Chapter 1103,
Occupations Code.
(b) Before a sale under Section 2267.051, the lessee shall
hire an appraiser to determine the current fair market value of
land. Not later than the 60th day after the date the appraiser is
hired, the appraiser shall complete the appraisal and send the
completed appraisal to the lessee and the governmental entity.
(c) If the governmental entity rejects the fair market value
determined by the appraisal, the governmental entity shall hire
another appraiser to conduct a second appraisal. Not later than the
60th day after the date the governmental entity rejects the initial
appraisal, the second appraisal must be completed and sent to the
lessee and the governmental entity.
(d) If the lessee rejects the fair market value determined
by the second appraiser, the two appraisers shall meet and attempt
to reach an agreement on the fair market value not later than the
30th day after the date the lessee receives the governmental
entity's appraisal.
(e) If the two appraisers fail to reach agreement on or
before the 10th day after the date of the meeting, not later than
the 20th day after the date of the meeting the governmental entity
shall request that the comptroller appoint a third appraiser to
reconcile the two previous appraisals. Not later than the 30th day
after the date of the request, the comptroller shall appoint the
third appraiser.
(f) Not later than the 30th day after the date the third
appraiser is appointed, the third appraisal must be completed and
sent to the lessee and the governmental entity. The third appraisal
is final and binding on all parties.
(g) The appraisal costs must be paid by the person who
requests the appraisal, except that the lessee and the governmental
entity shall each pay one-half of the cost of any third appraisal.
(h) An appraisal may not:
(1) include consideration of a freeze or other
suspension of lease rate increases for the homestead of a person who
is 65 years of age or older; and
(2) include the value of any improvements constructed
on the lot or over the water that is the lessee's property.
Sec. 2267.053. NO WATER CODE PERMIT EXEMPTION. (a) A
leased tract sold by the governmental entity under this chapter is
ineligible for, and the owner is not entitled to, the exemption
provided by Section 11.142(a), Water Code. The purpose of this
section is to protect the public health, safety, or welfare and to
ensure an adequate municipal, county, water district, river
authority, or other governmental water supply.
(b) The instrument conveying the leased tract must include a
provision stating that the exemption does not apply to the
conveyance.
[Sections 2267.054-2267.100 reserved for expansion]
SUBCHAPTER C. SALE OF LEASED LAND BY GOVERNMENTAL ENTITY TO BULK
PURCHASERS; LESSEE OPTIONS TO PURCHASE OR LEASE FROM BULK PURCHASER
Sec. 2267.101. SALE OF LEASED LAND TO BULK PURCHASER. (a)
Instead of a sale under Section 2267.051, a governmental entity may
by resolution pursue a bulk sale of all or part of the property
leased to a lessee to a bulk purchaser under this subchapter.
(b) A lessee may not purchase land under Section 2267.051
from the effective date indicated in the resolution until the date
on which any resulting bulk purchase and sale agreement is declared
terminated by the governmental entity.
(c) If the bulk sale of the leased property is completed and
ownership of the land is transferred to the bulk purchaser, the
lessee may not purchase land under Section 2267.051 and the
lessee's only purchase and lease options are those described by
this subchapter and Subchapter D. This subsection does not apply to
a lessee who timely exercises an option to purchase the land it is
leasing.
Sec. 2267.102. OPPORTUNITY OF LESSEE TO BUY LEASED TRACT.
Each lessee is entitled to buy the lessee's individual leased tract
from the bulk purchaser or continue leasing the applicable leased
tract from the bulk purchaser in accordance with the purchase or
lease options described by Sections 2267.103 through 2267.106.
Sec. 2267.103. OPTION TO PURCHASE FOR CASH. (a) The lessee
may purchase the leased tract in cash or through lender financing
for 100 percent of land only assessed value without any exemptions,
as determined by the appraisal district, for the most current
tax-assessed value.
(b) This option must be available on the closing date and
until at least the first anniversary of the closing date.
Sec. 2267.104. OPTION TO PURCHASE FOR LOAN. (a) The lessee
may purchase the individual leased tract by seller financing for
the percent of assessed value only as set forth in Section 2267.103,
with a down payment of 10 percent and an interest rate of 6 percent,
with a 30-year amortization.
(b) The lessee may not be charged any origination fees or
points as a part of the closing costs involved in this option.
(c) This option must be available on the closing date and
until at least the first anniversary of the closing date.
Sec. 2267.105. OPTION FOR 99-YEAR LEASE. (a) The lessee
may enter into a new 99-year lease for the leased tract at a rental
rate of six percent of the land only assessed value without any
exemptions, as determined by the appraisal district, for the
tax-assessed value that was used to determine the bulk purchaser's
purchase price.
(b) The rental price is subject to annual consumer price
index increases or decreases.
(c) The 99-year lease must include an option to purchase the
applicable leased tract at the land only assessed value without any
exemptions, as determined by the appraisal district, at the time of
the lessee's purchase. This value may not be less than the
tax-assessed value that was used to determine the bulk purchaser's
purchase price.
(d) This option must be available until at least the first
anniversary of the closing date.
Sec. 2267.106. OPTION FOR 20-YEAR LEASE FOR SENIOR
CITIZENS. (a) This section applies only to a lessee who is 65 years
of age or older and who receives a property tax exemption under
Section 11.13, Tax Code, for a structure on the lessee's individual
leased tract. The lessee must have received the property tax
exemption for a structure on the lessee's individual leased tract
by the first day of January before the bulk purchaser's closing
date.
(b) The lessee may enter into a 20-year lease for the leased
tract at a rental rate of six percent of the land only assessed
value without any exemptions, as determined by the appraisal
district, for the tax-assessed value that was used to determine the
bulk purchaser's purchase price.
(c) The rental price is subject to annual consumer price
index increases or decreases. All annual consumer price index
increases or decreases are deferred, and accrued and compounded for
20 years at the six percent rate.
(d) The 20-year lease must include an option to purchase the
applicable leased tract at the land only assessed value without any
exemptions, as determined by the appraisal district, at the time of
the lessee's purchase. This value may not be less than the
tax-assessed value that was used to determine the bulk purchaser's
purchase price.
(e) This option must be available until at least the first
anniversary of the closing date.
Sec. 2267.107. EXTENSION OF EXISTING LEASE IF OPTIONS NOT
EXERCISED; EIGHT-YEAR OPTION TO PURCHASE. (a) The bulk purchaser
shall extend the existing lease of any lessee who does not timely
exercise one of the options in Sections 2267.103 through 2267.106.
The bulk purchaser shall extend the lease as necessary to allow for
the full eight-year purchase option period provided by this
section.
(b) Not later than the eighth anniversary of the closing
date, the lessee may purchase the lessee's individual leased tract
for the greater of:
(1) the land only assessed value without any
exemptions, as determined by the appraisal district at the time of
the lessee's purchase; or
(2) the tax-assessed value that was used to determine
the bulk purchaser's purchase price.
(c) This section does not prevent the bulk purchaser from
offering additional purchase or lease options to a lessee.
Sec. 2267.108. DETERMINATION OF LEASE RATE OR PURCHASE
PRICE WHEN APPRAISAL DISTRICT VALUE UNAVAILABLE. (a) This section
applies when the appraisal district does not provide an assessed
value for the applicable portion of the leased tract for the
applicable year.
(b) To determine the purchase price or lease rate, the land
only assessed value without any exemptions for the applicable
portion of the leased tract must be calculated based on the assessed
value per square foot of comparable tracts with similar physical
characteristics in the applicable county or adjoining counties, as
determined by the selling governmental entity.
Sec. 2267.109. LIEN ON LEASED TRACT; LESSEE DUTIES. (a)
In this section, "lienholder" means any mortgagee under a mortgage,
or a trustee or beneficiary under a deed of trust, holding a lien on
any portion of the leased tract.
(b) On the date the sale of an individual leased tract
closes, the lessee shall:
(1) pay any debt secured by a lien on the lessee's
leasehold estate; or
(2) deliver the express written consent of each
lienholder on the leasehold estate in the leased tract permitting
the lessee to grant a purchase money lien on the fee simple estate
in the leased tract.
Sec. 2267.110. PROPERTY OWNERS' ASSOCIATION. The bulk
purchaser may create a property owners' association with the power
to assess property, impose a lien, and collect dues and assessments
for the operation of the property owners' association.
Sec. 2267.111. DEED RESTRICTIONS. The selling governmental
entity may impose a deed restriction on the leased tract conveyed to
the bulk purchaser that was included in the individual leases
conveyed.
[Sections 2267.112-2267.150 reserved for expansion]
SUBCHAPTER D. PROCEDURES FOR LESSEE PURCHASING LAND FROM BULK
PURCHASER
Sec. 2267.151. LESSEE'S RIGHT TO PURCHASE LEASED TRACT WHEN
BULK PURCHASER CLOSES. (a) In the manner provided by this
subchapter, a lessee may buy the lessee's individual leased tract
from the bulk purchaser under Section 2267.103 or 2267.104
concurrently with the bulk purchaser making its purchase from the
governmental entity on the closing date.
(b) The lessee shall notify the selling governmental entity
and the bulk purchaser not later than the 90th day after the
effective date of the purchase and sale agreement between the
entity and the bulk purchaser of the lessee's intent to purchase the
applicable leased tract using the format provided by the entity and
the bulk purchaser.
(c) Not later than the closing date, the lessee and the bulk
purchaser must enter into a purchase and sale agreement in
substantially the form as agreed to between the selling
governmental entity and the bulk purchaser.
Sec. 2267.152. PURCHASE PRICE REQUIRED IN AGREEMENT. The
purchase and sale agreement must contain the purchase price for the
individual leased tract in accordance with the applicable purchase
option under Section 2267.103 or 2267.104.
Sec. 2267.153. SURVEY REQUIRED. (a) The lessee shall
deliver an accurate survey of the lessee's individual leased tract
to the selling governmental entity and the bulk purchaser not later
than the 45th day before the closing date, at the lessee's expense.
(b) The survey must be acceptable to the title company
selected by the bulk purchaser and lessee and approved by the
selling governmental entity for the purpose of issuing a policy of
title insurance on the applicable portion of the leased tract.
(c) The survey must be prepared by a licensed state land
surveyor or a registered professional land surveyor acceptable to
the selling governmental entity and the bulk purchaser.
(d) The survey must include the boundaries of the lessee's
leased tract. The boundaries must be consistent with any master
survey prepared on behalf of the selling governmental entity in
conjunction with the sale of the leased tract to the bulk purchaser.
(e) The survey must include all improvements on the leased
tract and indicate any encroachments across the applicable boundary
lines.
(f) The survey must be reviewed and approved by the selling
governmental entity and the bulk purchaser.
(g) The selling governmental entity or the bulk purchaser
may perform an inspection of the applicable leased tract to verify
the accuracy of the survey and any encroachments.
Sec. 2267.154. TITLE COMMITMENT REQUIRED. The lessee shall
provide a title commitment from the title company selected by the
lessee and the bulk purchaser. The lessee shall pay for the title
commitment.
Sec. 2267.155. OBJECTIONS TO TITLE COMMITMENT OR SURVEY.
(a) The lessee must notify the bulk purchaser of any objections to
any items on the title commitment or survey not later than:
(1) the 15th day after the date the lessee receives the
title commitment or survey, as applicable; and
(2) the 45th day before the proposed closing date.
(b) The bulk purchaser or the selling governmental entity is
not required to cure any items described by Subsection (a) or to
incur any expenses in curing the items, except that the bulk
purchaser or the entity, as applicable, shall use good faith
efforts to address or remove those requirements or exceptions shown
on Schedule C of the title commitment that apply to or are created
by the bulk purchaser or entity. Despite this good faith exception,
the bulk purchaser or entity is not required to cure any exceptions
on the attached Schedule C regarding legal right of access to or
from the applicable leased tract.
Sec. 2267.156. "AS-IS" PURCHASE; NO WARRANTIES. (a) The
lessee purchases the applicable individual leased tract in its
"as-is" condition.
(b) The bulk purchaser:
(1) is not required to make any improvements or
modifications; and
(2) may not make any representations or warranties as
to the condition or use of the applicable leased tract.
Sec. 2267.157. NO RESPONSIBILITY FOR BROKER FEES OR
COMMISSIONS. The bulk purchaser is not responsible for any broker
fees or commissions due to any broker or agent engaged or claiming
to have been engaged by the lessee for the purchase and sale of the
applicable leased tract.
Sec. 2267.158. COSTS FOR WHICH BULK PURCHASER IS
RESPONSIBLE. The bulk purchaser is responsible for the following
costs:
(1) one-half of any escrow fee;
(2) costs to release existing liens placed on the
applicable portion of the leased tract by the bulk purchaser;
(3) prepayment penalties and recording fees;
(4) costs to release the bulk purchaser's loan
liability to the extent applicable to the individual leased tract;
(5) costs related to tax statements or certificates;
and
(6) costs to prepare the deed.
Sec. 2267.159. COSTS FOR WHICH LESSEE IS RESPONSIBLE. The
lessee is responsible for the following costs:
(1) one-half of any escrow fee;
(2) costs associated with a loan or financing for the
applicable portion of the leased tract, including:
(A) loan origination, discount, buy-down, and
commitment fees;
(B) appraisal fees;
(C) loan application fees;
(D) credit reports costs;
(E) costs to prepare loan documents;
(F) loan-related inspection fees; and
(G) interest on the loan from the date of
disbursement to the date of the first monthly payment;
(3) the cost of the survey prepared under Section
2267.153;
(4) recording fees;
(5) costs for copies of easements and restrictions;
(6) the cost of the mortgagee policy of title
insurance, including any endorsements required by the lender;
(7) the cost of any prepaid items, including insurance
premiums and reserves and taxes;
(8) underwriting fees; and
(9) the cost of any owner's policy of title insurance,
including endorsements obtained by the lessee.
Sec. 2267.160. TAXES. Taxes are prorated as of the closing
date. If the taxes are not paid as of the closing date, the lessee is
responsible for paying the taxes.
Sec. 2267.161. TITLE COMPANY AND ESCROW AGENT. The title
company and escrow agent must be acceptable to the selling
governmental entity and agreed to by the lessee and the bulk
purchaser in the purchase and sale agreement.
Sec. 2267.162. DELIVERY OF PURCHASE AND SALE AGREEMENT AND
EARNEST MONEY. On or before the closing date, $1,000 in earnest
money and the executed purchase and sale agreement between the
lessee and the bulk purchaser must be timely delivered to the title
company or escrow agent.
Sec. 2267.163. DELIVERY OF COMPLETED DOCUMENTS TO ESCROW
AGENT. On or before the date of the sale to the lessee, the bulk
purchaser and the lessee shall complete all documentation necessary
to transfer the applicable leased tract from the bulk purchaser to
the lessee and deliver the completed and executed documents to the
applicable escrow agent.
Sec. 2267.164. RECORDING OF DOCUMENTS. (a) The special
warranty deed or any other documents transferring the applicable
portion of the leased tract to the lessee may not be recorded before
the closing date.
(b) Promptly after the escrow agent receives written notice
from the selling governmental entity or the title company or escrow
agent facilitating the closing of the leased tract from the entity
to the bulk purchaser that the closing has been completed, the agent
shall file the special warranty deed and any other applicable
documents to transfer the leased tract to the lessee in the real
property records of the county in which the leased tract is located.
SECTION 2. This Act takes effect September 1, 2011.