Texas 2011 - 82nd Regular

Texas Senate Bill SB889 Compare Versions

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1	1	By: Carona S.B. No. 889
2	2	(S. Davis of Harris)
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to assignment of rents to holders of certain security
8	8	interests in real property.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Subsection (d), Section 9.109, Business &
11	11	Commerce Code, is amended to read as follows:
12	12	(d) This chapter does not apply to:
13	13	(1) a landlord's lien, other than an agricultural
14	14	lien;
15	15	(2) a lien, other than an agricultural lien, given by
16	16	statute or other rule of law for services or materials, but Section
17	17	9.333 applies with respect to priority of the lien;
18	18	(3) an assignment of a claim for wages, salary, or
19	19	other compensation of an employee;
20	20	(4) a sale of accounts, chattel paper, payment
21	21	intangibles, or promissory notes as part of a sale of the business
22	22	out of which they arose;
23	23	(5) an assignment of accounts, chattel paper, payment
24	24	intangibles, or promissory notes that is for the purpose of
25	25	collection only;
26	26	(6) an assignment of a right to payment under a
27	27	contract to an assignee that is also obligated to perform under the
28	28	contract;
29	29	(7) an assignment of a single account, payment
30	30	intangible, or promissory note to an assignee in full or partial
31	31	satisfaction of a preexisting indebtedness;
32	32	(8) a transfer of an interest in or an assignment of a
33	33	claim under a policy of insurance, other than an assignment by or to
34	34	a health care provider of a health-care-insurance receivable and
35	35	any subsequent assignment of the right to payment, but Sections
36	36	9.315 and 9.322 apply with respect to proceeds and priorities in
37	37	proceeds;
38	38	(9) an assignment of a right represented by a
39	39	judgment, other than a judgment taken on a right to payment that was
40	40	collateral;
41	41	(10) a right of recoupment or set-off, but:
42	42	(A) Section 9.340 applies with respect to the
43	43	effectiveness of rights of recoupment or set-off against deposit
44	44	accounts; and
45	45	(B) Section 9.404 applies with respect to
46	46	defenses or claims of an account debtor;
47	47	(11) the creation or transfer of an interest in or lien
48	48	on real property, including a lease or rents, as defined by Section
49	49	64.001, Property Code [thereunder], the interest of a vendor or
50	50	vendee in a contract for deed to purchase an interest in real
51	51	property, or the interest of an optionor or optionee in an option to
52	52	purchase an interest in real property, except to the extent that
53	53	provision is made for:
54	54	(A) liens on real property in Sections 9.203 and
55	55	9.308;
56	56	(B) fixtures in Section 9.334;
57	57	(C) fixture filings in Sections 9.501, 9.502,
58	58	9.512, 9.516, and 9.519; and
59	59	(D) security agreements covering personal and
60	60	real property in Section 9.604;
61	61	(12) an assignment of a claim arising in tort, other
62	62	than a commercial tort claim, but Sections 9.315 and 9.322 apply
63	63	with respect to proceeds and priorities in proceeds; or
64	64	(13) an assignment of a deposit account, other than a
65	65	nonnegotiable certificate of deposit, in a consumer transaction,
66	66	but Sections 9.315 and 9.322 apply with respect to proceeds and
67	67	priorities in proceeds.
68	68	SECTION 2. Subtitle B, Title 5, Property Code, is amended by
69	69	adding Chapter 64 to read as follows:
70	70	CHAPTER 64. ASSIGNMENT OF RENTS TO LIENHOLDER
71	71	SUBCHAPTER A. GENERAL PROVISIONS
72	72	Sec. 64.001. DEFINITIONS. In this chapter:
73	73	(1) "Assignee" means a person entitled to enforce an
74	74	assignment of rents.
75	75	(2) "Assignment of rents" means a transfer of an
76	76	interest in rents in connection with an obligation secured by real
77	77	property from which the rents arise. The term does not include a
78	78	contract for a charge authorized by Section 306.101, Finance Code,
79	79	or a true sale of rents.
80	80	(3) "Assignor" means an owner of real property who
81	81	makes an assignment of rents arising from the property or that
82	82	owner's successor in interest.
83	83	(4) "Cash proceeds" means proceeds that are money,
84	84	checks, deposit accounts, or similar legal tender.
85	85	(5) "Day" means a calendar day.
86	86	(6) "Deposit account" means a demand, time, savings,
87	87	passbook, escrow, or similar account maintained with a bank,
88	88	savings bank, savings and loan association, credit union, trust
89	89	company, or other person.
90	90	(7) "Document" means information that is inscribed on
91	91	a tangible medium or that is stored on an electronic or other medium
92	92	and is retrievable in perceivable form.
93	93	(8) "Proceeds" means personal property that is
94	94	received, collected, or distributed on account of an obligation to
95	95	pay rents.
96	96	(9) "Rents" means:
97	97	(A) consideration payable for the right to
98	98	possess or occupy, or for possessing or occupying, real property;
99	99	(B) consideration payable to an assignor under a
100	100	policy of rental interruption insurance covering real property;
101	101	(C) claims arising out of a default in the
102	102	payment of consideration payable for the right to possess or occupy
103	103	real property;
104	104	(D) consideration payable to terminate an
105	105	agreement to possess or occupy real property;
106	106	(E) consideration payable to an assignor for
107	107	payment or reimbursement of expenses incurred in owning, operating,
108	108	and maintaining, or constructing or installing improvements on,
109	109	real property; or
110	110	(F) any other consideration payable under an
111	111	agreement relating to the real property that constitutes rents
112	112	under a law of this state other than this chapter.
113	113	(10) "Secured obligation" means an obligation secured
114	114	by an assignment of rents.
115	115	(11) "Security instrument" means:
116	116	(A) a security instrument, as that term is
117	117	defined by Section 51.0001; or
118	118	(B) an agreement containing an assignment of
119	119	rents.
120	120	(12) "Security interest" means an interest in property
121	121	that arises by agreement and secures an obligation.
122	122	(13) "Sign" includes to sign by an electronic
123	123	signature, as defined by Section 15.002.
124	124	(14) "Tenant" means a person who has an obligation to
125	125	pay for the right to possess or occupy, or for possessing or
126	126	occupying, real property.
127	127	Sec. 64.002. MANNER OF PROVIDING NOTICE. (a) A person may
128	128	provide a notice under this chapter:
129	129	(1) by transmitting the notice in the manner described
130	130	by Section 51.002(e);
131	131	(2) by depositing the notice with the United States
132	132	Postal Service or a commercially reasonable delivery service,
133	133	properly addressed to the intended recipient's address in
134	134	accordance with this section, with first class postage or other
135	135	cost of delivery paid; or
136	136	(3) by transmitting the notice to the intended
137	137	recipient by any means agreed to by the intended recipient.
138	138	(b) Except as agreed under Subsection (a)(3), notice to an
139	139	assignee must be sent to the assignee's address as provided in the
140	140	relevant security instrument or another document entered into for
141	141	the purposes of this section by the assignee and the person sending
142	142	the notice, unless a more recent address for notice has been given
143	143	in a manner provided by Subsection (a) by the assignee to the person
144	144	sending the notice or in a security instrument or other document
145	145	signed by the assignee.
146	146	(c) Except as agreed under Subsection (a)(3), notice to an
147	147	assignor must be sent to the assignor's address as provided in the
148	148	relevant security instrument or another document entered into for
149	149	the purposes of this section by the assignor and the person sending
150	150	the notice or an address for the assignor to which a notice of
151	151	default under Section 51.002 is properly sent, unless a more recent
152	152	address for notice has been given in a manner provided by Subsection
153	153	(a) by the assignor to the person sending the notice or in a
154	154	security instrument or other document signed by the assignor.
155	155	(d) Except as agreed under Subsection (a)(3), notice to a
156	156	tenant must be sent to:
157	157	(1) an address for notice to the tenant provided in a
158	158	signed document entered into by the tenant and the person providing
159	159	the notice, unless a more recent address for notice has been given
160	160	by the tenant in accordance with that document;
161	161	(2) if an address for notice described by Subdivision
162	162	(1) does not exist, the address provided in a written agreement
163	163	between the tenant and the assignor for notices to the tenant if the
164	164	person sending the notice has received a copy of that agreement or
165	165	has actual knowledge of the address for notice specified in that
166	166	agreement; or
167	167	(3) if an address for notice described by Subdivision
168	168	(1) or (2) does not exist, the tenant's address at the real property
169	169	covered by the security instrument.
170	170	(e) Notice provided in accordance with this section is
171	171	considered received on the earliest of:
172	172	(1) the date the notice is received by the person to
173	173	whom the notice is provided;
174	174	(2) the fifth day after the date the notice is provided
175	175	in accordance with Subsection(a)(2); or
176	176	(3) the date on which notice is considered provided in
177	177	accordance with an agreement made by the person to whom the notice
178	178	is provided for the purposes of this section.
179	179	[Sections 64.003-64.050 reserved for expansion]
180	180	SUBCHAPTER B. ASSIGNMENT OF RENTS
181	181	Sec. 64.051. SECURITY INSTRUMENT CREATES ASSIGNMENT OF
182	182	RENTS; ASSIGNMENT OF RENTS CREATES SECURITY INTEREST. (a) An
183	183	enforceable security instrument creates an assignment of rents
184	184	arising from real property securing an obligation under the
185	185	security instrument, unless the security instrument provides
186	186	otherwise or the security instrument is governed by Section
187	187	50(a)(6), (7), or (8), Article XVI, Texas Constitution.
188	188	(b) An assignment of rents creates a presently effective
189	189	security interest in all accrued and unaccrued rents arising from
190	190	the real property described in the document creating the
191	191	assignment, regardless of whether the document is in the form of an
192	192	absolute assignment, an absolute assignment conditioned on default
193	193	or another event, an assignment as additional security, or any
194	194	other form. The security interest in rents is separate and distinct
195	195	from any security interest held by the assignee in the real property
196	196	from which the rents arise.
197	197	(c) An assignment of rents does not reduce the secured
198	198	obligation except to the extent the assignee collects rents and
199	199	applies, or is obligated to apply, the collected rents to payment of
200	200	the secured obligation.
201	201	Sec. 64.052. RECORDATION AND PERFECTION OF SECURITY
202	202	INTEREST IN RENTS; PRIORITY OF INTERESTS IN RENTS. (a) A document
203	203	creating an assignment of rents may be recorded in the county in
204	204	which any part of the real property is located.
205	205	(b) On recordation of a document creating an assignment of
206	206	rents, the security interest in the rents is perfected. This
207	207	subsection prevails over a conflicting provision in the document
208	208	creating the assignment of rents or a law of this state other than
209	209	this chapter that prohibits or defers enforcement of the security
210	210	interest until the occurrence of a subsequent event, such as a
211	211	subsequent default of the assignor, the assignee's obtaining
212	212	possession of the real property, or the appointment of a receiver.
213	213	(c) Except as provided by Subsection (d), a perfected
214	214	security interest in rents has priority over the rights of a person
215	215	who, after the security interest is perfected, acquires:
216	216	(1) a lien on or other security interest in the rents
217	217	or the real property from which the rents arise; or
218	218	(2) an interest in the rents or the real property from
219	219	which the rents arise.
220	220	(d) An assignee of a perfected security interest in rents
221	221	has the same priority over the rights of a person described by
222	222	Subsection (c) with respect to future advances as the assignee has
223	223	with respect to the assignee's security interest in the real
224	224	property from which the rents arise.
225	225	Sec. 64.053. ENFORCEMENT OF SECURITY INTEREST IN RENTS
226	226	GENERALLY. (a) An assignee may enforce an assignment of rents
227	227	using one or more of the methods provided by Section 64.054 or
228	228	64.055 or another method sufficient to enforce the assignment under
229	229	a law of this state other than this chapter.
230	230	(b) On and after the date on which an assignee begins to
231	231	enforce an assignment of rents, the assignee is entitled to collect
232	232	all rents that:
233	233	(1) accrued before but remain unpaid on that date; and
234	234	(2) accrue on or after that date.
235	235	Sec. 64.054. ENFORCEMENT BY NOTICE TO ASSIGNOR. (a) After
236	236	default, or as otherwise agreed by the assignor, the assignee may
237	237	provide the assignor a notice demanding that the assignor pay the
238	238	assignee the proceeds of any rents that the assignee is entitled to
239	239	collect under Section 64.053.
240	240	(b) For the purposes of Section 64.053, the assignee begins
241	241	enforcement under this section on the date on which the assignee
242	242	provides notice to the assignor in accordance with Section 64.002.
243	243	(c) An assignee may not enforce an assignment of rents under
244	244	this section if, on the date the security instrument was signed and
245	245	the date of prospective enforcement, the real property constitutes
246	246	the assignor's homestead on which is located a one-family to
247	247	four-family dwelling.
248	248	Sec. 64.055. ENFORCEMENT BY NOTICE TO TENANT. (a) After
249	249	default, or as otherwise agreed by the assignor, the assignee may
250	250	provide to a tenant of real property that is subject to an
251	251	assignment of rents a notice demanding that the tenant pay to the
252	252	assignee all unpaid accrued rents and all unaccrued rents as they
253	253	accrue. The assignee shall provide a copy of the notice to the
254	254	assignor in the manner provided by Section 64.002. The notice must
255	255	substantially comply with the form prescribed by Section 64.056 and
256	256	be signed by the assignee or the assignee's authorized agent or
257	257	representative.
258	258	(b) For the purposes of Section 64.053(b), the assignee
259	259	begins enforcement under this section on the date on which the
260	260	tenant receives a notice complying with Subsection (a).
261	261	(c) Subject to Subsection (d) and any other claim or defense
262	262	that a tenant has under a law of this state other than this chapter,
263	263	after a tenant receives a notice under Subsection (a):
264	264	(1) the tenant is obligated to pay to the assignee all
265	265	unpaid accrued rents and all unaccrued rents as they accrue, unless
266	266	the tenant has previously received a notice under this section from
267	267	another assignee of rents provided by that assignee in accordance
268	268	with this section and the other assignee has not canceled that
269	269	notice;
270	270	(2) except as otherwise provided by a document signed
271	271	by the tenant, the tenant is not obligated to pay to an assignee
272	272	rent that was prepaid to the assignor before the tenant received the
273	273	notice under Subsection (a);
274	274	(3) unless the tenant occupies the premises as the
275	275	tenant's primary residence, the tenant is not discharged from the
276	276	obligation to pay rents to the assignee if the tenant pays rents to
277	277	the assignor;
278	278	(4) the tenant's payment to the assignee of rents then
279	279	due satisfies the tenant's obligation under the tenant's agreement
280	280	with the assignor to the extent of the payment made; and
281	281	(5) the tenant's obligation to pay rents to the
282	282	assignee continues until the earliest date on which the tenant
283	283	receives:
284	284	(A) a court order directing the tenant to pay the
285	285	rents in a different manner;
286	286	(B) a signed notice that a perfected security
287	287	instrument that has priority over the assignee's security interest
288	288	has been foreclosed; or
289	289	(C) a signed document from the assignee canceling
290	290	the assignee's notice.
291	291	(d) Except as otherwise provided by a document signed by the
292	292	tenant, a tenant who has received a notice under Subsection (a) is
293	293	not in default for nonpayment of rents that accrue during the 30
294	294	days after the date the tenant receives the notice until the earlier
295	295	of:
296	296	(1) the 10th day after the date the next regularly
297	297	scheduled rental payment would be due; or
298	298	(2) the 30th day after the date the tenant receives the
299	299	notice.
300	300	(e) On receiving a notice from another creditor who has
301	301	priority under Section 64.052(c) that the creditor with priority
302	302	has conducted a foreclosure sale of the real property from which the
303	303	rents arise or is enforcing the creditor's interest in rents by
304	304	notice to the tenant, an assignee that has provided a notice to a
305	305	tenant under Subsection (a) shall immediately provide another
306	306	notice to the tenant canceling the earlier notice.
307	307	Sec. 64.056. FORM OF NOTICE TO TENANT. The following form
308	308	of notice, when properly completed, satisfies the requirements of
309	309	Section 64.055(a):
310	310	NOTICE TO PAY RENTS TO PERSON OTHER THAN LANDLORD
311	311	Tenant: [Name of tenant]
312	312	Property Occupied by Tenant (the "Premises"): [Address]
313	313	Landlord: [Name of landlord]
314	314	Assignee: [Name of assignee]
315	315	Address of Assignee and Telephone Number of Contact Person:
316	316	[Address of assignee] [Telephone number of person to contact]
317	317	1. Assignee is entitled to collect rents on the Premises
318	318	under [Name of Document] (the "Assignment of Rents") dated [Date of
319	319	Assignment of Rents], and recorded at [Recording Data] of [Name of
320	320	County] County, Texas. You may obtain additional information about
321	321	the Assignment of Rents and the Assignee's right to enforce it at
322	322	the address of the Assignee.
323	323	2. A default exists under the Assignment of Rents or related
324	324	documents between the Landlord and the Assignee. The Assignee is
325	325	entitled to collect rents from the Premises.
326	326	3. This notice affects your rights and obligations under the
327	327	agreement under which you occupy the Premises (your "Lease
328	328	Agreement"). Unless you have otherwise agreed in a document signed
329	329	by you, if your next scheduled rental payment is due within 30 days
330	330	after you receive this notice, you will not be in default under your
331	331	Lease Agreement for nonpayment of that rental payment until the
332	332	10th day after the due date of that payment or the 30th day
333	333	following the date you receive this notice, whichever occurs first.
334	334	4. You may consult a lawyer at your expense concerning your
335	335	rights and obligations under your Lease Agreement and the effect of
336	336	this notice.
337	337	5. You must pay to the Assignee at the Address of the
338	338	Assignee all rents under your Lease Agreement that are due and
339	339	payable on the date you receive this notice and all rents accruing
340	340	under your Lease Agreement after you receive this notice.
341	341	6. If you pay rents to the Assignee after receiving this
342	342	notice, the payment will satisfy your rental obligation to the
343	343	extent of that payment.
344	344	7. If you pay any rents to the Landlord after receiving this
345	345	notice, your payment to the Landlord will not discharge your rental
346	346	obligation, and the Assignee may hold you liable for that rental
347	347	obligation notwithstanding your payment to the Landlord unless you
348	348	occupy the Premises as your primary residence.
349	349	8. If you have previously received a notice from another
350	350	person who also holds an assignment of the rents due under your
351	351	Lease Agreement, you should continue paying your rents to the
352	352	person that sent that notice until that person cancels that notice.
353	353	Once that notice is canceled, you must begin paying rents to the
354	354	Assignee in accordance with this notice.
355	355	Name of assignee: __________
356	356	By: [Officer/authorized agent of assignee]
357	357	Sec. 64.057. EFFECT OF ENFORCEMENT. The enforcement of an
358	358	assignment of rents by a method provided by Section 64.054 or
359	359	64.055, the application of proceeds by the assignee under Section
360	360	64.059 after enforcement, the payment of expenses under Section
361	361	64.058, or an action under Section 64.060 does not:
362	362	(1) make the assignee a mortgagee in possession of the
363	363	real property from which the rents arise;
364	364	(2) make the assignee an agent of the assignor;
365	365	(3) constitute an election of remedies that precludes
366	366	a later action to enforce the secured obligation;
367	367	(4) make the secured obligation unenforceable;
368	368	(5) limit any right available to the assignee with
369	369	respect to the secured obligation; or
370	370	(6) bar a deficiency judgment under any law of this
371	371	state governing or relating to deficiency judgments following the
372	372	enforcement of any encumbrance, lien, or security interest.
373	373	Sec. 64.058. APPLICATION OF PROCEEDS GENERALLY. Unless
374	374	otherwise agreed by the assignor, an assignee who collects rents
375	375	under this chapter or collects on a judgment in an action under
376	376	Section 64.060 shall apply the sums collected in the following
377	377	order to:
378	378	(1) reimbursement of the assignee's expenses of
379	379	enforcing the assignee's assignment of rents, including, to the
380	380	extent provided for by agreement by the assignor and not prohibited
381	381	by a law of this state other than this chapter, reasonable
382	382	attorney's fees and costs incurred by the assignee;
383	383	(2) reimbursement of any expenses incurred by the
384	384	assignee to protect or maintain the real property that is subject to
385	385	the assignment of rents if the assignee elects or is required to
386	386	apply the proceeds to those expenses under Section 64.059;
387	387	(3) payment of the secured obligation;
388	388	(4) payment of any obligation secured by a subordinate
389	389	security interest or other lien on the rents if, before
390	390	distribution of the proceeds, the assignee receives a signed notice
391	391	from the holder of the interest or lien demanding payment of the
392	392	proceeds; and
393	393	(5) payment of any excess proceeds to the assignor.
394	394	Sec. 64.059. APPLICATION OF PROCEEDS TO EXPENSES OF
395	395	PROTECTING REAL PROPERTY; CLAIMS AND DEFENSES OF TENANT.
396	396	(a) Unless otherwise agreed by the assignee, an assignee that
397	397	collects rents following enforcement under Section 64.054 or 64.055
398	398	is not obligated to apply the collected rents to the payment of
399	399	expenses of protecting or maintaining the real property subject to
400	400	an assignment of rents.
401	401	(b) Unless otherwise agreed by a tenant, the right of the
402	402	assignee to collect rents from the tenant is subject to the terms of
403	403	any agreement between the assignor and tenant and any claim or
404	404	defense of the tenant arising from the assignor's nonperformance of
405	405	that agreement.
406	406	Sec. 64.060. TURNOVER OF RENTS; LIABILITY OF ASSIGNOR.
407	407	(a) If an assignor collects rents that the assignee is entitled to
408	408	collect under this chapter, the assignor shall turn over the
409	409	proceeds to the assignee not later than the 30th day after the date
410	410	the assignor receives notice from the assignee under Section 64.054
411	411	or within another period prescribed by a security instrument or
412	412	other document signed by the assignor and approved by the assignee,
413	413	less any amount representing payment of expenses authorized by a
414	414	security instrument or other document signed by the assignee.
415	415	(b) In addition to any other remedy available to the
416	416	assignee under a law of this state other than this chapter, if an
417	417	assignor does not turn over proceeds to the assignee as required by
418	418	Subsection (a), the assignee may recover from the assignor in a
419	419	civil action:
420	420	(1) the proceeds, or an amount equal to the proceeds,
421	421	that the assignor was obligated to turn over under Subsection (a);
422	422	and
423	423	(2) reasonable attorney's fees and costs incurred by
424	424	the assignee to the extent provided for by an agreement between the
425	425	assignor and assignee and not prohibited by a law of this state
426	426	other than this chapter.
427	427	(c) The assignee may maintain an action under Subsection (b)
428	428	with or without taking action to foreclose any security interest
429	429	that the assignee has in the real property.
430	430	(d) Unless otherwise agreed by an assignee that has priority
431	431	under Section 64.052, a subordinate creditor that has enforced the
432	432	subordinate creditor's interest under Section 64.054 or 64.055
433	433	before the priority assignee enforces the priority assignee's
434	434	interests in rents is not obligated to turn over any proceeds that
435	435	the subordinate creditor collects before the subordinate creditor
436	436	receives a signed notice from the priority assignee informing the
437	437	subordinate creditor that the priority assignee is enforcing the
438	438	priority assignee's interest in rents. The subordinate creditor
439	439	shall turn over to a priority assignee any proceeds that the
440	440	subordinate creditor collects after the subordinate creditor
441	441	receives the notice from the priority assignee that the priority
442	442	assignee is enforcing the priority assignee's interest in rents not
443	443	later than the 30th day after the date the subordinate creditor
444	444	receives the notice or as otherwise agreed between the priority
445	445	assignee and the subordinate creditor. Any proceeds subsequently
446	446	collected by the subordinate creditor shall be turned over to the
447	447	priority assignee not later than the 10th day after the date the
448	448	proceeds are collected or as otherwise agreed between the priority
449	449	assignee and the subordinate creditor.
450	450	Sec. 64.061. ATTACHMENT, PERFECTION, AND PRIORITY OF
451	451	ASSIGNEE'S SECURITY INTEREST IN PROCEEDS. (a) An assignee's
452	452	security interest in rents attaches to identifiable proceeds.
453	453	(b) If an assignee's security interest in rents is
454	454	perfected, the assignee's security interest in identifiable cash
455	455	proceeds is perfected.
456	456	(c) Except as provided by Subsection (b), the provisions of
457	457	Chapter 9, Business & Commerce Code, or the comparable Uniform
458	458	Commercial Code provisions of another applicable jurisdiction,
459	459	determine:
460	460	(1) whether an assignee's security interest in
461	461	proceeds is perfected;
462	462	(2) the effect of perfection or nonperfection;
463	463	(3) the priority of an interest in proceeds; and
464	464	(4) the law governing perfection, the effect of
465	465	perfection or nonperfection, and the priority of an interest in
466	466	proceeds.
467	467	(d) For purposes of this chapter, cash proceeds are
468	468	identifiable if they are maintained in a segregated deposit account
469	469	or, if commingled with other funds, to the extent they can be
470	470	identified by a method of tracing, including application of
471	471	equitable principles, that is permitted under a law of this state
472	472	other than this chapter with respect to commingled funds.
473	473	Sec. 64.062. PRIORITY SUBJECT TO SUBORDINATION. This
474	474	chapter does not preclude subordination by agreement by a person
475	475	entitled to priority.
476	476	SECTION 3. (a) Except as otherwise provided by this
477	477	section, Chapter 64, Property Code, as added by this Act, governs
478	478	the enforcement of an assignment of rents, the perfection and
479	479	priority of a security interest in rents, and the attachment and
480	480	perfection of a security interest in proceeds regardless of whether
481	481	the document creating the assignment of rents was signed and
482	482	delivered before the effective date of this Act.
483	483	(b) Chapter 64, Property Code, as added by this Act, does
484	484	not affect an action or other proceeding commenced before the
485	485	effective date of this Act.
486	486	(c) Subsection (a), Section 64.051, Property Code, as added
487	487	by this Act, applies only to a security instrument signed and
488	488	delivered on or after the effective date of this Act. A security
489	489	instrument signed and delivered before the effective date of this
490	490	Act is governed by the law that applied to the instrument
491	491	immediately before that date, and the former law is continued in
492	492	effect for that purpose.
493	493	(d) Chapter 64, Property Code, as added by this Act, does
494	494	not affect:
495	495	(1) the enforceability of an assignee's security
496	496	interest in rents or proceeds if, immediately before the effective
497	497	date of this Act, that security interest was enforceable;
498	498	(2) the perfection of an assignee's security interest
499	499	in rents or proceeds if, immediately before the effective date of
500	500	this Act, that security interest was perfected; or
501	501	(3) the priority of an assignee's security interest in
502	502	rents or proceeds with respect to the interest of another person if,
503	503	immediately before the effective date of this Act, the interest of
504	504	the other person was enforceable and perfected and that priority
505	505	was established.
506	506	SECTION 4. This Act takes effect immediately if it receives
507	507	a vote of two-thirds of all the members elected to each house, as
508	508	provided by Section 39, Article III, Texas Constitution. If this
509	509	Act does not receive the vote necessary for immediate effect, this
510	510	Act takes effect September 1, 2011.