By: Raymond (Senate Sponsor - West) H.B. No. 2795
(In the Senate - Received from the House May 9, 2013;
May 9, 2013, read first time and referred to Committee on
Jurisprudence; May 17, 2013, reported adversely, with favorable
Committee Substitute by the following vote: Yeas 7, Nays 0;
May 17, 2013, sent to printer.)
COMMITTEE SUBSTITUTE FOR H.B. No. 2795 By: Paxton
A BILL TO BE ENTITLED
AN ACT
relating to enforcement of a lien against certain decedents'
interests in real property.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle C, Title 2, Estates Code, as effective
January 1, 2014, is amended by adding Chapter 125 to read as
follows:
CHAPTER 125. ENFORCEMENT OF LIEN AGAINST CERTAIN DECEDENTS'
INTERESTS IN REAL PROPERTY
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 125.001. DEFINITIONS. In this chapter, "mortgage
servicer," "mortgagee," "mortgagor," and "security instrument"
have the meanings assigned by Section 51.0001, Property Code.
Sec. 125.002. APPLICABILITY OF CHAPTER; CONFLICT WITH OTHER
LAW. (a) This chapter applies only to foreclosure of a lien on real
property in which a decedent had an interest if the decedent was the
mortgagor of the security instrument creating the lien and an
obligor of the debt secured by the lien.
(b) To the extent of a conflict between this chapter and
another provision of this title, Rule 736, Texas Rules of Civil
Procedure, or Chapter 51, Property Code, this chapter controls.
SUBCHAPTER B. FORECLOSURE OF LIEN
Sec. 125.051. PROCEDURE PRIOR TO FORECLOSURE. (a) If a
debt that is secured by a decedent's interest in real property under
a security instrument is in default and no probate proceeding has
been commenced, the mortgagee or mortgage servicer may proceed with
foreclosure of the lien on the real property in accordance with this
section.
(b) Foreclosure of a lien on real property under this
section may not be initiated earlier than the 180th day after the
date of the decedent's death.
(c) Foreclosure of a lien on real property under this
section is considered an election by the mortgagee to have the claim
allowed, approved, and fixed as a preferred debt and lien claim
against the decedent's interest in the real property securing the
debt and paid according to the terms of the contract that secured
the lien. No further claim for the debt may be made by the mortgagee
against any other assets of the decedent's estate.
(d) The mortgagee or mortgage servicer, concurrently with
obtaining a judgment declaring heirship under Chapter 202, must:
(1) obtain a court order under Rule 736, Texas Rules of
Civil Procedure, allowing the mortgagee or mortgage servicer to
proceed with foreclosure of the lien under Chapter 51, Property
Code, and the terms of the security instrument; and
(2) give notice in accordance with Subchapter C.
Sec. 125.052. EFFECT OF FORECLOSURE. A deed given pursuant
to a foreclosure of a lien on real property in accordance with this
chapter divests all persons receiving notice under Subchapter C of
any right or title to or interest in the decedent's interest in the
real property.
SUBCHAPTER C. NOTICE AND OTHER REQUIREMENTS
Sec. 125.101. NOTICE. (a) For purposes of Section
51.002(b), Property Code, a mortgagee or mortgage servicer
foreclosing a lien under this chapter must send notice of sale to:
(1) each surviving obligor of the debt secured by the
real property or surviving mortgagor of the security instrument
encumbering the real property, sent to:
(A) the street address of the property subject to
the foreclosure; and
(B) the last known address in the records of the
mortgagee or mortgage servicer identified by the decedent
mortgagor, surviving mortgagor, or surviving obligor as an address
for notice;
(2) the decedent, with the notation "Decedent," sent
to the street address of the property subject to the foreclosure;
(3) the surviving spouse of the mortgagor, if any;
(4) each heir of the decedent named in the judgment
obtained under Chapter 202, sent to the heir's last known address;
(5) the "Occupant," sent to the street address of the
property subject to the foreclosure; and
(6) if an heir is a minor child or otherwise under a
legal disability, the person who is a natural guardian, a guardian,
or, if known to the mortgagee or mortgage servicer, an agent or
attorney in fact under a power of attorney signed by the heir, sent
to the person's last known address.
(b) The mortgagee or mortgage servicer shall mail a notice
required under Subsection (a) both by regular mail and by
registered or certified mail.
(c) If the name, last known address, or whereabouts of the
surviving spouse or an heir of a decedent or other person to whom
notice is required to be given under this section are unknown, the
mortgagee or mortgage servicer shall describe to the court by
affidavit the due diligence exercised by the person to find or
locate the whereabouts of the spouse, heir, or other person for
purposes of providing notice under this section and the court shall
determine whether citation by publication is necessary.
Sec. 125.102. CONTENTS OF APPLICATION FOR RULE 736 ORDER.
An application pursuant to this chapter for a court order under Rule
736, Texas Rules of Civil Procedure, must:
(1) substantially comply with the requirements of Rule
736.1; and
(2) contain an estimate of the "fair market value" of
the property prepared not earlier than the 120th day before the date
the application is filed and supported by documentation as to fair
market value.
Sec. 125.103. CONTENTS OF ORDER. An order allowing the
mortgagee or mortgage servicer to proceed with the foreclosure of a
lien under this chapter must:
(1) describe the material facts establishing the basis
for foreclosure;
(2) describe the real property to be foreclosed by the
property's commonly known mailing address and legal description;
(3) contain the name and last known address of each
person who is to receive the notice under this subchapter; and
(4) contain the recording or indexing information of
the security instrument to be foreclosed.
Sec. 125.104. ATTACHMENT OF ORDER TO TRUSTEE'S DEED. A
conformed copy of the court order obtained under Rule 736, Texas
Rules of Civil Procedure, pursuant to this chapter must be attached
to the trustee's or substitute trustee's deed when recorded in the
real property records.
SUBCHAPTER D. DISPOSITION OF EXCESS PROCEEDS OF FORECLOSURE SALE
Sec. 125.151. PAYMENT OF EXCESS PROCEEDS INTO COURT
REGISTRY. Not later than the 90th day after the date of a
foreclosure sale conducted pursuant to this chapter, the trustee or
substitute trustee shall pay into the court registry any proceeds
of the foreclosure sale remaining after the payment of:
(1) the costs of the foreclosure;
(2) any trustee fees or attorney's fees permitted
under a security instrument evidencing a lien foreclosed under this
chapter; and
(3) the debt owed to any lienholder who obtained an
order under this chapter in the order of priority of those liens.
Sec. 125.152. WITHDRAWAL FROM COURT REGISTRY. Excess
proceeds paid into a court registry as required by Section 125.151
may be withdrawn as follows:
(1) the personal representative of the decedent's
estate may withdraw the excess proceeds to be administered as a part
of the decedent's estate; or
(2) if no person is serving as personal representative
of the decedent's estate, the decedent's heirs named in a judgment
in a proceeding to declare heirship under Chapter 202 may withdraw
the excess proceeds on the earlier of:
(A) the expiration of the fourth anniversary of
the date of the decedent's death; or
(B) the date of entry of an order of no
administration under Chapter 451.
Sec. 125.153. PAYMENT TO COMPTROLLER. If any money paid
into the court registry under this subchapter remains on deposit
with the court four years and six months after the date of the
decedent's death, the court shall order the remaining amount to be
paid to the comptroller in accordance with Chapter 551.
SECTION 2. Chapter 125, Estates Code, as added by this Act,
applies only to the estate of a decedent who dies on or after the
effective date of this Act. The estate of a decedent who dies
before the effective date of this Act is governed by the law in
effect on the date of the decedent's death, and the former law is
continued in effect for that purpose.
SECTION 3. This Act takes effect January 1, 2014.
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