By: Villarreal H.B. No. 3485
A BILL TO BE ENTITLED
AN ACT
relating to the transfer of an ad valorem tax lien; providing an
administrative penalty.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subsection (c), Section 351.0021, Finance Code,
is amended to read as follows:
(c) A property tax lender or any successor in interest may
not charge:
(1) any fee, other than interest, after closing in
connection with the transfer of a tax lien unless the fee is
expressly authorized under this section; or
(2) any interest that is not expressly authorized
under Section 32.06, Tax Code.
SECTION 2. Subchapter A, Chapter 351, Finance Code, is
amended by adding Sections 351.0022 and 351.0023 to read as
follows:
Sec. 351.0022. WAIVER PROHIBITED. Except as specifically
permitted by this chapter or Chapter 32, Tax Code, a property owner
may not waive or limit a requirement imposed on a property tax
lender by this chapter.
Sec. 351.0023. SOLICITATION OF LOANS; NOTICE. (a) A
property tax lender who solicits property tax loans by mail,
e-mail, or other print or electronic media shall include on the
first page of all solicitation materials, in at least 12-point
boldface type, a notice substantially similar to the following:
"YOUR TAX OFFICE MAY OFFER DELINQUENT TAX INSTALLMENT PLANS THAT
MAY BE LESS COSTLY TO YOU. YOU CAN REQUEST INFORMATION ABOUT THE
AVAILABILITY OF THESE PLANS FROM THE TAX OFFICE."
(b) A property tax lender who solicits property tax loans by
broadcast media, including a television or radio broadcast, shall
state the following in the broadcast: "YOUR TAX OFFICE MAY OFFER
DELINQUENT TAX INSTALLMENT PLANS THAT MAY BE LESS COSTLY TO YOU.
YOU CAN REQUEST INFORMATION ABOUT THE AVAILABILITY OF THESE PLANS
FROM THE TAX OFFICE."
(c) A property tax lender may not, in any manner, advertise
or cause to be advertised a false, misleading, or deceptive
statement or representation relating to a rate, term, or condition
of a property tax loan.
(d) A property tax lender who refers to a rate or charge in
an advertisement shall state the rate or charge fully and clearly.
If the rate or charge is a rate of finance charge, the advertisement
must include the annual percentage rate and specifically refer to
the rate as an "annual percentage rate." The advertisement must
state that the annual percentage rate may be increased after the
contract is executed, if applicable. The advertisement may not
refer to any other rate, except that a simple annual rate that is
applied to the unpaid balance of a property tax loan may be stated
in conjunction with, but not more conspicuously than, the annual
percentage rate.
(e) If an advertisement for a property tax loan includes the
number of payments, period of repayment, amount of any payment, or
amount of any finance charges, the advertisement must, in addition
to any applicable requirements of Subsection (d), include:
(1) the terms of repayment, including the repayment
obligations over the full term of the loan and any balloon payment;
(2) the annual percentage rate, and must refer to that
rate as the annual percentage rate; and
(3) a statement that the lender may increase the
annual percentage rate after the contract is executed, if
applicable.
(f) The finance commission may adopt rules to implement and
enforce this section.
(g) Notwithstanding Section 14.251, the commissioner may
assess an administrative penalty under Subchapter F, Chapter 14,
against a property tax lender who violates this section, regardless
of whether the violation is knowing or wilful.
SECTION 3. Section 351.003, Finance Code, is amended to
read as follows:
Sec. 351.003. SECONDARY MARKET TRANSACTIONS. (a) Except
as provided by Subsection (b), this [This] chapter does not
prohibit a property tax lender from receiving compensation from a
party other than the property tax loan applicant for the sale,
transfer, assignment, or release of rights on the closing of a
property tax loan transaction.
(b) A person may not sell, transfer, assign, or release
rights to a property tax loan to a person who is not licensed under
Section 351.051 or exempt from the application of this chapter
under Section 351.051(c).
(c) The finance commission shall adopt rules to implement
this section.
SECTION 4. Subsection (c), Section 351.051, Finance Code,
is amended to read as follows:
(c) Except as provided by Section 351.003, this [This]
chapter does not apply to:
(1) any of the following entities or an employee of any
of the following entities, if the employee is acting for the benefit
of the employer:
(A) a bank, savings bank, or savings and loan
association, or a subsidiary or an affiliate of a bank, savings
bank, or savings and loan association; or
(B) a state or federal credit union, or a
subsidiary, affiliate, or credit union service organization of a
state or federal credit union; or
(2) an individual who:
(A) is related to the property owner within the
second degree of consanguinity or affinity, as determined under
Chapter 573, Government Code [makes a property tax loan from the
individual's own funds to a spouse, former spouse, or persons in the
lineal line of consanguinity of the individual lending the money];
or
(B) makes five or fewer property tax loans in any
consecutive 12-month period from the individual's own funds.
SECTION 5. Subsection (a), Section 351.054, Finance Code,
is amended to read as follows:
(a) A transferee of a tax lien must include with the sworn
document executed by the borrower and filed with the collector of a
taxing unit under Section 32.06(a-1), Tax Code, the information
required by this section.
SECTION 6. The heading to Section 32.06, Tax Code, is
amended to read as follows:
Sec. 32.06. PROPERTY TAX LOANS; TRANSFER OF TAX LIEN.
SECTION 7. Subdivision (2), Subsection (a), Section 32.06,
Tax Code, is amended to read as follows:
(2) "Transferee" means a person who is licensed under
Chapter 351, Finance Code, or is exempt from the application of that
chapter under Section 351.051(c), Finance Code, and who is:
(A) authorized to pay the taxes of another; or
(B) a successor in interest to a tax lien that is
transferred under this section.
SECTION 8. Section 32.06, Tax Code, is amended by amending
Subsections (a-1), (a-2), (a-3), (a-4), (b), (c), (d), (e-1),
(f-4), (g), (h), (i), and (j) and adding Subsections (a-5), (a-6),
(a-7), (a-8), and (l) to read as follows:
(a-1) A property owner [person] may authorize another
person to pay the taxes imposed by a taxing unit on the owner's
[person's] real property by executing and filing with the collector
for the taxing unit:
(1) a sworn document stating:
(A) the authorization for payment of the taxes;
(B) the name and street address of the transferee
authorized to pay the taxes of the property owner;
(C) a description of the property by street
address, if applicable, and legal description; and
(D) notice has been given to the property owner
that if the property owner is [age 65 or] disabled, the property
owner may be eligible for a tax deferral under Section 33.06; and
(2) the information required by Section 351.054,
Finance Code.
(a-2) Except as provided by Subsection (a-8), a [A] tax lien
may be transferred to the person who pays the taxes on behalf of the
property owner under the authorization described by Subsection
(a-1) for:
(1) taxes that are delinquent at the time of payment;
or
(2) taxes that are due but not delinquent at the time
of payment if[:
[(A)] the property is not subject to a recorded
mortgage lien[; or
[(B) a tax lien transfer authorized by the
property owner has been executed and recorded for one or more prior
years on the same property and the property owner has executed an
authorization consenting to a transfer of the tax liens for both the
taxes on the property that are not delinquent and taxes on the
property that are delinquent in the manner provided by Subsection
(a-1)].
(a-3) A person who is 65 years of age or older may not
authorize a transfer of a tax lien on real property on which the
person is eligible to claim an exemption from taxation under
Section 11.13(c). [If the property owner has executed an
authorization under Subsection (a-2)(2)(B) consenting to a
transfer of the tax liens for both the taxes on the property that
are not delinquent and taxes on the property that are delinquent,
the collector's certification under Subsection (b) may be in one
document.]
(a-4) The Finance Commission of Texas shall:
(1) prescribe the form and content of an appropriate
disclosure statement to be provided to a property owner before the
execution of a tax lien transfer;
(2) adopt rules relating to the reasonableness of
closing costs, fees, and other charges permitted under this
section; [and]
(3) by rule prescribe the form and content of the sworn
document under Subsection (a-1) and the certified statement under
Subsection (b); and
(4) by rule prescribe the form and content of a request
a lender with an existing recorded lien on the property must use to
request a payoff statement and the transferee's response to the
request, including the period within which the transferee must
respond.
(a-5) At the time the transferee provides the disclosure
statement required by Subsection (a-4)(1), the transferee must also
describe the type and approximate cost range of each additional
charge or fee that the property owner may incur in connection with
the transfer.
(a-6) Notwithstanding Subsection (f-3), a lender described
by Subsection (a-4)(4) may request a payoff statement before the
tax loan becomes delinquent. The Finance Commission of Texas by
rule shall require a transferee who receives a request for a payoff
statement to deliver the requested payoff statement on the
prescribed form within a period prescribed by finance commission
rule. The prescribed period must allow the transferee at least
seven business days after the date the request is received to
deliver the payoff statement. The consumer credit commissioner may
assess an administrative penalty under Subchapter F, Chapter 14,
Finance Code, against a transferee who wilfully fails to provide
the payoff statement as prescribed by finance commission rule.
(a-7) A contract between a transferee and a property owner
that purports to authorize payment of taxes that are not delinquent
or due at the time of the authorization, or that lacks the
authorization described by Subsection (a-1), is void.
(a-8) A tax lien may not be transferred to the person who
pays the taxes on behalf of the property owner under the
authorization described by Subsection (a-1) if the real property
has been financed, wholly or partly, with a grant or below market
rate loan provided by a governmental program or nonprofit
organization and is subject to the covenants of the grant or loan.
The Finance Commission of Texas may adopt rules to implement this
subsection.
(b) If a transferee authorized to pay a property owner's
taxes under [pursuant to] Subsection (a-1) pays the taxes and any
penalties, [and] interest, and collection costs imposed, the
collector shall issue a tax receipt to that transferee. In
addition, the collector or a person designated by the collector
shall certify that the taxes and any penalties, [and] interest, and
collection costs on the subject property [and collection costs]
have been paid by the transferee on behalf of the property owner and
that the taxing unit's tax lien is transferred to that
transferee. The collector shall attach to the certified statement
the collector's seal of office or sign the statement before a notary
public and deliver a tax receipt and the certified statement
attesting to the transfer of the tax lien to the transferee within
30 days. The tax receipt and certified statement may be combined
into one document. The collector shall identify in a discrete
field in the applicable property owner's account the date of the
transfer of a tax lien transferred under this section. When a tax
lien is released, the transferee shall file a release with the
county clerk of each county in which the property encumbered by the
lien is located for recordation by the clerk and send a copy to the
collector. The transferee may charge the property owner a
reasonable fee for filing the release.
(c) Except as otherwise provided by this section, the
transferee of a tax lien [and any successor in interest] is entitled
to foreclose the lien[:
[(1)] in the manner provided by law for foreclosure of
tax liens[; or
[(2) in the manner specified in Section 51.002,
Property Code, and Section 32.065, after the transferee or a
successor in interest obtains a court order for foreclosure under
Rule 736, Texas Rules of Civil Procedure, except as provided by
Subsection (c-1) of this section, if the property owner and the
transferee enter into a contract that is secured by a lien on the
property].
(d) A transferee shall record a tax lien transferred as
provided by this section with the certified statement attesting to
the transfer of the tax lien as described by Subsection (b) in the
deed records of each county in which the property encumbered by the
lien is located.
(e-1) A transferee of a tax lien may not charge a fee for any
expenses arising after the closing of a loan secured by a tax lien
transferred under this section, including collection costs, except
for:
(1) interest expressly authorized under this section;
(2) the fees for filing the release of the tax lien
under Subsection (b);
(3) the fee for providing a payoff statement under
Subsection (f-3);
(4) the fee for providing information regarding the
current balance owed by the property owner under Subsection (g);
and
(5) the fees expressly authorized under Section
351.0021, Finance Code.
(f-4) Failure to comply with Subsection (b-1), (f), or (f-1)
does not invalidate a tax lien transferred under this section [this
chapter, a contract lien,] or a deed of trust.
(g) At any time after the end of the six-month period
specified by Subsection (f) and before a notice of foreclosure of
the transferred tax lien is sent, the transferee of the tax lien [or
the holder of the tax lien] may require the property owner to
provide written authorization and pay a reasonable fee before
providing information regarding the current balance owed by the
property owner to the transferee [or the holder of the tax lien].
(h) A mortgage servicer who pays a property tax loan secured
by a [transferred] tax lien transferred under this section becomes
subrogated to all rights in the lien.
(i) A judicial [Except as provided by Section 33.445, a]
foreclosure of a tax lien transferred under [as provided by] this
section may not be instituted within one year from the date on which
the lien is recorded in all counties in which the property is
located, unless the contract between the owner of the property and
the transferee provides otherwise.
(j) After one year from the date on which a tax lien
transferred under [as provided by] this section is recorded in all
counties in which the property is located, the transferee of the
lien may foreclose the lien in the manner provided by Subsection (c)
unless the [a] contract between the transferee [holder of the lien]
and the owner of the property encumbered by the lien provides
otherwise. The proceeds of a sale following a judicial foreclosure
as provided by this subsection shall be applied first to the payment
of court costs, then to payment of the judgment, including accrued
interest, and then to the payment of any attorney's fees fixed in
the judgment. Any remaining proceeds shall be paid to other
holders of liens on the property in the order of their priority and
then to the person whose property was sold at the tax sale.
(l) Except as specifically provided by this section, a
property owner cannot waive or limit any requirement imposed on a
transferee by this section.
SECTION 9. Section 32.065, Tax Code, is amended by amending
Subsection (b) and adding Subsection (i) to read as follows:
(b) Notwithstanding any agreement to the contrary, a
contract entered into under Subsection (a) between a transferee and
the property owner under Section 32.06 that is secured by a priority
lien on the property shall provide for [a power of sale and]
foreclosure in the manner provided by Section 32.06(c)
[32.06(c)(2)] and:
(1) an event of default;
(2) notice of acceleration; and
(3) recording of the deed of trust or other instrument
securing the contract entered into under Subsection (a) in each
county in which the property is located.[;
[(4) recording of the sworn document and affidavit
attesting to the transfer of the tax lien;
[(5) requiring the transferee to serve foreclosure
notices on the property owner at the property owner's last known
address in the manner provided by Section 32.06(c)(2) or by a
commercially reasonable delivery service that maintains verifiable
records of deliveries for at least five years from the date of
delivery; and
[(6) requiring, at the time the foreclosure notices
required by Subdivision (5) are served on the property owner, the
transferee to serve a copy of the notice of sale in the same manner
on the mortgage servicer or the holder of all recorded real property
liens encumbering the property that includes on the first page, in
14-point boldfaced type or 14-point uppercase typewritten letters,
a statement that reads substantially as follows: "PURSUANT TO
TEXAS TAX CODE SECTION 32.06, THE FORECLOSURE SALE REFERRED TO IN
THIS DOCUMENT IS A SUPERIOR TRANSFER TAX LIEN SUBJECT TO RIGHT OF
REDEMPTION UNDER CERTAIN CONDITIONS. THE FORECLOSURE IS SCHEDULED
TO OCCUR ON THE (DATE)."]
(i) An agreement under this section that attempts to create
a lien for the payment of taxes that are not delinquent or due at the
time the property owner executes the sworn document under Section
32.06(a-1) is void.
SECTION 10. Subsection (c-1), Section 32.06, Tax Code, is
repealed.
SECTION 11. The changes in law made by this Act apply only
to a contract entered into on or after the effective date of this
Act. A contract entered into before that date is governed by the
law in effect immediately before the effective date of this Act, and
that law is continued in effect for that purpose.
SECTION 12. This Act takes effect immediately if it
receives a vote of two-thirds of all the members elected to each
house, as provided by Section 39, Article III, Texas Constitution.
If this Act does not receive the vote necessary for immediate
effect, this Act takes effect September 1, 2013.