85R20305 BEE-F
By: Kacal H.B. No. 3063
A BILL TO BE ENTITLED
AN ACT
relating to agricultural liens.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 70.401, Property Code, is amended by
amending Subdivision (4) and adding Subdivisions (5), (6), (7), and
(8) to read as follows:
(4) "Company-owned crop" means an agricultural crop:
(A) that is in the possession of a warehouse or
contract purchaser located in this state and for which the
agricultural producer has received full payment;
(B) that is not an open storage crop; or
(C) for which the warehouse or the contract
purchaser tenders payment and the agricultural producer, without
coercion, defers payment.
(5) "Contract purchaser" means a person who has agreed
under a contract to purchase an agricultural crop or otherwise pay
the agricultural producer for growing, producing, or harvesting the
agricultural crop. The term includes [does not include] a person
who, as to the transaction in question, is licensed and bonded under
Chapter 14, Agriculture Code, or the United States Warehouse Act (7
U.S.C. Section 241 et seq.).
(6) "Open storage crop" means an agricultural crop
that:
(A) an agricultural producer delivers or
transfers to:
(i) a warehouse for storage; or
(ii) a contract purchaser located in this
state;
(B) is not covered by a warehouse receipt; and
(C) is not owned by the lessee, owner, or
operator of the warehouse in which the crop is stored or the
contract purchaser to which the crop is delivered or transferred.
(7) "Secured lender" means a person that:
(A) has loaned money to a warehouse or a contract
purchaser; and
(B) holds a perfected secured lien against a
company-owned crop.
(8) "Warehouse" means a facility that stores or
handles any agricultural crop after the crop is harvested,
including a facility operated by a person who, as to the transaction
in question, is licensed and bonded under Chapter 14, Agriculture
Code, or the United States Warehouse Act (7 U.S.C. Section 241 et
seq.). The term includes a person engaged in the business of
operating a warehouse.
SECTION 2. Section 70.402, Property Code, is amended to
read as follows:
Sec. 70.402. LIEN CREATED. (a) An agricultural producer
who, under a contract with a contract purchaser, is to receive
consideration for selling an agricultural crop grown, produced, or
harvested by the producer has a lien against that crop for the
amount owed under the contract, or for the market [reasonable]
value of the crop on the date of transfer or delivery if there is no
agreement concerning the amount owed under the contract.
(b) An agricultural producer who delivers or transfers an
agricultural crop grown, produced, or harvested by the producer to
a warehouse has a lien against that agricultural crop for the market
value of the agricultural crop:
(1) on the date of delivery or transfer; or
(2) if there is to be a series of deliveries to the
warehouse, on the date of the first delivery of the agricultural
crop to the warehouse.
(c) A lien created under this subchapter is on every
agricultural crop, either in raw or processed form, that has been
transferred or delivered by the agricultural producer and is in the
possession of the warehouse or the contract purchaser, and if the
warehouse or the contract purchaser sells all or part of the crop,
on the proceeds of the sale. If an open storage [the agricultural]
crop is commingled with a company-owned crop by a warehouse or a
contract purchaser after the crop has been transferred or
delivered, a lien created under this subchapter applies only to
that portion of the agricultural crop in the possession of the
warehouse or the contract purchaser [purchaser's inventory] in an
amount that is equal to the amount of the crop transferred or
delivered by the agricultural producer.
(d) [(c)] For purposes of this subchapter, an agricultural
crop or processed form of an agricultural crop deposited by a
contract purchaser with a warehouse, whether or not a warehouse
receipt is given as security, is considered to be in the possession
of the contract purchaser and subject to the lien created by this
subchapter.
SECTION 3. Section 70.403, Property Code, is amended to
read as follows:
Sec. 70.403. WHEN LIEN ATTACHES. A lien created under this
subchapter attaches on the date on which physical possession of the
agricultural crop is delivered or transferred by the agricultural
producer to the warehouse or to the contract purchaser or the
purchaser's agent, or if there is to be a series of deliveries [to
the contract purchaser or purchaser's agent], on the date of the
first delivery of the agricultural crop [to the contract purchaser
or purchaser's agent].
SECTION 4. Section 70.404, Property Code, is amended to
read as follows:
Sec. 70.404. APPLICABILITY OF OTHER LAW; EFFECT ON OTHER
LAW. (a) Except as provided by Section 70.4045 of this code,
Chapter 9, Business & Commerce Code, including applicable filing
and perfection requirements, applies to a lien created under this
subchapter.
(b) Except as provided by Subsection (c), to the extent of a
conflict, this subchapter controls over any other law.
(c) This subchapter does not abridge the protections
afforded by any applicable law, including:
(1) Chapter 14, Agriculture Code;
(2) Chapter 7, Business & Commerce Code;
(3) the United States Warehouse Act (7 U.S.C. Section
241 et seq.); or
(4) common law, including the law of bailment.
SECTION 5. Section 70.4045, Property Code, is amended to
read as follows:
Sec. 70.4045. PERFECTION AND PRIORITY OF AGRICULTURAL LIEN
ON CROPS. (a) Notwithstanding Chapter 9, Business & Commerce Code,
a lien created under this subchapter is perfected at the time the
lien attaches under Section 70.403 and continues to be perfected if
a financing statement covering the agricultural crop is filed on or
before the 90th day after the date:
(1) the physical possession of the crop is delivered
or transferred by the agricultural producer to the warehouse or the
contract purchaser or the purchaser's agent, if there is only one
delivery [under the contract]; or
(2) of the last delivery of the crop to the warehouse
or the contract purchaser or the purchaser's agent, if there is a
series of deliveries [under the contract].
(b) If a financing statement covering the agricultural crop
is not filed within the time prescribed by Subsection (a)(1) or (2),
as applicable, the lien is considered unperfected [on the date the
lien attached until the date the financing statement is filed or the
lien is perfected under Chapter 9, Business & Commerce Code].
(c) Notwithstanding Chapter 9, Business & Commerce Code,
and except as provided by Subsection (d), a lien created and
perfected under this subchapter has priority over a conflicting
security interest in or lien on the agricultural crop or the
proceeds from the sale of the crop created by the warehouse or the
contract purchaser in favor of a third party, [other than a cotton
ginner's lien created under Section 70.003(d),] regardless of the
date the security interest or lien created by the warehouse or the
contract purchaser attached. This subsection does not affect:
(1) the validity or priority of a security interest or
lien:
(A) created and perfected to secure a loan
directly to the agricultural producer; or
(B) created and perfected under Chapter 9,
Business & Commerce Code, to secure a loan to a warehouse or a
contract purchaser on a company-owned crop in favor of a secured
lender;
(2) the validity or priority of a cotton ginner's lien
created under Section 70.003(d); or
(3) the rights of a holder of a negotiable warehouse
receipt.
(d) Subsection (c) does not apply to a contract purchaser
who purchases an agricultural crop from an agricultural producer
under a marketing contract created under:
(1) Section 52.016, Agriculture Code; or
(2) regulations adopted by the United States
Department of Agriculture under Title 7 of the United States Code.
SECTION 6. Section 70.406(a), Property Code, is amended to
read as follows:
(a) A buyer in ordinary course of business of an
agricultural crop, including a person who buys any portion of an
agricultural crop from a warehouse or a contract purchaser, whether
or not the agricultural crop has been commingled, takes the
agricultural crop free of a lien created under this subchapter, and
the lien created by this subchapter does not pass to any subsequent
claimant of the agricultural crop.
SECTION 7. Section 70.407(a), Property Code, is amended to
read as follows:
(a) A lien created under this subchapter is discharged when:
(1) the lienholder receives full payment for the
agricultural crop; or
(2) payment is tendered by the warehouse or the
contract purchaser, as applicable, and the lienholder, without
coercion, defers payment.
SECTION 8. Section 70.410, Property Code, is amended to
read as follows:
Sec. 70.410. WAIVER OF CERTAIN RIGHTS PROHIBITED. An
agricultural producer's agreement with a warehouse or a contract
purchaser to waive the producer's right to seek a remedy provided by
this subchapter is void.
SECTION 9. The changes in law made by this Act apply only to
an agricultural producer who delivers or transfers an agricultural
crop grown, produced, or harvested by the producer to a warehouse or
a contract purchaser on or after the effective date of this Act. An
agricultural producer who delivers or transfers an agricultural
crop grown, produced, or harvested by the producer to a warehouse or
a contract purchaser before the effective date of this Act is
governed by the law as it existed immediately before that date, and
that law is continued in effect for that purpose.
SECTION 10. This Act takes effect September 1, 2017.