Texas House Bill HB3725

Texas 2017 - 85th Regular

Caption

Relating to the priority of a transferred ad valorem tax lien.

Impact

The bill notably affects property owners as it alters how tax liens are enforced and prioritized. Specifically, if a tax lien is transferred under certain conditions—such as high closing costs—the transferred lien may become subordinate to prior encumbrances. This change is particularly significant for property transactions involving tax liens, as it could influence the decisions made by lenders and buyers about the risks associated with property investments burdened by tax liabilities.

Summary

House Bill 3725 introduces amendments to the Texas Tax Code focusing on the priority of transferred ad valorem tax liens. The main provision establishes that a tax lien takes precedence over other claims against the property, including those from creditors and homeowners' associations. This enhances the protection for tax collectors and ensures that taxes owed will be prioritized over various encumbrances on the property, streamlining the process for the collection of taxes in Texas.

Contention

While supporters of HB 3725 may argue that these changes provide clarity and strengthen tax collection efforts, there are potential points of contention. Critics might view this as an undue burden on property owners, especially those with multiple encumbrances who could face more profound challenges in negotiations with lenders and in maintaining property rights. As the law stands, the amendments take effect on September 1, 2017, applying solely to tax liens transferred after that date, which may spark discussions on the fairness of new policies to existing property owners.