Bulletin: TX000033

Date:
November 14, 1995
To:
All Texas Issuing Offices
RE:
Rollback Taxes

Dear Associates:

Rule P-20 allows us to delete the "rollback tax" language ("and subsequent assessments for prior years due to change in land usage or ownership") from the Mortgagee Policy or Binder upon payment of $20. We are not authorized to delete the language from the Owner Policy.

The following are our guidelines for deletion of the rollback tax language on the mortgagee policy or binder:

  • You may delete the rollback tax language if the land is not specially valued.

  • You may delete the rollback tax language if all rollback taxes, interest, and penalties are paid. New House Bill 947 does not allow a lender to require this.

  • You must add a specific exception or require payment of all rollback taxes, interest, and penalties if the taxes have become due. For example, if "agricultural land", valued for tax purposes under Article VIII, §1-d and Chapter 23, Subchapter C, Tax Code, is sold, the rollback taxes are triggered and are due.

We will consider an escrow of funds for the additional tax due if the land is appraised for tax purposes as "qualified open-space land" under Chapter 23, Subchapter D, Tax Code (Article VIII, §1-d-1, Texas Constitution). Please call our underwriting personnel to discuss any escrows.

We will consider deletion of the rollback tax language without an escrow under the following circumstances:

a. the land is appraised as "qualified open-space land" (Chapter 23, Subchapter D, Tax Code, Section 23.51 et. seq.; Article VIII, §1-d-1, Texas Constitution). We will not consider deletion if the land is appraised for "agricultural use" (Chapter 23, Subchapter C, Tax Code, Section 23.41, et. seq.; Article VIII, §1-d, Texas Constitution) since the additional tax is triggered by either sale or change in use, not simply by change in use. We will not consider deletion if the land is appraised as "timber land" (Subchapter E, Section 23.71 et. seq.); as "recreational, park, or scenic use" land (Subchapter F, Section 23.81 et. seq.); or as "public access airport property" (Subchapter G, Section 23.91 et. seq.).

the mortgagor must be an individual, not a partnership or corporation. The mortgagor must not be a developer or subdivider and must not intend to develop or subdivide the land. The mortgagor must execute the affidavit which can be found in the reference section at the end of this bulletin.

the land may not exceed 25 acres and the value of the residential improvements must be at least 50 percent of total value of the land.

the amount of potential rollback taxes as of Date of Policy for the previous five years may not exceed the lesser of $15,000 or 10 percent of the loan amount. Upon request and for a fee, the tax assessor will compute the potential rollback taxes and interest that would be due.

the land must be entirely surrounded by similar uses and must not be within one mile of a municipality.

the land must not be assessed as part of a larger tract.

you must review any sales contract and loan documents for any indication of the intended use of the land.

if the current transaction is a sale, you must receive a copy of the new application required by Section 23.54(e), Tax Code.

Please call our underwriting personnel to determine if you are asked to delete the rollback tax language on specially assessed land without an escrow.

THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

References

Bulletins Replaced:
None
Related Bulletins:
None
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
TX Affidavit of Use 1995