Bulletin: TX2013006

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Bulletin: TX2013006

Bulletin Document
V 1
Date: August 06, 2013
To: All Texas Issuing Offices
RE: LEGISLATIVE UPDATES - 2013 Texas Legislative Analysis (Part 1)

Dear Associates:

Note: Due to the number of bills and the complexity of the analysis, the 2013 Legislative Bulletin is divided into 2 parts. This is part 1.

The 2013 Texas legislature considered some 6000 bills and passed 1462. Of these, 100 or so do or could affect the title insurance industry. Unless otherwise indicated all bills have an effective date of September 1, 2013.

AD VALOREM AND OTHER TAXES

HB 242: H.B. 242 amends the Tax Code to add the following notices to the property tax notices that must be sent to a property owner by certified mail: notice by a chief appraiser of a determination that land previously designated for agricultural use has been diverted to a nonagricultural use; notice by a chief appraiser that a new application for an appraisal of property as agricultural land is required to confirm the land's current eligibility if the appraiser has reason to believe the land's eligibility has ended; notice of the imposition of a penalty for a late application for an appraisal of property as agricultural land and an explanation of the reason for the penalty; and notice by a chief appraiser of a determination that a change occurred in the use of land that has been appraised either as agricultural land or timber land and of the owner's right to protest the determination.

SECTION 1. Section 1.07(d), Tax Code, is amended to read as follows:

(d) A notice required by Section 11.45(d), 23.44(d), 23.46(c), 23.54(e), 23.541(c), 23.55(e), 23.57(d), 23.76(e), 23.79(d), or 23.85(d) must be sent by certified mail.

Signed by the governor June 14, 2013. This Act takes effect January 1, 2014.

What you should do:

Be aware of this extended notice requirement but do not change your existing examination practices.

HB 709: Amends Section 26.15(g), Tax Code, as follows:

Among other changes, (g) Authorizes a taxing unit that determines a taxpayer is delinquent in ad valorem tax payments on property other than the property for which liability for a refund arises or for a tax year other than the tax year for which liability for a refund arises to apply the amount of an overpayment to the payment of the delinquent taxes if the taxpayer was the sole owner of the property for which the refund is sought on January 1 of the tax year in which the taxes that were overpaid were assessed, and on which the taxes are delinquent on January 1 of the tax year for which the delinquent taxes were assessed. Makes nonsubstantive changes.

Signed by the governor June 14, 2013. Effective date: January 1, 2014.

What you should do:

The application of this amendment should not affect title examination since the source of payment of taxes is not a matter of concern.

HB 1287: Texas law has required a person seeking a homestead tax exemption to provide the tax assessor with a copy of their driver’s license and motor vehicle registration application as proof of ownership and residence. HB 1287 amends Sec. 11.43 of the tax code to provide that a person applying for a homestead tax exemption who is a resident of a facility that provides services related to health, infirmity, or aging or is certified for participation in the address confidentiality program administered by the attorney general for victims of family violence, sexual assault, or stalking may be exempted from this requirement. The bill removes the requirement that the application include a copy of the applicant's vehicle registration receipt or, if the applicant does not own a vehicle, an affidavit to that effect signed by the applicant and a copy of a utility bill for the property subject to the claimed exemption in the applicant's name.

What you should do:

Be aware of the legislation. This type of detail is not relevant to the title company determination that the property has homestead tax exemption.

Signed by the governor June 14, 2013. 

HB 1597: This bill is intended to provide protection to Texas property owners against poor business practices of some tax lien financing companies. It does not target the property tax loans directly. It removes the demand for property tax loans by requiring reasonable installment plans from the taxing entities and prohibiting mortgage lenders from declaring a default if an individual is current on a property tax installment plan. It amends Section 31.031 Tax Code effective 9-1-2013. Signed by the governor June 14, 2013.

HB 1913: From the Bill Analysis:

Current law requires the governing body of a taxing unit to waive penalties and authorizes the governing body to provide for the waiver of interest on a delinquent tax if an act or omission of an officer, employee, or agent of the taxing unit or the appraisal district in which the taxing unit participates caused or resulted in the taxpayer's failure to pay the tax before delinquency and if the tax is paid within a specified period.

At times, a taxing unit or appraisal district fails to give notice to a current owner or lender of subsequent assessment, which creates a delinquency to the property owner. In addition, when the property owner is not the original taxpayer, the property owner rarely receives notice within the specified period to seek a waiver of penalties and interest and that a new owner often may not receive any notice at all. H.B. 1913 seeks to advance tax equity for new property owners and ensure that taxing authorities receive amounts owed.

What you should do:

Simply be aware of these changes.

HB 1913: amends current law relating to the waiver of penalties and interest on certain delinquent ad valorem taxes.

Amends Section 33.011, Tax Code, by amending Subsection (d) and adding Subsections (i) and (j)

(d) Requires that a request for a waiver of penalties and interest under Subsection (a)(1) (relating to requiring the governing body of a taxing unit to waive penalties and authorizing the governing body of the taxing unit to provide for the waiver of interest on a delinquent tax) or (3) (relating to authorizing the governing body of the taxing unit to waive penalties and provide for the waiver of interest on a delinquent tax if the taxpayer submits evidence showing certain taxpayer payment information), (b) (relating to requiring the governing body of the taxing unit, if a tax bill is returned undelivered to the taxing unit by the United States Postal Service, to waive penalties and interest), (h) (relating to requiring the governing body of the taxing unit to waive penalties and interest on a delinquent tax if certain criteria are met), or (j) be made before the 181st day after the delinquency date. Requires that a request for a waiver of penalties and interest under Subsection (i) be made before the 181st day after the date the property owner making the request receives notice of the delinquent tax that satisfies the requirements of Section 33.04(b).

What you should do:

This amendment allows a title company to protect its insured in the case of missed taxes or improperly granted exemptions to pay the taxes and obtain a waiver of penalties and interest as long as the request is made within 6 months of the date the property owner receives notice of the problem. This does not affect current practices for proration and payment of taxes.

This bill was an important part of the title industry’s legislative package.

Signed by the governor June 14, 2013.

HB 2500: This bill seeks to provide more certainty and consistency for the property valuation and appraisal methodology for an industrial solar project in order to ensure that Texas remains competitive in this emerging and valuable industry.

HB 2500 amends current law relating to the appraisal for ad valorem tax purposes of solar energy property.

Amends Subchapter B, Chapter 23, Tax Code, by adding Section 23.26

(c) Requires the chief appraiser to use the cost method of appraisal to determine the market value of solar energy property.

(d) Requires the chief appraiser, to determine the market value of solar energy property using the cost method of appraisal, to:

(1) use cost data obtained from generally accepted sources;

(2) make any appropriate adjustment for physical, functional, or economic obsolescence and any other justifiable factor; and

(3)  calculate the depreciated value of the property by using a useful life that does not exceed 10 years.

(e) Prohibits the chief appraiser from in any tax year determining the depreciated value under Subsection (d)(3) to be less than 20 percent of the value computed after making appropriate adjustments under Subsection (d)(2) to the value determined under Subsection (d)(1).

What you should do:

Be aware of the law however the valuation method would not affect current practices for proration and payment of taxes.

Signed by the governor June 14, 2013.

HB 3613: Among other things, this bill amends Section 32.015(a), Tax Code, to provide that, when the tax certificate issued by the collector for the taxing unit showing no taxes due or tax paid receipt is filed with the Texas Department of Housing and Community Affairs (TDHCA) or when no suit to collect a personal property tax lien has been filed and the lien has been delinquent for more than four years, the tax lien is extinguished and canceled and is required to be removed from the title records of the manufactured home.

What you should do:

When insuring title to land and a permanently affixed MHU, you may rely on the SOL that no taxes were due prior to the date of the SOL when the SOL is more than 4 years old. If the SOL is new than 4 years old, then you must obtain a proper SOL from the TDHCA.

Signed by the governor June 14, 2013.

HJR 62: This constitutional amendment when passed by the voters of Texas will allow tax exemptions for surviving spouses of service members killed in action.

What you should know:

Applies to any spouse who remains unmarried after the death of the service member. It is not limited to any particular war. It would take effect 1-1-2015 if passed. See companion legislation SB 163 below.

SB 163: This bill provides for an exemption from ad valorem taxation of the residence homestead of the surviving spouse of a member of the armed services of the United States who is killed in action. Subchapter B, Chapter 11, Tax Code, is amended by adding Section 11.132.

This bill requires that the surviving spouse remain unmarried to obtain the exemption.

What you should know:

Applies to any spouse who remains unmarried after the death of the service member. It is not limited to any particular war. It would take effect 1-1-2015.

SB 193: This bill amends the Tax Code to clarify that a community housing development organization must deliver a copy of the audit necessary for the organization to claim an exemption from taxation of certain real property owned by the organization and used to provide low-income and moderate-income housing to the Texas Department of Housing and Community Affairs and the chief appraiser of the appraisal district in which the property is located in order for the organization to receive the exemption. The bill authorizes the chief appraiser to extend the deadline by which the organization must deliver a copy of the audit for good cause shown.

It adds Subsection (g), to Section 11.182, Tax Code.

Signed by the governor May 27, 2013. EFFECTIVE DATE: January 1, 2014.

What you should do:

Be aware of the requirement; however, the delivery of the audit would not affect the validity of transactions involving a community housing development organization.

SB 247: This bill provides regulation for property tax lenders under Section 32.06 Tax Code.

  • prohibiting property tax lending for seniors who had the option of deferring taxes and abating lawsuits filed to collect delinquent taxes under Tax Code, sec. 33.06;
  • requires honesty in advertising regulations similar to those that apply to mortgage lenders clearly stating interest rates and distinguishing annual percentage rates;
  • provides for solicitation notice requirements for a statement informing property owners that installment plans may be available to them from their local tax assessor-collector;
  • eliminates property tax lenders’ ability to foreclose a tax lien through a non-judicial foreclosure process that involves getting a court order and selling the tax lien interest at a public auction;
  • ensures that anyone who purchased a loan from a property tax lender would be held to the same restrictions as the original lien holder;
  • prohibits property owners from signing contracts that waive rights guaranteed in statute; and
  • specifically voids contracts that do not adhere to provisions in the bill
  • Signed by the governor June 14, 2013. Effective date: 9-1-2013.

What you should know:

Property tax lending is not a frequent matter for title insurance. However, in the case of a foreclosure of a property tax lien, the examiner should be aware that the foreclosure will now be done judicially and not non-judicially. See also HB 1597 on the same subject.

SB 1606: This bill amends Subsection (b), Section 32.01, Tax Code to clarify that the attachment of a tax lien to all inventory, furniture, equipment, and other personal property that the property owner owns on January 1 of the year the lien attaches or that the property owner subsequently acquires is irrespective of whether the personal property is located within the boundaries of the taxing unit in whose favor the lien attaches.

What you should know:

Vetoed by the governor 6-14-2013. This bill would have applied to personal property which the typical title insurance policy does not cover.

HOA LEGISLATION

HB 35: This bill amends Chapter 209, Property Code, by adding Section 209.015 dealing with the right of a residential homeowner to use an adjacent lot for certain residential purposes notwithstanding restrictions that require use for only a structure. Such uses include:

The location on the lot of a garage, sidewalk, driveway, parking area, children's swing or playscape, a fence, a septic system, swimming pool, utility line, or water well and, if otherwise specifically permitted by the dedicatory instrument, the parking or storage of a recreational vehicle.

An owner must obtain the approval of the property  owners' association or, if applicable, an architectural committee established by the association or the association's dedicatory instruments, based on criteria prescribed by the dedicatory instruments specific to the use of a lot for residential purposes, including reasonable restrictions regarding size, location,  shielding, and aesthetics of the residential purpose, before the owner begins the construction, placement, or erection of a building, structure, or other improvement for the residential purpose on an adjacent lot.

The owner must sell both the lot with the residence and the adjacent lot together or the owner must remove the adjacent property to its prior vacant condition before selling it separately.

What you should do:

Whenever a survey shows that an adjacent property to a home is being used for one of the purposes set out above, you need not except to violations of the restrictions provided you have written acknowledgment from the POA or Architectural Committee that the use complies with the restrictions. If the lots are being separately sold, you should require proof that the adjacent lot is currently vacant. Such proof could be shown by a current survey or by an inspection.

Signed by the governor June 14, 2013.

HB 1824: The bill deals with master mixed use POA subdivisions. It contains a number of housekeeping and administrative changes. Sections 215.003 and Section 215.008 Property Code are most affected. The changes make Master Mixed Use POAs an integrated section of the law without reference to other property code sections. Additionally, 215.003 is amended to provide for amendments to restrictions to be done by simple majority vote. Other matters do not directly affect title insurance.

What you should do:

Simply be aware of the bill.

Signed by the governor June 14, 2013.

HB 2075: This bill affects condominium declarations that were recorded prior to January 1, 1994 to allow them to be amended to provide that the condo association can borrower money for repairs to the project. If approval requires a vote of the owners, even owners whose unit or common elements were destroyed maintain the right to vote. Applies to Section 82.002(c), Property Code et seq.

Signed by the governor June 14, 2013. 

What you should know:

If called upon to insure a loan to a condominium association, you should review the minutes and other documents for compliance with these sections of the Condominium Act as well as obtain an opinion from the Association’s counsel that all proper steps were taken. If your search of a unit reveals a lien executed by the Association, exception must be taken to it.

HB 3800: Relates to filing and indexing of management certificates.

SECTION 1. Amends Section 209.004, Property Code, by adding Subsection (a-1), to require the county clerk of each county in which a management certificate is filed as required by this section to record the management certificate in the real property records of the county and index the document as a "Property Owners' Association Management Certificate."

SECTION 2. Requires each property owners' association that is subject to Section 209.004 (Management Certificates), Property Code, immediately before September 1, 2013, to ensure that all management certificates are recorded and indexed in accordance with Section 209.004(a-1), Property Code, as added by this Act, on or after September 1, 2013, and not later than January 1, 2014, to file the association's management certificate under that section, regardless of whether the association filed a management certificate before September 1, 2013.  Provides that this section does not affect the time in which a property owners' association is required to file the association's management certificate under Section 209.004, Property Code, as amended by this Act, if the association's initial duty to file the management certificate arises on or after September 1, 2013.

SECTION 3. Effective date: September 1, 2013.

What you should do:

Be sure that your plant index includes the new Property Owners’ Association Management Certificate records.

Whether or not the POA properly files its certificate, you should continue to take exception to the existence of such association and any dues or payments required to be paid to and to the restrictions that create the POA.

Signed by the governor June 14, 2013.

HB 3176: Amends Section 209.00593(a), Property Code. Current law states that to fill a vacancy on the board of a property owners’ association the vacancy must have occurred because of resignation, death, or disability. In practice, this means that if a board seat is vacant because there was no candidate to fill it at the time of election, that spot cannot be filled until the term for that seat is up. This can leave open board positions and unrepresented homeowners for lengthy time periods.

H.B. 3176 amends current law to allow property owners' associations to fill vacant spots whenever there is a vacancy.

What you should do:

Vacant board seats should have no impact on the collection and payment of maintenance fees.

SB 1372: This bill creates a new subchapter in the Timeshare Act to add basic provisions for the governance of timeshare owners’ associations and exclude timeshare associations from sections of the Property Code designed for whole ownership or primary home property associations. Timeshares in Texas are already governed by the Texas Timeshare Act (Chapter 221, Property Code) which provides for extensive disclosures to timeshare buyers and annual disclosures on timeshare association budget matters to the owners

What you should know:

While individual time-share interests are real property and may be insured, purchasers rarely do so. If called upon to insure either individual intervals or bulk financing of intervals, continue to except to the foundation documents.

Signed by the governor June 14, 2013.

SB 198: Sections 202.007, Property Code:

(8) Prohibit a property owners' association from requiring an owner to submit a detailed description or a plan for the installation of drought-resistant landscaping or water-conserving natural turf for review and approval by the property owners' association to ensure, to the extent practicable, maximum aesthetic compatibility with other landscaping in the subdivision.

(d-1) A property owners' association may not unreasonably deny or withhold approval of a proposed installation of drought-resistant landscaping or water-conserving natural turf under Subsection (d)(8) or unreasonably determine that the proposed installation is aesthetically incompatible with other landscaping in the subdivision.

What you should know:

While not precluding the ability of a homeowners' association or property owners' association to approve or establish parameters for a homeowner's landscape plan, S.B. 198 clearly establishes that an association's covenant or restriction cannot prohibit or restrict a homeowner's use of drought-resistant landscaping or water-conserving turf. You should still take exception to all restrictive covenants that apply to a subdivision. Signed by the governor June 14, 2013.

SALE OF PROPERTY

HB 243: Amends Subchapter A, Chapter 534, Health and Safety Code, by adding Section 534.023. While certain community centers currently have the authority to purchase real property, the law is unclear as to whether these community centers also have the authority to dispose of or sell real property. C.S.H.B. 243 seeks to clarify this issue by authorizing these community centers to sell certain real property under specified conditions.

What you should do:

If offered the opportunity to insure the sale out of a community center, you should assure yourself that the provisions of this Chapter of the Health and Safety Code have been complied with. You should review the records of the board of the community center for proper authorization at a board meeting. You should also require an opinion of counsel for the center that the compliance was had.

Signed by the governor June 14, 2013.

CORRECTION OF DOCUMENTS

SB 887: relates to certain correction instruments in the conveyance of real property.

Section 5.028, Property Code, is amended by amending Subsection (a) and adding Subsection (a-1).

Subsection (a) A correction affidavit may correct a reference to a plat or other plat information, a lot or block number.

Subsection(a-1)  A person who has personal knowledge of facts relevant  to the correction of a recorded original instrument of conveyance may prepare or execute a correction instrument to make a nonmaterial change that results from an inadvertent error, including the addition, correction, or clarification of:

(1) a legal description prepared in connection with the preparation of the original instrument but inadvertently omitted from the original instrument; or

(2) an omitted call in a metes and bounds legal description in the original instrument that completes the description of the property.

SECTION 2. Section 5.030, Property Code, is amended by

amending Subsection (b) and adding Subsection (c) to read as follows:

(b) A correction instrument replaces and is a substitute for the original instrument. Except as provided by Subsection (c), a bona fide purchaser of property that is subject to a correction instrument may rely on the instrument against any person making an adverse or inconsistent claim.

(c) A correction instrument is subject to the property interest of a creditor or a subsequent purchaser for valuable consideration without notice acquired on or after the date the original instrument was acknowledged, sworn to, or proved and filed for record as required by law and before the correction instrument has been acknowledged, sworn to, or proved and filed for record as required by law.

What you should know:

This bill was an important part of the TLTA legislative program in 2013. It clarifies that a correction affidavit may be used to correct incorrect or missing lot and block numbers. It also allows the correction affidavit to provide a legal description when the exhibit containing the legal description was inadvertently left off the recorded document.

What you should do:

First, make every reasonable effort to double check legal descriptions before recording documents. Especially, check the legal description in the body of the document to see if it refers to a more complete legal description on Exhibit A (or other exhibit). Be sure to attach such Exhibit to the document before recording.

Second, if despite your efforts to determine that the legal description is incomplete a document is recorded without a proper legal description, you can file an affidavit which makes the needed corrections. You will still have to follow the notice provisions in the law and that were discussed in our 2011 Legislative Bulletin TX2011009. If you are correcting a missing exhibit, your affidavit should clearly state that the exhibit was inadvertently left off.

Signed by the governor 5-24-2013 effective 9-1-2013.

PRIVACY ISSUES

HB 346: Amends Section 521.126, Transportation Code dealing with the use of personal information from driver’s licenses for commercial rather than identification purposes. See exemption (B) that does not involve the sale, transfer, or other dissemination of a name or driver's license number to a third party for any purpose, including any marketing, advertising, or promotional activities.

What you should know:

Use and photocopying a driver’s license for identification purposes in connection with guaranty files and closing the transaction (including notary books) should not violate this law. However, we would advise you not to share that information with third parties.

Signed by the governor 5-27-2013, effective 6-14-2013

HB 1632: This bill expands the class of government employees that can restrict their personal information for public disclosure to include federal and state judges. See Sections 552.1175(a) and (b), Government Code. The information that is now not public includes date of birth.

What you should know:

The individual must notify the appropriate state agency that they want personal information to remain confidential using the agency’s forms for such notice. It should affect real property records.

Signed by the governor June 14, 2013. 

HB 2267: This bill seeks to protect medical examiners and those who perform forensic analysis at any level of government by adding these professions to the list of those afforded confidentiality for their home address information in the tax office records. Section 25.025(a), Tax Code, as amended by Chapters 348 (H.B. 3307) and 953 (H.B. 1046), Acts of the 82nd Legislature, Regular Session, 2011, is reenacted and amended.

What you should know:

This is another of the many bills dealing with privacy that attempts to hide personal information from possible perpetrators of crime. Depending on your location, it may be very difficult to obtain proper information on tax records if your seller is a member of a protected class. If you have such difficulties, simply require the owner to provide you with a full tax certificate issued by the tax assessor in your county. Any delay in closing will be caused by the party’s seeking to make home address information and date of birth confidential.

Signed by the governor June 14, 2013. 

HB 3460: This bill deals with holding company filings for insurance companies and does not affect real estate activity.

What you should know:

This bill makes no changes relative to independent title insurance agents or to real estate activities.

Signed by the governor 5-27-2013 effective 6-14-2013

SB 953: dealing with trade secrets

This bill adds a new Chapter 134A to the Civil Practices and Remedies code dealing with trade secrets which include, inter alia, programs, financial data and lists of potential customers.

The bill provides for injunctive relief and damages.

What you should know:

This section could come into play when recruiting new employees from competitors.

Signed by the governor June 14, 2013.

SB 1368: amends the Government Code to require a contract between a nongovernmental vendor and a state agency, board, commission, office, department, or other agency in the executive or legislative branch of state government that involves the exchange or creation of public information that the state governmental entity collects, assembles, or maintains or to which the governmental entity has a right of access to be drafted in consideration of state information law requirements and to contain a provision that requires the vendor to make the information not otherwise excepted from disclosure under public information law available in a specific format that is agreed upon in the contract and accessible by the public. The bill requires a request for public information regarding such a contract to be submitted to the officer or employee responsible for responding to open records requests for the state governmental entity that executed the contract. The bill prohibits its provisions from being waived by contract or otherwise.

What you show know:

This bill does not affect title insurance transactions.

Signed by the governor June 14, 2013.

FAMILY LAW MATTERS

HB 389: amends Subchapter B, Chapter 8, and Family Code to provide for the uniform enforcement of court-ordered, agreed, and contractual alimony and maintenance and to provide for the enforcement of certain property division agreements, regardless of whether the agreement is included in the decree or in a separate document.

What you should do:

These matters are not normally an issue in title insurance transaction.

Signed by the governor June 14, 2013.

SB 1235: Financial records of wards

From the House Committee Report:

The Department of Aging and Disability Services (DADS) currently has the authority to obtain financial records of wards or proposed wards from financial institutions for purposes of guardianship services. Interested parties assert, however, that it is sometimes difficult for DADS to gather the records without a specific exemption from the application of certain Finance Code provisions relating to discovery of customer records in the custody of a financial institution.

In addition, an application for guardianship involving a person alleged to have an intellectual disability requires a determination of mental retardation occurring within the preceding 24 months. The parties contend that, in practice, courts typically accept updates or endorsements to older determinations if the update or endorsement took place in the previous 24 months. S.B. 1235 seeks to clarify these issues by amending guardianship laws relating to assessments for and provision of guardianship services by DADS.

What you should know:

These matters are not normally part of a title insurance transaction.

Signed by the governor June 14, 2013.

FORECLOSURES

HB 584: Posting of Notices on the internet

Section 51.002, Property Code, is amended by adding Subsection (f-1) to read as follows:

(f-1) If a county maintains an Internet website, the county must post a notice of sale filed with the county clerk under Subsection (b) (2) on the website on a page that is publicly available for viewing without charge or registration. This Act takes effect September 1, 2013.

What you should do:

When insuring a property that has been foreclosed, the county clerk’s website must be searched to determine that this mandatory filing and posting was done. This search is an additional step to determining that all proper posting were done. Expect to see that this step is also included in Trustee’s Affidavits.

Signed by the governor 5-18-2013

HB 699: amends Section 34.041, Civil Practice and Remedies Code Section 51.002(h), Property Code, and Section 34.01(r), Tax Code to allow county commissioners to designation a location other than the courthouse door for foreclosure sales.

What you should do:

Be aware of any changes in the location of foreclosures. Review foreclosure notices and trustee affidavits to determine that the proper location is set out. If you determine that the notices and trustee affidavit set out the wrong location, we would normally require the foreclosure to be redone properly.

Signed by the governor June 14, 2013.

HB 2590: Amends Subtitle B, Title 5, Property Code, by adding Chapter 66, SALE OF PROPERTY SUBJECT TO OIL OR GAS LEASE Vetoed by the Governor 6-14-2013

For title insurance purposes, section Sec 66.001 (d) was the most important: (d) if an oil or gas lease is executed and recorded in the real property records of the county after the date a security interest in the affected real property is recorded and the affected real property is subsequently sold in a foreclosure sale, the foreclosure sale terminates and extinguishes the lessee's right to use the surface of the real property pursuant to the oil or gas lease.

What you should do:

Be aware that after the effective date of this bill, an oil and gas lease that is recorded after a deed of trust but before the foreclosure of the deed of trust has priority over the deed of trust. It does not matter if the deed of trust is purchase money or for some other purpose. Exception must be taken to the oil and gas lease after foreclosure of the deed of trust as the lien does not have priority over the oil and gas lease. This would have been a major change in Texas law.

The veto message by the governor invited a revised version of this bill to be considered in the 2015 Legislative Session.

HB 2749: Requires the supreme court, not later than March 1, 2014, to promulgate the HEL foreclosure forms required by Section 22.018, Government Code.

Sec. 22.018. PROMULGATION OF FORMS FOR CERTAIN EXPEDITED FORECLOSURE PROCEEDINGS. (a) Requires the Texas Supreme Court (supreme court) to promulgate the following forms for use in expedited foreclosure proceedings described by Section 50(r) (relating to requiring the supreme court to promulgate rules of civil procedure for expedited foreclosure proceedings related to the foreclosure of liens under Subsection (a) (6) of this section and to foreclosure of a reverse mortgage lien that requires a court order), Article XVI (General Provisions), Texas Constitution:

(1) a form for application for an expedited foreclosure proceeding;

(2) a form for a supporting affidavit; and

(3) a form for any court-required citation.

(b) Prohibits a trial court or court clerk from refusing to accept a form promulgated by the supreme court under this section filed by an attorney licensed in this state.

What you should do:

Be aware that on or before March 1, 2014 the Texas Supreme Court would have had to promulgate forms for handling Home Equity Lien foreclosures. When the forms had been promulgated, examiners should require that only those forms be used. THIS BILL FAILED IN THE SENATE JURISPRUDENCE COMMITTEE. IT IS NOT LAW. We have included it in case the Supreme Court on its own motion promulgates standard forms.

HB 2978: EXPEDITED FORECLOSURE PROCEEDINGS

Subchapter B, Chapter 17, Civil Practice and Remedies Code, is amended by adding Section 17.031 

Sec. 17.031. EXPEDITED FORECLOSURE PROCEEDINGS. For a power of sale exercised by the filing of an application for an expedited court order allowing the foreclosure of a contract lien under the Texas Rules of Civil Procedure 736, service of citation shall be completed in accordance with Rule 736 or 106, Texas Rules of Civil Procedure, or in any other manner provided for petitions under the Texas Rules of Civil Procedure.

The bill also allows for mediation prior to foreclosure. See Subchapter B, Chapter 154, Civil Practice and Remedies Code, Section 154.028

Signed by the governor June 14, 2013. 

What you should do:

Under these rules, if no separate suit dealing with the lien is filed or if no response (answer) is made to the notice, no hearing is required. Since the party owing the debt is usually aware that payments are delinquent, substituted service of the expedited hearing would not rise to the level of a lack of due process and a policy may be issued immediately upon foreclosure. If the foreclosure is for any other purpose, the standard 3-year period to request a new trial applies and no policy should be issued until that time has passed or an appropriate exception made.

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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.


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