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AN ACT
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relating to the disposition of excess proceeds of a tax sale of real |
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property or foreclosure of a tax lien on real property. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subchapter A, Chapter 34, Tax Code, is amended by |
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adding Section 34.021 to read as follows: |
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Sec. 34.021. DISTRIBUTION OF EXCESS PROCEEDS IN OTHER TAX |
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FORECLOSURE PROCEEDINGS. A person conducting a sale for the |
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foreclosure of a tax lien under Rule 736 of the Texas Rules of Civil |
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Procedure shall, within 10 days of the sale, pay any excess proceeds |
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after payment of all amounts due all participants in the sale to the |
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clerk of the court that issued the order authorizing the sale. The |
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excess proceeds from such a sale shall be handled according to |
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Sections 34.03 and 34.04 of this code. |
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SECTION 2. Section 34.04, Tax Code, is amended by amending |
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Subsections (c), (e), (f), (g), (h), and (i) and adding Subsections |
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(c-1) and (j) to read as follows: |
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(c) At the hearing the court shall order that the proceeds |
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be paid according to the following priorities to each party that |
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establishes its claim to the proceeds: |
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(1) to the tax sale purchaser if the tax sale has been |
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adjudged to be void and the purchaser has prevailed in an action |
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against the taxing units under Section 34.07(d) by final judgment; |
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(2) to a taxing unit for any taxes, penalties, or |
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interest that have become due or delinquent on the subject property |
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subsequent to the date of the judgment or that were omitted from the |
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judgment by accident or mistake; |
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(3) to any other lienholder, consensual or otherwise, |
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for the amount due under a lien, in accordance with the priorities |
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established by applicable law; |
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(4) to a taxing unit for any unpaid taxes, penalties, |
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interest, or other amounts adjudged due under the judgment that |
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were not satisfied from the proceeds from the tax sale; and |
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(5) to each former owner of the property, as the |
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interest of each may appear, provided that the former owner: |
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(A) was a defendant in the judgment; |
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(B) is related within the third degree by |
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consanguinity or affinity to a former owner that was a defendant in |
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the judgment; or |
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(C) acquired by will or intestate succession the |
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interest in the property of a former owner that was a defendant in |
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the judgment. |
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(c-1) Except as provided by Subsections (c)(5)(B) and (C), a |
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former owner of the property that acquired an interest in the |
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property after the date of the judgment may not establish a claim to |
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the proceeds. For purposes of this subsection, a former owner of |
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the property is considered to have acquired an interest in the |
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property after the date of the judgment if the deed by which the |
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former owner acquired the interest was recorded in the real |
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property records of the county in which the property is located |
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after the date of the judgment. |
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(e) An [an] order under this section directing that all or |
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part of the excess proceeds be paid to a party is appealable. |
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(f) A person may not take an assignment or other transfer of |
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an owner's claim to excess proceeds unless: |
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(1) the assignment or transfer is taken on or after the |
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36th day after the date the excess proceeds are deposited in the |
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registry of the court; |
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(2) the assignment or transfer is in writing and |
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signed by the assignor or transferor; [and] |
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(3) the assignment or transfer is not the result of an |
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in-person or telephone solicitation; |
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(4) the assignee or transferee pays the assignor or |
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transferor on the date of the assignment or transfer an amount equal |
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to at least 80 percent of the amount of the assignor's or |
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transferor's claim to the excess proceeds; and |
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(5) the assignment or transfer document contains a |
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sworn statement by the assignor or transferor affirming: |
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(A) that the assignment or transfer was given |
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voluntarily; |
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(B) the date on which the assignment or transfer |
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was made and that the date was not earlier than the 36th day after |
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the date the excess proceeds were deposited in the registry of the |
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court; |
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(C) that the assignor or transferor has received |
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the notice from the clerk required by Section 34.03; |
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(D) the nature and specific amount of |
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consideration given for the assignment or transfer; |
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(E) the circumstances under which the excess |
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proceeds are in the registry of the court; |
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(F) the amount of the claim to excess proceeds in |
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the registry of the court; |
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(G) that the assignor or transferor has made no |
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other assignments or transfers of the assignor's or transferor's |
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claim to the excess proceeds; [and] |
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(H) that the assignor or transferor knows that |
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the assignor or transferor may retain counsel; and |
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(I) that the consideration was paid in full on |
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the date of the assignment or transfer and that the consideration |
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paid was an amount equal to at least 80 percent of the amount of the |
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assignor's or transferor's claim to the excess proceeds. |
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(g) An assignee or transferee who obtains excess proceeds |
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without complying with Subsection (f) is liable to the assignor or |
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transferor for the amount of excess proceeds obtained plus |
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attorney's fees and expenses. An assignee or transferee who |
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attempts to obtain excess proceeds without complying with |
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Subsection (f) is liable to the assignor or transferor for |
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attorney's fees and expenses. |
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(h) An assignee or transferee who files a petition setting |
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forth a claim to excess proceeds must attach a copy of the |
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assignment or transfer document and produce the original of the |
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assignment or transfer document in court at the hearing on the |
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petition. If the original assignment or transfer document is lost, |
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the assignee or transferee must obtain the presence of the assignor |
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or transferor to testify at the hearing. In addition, the assignee |
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or transferee must produce at the hearing the original of any |
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evidence verifying the payment of the consideration given for the |
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assignment or transfer. If the original of any evidence of the |
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payment is lost or if the payment was in cash, the assignee or |
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transferee must obtain the presence of the assignor or transferor |
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to testify at the hearing. |
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(i) A fee charged by an attorney to obtain excess proceeds |
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for an owner may not be greater than 25 percent of the amount |
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obtained or $1,000, whichever is less. A person who is not an |
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attorney may not charge a fee to obtain excess proceeds for an |
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owner. |
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(j) The amount of the excess proceeds the court may order be |
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paid to an assignee or transferee may not exceed 125 percent of the |
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amount the assignee or transferee paid the assignor or transferor |
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on the date of the assignment or transfer. |
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SECTION 3. The change in law made by this Act applies to the |
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disposition of excess proceeds of a tax sale paid to the clerk of |
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the court that issued the warrant or order of sale regardless of the |
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date on which the warrant or order of sale was issued, the tax sale |
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was conducted, or the proceeds were paid to the clerk. |
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SECTION 4. This Act takes effect September 1, 2009. |
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______________________________ |
______________________________ |
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President of the Senate |
Speaker of the House |
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I certify that H.B. No. 406 was passed by the House on April |
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24, 2009, by the following vote: Yeas 136, Nays 0, 1 present, not |
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voting. |
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______________________________ |
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Chief Clerk of the House |
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I certify that H.B. No. 406 was passed by the Senate on May |
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14, 2009, by the following vote: Yeas 30, Nays 1. |
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______________________________ |
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Secretary of the Senate |
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APPROVED: _____________________ |
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Date |
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_____________________ |
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Governor |