- August 10, 2011
- All Texas Issuing Offices
- 2011 Legislation affecting real estate generally
The 2011 Texas Legislature passed a number of bills impacting real estate generally. These bills deal with restrictions, subdivisions, probate matters and many others.
HB 252 by Hildebrand deals with the application for a homestead tax exemption.
Effective Date: September 1, 2011
Section 11.43, Tax Code: an application for a residence homestead exemption prescribed by the comptroller and authorized by Section 11.13 must:
(1) list each owner of the residence homestead and the interest of each owner;
(2) state that the applicant does not claim an exemption under that section on another residence homestead in this state or claim a residence homestead exemption on a residence homestead outside this state;
(3) state that each fact contained in the application is true;
(4) include a copy of the applicant's driver's license or state-issued personal identification certificate and:
(A) a copy of the applicant's vehicle registration receipt.
(a) Except as provided by Subsection (a-1), for a manufactured home to qualify as a residence homestead under Section 11.13, the application for exemption required by Section 11.43 must be accompanied by:
(1) a copy of the statement of ownership and location for the manufactured home issued by the manufactured housing division of the Texas Department of Housing and Community Affairs under Section 1201.207, Occupations Code, showing that the individual applying for the exemption is the owner of the manufactured home;
(2) a copy of the purchase contract or payment receipt showing that the applicant is the purchaser of the manufactured home;
(3) a sworn affidavit by the applicant stating that:
(A) the applicant is the owner of the manufactured home;
(B) the seller of the manufactured home did not provide the applicant with a purchase contract; and
(C) the applicant could not locate the seller after making a good faith effort.
(a-1) An appraisal district may rely upon the computer records of the Texas Department of Housing and Community Affairs to verify an applicant's ownership of a manufactured home. An applicant is not required to submit an accompanying document described by Subsection (a) if the appraisal district verifies the applicant's ownership under this subsection
What you need to do: Nothing. The proper granting of a homestead exemption is the responsibility of the appraisal district.
H.B. No. 362 relating to the regulation by a property owners' association of the installation of solar energy devices and certain roofing materials on property. Effective Date: June 17, 2011;
This bill amends Chapter 202, Property Code. (b) Except as otherwise provided by Subsection (d), a property owners' association may not include or enforce a provision in a dedicatory instrument that prohibits or restricts a property owner from installing a solar energy device. Section (d) provides a number of restrictions that the POA can enforce.
The bill also deals with regulation of certain roofing materials.
Sec. 202.011. REGULATION OF CERTAIN ROOFING MATERIALS.
A property owners' association may not include or enforce a provision in a dedicatory instrument that prohibits or restricts a property owner who is otherwise authorized to install shingles on the roof of the owner's property from installing shingles that:
(1) are designed primarily to:
(A) be wind and hail resistant;
(B) provide heating and cooling efficiencies greater than those provided by customary composite shingles; or
(C) provide solar generation capabilities; and
(2) when installed:
(A) resemble the shingles used or otherwise authorized for use on property in the subdivision;
(B) are more durable than and are of equal or superior quality to the shingles described by Paragraph (A); and
(C) match the aesthetics of the property surrounding the owner's property.
What you need to do: An exception taken to the restrictions affecting the property is generally sufficient to deal with these issues. If a resale certificate contains information that indicates that the home owner and the POA are at odds or liens have been filed for violating the restrictions, require a release of an claim or lien. Effective date is June 17, 2011.
H.B. No. 901 relating to spousal maintenance. Effective date is September 1, 2011
This bill deals with Sections 8.051 and 8.052, Family Code, about a court approving spousal maintenance in a divorce case.
Section 8.059 (b) provides that a court can impose a judicial lien to collect an such lien.
What you need to do: If presented with a divorce decree wherein spousal maintenance is provided, you should determine 1. if the period to collect such amounts has passed and 2. if not passed, it is a good practice to require proof that such payments are current and the former spouse claims no separate interest in the property to secure such payments.
HB 908: Deals with fraud on the community estate. Effective date is September 1, 2011
Sec. 7.009. FRAUD ON THE COMMUNITY; DIVISION AND DISPOSITION OF RECONSTITUTED ESTATE.
(a) In this section, "reconstituted estate" means the total value of the community estate that would exist if an actual or constructive fraud on the community had not occurred.
(b) If the trier of fact determines that a spouse has committed actual or constructive fraud on the community, the court shall:
(1) calculate the value by which the community estate was depleted as a result of the fraud on the community and calculate the amount of the reconstituted estate; and
(2) divide the value of the reconstituted estate between the parties in a manner the court deems just and right.
(c) In making a just and right division of the reconstituted estate under Section 7.001, the court may grant any legal or equitable relief necessary to accomplish a just and right division, including:
(1) awarding to the wronged spouse an appropriate share of the community estate remaining after the actual or constructive fraud on the community;
(2) awarding a money judgment in favor of the wronged spouse against the spouse who committed the actual or constructive fraud on the community; or
(3) awarding to the wronged spouse both a money judgment and an appropriate share of the community estate.
SECTION 2. The change in law made by this Act applies to a suit for dissolution of a marriage pending before a trial court on or filed on or after the effective date of this Act
SECTION 3. This Act takes effect September 1, 2011
What you should do: Look for a lis pendens filed in connection with case. If one is filed require a release. Whether or not a lis pendens is filed, you should obtain a release of an abstract of judgment filed. It is now a good examination practice to be sure to check the docket of any final judgment less than 5 years old in a divorce case to be certain that the case has not been reopened alleging fraud on the community estate. Also, be certain that if asked to insure a transaction where one of the parties to divorce is buying property prior to the divorce being final and non-appealable that you obtain a document signed by the other spouse that they are aware of the pending purchase and waive any claim that the purchase is a fraud on the community estate.
H.B. No. 627 relating to a fee collected by a district clerk for certain certified copies. Effective date is June 17, 2011.
Section 51.318 (b), Government Code, is amended to provide (7) or a certified copy of a record, judgment, order, pleading, or paper on file or of record in the district clerk's office, including certificate and seal, for each page or part of a page not to exceed $1
What you should know: This change in the law does not prohibit receiving an uncertified copy of a document in the district court’s file.
H.B. No. 1147 relating to notice by a governmental entity regarding certain geospatial data products. Effective date is September 1, 2011
Chapter 2051, Government Code, is amended by adding Subchapter D requiring that a notice be placed on the website of any governmental entity that purports to show the boundaries of real property that were not created by an on the ground survey.
Sec. 2051.102. NOTICE REQUIRED.
(a) A governmental entity shall include a notice as provided by this subchapter on each geospatial data product that:
(1) is created or hosted by the governmental entity;
(2) appears to represent property boundaries; and
(3) was not produced using information from an on-the-ground survey conducted by or under the supervision of a registered professional land surveyor or land surveyor authorized to perform surveys under laws in effect when the survey was conducted.
(b) The notice required under Subsection (a) must be in substantially the following form:
This product is for informational purposes and may not have been prepared for or be suitable for legal, engineering, or surveying purposes. It does not represent an on-the-ground survey and represents only the approximate relative location of property boundaries. There can be other pieces of information shown.
What you should do: Without underwriting approval, do not accept or use a legal description from a governmental website (like a Central Appraisal District). Generally, the only legal description must have been created by a
H.B. No. 1510 is the biennial bill relating to the regulation of manufactured housing. Effective date is September 1, 2011
As usual, many changes are made dealing the election of the MHU as real property and the bill requires action by the chief appraiser and the Department dealing with lien releases.
Sections 1201.2055(d), (e), and (g), Occupations Code, are amended as follows:
(e) A real property election for a manufactured home is not considered to be perfected until a certified copy of the statement of ownership and location has been filed and the department and the chief appraiser of the applicable appraisal district have been notified of the filing as provided by Subsection (d).
(g) After a real property election is perfected under Subsection (e):
(1) the home is considered to be real property for all purposes; and
(2) no additional issuance of a statement of ownership and location is required with respect to the manufactured home, unless:
(A) the home is moved from the location specified on the statement of ownership and location;
(B) the real property election is changed; or
(C) the use of the property is changed as described by Section 1201.216
SECTION 2. Section 1201.207(c), Occupations Code, is amended to read as follows:
(c) Except with respect to any change in use, servicing of a loan on a manufactured home, release of a lien on a manufactured home by an authorized lienholder, or change in ownership of a lien on a manufactured home, but subject to Section 1201.2075, if the department has issued a statement of ownership and location for a manufactured home, the department may issue a subsequent statement of ownership and location for the home only if all parties reflected in the department's records as having an interest in the manufactured home give their written consent or release their interest, either in writing or by operation of law, or the department has followed the procedures provided by Section 1201.206(k) to document ownership and lien status. Once the department issues a statement of ownership and location, the department shall not alter the record of the ownership or lien status, other than to change the record to accurately reflect the proper owner's or lienholder's identity or to release a lien if an authorized lienholder files with the department a request for that release, of a manufactured home for any activity occurring before the issuance of the statement of ownership and location without either the written permission of the owner of record for the manufactured home, their legal representative, or a court order. Other sections deal with tax liens.
What you should do: When you take on the responsibility for obtaining a Statement of Ownership and Location you must comply with all of the steps required by the department of housing and community affairs including the required notices to the chief appraiser.
H.B. No. 3096 relates to the cancellation of a subdivision plat by a commissioners court. Effective Date is June 17, 2011
Section 232.008(h), Local Government Code, is amended to read as follows:
(h) Regardless of the date land is subdivided or a plat is filed for a subdivision, the commissioners court may deny a cancellation under this section if the commissioners court determines the cancellation will prevent the proposed interconnection of infrastructure to pending or existing development as defined by Section 232.0085.
What you should do: Simply remember that even if a subdivision has been accepted by the Commissioner’s Court (property outside of a city limits or ETJ of the city) the subdivision can be canceled.
H.B. No. 3389 relating to a seller's disclosure of natural or liquid propane gas on residential real property. Effective date is September 1, 2011
Section 5.008(b), Property Code, dealing with the property disclosure notice is amended to require the seller to disclose if natural or liquid propane is used on the property.
What you should do: Although the seller’s disclosure form itself is not the responsibility of the title company, it is a good practice to remind your real estate agent clients of the 2011 form.
SB 18 is the comprehensive reform of eminent domain laws in
What you should do: Generally, you may continue to rely on a court order seizing private property for public use as long as the land owner(s) received personal notice of the lawsuit and the court order is final and non-appealable.
S.B. No. 201 relates to the calculation of ad valorem taxes on the residence homestead of a 100 percent or totally disabled veteran for the tax year in which the veteran qualifies or ceases to qualify for an exemption from taxation of the homestead. Effective date is January 1, 2012.
What you should do: You may rely on the calculation by the appraisal district of the amount of tax a person owes on their residential homestead. Just keep in mind that if the veteran becomes disabled during the year, the exemptions can be recalculated and so you should rely only on a current tax certificate issued in connection with your transaction.
SB 313 deals with ground water districts. Effective date is September 1, 2011
SECTION 4. Section 35.013, Water Code, is amended by amending Subsections (b), (c), (e), (f), (g), and (h) and adding Subsections (b-1) and (g-1) to read as follows:
(b) The commission shall submit a copy of the order to the board of the district to which it is recommending the priority groundwater management area be added. Not later than the 120th day after the date of receiving the copy, the board shall vote on the addition of the priority groundwater management area to the district and shall advise the commission of the outcome.
(b-1) If the district described by Subsection (b) has not approved an ad valorem tax on the date of the commission's order issued under Section 35.008 and the board of the district votes to accept the addition of the priority groundwater management area to the district, the board shall enter an order adding the territory in the district.
What you should do: Be aware that a ground water district can vote to add new land to an existing district and collect ad valorem taxes on the lands including in the district.
SB 328 deals with Hospital liens. Effective date is September 1, 2011
(from the bill analysis)
Provisions of the Property Code provide for a lien against an individual for an amount owed as a result of services provided by a hospital or by certain emergency services providers in connection with an injury resulting from an accident that is attributable to the negligence of another person. The law provides that the lien may be secured against a cause of action or claim by the injured individual relating to the accident. Some parties assert that, because the statute authorizing such a lien is in the Property Code, the lien may be perceived as encumbering real property owned by the injured individual.
S.B. 328 responds to this assertion by requiring a hospital or emergency services provider, before placing a lien against an injured individual's cause of action or claim, to notify the individual about the possibility of a lien being filed so the individual understands the effect of the lien and to include a statement that the lien does not encumber the injured individual's real property interests.
What you should do: This law simply clarifies our opinion that a hospital lien does not affect title to real property and need not be shown as an exception to title nor a release required.
SB 332 amends the Water Code by stating that the Legislature recognizes that a landowner owns the groundwater below the surface of the landowner’s land as real property. Effective date is September 1, 2011
From the bill analysis:
The groundwater ownership and rights would entitle the landowner, including lessees, heirs, or assigns, to drill for and produce the groundwater below the surface of real property without causing waste or malicious drainage of other property or negligently causing subsidence, but would not entitle a landowner to the right to capture a specific amount of groundwater below the surface of the land, and would not affect the existence of common law defenses or other defenses to liability under the rule of capture. The bill would delete the phrase "except as those rights may be limited or altered by rules promulgated by a district" in relation to the landowner’s rights.
The bill would state that nothing in the law could be construed as granting the authority to deprive or divest a landowner of the groundwater ownership and rights.
CSSB 332 would not:
prohibit a district from limiting or prohibiting the drilling of a well by a landowner for failure or inability to comply with minimum well spacing or tract size requirements adopted by a groundwater conservation district; affect the ability of a groundwater conservation district to regulate groundwater production; or require that a rule adopted by a district allocate to each landowner a proportionate share of available groundwater for production from the aquifer based on the number of acres owned by the landowner.
Exemptions. CSSB 332 would not affect the ability of the Edward Aquifer Authority, Harris-Galveston Coastal Subsidence District, or the Fort Bend Subsidence District to regulate groundwater.
What you should know: Stewart has insured permitted and adjudicated water rights for some time, this law now specifically recognizes our position that ground water is real property. Agents are not authorized to insure permitted or adjudicated water rights without the participation of Stewart’s Water Rights division.
SB 402 amends Subtitle A, Title 12, Local Government Code, by adding Chapter 373B.
From the bill analysis:
Community land trusts (CLTs) have been successfully used in other states to develop vacant and blighted land for permanent affordable housing. By 2008, there were over 200 CLTs in 41 states. Under this model, the CLT sells a home at a restricted sales price and leases the underlying land to the homeowner through a long-term renewable lease, providing an opportunity for homeownership for low-income families who would otherwise be unable to afford it.
S.B. 402 establishes the CLT model in statute and authorizes a city or county by ordinance or order to create or designate a CLT, including those operated by a housing finance corporation or either a city or county-certified community housing development organization. S.B. 402 defines the income qualifications for the single-family and multi-family units within the CLT.
S.B. 402 provides that the land and improvements within the CLT be valued similarly to other property used for affordable housing in Texas and authorizes an optional municipal or county tax exemption, approved by the governing body, for the property within the CLT.
S.B. 402 amends current law relating to community land trusts.
What you should do: You may rely on the CLT to acquire and develop land for permanent affordable housing. You are not required to make determinations as to whether each of the individual requirements of the law is met. The CLT may lease the property for periods up to 99 years.
SB 422 allows one governmental entity to contract with another or the appraisal district to collect special assessments. Effective date is June 17, 2011
Subchapter A, Chapter 372, Local Government Code, is amended by adding Section 372.0175 to read as follows:
Sec. 372.0175. CONTRACTS FOR COLLECTION OF ASSESSMENTS.
The governing body of a municipality or county may contract with the governing body of another taxing unit, as defined by Section 1.04, Tax Code, or the board of directors of an appraisal district to perform the duties of the municipality or county relating to collection of special assessments levied under this subchapter.
What you should do: Be sure to obtain a proper tax certificate showing all taxes are paid from every taxing jurisdiction as normal.
SB 428 requires a foreign judgment creditor to notify the judgment debtor of the filing of an Abstract of Judgment in Texas. Effective date is May 17, 2011
Section 35.004, Civil Practice and Remedies Code, is amended by amending Subsection (b) and adding Subsection (d) to read as follows:
(b) The judgment creditor or the judgment creditor's attorney shall:
(1) promptly mail notice of the filing of the foreign judgment to the judgment debtor at the address provided for the judgment debtor under Subsection (a); and
(2) file proof of mailing of the notice with the clerk of the court
(e) On receipt of proof of mailing under Subsection (b), the clerk of the court shall note the mailing in the docket.
SECTION 2. Section 35.005, Civil Practice and Remedies Code, is repealed.
SECTION 3. The change in law made by this Act applies only to the filing of a foreign judgment on or after the effective date of this Act. The filing of a foreign judgment before the effective date of this Act is governed by the law in effect immediately before that date, and that law is continued in effect for that purpose.
What you should do: Irrespective of the notice being sent, obtain a release of all Abstracts of Judgment that are not barred by the 10 year statute of limitations.
S.B. No. 481 relates to the removal of a guardian of an incapacitated person ordered by a court. Effective date is September 1, 2011
SECTION 1. Section 761, Texas Probate Code, is amended by adding Subsection (a-1) to read as follows:
(a-1) The court clerk shall issue notice of an order rendered by the court removing a guardian under Subsection (a)(1), (2), (3), (4), (6), (7), or (8) of this section. The notice must:
(1) state the names of the ward and the removed guardian;
(2) state the date the court signed the order of removal;
(3) contain the following statement printed in 12-point bold font:
If you have been removed from serving as guardian under Section 761(a)(6) or (7), Texas Probate Code, you have the right to contest the order of removal by filing an application with the court for a hearing under Section 762, Texas Probate Code, to determine whether you should be reinstated as guardian. The application must be filed not later than the 30th day after the date the court signed the order of removal;
What you should do: If your examination reveals that a guardian has been removed, do not proceed with a transaction by the successor guardian until you can check the court docket to determine that the prior guardian has not contested the order removing the guardian within 30 days after giving the notice set out above.
S.B. No. 577 relating to the use of facsimile signatures for certain documents involving certain municipalities. Effective date is June 17, 2011
Applies to a home rule city of more than 200,000 population and allows the city administration to affix a facsimile signature to a contract or a lien claim by the city.
What you should do: For a sales contract or conveyance, determine that the party affixing the facsimile signature has been properly authorized by resolution or ordinance to do so. For a lien claimed by the city, require release without regard to whether the signature is ink or facsimile.
SB 748 makes numerous changes to the laws affecting business entities. Effective date is September 1, 2011
From the bill analysis:
S.B. 748 makes provisions relating to contracts or transactions involving interested directors and officers of for-profit corporations applicable to a contract or transaction between a corporation and one or more affiliates or associates of one or more directors or officers of the corporation and to a contract or transaction between a corporation and an entity or other organization in which one or more affiliates or associates of one or more directors or officers of the corporation is a managerial official or has a financial interest. The bill establishes that an otherwise valid and enforceable contract or transaction is valid and enforceable, and is not void or voidable, notwithstanding the fact that the contract is between the corporation and certain individuals associated with both the corporation and the entity that is the object of the contract or transaction if one of several conditions is satisfied. The bill removes language that authorizes a director or officer of the corporation who is also associated with the object of the contract or transaction to participate in an action that approves the contract or transaction if a condition is satisfied. The bill authorizes a person who has the relationship or interest in both the corporation and the object of the contract or transaction, whether a director, officer, affiliate, associate, or other entity, to be present at or participate in and, if the person is a director or committee member, vote at a meeting of the board of directors or of a committee of the board that authorizes the contract or transaction or to sign, in the person's capacity as a director or committee member, a unanimous written consent of the directors or committee members to authorize the contract or transaction.
S.B. 748 specifies that if at least one of the conditions making a contract or transaction valid and enforceable is satisfied, neither the corporation nor any of the corporation's shareholders will have a cause of action against any of the persons involved in the contract or transaction for breach of duty with respect to the making, authorization, or performance of the contract or transaction because of the person's relationship or interest of an action taken by the person that the person is authorized to take. The bill makes similar changes relating to contracts and transactions involving interested directors, officers, members, governing persons, managers and their affiliates, associates, and other persons, as applicable, for contracts and transactions of nonprofit corporations, limited liability companies, and real estate investment trusts.
S.B. 748 establishes that a membership interest in a limited liability company may be community property under applicable law and specifies that a member's right to participate in the management and conduct of the business of the company is not community property. The bill establishes the following effects of death or divorce on membership interest in a limited liability company: on the divorce of a member, the member's spouse, to the extent of the spouse's membership interest, if any, is an assignee of the membership interest; on the death of a member, the member's surviving spouse, if any, and an heir, devisee, personal representative, or other successor of the member, to the extent of their respective membership interest, are assignees of the membership interest; and on the death of a member's spouse, an heir, devisee, personal representative, or other successor of the spouse, other than the member, to the extent of their respective membership interest, if any, is an assignee of the membership interest. The bill specifies that the provisions governing limited liability companies do not impair an agreement for the purchase or sale of a membership interest at any time, including on the death or divorce of an owner of the membership interest.
S.B. 748 establishes that a partner in a limited liability partnership is not personally liable to any person for any obligation of the partnership incurred while the partnership is a limited liability partnership by removing an exception that made such a partner personally liable for a debt or obligation of the partnership under certain conditions.
What you should do:
1. In the case of transactions between the entity and its members, require an opinion of counsel that the proper corporate resolutions have been passed and that the board and officers have been made aware of the insider dealings.
2. Review the law as issues arise.
3. As this bill covers many aspects of business entities, you should review the entire bill to see the possible effect on your title agency.
S.B. No. 762 relating to the transfer of an ad valorem tax lien. Effective date is September 1, 2011
What you should do: Although insuring a deed of trust securing the payment of ad valorem taxes by assignment to a private lender is fairly rare, if asked to do so , you should carefully review the provisions of Section 32.06, Tax Code and follow then. We suggest that you also contact your
S.B. No. 767 relates to the regulation of certain residential mortgage foreclosure consulting services; providing a criminal penalty. Effective date is September 1, 2011
What you should do: Essentially, this legislation does not impact the title industry. On occasion, you may be contacted by someone purporting to be a foreclosure consultant. In those cases, you should not discuss a file until you are provided with permission by the owner or a copy of the contract between the consultant and the homeowner.
SB 782 amends
From the Bill Analysis:
Article 9 (Secured Transaction), located in the Texas Business and Commerce Code, is the body of law that controls secured transactions. Secured transactions include security agreements for real and personal property and related agreements between creditors and debtors.
The revised version of Article 9 of the Texas Uniform Commercial Code (UCC) took effect in 2001. Since the time of its original drafting, a number of provisions within UCC have proven cumbersome or problematic. This bill revises UCC to address many of these outdated provisions. The revisions to Article 9, UCC, included in this bill have been approved and recommended for enactment by the National Conference of Commissioners on Uniform State Laws (NCCUSL).
The majority of the changes made by S.B. 782 are for clarification or updates necessary due to advances in technology or business practices.
What you should do: If your search and examination reveals a UCC filing, an exception should be made to it. If you are asked to insure against UCC filings on personal property, contact a
SB 889 relating to assignment of rents to holders of certain security interests in real property. Effective date is June 17, 2011
From the Bill Analysis:
A lien against collateral is perfected when a person's security interest in that collateral is established with respect to third party creditors. With most types of security interest, perfecting a lien is a standardized process that is clearly defined in statute, which provides lenders confidence that a loan is secured in the event of a default by a borrower. In a commercial lease transaction, a lender will obtain a security interest in both the property being purchased and the rents and other proceeds that the property may generate. Such an interest, known as a collateral assignment of rents, provides a lender only a security interest in those proceeds.
A Texas Supreme Court case in the early 1980s complicated this process by holding that a lender does not have a perfected security interest in a property's proceeds until the lender takes some proactive action to collect those proceeds directly from the property tenant following a default by the borrower. As a result of this holding, a lender's security interest may become subordinate to another party's security interest if that other party is able to perfect its lien before the lender perfects its security interest.
To resolve this issue, lenders have for decades required parties to a commercial real estate loan to execute an absolute assignment of rents, which states that a lender owns all proceeds from the subject property and will allow the property owner to use those rents until a default occurs. However, the use of absolute assignment of rents agreements has caused a separate problem for lenders. In some bankruptcy cases, it has been argued that rents collected and kept by the property owner should be credited against the owner's debt to the lender, even if the lender did not actually receive those funds, an argument based on the fact that the lender owns all proceeds paid on the property, regardless of whether any of those funds are actually applied against the debt.
What you should do: We would expect that the form of a
S.B. No. 1124 relating to licensing and regulation of certain persons involved in residential mortgage lending pursuant to the
(7) any owner of residential real estate who in any 12-consecutive-month period makes no more than five residential mortgage loans to purchasers of the property for all or part of the purchase price of the residential real estate against which the mortgage is secured;
What you should know: It is not the responsibility of the title company to enforce licensing requirements for owner finance transactions. A loan made by an unlicensed lender is not void.
S.B. No. 1196 relating to guardianships and alternatives to guardianship for persons who have physical disabilities or who are incapacitated. Effective date is September 1, 2011
What you should know: This is a 33 page bill than makes numerous administrative changes to guardianships. Generally, you should rely on a court order creating the guardianship and authorizing transactions by the guardian.
SB 1198 relating to probate matters. Effective date is September 1, 2011
What you should know: This is a 139 page bill touching many areas of probate law. We will be providing a separate bulletin on this bill at a later date.
SB 1368 deals with co-owners preservation of property. Effective date is September 1, 2011
From the Bill Analysis:
Concerned parties contend that, in the aftermath of a hurricane or other disaster, so-called informal homeowners, meaning homeowners whose ownership of real property is achieved outside of formal transactions and particularly those with co-tenant interests, may face difficulties in securing disaster assistance to repair their homes because such a homeowner can only sell or secure a loan on the homeowner's fractionalized co-tenant interest, a type of transaction typically not allowed in the open market.
S.B. 1368 seeks to address this situation by allowing a co-owner of certain residential property who has been residing in and maintaining the property for a specified period of time to act as a statutory agent or as an attorney-in-fact, with the limited authority to enter into a contract giving rise to a mechanic's or materialman's lien and to execute a deed of trust for the purpose of preserving or improving the residential property.
In addition, the bill seeks to establish that the occupying co-owner is the sole obligor of the debt incurred under the contract and secured by the deed of trust. These provisions are intended to give such homeowners the ability to secure resources, including federal and state disaster assistance, from lenders and governmental entities. Effective date June 17, 2011
Sec. 64.002. CONDITIONS FOR AUTHORITY TO ACT AS AGENT FOR CO-OWNER.
A co-owner of residential property may act in the name of and on behalf of another co-owner, whether known or unknown, as the co-owner's statutory agent and attorney-in-fact for the purposes described by Section 64.004 if:
(1) the co-owner has occupied the property for more than five years;
(2) the co-owner has a residence homestead exemption for the property under Section 11.13, Tax Code;
(3) for the five years preceding the date the documents required by Section 64.003 are filed, the occupying co-owner has paid all assessed ad valorem taxes without delinquency and without contribution from the other co-owner; and
(4) the occupying co-owner files the documents required by Section 64.003.
Sec. 64.003. REQUIRED DOCUMENTATION.
The occupying co-owner may establish the authority to act as an agent and attorney-in-fact for another co-owner by filing in the office of the county clerk of the county in which the real property is located:
(1) an affidavit of the occupying co-owner affirming the facts described by Sections 64.002(1)(3);
(2) the affidavits of two additional affiants personally familiar with the co-owner's occupancy of the real property corroborating the occupancy during the preceding five years; and
(3) a certificate of the tax assessor-collector for the county in which the real property is located affirming that the co-owner has paid all taxes assessed against the real property for the preceding five years without delinquency
What you should do: In the case of a co-owner attempting to create a loan when there is a co-owner that is not available, the borrower must comply with the requirements of this law. Make your commitment requirements accordingly. We do not believe that this bill is intended to apply between spouses who occupy the property. Require both spouses to sign any mechanic’s lien contract or deed of trust unless you obtain underwriter approval.
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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.
- Bulletins Replaced:
- Related Bulletins:
- TX2011008 PROBATE Amendments 2011
- Underwriting Manual:
- Exceptions Manual: