HBA-NLM H.B. 1221 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 1221 By: Brimer Financial Institutions 4/5/1999 Introduced BACKGROUND AND PURPOSE Currently, Section 41.002 (Interests in Land), Property Code, provides that the homestead of a family cannot consist of more than one acre of land if used for the purposes of an urban home. Many residents of Texas live in urban areas on tracts of land that exceed one acre, and are therefore constitutionally prevented from using the equity in their homes. Current law prohibits the use of collateral other than the homestead as security for a home equity loan. H.B. 1221 establishes that the maximum size of the homestead is 10 acres, rather than one acre, and specifies the criteria that define an urban homestead. In conjunction with H.J.R. 43, this bill effectively allows a person to claim up to 10 acres as an urban homestead exemption. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 41.002(a), Property Code, as follows: (a) Increases the existing maximum size of a homestead from only one acre of land to 10 acres of land, which may be in one or more contiguous lots, together with any improvements thereon. Deletes language that extends the existing provisions of this subsection to a place to exercise a calling or business in the same urban area. SECTION 2. Amends Section 41.002(c), Property Code, as follows: (c) Provides that a homestead is considered to be urban, rather than rural if, at the time the designation is made, the property is: (1) located within the limits of a municipality or its extraterritorial jurisdiction or a platted subdivision; and (2) served by police protection, paid or volunteer fire protection, and if at least three of the following services are provided by a municipality or under contract to a municipality: electric, natural gas, sewer, storm sewer, and water. Deletes existing text. Makes a nonsubstantive change. SECTION 3. Amends Section 41.005(b), Property Code, to make conforming changes. SECTION 4. Provides that Section 2 of this Act takes effect September 1, 1999. SECTION 5. (a) Provides that Sections 1, 3, and 5 of this Act take effect January 1, 2000, but only if the constitutional amendment proposed by the 76th Legislature, Regular Session, 1999, relating to increasing the maximum size of an urban homestead to 10 acres, prescribing permissible uses of urban homesteads, and preventing the overburdening of a homestead, is approved by the voters. If the proposed constitutional amendment is not approved by the voters, Sections 1, 3, and 5 of this Act have no effect. (b) Makes application of Sections 1 and 3 of this Act prospective as of January 1, 2000. (c) Provides that the change in law made by Sections 1 and 3 of this Act does not affect the validity of a voluntary or involuntary lien on real property that was acquired before January 1, 2000. (d) Provides that the change in law made by Sections 1 and 3 of this Act does not affect the exemption from seizure of the sale proceeds of a homestead under Section 41.001(c), Property Code, on real property that was sold before January 1, 2000. SECTION 6. Emergency clause.