HBA-ATS H.B. 1453 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 1453 By: Smith Insurance 3/3/1999 Introduced BACKGROUND AND PURPOSE Under the Tax Code, a homeowner is entitled to claim a homestead exemption from school ad valorem taxes. In addition, any person age 65 years or older is entitled to an additional exemption from school taxes on a residential homestead. To receive the exemption, a person claiming the exemption must apply for it by filing an exemption application form with the chief appraiser for each appraisal district in which the property subject to the claimed exemption is located. After considering the application, the chief appraiser determines whether to approve or disapprove the application. Even if the chief appraiser approves the application, the law requires an investigation if any reason materializes that indicates that an exemption previously allowed should be canceled. If the chief appraiser discovers that the property escaped taxes, the exemption is canceled and the school district is entitled to impose taxes, penalties, and interest on the property or value that escaped taxation. Many times, new homeowners and title companies are unaware of any improprieties concerning erroneous claims for homestead exemptions. Nonetheless, if a person purchases a residential homestead encumbered with delinquent taxes, penalties, and interest due to an invalid exemption, that person, rather than the former owner, must pay since the delinquent taxes, penalties, and interest are levied against the property, rather than the owner. H.B. 1453 requires a title insurance policy to indemnify a purchaser of a home on which delinquent ad valorem taxes and any tax liens exist, including penalties and interest, if the purchaser did not know about the delinquent tax or tax lien at the time of the purchase. In addition, this bill requires the chief appraiser to send written notice to the county clerk of the county in which real property is located of each application for a residential homestead exemption that the chief appraiser has approved and of each exemption that the chief appraiser has canceled. 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 Article 9.07A, Insurance Code, by adding Subsection (f), to require a title insurance policy to indemnify an owner of residential real property on which delinquent ad valorem taxes and any tax liens exist if the owner paid consideration and had no knowledge of the encumbrances upon the property at the time of the purchase. Provides that this subsection applies only to real property that is owned by a natural person and occupied by the owner as the owner's principal residence. SECTION 2. Amends Subchapter C, Chapter 11, Tax Code, by adding Section 11.48, as follows: Sec. 11.48. NOTICE TO COUNTY CLERK; REAL PROPERTY RECORDS. (a) Requires the chief appraiser to send written notice (notice) to the county clerk of the county in which real property is located of each application for a residential homestead exemption (exemption) that is approved by the chief appraiser and of each exemption that is canceled by the chief appraiser. (b) Provides that notice must be sent within five days after the chief appraiser approves the application or cancels the exemption, and that the notice must include a legal description of the property. (c) Requires the county clerk to file notice in the real property records of the county. SECTION 3. Amends Section 118.013(c), Local Government Code, to include documents filed in accordance with Section 11.48, Tax Code, among the records to which a fee for filing and recording real property records in the office of the county clerk does not apply. Redesignates existing Subdivisions (4)-(7) to Subdivisions (5)-(8). SECTION 4. Effective date: September 1, 1999. SECTION 5. Makes application of Subsection (f), Article 9.07A, Insurance Code, prospective for an owner policy of title insurance that is delivered or issued for delivery on or after January 1, 2000. SECTION 6. Makes application of Section 11.48, Tax Code, prospective. SECTION 7. Emergency clause.