HBA-JRA C.S.H.B. 3549 76(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 3549 By: Heflin Ways & Means 4/30/1999 Committee Report (Substituted) BACKGROUND AND PURPOSE The Tax Code contains provisions governing redemptions in delinquent tax suits, procedures to be followed in collecting delinquent taxes, tax sales, and proceeds from tax sales. Over the past few years, case law has determined that some of these procedures outlined in the Tax Code are not explicit enough in directing parties in property tax cases. Some current practices in this area are more accurately governed by case law, rather than statutory law. The purpose of C.S.H.B. 3549 is to clarify directive actions in the administration of property taxes, codify current practice in case law into statutory law, and make perfecting technical amendments to the Tax Code, and repeal duplicative sections enacted by the 75th Texas Legislature. 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 25.06, Tax Code, to require that property subject to an installment contract of sale be listed in the name of the seller if the installment contract is not filed of record in the real property records of the county, except as otherwise directed in writing under Section 1.111(f) (Representation of Property Owner). SECTION 2. Amends Chapter 31, Tax Code, by adding Section 31.081, as follows: Sec. 31.081. PROPERTY TAX WITHHOLDING ON PURCHASE OF BUSINESS OR INVENTORY. (a) Provides that this section applies only to a person who purchases a business, an interest in a business, or the inventory of a business from a person who is liable under this title (Property Tax Code) for the payment of taxes imposed on personal property used in the operation of that business. (b) Requires the purchaser to withhold from the purchase price an amount sufficient to pay all of the taxes imposed on the personal property of the business, plus any penalties, and interest incurred, until the seller provides the purchaser a receipt from the tax collector showing that the taxes, penalties, and interest have been paid or a tax certificate issued under Section 31.08 (Tax Certificate) stating that no taxes, penalties, or interest is due. (c) Provides that a purchaser who fails to withhold the amount required by this section is liable for that amount to the extent of the value of the purchase price, including the value of a promissory note given in consideration of the sale to the extent of the note's market value on the effective date of the purchase, regardless or whether the purchaser has been required to make any payments on that note. (d) Authorizes the purchaser to request each appropriate collector to issue a tax certificate under Section 31.08 or a statement that no tax, penalties, or interest is due. Requires the tax collector to issue the certificate or statement within 10 days after receiving the request. Provides that the purchaser is released from the obligation if a collector fails to timely mail the certificate or statement. (e) Provides that any action to enforce the obligation of a purchaser under this section must be brought within four years of the effective date of the purchase and is subject to a limitation plea by the purchaser as to any taxes more than four years delinquent as of the date of issuance of the tax collector's statement under Subsection (d). (f) Provides that this section does not release the seller from any personal liability imposed on the personal property of the business or for penalties or interest on those taxes. (g) Provides that, for purposes of this section, a person is considered to have purchased a business if the person purchases the name of the business or the goodwill associated with the business and a person is considered to have purchased the inventory of a business if the person purchases inventory of a business, the value of which is at least 50 percent of the value of the total inventory of the business on the date of the purchase. SECTION 3. Amends Section 32.01, Tax Code, to add a new Subsection (c) and redesignate existing Subsection (c) to Subsection (d), as follows: (c) Provides that, if an owner's real property is described with certainty by metes and bounds in one or more instruments of conveyance and part of that property is the owner's residence homestead taxed separately and apart from the remainder of the property, each of the liens under this section (Tax Lien) securing the taxes imposed on that homestead and on the remainder of the property owned extends in solido to all the real property described in the instrument or instruments of conveyance. (d) Redesignated from existing Subsection (c). SECTION 4. Amends Section 32.015(b), Tax Code, to provide that a lien for which a notice is not timely filed is unenforceable against a bona fide purchaser for value who is without notice or actual knowledge of the lien or the delinquent taxes for which the lien exists or the holder of a lien recorded on the manufactured home document of title, rather than extinguished and unenforceable without exception. SECTION 5. Amends Section 32.05(c), Tax Code, to provide that a tax lien is not inferior to a restrictive covenant in favor of a property owner's association or homeowner's association recorded before January 1 of the year the tax lien arose. Makes conforming changes. SECTION 6. Amends Section 32.07(e), Tax Code, to makes conforming and nonsubstantive changes. SECTION 7. Amends Section 32.07, Tax Code, by adding Subsection (h), as follows: (h) Provides that, for purposes of Subsection (a), a person is considered to be an owner of property subject to an installment contract of sale if the person is the seller of the property or a purchaser of the property who has the duty under the installment contract to pay taxes on the property. SECTION 8. Amends Section 33.011(a), Tax Code, to authorize the governing body of a taxing unit to delegate to the collector for the taxing unit the authority to waive penalties and interest under this subsection and impose limitations or restrictions on the exercise of that authority. SECTION 9. Amends Section 33.04, Tax Code, as follows: (a) Makes nonsubstantive changes. (b) Requires the collector for each taxing unit to mail a written notice of delinquency in each year divisible by five, to each person whose name and mailing address are listed on the most recent certified appraisal roll if the taxes on the property have been delinquent more than one year and to each person who owes a tax that has been delinquent more than one year on personal property or on an interest in a mineral estate which is no longer listed on the current appraisal roll under that person's name, but whose name and mailing address are known to the collector. (c) Makes conforming changes. (d) Provides that, in a suit brought against that person for the enforced collection of penalties and interest on taxes delinquent more than five years or a multiple of five years, it is an affirmative defense available to the person entitled to the notice that the collector did not deliver the required notice. (e) Provides that interest and penalty on a tax are reinstated and requires the tax collector to collect it if, subsequent to any failure to deliver the required notice, the tax collector delivers the notice in any year divisible by five, notwithstanding Subsection (d). Provides that the resumption of interest and penalty on the tax is prospective and begins to accrue at the rates provided by Section 33.01 on the first day of the first month following that begins at least 21 days after the date the collector delivers the subsequent notice. Deletes existing Subsection (c) which provides that penalties and interest on a tax delinquent more than five years or a multiple of five years are canceled and prohibits their collection if the collector has not delivered the notice required by Subsection (b) of this section in each year that is divisible by five following the date on which the tax first became delinquent for one year. (f) Provides that a notice under this section is presumed delivered when it is deposited in regular first class mail, with postage prepaid, and addressed to the appropriate person under Subsection (b). Prohibits the presumption of delivery under this section from being rebutted with evidence of failure to receive the notice, notwithstanding the provisions of Section 1.07 (Delivery of Notice) of this code. SECTION 10. Amends Section 33.07, Tax Code, as follows: Sec. 33.07. New title: ADDITIONAL PENALTY FOR COLLECTION COSTS FOR TAXES DUE BEFORE JUNE 1. Authorizes a taxing unit or appraisal district to provide that taxes that become delinquent on or after February 1 of a year but not later than May 1 of that year and that remain delinquent on July of the year in which they become delinquent incur an additional penalty to defray cost of collection if the unit that collects taxes has contracted with an attorney. SECTION 11. Amends Subchapter A, Chapter 33, Tax Code, by adding Section 33.08, as follows: Sec. 33.08. ADDITIONAL PENALTY FOR COLLECTION COSTS FOR TAXES DUE ON OR AFTER JUNE 1. (a) Makes this section applicable to a taxing unit or appraisal district only if the governing body of the taxing unit or appraisal district has imposed the additional penalty for collection costs under Section 33.07 and the taxing unit or appraisal district has entered into a contract with an attorney under Section 6.30 for the collection of the unit's delinquent taxes. (b) Authorizes the governing body of the taxing unit or appraisal district to provide that taxes that become delinquent on or after June 1 under Section 31.03, 31.031, 31.032, or 31.04 incur an additional penalty to defray costs of collection. Prohibits the amount of the penalty from exceeding 15 percent of the amount of taxes, penalty, and interest due. (c) Requires the collector for a taxing unit or appraisal district that has provided for the additional penalty under this section to send a notice of the delinquency and the penalty to the property owner after the taxes become delinquent. (d) Provides that a tax lien attaches to the property on which the tax is imposed to secure payment of the additional penalty. (e) Prohibits a taxing unit or appraisal district that imposes the additional penalty under this section from recovering attorney's fees in a suit to collect delinquent taxes subject to the penalty. SECTION 12. Amends Section 33.43(a), Tax Code, to make a conforming change. SECTION 13. Amends Section 33.47(a), Tax Code, to provide that, in a suit to collect a delinquent tax, a taxing unit's current tax roll and delinquent tax roll or certified copies of the entries showing the property and the penalties and interest imposes constitute prima facie evidence that each person charged with a duty relating to the imposition of the penalties and interest has complied with all requirements of law and the amount of penalties and interest due on that tax as listed are the correct amounts. SECTION 14. Amends Section 33.50, Tax Code, by adding Subsection (c), as follows: (c) Requires an order of sale to prohibit the sale of the property to a person owning an interest in the property or to a person who is a party to the suit other than a taxing unit unless the person is the highest bidder at the tax sale and the amount bid by that person equals or exceeds the aggregate amount of the judgments against the property, including all costs of suit and sale. SECTION 15. Amends Section 33.52, Tax Code, as amended by Chapters 906, 981, and 111, Acts of the 75th Legislature, Regular Session, 1997, as follows: Sec. 33.52. New title: TAXES INCLUDED IN JUDGMENT. (a) Authorizes only taxes that are delinquent on the date of a judgment to be included in the amount recoverable under the judgment by the taxing units that are parties to the suit. (b) Authorizes a judgment, in lieu of stating as a liquidated amount the aggregate total of taxes, penalties, and interest due, to set out the base tax due each taxing unit for each year and provide that penalties and interest accrue on the unpaid taxes as provided by Subchapter A (General Provisions) of this chapter (Delinquency). (c) Provides that, for purposes of calculating penalties and interest due under the judgment, it is presumed that the delinquency date is February 1 of the year following the year in which the tax was imposed unless the judgment provides otherwise. (d) Provides that a taxing unit's claim for taxes that become delinquent after the date of the judgment is not affected by the entry of a judgment or any sale conducted under that judgment and authorizes the taxing unit to collect them by any remedy provided by this title. SECTION 16. Amends Section 33.53, Tax Code, as follows: Sec. 33.53. ORDER OF SALE; PAYMENT BEFORE SALE. (a) Makes no change. (b) Requires the district clerk, upon application by any taxing unit that is a party to the judgment in a suit for foreclosure of a tax lien, to prepare an order to an officer authorized to conduct execution sales, ordering the sale of the property. Authorizes the taxing unit to specify particular parcels of the property to be sold if multiple parcels are included in the judgment. Authorizes a taxing unit to request more than one order of sale. (c) Requires an order of sale to be returned as unexecuted if not executed within 180 days after issuance. Authorizes the order of sale to be accompanied by a copy of the judgment and a bill of costs attached to the order or incorporate the terms of the judgment or bill of costs by reference. (d) Provides that a judgment or a bill of costs attached to the order of sales is not required to be certified. (e) Created from existing text. SECTION 17. Amends Section 34.01, Tax Code, as follows: Sec. 34.01. SALE OF PROPERTY. (a) Requires property seized or ordered sold pursuant to foreclosure of a tax lien to be sold by the officer charged with the sale, unless otherwise directed by the taxing unit that requested the order, its agent or attorney. Requires the sale to be conducted in the manner similar property is sold under execution except as otherwise provided by this subtitle, rather than subchapter. (b) Requires the officer charged with the sale to endorse on the order of sale the date and exact time of receipt, which constitutes a levy on the property. Requires the officer to calculate the total amount due under the judgment, including the taxes, penalties, and interest due, any other amounts awarded by the judgment, court costs, and the costs of the sale, including the costs of advertising under Subsection (d). Authorizes the tax assessorcollector of each taxing unit that is a party to the judgement to provide the officer with a certified tax statement showing the amount due as of the date of the proposed sale. Requires the officer to rely on the amounts so certified and exempts the officer from responsibility or liability for the accuracy of that portion of the calculation. (c) Requires the officer charged with the sale to give written notice of the sale to all persons who were defendants to the judgment, or their attorney. (d) Sets forth the requirements for the notice. (e) Provides that the officer's failure to send the written notice of the sale or a defendant's failure to receive the notice is insufficient by itself to invalidate the sale or the title conveyed by the sale. (f) Authorizes a notice to include one or more properties foreclosed by a single judgment or one or more properties foreclosed by multiple judgments in more than one cause of action. (g) Sets forth the required contents of the notice. (h) Provides that a notice is not required to include field notes describing the property. Sets forth the information that constitutes a sufficient description of the property. (i) Sets forth the rate to be charged for publication. (j) Sets forth alternative forms of publication if no newspaper is published in the county of the sale. (k) Prohibits an owner, when requesting that property subject to the sale be divided and that only as many portions as necessary be sold, from specifying more than four portions or a portion that divides a buildings or other contiguous improvement. Provides that such request must be delivered to the officer not less than seven days before the sale. Redesignated from existing Subsection (b). (l) Authorizes the taxing unit that requested the order of sale to terminate the sale if a sufficient bid is not received to pay the amount calculated under Subsection (b) or the adjudged value, whichever is less. Requires the officer making the sale, if the taxing unit does not terminate the sale, to bid the property off to the taxing unit that requested the order of sale, unless otherwise agreed by all of the taxing units that are parties to the judgment, for the aggregate amount of the judgment against the property or for the market value of the property as specified in the judgment, whichever is less. Previously, if a sufficient bid was not received, the officer making the sale was required to bid the property off to a taxing unit that is a party to the judgment for the aggregate amount of the judgment against the property or for the market value of the property as specified in the judgment, whichever is less. Provides that the duty of the officer to bid off the property to a taxing unit under this subsection is self-executing and the actual attendance of a taxing unit representative at the sale is not a prerequisite to that duty. Redesignated from existing Subsection (c). (m) Makes nonsubstantive changes. (n) Authorizes a taxing unit that established a tax lien in the suit to continue to enforce collection of any amount due from the owner for which a former owner of the property is liable to the taxing unit, including any post-judgment taxes, penalties, and interest, in any other manner provided by law, notwithstanding that the property has been bid off to a taxing unit under this section. (o) Authorizes the taxing unit that requested the order of sale to elect to prepare a deed for execution by the officer. Requires the officer to execute the deed and either file the deed for recording with the county clerk or deliver the executed deed for to the taxing unit that requested the order of sale, which is required to file the deed for recording with the county clerk. Requires the county clerk to file and record all such deeds without imposing any recording or other fees and return the deed to the grantee. (p) Provides that the deed vests good and perfect title in the purchaser or the purchaser's assigns to the defendant's interest in the property subject to the foreclosure, including the defendant's right to the use and possession of the property, subject to the terms of a recorded restrictive covenant running with the land that was recorded before January 1 of the year in which the tax lien on the property arose and a recorded lien that arose under than restrictive covenant that was not extinguished in the judgment foreclosing the tax lien. (q) Redesignated from existing Subsection (e). Makes conforming changes. (r) Redesignated from existing Subsection (f). Makes conforming changes. (s) Provides that a sale of property under this section to a purchaser other than a taxing unit extinguishes each lien securing payment of the taxes, penalties, and interest against that property and included in the judgment and does not affect the personal liability of any person for those taxes, penalties, and interest included in the judgment that are not satisfied from the proceeds of the sale. (t) Requires the a sale of real property under this section take place at the county courthouse in the county in which the land is located. Requires the sale to occur in the same area of the courthouse as designated by the commissioners court of the county for the sale of real property pursuant to Section 51.002 (Sale of Real Property Under Contract Lien), Property Code. (u) Provides that, to the extent of a conflict between this section and a provision of the Texas Rules of Civil Procedure that relates to an execution, this section controls. SECTION 18. Amends Section 34.015(a), Tax Code, to authorize the governing body of a municipality to provide for the manner in which land acquired by seizure. SECTION 19. Amends Sections 34.02(a), (b), and (c), Tax Code, as follows: Sec. 34.02. DISTRIBUTION OF PROCEEDS. Requires the proceeds of a tax sale under Section 33.94 or Section 34.01 to be applied first, to all costs of advertising the sale and all original court costs due to the clerk of the court; second, to all fees and commissions due to the officer conducting the sale; third, to taxes, penalties, and interest due pursuant to the judgment; and fourth, to any other amount awarded to any taxing unit. Makes conforming changes. SECTION 20. Amends Section 34.04, Tax Code, to authorize a person, including a taxing unit, to file a petition setting forth a claim to the excess proceeds under the same cause number as the action ordering seizure or foreclosing the tax lien. Provides that the petition must filed before the second anniversary, rather than within seven years from, the date of the sale of the property. Requires a copy of the petition to be served pursuant to Rule 21a, Texas Rules of Civil Procedure, rather than on the county or district attorney. Sets forth the priorities of the court in ordering the payment of proceeds. SECTION 21. Reenacts Section 34.05(a), Tax Code, as amended by Chapters 906 and 1111, Acts 1997, 75th Legislature. SECTION 22. Amends Sections 34.05(c) and (d), Tax Code, to authorize the taxing unit purchasing the property by resolution of its governing body to request the constable to sell the property at a public sale. Requires the officer making the sale, upon conclusion of the sale, to execute the deed and file it for recording with the county clerk accompanied by instructions to the clerk to return the deed to the purchaser following its recordation. Authorizes the taxing unit that requested the sale to elect to prepare a deed for execution by the officer. Requires the county clerk to file and record all such deeds without imposing any recording or other fees. Makes nonsubstantive changes. SECTION 23. Amends Section 34.05(h), Tax Code, as amended by Acts 1997, 75th Legislature, Chapter 712, Section 4, by redesignating it to Subsection (g) and making nonsubstantive changes. SECTION 24. Amends Section 34.06, Tax Code, by amending Subsections (b) and (c) and adding Subsections (d), (e), and (f), as follows: (b) Deletes existing text requiring the purchasing taxing unit to pay all cost and expenses of court, sale, and resale, and, after deducting an amount equal to the amount the taxing unit has reasonable spent for the maintenance and preservation of the property. Requires the proceeds of a resale to be distributed as required by Subsection (c)-(e). (c) Requires the purchasing taxing unit to first retain an amount to recover its reasonable costs and expenses. (d) Requires the unit to then pay, to the officer conducting the sale and the clerk of the court, all costs in connection with the suit and the sale (e) Requires the balance to be paid to the participating taxing units in shares equal to the proportion each taxing unit's taxes, penalties, and interest bear to the total amount of taxes, penalties, and interest adjudged due all participants in the sale. (f) Makes conforming changes. SECTION 25. Amends Sections 34.07(a), (b), (c), and (d), Tax Code, as follows: Sec. 34.07. SUBROGATION OF PURCHASER AT VOID SALE. (a) Provides that a purchaser at a tax resale is subrogated to the rights of the taxing unit in whose behalf the property was resold to the same extent a purchase at a void or defective sale conducted in behalf of a judgment creditor is subrogated to the rights of the judgment creditor. (b) Provides that a purchaser at a tax resale is subrogated to the tax lien of the taxing unit in whose behalf the property was resold to the same extent a purchase at a void or defective mortgage or other lien foreclosure sale is subrogated to the lien of the lienholder, and the purchaser is entitled to a reforeclosure of the lien to which the purchaser is subrograted. (c) Provides that, if the purchaser at a tax resale paid less than the total amount of the judgment against the property, the purchaser is subrograted to the tax lien only in the amount actually paid at the resale. (d) Requires the court, if the purchaser prevails in any such suit, to expressly provide in its final judgment that the tax sale is vacated and set aside and all liens are restored and reinstated on the property effective as of the date on which the liens originally attached. SECTION 26. Reenacts and amends Sections 34.21, Tax Code, as amended by Chapters 906, 914, and 1111, Acts of the 75th Legislature, 1997, as follows: Sec. 34.21. RIGHT OF REDEMPTION. (a) Makes conforming and nonsubstantive changes. (b) Makes conforming and nonsubstantive changes. (c) Makes conforming and nonsubstantive changes. (d) Requires the owner to pay to the taxing unit to which the property was bid off an amount equal to the difference between the amount paid under Subsection (c) and the amount of the judgment if the amount paid by the owner is less than the amount of the judgment under which the property was sold. Requires the taxing unit to issue a receipt for a payment received under this subsection and to distribute the amount received to each taxing unit that participated in the judgment and sale in an amount proportional to the unit's share of the total amount of the aggregate judgments of the participating taxing units. Requires the owner of the property to deliver the receipt received from the taxing unit to the person from whom the property is redeemed. (e) Makes conforming and nonsubstantive changes. (f) Redesignated from existing Subsection (e). (g) Redefines "land designated for agricultural use." Redesignated from existing Subsection (e). (h) Redesignated from existing Subsection (f). (i) Authorizes the owner of property who is entitled to redeem the property under this section to request that the purchaser of the property, or the taxing unit to which the property was bid off, provide that owner a written itemization of all amounts spent by the purchaser or taxing unit in costs on the property. Sets forth the requirements for the itemization. Deletes existing Subsection (g), which defines "residence homestead." Deletes existing Subsection (h), which defines "agricultural use." Deletes existing Subsection (i), which defines "costs." SECTION 27. Amends Subsection 42.031(b), Tax Code, to make a nonsubstantive change. SECTION 28. Amends Section 49.231, Water Code, by amending Subsections (j)-(l) and adding Subsections (o) and (p), as follows: (j) Authorizes the governing body of a district (board) to impose a penalty on a standby fee not paid in a timely manner. Makes conforming changes. (k) Makes conforming changes. (l) Makes conforming changes. (o) Provides that the penalty is six percent of the amount of the standby fee for the first calendar month it is delinquent plus one percent for each of the following four months or portion of any of such months the fee remains unpaid. Provides that a fee remaining unpaid on the first day of the sixth month following the month in which it was due incurs a total maximum penalty of twelve percent of the amount of the fee. (p) Provides that this subsection applies only to the board of a district that has entered into a contract with an attorney for the collection of unpaid standby fees. Authorizes the board to impose an additional penalty for a standby fee not remitted in a timely manner. Sets forth the amount and due date of the additional penalty. Prohibits a district from recovering both the additional penalty and the attorney fees provided by Subsection (l) of this section. SECTION 29. Amends Chapter I, Probate Code, by adding Section 5C, as follows: Sec. 5C. ACTIONS TO COLLECT DELINQUENT PROPERTY TAXES. (a) Provides that this section applies only to a decedent's estate that is being administered in a pending probate proceeding and owns or claims an interest in property against which a taxing unit has imposed ad valorem taxes that are delinquent. (b) Sets forth the court with jurisdiction for a proceeding pending in a foreign jurisdiction or in a county other than the county in which the taxes were imposed. (c) Sets forth the court with jurisdiction for a proceedings pending in the county in which the taxes were imposed. (d) Provides that the taxing unit must bring a suit under Section 33.41, Tax Code, in a court of competent jurisdiction for the county in which the taxes were imposed to foreclose the lien if the probate proceeding have been pending in that county for more than four years and the taxing unit did not file a claim against the estate or property that is part of the estate or the probate court did not authorize payment of the taxes. (e) Requires the taxing unit to make the personal representative of the decedent's estate a party to the suit and prohibits the taxing unit from seeking to enforce personal liability for the taxes against the estate of the decedent. SECTION 30. Amends Section 317(c), Probate Code, to prohibit the foregoing provisions relative to the presentment of claims from being so construed as to apply to any claim for delinquent ad valorem taxes against a decedent's estate being administered in probate in a county other than the county in which the tax was imposed or any claim for delinquent ad valorem taxes against a decedent's estate being administered in the same county in which the tax was imposed if the probate proceeding has been pending for a period of more than four years. SECTION 31. Amends Section 801, Probate Code, to provide that the prohibition against a judgment being rendered in favor of a claimant on any claim for money that has not been legally presented to the guardian of the estate of the ward and rejected by the guardian or by the court does not apply to a claim for delinquent ad valorem taxes against a ward's estate being administered in probate in a county other than the county in which the tax was imposed. SECTION 32. Amends Article 1396-2.07, V.T.C.S. (Texas Non-Profit Corporation Act), by adding Section D, as follows: D. Sets forth the procedures for obtaining service of process on a corporation that loses its privileges by forfeiture or by involuntary dissolution. SECTION 33. Amends Article 2.11, V.T.C.S. (Texas Business Corporation Act), by adding Section D, as follows: D. Sets forth the procedures for obtaining service of process on a corporation that loses its privileges by forfeiture or by involuntary dissolution. SECTION 34. Amends Article 8.10, Texas Business Corporation Act, by adding Section E, as follows: E. Sets forth the procedures for obtaining service of process on a corporation that loses its privileges by forfeiture or by involuntary dissolution. SECTION 35. Repealer: Section 33.51 (Writ of Possession), Tax Code, as amended by Chapter 914, Acts of the 75th Legislature, Regular Session, 1997 and Section 34.05(g), Tax Code, as amended by Chapters 712 and 906, Acts of the 75th Legislature, Regular Session, 1997. SECTION 36. (a) Effective date: September 1, 1999, except as otherwise provided by Subsection (b) of this section. (b) Provides that Sections 1-4, 6, 7, 9, and 28 of this Act take effect January 1, 1999. SECTION 37. Makes application of Section 4 of this Act prospective. SECTION 38. Provides that the change in law made by Section 9 of this Act applies to the notice required to be given by Section 33.04(b), Tax Code, in and after 2000. Provides that penalties and interest on a delinquent tax are not canceled for failure to deliver a notice required by Section 33.04(b), as it existed before the effective date of this Act, if the notice is not required by Section 33.04(b), as amended by this Act. SECTION 39. Provides that the change in law made by Sections 14 and 15 of this Act apply to all tax suits, regardless of when commenced, in which judgment is signed on or after September 1, 1999. SECTION 40. Makes application of Sections 16, 17, and 19 of this Act prospective. Provides that the date on which a tax sale was conducted is deemed to be the first Tuesday of the month in which the public auction occurred. SECTION 41. Provides that the change in law made by Section 20 of this Act applies to the disposition of excess proceeds of a property tax foreclosure or summary sale paid into court regardless of the date on which the sale occurred or the date on which the proceeds were paid into the court. Requires the clerk to distribute any proceeds that have been retained for longer than the period provided by Section 34.03(a), Tax Code, as amended by this Act, on the effective date of this Act, as soon as practicable after the effective date of this Act. SECTION 42. Provides that the change in law made by Sections 22 and 24 of this Act applies to any resale conducted on or after September 1, 1999, and based on a judgment signed before, on, or after September 1, 1999. Provides that the date on which a resale was conducted is deemed to be the date on which the grantor's acknowledgment was taken or, if multiple grantors, the latest date of acknowledgment as between the various grantors. SECTION 43. Provides that the change in law made by Section 26 of this Act applies to all tax resales based upon original tax sales conducted before, on, or after September 1, 1999. SECTION 44. Makes application of Sections 26 of this Act prospective. Provides that the date on which a tax sale was conducted is deemed as the first Tuesday of the month in which the public auction occurred. SECTION 45. Provides that the change in law made by Sections 29, 30, and 31 of this Act apply to the estates of all decedents, regardless of the date of death, and apply to the estates of all wards, regardless of the date the application for appointment of a guardian was filed, and to all causes of action pending on its effective date as well as future actions. SECTION 46. Provides that the change in law made by Sections 32, 33, and 34 apply to all actions pending on September 1, 1999, and to all actions instituted thereafter. COMPARISON OF ORIGINAL TO SUBSTITUTE The substitute modifies the original throughout to conform to Legislative Council format. The substitute redesignates SECTIONS 6, 8, 9, 11, 12, 13, 14, 15, 18, 22, 23, 24, 25, 27, 28, 29, 31, 32, 35, 36, 43, 45, 46, 47, 48, 49, 50, 51, 55, 56, 57, 58, 59, 60, 61, 62, 63, and 64 of the original to SECTIONS 2, 3, 4, 6, 8, 9, 13, 14, 15, 16, 17, 18, 19, 20, 21, 23, 24, 25, 26, 27, 29, 30, 31, 32, 33, 34, 28, 37, 38, 39, 40, 41, 42, 43, 44, 45, and 46. The substitute modifies the original by deleting SECTIONS 2, 3, 4, and 5 of the original, which would have amended Sections 31.03, 31.031, 31.032, and 31.04, Tax Code, and moving the proposed provisions to SECTION 11 (Section 33.08, Tax Code). The substitute modifies the original in SECTION 2 (proposed Section 31.081, Tax Code) by changing the section title to "Property Tax Withholding on Purchase of Business or Inventory" from "Property Tax Collection on Termination or Sale of Business" and deleting the requirement that a person who quits the business withhold an amount sufficient to pay all of the personal property taxes, penalties and interest due. The substitute deletes SECTION 7 of the original which would have amended Section 31.12(a), Tax Code, to extend from 60 days to 90 days the period within which a taxing entity must pay tax refunds before the refund accrues interest. The substitute deletes SECTION 10 of the original which would have amended Section 32.05, Tax Code, by adding Subsections (d) and (e), to define "holder of a lien" in Subsection (b) of this section and to prohibit "recorded restrictive covenants" from being construed to include a lien perfected under those restrictive covenants and held by a property owners' association or homeowners' association in Subsection (c) of this section. The substitute adds a new SECTION 5 to amend Section 32.05(c), Tax Code, to provide that a tax lien is not inferior to a restrictive covenant in favor of a property owner's association or homeowner's association recorded before January 1 of the year the tax lien arose. The substitute modifies the original in SECTION 6 (Section 32.07, Tax Code) by deleting the proposed definition of "the person who owns or acquires the property." The substitute adds a new SECTION 7 to amend Section 32.07, Tax Code, by adding Subsection (h), to provide that, for purposes of Subsection (a), a person is considered to be an owner of property subject to an installment contract of sale if the person is the seller of the property or a purchaser of the property who has the duty under the installment contract to pay taxes on the property. The substitute adds a new SECTION 10 to amend Section 33.07, Tax Code, to change the title to "Additional Penalty for Collection Costs For Taxes Due Before June 1" from "Additional Penalty For Collection Costs." The substitute authorizes a taxing unit or appraisal district to provide that taxes that become delinquent on or after February 1 of a year but not later than May 1 of that year and that remain delinquent on July of the year in which they become delinquent incur an additional penalty to defray cost of collection if the unit that collects taxes has contracted with an attorney. The substitute add a new SECTION 11 to amend Subchapter A, Chapter 33, Tax Code, by adding Section 33.08, which contains the provisions of SECTIONS 2, 3, 4, and 5 of the original. The substitute adds a new SECTION 12 to amend Section 33.43(a), Tax Code, to make a conforming change. The substitute deletes SECTION 16 of the original which would have repealed Section 33.51 (Writ of Possession), Tax Code, as amended by Acts 1997, 75th Legislature, Chapter 914, Section 6. The substitute deletes SECTION 17 of the original which would have repealed Section 33.51 (Writ of Possession), Tax Code, as amended by Acts 1997, 75th Legislature, Chapter 1111, Section 2. The substitute deletes SECTION 19 of the original which would have repealed Section 33.52 (Judgment for Current Taxes), Tax Code, as amended by Acts 1997, 75th Legislature, Chapter 906, Section 8. The substitute deletes SECTION 20 of the original which would have repealed Section 33.52 ((Judgment for Current Taxes and Postjudgment Taxes, Penalties, and Interest), Tax Code, as amended by Acts 1997, 75th Legislature, Chapter 981, Section 2. The substitute deletes SECTION 21 of the original which would have repealed Section 33.52 (Judgment for Current Taxes), Tax Code, as amended by Acts 1997, 75th Legislature, Chapter 1111, Section 3. The substitute modifies the original in SECTION 17 (Section 34.01, Tax Code) to add a new Subsection (s) to provide that a sale of property under this section to a purchaser other than a taxing unit extinguishes each lien securing payment of the taxes, penalties, and interest against that property and included in the judgment and does not affect the personal liability of any person for those taxes, penalties, and interest included in the judgment that are not satisfied from the proceeds of the sale. The substitute deletes SECTION 26 of the original which would have amended Sections 34.03(a) and (b), Tax Code, to reduce, from seven to two years, the time the clerk of court is required to keep the excess proceeds paid into court as provided by Section 34.04(c). The substitute modifies the original in SECTION 20 (Section 34.04, Tax Code) to provide that the petition must filed before the second anniversary, rather than within seven years from, the date of the sale of the property. The substitute modifies the original in SECTION 21 to reenact, rather than repeal Section 34.05(a), Tax Code, as amended by Chapter 906 and 1111, Acts 1997, 75th Legislature. The substitute modifies the original in SECTION 24 (Section 34.06, Tax Code) by deleting existing text requiring the purchasing taxing unit to pay all cost and expenses of court, sale, and resale, and, after deducting an amount equal to the amount the taxing unit has reasonably spent for the maintenance and preservation of the property, distribute the proceeds. The substitute also deletes the proposed prohibition against the previous owner from receiving any proceeds from the resale of the property. The substitute deletes SECTION 33 of the original which would have repealed Section 34.06(b), Tax Code, as amended by Acts 1997, 75th Legislature, Chapter 906, Section 10. The substitute deletes SECTION 34 of the original which would have repealed Section 34.06(b), Tax Code, as amended by Acts 1997, 75th Legislature, Chapter 914, Section 3. The substitute modifies the original in SECTION 26 (Section 34.21, Tax Code) to add Subsection (d) to require the owner to pay to the taxing unit to which the property was bid off an amount equal to the difference between the amount paid under Subsection (c) and the amount of the judgment if the amount paid by the owner is less than the amount of the judgment under which the property was sold. Subsection (d) also requires the taxing unit to issue a receipt for a payment received under this subsection and to distribute the amount received to each taxing unit that participated in the judgment and sale in an amount proportional to the unit's share of the total amount of the aggregate judgments of the participating taxing units and requires the owner of the property to deliver the receipt received from the taxing unit to the person from whom the property is redeemed. The substitute also add a new Subsection (i) to authorize the owner of property who is entitled to redeem the property under this section to request that the purchaser of the property, or the taxing unit to which the property was bid off, provide that owner a written itemization of all amounts spent by the purchaser or taxing unit in costs on the property and set forth the requirements for the itemization. In addition, the substitute deletes existing Subsections (g)-(i), which define "residence homestead," "agricultural use," and "costs." The substitute deletes SECTION 37 which would have repealed Section 34.21(b), Tax Code, as amended by Acts 1997, 75th Legislature, Chapter 914, Section 4. The substitute deletes SECTION 38 which would have amended Sections 34.21(c) and (d), to require a person who redeems property that has been resold by the taxing unit to pay any tax sale deficiency to the taxing unit and to replace references to a suit to collect the tax to a suit or application for warrant. The substitute deletes SECTION 39 which would have amended Section 34.21(e), Tax Code, as amended by Acts 1997, 75th Legislature, Chapter 1111, Section 6, to define "land designated for agricultural use," rather than "use" in this section. The substitute deletes SECTION 40 which would have repealed Sections 34.21(g), (h), and (i), as amended by Acts 1997, 75th Legislature, Chapter 906. The substitute deletes SECTION 41 which would have amended Section 34.21(g), Tax Code. The substitute makes these amendments in SECTION 26. The substitute deletes SECTION 42 which would have amended Section 34.21(f), Tax Code, as amended by Acts 1997, 75th Legislature, Chapter 906, by redesignating it to Subsection (h). The substitute deletes SECTION 44 which would have amended Section 304.301, Finance Code, to provide that this chapter (Judgment Interest) does not apply to a judgment that earns interest at a rate set by Title 1 (Property Tax Code), Tax Code. The substitute modifies the original in SECTION 29 by amending Chapter I, Probate Code, by adding Section 5C, rather than Part 4, Chapter VIII, Probate Code, by adding Section 313A. The substitute additionally sets forth the court with jurisdiction for a proceeding pending in the county in which the taxes were imposed; provides that the taxing unit must bring a suit under Section 33.41, Tax Code, in a court of competent jurisdiction for the county in which the taxes were imposed to foreclose the lien if the probate proceeding have been pending in that county for more than four years and the taxing unit did not file a claim against the estate or property that is part of the estate or the probate court did not authorize payment of the taxes; and requires the taxing unit to make the personal representative of the decedent's estate a party to the suit and prohibits the taxing unit from seeking to enforce personal liability for the taxes against the estate of the decedent. The substitute adds a new SECTION 35 which repeals the sections (Sections 33.51 and 34.05(g), Tax Code) repealed in SECTIONS 16 and 30 of the original. The substitute deletes SECTIONS 52-54 of the original which provided effective dates and prospective clauses. The substitute adds a new SECTION 36 which provides new effective dates. In SECTIONS 37-46, the substitute makes conforming changes with respect to the application of various sections of the bill. The substitute deletes SECTION 65 of the original (emergency clause).