HBA-ATS S.B. 378 76(R) BILL ANALYSIS Office of House Bill AnalysisS.B. 378 By: Nixon Civil Practices 5/20/1999 Engrossed BACKGROUND AND PURPOSE Currently, ambiguity exists over several aspects of judgments against the partial owner of real property. Significant and confusing legal questions regarding property titles may result when the other owner or owners of the property attempt to sell the property, when an owner dies without a will, or when heirs have any outstanding pending judgments. S.B. 378 establishes a statutory procedure for the payment of a judgment of abstract or judgment lien levied against an owner of an undivided interest in real property. 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 Chapter 31, Civil Practice and Remedies Code, by adding Section 31.009, as follows: Sec. 31.009. PAYMENT OF JUDGMENT AGAINST UNDIVIDED INTEREST IN REAL PROPERTY. (a) Enumerates the four conditions that must exist for this section to apply: _the owner of an undivided interest in real property (owner), alone or with the other owners of the real property (property), is selling and conveying title to the property or the undivided interest in the property to another person under a written contract and the consideration under the contract is money, secured loans assumed or existing on the property, or both money and secured loans; _the interest of the owner is subject to an abstract of judgment or judgment lien, or the abstract of judgment or judgment lien names that person as the judgment debtor; _the interest of the owner which is subject to the abstract of judgment or judgment lien that attaches to the interest or that names the owner as the judgment debtor does not exceed a 50 percent undivided interest in the property; and _the abstract of judgment or judgment lien does not name the owner of any other undivided interest in the property as a judgment debtor and does not purport to attach to the interest of the owner of any other undivided interest in the property. (b) Provides that the owner, before the owner is entitled to pay for partial release of the judgment to a court, must send a letter to the judgment creditor (creditor) of the judgment. Provides that the letter is to be sent to four locations by registered or certified mail, return receipt requested. (c) Sets forth the contents of the owner's letter to the creditor: _the legal description of the property; _the percentage, fraction, or amount of undivided interest in the property owned or claimed by the owner as evidenced by a copy of a title report, title commitment, deed, or other written evidence of title; _a copy of the written contract to sell the property or the undivided interest of the owner; _a statement of the total sales price of the undivided interest of the owner or proportionate share of the sales price of the property equivalent to the undivided interest of the owner in the property if sold in conjunction with other owners of the property, without reduction for any costs, expenses, debts, or other amounts paid by or on behalf of the owner, and any offset; _an affidavit in the letter or included with the letter stating that the contract is a bona fide sale; and _an offer to pay by cash, wire of funds, or cashier's check the sales price of the undivided interest of the owner or proportionate share of the sales price of the property equivalent to the undivided interest of the owner in the property if sold in conjunction with other owners of the property in return for a release of the abstract of judgment or judgment lien. (d) Authorizes the owner to file certain documents and payment with the court that rendered the abstract of judgment or judgment lien, if the creditor fails to respond to the letter by furnishing a release of the abstract of judgment or judgment lien on or before the 15th day after the letter was sent. Those documents are: _an affidavit stating that the owner has complied with this section and is entitled to a release of the abstract of judgment or judgment lien, the owner provided the letter and offered payment of the sales price of the undivided interest of the owner, without reduction for any costs, expenses, debts, or other amounts paid by or on behalf of the owner and without reduction for any offset, and the creditor has not responded to the letter by furnishing a release; _a copy of the contract to sell the property or undivided interest of the owner in the property; _a copy of the letter sent under this section and any document included with the letter; _payment of the amount of the sales price of the undivided interest of the owner or proportionate share of the sales price of the property equivalent to the undivided interest of the owner in the property if sold in conjunction with other owners of the property; and _any written correspondence received from the creditor or the creditor's attorney in response to the letter; and a copy of the deed executed or to be executed by the owner under the contract. (e) Requires the owner to send a copy of the affidavit under Subsection (d) by registered or certified mail, return receipt requested, to the creditor and creditor's last attorney as shown in the creditor's pleadings or other court record at the four addresses listed in Subsection (b) before the sixth day after the affidavit is filed with the court. (f) Requires the owner to prepare a recordable release of the abstract of judgment or judgment lien describing the owner's undivided interest. Sets forth the required language of the owner's release. Requires the judge or clerk of the court to execute the release on behalf of the creditor and issue the release to the owner on or after the 15th day after the owner files the affidavit with the court and before the 31st day after the owner files the affidavit with the court, unless the judge determines that the owner is not entitled to a release. Sets forth the required content of the executed release. (g) Requires the court to hold the owner's payment and interest earned on that payment in trust for the creditor. Requires the court clerk to deposit the trust funds and any interest earned by the funds in the clerks' trust fund account. Requires the clerk to pay these monies to the creditor or the creditor's successors. Authorizes the clerk to presume that the funds are payable to the creditor unless the clerk is furnished with a written assignment of the judgment. Provides that funds held in the clerk's trust fund account are subject to escheat under Chapter 72 (Abandonment of Personal Property), Property Code. (h) Authorizes a purchaser or lender to conclusively rely on the partial release of abstract of judgment or judgment lien and take title to the owner's undivided interest free and clear of the abstract or lien. Prohibits the purchaser or lender from being required to determine if the owner has complied with this section. (i) Defines "judgment creditor." SECTION 2. (a) Effective date: September 1, 1999. (b) Provides that this Act applies to the payment of judgments against undivided interests in real property, for which acceptable notice is given, before, on, or after September 1, 1999. SECTION 3.Emergency clause.