Bulletin: TX000008

Dear Associates:

The Texas Legislature passed numerous bills concerning real estate during 1991. Among those bills concerning our industry are the following:

• Foreclosures

  Deficiencies - House Bill 169 (effective April 1, 1991)

  A court may determine the fair market value of the land at the date of the non-judicial foreclosure sale. If the fair market value was greater than the foreclosure sales price, the borrower may receive an offset of the difference. The borrower does not receive an offset of the debt secured by a lien on real estate not extinguished by foreclosure. The deficiency suit must occur within two years of the foreclosure.

  Deficiencies - House Bill 2825 (effective June 5, 1991)

  A guarantor or other obligor may bring an action to determine the fair market value of real estate at the date of the judicial foreclosure sale. A guarantor also may bring an action to determine the fair market value of real estate at the date of the non-judicial foreclosure sale. The guarantor must bring the action within 90 days after the sale or after the guarantor received notice of the sale. The guarantor may receive an offset in the amount by which the fair market value exceeds the sales price. The guarantor does not receive an offset of the debt secured by a lien not extinguished by the foreclosure.

• Texas Limited Liability Company Act

  House Bill 278 (effective August 26, 1991)

  A limited liability company shall have the power provided for a corporation or limited partnership. The name of the company must contain the word "Limited", or the abbreviation, "Ltd." or "L.C.". Limited partnerships may merge with corporations, general partnerships, joint ventures, or other legal entities to the extent allowed by law of the state of the entity.

• Historic Structures

  Senate Bill 923 (effective September 1, 1991)

  Cities and the Texas Historic Commission must record notices listing historic structures, street address (if available), the legal description, and the name of the owner (if available). If the notice appears in your chain of title, you must except to it in Schedule B.

• Wills

  Senate Bill 952 (effective September 1, 1991)

  A person may disinherit an heir. A will may direct how property may not be disposed of. The Anti-Lapse Statute (allowing issue of certain devisees to receive under a will) applies to a devisee who is a descendent of the testator and now also applies to a descendent of the testator's parents. If a residuary devisee's share fails, it passes to the other residuary devisees in proportion to their interest in the residuary estate. (The residuary portion of the estate is the portion remaining after satisfying debts, bequests and specific devises.) This provision does not apply if the Anti-Lapse provision applies or if the will provides otherwise. A personal representative may purchase property from the estate upon the court's determination that the sale is in the best interest of the estate. The representative must give notice by certified mail to distributees and creditors. The court shall appoint an attorney ad litem for the estate of the ward.

  If you are relying upon a disinheritance provision in a will, or if you are insuring on a sale by the estate to a personal representative, please call Stewart underwriting personnel.

• Taxes

  Easements and Restrictions - Senate Bill 1426 (effective June 16, 1991)

  A real estate tax lien is subordinate to restrictive covenants and easements that were recorded before January 1 of the year the tax arose. If you insure an easement or if you insure access that is based upon an appurtenant easement, verify that taxes have been paid on that property up to and including the year of the recordation of the easement. Otherwise, except to those taxes.

  Hotel Occupancy Taxes - House Bill 651 (effective August 26, 1991)
  The buyer of a hotel must withhold from the purchase price an amount sufficient to pay municipal and county hotel occupancy taxes. If the buyer fails to withhold the sufficient funds, the buyer is liable for the taxes to the extent of the purchase price. The purchaser may request a receipt or tax certificate. Other applicable law requires the buyer to withhold sufficient proceeds to pay state hotel occupancy taxes. As an accommodation to the purchaser where a hotel is being sold, we recommend that you verify that these taxes are paid current.

• Liens

  Mental Health - House Bill 902 (effective September 1, 1991)

  The Texas Department of Mental Health and Mental Retardation and the Community Center may file liens to secure reimbursement for support and maintenance of mentally ill or mentally retarded persons. The claimant must file the notice of lien with the County Clerk. The notice shall contain the name and address of the patient or client and the person, if any, legally responsible. A similar lien may exist for unpaid charges owed by a parent for support, maintenance and treatment of a mentally retarded resident. You should require the release of any such lien that appears in the chain.

  Child Support - House Bill 7 (Not yet signed by Gov. Richards)

  This Bill creates a child support lien. The lien exists in favor of the obligee or a private attorney representing the obligee, the Attorney General, a domestic relations office, or an attorney appointed as a friend of the court. The filing of an abstract of judgment or a child support notice perfects the lien. Any claimant may file a child support notice. The notice must contain (a) the style, docket number and identity of the court; (b) name, address, and other available information of the obligor; (c) name and social security number, if available, of the obligee and child; (d) amount of child support arrearage; (e) date of rendition of the Order and rate of interest; and (f) name and address of the person or agency to whom the payment shall be made. The lien is effective for 10 years from date of recording of the notice. Recordation of a subsequent child support lien notice in the last year following the date of the original recording extends the lien for an additional 10-year period. The lien is inferior to any lien or conveyance recorded before the child support lien notice. The claimant shall execute any release of the child support lien. The Bill applies to enforcement of child support Orders, regardless of whether the Order is entered before or after the effective date of the Bill. You should verify whether a child support judgment lien or notice is extended for an additional 10-year period before waiving it after 10 years. Do not escrow money to insure without exception to this lien.

  Refuse Removal - Senate Bill 406 (effective September 1, 1991)

  The county may remove junk or refuse on property within 50 feet of a public highway. The county has a lien for the costs. The county shall file the lien in the County Clerk's office. You should require a release of any such lien that appears in the chain.

• Assessments

  Road District - House Bill 1079 (effective June 10, 1991)

  A road district may apportion assessments against an owner's property. The assessment is a first lien against the property. It is effective from the date the assessment is levied. The assessment and any interest, expenses and attorney's fees are considered taxes for purposes of title insurance. If your property lies within a road district, verify that assessments are paid through the current year. Otherwise, except to the unpaid assessments.

  Municipal Management Districts - Senate Bill 232 (effective August 26, 1991)

  Municipal management districts may levy and collect special assessments and impact fees. One-to-four family residential properties are exempt. Cities that regulate watersheds, flood-prone areas, and impoundment areas for flood control must file a notice with the County Clerk. The notice must show the boundaries of the area subject to regulation. If your property is located within a special district, you must verify whether any assessments are paid through the current year. If a notice concerning watersheds, flood-prone areas, and impoundment areas has been filed with the County Clerk, you must except to this notice in Schedule B.

  Standby-Fees - House Bill 1107 (effective September 1, 1991)

  A District may not impose a standby fee on undeveloped property if (1) the owner owns other tracts that are contiguous, (2) the owner has a residence on other tracts to which water or sewer connection has been made, (3) the combined acreage is less than two acres, and (4) the owner delivers a sworn statement stating that the property is not held for resale as a separate unit. You should confirm that the district is not assessing standby fees against the property because of a valid exception if it generally assesses for standby fees.

  Water Districts - Senate Bill 997 (effective August 26, 1991)

  This Bill revises the water district notice. The purchaser does not need to acknowledge before a notary the notice given prior to execution of the contract. The seller may rely upon recording information as of January 1 for the contract disclosure. For a fee not to exceed $10, the district shall issue the notice form required to be furnished by the seller to the purchaser. Attached is a notice you may use on future closings.

• Judgment Liens

  House Bill 2758 (effective September 1, 1991)

  A judgment debtor may pay to the court rendering the judgment the amount owed, if the creditor cannot be located. The judge or clerk of the court shall execute the release on behalf of the creditor. The Bill applies only to judgments rendered on or after September 1, 1991. Please see form referenced at the end of this bulletin.

• Exemptions

  Senate Bill 654 (effective May 24, 1991)

  This Bill increases the personal property exemption for a family to $60,000 and for a single person to $30,000.