Bulletin: TX2009004

Dear Associates:

2009 was a record year in the Texas Legislature, both for what was done and what failed to occur.

Comparison of Bills Filed March 9, 2007 to March 13, 2009 60th Day

	80th Leg	81st Leg	+/-	%
House Bills	3977	4697	+720	+18%
Senate Bills	1944	2447	+503	+26%
Total	5921	7144	+1223	+21%

Bills passed this session 1724. or 24%

HB 10 by Solomons

• Regulation of mortgage loan originators
• Subtitle E, Title 3, Finance Code, is amended by adding Chapter 180: The purpose of this chapter is to protect consumers seeking mortgage loans and to ensure that the mortgage lending industry is operating without unfair, deceptive, or fraudulent practices by mortgage loan originators.
• (a) An individual may not engage in business as a mortgage loan originator with respect to a dwelling located in this state unless the individual: (1) is licensed to engage in that business under Chapter 127, 156, 157, 342, 347, 348, or 351; and (2) complies with the requirements of this section. Also requires educational hours, testing and financial responsibility.

Changes/actions required: None.

HB 108

• Relating to persons eligible to be appointed as a receiver for certain mineral interests
• Removes county clerk from Section 64.091(d), Civil Practice and Remedies Code as person who can be a receiver.

Effective September 1, 2009.

Changes/actions required: None.

HB 352 on coverage of mineral interests in title policies

 • Sec.2551.004.MINERAL INTERESTS. The commissioner shall adopt and enforce rules that prohibit the exception or exclusion of mineral interests from coverage under a title insurance policy, commitment, binder, or endorsement. This prohibition also applies to a renewal and extension of a commitment or binder.
• This is being dealt with by the commissioner in a series of hearings (last scheduled for 4-23-09, which will make bill redundant). This Bill failed but is included to remind you to watch for news on the mineral hearing as mentioned below.

Changes/actions required: Watch for bulletins and other information from Stewart and other sources when commissioner has entered his order on the mineral hearing.

HB 396 by Harnett relating to expunction of a notice of lis pendens

 • Sec.12.0071.MOTION TO EXPUNGE LIS PENDENS. (a) A party to an action in connection with which a notice of lis pendens has been filed may:
(1) apply to the court to expunge the notice; and
(2) file evidence, including declarations, with the motion to expunge the notice.
(b) The court may:
(1) permit evidence on the motion to be received in the form of oral testimony; and
(2) make any orders the court considers just to provide for discovery by a party affected by the motion.
(c) The court shall order the notice of lis pendens expunged if the court determines that:
(1) the pleading on which the notice is based does not contain a real property claim;
(2) the claimant fails to establish by a preponderance of the evidence the probable validity of the real property claim; or
(3) the person who filed the notice for record did not serve a copy of the notice on each party entitled to a copy under Section 12.007(d).
(f) After a certified copy of an order expunging a notice of lis pendens has been recorded, the notice of lis pendens and any information derived from the notice:
(1) does not:
(A) constitute constructive or actual notice of any matter contained in the notice or of any matter relating to the proceeding;
(B) create any duty of inquiry in a person with respect to the property described in the notice; or
(C) affect the validity of a conveyance to a purchaser for value or of a mortgage to a lender for value; and
(2) is not enforceable against a purchaser or lender described by Subdivision (1)(C), regardless of whether the purchaser or lender knew of the lis pendens action.
(g) The court in its discretion may require that the party prevailing in the expunction hearing submit an undertaking to the court in an amount determined by the court.

Effective September 1, 2009.

Changes/actions required: You may rely on a final court order expunging a lis pendens and remove from or not take exception to it on your commitment or policies. If no order of expunction is filed in the public record, you must continue to exercise sound business judgment in accordance with Virtual Underwriter Section 11.24.1 and obtain a release of the real property to be insured from the lis pedens.

HB 556 by Kuempel

a bad neighbor bill
• Section 16.034(a), Civil Practice and Remedies Code, is amended to read as follows: (1)shall [may] award costs and reasonable attorney's fees to the prevailing party if the court finds that the person unlawfully in actual possession made a claim of adverse possession that was groundless and made in bad faith; and
• (2 )may award costs and reasonable attorney's fees to the prevailing party in the absence of a finding described by Subdivision (1).

Effective September 1, 2009.

Changes/actions required: None.

HB 651 by Darby

• Section 841.252(a), Insurance Code, is amended to read as follows:
• (a) Unless first authorized by a vote of a domestic insurance company's board of directors or a committee of the board that has the duty to authorize the payments, the company may not pay any compensation or emolument in an amount that, when added to any compensation or emolument paid to the person by an affiliated domestic insurance company, exceeds $150,000 [$100,000] in any year to an individual, firm, or corporation, including an officer or director of the company.

Effective September 1, 2009.

Changes/actions required: None. This bill applies only to domestic insurance companies.

HB 652 by Darby

• Deals with escrow officers who live across state line.
• Section 2652.051, Insurance Code, is amended by amending Subsection (c) and adding Subsection (d) .
• The escrow officer may live any where in an adjoining state but must be a bona fide employee of a title insurance agent or direct operation with an office in this state.
• (d) Notwithstanding Sections 406.004 and 406.020, Government Code, a person qualified under this section as an escrow officer may hold a license and operate as a notary public under Chapter 406, Government Code.

EffectiveSeptember 1, 2009.

Changes/actions required: You may employ as an escrow officer a person who lives in Texas, New Mexico, Oklahoma, Arkansas or Louisiana so long as that person is a bona fide employee and works regularly in your office under your supervision. TDI has fined a number of companies substantial amounts of money for allowing persons to act as an escrow officer without being licensed. You will want to be cautious in availing yourself of this statute especially the bona fide status of the employee.

CSHB 669 by Solomons

• Section 12.002, Civil Practice and Remedies Code, is amended by adding Subsection (c) to read as follows:
• (c) A person claiming a lien under Chapter 53, Property Code, or the claimant's representative, is not liable under this section for the making, presentation, or use of a document or other record in connection with the assertion of the claim if:
• (1) the lien claim is reasonable and the filed lien is determined to be invalid only because of a technical error or omission in the document or other record being made, presented, or used; or
• (2) the lien claim is reasonable and the filed lien is determined to be substantially valid, in whole or in part.

Effective September 1, 2009.

Changes/actions required: None. Continue to apply normal underwriting standards to all mechanic's liens.

HB 882 by Rodriguez

• Creates a new section 92.0091 allowing a tenant whose utilities were wrongfullycut off to go to justice court to have themturned back on.

Effective September 1, 2009.

Changes/actions required: None.

HB 1038 by Paxton

• Section 23.01, Tax Code, is amended by adding Subsection (c) to read as follows:
• (c) Notwithstanding Section 1.04(7)(C), in determining the market value of a residence homestead, the chief appraiser may not exclude from consideration the value of other residential property that is in the same neighborhood as the residence homestead being appraised and would otherwise be considered in appraising the residence homestead because the other residential property:
• (1) was sold at a foreclosure sale conducted in any of the three years preceding the tax year in which the residence homestead is being appraised and was comparable at the time of sale based on relevant characteristics with other residence homesteads in the same neighborhood; or
• (2) has a market value that has declined because of a declining economy.

Effective September 1, 2009.

Changes/actions required: None. Continue to use caution when establishing the value of property to determine an appropriate amount of title insurance.

HB1083 by Elkins

• SECTION 1.Section 154.021, Civil Practice and Remedies Code, is amended by adding Subsection (c) to read as follows:
• (c) Except as provided by agreement of the parties, a court may not order mediation in an action that is subject to the Federal Arbitration Act (9 U.S.C. Sections 1-16).

Effective September 1, 2009.

Changes/actions required: None.

HB1460 by Paxton

• Application for Probate must include information:
• (8) Whether a marriage of the decedent was ever dissolved after the will was made, whether by divorce, annulment, or a declaration that the marriage was void [divorced], and if so, when and from whom.

Effective September 1, 2009.

Changes/actions required: Before relying on an order in a probate case, be sure that the application contains information about the marital status of the decedent as set out above.

HB 2238 Sunset review of insurance

• Relating to the continuation and operation of the Texas Department of Insurance and the operation of certain insurance programs; imposing administrative penalties. (FIL )
• FAILED

Companions: HB 1959 safety net passed in Special Session. Both agencies will be reviewed again in 2011.

Changes/actions required: None.

HB 2235 Business entities and associations

• Relating to business entities and associations. (FIL )

Companions: SB 1442 Fraser(Identical) PASSED, Effective September 1, 2009.
• Makes many changes not directly related to title

Changes/actions required: None.

HB 2238 by Hamilton dealing with MHUs

• Only section really dealing with title companies
• (c) Except with respect to any change in use, servicing of a loan on a manufactured home, or change in ownership of a lien on a manufactured home, but subject to Section 1201.2075, if the department has issued a statement of ownership and location for a manufactured home, the department may issue a subsequent statement of ownership and location for the home only if all owners [parties] reflected in the department's records as having an ownership interest in the manufactured home give their written consent or release their interest, either in writing or by operation of law, or the department has followed the procedures provided by Section 1201.206(k) to document ownership and lien status. Once the department issues a statement of ownership and location, the department may [shall] not alter the record of the ownership or lien status, other than to change the record to accurately reflect the proper owner's or lienholder's identity,

Effective September 1, 2009.

Changes/actions required: None. The subject as to whether and when new statements of ownership and location remains controversial and unevenly applied by tax assessors and the TDHCA.

HB 2353 by Hughes

• Relating to the limitations period for certain disciplinary actions against title insurance companies.
• Adds 81.001 Insurance Code as law that applies to title companies
- 5th anniversary of the event;
- 2nd anniversary of the earlier of
• The conduct is discovered by the department or
• The date violation is made known to the department

Effective September 1, 2009.

Changes/actions required: Discussed in Bulletin TX2009003.

SB 1919

Relating to the requirements for recording a property owners' association management certificate.
• (d)If a property owners' association fails to record a management certificate or an amended management certificate under this section, the purchaser, lender, or title insurance company or its agent in a transaction involving property in the property owners' association is not liable to the property owners' association for:
• (1)any amount due to the association on the date of a transfer to a bona fide purchaser; and
• (2)any debt to or claim of the association that accrued before the date of a transfer to a bona fide purchaser.
• (e)A lien of a property owners' association that fails to file a management certificate or an amended management certificate under this section to secure an amount due on the effective date of a transfer to a bona fide purchaser is enforceable only for an amount incurred after the effective date of sale.

Passed, Effective September 1, 2009.

Changes/actions required: Discussed in Bulletin TX2009003.

SB 1918

Disclosure by Property Owners' Association
• (f)Not later than the seventh day after the date a written request for an update to a resale certificate delivered under Subsection (a) is received from an owner, owner's agent, or title insurance company or its agent acting on behalf of the owner, the property owners' association shall deliver to the owner, owner's agent, or title insurance company or its agent an updated resale certificate that contains the following information:
• (1)if a right of first refusal or other restraint on sale is contained in the restrictions, a statement of whether the property owners' association waives the restraint on sale;
• (2)the status of any unpaid special assessments, dues, or other payments attributable to the owner's property; and
• (3)any changes to the information provided in the resale certificate issued under Subsection (a).

Effective September 1, 2009.

Changes/actions required: Discussed in Bulletin TX2009003.

HB 2502 by Harnett non substantive revision of probate code.

The bill enacts an Estates and Guardianship Code to replace the existing Probate Code. The bill became effective June 2009 but the new code is not effective until January 1, 2014.
• Same as SB 2071 by Duncan
• Recodification of Probate Code

Effective September 1, 2009.

Changes/actions required: None at this time.

HB 2462 dealing with County road map

• Sec.258.007.APPLICATION [EXPIRATION] OF CHAPTER. This chapter applies only to a county that initiates or completes compliance with the provisions of this chapter before [expires] September 1, 2011 [2009].
• This bill extends the ability of a county to create a county road map.

Effective September 1, 2009.

Changes/actions required: None. You may continue to insure access when the property in question is shown on the official county road map.

HB 2685 Eminent domain

• Section 21.0112(a), Property Code,
• Not later than the seventh day before the date [Before] a governmental or private entity with eminent domain authority makes a final offer to [begins negotiating with] a property owner to acquire real property, the entity must send by first-class mail or otherwise provide a landowner's bill of rights statement provided by Section 402.031, Government Code,
• In addition to the other requirements of this subsection, an entity with eminent domain authority shall provide a copy of the landowner's bill of rights statement to a landowner before or at the same time as the entity first represents in any manner to the landowner that the entity possesses eminent domain authority.

Effective September 1, 2009.

Changes/actions required: none other than to determine that the bill of rights was timely given or at least 4 years has passed since the proceeding is complete and the property has been conveyed to the governmental or private entity.

HB 2840 by Solomons

• SECTION6.Section 32.32, Penal Code, is amended by adding Subsection (b-1) and amending Subsection (d) to read as follows:
• (b-1)A person commits an offense if the person intentionally or knowingly makes a materially false or misleading written statement in providing an appraisal of real property for compensation or in providing any other service related to the closing or settlement of a real property transaction.

Effective September 1, 2009.

Changes/actions required: None.

HB 2908 by Paxton (SB1620 by Wenworth)

• Regulation of property tax lenders
• Gives finance commissioner the unencumbered right to audit every office of an entity that provides financing for property tax financing.
• Both house and senate version recommended for local calendars 4-16 & 4-8-9

Effective September 1, 2009.

Changes/actions required: None.

HB 3053 by Truitt and SB 1661 by Harris

· Relating to child support liens on real property
· Sec.157.3171.RELEASE OF LIEN ON HOMESTEAD PROPERTY. (a)An obligor who believes that a child support lien has attached to real property of the obligor that is the obligor's homestead, as defined by Section 41.002, Property Code, may file an affidavit to release the lien against the homestead in the same manner that a judgment debtor may file an affidavit under Section 52.0012, Property Code, to release a judgment lien against a homestead.
· ( d)The claimant under the child support lien may dispute the obligor's affidavit by filing a contradicting affidavit in the manner provided by Section 52.0012(e), Property Code.
· (e)Subject to Subsection (f), an affidavit filed by an obligor under this section has the same effect with respect to a child support lien as an affidavit filed under Section 52.0012, Property Code, has with respect to a judgment lien.
· (f)If the claimant files a contradicting affidavit as described by Subsection (d), the issue of whether the real property is subject to the lien must be resolved in an action brought for that purpose in the district court of the county in which the real property is located and the lien was filed.
· Section 157.318, Family Code, is amended to add:
· (d)A lien is effective with respect to real property until the 10th anniversary of the date on which the lien notice was filed with the county clerk. A lien subject to the limitation prescribed by this subsection may be renewed for subsequent 10-year periods by filing a renewed lien notice in the same manner as the original lien notice. For purposes of establishing priority, a renewed lien notice filed before the applicable 10th anniversary relates back to the date the original lien notice was filed. A renewed lien notice filed on or after the applicable 10th anniversary has priority over any other lien recorded with respect to the real property only on the basis of the date the renewed lien notice is filed

Passed, Effective date May 26, 2009.

Changes/actions required: Discussed in Bulletin TX2009003.

HB 3073 electronic recording fees

• SECTION 1.Chapter 2501, Insurance Code, is amended by adding Section 2501.008 to read as follows:
• Sec.2501.008.THIRD-PARTY CHARGES. A title insurance company, title insurance agent, or direct operation may charge, separate from the title insurance premium, actual costs or a reasonable estimate of costs incurred in connection with a closing and settlement, including:
• (1) a charge by a third party for an electronic filing fee; or
• (2) a fee of a third party for the provision of an ad valorem tax report.
• Passed and sent to Governor

Changes/actions required: Discussed in Bulletin TX2009003.

HB 3312 and SB 1685

• Sec. 51.305. DISTRICT COURT RECORDS TECHNOLOGY FUND. (a) Defines "court document," "deterioration," "preservation," and "restoration."
• (b) The commissioners court of a county may adopt a district court records archive fee of not more than $5 for the filing of a suit, including an appeal from an inferior court, or a cross-action, counterclaim, intervention, contempt action, motion for new trial, or third-party petition, in a district court in the county as part of the county's annual budget. The fee must be set and itemized in the county's budget as part of the budget preparation process and must be approved in a public meeting. The fee is for preservation and restoration services performed in connection with maintaining a district court records archive.
• (c) The county treasurer, or the official who discharges the duties commonly delegated to the county treasurer, in a county that adopts a fee under Subsection (b) shall establish a district court records technology fund in the general fund of the county for deposit of fees paid under Section 51.317(f).
• (d) Subject to Subsection (f), money generated from the fee imposed under this section may be expended only for the preservation and restoration of the district court records archive.

Effective September 1, 2009.

Changes/actions required: None.

HB 3479 by Gallegos

• In a county of less than 15000 population along an International Border in a colonia self-help center (it owns or is administered by another county), the county clerk can send any document relating to real estate to the county attorney to see if it complies with colonias laws. The County Attorney has 5 days to complete the review.

Effective September 1, 2009.

Changes/Actions required: none unless you are in the affected county (Brewster). However, the title industry needs to monitor this situation closely in case the legislature seeks to broaden this scheme to other counties.

HB 3502

• Requires notice of law be given in the Sellers Disclosure Statement. requiring smoke detectors and right to have them installed.

Effective September 1, 2009.

Changes/actions required: None, however, when the Texas Real Estate Commission modifies the contract form or promulgates a form specifically giving this notice, you should take care to see that this provision is in the contract you are closing.

HB 3767 by Paxton

• Property conveyed by both spouses to an express inter vivos trust on homestead using a proper legal description remains homestead property under Art. 16, Sec. 50 and Section 41.001 Property Code.
• Spouse need not join trustee in sale or encumbrance of property
• Surviving spouse and children still have rights under Art. 16, Sec. 52 and Part 3 Chapter VIII (sec. 270 et seq) of Probate.

Effective September 1, 2009.

Changes/actions required: This bill will allow us to insure a home equity loan or conveyance where title is in the name of an express inter vivos trust without requiring a conveyance back to the spouses, provided the spouses also join in the mortgage or conveyance.

HB 3768 by Paxton

• Section 2703.101, Insurance Code, is amended by adding Subsection (g) to read as follows:

(g) For an owner's title insurance policy on residential real property that is issued to an individual, the commissioner shall adopt terms that provide for continuation of coverage subject to rights and defenses against the original named insured for:

(1) a person who inherits the original named insured's title on the original named insured's death;

(2) the original named insured's spouse who receives title in a dissolution of marriage with the original named insured;

(3) the trustee or successor of a trust established by the original named insured to whom the original named insured transfers title after the date of policy; or

(4) the beneficiaries of a trust described by Subdivision (3) on the death of the original named insured.

Effective September 1, 2009.

Changes/actions required: None.Proposals will be made to Commissioner at a rules hearing to be held in the future.

HB 3857 amends Section 51 of the Property Code by adding a new section

Section 51.015 which establishes that a service member in the Active military or in the Reserve or National Guard called to active duty may not foreclose a mortgage that existed at the time the service member entered active duty during the service member's active duty or within 9 months after the end of such active duty without a court order. The court may stay the foreclosure or adjust the terms of the service member's mortgage. The service member may waive this right in writing. The court may also allow the foreclosure. Improper foreclosure under this section is a class A misdemeanor.

Changes/Actions required: Texas law now supplements the national service members act. It is imperative that we have a sworn statement by the Trustee that none of the makers of a real estate mortgage are on active duty or that more than 9 months have expired since the end of the service member's active duty. If the person whose mortgage is being foreclosed is a member of the armed services as contemplated by the act, we will require a court order or waiver of the person's rights.

HB 3945 by Orr

Title agent release of lien bill

• Allowing title insurance agents to release liens as has been allowed of insurers for more than 15 yrs.
• Subsection (a), Section 12.017, Property Code, is amendedto allow agents approved by their underwriter to execute affidavits releasing liens as provided by law.
• (b)This section applies only to a mortgage on:
• (1) property consisting exclusively of a one-to-four-family residence, including a residential unit in a condominium regime; or
• (2) property other than property described by Subdivision (1), if the original face amount of the indebtedness secured by the mortgage on the property is less than $1.5 million.
• AFFIDAVIT AS RELEASE OF LIEN
• Before me, the undersigned authority, on this day personally appeared (insert name of affiant) ("Affiant") who, being first duly sworn, upon his/her oath states:
• 1. My name is (insert name of Affiant), and I am an authorized officer of (insert name of title insurance company or title insurance agent) ("Title Company").
• 2. This affidavit is made on behalf of the mortgagor or a transferee of the mortgagor who acquired title to the property described in the following mortgage:
• (describe mortgage, the name of the mortgagor, and the property described in the mortgage)
• 3. (Insert name of Mortgagee) ("Mortgagee") provided a payoff statement with respect to the loan secured by the mortgage.
• 4.Affiant has ascertained that Title Company delivered to Mortgagee payment of the loan secured by the mortgage in the amount and time and to the location required by the payoff statement.
• 5.The mortgage relates to:
• (A) property consisting exclusively of a one-to-four-family residence, which may include a residential unit in a condominium regime; or
• (B) property, other than property described by Paragraph (A) above, for which the original face amount of the indebtedness secured by the mortgage on the property is less than $1.5 million.
• 6.Pursuant to Section 12.017, Texas Property Code, this affidavit constitutes a full and final release of the mortgage from the property.
• Signed this___ day of ___________, ____.
• __________________________________________ (signature of affiant)
• State of ______________
• County of _____________
• Sworn to and subscribed to before me on __________ (date) by ____________ (insert name of affiant).
• _________________________________ (signature of notarial officer)
• (Seal, if any, of notary) __________
• ___________________________________________________ (printed name)
• My commission expires:
•( f) On or after the date of the payment to which the affidavit relates, the title insurance company or title insurance agent must notify the mortgagee at the location to which the payment is sent that the company or agent may file for record at any time the affidavit as a release of lien. If notice required by this section is not provided to the mortgagee, the title insurance company or title insurance agent may not file for record the affidavit as a release of lien. The mortgagee may file a separate affidavit describing the mortgage and property and controverting the affidavit by the title insurance company or title insurance agent as a release of lien on or before the 45th day after the date the mortgagee receives the notice if the mortgagee mails a copy of the mortgagee's affidavit to the title insurance company or title insurance agent within that 45-day period.
• (j) A title insurance company or title insurance agent that, at any time after payment of the mortgage, files for record an affidavit executed under Subsection (c) may use any recording fee collected for the recording of a release of the mortgage for the purpose of filing the affidavit.
• STG drafted bill.

Effective September 1, 2009.

Changes/actions required: Discussed in bulletin TX2009003.

HB 4338 by Smithee

• Relating to title agent insolvency
• Study committee recommendation to TDI
• TLTA committee, STG, Guaranty Association and TDI compromise draft
• Is really the Industry version of Sunset legislation
• Depending on the size of the county in which the agent is licensed, minimum capitalization is required as determined by the commissioner. The following levels apply:
- if the agent is to have its principal office in a county with a population in excess of 10,001 but less than 50,000: $25,000
- if the agent is to have its principal office in a county with a population in excess of 50,001 but less than 200,000: $50,000
- if the agent is to have its principal office in a county with a population in excess of 200,001 but less than 1,000.000: $100,000
- if the agent is to have its principal office in a county with a population in excess of 1,000,001: $150,000
• if the agent is to have its principal office in a county of less than 10,000, the applicant is exempt from these standards.
• An agent licensed on September 1, 2009, has a minimum of 3 and a maximum of 10 years to reach the minimum capital structure depending on how long the agent has been licensed on that date on a sliding scale.
• The breakdown of the 2007 Texas population by county as estimated by the Texas State Data Center, Institute for Demographic and Socioeconomic Research, UTSA, San Antonio is as follows: - Less than 10,000: 102
- 10,000 to 50,000: 106
- 50,000 to 200,000: 27
- 200,000 to 1,000,000: 16
- More than 1 million: 3
• For the purposes of this law, capitalization is composed of unencumbered assets, exclusive of title plants. Title plants are not included, even though they constitute a large portion of an agents assets because (i) there is no ready market for title plants especially in smaller areas and (ii) such plants are treated as expense item rather than increasing in value after their initial evaluation.
• Unencumbered assets means: 1. cash or cash equivalents, 2. assets that have no liens against them, 3. tangible assets that have value in excess of any encumbrances such as real estate, furniture, fixtures, equipment, computers and software and 4. investments, such as mutual funds, certificates of deposit and stocks and bonds, letters of credit.
• Agent can use these assets or may make a deposit of the appropriate amount with TDI.
• The bill also provides that the Title Insurance Guaranty Association has the right to set the guaranty fee at any amount rather than being capped at $5.00.
• The guaranty fee can be used to pay for administrative expenses of the estate of an impaired agent as well as any and all expenses of an audit or examination by the department or the association.
• The commissioner is given the discretion to require the Guaranty Association to take action in the case of a failed agent to:
- Close real estate transactions
- Disburse escrow accounts
- Pay existing liens against real property
- Record documents
- Issue final title insurance policies
• The bill changes the definition of an impaired title insurance company to one designated as impaired by the commissioner or:
- Placed by court of Texas or another state into supervision, conservatorship, rehabilitation or liquidation;
- Subject to a commissioner's order of supervision, conservatorship, rehabilitation or liquidation;
- Or is found by a court to be insolvent or otherwise unable to pay obligations as they become due.
- A person or entity that has been part of a failed agent may not be licensed again as an agent until he/it has repaid the cost of supervision, conservatorship, rehabilitation or liquidation;
• All office or storage leases contain statutory language wherein the landlord is advised of the rights of the Guaranty Association and certain title insurance companies to have access to the title insurance files for a period of 60 days after the agent is declare impaired.
• As part of an attempt to gain early warning information that could reasonably call into question an agent's solvency, the underwriter(s) that appointed the agent may provide to or receive from the department such information.
- No one but the underwriter(s) that appointed the agent may request or receive a copy of the information.
- Each agent must on a quarterly basis provide the TDI with a copy of its federal withholding tax report to the IRS and proof of payment.
• An agent with no employees must certify to the TDI that there has been no material change in the agent's financial condition.
- Information is not admissible in a court action except by subpoena or disclosure under open records act.
- The Commissioner may prescribe by rule the types of information that are privileged.
• Funds owed to a title insurance company or another agent or direct operation from a division of premium are held in trust for the party to whom the money is owed. This provision will place these funds in a higher category of protection in an insolvency situation than they are currently.
- The bill provides expressly that the funds do not have to be held in a separate account.
• In order to be licensed as a title insurance agent, the agent and its management personnel must provide evidence that they have successfully completed a professional training program within 1 year preceding the date of the application
• The commissioner shall adopt the professional training program by rule which shall cover
- Basic principles and coverages
- Recent and prospective changes to those principles and coverages
- Applicable rules and laws
- Proper conduct of title insurance business
- Account principles and practices
- Duties and responsibilities of a title insurance agent.
- Professional education hours shall be counted against the individual's educational requirements
• Courses must be offered by the same groups, associations and educational facilities that are currently recognized by the TDI regulations (P-29.2).
• Existing agent management personnel who have been in the Texas Title Insurance business for more than 5 years are exempt from this provision.
• to provide for an increasingly secure search and examination of title to real property, all licensed abstract plants must have an inception date of January 1, 1979. Abstract plants that do not have such an inception date on the effective date of the bill have until January 1, 2014 to reach that inception date.

Effective September 1, 2009.

Changes/actions required: Discussed more fully in Bulletin TX2009003.

HB 4359 by Smithee

• This bill is designed to curb abuses of market conduct examinations by private companies conducting the same examination of the same materials at the expense of the insurer in state after state.
• Such contract examiners must be licensed by the commissioner who can share prior reports with other states (which the examiners must furnish to him).

Effective September 1, 2009.

Changes/actions required: None, applies only to insurance companies.

HB 4452 by Guerin SB 1036 by Harris

• Relating to amendments to Texas Timeshare Act mostly non substantive except:
• SECTION5.Section 221.062, Property Code, is amended by adding Subsection (h) to read as follows:
• (h) Excluding any encumbrance placed against the purchaser's timeshare interest that secures the purchaser's payment of purchase money financing for the purchase, the developer is not entitled to the release of any funds escrowed with respect to each timeshare interest until the developer has provided the commission with satisfactory evidence that:
• (1 )the timeshare interest and any other property or rights to property appurtenant to the timeshare interest, including any amenities represented to the purchaser as being part of the timeshare plan, are free and clear of any of the claims of the developer, any owner of the underlying fee, a mortgagee, judgment creditor, or other lienor, or any other person having an interest in or lien or encumbrance against the timeshare interest or appurtenant property or property rights;

Effective September 1, 2009.

Changes/actions required: None by title companies.

HB 4529 by Chavez

• Relating to court reported service fees in certain counties
• Section 51.601, Government Code, is amended by adding Subsection (a-1) to read as follows:
• (a-1) Notwithstanding Subsection (a), the clerk of each court that has an official court reporter and that serves a county with a population of 600,000 or more and is located on the international border shall collect a court reporter service fee of $30 as a court cost in each civil case filed with the clerk to maintain a court reporter who is available for assignment in the court.

Effective September 1, 2009.

Changes/actions required: None.

SB 390 by Patrick

• Relating to confidentiality of certain information under the public information law and in local tax appraisal records regarding federal law enforcement officers.
• Changes names and adds new officials

Effective September 1, 2009.

Changes/actions required: None, although you may find it difficult to obtain information from the public record about certain of your customers. This bill does not change our basic underwriting requirements that you have sufficient evidence as to payment of taxes or a good chain of title.

SB 1442

Chapter 101, Business Organizations Code, is amended by adding Subchapter M to read as follows:

SUBCHAPTER M. SERIES LIMITED LIABILITY COMPANY

Sec. 101.601. SERIES OF MEMBERS, MANAGERS, MEMBERSHIP INTERESTS, OR ASSETS. (a) A company agreement may establish or provide for the establishment of one or more designated series of members, managers, membership interests, or assets that:

(1) has separate rights, powers, or duties with respect to specified property or obligations of the limited liability company or profits and losses associated with specified property or obligations; or

(2) has a separate business purpose or investment objective.

(b) A series established in accordance with Subsection (a) may carry on any business, purpose, or activity, whether or not for profit, that is not prohibited by Section 2.003.

Sec. 101.602. ENFORCEABILITY OF OBLIGATIONS AND EXPENSES OF SERIES AGAINST ASSETS. (a) Notwithstanding any other provision of this chapter or any other law, but subject to Subsection (b) and any other provision of this subchapter:

(1) the debts, liabilities, obligations, and expenses incurred, contracted for, or otherwise existing with respect to a particular series shall be enforceable against the assets of that series only, and shall not be enforceable against the assets of the limited liability company generally or any other series; and

(2) none of the debts, liabilities, obligations, and expenses incurred, contracted for, or otherwise existing with respect to the limited liability company generally or any other series shall be enforceable against the assets of a particular series.

(b) Subsection (a) applies only if:

(1) the records maintained for that particular series account for the assets associated with that series separately from the other assets of the company or any other series;

(2) the company agreement contains a statement to the effect of the limitations provided in Subsection (a); and

(3) the company's certificate of formation contains a notice of the limitations provided in Subsection (a).

· Effective September 1, 2009.

Changes/actions required: This section of the bill provides that a limited liability company may be created or amended to provide that the one entity may have several series or "sub-companies" within one company agreement. As long as the agreement specifies and the company maintains separate records for assets, the assets of each series are separate from and not liable for the debts of the other series. Abstracts of judgment againstone denominated series do not affect assets of the other series. At this time, we are taking the position that it is uncertain whether the IRS recognizes that Federal Tax Liens against one series do not affect all series and so, we are requiring partial releases of Federal Tax Liens against any series.

SB 1589 dealing with Escheating of Property

Subsection (c), Section 74.101, Property Code, is amended to read as follows:

(c) The property report must include, if known by the holder:

(1)the name, [and] social security number, driver's license or state identification number, e-mail address [if known], and the last known address[, if any,] of:

(A)each person who, from the records of the holder of the property, appears to be the owner of the property;[,] or

(B) [the name and address, if known, of] any person who is entitled to the property.

Section 74.1001 Property Code is amended:

Sec.74.1011.NOTICE BY PROPERTY HOLDER REQUIRED. (a)Except as provided by Subsection (b), a holder who on June 30 holds property valued at more than $250 that is presumed abandoned under Chapter 72, 73, or 75 of this code or Chapter 154, Finance Code, shall, on or before the following August 1, mail to the last known address of the known owner written notice stating that:

(1) the holder is holding the property; and

(2) the holder may be required to deliver the property to the comptroller on or before November 1 if the property is not claimed.

(b) The notice required under Subsection (a) doesnot apply to a holder who:

(1) has already provided such notice to the owner of the property or a person entitled to the property under existing federal law, rules, and regulations or state law within the time specified under Subsection (a); or

(2) does not have a record of an address for theproperty owner or any other person entitled to the property.

(c) A holder that provides notice under this section may charge the cost of the postage as a service charge against the property.

Changes/actions required: The main changes in this bill require you include the Texas Drivers License Number and email address in the report to the Comptroller if you have that information. Unlike most state laws, you must send the full drivers license number not just the last 3 numbers. Additionally, if you are holding more than $250 and have not sent a notice to the parties that the money is about to escheat by June 30th of the year in which you are to escheat the money, you must send such notice by August 1st.

TexasResidential Construction Commission

The following information was copied from the TRCC website discussing the impact of the agency being abolished September 1, 2010.

At its June 11, 2009 meeting, the Texas Residential Construction Commission announced a general timeline and action plan related to the implementation of the State's sunset provisions.

Under provisions of Texas Government Code 325.017, the commission will not be accepting new inspection requests after August 31, 2009. In other action taken, the commission approved the following:

· All new homes and projects completed by August 31, 2009 must be registered;

· All new builder registrations and timely renewal registration applications will be accepted through August 31, 2009

· All new builder registrations and timely renewal registration applications will be prorated

· Inspection requests will be accepted through August 31, 2009;

· Inspection requests will be scheduled for inspection as soon as possible following commission rules, policies and procedures; and

· Ombudsmen will actively process complaints and post-inspection actions through August 31, 2010.

What is the effect of the abolishment of the commission on cities and lending institutions that use the commission's Web site to check on a builder or remodeler's registration?

The commission will not process new or renewal builder/remodeler registration application forms received after August 31, 2009. Until that time, cities and lending institutions can continue to use the commission's Web site to determine if a builder/remodeler is registered and in good standing with the commission. After that date, the commission's Web site will reflect the status of builder/remodeler registrations as of August 31, 2009.

The Property Code requires builders and remodelers to include certain language in their contracts with homeowners about the commission, the builder/remodeler's registration number, and the commission's toll-free number. It also requires any arbitration provision included to be set out conspicuously. Do builder and remodeler contracts need to have that information in their contracts after August 31, 2009?

Now until August 31, 2009 : the statutory provisions that require those contract provisions are still in effect and will apply to residential construction contracts signed before September 1, 2009. On or after September 1, 2009, to August 31, 2010: nothing in the law prohibits a builder or remodeler from complying with the Property Code chapter 420 as it relates to certain contract provisions and also providing information to the homeowner that the agency has been abolished pursuant to the Sunset Act and will not available after August 31, 2010. However, parties to a construction contract may want to consult legal counsel to determine their best course of action.

Changes/actions required: Until the TRCC is completely shut down on September 1, 2010, it remains in business on a limited basis. No new registrations will be accepted, no new regulations will be adopted and the agency will devote most of its time to the winding up process. For construction contracts entered after September 1, 2009, registration of the home is not required nor must the title company determine if the builder is licensed.

If you have questions related to this bulletin, please contact your local underwriting personnel or Stewart Legal Services.

For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.