Bulletin: TX2023005

Dear Associates:

Contained in this bulletin are bills you should be aware of that passed in the 2023 Texas Legislative Session. The Legislature had 8,285 house bills and 3,522 senate bills. About 4,550 bills were passed and signed into law. STG Lobby team had to review all of the bills for impact of real estate and title insurance.

TRUSTS:

SB 801 - Related to trusts named as grantee on deeds.
(Effective 09/01/2023)

Senate Bill 801 was passed to clarify existing case law related to deeds that listed the trust as grantee. SECTION 1. Subchapter D, Chapter 114, Property Code was amended, by adding Section 114.087.

What you should know/do:

Please see separate bulletin TX2023003.

HB 2196 - Relating to Trusts.
(Effective 06/09/2023)

HB 2196 Relating to Trusts. Effective immediately.

This bill includes amendments to the Property Code §41.0021 regarding qualifying trusts for homestead property. In summary, the bill provides that a qualifying trust is one that is binding on the trustee and unless provided in the trust agreement or court order creating the trust can be revoked without the consent of any person other than a settlor-spouse  and that the settlors or beneficiaries may use and occupy residential property as a primary residence rent free and without charge except for taxes and other costs specified in the trust document or court order.

What You Should Know/Do:

If your transaction involves what appears or purports to be a qualifying trust on homestead property you should review the trust agreement to determine if it meets the requirements for a qualifying trust contained in the Property Code. In particular, if you have questions related to a qualifying trust involved in a sale or home equity transaction, please contact a Stewart Title Guaranty Company Texas underwriter.

HB 2333 - Relating to noncharitable trusts without an ascertainable beneficiary.

(Effective 06/18/2023)

Allows for the creation of a trust for a particular noncharitable purpose rather than for the benefit of a beneficiary. It requires the trust agreement to appoint a trust enforcer to enforce the terms of the trust, provides that if more than one person is acting as trust enforcer a majority controls and in case of a tie the decision of the trustee controls. It provides that trust property must only be used for the intended purpose of the trust unless there is excess property as determined by a court.

What you should know/do:

Be sure to review the trust agreement to determine whether the trust is created for a particular purpose, and whether the sale of the property or use of the property as security for a loan meets that specified purpose of the trust. If you are unable to make the determination that it is, then a court must declare that the property is excess property that may be used for that specific purpose.

 

NOTARY/RIN:

SB 1780 – Relating to Remote Ink Notarizations.
(Effective 01/01/2024)

What you should know/do:

Please see separate Bulletin TX2023004.

HB 255 – Relating to notaries public; increasing the amount of certain fees.

(Effective 09/01/2023)

• Notary is restricted from giving their seal copy to another person and cannot affix a seal for any other reason but to authenticate a document.
• They can include the expiration date of ID presented as part of an acknowledgement if they choose.
• For taking the acknowledgment or proof of a deed or other instrument in writing, for registration, including certificate and seal, a fee of $10 for the first signature and $1 for each additional signature.

What you should know/do:

Notaries should be aware of these matters and discuss internal notary practices with your management. Be aware that external notaries may be increasing their fees in accordance with this bill.

 

ENTITIES:

SB 1514 - Relating to business entities and nonprofit entities.
(Effective 09/01/2023)

This bill updates and modernizes provisions of the Bus. Org. Code. Those provisions include:

the assumed name of a limited liability company,
restated certificates of formation,
definition of an emergency period,
winding up and termination of a domestic entity,
governing documents and management of a LLC,
certificates of LLCs and merger of Series LLCs,
issuance of shares of a corporation,
lists of shareholders at shareholder meetings,
expands the definition of partnership agreement,
establishes retroactive reinstatement for a limited partnership,
right to examine records of an entity,
ratification or waiver of void and voidable acts and transactions,
certificates of formation and retroactive reinstatement of nonprofits, and
repeals provisions related to the determination of consideration of shares, terms and conditions of rights and options, inspection of voting lists and list of voting members.

What you should know/do:

Be aware of the existing law in effect for the type of entity you are dealing with. This bill does not affect our typical requirements related to dealing with entities (See Bulletin TX000078 and TX2022004).

 

POWER OF ATTORNEY:

SB 1650 - Relating to durable powers of attorney and the construction of certain powers conferred in those durable powers of attorney.
(Effective 09/01/2023)

This bill authorizes a court to affirm and restate the authority of an agent, rather the suspend the durable power of attorney (DPOA) in a temporary guardianship; and it allows the court to suspend rather than revoke a DPOA in a permanent guardianship. It corrects the statute to allow the Texas Department of Family and Protective Services to file an action questioning the actions of an agent under a DPOA and authorizes the court to award costs and attorneys' fees as deemed equitable and just when a person files an action questioning the actions of an agent under a DPOA. It expands the definition of the grant of authority to an agent over "business operation transactions" to transactions beyond just those in a partnership, to include transactions related to a limited liability company. It provides that a court does not have to approve an agent executing a disclaimer if the agent is given the power to execute such a disclaimer in the DPOA and amends current law relating to durable powers of attorney and the construction of certain powers conferred in those durable powers of attorney.

What You Should Know/Do:

If there is a guardianship involving the principal of a DPOA being offered for use, review of the guardianship proceedings to determine if it is permanent or temporary guardianship. If there is a temporary guardianship further review is suggested to determine if the DPOA was automatically suspended or whether the court affirmed the appointment and confirmed and restated the effectiveness and validity of the appointment of the named agent. If the guardianship was permanent the court may have suspended rather the revoked the DPOA. If you have any questions, reach out to a Stewart Title Guaranty Company Texas underwriter.

 

EXECUTION SALES:

HB 1382 - Relating to the public sale of real property taken in execution of a judgment.
(Effective 09/01/2023)

Authorizes county commissioners’ courts to allow the public sale of real property taken in execution of a judgment to be conducted in an online auction and allows commissioners’ courts to adopt rules governing such online auctions, which would take effect 90 days after being published in county property records. The bill does not apply to certain sales of real property under contract liens as provided for by the Property Code.

What should you know/do:

Execution sales are considered extra-hazardous risk. This bill does not change our existing guidelines related to execution sales. Please see section TX 5.28 Execution Sales on www.vuwriter.com for more information.

 

PUBLIC SALE NOTICES:

SB 62 - Relating to posting certain documents and information related to certain real property sales on a county's Internet website.
(Effective 09/01/2023)

A county shall prominently post a notice of sale filed with the county clerk under Subsection (b)(2) on the county’s Internet website on a page where the county posts other auction information and that is publicly available for viewing without charge or registration.

What you should know/do:

Review the county’s website for proper notice publication as to transactions with a public sale. This will be in addition to the regular statutory requirements of notice of sale required to be examined for public real property sales.

 

FORECLOSURE:

SB 2091 – Relating to the authority of a taxing unit to sell certain seized or foreclosed property to an owner of an abutting property without conducting a public sale.
(Effective 09/01/2023)

This Bill amends Chapter 34, Tax Code, by adding Section 34.0101 - SALE OF CERTAIN PROPERTY TO OWNER OF ABUTTING PROPERTY. This statute allows a taxing unit that requested a tax warrant or order of sale to direct the officer selling the property to sell same at a private sale to an owner of abutting property if the property was offered for sale at a public auction and an insufficient bid was received.
This statute applies to real property that is seized under tax warrant or ordered sold pursuant to foreclosure of a tax lien and said property is 1) a narrow strip of land that cannot be used independently under its current zoning or subdivision/development ordinances; 2) is landlocked without direct access to a public road; or 3) is located in an area designated by the Federal Management Agency under the National Flood Insurance Act of 1968 or a floodway. If there are two or more abutting owners, notice of the sale must be given to each abutting owner.

What you should know/do:

Continue to review all foreclosure proceedings and confirm compliance  with the Tax Foreclosure Checklist provided on virtual underwriter.

 

STATUTORY PRETENDED SALE EXCLUSION:

HB 207 - Amends Subchapter A, Chapter 41, Property Code, by adding Section 41.0022.
(Effective 09/01/2023)

This amendment creates an exclusion of specific conveyances from a pretended sale classification when the conveyance involves a conveyance from an individual to their related entity as prescribed in the Property Code, Section 41.0022.

What you should do:

Please see separate Bulletin TX2023002.

 

HOA ASSESSMENT CHANGES:

HB 614 – Relating to property owners' association fines.
(Effective 01/01/2024)

If a Homeowners Association (HOA) requires any new fines that are not outlined in the dedication of Covenant, Conditions, and Restrictions (CCR’s), there will be new notice and posting requirements the HOA will have to comply with for these new fines. It will only be effective for any new fines after the effective date. All previously filed fines would be subject to prior laws.

What you should know/do:

Be aware of the changes, but your procedures for collecting HOA fines/fees as part of the closing will not change. A resale certificate will still be required to ascertain the fines/fees owed. Any other notice of new fines/fees must be shown as an exception until a determination is made that the exception can be removed. 

HB 886 - Relating to requirements to file a property owners' association assessment lien.

(Effective 09/01/2023)

If an assessment lien is going to be filed in the real property records, it is required that the HOA provide written notice to the owner and wait at least 90 days before filing the lien.

What you should know/do:

No changes as to your process for collection of pay offs for assessment liens. If a lien is filed before 90 days after the notice was sent, you should still require a release of the lien.

 

PROPERTY CODE:

SB 1768 – Relating to the correction or removal of certain obsolete provisions of the Property Code.
(Effective 05/29/2023)

This Bill makes corrections and deletions to references in the Property Code that are outdated or antiquated. For example, section 1 deals with construction disputes while section 6 deals with changing the references relative to mechanic’s lien bonds in section 53.172 to reference the appropriate insurance code section.

 

LANDMAN SERVICES:

SB 604 - Relating to land services performed by a landman.
(Effective 05/24/2023)

Amends government code that the "practice of law" does not include engaging in land services and defines land services in Chapter 954 Occupations Code.

What you should know/do:

Not applicable to title insurance.

 

CANCELLATION OF UNDEVELOPED PLATS:

SB 580 - Section 232.0085(a), Local Government Code.
(Effective 09/01/2023)

Section 232.0085(a), Local Government Code, was amended relating to the authority of certain counties to cancel platted subdivisions that have remained undeveloped.

What you should know/do:

Real property that is located in the unincorporated area of the county and extraterritorial jurisdiction of a municipality, if not subject to municipal agreement, can have the platted subdivisions cancelled by the county if the plats have remained undeveloped. Generally, applies to economically distressed areas along the Rio Grande as defined in Water Code 16.34 and the bill. If a cancellation order by commissioner court is recorded in relation to the plat or the property you are searching, do not rely on the plat and contact a Stewart Title Guaranty Company Texas Underwriter. 

ENERGY:

SB 785 - Geothermal Energy
(Effective 06/18/2023)

SB 785 passed during the 88th Texas Legislative Regular Session, amends Chapter 141 of the Texas Natural Resources Code and Section 2703.056 of the Texas insurance Code to address geothermal energy interests.

What you should know/do:

Please see separate Bulletin TX2023001.

 

WATER DISTRICT:

HB 2816 – Relating to the notice given to purchasers of property within certain water districts.
(Effective 09/01/2023)

This Bill sets forth a prescribed notice to purchasers in Section 49.4521 of the Water Code. The notice must be dated and executed by the seller and purchaser. Additionally, a water district required to maintain an Internet website must post online or create a process for posting the district's notice to purchasers on the Internet website. The notices previously prescribed in Sections 49.452(b), (c), and (d) are repealed.

What you should know/do:

The currently required notice in Section 49.4521 should be provided by the Seller for all properties located in a water district.

 

PHOTO IDENTIFICATION (ID) REQUIREMENT:

HB 1195 - Relating to the authority of certain county and district clerks to obtain and retain information that identifies a person filing a document or requesting services.

(Effective 06/09/2023)

A county/district clerk in a county that allows for electronic filing of documents in the real property records of the county may require in-person filings individuals to present a photo ID to the clerk. If a county requires photo ID, no document filed in that county in-person can be filed without one.

What you should know/do:

Photo ID may be required for in-person filings. Please check with your county clerk(s).

 

TDI ELECTRONIC BUSINESS:

HB 1040 - Relating to the authority of entities regulated by the Texas Department of Insurance to conduct business electronically.
(Effective 09/01/2023)

SECTION 1. Section 35.003, Insurance Code, was amended to provide that written communication may be delivered by electronic means to a party by a regulated entity under this section with affirmative consent. If a regulated entity provides notice under Subsection (a)(2) and the other party does not opt out of conducting business electronically, the other party is considered to have agreed to conduct business electronically for the purposes of Chapter 322, Business & Commerce Code.

HB 1901 - Relating to the filing of an annual audit report by a title insurance company, title insurance agent, or direct operation.

(Effective 09/01/2023)

Provides for filing the annual trust fund account audit report, rather than mailing. This provides TDI flexibility to allow online filing.

What you should know/do:

There is currently no change, but TDI may provide an option for online filing.

 

TAXES:

HB 3273 – Relating to public notice of the availability on the Internet of property-tax-related information.
(Effective 01/01/2024)

This Bill amends the Tax Code to provide that if an Internet database is used by the Central Appraisal District, information regarding notices must be provided on the website and instructions provided on how to register on the website to have email notifications delivered to owners.

What you should know/do:

This change does not affect how you calculate and/or collect for taxes.

HB 4645 – Relating to the exemption from ad valorem taxation of certain property used to provide low-income or moderate-income housing.

(Effective 01/01/2024)

This Bill amends Section 11.1825, Tax Code, providing that organizations leasing property to provide low-income or moderate-income housing may receive a tax exemption.

What you should know/do:

This change does not affect how you calculate and/or collect for taxes.

SB 1801 – Relating to a requirement that each appraisal district periodically confirm that recipients of residence homestead exemptions qualify for those exemptions.

(Effective 09/01/2023)

This Bill requires the chief appraiser of an appraisal district to develop a program for the periodic review of each residence homestead exemption to confirm the exemption is still applicable. Review of each residence homestead exemption must occur at least once every five tax years.

What you should know/do:

This change does not affect how you currently calculate and/or collect for taxes.

HB 260 – Calculation of net to land in the appraisal of open-space land for ad valorem tax purposes.

(Effective 01/01/2024)

In calculating net to land of open-space land located in or adjacent to a wildlife or livestock disease or pest area, the chief appraiser shall take into consideration the effect that the presence of the applicable disease or pest or the designation of the area has on the net income from the land.

What you should know/do:

This change does not affect how you calculate and/or collect for taxes.

SB 1145 - Relating to a local option exemption from ad valorem taxation by a county or municipality of all or part of the appraised value of real property used to operate a Child-Care Facility.

(Effective 01/01/2024 if Adoption of Constitution amendment occurs)

Provides that the local government may establish ad valorem tax exemptions for qualifying Child Care Facilities as outlined in Subchapter B, Chapter 11, Tax code, amended by adding Section 11.36.

What you should know/do:

This change does not affect how you calculate and/or collect for taxes.

SB 1191 - Relating to late applications for the appraisal of land for ad valorem tax purposes as qualified open-space land following the death of the owner of the land.

(Effective 05/23/2023)

Allows an exception to accept late applications for open space exemption by surviving spouse/child of decedent in title, executor, or fiduciary of a surviving spouse/child in title if filed prior to the delinquency date for taxes for the year of application. Waiver of late penalty.

What you should know/do:

This change does not affect how you calculate and/or collect for taxes.

SB 1381 - Relating to the eligibility of the surviving spouse of an elderly person and their tax exemption qualification.

(Effective 01/01/2024)

Eligibility of the surviving spouse who qualified for a local option exemption from ad valorem taxation by a taxing unit of a portion of the appraised value of the deceased person's residence homestead to continue to receive an exemption for the same property from the same taxing unit in an amount equal to that of the exemption for which the deceased person qualified without applying for the exemption. Also, failure to provide the date of birth of the applicant’s spouse does not affect the applicant’s eligibility for an exemption under Section 11.13 or the applicant’s spouse’s eligibility for an exemption under that section, other than an exemption under Section 11.13(q) for the surviving spouse of an individual 65 years of age or older.

What you should know/do:

This change does not affect how you calculate and/or collect for taxes.

 

PRIVACY:

SB 617 - Confidentiality of certain home address information in ad valorem tax appraisal records.
(Effective 05/19/2023)

A customs and border protection officer or border patrol agent of United States Customs and Border Protection or the spouse, surviving spouse, or adult child of a customs and border protection officer or border patrol agent addresses are subject to confidentiality protections in tax appraisal records.

What you should know/do:

There may be statutorily permitted omissions of addresses in the tax appraisal records.

HB 1161 - Relating to the confidentiality of home address information for victims of child abduction and to the administration of the address confidentiality program by the office of the attorney general.

(Effective 05/24/2023)

Children of child abductions are eligible for the address confidentiality program by the office of the attorney general.

What you should know/do:

There may be statutorily permitted omissions of addresses in certain government records.

HB 1911 - Relating to the confidentiality of certain home address information in ad valorem tax appraisal records.

(Effective 09/01/2023)

Extends the confidentiality of home address information of certain individuals in property tax appraisal records to include current or former employees or contract staff members of a university health care provider at a TDCJ or TJJD facility, as well as to current or former attorneys for the Department of Family and Protective Services.

What you should know/do:

There may be statutorily permitted omissions of addresses in the tax appraisal records.

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

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