Bill Text: TX SB1405 | 2017-2018 | 85th Legislature | Engrossed

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Bill Title: Relating to the public sale of real property under a power of sale in a security instrument.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Engrossed - Dead) 2017-05-20 - Referred to Business & Industry [SB1405 Detail]

Download: Texas-2017-SB1405-Engrossed.html

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By: Creighton S.B. No. 1405

A BILL TO BE ENTITLED
AN ACT
relating to the public sale of real property under a power of sale
in a security instrument.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Title 2, Business & Commerce Code, is amended by
adding Chapter 22 to read as follows:
CHAPTER 22. PUBLIC SALE OF RESIDENTIAL REAL PROPERTY UNDER POWER OF
SALE
Sec. 22.001. DEFINITIONS. In this chapter:
(1) "Auction company" has the meaning assigned by
Section 1802.001, Occupations Code.
(2) "Residential real property" means:
(A) a single-family house;
(B) a duplex, triplex, or quadraplex; or
(C) a unit in a multiunit residential structure
in which title to an individual unit is transferred to the owner of
the unit under a condominium or cooperative system.
(3) "Security instrument," "substitute trustee," and
"trustee" have the meanings assigned by Section 51.0001, Property
Code.
Sec. 22.002. APPLICABILITY. This chapter applies only to a
public sale of residential real property conducted under a power of
sale in a security instrument.
Sec. 22.003. CONTRACTS CONCERNING SALE. A trustee or
substitute trustee conducting a sale to which this chapter applies
may contract with:
(1) an attorney to advise the trustee or substitute
trustee or to administer or perform any of the trustee's or
substitute trustee's functions or responsibilities under a
security instrument or this chapter; or
(2) an auction company to arrange, manage, sponsor, or
advertise a public sale.
Sec. 22.004. INFORMATION FROM WINNING BIDDER. (a) A
winning bidder at a sale, other than the foreclosing mortgagee or
mortgage servicer, shall provide the following information to the
trustee or substitute trustee at the time the trustee or substitute
trustee completes the sale:
(1) the name, address, telephone number, and e-mail
address of the bidder and of each individual tendering or who will
tender the sale price for the winning bid;
(2) if the bidder is acting on behalf of another
individual or organization, the name, address, telephone number,
and e-mail address of the individual or organization and the name of
a contact person for the organization;
(3) the name and address of any person to be identified
as the grantee in a trustee's or substitute trustee's deed;
(4) the purchaser's tax identification number;
(5) a government-issued photo identification to
confirm the identity of each individual tendering funds for the
winning bid; and
(6) any other information reasonably needed to
complete the trustee's or substitute trustee's duties and functions
concerning the sale.
(b) If a winning bidder required to provide information
under Subsection (a) fails or refuses to provide the information,
the trustee or substitute trustee may decline to complete the
transaction or deliver a deed.
Sec. 22.005. RECEIPT AND DEED. The trustee or substitute
trustee shall:
(1) provide the winning bidder with a receipt for the
sale proceeds tendered; and
(2) except when prohibited by law, within a reasonable
time:
(A) deliver the deed to the winning bidder; or
(B) file the deed for recording.
Sec. 22.006. SALE PROCEEDS. (a) The trustee or substitute
trustee shall ensure that funds received at the sale are maintained
in a separate account until distributed. The trustee or substitute
trustee shall cause to be maintained a written record of deposits to
and disbursements from the account.
(b) The trustee or substitute trustee shall make reasonable
attempts to identify and locate the persons entitled to all or any
part of the sale proceeds.
(c) In connection with the sale and related post-sale
actions to identify persons with legal claims to sale proceeds,
determine the priority of any claims, and distribute proceeds to
pay claims, a trustee or substitute trustee may receive:
(1) reasonable actual costs incurred, including costs
for evidence of title;
(2) a reasonable trustee's or substitute trustee's
fee; and
(3) reasonable trustee's or substitute trustee's
attorney's fees.
(d) A fee described by Subsection (c):
(1) is considered earned at the time of the sale;
(2) may be paid from sale proceeds in excess of the
payoff of the lien being foreclosed; and
(3) is conclusively presumed to be reasonable if the
fee:
(A) is not more than the lesser of 2.5 percent of
the sale proceeds or $5,000, for a trustee's or substitute trustee's
fee; or
(B) is not more than 1.5 percent of the sale
proceeds, for trustee's or substitute trustee's attorney's fees
incurred to identify persons with legal claims to sale proceeds and
determine the priority of the claims.
(e) A trustee or substitute trustee who prevails in a suit
based on a claim that relates to the sale and that is found by a
court to be groundless in fact or in law is entitled to recover
reasonable attorney's fees necessary to defend against the claim,
which may be paid from the excess sale proceeds, if any.
(f) Nothing in this section precludes the filing of an
interpleader action or the depositing of funds in a court registry.
SECTION 2. Section 1802.001, Occupations Code, is amended
by adding Subdivision (14) to read as follows:
(14) "Security instrument," "substitute trustee," and
"trustee" have the meanings assigned by Section 51.0001, Property
Code.
SECTION 3. Section 1802.002(a), Occupations Code, as
amended by Chapters 777 (H.B. 2481) and 1230 (S.B. 1982), Acts of
the 84th Legislature, Regular Session, 2015, is reenacted and
amended to read as follows:
(a) This chapter does not apply to:
(1) a sale conducted by order of a United States court
under Title 11, United States Code;
(2) a sale conducted by an employee of the United
States, this state, or a political subdivision of this state in the
course and scope of employment;
(3) a sale conducted by a charitable, religious, or
civic organization, including an organization having a tax exempt
status under Section 501(c), Internal Revenue Code of 1986, or
organized as a nonprofit entity, if the person organizing,
arranging, or conducting the auction receives no compensation;
(4) a foreclosure auction involving the sale of real
property personally conducted by a trustee or substitute trustee
under a security instrument [under a deed of trust];
(5) a foreclosure sale of personal property personally
conducted by:
(A) a person who holds a security interest in the
property, including a mortgage; or
(B) an employee or agent of a person described by
Paragraph (A) acting in the course and scope of employment, if:
(i) the employee or agent is not otherwise
engaged in the auction business; and
(ii) all property for sale in the auction is
subject to a security agreement;
(6) a sale conducted by sealed bid without the option
of increasing or decreasing the amount of a bid;
(7) an auction conducted only for student training
purposes as part of a course of study approved by the department;
(8) an auction conducted by a posted stockyard or
market agency as defined by the federal Packers and Stockyards Act
(7 U.S.C. Section 181 et seq.), as amended;
(9) an auction of livestock conducted by a nonprofit
livestock trade association chartered in this state, if the auction
involves only the sale of livestock owned by members of the trade
association;
(10) an auction conducted by a charitable or nonprofit
organization chartered in this state, if the auction:
(A) is part of a fair that is organized under
state, county, or municipal authority; and
(B) involves only the sale of property owned by
the organization's members;
(11) a sale or auction conducted by an auctioneer
while the auctioneer is physically located outside of this state;
(12) a sale of motor vehicles at auction by a person
licensed under Chapter 2301 or 2302;
(13) a sale of motor vehicles at auction by a person
who holds a wholesale motor vehicle auction general distinguishing
number or an independent motor vehicle general distinguishing
number issued by the Texas Department of Motor Vehicles; or
(14) an auction of property through the Internet.
SECTION 4. The changes in law made by this Act apply only to
a sale for which the notice of sale is given under Section 51.002,
Property Code, on or after the effective date of this Act. A sale
for which the notice of sale is given before the effective date of
this Act is governed by the law applicable to the foreclosure sale
immediately before the effective date of this Act, and that law is
continued in effect for that purpose.
SECTION 5. To the extent of any conflict, this Act prevails
over another Act of the 85th Legislature, Regular Session, 2017,
relating to nonsubstantive additions to and corrections in enacted
codes.
SECTION 6. This Act takes effect September 1, 2017.