Bill Text: TX SB848 | 2013-2014 | 83rd Legislature | Enrolled

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Bill Title: Relating to assignment of rents to holders of certain security interests in real property.

Spectrum: Partisan Bill (Republican 2-0)

Status: (Passed) 2013-06-14 - Effective immediately [SB848 Detail]

Download: Texas-2013-SB848-Enrolled.html

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S.B. No. 848

AN ACT
relating to assignment of rents to holders of certain security
interests in real property.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subdivisions (1), (3), (4), and (9), Section
64.001, Property Code, as added by Chapter 636 (S.B. 889), Acts of
the 82nd Legislature, Regular Session, 2011, are amended to read as
follows:
(1) "Assignee" means a person entitled to enforce a
security instrument [an assignment of rents].
(3) "Assignor" means a person [an owner of real
property] who makes a security instrument that creates an
assignment of rents arising from real [the] property or that
person's [owner's] successor in interest with respect to the real
property.
(4) "Cash proceeds" means proceeds that are money,
checks, deposit accounts, or the like [similar legal tender].
(9) "Rents" means[:
[(A)] consideration payable for the right to
possess or occupy, or for possessing or occupying, real property,
[;
[(B)] consideration payable to an assignor under
a policy of rental interruption insurance covering real property,
[;
[(C)] claims arising out of a default in the
payment of consideration payable for the right to possess or occupy
real property, [;
[(D)] consideration payable to terminate an
agreement to possess or occupy real property, [;
[(E)] consideration payable to an assignor for
payment or reimbursement of expenses incurred in owning, operating,
and maintaining, or constructing or installing improvements on,
real property, [;] or
[(F)] any other consideration payable under an
agreement relating to the real property that constitutes rents
under a law of this state other than this chapter. The term does not
include consideration payable under an oil and gas lease, mineral
lease, or other conveyance of a mineral estate.
SECTION 2. Section 64.002, Property Code, as added by
Chapter 636 (S.B. 889), Acts of the 82nd Legislature, Regular
Session, 2011, is amended to read as follows:
Sec. 64.002. MANNER OF GIVING [PROVIDING] NOTICE. (a) A
person may give [provide a] notice under this chapter:
(1) by transmitting the notice in the manner described
by Section 51.002(e);
(2) by depositing the notice with the United States
Postal Service or a commercially reasonable delivery service,
properly addressed to the intended recipient's address in
accordance with this section, with first class postage or other
cost of delivery paid; or
(3) by transmitting the notice to the intended
recipient by any means agreed to by the intended recipient.
(b) The following rules determine the address for notices
under Subsection (a):
(1) the address for notices [Except as agreed under
Subsection (a)(3), notice] to an assignee is [must be sent to] the
[assignee's] address of the assignee agreed [as provided] in the
[relevant] security instrument or other [another] document between
the parties as the address for notices to [entered into for the
purposes of this section by] the assignee [and the person sending
the notice], unless a more recent address for notices [notice] has
been given [in a manner provided by Subsection (a)] by the assignee
to the person giving [sending] the notice in accordance with
Subsection (a) or as agreed in a security instrument or other
document signed by the assignee; [.]
(2) the address for notices [(c) Except as agreed
under Subsection (a)(3), notice] to an assignor is [must be sent to]
the [assignor's] address of the assignor agreed [as provided] in
the [relevant] security instrument or other [another] document
between the parties as the address for notices to [entered into for
the purposes of this section by] the assignor or as provided in [and
the person sending the notice or an address for the assignor to
which a notice of default under] Section 51.002 [is properly sent],
unless a more recent address for notices [notice] has been given [in
a manner provided by Subsection (a)] by the assignor to the person
giving [sending] the notice in accordance with Subsection (a) or as
agreed in a security instrument or other document signed by the
assignor; and [.]
(3) for notices [(d) Except as agreed under
Subsection (a)(3), notice] to a tenant [must be sent to]:
(A) if there is [(1)] an address for notices
[notice] to the tenant [provided] in a signed document between
[entered into by] the tenant and the person giving [providing] the
notice, the person giving the notice shall use that address unless a
more recent address for notices [notice] has been given by the
tenant in accordance with that document;
(B) [(2)] if an address for notices [notice]
described by Paragraph (A) [Subdivision (1)] does not exist, but
the tenant's [the address provided in a written] agreement with
[between the tenant and] the assignor has an address for notices to
the tenant and [if] the person giving [sending] the notice has
received a copy of that document [agreement] or has actual
knowledge of the address for notices [notice] specified in that
document, the person giving the notice shall use that address
[agreement]; or
(C) [(3)] if an address for notices [notice]
described by Paragraphs (A) and (B) [Subdivision (1) or (2)] does
not exist, the person giving the notice shall use the tenant's
address at the real property covered by the security instrument.
(c) [(e)] Notice given [provided] in accordance with this
chapter [section] is deemed [considered] received on the earliest
of:
(1) the date the notice is received by the person to
whom the notice is given [provided];
(2) the fifth day after the date the notice is given
[provided] in accordance with Subsection (a)(2); or
(3) the date on which notice is deemed received
[considered provided] in accordance with an agreement made by the
person to whom the notice is given [provided for the purposes of
this section].
(d) A notice under this chapter must be a document.
SECTION 3. Subsections (a) and (b), Section 64.051,
Property Code, are amended to read as follows:
(a) An enforceable security instrument creates an
assignment of rents arising from real property described in that
[securing an obligation under the] security instrument, unless the
security instrument provides otherwise or the security instrument
is governed by Section 50(a)(6), (7), or (8), Article XVI, Texas
Constitution.
(b) An assignment of rents creates a presently effective
security interest in all accrued and unaccrued rents arising from
the real property described in the security instrument [document]
creating the assignment, regardless of whether the security
instrument [document] is in the form of an absolute assignment, an
absolute assignment conditioned on default or other [another]
event, an assignment as additional security, or any other
form. The security interest in rents is separate and distinct from
any security interest held by the assignee in the real property from
which the rents arise.
SECTION 4. Subsections (a), (b), and (d), Section 64.052,
Property Code, are amended to read as follows:
(a) A security instrument [document] creating an assignment
of rents may be recorded in the county in which any part of the real
property is located in accordance with this code.
(b) On recordation of a security instrument [document]
creating an assignment of rents, the security interest in the rents
is perfected. This subsection prevails over a conflicting
provision in the security instrument [document] creating the
assignment of rents or a law of this state other than this chapter
that prohibits or defers enforcement of the security interest until
the occurrence of a subsequent event, including [such as] a
subsequent default of the assignor, the assignee's obtaining
possession of the real property, or the appointment of a receiver.
(d) An assignee with [of] a perfected security interest in
rents has the same priority over the rights of a person described by
Subsection (c) with respect to future advances as the assignee has
with respect to the assignee's security interest in the real
property from which the rents arise.
SECTION 5. Section 64.053, Property Code, is amended to
read as follows:
Sec. 64.053. ENFORCEMENT OF SECURITY INTEREST IN RENTS
GENERALLY. (a) An assignee may enforce an assignment of rents
using one or more of the methods provided by Section 64.054 or
64.055 or any other [another] method sufficient to enforce an [the]
assignment of rents under a law of this state other than this
chapter.
(b) On and after the date on which an assignee begins to
enforce an assignment of rents, the assignee is entitled to collect
all rents that:
(1) have accrued [before] but remain unpaid on that
date; and
(2) accrue on or after that date.
SECTION 6. Subsections (a) and (b), Section 64.054,
Property Code, as added by Chapter 636 (S.B. 889), Acts of the 82nd
Legislature, Regular Session, 2011, are amended to read as follows:
(a) After default, or as otherwise agreed by the assignor,
the assignee may give [provide] the assignor a notice demanding
that the assignor pay the assignee the proceeds of any rents that
the assignee is entitled to collect under Section 64.053.
(b) For the purposes of Section 64.053, the assignee begins
enforcement under this section on the date on which the assignee
gives [provides] notice to the assignor in accordance with Section
64.002.
SECTION 7. Subsections (a), (c), (d), and (e), Section
64.055, Property Code, are amended to read as follows:
(a) After default, or as otherwise agreed by the assignor,
the assignee may give [provide] to a tenant of real property that is
subject to an assignment of rents a notice demanding that the tenant
pay to the assignee all unpaid accrued rents and all unaccrued rents
as they accrue. The assignee shall give [provide] a copy of the
notice to the assignor in accordance with [the manner provided by]
Section 64.002. The notice must substantially comply with the form
prescribed by Section 64.056 and be signed by the assignee or the
assignee's authorized agent or representative.
(c) Subject to Subsection (d) and any other claim or defense
that a tenant has under a law of this state other than this chapter,
after a tenant receives a notice under Subsection (a):
(1) the tenant is obligated to pay to the assignee all
unpaid accrued rents and all unaccrued rents as they accrue, unless
the tenant has previously received a notice under this section from
another assignee of rents given [provided] by that assignee in
accordance with this section and the other assignee has not
canceled that notice;
(2) except as otherwise agreed in [provided by] a
document signed by the tenant, the tenant is not obligated to pay to
an assignee rent that was prepaid to the assignor before the tenant
received the notice under Subsection (a);
(3) unless the tenant occupies the premises as the
tenant's primary residence, the tenant is not discharged from the
obligation to pay rents to the assignee if the tenant pays rents to
the assignor;
(4) the tenant's payment to the assignee of rents then
due satisfies the tenant's obligation under the tenant's agreement
with the assignor to the extent of the payment made; and
(5) the tenant's obligation to pay rents to the
assignee continues until the earliest date on which the tenant
receives:
(A) a court order directing the tenant to pay the
rents in a different manner;
(B) a signed notice that a perfected security
instrument that has priority over the assignee's security interest
has been foreclosed; or
(C) a signed document from the assignee canceling
the assignee's notice.
(d) Except as otherwise agreed in [provided by] a document
signed by the tenant, a tenant who has received a notice under
Subsection (a) is not in default for nonpayment of rents that accrue
during the 30 days after the date the tenant receives the notice
until the earlier of:
(1) the 10th day after the date the next regularly
scheduled rental payment would be due; or
(2) the 30th day after the date the tenant receives the
notice.
(e) On receiving a notice from another assignee [creditor]
who has priority under Section 64.052(c) that the assignee
[creditor] with priority has conducted a foreclosure sale of the
real property from which the rents arise or is enforcing the
[creditor's] interest in rents of the assignee with priority by
notice to the tenant, an assignee that has given [provided] a notice
to a tenant under Subsection (a) shall immediately give [provide]
another notice to the tenant canceling the earlier notice.
SECTION 8. Section 64.058, Property Code, is amended to
read as follows:
Sec. 64.058. APPLICATION OF PROCEEDS GENERALLY. Unless
otherwise agreed [by the assignor], an assignee who collects rents
under this chapter or collects on a judgment in an action under
Section 64.060 shall apply the sums collected in the following
order to:
(1) reimbursement of the assignee's expenses of
enforcing the assignee's assignment of rents, including, to the
extent provided for by agreement by the assignor and not prohibited
by a law of this state other than this chapter, reasonable
attorney's fees and costs incurred by the assignee;
(2) reimbursement of any expenses incurred by the
assignee to protect or maintain the real property that is subject to
the assignment of rents [if the assignee elects or is required to
apply the proceeds to those expenses under Section 64.059];
(3) payment of the secured obligation;
(4) payment of any obligation secured by a subordinate
security interest or other lien on the rents if, before
distribution of the proceeds, the assignee receives a signed notice
from the holder of the interest or lien demanding payment of the
proceeds; and
(5) payment of any excess proceeds to the assignor.
SECTION 9. Subsection (b), Section 64.059, Property Code,
is amended to read as follows:
(b) Unless otherwise agreed by a tenant, the right of the
assignee to collect rents from the tenant is subject to the terms of
any agreement between the assignor and tenant or [and] any claim or
defense of the tenant arising from the assignor's nonperformance of
that agreement.
SECTION 10. Subsections (a) and (d), Section 64.060,
Property Code, are amended to read as follows:
(a) If an assignor collects rents that the assignee is
entitled to collect under this chapter, the assignor shall turn
over the proceeds to the assignee not later than the 30th day after
the date the assignor receives notice from the assignee under
Section 64.054 or within such other [another] period agreed
[prescribed] by the assignor and assignee in a security instrument
or other document [signed by the assignor and approved by the
assignee], less any amount representing payment of expenses agreed
in that [authorized by a] security instrument or other document
[signed by the assignee].
(d) Unless otherwise agreed, if [by] an assignee who [that]
has a security interest in rents that is subordinate to the security
interest of another assignee [priority] under Section 64.052
enforces the [, a] subordinate assignee's [creditor that has
enforced the subordinate creditor's] interest under Section 64.054
or 64.055 before the [priority] assignee with [enforces the]
priority enforces the [assignee's] interests in rents of the
assignee with priority, the subordinate assignee is not obligated
to turn over any proceeds that the subordinate assignee [creditor]
collects before the subordinate assignee [creditor] receives a
signed notice from the [priority] assignee with priority informing
the subordinate assignee [creditor] that the [priority] assignee
with priority is enforcing the [priority assignee's] interest in
rents of the assignee with priority. The subordinate assignee
[creditor] shall turn over to the [a priority] assignee with
priority any proceeds that the subordinate assignee [creditor]
collects after the subordinate assignee [creditor] receives the
notice from the [priority] assignee with priority that the
[priority] assignee with priority is enforcing the [priority
assignee's] interest in rents of the assignee with priority not
later than the 30th day after the date the subordinate assignee
[creditor] receives the notice or as otherwise agreed between the
[priority] assignee with priority and the subordinate assignee
[creditor]. Any proceeds subsequently collected by the subordinate
assignee [creditor] shall be turned over to the [priority] assignee
with priority not later than the 10th day after the date the
proceeds are collected or as otherwise agreed between the
[priority] assignee with priority and the subordinate assignee
[creditor].
SECTION 11. The legislature finds that Subsection (c),
Section 64.051, Property Code, as added by Chapter 636 (Senate Bill
No. 889), Acts of the 82nd Legislature, Regular Session, 2011, was
intended by the 82nd Legislature to eliminate confusion arising
from language in the Texas Supreme Court's decision in Taylor v.
Brennan, 621 S.W.2d 592 (Tex. 1981), to the effect that an absolute
assignment of rents is a pro tanto payment of a secured obligation.
In accordance with Subsection (c), Section 64.051, Property Code,
as added by Chapter 636 (Senate Bill No. 889), Acts of the 82nd
Legislature, Regular Session, 2011, unless the parties expressly
agree otherwise, a secured obligation is reduced only if and to the
extent that the assignee collects rents and applies the rents to the
obligation. Simply taking an assignment of rents does not reduce
the secured obligation.
SECTION 12. (a) Except as otherwise provided by this
section, Chapter 64, Property Code, as added by Chapter 636 (Senate
Bill No. 889), Acts of the 82nd Legislature, Regular Session, 2011,
and amended by this Act, governs the enforcement of an assignment of
rents, the perfection and priority of a security interest in rents,
and the attachment and perfection of a security interest in
proceeds regardless of whether the document creating the assignment
of rents was signed and delivered before the effective date of this
Act or before June 17, 2011.
(b) Chapter 64, Property Code, as added by Chapter 636
(Senate Bill No. 889), Acts of the 82nd Legislature, Regular
Session, 2011, and amended by this Act, does not affect an action or
other proceeding commenced before June 17, 2011.
(c) Subsection (a), Section 64.051, Property Code, as added
by Chapter 636 (Senate Bill No. 889), Acts of the 82nd Legislature,
Regular Session, 2011, and amended by this Act, does not apply to a
security instrument signed and delivered before June 17, 2011.
(d) Chapter 64, Property Code, as added by Chapter 636
(Senate Bill No. 889), Acts of the 82nd Legislature, Regular
Session, 2011, and amended by this Act, does not affect:
(1) the enforceability of an assignee's security
interest in rents or proceeds if, immediately before June 17, 2011,
that security interest was enforceable;
(2) the perfection of an assignee's security interest
in rents or proceeds if, immediately before June 17, 2011, that
security interest was perfected; or
(3) the priority of an assignee's security interest in
rents or proceeds with respect to the interest of another person if,
immediately before June 17, 2011, the interest of the other person
was enforceable and perfected and that priority was established.
SECTION 13. This Act takes effect immediately if it
receives a vote of two-thirds of all the members elected to each
house, as provided by Section 39, Article III, Texas Constitution.
If this Act does not receive the vote necessary for immediate
effect, this Act takes effect September 1, 2013.
______________________________ ______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 848 passed the Senate on
March 27, 2013, by the following vote: Yeas 30, Nays 0.
______________________________
Secretary of the Senate
I hereby certify that S.B. No. 848 passed the House on
May 17, 2013, by the following vote: Yeas 134, Nays 0, two
present not voting.
______________________________
Chief Clerk of the House
Approved:
______________________________
Date
______________________________
Governor