H.B. No. 3306

AD VALOREM TAXATION (VENUE PROVISIONS MAY AFFECT PROBATE)

Effective Date: January 1, 1998

AN ACT

relating to penalties and interest, writs, suits, judgment amounts, right of redemption, and distribution of proceeds in ad valorem tax matters.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1.  Section 31.01(a), Tax Code, is amended to read as follows:

(a)  Except as provided by Subsection (f) of this section, the assessor for each taxing unit shall prepare and mail a tax bill to each person in whose name the property is listed on the tax roll or to his authorized agent. The assessor shall mail tax bills by October 1 or as soon thereafter as practicable. The assessor shall mail to the state agency or institution the tax bill for any taxable property owned by the agency or institution. The agency or institution shall pay the taxes from funds appropriated for payment of the taxes or, if there are none, from funds appropriated for the administration of the agency or institution. The exterior [outside] of the [envelope in which a] tax bill [is sent] must show the return address of the taxing unit and must contain, in all capital letters, the words "ADDRESS CORRECTION REQUESTED".

SECTION 2.  Section 32.07, Tax Code, is amended by adding Subsections (d) through (g) to read as follows:

(d)  Any person who receives or collects an ad valorem tax or any money represented to be a tax from another person holds the amount so collected in trust for the benefit of the taxing unit and is liable to the taxing unit for the full amount collected plus any accrued penalties and interest on the amount collected.

(e)  With respect to an ad valorem tax or other money subject to the provisions of Subsection (d), an individual who controls or supervises the collection of tax or money from another person, or an individual who controls or supervises the accounting for and paying over of the tax or money, and who wilfully fails to pay or cause to be paid the tax or money is liable as a responsible individual for an amount equal to the tax or money not paid or caused to be paid. The liability imposed by this subsection is in addition to any other penalty provided by law. The dissolution of a corporation, association, limited liability company, or partnership does not affect a responsible individual's liability under this subsection.

(f)  Venue for suits arising under this section shall be governed by Section 33.41(a).

(g)  In this section:

(1)  "Responsible individual" includes an officer, manager, director, or employee or a corporation, association, or limited liability company or a member of a partnership who, as an officer, manager, director, employee, or member, is under a duty to perform an act with respect to the collection, accounting, or payment of a tax or money subject to the provisions of Subsection (d).

(2)  "Tax" includes any ad valorem tax or money subject to the provisions of Subsection (d), including the penalty and interest computed by reference to the amount of the tax or money.

SECTION 3.  Sections 33.01(a) and (c), Tax Code, are amended to read as follows:

(a)  A delinquent tax incurs a penalty of six percent of the amount of the tax for the first calendar month it is delinquent plus one percent for each additional month or portion of a month the tax remains unpaid prior to July 1 of the year in which it becomes delinquent. However, a tax delinquent on July 1 incurs a total penalty of twelve percent of the amount of the delinquent tax without regard to the number of months the tax has been delinquent. A delinquent tax continues to incur the penalty provided by this subsection as long as the tax remains unpaid, regardless of whether a judgment for the delinquent tax has been rendered.

(c)  A delinquent tax accrues interest at a rate of one percent for each month or portion of a month the tax remains unpaid. Interest payable under this section is to compensate the taxing unit for revenue lost because of the delinquency. A delinquent tax continues to accrue interest under this subsection as long as the tax remains unpaid, regardless of whether a judgment for the delinquent tax has been rendered.

SECTION 4.  Section 4, Article 1.05, Title 79, Revised Statutes (Article 5069-1.05, Vernon's Texas Civil Statutes), is amended to read as follows:

Sec. 4. This article does not apply to a judgment:

(1)  in favor of a taxing unit in a suit to collect a delinquent tax under Subchapter C, Chapter 33, Tax Code; or

(2)  that earns interest that is set by Title 2, Tax Code.

SECTION 5.  Section 33.02(b), Tax Code, is amended to read as follows:

(b)  Interest and a penalty accrue [accrues] as provided by Subsections (a) and [Subsection] (c) of Section 33.01 [of this code] on the unpaid balance during the period of the agreement.

SECTION 6.  (a) Section 33.48(a), Tax Code, is amended to read as follows:

(a)  In addition to other costs authorized by law, a taxing unit is entitled to recover the following costs and expenses in a suit to collect a delinquent tax:

(1)  all usual court costs, including the cost of serving process;

(2)  costs of filing for record a notice of lis pendens against property;

(3)  expenses of foreclosure sale;

(4)  reasonable expenses[, subject to approval by the court,] that are incurred by the taxing unit in determining the name, identity, and location of necessary parties and in procuring necessary legal descriptions of the property on which a delinquent tax is due; and

(5)  [reasonable] attorney's fees in the amount of [approved by the court and not exceeding] 15 percent of the total amount of taxes, penalties, and interest due the unit.

(b)  The change in law made to Section 33.48(a), Tax Code, by this Act applies only to a suit to collect a delinquent ad valorem tax pending on or after the effective date of this Act.

SECTION 7.  Section 33.51, Tax Code, is amended to read as follows:

Sec. 33.51.  WRIT OF POSSESSION. If the court orders the foreclosure of a tax lien and the sale of real property, the judgment shall provide for the issuance by the clerk of said court of a writ of possession to the purchaser at the sale or to the purchaser's [his] assigns no sooner than 20 days following the date on which the purchaser's deed from the sheriff or constable is filed of record [within 20 days after the period of redemption expires].

SECTION 8.  Section 33.52, Tax Code, is amended to read as follows:

Sec. 33.52.  JUDGMENT FOR CURRENT TAXES. (a)  If the court orders the foreclosure of a tax lien and the sale of real property, the judgment may include foreclosure on any unpaid tax on the property for the current year [shall order that the taxing unit recover from the proceeds of the sale the amount of tax on the property for the current tax year prorated to the day of judgment].

(b)  If the amount of tax for the current tax year has not been determined on the date of judgment, the court may [shall] order recovery of and foreclosure on the amount of tax imposed on the property for the preceding tax year[, prorated to the date of judgment].

(c)  If the judgment does not provide for recovery of taxes imposed for the current tax year, or for recovery of estimated taxes that cannot then be calculated for the current year, the real property is subject to the taxes for the current tax year and to the lien that secures those taxes, and any subsequent purchaser takes the property subject to those taxes and the tax lien.

SECTION 9.  Sections 34.05(a) and (g), Tax Code, are amended to read as follows:

(a)  If property is sold to a taxing unit that is a party to the judgment, the taxing unit may sell the property at any time and in any manner, except as otherwise required by this section. All such resales shall be [,] subject to any right of redemption existing at the time of the sale.

(g)  Sections 263.001 and 272.001(a), Local Government Code, do not apply to property sold by a taxing unit [in a municipality with a population of 1.5 million or more] under this section. A taxing unit may, however, elect to follow the Local Government Code provisions in reselling such property.

SECTION 10.  Section 34.06(b), Tax Code, is amended to read as follows:

(b)  The purchasing taxing unit shall pay all costs and expenses of court and sale and shall distribute the remainder of the proceeds to each taxing unit participating in the sale in an amount equal to the proportion each participant's taxes, penalties, and interest bear to the total amount of taxes, penalties, and interest due all participants in the sale, less any amounts previously paid as costs on the property as defined under Section 34.21(i) [as provided by Section 34.02 of this code for distribution of proceeds after payment of costs].

SECTION 11.  Section 34.21, Tax Code, is amended to read as follows:

Sec. 34.21.  RIGHT OF REDEMPTION. (a)  The owner of real property sold at a tax sale to a purchaser other than a taxing unit and that was the residence homestead of the owner or that was land designated for agricultural use when the suit to collect the tax was filed may redeem the property within two years after the date on which the purchaser's deed is filed for record by paying the purchaser the amount the purchaser bid for the property, the amount of the deed recording fee, and the amount paid by the purchaser as taxes, penalties, interest, and costs on the property, plus a redemption premium of 25 percent of the aggregate total if the property is redeemed during the first year of the redemption period or 50 percent of the aggregate total if the property is redeemed during the second year of the redemption period.

(b)  If property that was the owner's residence homestead or was land designated for agricultural use when the suit to collect the tax was filed is bid off to a taxing unit under Section 34.01(c) and has not been resold by the taxing unit, the owner having a right of redemption may redeem the property within two years after the date on which the deed of the taxing unit is filed for record by paying the taxing unit the amount of the judgment against the property or the market value of the property as specified in that judgment, whichever is less, plus the amount of the fee for filing the taxing unit's deed and the amount expended by the taxing unit as costs on the property.

(c)  If real property that was the owner's residence homestead or was land designated for agricultural use when the suit to collect the tax was filed has been resold by the taxing unit under Section 34.05, the owner of the property having a right of redemption may redeem the property within two years after the date on which the taxing unit files for record the deed from the sheriff or constable by paying the person who purchased the property from the taxing unit the amount the purchaser paid for the property, the amount of the fee for filing the purchaser's deed for record, the amount paid by the purchaser as taxes, penalties, interest, and costs on the property, plus a redemption premium of 25 percent of the aggregate total if the property is redeemed in the first year of the redemption period or 50 percent of the aggregate total if the property is redeemed in the second year of the redemption period.

(d)  The owner of real property sold at a tax sale other than property that was the residence homestead of the owner or that was land designated for agricultural use when the suit to collect the tax was filed [covered by Subsection (a)] may redeem the property in the same manner and by paying the same amounts as prescribed by Subsection (a), (b), or (c), as applicable, except that:

(1)  the owner's right of redemption may be exercised no later than 180 days following [within six months after] the date on which the purchaser's or taxing unit's deed is filed for record; and

(2)  the redemption premium payable by the owner to a purchaser other than a taxing unit shall not exceed 25 percent. [by paying the purchaser the amount the purchaser bid for the property, the amount of the deed recording fee, and the amount paid by the purchaser as taxes, penalties, interest, and costs on the property, plus 25 percent of the aggregate total.]

(e) [(c)]  If the owner of the real property makes an affidavit that the owner [he] has made diligent search in the county in which the property is located for the purchaser at the tax sale or for the purchaser at resale, and has failed to find the purchaser [him], that the purchaser [at the sale] is not a resident of the county in which the property is located, that the owner [he] and the purchaser cannot agree on the amount of redemption money due, or that the purchaser refuses to give the owner [him] a quitclaim deed to the property, the owner may redeem the land [property] by paying the required amount as prescribed by this section [Subsection (a) or (b), as applicable,] to the assessor-collector for the county in which the property described has been redeemed [is located]. The assessor-collector receiving the payment shall give the owner a signed receipt witnessed by two persons. The receipt, when recorded, is notice to all persons that the property described has been redeemed. The assessor-collector shall on demand pay the money received by the assessor-collector [him] to the purchaser [at the tax sale].

(f) [(d)]  The right of redemption does not grant or reserve in the former owner of the real property the right to the use or possession of the property, or to receive rents, income, or other benefits from the property while the right of redemption exists.

(g) [(e)]  In this section, "residence homestead" has the meaning assigned by Section 11.13.

(h) [(f)]  In this section, "agricultural use" has the meaning assigned by Section 23.51.

(i)  In this section, "costs" is defined to include all those amounts reasonably expended by a purchaser or taxing unit in the maintenance, preservation, and safekeeping of the property, including but not limited to:

(1)  insurance against fire, flood, and other hazards;

(2)  repairs and improvements required by local ordinance, building code, or by the terms of any existing lease of the property, whether written or oral;

(3)  discharge of mowing, cleaning, or demolition liens against the property that secure expenses incurred by a municipality;

(4)  dues, assessments for maintenance, or liens provided by recorded restrictive covenants affecting the property and payable to a property owner's association; and

(5)  standby fees payable to a water district, fresh water supply district, or other municipality as authorized by law.

SECTION 12.  Section 34.23(b), Tax Code, is amended to read as follows:

(b)  Except as provided by Section 34.21(e), the owner of property sold for taxes to a taxing unit may not redeem the property from the taxing unit after the property has been resold. [If the owner of property sold for taxes redeems the property from the taxing unit after the property has been resold, the taxing unit shall pay the purchaser at the resale the amount he paid for the property, plus 25 percent of that amount if the redemption occurs within one year after the date the property is resold or 50 percent of that amount if the redemption occurs more than one year after the date the property is resold. The taxing unit shall distribute the redemption proceeds remaining after payment of the amount due the purchaser at resale to the taxing units adjudged to have tax liens against the property in the proportion the amount of each unit's lien bears to the total amount of all liens established in foreclosure suit.]

SECTION 13.  Section 41.11(a), Tax Code, is amended to read as follows:

(a)  Not later than the [15th day before the] date the appraisal review board approves the appraisal records as provided by Section 41.12 [of this code], the secretary of the board shall deliver written notice to a property owner of any change in the records that is ordered by the board as provided by this subchapter and that will result in an increase in the tax liability of the property owner. An owner who receives a notice as provided by this section shall be entitled to protest such action as provided by Section 41.44(a)(2).

SECTION 14.  This Act takes effect January 1, 1998.

SECTION 15.  The importance of this legislation and the crowded condition of the calendars in both houses create an emergency and an imperative public necessity that the constitutional rule requiring bills to be read on three several days in each house be suspended, and this rule is hereby suspended.


Courtesy of Glenn M. Karisch, Ikard & Golden, P. C., Austin, Texas. This page was last revised on May 28, 1997.