Tex.
Tax Code Section 32.06
Property Tax Loans; Transfer of Tax Lien
(a)
In this section:(1)
“Mortgage servicer” has the meaning assigned by Section 51.0001 (Definitions), Property Code.(2)
“Transferee” means a person who is licensed under Chapter 351 (Property Tax Lenders), Finance Code, or is exempt from the application of that chapter under Section 351.051 (License Required)(c), Finance Code, and who is:(A)
authorized to pay the taxes of another; or(B)
a successor in interest to a tax lien that is transferred under this section.(a-1)
A property owner may authorize another person to pay the taxes imposed by a taxing unit on the owner’s real property by executing and filing with the collector for the taxing unit:(1)
a sworn document stating:(A)
the authorization for payment of the taxes;(B)
the name and street address of the transferee authorized to pay the taxes of the property owner;(C)
a description of the property by street address, if applicable, and legal description; and(D)
notice has been given to the property owner that if the property owner is disabled, the property owner may be eligible for a tax deferral under Section 33.06 (Deferred Collection of Taxes on Residence Homestead of Elderly or Disabled Person or Disabled Veteran); and(2)
the information required by Section 351.054 (Notice to Taxing Unit), Finance Code.(a-2)
Except as provided by Subsection (a-8), a tax lien may be transferred to the person who pays the taxes on behalf of the property owner under the authorization described by Subsection (a-1) for:(1)
taxes that are delinquent at the time of payment; or(2)
taxes that are due but not delinquent at the time of payment if the property is not subject to a recorded mortgage lien.(a-3)
A person who is 65 years of age or older may not authorize a transfer of a tax lien on real property on which the person is eligible to claim an exemption from taxation under Section 11.13 (Residence Homestead)(c).(a-4)
The Finance Commission of Texas shall:(1)
prescribe the form and content of an appropriate disclosure statement to be provided to a property owner before the execution of a tax lien transfer;(2)
adopt rules relating to the reasonableness of closing costs, fees, and other charges permitted under this section;(3)
by rule prescribe the form and content of the sworn document under Subsection (a-1) and the certified statement under Subsection (b); and(4)
by rule prescribe the form and content of a request a lender with an existing recorded lien on the property must use to request a payoff statement and the transferee’s response to the request, including the period within which the transferee must respond.(a-5)
At the time the transferee provides the disclosure statement required by Subsection (a-4)(1), the transferee must also describe the type and approximate cost range of each additional charge or fee that the property owner may incur in connection with the transfer.(a-6)
Notwithstanding Subsection (f-3), a lender described by Subsection (a-4)(4) may request a payoff statement before the tax loan becomes delinquent. The Finance Commission of Texas by rule shall require a transferee who receives a request for a payoff statement to deliver the requested payoff statement on the prescribed form within a period prescribed by finance commission rule. The prescribed period must allow the transferee at least seven business days after the date the request is received to deliver the payoff statement. The consumer credit commissioner may assess an administrative penalty under Subchapter F (Assessment of Penalty; Restitution Order), Chapter 14 (Consumer Credit Commissioner), Finance Code, against a transferee who wilfully fails to provide the payoff statement as prescribed by finance commission rule.(a-7)
A contract between a transferee and a property owner that purports to authorize payment of taxes that are not delinquent or due at the time of the authorization, or that lacks the authorization described by Subsection (a-1), is void.(a-8)
A tax lien may not be transferred to the person who pays the taxes on behalf of the property owner under the authorization described by Subsection (a-1) if the real property:(1)
has been financed, wholly or partly, with a grant or below market rate loan provided by a governmental program or nonprofit organization and is subject to the covenants of the grant or loan; or(2)
is encumbered by a lien recorded under Subchapter A (Authority Regarding Substandard Building), Chapter 214 (Municipal Regulation of Housing and Other Structures), Local Government Code.(a-9)
The Finance Commission of Texas may adopt rules to implement Subsection (a-8).(b)
If a transferee authorized to pay a property owner’s taxes under Subsection (a-1) pays the taxes and any penalties, interest, and collection costs imposed, the collector shall issue a tax receipt to that transferee. In addition, the collector or a person designated by the collector shall certify that the taxes and any penalties, interest, and collection costs on the subject property have been paid by the transferee on behalf of the property owner and that the taxing unit’s tax lien is transferred to that transferee. The collector shall attach to the certified statement the collector’s seal of office or sign the statement before a notary public and deliver a tax receipt and the certified statement attesting to the transfer of the tax lien to the transferee within 30 days. The tax receipt and certified statement may be combined into one document. The collector shall identify in a discrete field in the applicable property owner’s account the date of the transfer of a tax lien transferred under this section. When a tax lien is released, the transferee shall file a release with the county clerk of each county in which the property encumbered by the lien is located for recordation by the clerk and send a copy to the collector. The transferee may charge the property owner a reasonable fee for filing the release.(b-1)
Not later than the 10th business day after the date the certified statement is received by the transferee, the transferee shall send by certified mail a copy of the sworn document described by Subsection (a-1) to any mortgage servicer and to each holder of a recorded first lien encumbering the property. The copy must be sent, as applicable, to the address shown on the most recent payment invoice, statement, or payment coupon provided by the mortgage servicer to the property owner, or the address of the holder of a recorded first lien as shown in the real property records.(c)
Except as otherwise provided by this section, the transferee of a tax lien is entitled to foreclose the lien in the manner provided by law for foreclosure of tax liens.(c-1)
Repealed by Acts 2013, 83rd Leg., R.S., Ch. 206, Sec. 10, eff. May 29, 2013.(d)
A transferee shall record a tax lien transferred as provided by this section with the certified statement attesting to the transfer of the tax lien as described by Subsection (b) in the deed records of each county in which the property encumbered by the lien is located.(d-1)
A right of rescission described by the Truth in Lending Act (15 U.S.C. Section 1635) and Regulation Z (12 C.F.R. Section 1026.23) applies to a transfer under this section of a tax lien on residential property owned and used by the property owner for personal, family, or household purposes.(e)
A transferee holding a tax lien transferred as provided by this section may not charge a greater rate of interest than 18 percent a year on the funds advanced. Funds advanced are limited to the taxes, penalties, interest, and collection costs paid as shown on the tax receipt, expenses paid to record the lien, plus reasonable closing costs.(e-1)
A transferee of a tax lien may not charge a fee for any expenses arising after the closing of a loan secured by a tax lien transferred under this section, including collection costs, except for:(1)
interest expressly authorized under this section;(2)
the fees for filing the release of the tax lien under Subsection (b);(3)
the fee for providing a payoff statement under Subsection (f-3);(4)
the fee for providing information regarding the current balance owed by the property owner under Subsection (g); and(5)
the fees expressly authorized under Section 351.0021 (Authorized Charges), Finance Code.(e-2)
The contract between the property owner and the transferee may provide for interest for default, in addition to the interest permitted under Subsection (e), if any part of the installment remains unpaid after the 10th day after the date the installment is due, including Sundays and holidays. If the lien transferred is on residential property owned and used by the property owner for personal, family, or household purposes, the additional interest may not exceed five cents for each $1 of a scheduled installment.(f)
The holder of a loan secured by a transferred tax lien that is delinquent for 90 consecutive days must send a notice of the delinquency by certified mail on or before the 120th day of delinquency or, if the 120th day is not a business day, on the next business day after the 120th day of delinquency, to any holder of a recorded preexisting lien on the property. The holder or mortgage servicer of a recorded preexisting lien on property encumbered by a tax lien transferred as provided by Subsection (b) is entitled, within six months after the date on which the notice is sent, to obtain a release of the transferred tax lien by paying the transferee of the tax lien the amount owed under the contract between the property owner and the transferee.(f-1)
If an obligation secured by a preexisting first lien on the property is delinquent for at least 90 consecutive days and the obligation has been referred to a collection specialist, the mortgage servicer or the holder of the first lien may send a notice of the delinquency to the transferee of a tax lien. The mortgage servicer or the first lienholder is entitled, within six months after the date on which that notice is sent, to obtain a release of the transferred tax lien by paying the transferee of the tax lien the amount owed under the contract between the property owner and the transferee. The Finance Commission of Texas by rule shall prescribe the form and content of the notice under this subsection.(f-2)
The rights granted by Subsections (f) and (f-1) do not affect a right of redemption in a foreclosure proceeding described by Subsection (k) or (k-1).(f-3)
Notwithstanding any contractual agreement with the property owner, the transferee of a tax lien must provide the payoff information required by this section to the greatest extent permitted by the Gramm-Leach-Bliley Act (15 U.S.C. Section 6802) and Regulation P (12 C.F.R. Part 1016). The payoff statement must meet the requirements of a payoff statement defined by Section 12.017 (Title Insurance Company Affidavit as Release of Lien; Civil Penalty), Property Code. A transferee may charge a reasonable fee for a payoff statement that is requested after an initial payoff statement is provided. However, a transferee is not required to release payoff information pursuant to a notice under Subsection (f-1) unless the notice contains the information prescribed by the Finance Commission of Texas.(f-4)
Failure to comply with Subsection (b-1), (f), or (f-1) does not invalidate a tax lien transferred under this section or a deed of trust.(g)
At any time after the end of the six-month period specified by Subsection (f) and before a notice of foreclosure of the transferred tax lien is sent, the transferee of the tax lien may require the property owner to provide written authorization and pay a reasonable fee before providing information regarding the current balance owed by the property owner to the transferee.(h)
A mortgage servicer who pays a property tax loan secured by a tax lien transferred under this section becomes subrogated to all rights in the lien.(i)
A judicial foreclosure of a tax lien transferred under this section may not be instituted within one year from the date on which the lien is recorded in all counties in which the property is located, unless the contract between the owner of the property and the transferee provides otherwise.(j)
After one year from the date on which a tax lien transferred under this section is recorded in all counties in which the property is located, the transferee of the lien may foreclose the lien in the manner provided by Subsection (c) unless the contract between the transferee and the owner of the property encumbered by the lien provides otherwise. The proceeds of a sale following a judicial foreclosure as provided by this subsection shall be applied first to the payment of court costs, then to payment of the judgment, including accrued interest, and then to the payment of any attorney’s fees fixed in the judgment. Any remaining proceeds shall be paid to other holders of liens on the property in the order of their priority and then to the person whose property was sold at the tax sale.(k)
Beginning on the date the foreclosure deed is recorded, the person whose property is sold as provided by Subsection (c) or the mortgage servicer of a prior recorded lien against the property is entitled to redeem the foreclosed property from the purchaser or the purchaser’s successor by paying the purchaser or successor:(1)
125 percent of the purchase price during the first year of the redemption period or 150 percent of the purchase price during the second year of the redemption period with cash or cash equivalent funds; and(2)
the amount reasonably spent by the purchaser in connection with the property as costs within the meaning of Section 34.21 (Right of Redemption)(g) and the legal judgment rate of return on that amount.(k-1)
The right of redemption provided by Subsection (k) may be exercised on or before the second anniversary of the date on which the purchaser’s deed is filed of record if the property sold was the residence homestead of the owner, was land designated for agricultural use, or was a mineral interest. For any other property, the right of redemption must be exercised not later than the 180th day after the date on which the purchaser’s deed is filed of record. If a person redeems the property as provided by Subsection (k) and this subsection, the purchaser at the tax sale or the purchaser’s successor shall deliver a deed without warranty to the property to the person redeeming the property. If the person who owned the property at the time of foreclosure redeems the property, all liens existing on the property at the time of the tax sale remain in effect to the extent not paid from the sale proceeds.(l)
Except as specifically provided by this section, a property owner cannot waive or limit any requirement imposed on a transferee by this section.
Source:
Section 32.06 — Property Tax Loans; Transfer of Tax Lien, https://statutes.capitol.texas.gov/Docs/TX/htm/TX.32.htm#32.06 (accessed Jun. 5, 2024).
