Bulletin: TX2017007

Dear Associates:

Introduction

The 2017 Texas Legislative Session passed 1,163 bills.

PUBLIC RECORDS

HB 457 - Confidentiality of certain home address information in ad valorem tax appraisal records

(Effective 6-15-17)

This bill adds to Section 25.025(a) of the Tax Code to allow spouses, surviving spouses, or adult children of a police officer to request that their home address is kept confidential on the tax records. This bill adds the above-stated people to the existing list of 17 other categories of persons that may exempt such information.

What you should do: If tax information is not available, you must require the party to obtain and furnish a tax statement showing the current status of the property taxes. The statement does not need to show the address of the tax payer.  

HB 1278 - Availability of personal information of certain current and former prosecutors

(Effective 6-15-17)

This bill adds to Section 552.117(a) of the Government Code as it relates to prosecutors, former prosecutors, and their current or former employees whose jurisdiction was criminal law or child protective services. Personal information is excepted from the requirements of Section 552.012 if the information relates to their home address, home telephone number, emergency contact information, social security number, or reveals whether the person has family members.

What you should do: If tax information is not available, you must require the party to obtain and furnish a tax statement showing the current status of the property taxes. The statement does not need to show the address of the tax payer.

HB 890 - Providing information to the public and to purchasers of real property regarding the impact of military installations

(Effective 9-1-17)

The bill adds a new paragraph 8 to the Seller’s Disclosure Notice required by Section 5.008(b) of the Property Code:

8.  This property may be located near a military installation and may be affected by high noise or air installation compatible use zones or other operations. Information relating to high noise and compatible use zones is available in the most recent Air Installation Compatible Use Zone Study or Joint Land Use Study prepared for a military installation and may be accessed on the Internet website of the military installation and of the county and any municipality in which the military installation is located.

What you should do:  While a title insurance company and its title insurance agents have no obligations or liability regarding the Seller’s Disclosure Notice, we suggest that it is a good practice to encourage that the most recent forms are used. We would expect the Texas Real Estate Commission to promulgate changes to the Seller’s Disclosure Notice form as quickly as possible. As of 8-20-2017, the change has not been made to the form. (See https://www.trec.texas.gov/forms/sellers-disclosure-property-condition)

HB 3107 - Repeat requests under the public information act

(Effective 9-1-17)

This bill amends Section 552.221 of the Government Code as it relates to persons who make repeated requests for copies of public information maintained by governmental bodies. If the requested information exceeds 36 hours of labor costs to comply with the requests, the governmental body may submit a written cost estimate of the additional costs of compliance. The governmental body need not comply with the request unless the requestor provides a statement committing to the payment of the additional costs. 

What you should know:  We don’t expect this act to affect title companies and their ability to obtain title information necessary to maintain their title plants. Please contact your Agency Services Manager or a Stewart Title Guaranty Company Texas Underwriter if you obtain differing information. 

HB 3423 - Recording documents related to the sale or lease of public school land

(Effective 9-1-17)

This bill amends Section 51.065 of the Natural Resources Code to require that the land commissioner send a written notice of the sale of a tract of public school lands which the clerk shall post in the land records of that county.  The notice must contain the name and address of the purchaser and the price of the land. 

What you should do: If you receive such notice, please post it in your title plant.

SB 1955 - Expunction of a notice of lis pendens

(Effective 9-1-17)

This bill amends Section 12.0071(f) of the Property Code to clarify that when a certified copy of an order expunging a notice of lis pendens is recorded, the lis pendens no longer provides constructive or actual notice of any action in connection with the subject property. Additionally, property to which the lis pendens would have applied is transferred or encumbered “free of all matters asserted or disclosed in the notice and all claims or other matters asserted or disclosed in the action in connection with which the notice was filed.”

What you should do:  Notwithstanding the foregoing, if you are presented with a transaction that has a certified expunction order recorded, you must obtain approval from a Stewart Title Guaranty Company Texas Underwriter before closing or insuring. 

SB 1098 - Recordings, acknowledgments, and proofs of certain written instruments

(Effective 9-1-17)

This bill amends sections 406.014 Government Code to require that a notary must keep the signer, grantor or maker’s mailing address (instead of residence or alleged residence.)

What you should do:  Each notary should amend their notary book to show the signer’s mailing address. 

AD VALOREM TAXES

HB 217 - Allows disabled veterans who qualify for a residential homestead exception to defer collection of property taxes 

(Effective 9-1-17)

This bill amends Chapter 33, Section 33.06(a), Tax Code, allowing disabled veterans who qualify for a residential homestead exemption to defer collection of property taxes, abate a suit to collect a delinquent tax, or abate a tax lien foreclosure sale, in the same manner as homeowners who are 65 years of age or older or who are otherwise disabled.

What you should know/do: Qualified disabled veterans may now defer property tax collection, abate a tax collection lawsuit or tax foreclosure sale, in the same manner as over 65 or other disabled homeowners/taxpayers. Upon the sale of a property with a tax deferment, the seller must provide evidence that the deferment has been terminated and the deferred taxes, including the statutory interest of 8% annual interest, are paid or will be paid at closing. 

HB 777 - Allows eligibility for agricultural land appraisal valuation to members of U.S. armed forces while stationed outside of Texas

(Effective 5-23-17) 

This bill adds Section Sec. 23.523 to the Tax Code to allow members of the United States armed services, while they are deployed or stationed outside of Texas, to maintain their eligibility for agricultural (open space) land appraisal valuation as long as they resume the qualifying land use to the degree of intensity generally accepted in the area, not later than 180 days after the date the owner ceases to be deployed or stationed outside of the state.

What you should know/do: AG/Open Space valuation continues to apply to the qualifying land during the owners’ military deployment out of state, provided the owner resumes the appropriate agricultural land use practices within 6 months of her/his return to the state. Require a tax certification showing no roll back taxes are due or will be due.

HB 2228 - Amends deadlines for performing various functions in connection with the ad valorem tax system 

(Effective 1-1-18)

Section 3 of this bill amends Section 22.23, Tax Code, in two subsections setting deadlines for filing property rendition statements and property reports for certain exempt properties and properties regulated by the Texas PUC, RRC, Federal STB, and Federal ERC.  

Section 4 of this bill amends Section 41.11, Tax Code, to require that an owner who receives a Notice to Property Owner of Change in Records is entitled to protest such action as provided by Section 41.44(a)(2), rather than as provided by Section 41.44(a)(3).  

Section 5 of this bill amends Sections 41.44 (a) and (c), Tax Code, to change the deadline to file a notice of protest to May 15 or other designated date, whichever is later. If notice is timely, the protester is entitled to a hearing regardless of whether the appraisal records have been approved.

What you should know/do:  Make note of the new earlier deadlines that pertain to ad valorem taxes on real property, particularly for notice of appraisal protests. For title insurance purposes, if a protest has been filed, it must be disposed of and a receipt must be obtained for taxes for the current year. If taxes are not yet due and payable, you should obtain an agreement between the seller and buyer that they will handle any additional taxes themselves complying with Rule P-20. 

SB 594 - Allows Comptroller to revise the rules and procedural manual for appraising qualified open-space land 

(Effective 1-1-18) 

This bill amends Chapter 23, Tax Code, allowing the Comptroller to revise the rules and procedural manual for appraising qualified open-space land as reviewed by the Texas Department of Agriculture, as well as revise the manual for appraising qualified timber land as reviewed by the Texas A&M Forest Service. This bill removes prior requirements that these manuals be approved by a majority vote of the Governor, Comptroller, Attorney General, Commissioner of Agriculture, and Commissioner of GLO prior to publication.

What you should know/do: Be aware of any changes to be made to the manuals for appraising qualified open-space land and timber lands pursuant to this more streamlined review and approval process.  Despite any changes made, title insurance agents and companies must comply with Rule P-20.

LOANS

HB 45 - Foreign judgments and arbitrations being enforced/recognized in Texas 

(Effective 9-1-17)

This bill relates to foreign judgments and arbitration awards being enforced or recognized in Texas as they relate to family matters involving marriage and parent-child relationships. The bill requires the Texas Supreme Court to adopt rules and provide judicial instruction regarding the application of the foreign laws in the aforementioned family law matters.   

What you should do: If a foreign judgment has not been ruled on as it relates to matters involving marriage and parent-child relationships, wait the necessary time for an appeal to have run before proceeding with any transaction that has a foreign judgment involving the aforementioned family matters. We will advise you when the Supreme Court has published its rules. 

HB 1470 - Public sale of residential real property under a power of sale in a security instrument

(Effective 9-1-17)

This bill adds to Title 2, Business & Commerce Code, by amending Chapter 22. Public Sale of Residential Real Property (1-4 family or condo property) under a Power of Sale.  It outlines the Trustee’s or Substitute Trustee’s responsibilities, requirements of the winning bidder, obligations for delivery of the deed, handling of sale proceeds, and the rights of the Trustee’s or substitute Trustee’s payment of reasonable fees for services performed in connection with the Public Sale. 

It also allows the trustee or substitute trustee to contract with an attorney to advise the trustee or perform any of the trustee’s duties or responsibilities. Further, it allows an auction house to arrange, manage, sponsor or advertise a public sale.

It requires that the bidder at a foreclosure sale provide the trustee with full information as it relates to the identity of the bidder or the bidder’s principal.

Further, it requires a prompt receipt of funds and a trustee deed being delivered within a reasonable time. The sales proceeds must be maintained in a separate account of the trustee until distributed. A trustee’s fee cannot exceed the lesser of 2.5% or $5,000. ($5,000 is equal to 2.5% of $200,000).

What you should do: You should require that the trustee’s deed contain the required information regarding the identity and contact information of the successful bidder. You may require proof of a contract when a trustee engages an attorney to conduct the foreclosure.  We are not responsible for determining the amount of the trustee’s fee. However, if you have information that the trustee is requesting a fee exceeding the statutory amount, contact a Texas Underwriter to discuss. 

If the actual foreclosure sale has been conducted by an auction house, contact a Stewart Title Guaranty underwriter before issuing a commitment or insuring.

PROBATE

HB 1814 - Adds a requirement to applications for the probate of a will 

(Effective 9-1-17)

This bill adds a requirement to applications for the probate of a will, muniment of title, or letters of administration to include the last three numbers of each applicant’s and decedent’s driver’s license number and social security number. If the application for letters of administration doesn’t include these numbers, the applicant must state the reasons.

What you should know/do: This additional information is required in the above-referenced applications going forward. This identifying information may be a helpful resource for you to determine if a prior lien or abstract of judgment is against the decedent or potential beneficiary in your transaction.

HB 1877 - Allows the court to impose a fine up to $1,000 plus damages and costs for misrepresentations 

(Effective 9-1-17)

This bill allows the court to impose a fine up to $1,000 plus damages and costs for misrepresentations made in an affidavit in lieu of inventory, appraisement, and list of claims.

What you should know/do: This law will hopefully serve to discourage misrepresentations in affidavits in lieu of inventory, appraisement, and list of claims, however, you must continue to comply with Rule P-11b.(9) by examining a balance sheet in instances where federal estate taxes and state inheritance taxes have not been paid.

HB 2207 - Clarifies the manner in which a will can be deposited with the county clerk

(Effective 9-1-17)

This bill clarifies the manner in which a will can be deposited with the county clerk by an attorney, business or other person in possession of a testator’s will.

What you should know/do: Upon receiving an affidavit or other notice or proof of a testator’s death, the county clerk must notify the persons named on the endorsement of the will wrapper that the will is deposited in the clerk’s office.  As stated in the statute, depositing the will with the county clerk merely provides a safe and convenient repository for a will. This does not change our requirements related to obtaining proof of probate proceeding and related pleadings or obtaining an affidavit of heirship.

HB 2271 - Makes many modifications to the Estates Code related to decedent’s estates

(Effective 9-1-17)

Some of the numerous changes this bill makes to the Estates Code are:   

• allowing proof of a community property survivorship agreement by written deposition;
• adding children adopted equitably or by estoppel are considered adopted children;
• increasing the limit for small estate affidavits from $50,000 to $75,000;
• clarifying that members of a class include persons born before, or in gestation at, the death of the person or persons who are measuring the lives for the class (and not at the testator’s death);
• limiting the time frame to modify or reform a will to four years following the admission of the will to probate;
• allowing an estate administration to be opened more than four years after the decedent’s death if the application is filed before the fourth anniversary;
• requiring an applicant for a muniment of title to state if there is another reason that there isn’t a necessity for administration of the estate other than no unpaid debts;
• changing the notice provisions to claimants after probate of a will from a newspaper printed in the county in which the letters are issued to a newspaper of general circulation in the county; and 
• clarifying and using consistent definitions that currently exist in the Estates Code. 

What you should know/do: Take note of the statutory changes to apply in evaluating future transactions. Remember that Section 105.001 of the Estates Code excludes the value of the homestead and exempt property from the $50,000 (now $75,000) limitation for small estates. Thus, it remains possible for a homestead of $150,000 or more to be handled under a small estate affidavit under Section 205.006.

SB 617 - Addresses provisions related to trusts primarily contained in the Property Code 

(Effective 9-1-17)

This bill addresses provisions related to trusts primarily contained in the Property Code, including authorizing reformation of trusts, expanding the statutory authority of a trustee to delegate authority to engage in various powers related to transactions involving real property, and amending provisions to correct drafting errors.

What you should know/do: Property Code Sec. 113.018 on the Employment and Appointment of Agents contains numerous additions to the statutory trustee powers that can be delegated to agents for the purposes of real property transactions. These include, but are not limited to:  

• Executing and delivering any legal instruments relating to the sale and conveyance of the property;
• Accepting notes, deeds of trust, or other legal instruments;
• Approving closing statements authorizing deductions from the sale price;
• Receiving trustee’s net proceeds by check payable to the trustee;
• Indemnifying and holding harmless any third party who accepts and acts under a power of attorney with respect to the sale; and
• Taking any action necessary to sell the property and accomplish the delegated powers 

What you should know/do: A delegation by the trustee must be in writing and acknowledged by the trustee before an officer of the state (or another state) authorized to take acknowledgments to deeds of conveyance and administer oaths. The statute provides the delegation terminates six months after the date of the acknowledgment unless terminated earlier by death or incapacity of the trustee, resignation or removal of the trustee or a date specified in the written delegation. Although delegation of some of the trustee’s duties may be statutorily permissible in a real property transaction, please contact a Stewart Title Guaranty Company Texas Underwriter to ensure the agent has the proper authority for the given action in the transaction.

SB 2150 - Amends Estate Code Sections 114.103 and 114.151 related to Transfer on Death Deeds (TODD) enacted last session 

(Effective 9-1-17)

This bill amends the statutory framework so that it is now consistent with anti-lapse rules for a failure of devices under a will, such that a predeceased beneficiary’s share would go to that beneficiary’s surviving children or other descendants. The statutory form of TODD has been amended by adding options to deal with the shares of predeceasing beneficiaries. An anti-lapse election is provided in the TODD form as an option, or if no options are selected, would be the default.

What you should know/do: Be aware of the changes and the new existing options to the statutory form that goes into effect 9-1-2017; however, you cannot provide legal advice as to the TODD form or use or the various options contained within it. Please see TX2015003 for more information regarding the requirements and guidance for TODDs.

SB 499 - Adopts the Uniform Partition of Heirs Property Act (UPHPA) as the new Chapter 23A of the Property Code 

(Effective 9-1-17)

The intent of the statute is to protect property owned by families as tenants in common (often the case after an intestate succession) from forced partition actions. Keep in mind that any tenant in common has the right to sell or convey their interest without the consent of the other tenants-in-common regardless of the size of their interests. In addition, any tenant can force a partition in kind or a partition by sale. The UPHPA provides more due process protections to an heir’s property by setting out several new requirements in a partition proceeding.

What you should know/do: If you have a transaction that involves a partition action in the chain of title by co-tenants, review the UPHPA requirements and obtain approval from a Stewart Title Guaranty Company Texas Underwriter.

eNOTARIZATION

HB 1217 - Remote eNotarization 

(Effective 7-1-18) 

This bill:

• Establishes the framework for remote eNotarization in Texas;
• Requires rulemaking by the Secretary of State;
• Requires that eNotarized documents must be identified as such;
• Prevents vendor monopoly; and
• Establishes Texas as a leader in remote eNotarization. 

What you should know/do:

• Expect a Stewart bulletin in coming months; and
• Until the rules are adopted, we will not accept a document that is remotely electronically notarized. 

POWER OF ATTORNEY

HB 1974 – Texas Power of Attorney Act 

(Effective 9-1-17)

This bill addresses many issues: 

In Section 751.00201 of the Estates Code, it defines disabled or incapacitated for purposes of a POA: 

If a physician certifies in writing at a date later than the date the durable power of attorney is executed, based on the physician's medical examination of the person, the person is determined to be mentally incapable of managing the person's financial affairs.

In Section 751.0021 of the Estates Code are set out the requirements for a durable power of attorney:

(1) In writing and granting authority to another person to act in place of the principal whether the words power of attorney are used;

(2) Signed by an adult principal or in the adult principal’s conscious presence by another adult;

(3) Contains language as to disability that clearly indicates the authority continues after disability; and

(4) Is acknowledged.

A power of attorney has the meaning of the jurisdiction set out in the POA or the state where it was executed or the place of the principal’s residence if so designated (Section 751.0024).

A number of additional matters are addressed but do not have a direct bearing on the use of a power of attorney in a real estate transaction.

Section 751.201 deals with the acceptance of a power of attorney within seven (7) days after it is offered. It was intended to deal with financial institutions who may require substantial time to approve, and which may cause a delay in the use of the POA. The bill purports to require a person to accept a POA unless grounds for refusal exist under Section 751.206.  

The person to whom the POA is presented can require an opinion of counsel, including an English translation. The person can also request a certification of facts under Section 751.203 in the form stated in the law.  

What you should know/do: You may generally accept as true statements made in the certification of facts so long it is made under penalty of perjury and you have no actual knowledge that the certification is false. 

Section 751.206 provides the grounds for refusing to accept a power of attorney. It provides that a person is not required to accept the power of attorney if an agent is seeking to establish a customer relationship under the POA when the principal is not already a customer of the person or to expand an existing customer relationship.  

What you should know/do: It is our position that only in the rarest of cases, will the person offering a power of attorney be seeking to establish a customer relationship with the title company. 

• A seller offering a POA is not the customer of the title company; the insured buyer is the customer.
• A borrower offering a POA is not the customer of the title company; the insured lender is the customer.
• A seller in a seller financed transaction who is getting a loan policy may create a customer relationship.
• It may be possible to create a customer relationship where the activity involves only the escrow of funds and/or documents. Escrow matters are outside the scope of the agency agreement and as such should be discussed with your management or your attorney. 

Home Equity Loan Issues: 

Section 752.102(b) provides that a power of attorney may be used to create a home equity loan.

What you should know/do: We never doubted that such power existed. 

However, we believe that the Texas Supreme Court’s holding in Finance Commissioner v. Norwood,10-0112 discussed in bulletin TX2013004, still applies. In the Norwood case, the Supreme Court held that executing the required consent or a power of attorney are parts of the closing process and must occur at one of the locations allowed by the constitutional provisions (attorney’s office, lender’s office or title company’s office). 

Accordingly, unless you have satisfactory proof that a POA was signed in one of those locations, the POA may not be used in a home equity loan situation. The rule announced in Norwood does not apply to reverse mortgages.  

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.