Bulletin: TX2019009

Dear Associates:

ESTATES

HB 1689 - Disclosure regarding the existence of a gestational agreement in a suit for the dissolution of a marriage and standing of an intended parent under a gestational agreement to file a suit affecting the parent-child relationship. 
(Effective Date: 9-1-2019) 

A gestational agreement is a written contract between a married couple that are the intended parents and a third-party gestational mother agreeing that the gestational mother will relinquish all parental rights and duties with respect to a child conceived through assisted reproduction. If the parties in a suit for the dissolution of marriage are the intended parents under a gestational agreement that is in effect, the petition for the suit must state so as well as whether the agreement has been validated under §160.756 of the Family Code. This applies to any petition for dissolution filed after September 1, 2019. In addition, §102.003 of the Family Code has been amended to add that an intended parent of a child or unborn child under a gestational agreement can file an original suit affecting the parent-child relationship and provides the qualifications to have standing to do so.

As with many aspects of assisted reproduction, there are legal consequences as to how the parent-child relationship is recognized in the State of Texas. The existence of a gestational agreement or lack thereof has specific consequences that can affect child support obligations, determining a potential heir or dealing with a minor's interest.

What the title company should know: When a valid gestational agreement is in place under §160.756 of the Family Code, the intended parents are recognized as the legal guardians of the child and the surrogate mother relinquishes all rights as a parent of that child.

What the title company should do: If facts are revealed to you that suggest there may be a title issue related to a gestational agreement, valid or not, contact a Texas underwriter.

HB 2245 - Trusts
Effective date: 9-1-2019) 

This bill addresses many areas in connection to trusts including: 

• Incorporating the provisions of Estates Code Chapter 255 to also relate to trusts in Property Code Chapter 112 such as pretermitted children, advancements, lapsed gifts, class closing, etc. 
• Codifying the common law that if a second trust is created by a distribution of principal under §112.072 or §112.073 to a trust created under the same instrument as the first trust, the property is not required to be retitled. 
• Adding the provisions related to the effect of divorce on revocable dispositions in trust in favor of a former spouse and the former spouse's family into the Trust Code (these provisions are also located in Estates Code §123.051-056). 
• Adding provisions as to how trusts created by a court under Chapter 142 of the Property Code can be terminated. 
• Creating a new Chapter 143 of the Property Code for pooled trust subaccounts and the transfer of assets from a Chapter 142 management account.  

In general, the concepts related to the construction and interpretation of wills are applicable to trusts. 

What the title company should know: When a trust calls for distributing trust property into a new trust, a trustee does not need to formally retitle the property under a different instrument. 

What the title company should do: Become acquainted with the additions to the Trust Code and contact a Texas underwriter if you have any questions. 

HB 2782 - Decedents' estates, Transfer on Death Deeds (TODD), and matters involving probate courts. 
(Effective Date: 9-1-2019) 

This bill addresses many areas in connection to decedents' estates including: 

• Will modifications or reformation proceedings to the definition of "Probate Proceeding" (§31.001). 
• Upon request by the personal representative, requiring contracting third parties to provide information as to decedent's interest prior to death even if the estate has no interest in the asset (e.g., beneficiary accounts, insurance contracts, etc.) to assist in the preparation of the estate tax return or in evaluating whether nonprobate assets need to be used to pay debts and expenses (§111.101-111.102). 
• Clarification that a personal representative has no duty to pursue nonprobate assets to pay claims, expenses and taxes unless a surviving spouse, creditor or someone acting on behalf of a minor to pay debts of the decedent provides written demand (§113.252). 
• Adding a Transfer on Death Deed (TODD) can be made void by the recordation of a memorandum of conveyance in addition to a subsequent conveyance (§144.102). 
• Repeals the statutory forms for TODD and the revocation of a TODD (§114.151-152). 
• Clarifies intestate succession as to the deceased's spouse's half of the community estate (§201.003). 
• Requiring testimony of two disinterested and credible witnesses in a proceeding to declare heirship unless the court is satisfied that only one can be found (§202.151).  
• The authority to designate one or more persons to serve as an administrator of the testator's estate can be granted in a will to an executor or to another person named in the will, but the administrator may only serve if each executor named in the will is deceased, disqualified to serve or indicates by affidavit that the executor is unable or unwilling to serve (§254.006).  
• Unless the will provides otherwise, a failed devise provision would be inapplicable to charitable gifts such that the cy pres doctrine could be used to find an alternative charitable beneficiary (§255.152). 
• Addresses jurisdiction and transferring proceedings in counties without a statutory probate court or county-court-at-law to a statutory probate judge or to the district court (§255.456). 
• References to unwritten wills are deleted since this type of will has not been allowed in Texas since 2007 (§256.051). 
• When a will is filed for probate, it must remain in the clerk's custody unless removed for inspection by court order (§256.053 and §256.202). 
• A new §257.151 and §257.152 have been added to clarify that after the admission of a will as muniment of title, the will can still be filed for probate for the appointment of an executor or administrator so long as the application is filed within the appropriate timeframe or with court approval under Estates Code §301.002(b). 
• Clarifies the proof required for issuance of letter testamentary or of administration of an estate (§301.151). 
• Adds subsection (e) to §309.056 allowing for an affidavit in lieu of inventory to be filed after an extension is granted by the court to file an inventory, appraisement and list of claims under §309.051. 
• §351.106 is added to permit an executor or administrator to obtain a court order to access digital assets of a decedent. 
• A successful will contestant can be awarded costs, including attorneys' fees even if the contestant does not offer an alternative will (§352.052). 
• Allows for separate $15,000 limits for funeral expenses and expenses of last illnesses (§355.102 and §355.103). 
• §356.105, §356.401-405, §256.451, §356.502, §256.551-356.558 are amended to clarify the procedure to sell real estate when there is no will granting a power of sale. 
• Changes §401.005 to allow distributes to waive bond for an independent executor or administrator where the will doesn't waive it. 
• Clarifies §25.002201 and §25.00255 on the procedure to recuse a probate judge. 

What the title company should know: Be aware of the changes in general. As to TODDs, Stewart Bulletins TX2015003 and TX2017007 still apply but Stewart will accept a TODD or revocation of a TODD so long as the document contains the elements required therein. Consult a Texas underwriter if you are not sure whether the TODD or revocation conforms. 

SB 874 - Relating to forms for creating or revoking a Transfer on Death Deed (TODD)
(Effective Date: 9-1-2019) 

The Supreme Court shall, as the court considers appropriate, promulgate a form for use to create a transfer on death deed and a form for use to create an instrument of revocation of a transfer on death deed under Chapter 114, Estates Code. 

What the title company should know: When the Supreme Court has published the new forms, we will advise you.  

PRIVACY & PUBLIC RECORDS

HB 4390 - Privacy of personal identifying information and creation of the Texas Privacy Protection Advisory Council  
(Effective Date: 9-1- 2019) 

Amends §521.053, Business & Commerce Code to strengthen notification requirements (60 days) for a business to notify any individual whose sensitive personal information was or is reasonably believed to have been acquired by an unauthorized person due to a system security breach and to notify the attorney general of such a breach that involves at least 250 Texas residents and sets out the required contents of that notification. It also establishes the interim Texas Privacy Protection Advisory Council to study relevant data privacy laws in Texas and other states and countries and report its findings by December 1, 2020.  

What the title company should know: In case of a security breach involving sensitive personal information, the title company must notify affected persons/entities within 60 days of the breach and notify the Texas Attorney General. This would include escrow accounts.  

What the title company should do: Be aware of this law as it concerns sensitive personal information of customers revealed in a data breach. Statute does not require disclosure of the title company's remedial plans though; still may be a good idea to let affected customers know what is being done to further protect their information. 

SB 73 - Personal information on state and federal judges and their spouses. 
(Effective Date: 9-1-2019) 

Expands the types of records from which personal information relating to state and federal judges and their spouses may be omitted and by providing certain clarification regarding definitions. It amends the Property Code to include any record recorded by a county clerk related to real property in the definition of "instrument" for purposes of statutory provisions relating to personal information in real property records, including provisions requiring a county clerk to omit or redact certain personal information of a federal judge, state judge, or spouse of a federal or state judge from an instrument available in a public online database on receipt of a written request from the applicable judge or spouse.  

Since title policies insure on the basis of legal descriptions and not personal information like physical addresses, there is little to no impact.  

What the title company should know: In your title research you may see redactions of such personal information related to a federal judge, state judge, or spouse of a federal or state judge. 

What the title company should do: Continue to base your title policy upon legal descriptions of the property being insured.  

This type of redaction in the public record can impact the ability of a judge or spouse to sell or encumber property since the information may not be readily available in the records of the clerk used to create the agent's title plant.  

SB 489 - Judges' personal information that may be omitted from certain records, licenses, and reports and to other court security measures. 
(Effective Date: 9-1-2019) 

To ensure the personal safety of judges and their spouses, existing law redacts certain personal information about a federal or state judge and spouse from public records including deeds and deeds of trust filed of record. This bill amends the Election Code, Government Code, Local Government, Tax Code and Property Code §11.008 to redact residence address information from campaign report filings, tax appraisal records and from additional property-related instruments concerning the judge or spouse that are filed with a county clerk, including a mineral lease, a mechanic's lien, and the release of a mechanic's lien.  

Since title policies insure on the basis of legal descriptions and not physical addresses, there is little to no impact.  

What the title company should know: In your title research you may see redactions of such physical address information in instruments concerning a federal or state judge. 

What the title company should do: Continue to base your title policy upon legal descriptions of the property being insured. This type of redaction in the public record can impact the ability of a judge or spouse to sell or encumber property since the information may not be readily available in the records of the clerk used to create the agent's title plant. 

SB 662 - Personal information of members of the legislature and statewide elected officials that may be omitted from public availability. 
(Effective Date: 6-14-2019) 

Amends Government Code §552.117(a) to except from the public availability certain personal information (home addresses, phone numbers, social security numbers, emergency contacts, and names of family members) related to members of the legislature and statewide elected officials.  

Since title policies insure on the basis of legal descriptions and not personal information like physical addresses, there is little to no impact.  

What the title company should know: In your title research you may see redactions of such personal information related to members of the Texas legislature or statewide elected officials or their family members. 

What the title company should do: Continue to base your title policy upon legal descriptions of the property being insured. This type of redaction in the public record can impact the ability of a member of the Texas legislature or spouse to sell or encumber property since the information may not be readily available in the records of the clerk used to create the agent's title plant. 

TAXES

HB 861 - Calculation of penalties and interest resulting from the final determination of an ad valorem tax appeal that changes a property owner's tax liability. 
(Effective Date: 9-1-2019) 

This bill changes the date that penalties and interest will begin to accrue when tax liability increases after an appeal under Chapter 42 of the Tax Code. Under the bill, penalties and interest will not begin to accrue unless the additional tax is not paid by the delinquency date for the additional tax. What the title company should know: If any suit is pending between the owner and the appraisal district or State Comptroller, you should ascertain if the suit is concluded and whether a supplemental tax bill has been prepared and mailed. 

What the title company should do: No action to be taken; this change does not affect how you determine if taxes are unpaid. 

HB 1254 - Eligibility of land secured by a home equity loan to be designated for agricultural use for ad valorem tax purposes. 
(Effective Date: 1-1-2020) 

This bill reconciles the Tax Code with the change made beginning in 2018 to allow home equity loans on homesteads designated for agricultural use. It removes Tax Code §23.42(a-1) which made land securing a home equity loan ineligible for agricultural use designation under the Tax Code.  

What the title company should know: You should expect to see more agricultural use designated land securing home equity loans. 

What the title company should do: No action to be taken.

HB 1652 - Public resale by means of a public auction using online bidding and sale of property purchased by a taxing unit at an ad valorem tax sale. 
(Effective Date: 9-1-2019) 

This bill allows for online bidding and sale, in accordance with existing law, of property acquired by a taxing unit at a tax sale, if directed by the commissioner's court of the county.  

What the title company should know: Resales of property acquired by a taxing unit may be conducted by an online auction process after this bill takes effect. Such sales are subject to redemption rights which commence when the deed to the taxing unit is filed. 

What the title company should do: Be aware if your commissioner's court establishes an online bidding and sale process. If so, you must determine that any sale conducted in that manner complies with the regulations that the court establishes. This bill does not change our underwriting standards regarding sales of property after tax sales (See Stewart Bulletin TX000073). 

HB 1743 - Additional ad valorem tax and interest imposed as a result of a change of use of certain land.
(Effective Date: 9-1-2019) 

This bill reduces the rollback period under Tax Code §23.55 from 5 years to 3 for imposing an additional tax as a result of a change from agricultural or timber use, and reduces the annual interest imposed on the additional tax which would have been due during that time from 7 percent to 5 percent.  

What the title company should know: Changes in tax valuation for loss of agricultural or timber use valuation will result in an additional tax for the 3 years preceding the change. 

What the title company should do: No action to be taken; this bill does not change our requirements for providing roll back coverage under P-20 (see Stewart Bulletin TX2010009). 

HB 1885 - Waiver of penalties and interest if an error by a mortgagee results in failure to pay an ad valorem tax. 
(Effective Date: 1-1-2020) 

Amends §33.011, Tax Code, to allow the governing body of a taxing unit to waive penalties and interest on a delinquent tax if an error by the mortgagee results in the failure of the owner to timely pay an ad valorem tax. This change may affect escrow. 

What the title company should know: There is a potential for a waiver of penalties and interests on delinquent ad valorem taxes that was not available before. The request for waiver must be received by the 181st date after the delinquency date. 

The governing Tax unit may waive penalties and interest on a delinquent tax if: 

(1) The property is subject to a mortgage that does not require the owner of the property to fund an escrow account for payment of the taxes on property; 

(2) The tax bill was mailed or delivered to the mortgagee electronically, but the mortgagee failed to mail a copy of the bill to the owner as required, and  

(3) The taxpayer paid the tax not later than the 21st day after the taxpayer knew or should have known of the delinquency. 

What the title company should do: If taxes have been paid on a delinquent account, and 181 days have not passed since the delinquency date the taxpayer may request in writing for the tax collector to waive the penalties and interest. The waiver or approval of waiver should be maintained in your file. It is not a recommended practice of the closing agent to get involved in this process.

SB 443 - Period for which a property owner may receive a residence homestead exemption from ad valorem taxation for property that is rendered uninhabitable or unusable as a result of a disaster. 
(Effective Date: 6-4-2019) 

This bill extends to 5 years, both the time owners can continue to claim a homestead exemption and the time they must begin reconstruction to claim the exemption when displaced from their residence by a disaster if the area is declared a disaster by the governor and the house is rendered uninhabitable and unusable as a result of the disaster. 

What the title company should know: We expect this bill will lessen the frequency of possible exemption removals as a result of Harvey and other natural disasters. 

SB 1642 - Authority of an owner of real property sold at a tax sale to transfer the owner's right of redemption to another person.
(Effective Date: 6-14-2019) 

This bill amends Tax Code §34.21 to clarify that an owner's right to redeem property sold at a tax sale is not transferable and voids any instrument purporting to do so.  

What the title company should know: The right of redemption is not transferable. 

What the title company should do: Treat as void and do not rely on any instrument in the chain of title which purports to transfer the right to redeem property sold at a tax sale.  

SB 1943 - Ad valorem taxation of "heir property".
(Effective Date: 9-1-2019) 

This bill amends several sections of the Tax Code to clarify that owners through inheritance, who reside on a property (called "heir property") may claim the homestead exemption on the property, regardless of whether there is any recorded document reflecting their ownership. It also sets out provisions related to claiming the exemption on heir property. The bill specifically provides that the granting or denial of the homestead exemption on heir property does not affect the legal title to the property.  

What the title company should know: Qualifying for a homestead exemption does not determine title. 

What the title company should do: Determine your title requirements from your search and do not rely on tax records for purposes of establishing title.  

WATER

SB 483 - Permits for certain injection wells that transect a portion of the Edwards Aquifer.
(Effective Date: 6-10-2019) 

Provides the option for the Texas Commission on Environmental Quality (TCEQ) to authorize injection activities and injection wells as part of an aquifer storage and recovery project that transects a portion of the Edwards Aquifer. Insured properties may contain underground aquifer recharge projects and be subject to water rights.  

What the title company should know: Stewart does not currently insure water rights in Texas. 

What the title company should do: Include any recorded notice as an exception. 

HEMP

HB 1325 - Production and regulation of hemp; requiring occupational licenses; authorizing fees; creating criminal offenses; providing civil and administrative penalties. 
(Effective Date: 6-10-2019) 

1. Requires creation of a state plan to monitor and regulate the production of hemp and hemp products.  
2. The hemp products may not have 0.3% or more of delta-9 tetrahydrocannabinol (THC) concentration on a dry weight basis. 
3. Local regulation is prohibited. 
4. Require a Hemp Growers License, which application includes a legal description of each location where the applicant intends to cultivate or handle hemp and its GPS position and written consent of the property owner if rented. 
5. Non-consumable hemp products may not be prohibited. Smoking hemp appears to be prohibited. 
6. Consumable hemp products are also regulated.  
7. Substantial fines are provided for violations of the law and the regulations.  
8. The state plan is to be submitted to the US Agriculture Secretary for approval within 90 days after the effective date of the bill. The plan may be implemented not later than 30 days after the USDA approval. The Agricultural Marketing Service (AMS) has been designated as the lead USDA agency to administer the new USDA Hemp Production Program. AMS is in the process of working toward developing regulations to implement the 2018 Farm Bill provisions. It is expected that the final rule will be implemented by the end of calendar year 2019. 

What the title company should know: Pursuant to Stewart Bulletin SLS2017004, Stewart Title Guaranty Company is not currently insuring title to land that is known to be used or intended to be used for any lawful purpose under state law for recreational or medical marijuana activities, including cultivation, storage, transport, manufacture, retail, or distribution.  Likewise, we are not currently insuring title to land used for hemp. 

What the title company should do: We are not currently authorizing the issuance of policies on land where hemp is grown. 

ESCROW

SB 658 - Making permanent the former temporary increases in records archive fees and records management and preservation fees charged by district and county clerks. 
(Effective Date: 9-1-2019) 

Section 5 of this bill increases the Records Management and Preservation fee to $10 and the Records Archive Fee to $10. This bill affects escrow.  

What the title company should know: Check with your county clerk to determine when and if recording fees will increase to the amounts allowed by the bill.  

What the title company should do: Be aware of the increase as to collect the proper amounts in your files.  

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

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