HBA-ATS, DMD H.B. 1086 76(R)BILL ANALYSIS


Office of House Bill AnalysisH.B. 1086
By: Solomons
Business & Industry
6/3/1999
Enrolled



BACKGROUND AND PURPOSE 

H.B. 1086 provides that a purchase money lien against personal property
becomes a purchase money lien on real estate when a manufactured housing
unit is converted to real estate under the provisions of Article 5221f
(Texas Manufactured Housing Standards Act), V.T.C.S.  This effectively
expands the meaning of Section 50 (Homestead; protection from forced sale;
mortgages, trusts deeds and liens), Article XVI, Texas Constitution.
Courts have held that the legislature may define terms not defined in the
Constitution, provided that the definition reasonably interprets the
meaning of the Constitution and the intent of its framers.  This bill also
provides that when a person is refinancing the lien, that person is
substituted to the lien position of the previous lienholder.  Additionally,
the bill authorizes a lien on real property to be refinanced with another
lien on the real property to which the manufactured home is attached.  

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Subtitle B, Title 5, Property Code, by adding Chapter
62, as follows: 

CHAPTER 62.  MANUFACTURED HOME LIEN

Sec. 62.001.  MANUFACTURED HOME.  Defines "manufactured home" with the
meaning assigned by Article 5221f (Texas Manufactured Housing Standards
Act), V.T.C.S. 

Sec. 62.002.  APPLICABILITY.  Sets forth that this chapter applies only to
a lien on a manufactured home provided that the loan or credit advance
documents state or indicate that the lien is a vendor's lien or is in the
nature of a vendor's lien, is a purchase money lien or is in the nature of
a purchase money lien, or is a retail installment lien or is in the nature
of a retail installment lien. 

Sec. 62.003.  CONVERSION OF LIEN FROM PERSONAL PROPERTY LIEN TO REAL
PROPERTY LIEN.  Provides that when the manufactured home converts to real
property as provided by Section 2.001(b) (Manufactured Housing), the lien
on the property is then converted to a purchase money lien on real property
by law and exists independently of any other existing lien on the real
property to which the home is permanently attached. 

Sec. 62.004.  REFINANCING OF LIEN.  (a) Sets forth that when a person
provides funds to refinance a lien that is secured by a manufactured home,
that person is substituted to the lien position of the previous lienholder. 

(b) Provides that if the holder of a lien, that is secured by a
manufactured home, transfers loan or credit advance documents to a lender
who is refinancing the lien, that lender and a title insurance company,
title insurance agent or direct operation, or attorney to whom the loan or
credit advance documents are delivered holds the loan or credit advance
documents in trust for that lienholder.  Defines "direct operation" with
the meaning  assigned by Article 9.02 (Definitions), Insurance Code. 

(c) Authorizes a lien that is converted to a purchase money lien on real
property under Section 62.003 to be refinanced with another lien on the
real property to which the manufactured home is permanently attached as
provided by Section 2.001(b). 

SECTION 2.Effective date: September 1, 1999.

SECTION 3.Emergency clause.