HBA-TYH, MAJ H.B. 763 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 763
By: Dutton
Financial Institutions
3/31/1999
Introduced



BACKGROUND AND PURPOSE 

Current law exempts homesteads from seizure for the claims of creditors
except for encumbrances that are properly fixed on homestead property for
purchase money, taxes on property, work and material used in construction
improvements, owelty of partition against the property, and the refinance
of a lien against a homestead, including federal tax liens.  While it is
not legal to place a lien on a homestead for assessment fees, some
homeowners associations are circumventing the law by acquiring the right to
place a lien on a homestead for assessment fees by having a contract for
lien included in the deed restriction.  H.B. 763 provides for an
encumbrance to be properly fixed on homestead property for property owners'
association fees and that the encumbrance may be collected at the time the
property is transferred. 

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 Sections 41.001 (a) and (b), Property Code, as follows:

(a)  Provides that the encumbrances described by Subsection (b), rather
than encumbrances properly fixed on homestead property, are not allowed the
exemption from seizure for the claims of creditors provided to a homestead
and one or more lots used for a place of burial of the dead. 

(b)  Makes conforming changes.

SECTION 2.  Amends Subchapter A, Chapter 41, Property Code, by adding
Section 41.0011, as follows: 

Sec. 41.0011.  CERTAIN ENCUMBRANCES FIXED ON HOMESTEAD EXEMPT FROM SEIZURE.
Provides that an obligation to pay property owners' association fees for
maintenance and ownership of common facilities and services is a debt for
which an encumbrance may be properly fixed on homestead property.  Exempts
homestead property from seizure for the claims of creditors for such an
encumbrance.  Authorizes a property owners' association to collect on such
an encumbrance properly fixed on homestead property at the time the
homestead property is transferred.  Provides that Section 41.001 (c)
(Interests in Land Exempt from  Seizure) does not apply to a claim of a
property owners' association under this section.  Provides that "property
owners' association" has the meaning assigned by Section 202.001
(Definitions). 

SECTION 3.  Provides that this Act takes effect January 1, 2000, but only
if the constitutional amendment proposed by the 76th Legislature, Regular
Session, 1999, permitting an encumbrance to be fixed on homestead property
for an obligation to pay certain property owners' association fees without
permitting the forced sale of the homestead, takes effect.  Provides that
this Act has no effect if that amendment is not approved by the voters. 

SECTION 4.  Emergency clause.