HBA-GUM H.J.R. 73 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.J.R. 73
By: Solomons
Business & Industry
4/5/1999
Introduced



BACKGROUND AND PURPOSE 

The "home equity" constitutional amendment created some ambiguities  in the
law relating to a lien on homestead for home improvements.  Questions have
arisen regarding the applicability of the law. The current wording of the
law appears to distinguish between new improvements and the repair and
renovation of existing improvements.  The law also provides a 12-day
waiting period from the time the owner makes a written application for an
extension of credit, but does not address a request for an extension of
credit in which there is no written application.  Also, as written, the law
does not specify whether the three-day right of rescission applies to all
improvements or only to repairs and renovations.  In addition, current law
requires that the contract be signed in the office of a lawyer, title
company, or lender. 

H.J.R. 73  proposes a constitutional amendment to amend Section 50(a)
(relating to homestead; extension of credit secured by lien; protection
from forced sale; mortgages, trust deeds, and liens), Article XVI, Texas
Constitution to eliminate the aforementioned ambiguities by providing that
this section applies to an improvement, rather than a new improvement;
providing a right of rescission to a contract signed at the homestead; and
deleting existing Subdivisions (C) and (D) (relating to the execution and
nullification of contracts for renovation, repair, and work on a
homestead).  This joint resolution also requires the submission to the
voters of a constitutional amendment prescribing the requirements for
imposing a lien for work and material used in the construction, repair, or
renovation of improvements on homestead property. 

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 Section 50(a), Article XVI, Texas Constitution, as
follows: 

(5)  Deletes existing text to provide that this subdivision regards
improvements, rather than only new improvements and deletes existing text
providing that this subdivision applies if the contract is in writing. 

(A)  Makes a conforming change.

(B)  Provides that Subdivision (5) is an exemption under this section
(Homestead; protection from forced sale; Mortgages, trust deeds and liens)
if the contract provides that the owner may rescind the contract under
terms prescribed by law if the contract is a contract for work and material
used to repair or renovate existing homestead improvements and the contract
is executed at the homestead property.  Deletes existing text relating to
improvements executed by the owner or the owner's spouse on the homestead. 

(C)  Deletes existing text relating to the owner's authorization to rescind
the contract within three days after the execution of the contract by all
parties under specified conditions. 
 
(D) Deletes existing text relating to the execution of the contract by the
owner and the owner's spouse at the office of a third party lender, an
attorney-at-law, or a title company. 

SECTION 2.  Proposes the addition of  a temporary provision to the Texas
Constitution prescribing the requirements for imposing a lien for work and
material used in the construction, repair, or renovation of improvements on
homestead property.  Provides that this constitutional amendment takes
effect January 1, 2000, and expires January 2, 2000. 

SECTION 3.  Requires the proposed constitutional amendment to be submitted
to the voters at an election to be held November 2, 1999.  Sets forth the
ballot language for the amendment.