HBA-JLV H.B. 861 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 861 By: Dutton Financial Institutions 3/16/2001 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 a lien included in the deed restriction. House Bill 861 provides for an encumbrance to be properly fixed on homestead property for property owners' association fees and provides 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. ANALYSIS House Bill 861 amends the Property Code to provide that a homestead is not exempt from seizure for encumbrances that are properly fixed on homestead property for purchase money, property taxes, certain work and material used in constructing improvements on the property, an owelty of partition imposed against the entirety of the property by a court order or by a written agreement, or the refinance of a lien against a homestead. The bill provides authorization for an encumbrance to be properly fixed on a homestead property if there exists a debt of property owners' association (association) fees and provides protection for the homestead from seizure for the payment of association fees. The bill also authorizes an association to collect on an encumbrance placed for the collection of association fees at the time the homestead property is transferred. EFFECTIVE DATE January 1, 2002, but only if the constitutional amendment 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.