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.