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A BILL TO BE ENTITLED
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AN ACT
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relating to foreclosure sales of residential real property; |
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providing a penalty. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subchapter B, Chapter 402, Government Code, is |
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amended by adding Section 402.035 to read as follows: |
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Sec. 402.035. RESIDENTIAL PROPERTY FORECLOSURE NOTICE. (a) |
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The attorney general, in consultation with interested stakeholders |
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as the attorney general considers appropriate, shall prescribe the |
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form and content of the written notice that must be sent by a |
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mortgage servicer to a debtor under Sections 51.002 and 51.0022, |
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Property Code. |
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(b) The notice must: |
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(1) be written in plain language in English and |
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Spanish; |
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(2) be entitled "Rights of Homeowners or Tenants of |
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Homeowners Facing Foreclosure" or the Spanish equivalent of that |
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title, as applicable; and |
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(3) include: |
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(A) an explanation of foreclosure, including a |
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description of the various processes of foreclosure of a mortgage |
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lien on residential property as applicable to each type of mortgage |
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lien; |
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(B) a statement that state law requires that the |
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debtor in default under a residential mortgage lien be given at |
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least 45 days to cure the default; |
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(C) a description of the handling of payments |
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made after the time for cure has expired; |
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(D) the debtor's right to the return of payments |
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in certain circumstances; |
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(E) a statement that the debtor and the public |
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must be given at least 21 days' notice of the foreclosure sale and |
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that a foreclosure sale may occur only on the first Tuesday of a |
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month; |
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(F) a description of the options available to the |
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debtor in default to prevent the foreclosure; |
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(G) a description of and warning against typical |
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activities that may be encountered by the debtor in connection with |
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the foreclosure, including any unconscionable actions or courses of |
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action under Subchapter E, Chapter 17, Business & Commerce Code; |
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(H) a description of the rights and remedies of a |
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tenant whose landlord loses the property to foreclosure, including |
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a tenant's right to credit a security deposit toward rent under |
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certain circumstances and to withhold rent from a landlord during |
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and after the foreclosure process; and |
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(I) a description of and contact information for |
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resources available to the debtor to assist in preventing the |
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foreclosure or in filing an action concerning the foreclosure |
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process or the lien being foreclosed, including local bar |
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associations, the State Bar of Texas, and nonprofit legal |
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assistance programs. |
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(c) The attorney general shall update the notice prescribed |
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under this section at least annually and maintain the most current |
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version of the notice on the attorney general's Internet website. |
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SECTION 2. Section 24.005(b), Property Code, is amended to |
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read as follows: |
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(b) If the occupant is a tenant at will or by sufferance, the |
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landlord must give the tenant at least three days' written notice to |
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vacate before the landlord files a forcible detainer suit unless |
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the parties have contracted for a shorter or longer notice period in |
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a written lease or agreement. If a building is purchased at a tax |
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foreclosure sale or a trustee's foreclosure sale under a lien |
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superior to the tenant's lease and the tenant timely pays rent and |
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is not otherwise in default under the tenant's lease after |
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foreclosure, the purchaser must give a residential tenant of the |
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building at least 90 [30] days' written notice to vacate and must |
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otherwise comply with Section 51.011 [if the purchaser chooses not
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to continue the lease. The tenant is considered to timely pay the
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rent under this subsection if, during the month of the foreclosure
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sale, the tenant pays the rent for that month to the landlord before
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receiving any notice that a foreclosure sale is scheduled during
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the month or pays the rent for that month to the foreclosing
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lienholder or the purchaser at foreclosure not later than the fifth
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day after the date of receipt of a written notice of the name and
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address of the purchaser that requests payment. Before a
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foreclosure sale, a foreclosing lienholder may give written notice
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to a tenant stating that a foreclosure notice has been given to the
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landlord or owner of the property and specifying the date of the
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foreclosure]. |
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SECTION 3. Section 51.002, Property Code, is amended by |
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amending Subsection (d) and adding Subsections (d-1) and (d-2) to |
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read as follows: |
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(d) Notwithstanding any agreement to the contrary, the |
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mortgage servicer of the debt shall serve a debtor in default under |
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a deed of trust or other contract lien on residential real property |
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[used as the debtor's residence] with written notice by certified |
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mail, and first class regular mail, addressed to the debtor at the |
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debtor's last known address stating that the debtor is in default |
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under the deed of trust or other contract lien and giving the debtor |
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at least 45 [20] days to cure the default before notice of sale can |
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be given under Subsection (b). The entire calendar day on which the |
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notice required by this subsection is given, regardless of the time |
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of day at which the notice is given, is included in computing the |
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45-day [20-day] notice period required by this subsection, and the |
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entire calendar day on which notice of sale is given under |
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Subsection (b) is excluded in computing the 45-day [20-day] notice |
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period. |
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(d-1) In addition to the notice of sale sent by certified |
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mail under Subsection (b)(3), the mortgage servicer must send the |
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notice of sale by first class regular mail addressed to the debtor |
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at the debtor's last known address and by first class regular mail |
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sent to the property's physical address and addressed to |
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"Occupant." |
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(d-2) The mortgage servicer must include with each notice |
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sent by regular or certified mail under Subsection (b)(3), (d), or |
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(d-1) a copy of the notice prescribed by the attorney general under |
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Section 402.035, Government Code. |
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SECTION 4. Chapter 51, Property Code, is amended by adding |
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Sections 51.0022, 51.010, 51.011, and 51.012 to read as follows: |
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Sec. 51.0022. RETURN OF CERTAIN PAYMENTS; PROVISION OF |
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CERTAIN NOTICE. (a) Before giving a notice of sale under Section |
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51.002(b), a mortgage servicer must return to the debtor any |
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payments received from the debtor after the last notice of default |
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was sent to the debtor under Section 51.002(d). |
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(b) If the mortgage servicer receives a payment from the |
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debtor after giving notice of sale under Section 51.002(b), and the |
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foreclosure sale occurs on the date in the notice of sale, the |
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mortgage servicer shall return those payments on or before the 10th |
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day after the date of the sale. |
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(c) A payment returned under this section by mail must |
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include a copy of the notice prescribed by the attorney general |
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under Section 402.035, Government Code. If a payment is returned |
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under this section by electronic means, the mortgage servicer shall |
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mail a notice of the payment's return to the debtor by first class |
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regular mail with a copy of the notice prescribed by the attorney |
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general under Section 402.035, Government Code. |
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(d) This section applies only to a lien on residential real |
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property occupied by the debtor as the debtor's homestead. |
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Sec. 51.010. JUDICIAL FORECLOSURE REQUIRED FOR CERTAIN |
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DEBTS. (a) A deed of trust or other contract lien on residential |
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real property occupied by the debtor as the debtor's homestead may |
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not be foreclosed and a power of sale under the contract may not be |
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exercised without a court judgment foreclosing the lien and |
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ordering the sale of the property by a sheriff or constable if the |
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debt in default: |
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(1) had an annual percentage rate, as defined by the |
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federal Truth in Lending Act (15 U.S.C. Section 1601 et seq.), that |
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was at least three percentage points more than the prime rate as |
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published by the Wall Street Journal two weeks before the date the |
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debt was incurred; |
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(2) allows the contract interest rate to increase: |
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(A) by more than two percentage points in any |
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one-year period; or |
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(B) more often than once a year; |
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(3) has a universal default provision that allows for |
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a change in the interest rate when there is: |
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(A) a default by the debtor on any obligation to |
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the lender or any other lender; or |
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(B) a decrease in the debtor's credit score; |
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(4) has a prepayment penalty; |
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(5) allows negative amortization; |
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(6) provides for a scheduled payment that is more than |
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twice as large as the average of earlier scheduled monthly |
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payments; or |
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(7) allows for the payment of interest only. |
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(b) This section does not apply to an interim construction |
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loan. |
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Sec. 51.011. TENANT'S TIME TO VACATE; PAYMENT OF RENT. (a) |
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A person who purchases residential real property at a foreclosure |
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sale under this chapter and gives a notice to vacate under Section |
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24.005 to a tenant who occupies the property at the time of the |
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foreclosure sale under a lease agreement entered into after the |
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date the lien that was the subject of the foreclosure sale attached |
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to the property may not require the tenant to vacate the property |
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before the 90th day after the date the notice is sent. |
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(b) Except as provided by Subsection (c), on a written |
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demand by the purchaser, a tenant described by Subsection (a) must |
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pay rent to the purchaser of the property as required by the lease |
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agreement that applied to the tenant on the date of the foreclosure |
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sale and otherwise comply with the terms of that lease. |
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(c) A tenant who, before the foreclosure sale, has paid rent |
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for a rental period that includes the date of the foreclosure sale |
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is not required to pay rent to the purchaser until rent for the |
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first rental period commencing after the foreclosure sale is due. |
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(d) Unless the purchaser acknowledges and delivers in |
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writing a statement that the new owner is responsible for the |
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tenant's security deposit and specifying the exact dollar amount of |
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the deposit, the tenant is entitled to credit the security deposit |
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toward the rent owed the purchaser without the necessity of |
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judicial action. |
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Sec. 51.012. WAIVER. A provision of a contract, agreement, |
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or other document that purports to waive a right of a debtor or |
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exempt a mortgage servicer, mortgagee, trustee, substitute |
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trustee, or government official from a duty under this chapter is |
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void. |
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SECTION 5. Subchapter A, Chapter 92, Property Code, is |
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amended by adding Section 92.021 to read as follows: |
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Sec. 92.021. WITHHOLDING OF RENT ON NOTICE OF FORECLOSURE. |
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(a) Notwithstanding any other law or a provision of a lease |
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agreement, if a tenant receives written notice that the leased |
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premises are subject to a foreclosure sale, the tenant is |
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authorized to withhold the payment of rent without any adverse |
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action, penalty, fee, or charge until: |
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(1) the property is purchased at a foreclosure sale; |
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or |
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(2) the default giving rise to the foreclosure sale |
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has been cured, the sale has been canceled, the tenant has been |
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given at least 10 days' notice and proof of the cure and |
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cancellation, and the tenant has been provided a method to confirm |
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the facts directly with the lienholder who initiated the |
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foreclosure sale. |
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(b) A landlord who violates this section or threatens to |
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violate this section is liable to the tenant for: |
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(1) actual damages; |
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(2) a civil penalty of three times the monthly rent; |
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and |
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(3) reasonable attorney's fees. |
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(c) A landlord who violates this section or threatens to |
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violate this section commits an offense. An offense under this |
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subsection is a Class A misdemeanor. |
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SECTION 6. (a) Not later than November 1, 2009, the attorney |
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general shall prescribe the form and content of the notice under |
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Section 402.035, Government Code, as added by this Act. |
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(b) Section 24.005(b), Property Code, as amended by this |
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Act, and Section 51.011, Property Code, as added by this Act, apply |
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only to a notice to vacate residential real property purchased at a |
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foreclosure sale on or after the effective date of this Act. Notice |
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to vacate residential real property purchased at a foreclosure sale |
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before the effective date of this Act is governed by the law in |
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effect immediately before the effective date of this Act, and that |
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law is continued in effect for that purpose. |
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(c) Except as provided by this section, Chapter 51, Property |
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Code, as amended by this Act, applies only to a sale of residential |
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real property in which notice of default under Section 51.002, |
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Property Code, is provided on or after December 1, 2009. A sale in |
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which notice of default is provided before December 1, 2009, is |
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subject to the law in effect immediately before the effective date |
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of this Act, and that law is continued in effect for that purpose. |
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(d) Section 92.021, Property Code, as added by this Act, |
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applies only to a lease agreement entered into or renewed on or |
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after the effective date of this Act. A lease agreement entered |
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into or renewed before the effective date of this Act is governed by |
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the law in effect immediately before the effective date of this Act, |
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and that law is continued in effect for that purpose. |
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SECTION 7. This Act takes effect September 1, 2009. |