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2

ATTORNEY INFORMATION

Because of opinions expressed by the Texas Department

• f Insurance (TDI) concerning rebates, legal credit is

available only to:  Attorneys who own title agencies that are Stewart Title Guaranty Agents  Attorneys employed by a title insurance agent licensed with Stewart Title Guaranty or Stewart entities  Fee attorneys who have an Escrow Officer license through a Stewart Title Agent or Stewart entity

We welcome any other lawyers to listen, but cannot provide continuing education credit to you.

3

2017 Legislation

John Rothermel

Senior Vice President Regional Underwriting Counsel Senior Underwriter

SW Regional Underwriting Office Stewart Title Guaranty Company

• 6,631 bills filed (not including resolutions)

– 4,333 in the House – 2,298 in the Senate

• 1,163 bills and joint resolutions became law
• 50 bills vetoed by the governor

Texas Land and Title Association 2017, p.1 5

Rate Re-regulation Attempts Defeated

Three bills were filed, that could have dramatically impacted

• ur rate system. SB 372 by Sen. Bob Hall would have

created a “file-and-use” rate system, where each underwriter would file a rate. Even though SB 2203 by Chairman Kelly Hancock, as filed, did not contain language amending the rate system, it was understood to be a vehicle for rate re-regulation bill depending on how the conversation went during the session. That conversation was centered around HB 4239 – authored by Rep. Sergio Munoz, Jr. – which would dramatically upend

• ur rate system by injecting both a “file-and-use” and “flex

band” approach to title rates.

Texas Land and Title Association 2017, p.1 6

PUBLIC RECORDS

7

HB 457—Confidentiality of certain home address information in ad valorem tax appraisal records passed/signed/effective 6-15-17

Adds to Section 25.025(a) of the Tax Code to allow spouses, surviving spouses, or adult child of a police officer to request that their home address be kept confidential on the tax records. Please note that this bill adds the above stated people to the existing list of 17 other categories of persons that may exempt such information.

8

HB 457—Confidentiality of certain home address information in ad valorem tax appraisal records passed/signed/effective 6-15-17

What you should do: If tax information is not available, you will need to require the party obtain and furnish a proper tax statement showing the current status of the property taxes

• n the property.

The statement does not need to show the actual address of the tax payer.

9

HB 1278—Availability of personal information of certain current and former prosecutors passed/signed/effective 6-15-17

Adds to Section 552.117(a) of the Government Code as it relates to prosecutors, former prosecutors, and their current

• r former employees whose jurisdiction was criminal law or

child protective services. Personal information is excepted from the requirements of 552.012 if the information relates to their home address, home telephone number, emergency contact information, social security numbers, or reveals whether the person has family members.

10

HB 1278—Availability of personal information of certain current and former prosecutors passed/signed/effective 6-15-17

What you should do: If tax information is not available, you will need to require the party obtain and furnish a proper tax statement showing the current status of the property taxes

• n the property.

The statement does not need to show the actual address of the tax payer.

11

HB 890—Providing information to the public and to purchasers of real property regarding the impact of military installations passed/signed/effective 9-1-17

The bill adds Section 397.007 to the Local Government Code and provides that the most recent Air Installation Compatible Use Zone Study or Joint Land Use Study applicable to each military installation or a link to that information is publicly available on the local governmental entity's Internet website.

12

HB 890—Providing information to the public and to purchasers of real property regarding the impact of military installations passed/signed/effective 9-1-17

It also adds a new paragraph 8 to the Seller’s Disclosure Notice required by Section 5.008(b) of the Property Code:

• 8. This property may be located near a military installation and may

be affected by high noise or air installation compatible use zones or

• ther operations. Information relating to high noise and compatible

use zones is available in the most recent Air Installation Compatible Use Zone Study or Joint Land Use Study prepared for a military installation and may be accessed on the Internet website of the military installation and of the county and any municipality in which the military installation is located.

13

HB 890—Providing information to the public and to purchasers of real property regarding the impact of military installations passed/signed/effective 9-1-17

What you should do: Determine if the Seller’s Disclosure Notice contains the previous slide’s language. While a title insurance company and its title insurance agents have no liability for the Seller’s Disclosure Notice it is a good practice to see that the most recent forms are used. We would expect the Texas Real Estate Commission to promulgate changes to the Seller’s Disclosure Notice form as quickly as possible.

14

HB 3107—Repeat requests under the public information act passed/signed/effective 9-1-17

This bill amends Section 552.221 of the Government Code as it relates to persons who make repeated requests for copies of public information maintained by governmental bodies. If requested information exceeds 36 hours of labor costs to comply with said requests, the governmental body may submit a written cost estimate of the additional costs of compliance. The governmental body need not comply with the request unless the requestor provides a statement committing to the payment of the additional costs.

15

HB 3107—Repeat requests under the public information act passed/signed/effective 9-1-17

What you should know: We don’t expect this act to affect title companies and their ability to obtain title information necessary to maintain their title plants. Please let you Agency Services Manager or a Texas underwriter know if you obtain differing information.

16

HB 3423—Relates to recording documents related to the sale or lease of public school land passed/signed/effective 9-1-17

This bill amends Section 51.065 of the Natural Resources Code to require that the commissioner send a written notice

• f the sale of a tract of public school lands which the clerk

shall post in the land records of that county. The notice must contain the name and address of the purchaser and the price of the land.

17

HB 3423—Relates to recording documents related to the sale or lease of public school land passed/signed/effective 9-1-17

What you should do: Make sure that you record such written notice in your title plant.

18

SB 1955—Relates to the expunction of a notice

• f lis pendens

passed/signed/effective 9-1-17

This bill amends Section 12.0071(f) of the Property Code to clarify that when a certified copy of an order expunging a notice of lis pendens is recorded, the lis pendens no longer provides constructive or actual notice of any action that could be derived to be in connection with the property which the notice was filed. Additionally, property to which the lis pendens would have applied is transferred or encumbered “free of all matters asserted or disclosed in the notice and all claims or other matters asserted or disclosed in the action in connection with which the notice was filed.”

19

SB 1955—Relates to the expunction of a notice

• f lis pendens

passed/signed/effective 9-1-17

What you should do: If presented with a transaction that has a certified expunction order recorded please obtain approval from a Senior Stewart Underwriter before closing or insuring. The recent Supreme Court decision, Cause No. 15-0847, Ron Sommers, etal., v. Sandcastle Homes, Inc., consolidated with, Cause No. 15-0848, Ron Sommers, etal.,

• v. Newbiss Property, LP, rendered on the expunction of a

notice of lis pendis statute cautions us to provide closer review of these transactions.

20

SB 1098—Relating to recordings, acknowledgements, and proofs of certain written instruments passed/signed/effective 9-1-17

This bill amends sections 406.014 Government Code to require that a notary must keep the signer, grantor or maker’s mailing address (instead of residence or alleged residence).

21

SB 1098—Relating to recordings, acknowledgements, and proofs of certain written instruments passed/signed/effective 9-1-17

What you should do: Each notary that works for you should amend their notary book to show the mailing address.

22

AD VALOREM TAXES

23

HB 217—Amends Tax Code to allow disabled veterans who qualify for a residential homestead exception to defer collection of property taxes passed/signed/effective 9-1-17

Amends Chapter 33, Section 33.06(a), Tax Code, allowing disabled veterans who qualify for a residential homestead exemption to defer collection of property taxes, abate a suit to collect a delinquent tax, or to abate a tax lien foreclosure sale, same as homeowners who are 65 years of age or older

• r who are otherwise disabled.

24

HB 217—Amends Tax Code to allow disabled veterans who qualify for a residential homestead exception to defer collection of property taxes passed/signed/effective 9-1-17

What you should know/do: Be aware that qualified disabled veterans may now defer property tax collection, abate a tax collection lawsuit or tax foreclosure sale, in the same manner as over 65 or other disabled homeowner/taxpayers. Upon sale of a property with a deferment, the seller will need to provide evidence that the deferment has been terminated and the deferred taxes including the statutory interest of 8% annual interest are paid or will be paid at closing.

25

HB 77—Allows eligibility for agricultural land appraisal valuation to members of U.S. armed forces while stationed outside of Texas passed/signed/effective 5-23-17

Adds Section Sec. 23.523 to the Tax Code to allow members

• f the United States (U.S.) armed services, while they are

deployed or stationed outside of Texas, to maintain their eligibility for agricultural (open space) land appraisal valuation as long as they resume the qualifying land use to the degree of intensity generally accepted in the area, not later than 180 days after the date the owner ceases to be deployed or stationed outside of the state.

26

HB 77—Allows eligibility for agricultural land appraisal valuation to members of U.S. armed forces while stationed outside of Texas passed/signed/effective 5-23-17

What you should know/do: Be aware that the AG/Open Space valuation continues to apply to the qualifying land during the owners’ military deployment out of state, provided the owner resumes the appropriate agricultural land use practices within 6 months of her/his return to the state.

27

HB 804—Amends Tax Code to require property

• wner to send their lessees copies of any

notices of appraised value of leasehold passed/signed/effective 9-1-17

Amends Section 41.413 of the Tax Code to require that a property owner send their lessees a copy of any notices of appraised value of the leasehold within 10 days of receipt of the appraisal notice. In addition, the lessee can request that a chief appraiser send direct notice of a property's appraisal to the lessee. These changes ensure that lessees receive timely, fair notice of their leased property's appraised value, better enabling lessees to protest those values.

28

HB 804—Amends Tax Code to require property

• wner to send their lessees copies of any

notices of appraised value of leasehold passed/signed/effective 9-1-17

What you should know/do: Applies to taxation of leaseholds, giving lessees more timely notice and thereby facilitating a more timely protest of the leasehold appraisal value by the lessee.

29

HB 2228—Relating to deadlines for performing various functions in connection with the ad valorem tax system passed/signed/effective 1-1-18

Section 1 of the bill amends Section 11.4391(a), Tax Code, dealing with Freeport goods exemptions (business inventory/personal property) deadlines – not applicable to real property title work.

30

HB 2228—Relating to deadlines for performing various functions in connection with the ad valorem tax system passed/signed/effective 1-1-18

Section 2 changes Tax Code section 21.09 (b), requiring a person claiming an allocation to file the application by April 1 instead of May 1 each year. If the property was not on the appraisal roll last year, the new applicant has 30 days to apply after receipt of notice of appraised value, which can be extended for additional 30 days thereafter by chief appraiser’s written order. This section applies only to vessels and other watercraft used outside of Texas, thus would apply to personal property title insurance which is handled solely by the underwriter.

31

HB 2228—Relating to deadlines for performing various functions in connection with the ad valorem tax system passed/signed/effective 1-1-18

Section 3 amends Section 22.23, Tax Code, in 2 subsections setting deadlines for filing property rendition statements and property reports for certain exempt properties and properties regulated by the Texas PUC, RRC, Federal STB, and Federal ERC.

32

HB 2228—Relating to deadlines for performing various functions in connection with the ad valorem tax system passed/signed/effective 1-1-18

Section 4 amends Section 41.11, Tax Code, to require that an owner who receives a Notice to Property Owner of Change in Records be entitled to protest such action as provided by Section 41.44(a)(2), rather than as provided by Section 41.44(a)(3).

33

HB 2228—Relating to deadlines for performing various functions in connection with the ad valorem tax system passed/signed/effective 1-1-18

Section 5 amends Sections 41.44 (a) and (c), Tax Code, to change the deadline to file a notice of protest to May 15, or

• ther designated date whichever is later.

If notice is timely, the protestor is entitled to a hearing regardless of whether the appraisal records have been approved.

34

HB 2228—Relating to deadlines for performing various functions in connection with the ad valorem tax system passed/signed/effective 1-1-18

What you should know/do: Make note of the new earlier deadlines that pertain to ad valorem taxes on real property, particularly for notice of appraisal protests. For title insurance purposes, if a protest has been filed, it must be disposed of and a receipt must be obtained for taxes for the current year. If taxes are not yet due and payable, you should obtain an agreement between the seller and buyer that they will handle any additional taxes themselves complying with P-20.

35

HJR 21—Amends current law regarding exemptions for veterans who receive homes from charitable organizations passed/election date 11-7-17

Amends current law, which states that a partially disabled veteran who receives a home from a charitable organization is only entitled to the exemption if the home is donated at no cost to the veteran. If approved by voters this November, HJR 212 will amend Section 1-b (l), Article VIII, Texas Constitution to extend the homestead exemption to a home that was donated by a charitable organization whether at no cost or at some cost to the veteran; the exemption percentage valuation is equal to the designated percentage of disability of the disabled veteran.

36

HJR 21—Amends current law regarding exemptions for veterans who receive homes from charitable organizations passed/election date 11-7-17

What you should know/do: If it passes in November, be aware of this additional exemption option given to the partially disabled veteran homeowner, for a homestead donated by a charitable organization whether at some cost

• r at no cost to the veteran.

In any event, you should deal with taxes in the normal course of your title insurance business and in compliance with P-20.

37

SB 594—Allows comptroller to revise the rules and procedural manual for appraising qualified

• pen-space land

passed/signed/effective 1-1-18

Amends Chapter 23, Tax Code, allowing the comptroller to revise the rules and procedural manual for appraising qualified open-space land as reviewed by the Texas Department of Agriculture, as well as revise the manual for appraising qualified timber land as reviewed by the Texas A&M Forest Service. SB 594 removes prior requirements that these manuals be approved by a majority vote of the governor, comptroller, attorney general, commissioner of agriculture, and commissioner of GLO prior to publication.

38

SB 594—Allows comptroller to revise the rules and procedural manual for appraising qualified

• pen-space land

passed/signed/effective 1-1-18

What you should know/do: Be aware of any changes to be made to the manuals for appraising qualified open-space land and timber lands pursuant to this more streamlined review and approval process. Despite any changes made, title insurance agents and companies must comply with P-20.

39

LOANS

40

HB 45—Related to foreign judgments and arbitrations being enforced/recognized in Texas passed/signed/effective 9-1-17

This Bill relates to foreign judgments and arbitrations awards being enforced or recognized in Texas as it relates to Family matters involving marriage and parent-child relationships. It requires the Texas Supreme Court to adopt rules and provide judicial instruction regarding the application of the foreign laws in the aforementioned family law matters.

41

HB 45—Related to foreign judgments and arbitrations being enforced/recognized in Texas passed/signed/effective 9-1-17

What you should do: If a foreign judgment has not been ruled on as it relates to matters involving marriage and parent-child relationships wait the necessary time for appeal to run before proceeding with any transaction that has a foreign judgment involving the family matters. We will advise you when the Supreme Court has published its rules.

42

HB 1470—Relating to the Public Sale of Residential Real Property under a power of Sale in a Security Instrument passed/signed/effective 9-1-17

Adds to Title 2, Business & Commerce Code, by amending Chapter 22. Public Sale of Residential Real Property (1-4 family or condo property) under a Power of Sale. It outlines the Trustee’s or Substitute Trustee’s responsibilities, requirements of winning bidder, obligations for delivery of the deed, handling of sale proceeds, rights of the Trustee’s or substitute Trustee’s payment of reasonable fees for services performed in connection with the Public Sale.

43

HB 1470—Relating to the Public Sale of Residential Real Property under a power of Sale in a Security Instrument passed/signed/effective 9-1-17

It also allows the trustee or substitute trustee to contract with an attorney to advise the trustee or perform any of the trustee’s duties or responsibilities. Further, it allows an auction house to arrange, manage, sponsor or advertise a public sale. It requires that the bidder at a foreclosure sale provide the trustee with full information as it relates to the identity of the bidder or the bidder’s principal.

44

HB 1470—Relating to the Public Sale of Residential Real Property under a power of Sale in a Security Instrument passed/signed/effective 9-1-17

Further, it requires a prompt receipt of funds and a trustees deed being delivered within a reasonable time.

– The Sales proceeds must be maintained in a separate account of the trustee until distributed. – A trustee’s fee cannot exceed the lesser of 2.5% or $5,000.

45

HB 1470—Relating to the Public Sale of Residential Real Property under a power of Sale in a Security Instrument passed/signed/effective 9-1-17

What you should know: You should require that the trustee’s deed contain the required information regarding the identity and contact information of the successful bidder. You may require proof of a contract when a trustee engages an attorney to conduct the foreclosure. We are not responsible for determining the amount of the trustee’s fee. However if you have information that the fee exceeds the statutory amount, contact a Texas underwriter to discuss.

46

HB 1470—Relating to the Public Sale of Residential Real Property under a power of Sale in a Security Instrument passed/signed/effective 9-1-17

What you should know: We currently are of the opinion that the activities that an auction house may engage in do not include the actual foreclosure sale. Instead, we are of the opinion that the trustee instead of the foreclosing lender may arrange for a post foreclosure auction

• f the property

47

SJR 60—Changes to the Home Equity Loans lending rules passed/election date 11-7-17

Proposed Constitutional amendment to

– establish a lower amount of expenses that can be charged to a borrower, – remove certain financing expense limitations on home equity loans, – establish certain authorized lenders to make a home equity loan, – change certain options for refinancing of home equity loans, – change the threshold for an advance of a home equity line of credit, and – allow home equity loans on agricultural homesteads.

48

SJR 60—Changes to the Home Equity Loans lending rules passed/election date 11-7-17

• Lowers the cap of fees from the existing 3% to 2% of

the principal balance of the loan exclusive of :

– Appraisals by 3rd party appraisers, property surveys by licensed surveyors – State base title premiums and endorsements and – A title report of the cost is less than the premium for a title policy without endorsements

49

SJR 60—Changes to the Home Equity Loans lending rules passed/election date 11-7-17

What you should know: As to the fee cap, please recall that Item 1e of the T-42 does not require the title company to compute or be responsible for the fees. T-42.1(e) instead insures that the title company did not collect or disburse any fees not shown on the settlement statement prepared by the Company and that the settlement statement was sent to the lender before execution of the mortgage. In regards to the title insurance premium computation, the T-42.1(e) does not require the title company to make such computation nor does it require you to offer a title report.

50

SJR 60—Changes to the Home Equity Loans lending rules passed/election date 11-7-17

What you should know: Allows a home equity loan to be refinanced as a non-home equity loan and secured with a lien against a home if the refinancing occurs at least a year after the home equity loan was closed, includes no additional funds other than expenses of refinancing, and does not exceed 80% of the fair market value of the loan.

51

SJR 60—Changes to the Home Equity Loans lending rules passed/election date 11-7-17

• This section, if enacted, would remove the “once home

equity always home equity” requirement for homestead property and would allow a normal deed of trust to refinance a home equity loan.

• The proposed amendment would repeal the current

prohibition against home equity loans for homesteads with agricultural use.

52

PROBATE

53

HB 1814—Adds a requirement to applications for the probate of a will passed/signed/effective 9-1-17

Adds a requirement to applications for the probate of a will, muniment of title, or letters of administration to include the last three numbers of each applicant’s and decedent’s driver’s license number and social security number. If the application for letters of administration doesn’t include these numbers, applicant must state the reasons.

54

HB 1814—Adds a requirement to applications for the probate of a will passed/signed/effective 9-1-17

What you should know/do: Be aware that this additional information is required in the above referenced applications going forward. This identifying information may be a helpful resource for you to determine if a prior lien or abstract of judgment is against the decedent or potential beneficiary in your transaction.

55

HB 1877—Allows the court to impose a fine up to $1,000 plus damages and costs for misrepresentations passed/signed/effective 9-1-17

Allows the court to impose a fine up to $1,000, plus damages and costs, for misrepresentations made in an affidavit in lieu of inventory, appraisement, and list of claims.

56

HB 1877—Allows the court to impose a fine up to $1,000 plus damages and costs for misrepresentations passed/signed/effective 9-1-17

What you should know/do: This law will hopefully serve to discourage misrepresentations in affidavits in lieu of inventory, appraisement, and list of claims, however you must continue to comply with P-11b.(9) by examining a balance sheet in instances where federal estate taxes and state inheritance taxes have not been paid.

57

HB 2207—Clarifies the manner in which a will can be deposited with the county clerk passed/signed/effective 9-1-17

Clarifies the manner in which a will can be deposited with the county clerk by an attorney, business or other person in possession of a testator’s will.

58

HB 2207—Clarifies the manner in which a will can be deposited with the county clerk passed/signed/effective 9-1-17

What you should know/do: Upon receiving an affidavit or

• ther notice or proof of a testator’s death, the county clerk

must notify the persons named on the endorsement of the will wrapper that the will is deposited in the clerk’s office. As stated in the statute, depositing the will with the county clerk is merely to provide a safe and convenient repository for a will. This does not change our requirements related to obtaining proof of probate proceeding and related pleadings or

• btaining an affidavit of heirship.

59

HB 2271—Makes many modifications to the Estates Code to decedent’s estates passed/signed/effective 9-1-17

• allowing proof of a community

property survivorship agreement by written deposition,

• adding children adopted

equitably or by estoppel are considered adopted children,

• increasing the limit for small

estate affidavits from $50,000 to $75,000,

• clarifying members of a class

include persons born before, or in gestation at,

• the death of the person or

persons who are measuring the lives for the class (and not at the testator’s death),

• limiting the timeframe to modify
• r reform a will to four years

following the admission of will to probate,

Some of the numerous changes are:

60

HB 2271—Makes many modifications to the Estates Code to decedent’s estates passed/signed/effective 9-1-17

• allowing an estate

administration to be opened more than four years after the decedent’s death if the application is filed before the fourth anniversary,

• requiring an applicant for

muniment of title state if there is another reason that there isn’t a necessity for administration of the estate other than no unpaid debts,

• changing the notice provisions

to claimants after probate of will from a newspaper printed in the county in which the letters are issued to a newspaper of general circulation in the county,

• and clarifying and using

consistent definitions that currently exist in the Estates Code.

Some of the numerous changes are:

61

HB 2271—Makes many modifications to the Estates Code to decedent’s estates passed/signed/effective 9-1-17

What you should know/do: Take note of the statutory changes to apply in evaluating future transactions. Remember that 105.001 of the estates code excludes the value of the homestead and exempt property from the $50,000 (now $75,000) limitation. Thus it remains possible for a homestead of $150,000 or even more to be handled under a small estate affidavit under 105.006.

62

SB 617—Addresses provisions related to trusts primarily contained in the Property Code passed/signed/effective 9-1-17

The bill addresses provisions related to trusts primarily contained in the Property Code, including:

– authorizing reformation of trusts, – expanding the statutory authority of a trustee to delegate authority to engage in various powers related to transactions involving real property, and – amending provisions to correct drafting errors.

63

SB 617—Addresses provisions related to trusts primarily contained in the Property Code passed/signed/effective 9-1-17

What you should know/do: Review all of the changes made to the Property Code per this bill. In particular, Property Code Sec. 113.018 on the Employment and Appointment of Agents contains numerous additions to the statutory trustee powers that can be delegated to agents for the purposes of real property transactions and include, but is not limited to:

– Executing and delivering any legal instruments relating to the sale and conveyance

• f the property

– Accepting notes, deeds of trust, or other legal instruments – Approving closing statements authorizing deductions from the sale price – Receiving trustee’s net proceeds by check payable to the trustee – Indemnifying ahold holding harmless any third party who accepts and acts under a power of attorney with respect to the sale – Taking any action necessary to sell the property and accomplish the delegated powers

64

SB 617—Addresses provisions related to trusts primarily contained in the Property Code passed/signed/effective 9-1-17

What you should know/do: A delegation by the trustee must be in writing and acknowledged by the trustee before an officer of the state (or another state) authorized to take acknowledgments to deeds of conveyance and administer oaths. (typically a notary) The statute provides the delegation terminates six months after the date

• f the acknowledgment unless terminated earlier by death or incapacity
• f the trustee, resignation or removal of the trustee or a date specified in

the written delegation. Although delegation of some of the trustee’s duties may be statutorily permissible in real property transaction, please contact a Texas underwriter to ensure the agent has the proper authority for the given action in the transaction.

65

SB 2150—Amends Estate Code Sections 114.103 and 114.151 related to Transfer on Death Deeds (TODD) enacted last session passed/signed/effective 9-1-2017)

The statutory framework is now consistent with anti-lapse rules for failure of devises under a will. In addition, the statutory form of TODD has been amended to add options to deal with the shares of predeceasing beneficiaries.

66

SB 2150—Amends Estate Code Sections 114.103 and 114.151 related to Transfer on Death Deeds (TODD) enacted last session passed/signed/effective 9-1-2017

What you should know/do: Be aware of the changes and the new existing options to the statutory form that go into effect 9-1-2017; however, you cannot provide legal advice as to the TODD form or use nor the various options contained within it. Please see TX2015003 for more information regarding the requirements and guidance for TODDs.

67

SB 499—Adopts the Uniform Partition of Heirs Property Act (UPHPA) as the new Chapter 23A of the Property Code. passed/signed/effective 9-1-2017

The intent of the statute is to protect property owned by families as tenants in common (often the case after an intestate succession) from forced partition actions. Keep in mind that any tenant in common has the right to sell or convey their interest without the consent of the other tenants

• in-common regardless of the size of their interests. In

addition, any tenant can force a partition in kind or a partition by sale. The UPHPA provides more due process protections to an heir’s property by setting out several new requirements in a partition proceeding.

68

SB 499—Adopts the Uniform Partition of Heirs Property Act (UPHPA) as the new Chapter 23A of the Property Code. passed/signed/effective 9-1-2017

What you should know/do: If you have a transaction that involved a partition action in the chain of title by co-tenants, review the UPHPA requirements and seek Texas underwriter approval.

69

INSURANCE

70

HB 1944 – Deals with captive insurance company passed/signed/effective 6-15-17

The bill states that a captive insurance company cannot issue title insurance policies.

71

HB 2491 – Deals with reinsurance and financial statement credit and accounting for reinsurance passed/signed/effective 9-1-17

Section 2551.001, Insurance Code states that Section 493, Insurance is applicable to title insurance. The bill, to the extent that it applies to title insurance, is applicable only to title insurance companies and has no impact on title insurance agents.

72

SB 1073 – Applies to provisional permits for certain title insurance agents passed/signed/effective 5-22-17

According to Section 4001.351 it is not applicable to title insurance agents.

73

REMOTE E-NOTARIZATION

74

HB 1217—Remote E-Notarization effective 7-1-2018

• Established the framework for remote e-notarization in

Texas

• Rulemaking required by the Secretary of State
• Documents e-notarized must be identified as such
• Prevents vendor monopoly
• Texas as a leader in remote e-notarization

(Expect Stewart bulletin in coming months.)

75

REAL ESTATE

76

HB 2534—Allows an person not licensed as a real estate agent or broker to acquire an option

• r interest in a real estate contract and then sell
• r assign the contract

The person cannot engage in real estate brokerage and disclose the interest to any potential buyer. Failure to disclose is real estate brokerage.

77

HB 2534—Allows an person not licensed as a real estate agent or broker to acquire an option

• r interest in a real estate contract and then sell
• r assign the contract

What you should know: Title companies are not charged with enforcing rules of the Texas Real Estate Commission. Nevertheless, our long standing practice of requiring notice to the parties of the assignment of a contract and approval by the lender are essentially confirmed by this legislation.

78

POWER OF ATTORNEY

79

HB 1974—Texas Power of Attorney Act

This bill addresses many issues:

• 1. In 751.00201 Estates Code it defines disabled or

incapacitated for purposes of a POA: if a physician certifies in writing at a date later than the date the durable power of attorney is executed that, based

• n the physician's medical examination of the person, the

person is determined to be mentally incapable of managing the person's financial affairs.

80

HB 1974—Texas Power of Attorney Act

• 2. In 751.0021 Estates Code are set out the requirements

for a durable power of attorney:

a) In writing and granting authority to another person to act in place of the principal whether the words power of attorney are used b) Signed by an adult principal or in the adult principal’s conscious presence by another adult c) Contains language as to disability that clearly indicate the authority continues after disability d) Is acknowledged

81

HB 1974—Texas Power of Attorney Act

• 3. A power of attorney has the meaning of the jurisdiction

set out in the POA or the state where it was executed or the place of the principal’s residence if so designated (751.0024)

• 4. A great number of additional matters are addressed but

do not have direct bearing on the use of a power of attorney in a real estate transaction.

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HB 1974—Texas Power of Attorney Act

• 5. Section 751.201 deals with the acceptance of a power of

attorney within 7 days after it is offered. It was intended to deal with financial institutions who require substantial time to approve and which cause delay in the use of the

• POA. The bill purports to require a person to accept a

POA unless grounds for refusal exist under 751.206. The person to whom the POA is presented can require an opinion of counsel, including an English translation. The person can also request a certification of facts under 751.203 in the form stated in the law.

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HB 1974—Texas Power of Attorney Act

What you should know/do: You may generally accept as true statements made in the certification of facts so long it is made under penalty of perjury and you have no actual knowledge that the certification is false.

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HB 1974—Texas Power of Attorney Act

What you should know: Section 751.206 provides the grounds for refusing to accept a power of attorney. It provides that a person is not required to use the power of attorney if agent is seeking to establish a customer relationship under the POA when the principal is not already a customer of the person or to expand an existing customer relationship. It is our position that only in the rarest of cases will the person offering a power of attorney be seeking to establish a customer relationship with the title company.

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HB 1974—Texas Power of Attorney Act

What you should know: A seller offering a POA is not the customer of the title company; the insured buyer is the customer. A borrower offering a POA is not the customer of the title company; the insured lender is the customer. A seller in a seller finance transaction who is getting a loan policy may create a customer relationship. It may be possible for a person in a strictly escrowing of funds and documents to create a customer relationship. Escrow matters are outside the scope of the agency agreement and as such need to be discussed with your management or counsel.

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HB 1974—Texas Power of Attorney Act

Constitutional Issues: Section 752.102 provides in section b that a power of attorney may be used to create a home equity loan . We never doubted that such power existed. We do disagree that the Legislature which created home equity lending in Art. 16, Sec. 50 a6 of the Texas Constitution has the power in this legislation to overturn the Texas Supreme Court’s holding in Finance Commissioner v. Norwood, 10-0112 discussed in bulletin TX2013004.

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HB 1974—Texas Power of Attorney Act

Constitutional Issues: In the Norwood case the Supreme Court held that executing the required consent or a power of attorney are part of the closing process and must occur at one of the locations allowed by the constitutional provisions (attorney’s office, lender’s office or title company’s office). Accordingly, unless you have satisfactory proof that a POA was signed in one of those locations the POA may not be used in a home equity loan situation. The rule announced in Norwood does not apply to reverse mortgages.

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BILLS THAT DID NOT PASS

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Title Deregulation/Banding

Despite the efforts of some of the largest developers in Texas to gain rate relief at the legislature, their proposed bills did not pass this session. It appears that one group simply wants lower premiums while another group simply believes that the state has no business regulation rates. The former group has never asked the TDI for another jumbo policy rate

• reduction. The latter group wants no rate regulation at all.

It is unknown whether they want no regulation or just the results of what they would hope would be a rate reduction due to competition. Since most of them do business in the bigger cities they seem to have little regard for the smaller town title companies and their need to have a reasonable rate in order to maintain title plants and provide service to their local communities.

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SJR 38—The Texas Legislature wants to be able complain more often.

A concurrent resolution that passed was SJR 38, which rescinded every previous request made by the Texas Legislature for a constitutional convention to amend the US Constitution and that all future requests be automatically rescinded after 8 years and no such convention being held.

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SJR 38—The Texas Legislature wants to be able complain more often.

The legislature ordered that a copy of this resolution be sent to the Vice President and to Secretary and parliamentarian

• f the Senate and to both Texas Senators accompanied by a

cover letter to each addressee drawing attention to the fact that it is the 85th Texas Legislature's courteous, yet firm request that the full and complete verbatim text of this joint resolution be duly published in the United States Senate's portion of the Congressional Record as an official memorial to the United States Senate.

– That’s the Texas legislature for you…courteous, yet firm.

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CR 8 Designating the Canon as the Official State Gun

This bill passed the Texas Senate unanimously but failed to get a vote in the Texas House.

WHEREAS, Throughout the long and colorful history of Texas, the cannon has been an important weapon in the state s fight for liberty and independence as well as a symbol of the defiance and determination of its people WHEREAS, A cannon featured in a memorable incident in the early years of the Texas Republic; in 1842, Austin residents feared that President Sam Houston wanted to move the republic’s capital from Austin to Houston, and when he sent Texas Rangers to take the government’s archives, an Austin innkeeper named Angelina Eberly fired off a cannon on the corner of Sixth Street and Congress Avenue, rousing the city’s population and blowing a hole in the General Land Office(!) emphasis added

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CR 8 Designating the Canon as the Official State Gun

It’s just a little sad that the House thought other bills were more important than this one!!

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Contact Info John Rothermel

SW Regional Underwriter Senior Vice President Senior Underwriter

Stewart Title Guaranty Company San Antonio, Texas

210.590.1981 john.rothermel@stewart.com

Per the TDI and the State Bar, in order to obtain a CE Certificate or CLE Credit, you must listen to the webinar for a minimum of 55 minutes, obtain the password provided at the end of the presentation and follow the instructions as given.

To Receive CE Credit

Each individual seeking credit hours must send their own certificate request to: CEcertificate@stewart.com Please include the following information:

• Provide only this Presentation Name in the Subject Line of your e-mail – “2017

Legislation” In the body of your e-mail:

• Name of Participant (as it appears on your Escrow Officer License);
• Presentation PASSWORD given at the end of the webinar;
• License Number Only (located on left side of Escrow Officer Certificate of License –

for example: License Number: 1234567-890123) For Attorney CLE Credit also include:

• Texas State Bar Number
• Affiliation with Stewart

– Employed by Stewart Title Guaranty Company; – an affiliate; or – a Stewart agent

For more details, see the CE and CLE FAQs at:

http://www.stewart.com/en/stg/texas/education/texas-tips/ce-cle-faqs.html

Please contact us ONLY if you haven’t received your certificate within 10 business days at: CEcertificate@stewart.com

You can access the full presentation materials 10 business days after this presentation as well as all current courses at:

www.stewart.com/texas under the “Texas TIPS” tab

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Next Month’s Texas TIPS Online presentation is

September 21, 2017

“Review of Loan Policy”

presented by:

Richard Black

For Questions/Comments Email john.rothermel@stewart.com

• r

heidi.junge@stewart.com

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