On May 29th, the Texas Legislature concluded its 2023 regular session. The mortgage and title industries were closely watching several bills that could have had substantial impact on real estate lending in Texas. Three such bills, HB 219, SB 801, and SB 1780, were signed into law. However, three notable bills were not passed: SB 147, HB 264, and HJR 124. A brief summary of each bill is located below. Please reach out to compliance@docsdirect.com with any questions or comments.
ENACTED:
HB 219: Relating to the release of a deed of trust or other contract lien securing a home loan after payoff by mortgagor.
Currently, there is no statutory time requirement dictating when a mortgage holder must release a lien. However, the addition of Texas Finance Code Section 343.108 will now require mortgage servicers or mortgagees to release a lien within 60 days of receiving the correct payoff amount from a mortgagor. Additionally, if the mortgagor requests a release of lien in writing within 20 days of the mortgage payoff, then the mortgage servicer or mortgagee is required to release the lien within 30 days of receiving the written request.
This change is effective September 1, 2023.
The bill text can be found here: 88(R) HB 219 - Enrolled version (texas.gov)
SB 801: Relating to an instrument that names a trust as a party.
SB 801 was enacted in direct response to Fugedi v. Intram, Incorporated et al., No. 21-40365, 2022 WL 3716198, where a lower court found that because a trust is not a legal entity in Texas, a deed mistakenly conveying property to a trust without naming the trustee was void and could not be corrected. Although the appellate court overturned that ruling, SB 801 clears up any confusion by clarifying that if an instrument names only the trust as a party, then the trustee of that trust is considered the "named party." Therefore, if a deed lists only the trust as the grantee, then the property is still considered to be conveyed to the trustee, even though the trustee's name is not present on the deed.
In addition, SB 801 amends the correction affidavit statutes to specifically state that a nonmaterial correction affidavit may be used to add, correct, or clarify "the identity of the trustee of a trust named as party."
This change is effective September 1, 2023.
The bill text can be found here: 88(R) SB 801 - Enrolled version (texas.gov)
SB 1780: Relating to online notarization.
Texas law currently allows for remote online notarization (RON), which occurs when one party electronically signs an electronic document, which is then electronically notarized by an online notary. With the enactment of SB 1780, Texas will also allow for remote ink notarization (RIN), which allows an individual to sign physical documents using a "wet ink" signature while the notary confirms the signer's ID and witnesses the signature using an audio-visual platform. The signed documents are then sent to the notary to sign and place his or her notarial seal.
This change is effective January 1, 2024.
The bill text can be found here: 88(R) SB 1780 - Enrolled version (texas.gov)
NOT ENACTED:
SB 147: Relating to the purchase of or acquisition of title to real property by certain aliens or foreign entities.
As introduced, SB 147 would have prohibited governments or citizens of China, Iran, North Korea, or Russia; companies or entities headquartered in those countries; or companies or entities controlled by the governments or citizens of those countries from purchasing any real property in the state of Texas.
However, the bill in its final form would only have prohibited governments, citizens, and entities of certain countries that pose "a risk to the national security of the United States" from purchasing certain real property in Texas, including agricultural land, mines, or standing timber. There would have been no restrictions on those parties purchasing residential real property in Texas.
The bill text can be found here: 88(R) SB 147 - Engrossed version (texas.gov)
HB 264: Relating to requirements for the physical presence of a borrower for signing certain documents related to a home equity loan.
This bill would have amended Texas home equity loan provisions to allow members of the armed forces and their spouses, individuals with disabilities prohibiting travel, individuals quarantined for health reasons, and individuals who are incarcerated or under house arrest to sign closing documents for a Texas home equity loan via remote online notarization, or through an agent under a durable POA regardless of where the POA was signed. However, the agent would have still needed to sign the closing documents at the office of the lender, attorney, or title company.
The bill text can be found here: 88(R) HB 264 - Engrossed version (texas.gov)
HJR 124: Proposing a constitutional amendment to remove the requirement that a home equity loan be closed only at the office of the lender, an attorney at law, or a title company.
This bill would have completely removed the requirement that a Texas home equity loan be closed only at the office of the lender, an attorney, or title company.
The bill text can be found here: 88(R) HJR 124 - Introduced version (texas.gov)
