CHAPTER 351. PROPERTY TAX LENDERS
FINANCE CODE
TITLE 4. REGULATION OF INTEREST, LOANS, AND FINANCED TRANSACTIONS
SUBTITLE B. LOANS AND FINANCED TRANSACTIONS
CHAPTER 351. PROPERTY TAX LENDERS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 351.001. SHORT TITLE. This chapter may be cited as the
Property Tax Lender License Act.
Added by Acts 2007, 80th Leg., R.S., Ch.
1220, Sec. 1, eff. September 1, 2007.
Sec. 351.002. DEFINITIONS.In this chapter:
(1) "Property tax lender" means a person that engages in
activity requiring a license under Section 351.051. The term
does not include:
(A) a person who is sponsored by a licensed property tax lender
to assist with or perform the acts of a property tax lender; or
(B) a person who performs only clerical functions such as
delivering a loan application to a property tax lender, gathering
or requesting information related to a property tax loan
application on behalf of the prospective borrower or property tax
lender, word processing, sending correspondence, or assembling
files.
(2) "Property tax loan" means an advance of money:
(A) in connection with a transfer of lien under Section 32.06,
Tax Code, or a contract under Section 32.065, Tax Code;
(B) in connection with which the person making the transfer
arranges for the payment, with a property owner's written
consent, of property taxes and related closing costs on behalf of
the property owner in accordance with Section 32.06, Tax Code;
and
(C) that is secured by a special lien against property
transferred from a taxing unit to the property tax lender and
which may be further secured by the lien or security interest
created by a deed of trust, security deed, or other security
instrument.
Added by Acts 2007, 80th Leg., R.S., Ch.
1220, Sec. 1, eff. September 1, 2007.
Sec. 351.003. SECONDARY MARKET TRANSACTIONS. This chapter does
not prohibit a property tax lender from receiving compensation
from a party other than the property tax loan applicant for the
sale, transfer, assignment, or release of rights on the closing
of a property tax loan transaction.
Added by Acts 2007, 80th Leg., R.S., Ch.
1220, Sec. 1, eff. September 1, 2007.
Sec. 351.004. AFFILIATED BUSINESS ARRANGEMENTS. A property tax
lender may conduct business under this chapter in an office,
office suite, room, or place of business in which any other
business is conducted or in combination with any other business
unless the commissioner:
(1) determines after a hearing that the conduct of the other
business in that office, office suite, room, or place of business
has concealed an evasion of this chapter; and
(2) orders the lender in writing to desist from the conduct of
the other business in that office, office suite, room, or place
of business.
Added by Acts 2007, 80th Leg., R.S., Ch.
1220, Sec. 1, eff. September 1, 2007.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
1382, Sec. 1, eff. September 1, 2009.
Sec. 351.005. APPLICATION OF TAX CODE. This chapter does not
affect the application of Section 32.06 or 32.065, Tax Code.
Added by Acts 2007, 80th Leg., R.S., Ch.
1220, Sec. 1, eff. September 1, 2007.
Sec. 351.006. ENFORCEMENT. In addition to any other applicable
enforcement provisions, Subchapters E, F, and G, Chapter 14,
apply to a violation of this chapter or Section 32.06 or 32.065,
Tax Code, in connection with property tax loans.
Added by Acts 2007, 80th Leg., R.S., Ch.
1220, Sec. 1, eff. September 1, 2007.
Sec. 351.007. RULES. The finance commission may adopt rules to
ensure compliance with this chapter and Sections 32.06 and
32.065, Tax Code.
Added by Acts 2007, 80th Leg., R.S., Ch.
1220, Sec. 1, eff. September 1, 2007.
Sec. 351.008. EXAMINATION OF LENDERS; ACCESS TO RECORDS. (a)
The commissioner or the commissioner's representative shall, at
the times the commissioner or the representative considers
necessary:
(1) examine each place of business of each property tax lender;
and
(2) investigate the lender's transactions, including loans, and
records, including books, accounts, papers, and correspondence,
to the extent the transactions and records pertain to the
business regulated under this chapter and Sections 32.06 and
32.065, Tax Code.
(b) The property tax lender shall:
(1) give the commissioner or the commissioner's representative
free access to the lender's office, place of business, files,
safes, and vaults; and
(2) allow the commissioner or the representative to make a copy
of an item that may be investigated under Subsection (a)(2).
(c) During an examination, the commissioner or the
commissioner's representative may administer oaths and examine
any person under oath on any subject pertinent to a matter that
the commissioner or the representative is authorized or required
to consider, investigate, or secure information about under this
chapter or Section 32.06 or 32.065, Tax Code.
(d) Information obtained under this section is confidential.
(e) A property tax lender's violation of Subsection (b) is a
ground for the suspension or revocation of the lender's license.
Added by Acts 2009, 81st Leg., R.S., Ch.
1382, Sec. 2, eff. September 1, 2009.
Sec. 351.009. GENERAL INVESTIGATION. (a) To discover a
violation of this chapter or Section 32.06 or 32.065, Tax Code,
or to obtain information required under this chapter or Section
32.06 or 32.065, Tax Code, the commissioner or the commissioner's
representative may investigate the records, including books,
accounts, papers, and correspondence, of a person, including a
property tax lender, who the commissioner or the representative
has reasonable cause to believe is violating this chapter or
Section 32.06 or 32.065, Tax Code, regardless of whether the
person claims to not be subject to this chapter or Section 32.06
or 32.065, Tax Code.
(b) For the purposes of this section, a person who advertises,
solicits, or otherwise represents that the person is willing to
make a property tax loan is presumed to be engaged in the
business described by Section 351.051.
Added by Acts 2009, 81st Leg., R.S., Ch.
1382, Sec. 2, eff. September 1, 2009.
Sec. 351.010. REFUSAL TO ALLOW EXAMINATION OR INSPECTION. A
property tax lender who fails or refuses to permit an examination
or investigation authorized by this subchapter violates this
chapter. The failure or refusal is grounds for the suspension or
revocation of the lender's license.
Added by Acts 2009, 81st Leg., R.S., Ch.
1382, Sec. 2, eff. September 1, 2009.
Sec. 351.011. VERIFICATION OF NET ASSETS. If the commissioner
questions the amount of a property tax lender's net assets, the
commissioner may require certification by an independent
certified public accountant that:
(1) the accountant has reviewed the property tax lender's books,
other records, and transactions during the reporting year;
(2) the books and other records are maintained using generally
accepted accounting principles; and
(3) the property tax lender meets the net assets requirement of
Section 351.153.
Added by Acts 2009, 81st Leg., R.S., Ch.
1382, Sec. 2, eff. September 1, 2009.
SUBCHAPTER B. AUTHORIZED ACTIVITIES; LICENSE
Sec. 351.051. LICENSE REQUIRED. (a) A person must hold a
license issued under this chapter to:
(1) engage in the business of making, transacting, or
negotiating property tax loans; or
(2) contract for, charge, or receive, directly or indirectly, in
connection with a property tax loan subject to this chapter, a
charge, including interest, compensation, consideration, or
another expense, authorized under this chapter that in the
aggregate exceeds the charges authorized under other law.
(b) A person may not use any device, subterfuge, or pretense to
evade the application of this section.
(c) This chapter does not apply to:
(1) any of the following entities or an employee of any of the
following entities, if the employee is acting for the benefit of
the employer:
(A) a bank, savings bank, or savings and loan association, or a
subsidiary or an affiliate of a bank, savings bank, or savings
and loan association; or
(B) a state or federal credit union, or a subsidiary, affiliate,
or credit union service organization of a state or federal credit
union; or
(2) an individual who:
(A) makes a property tax loan from the individual's own funds to
a spouse, former spouse, or persons in the lineal line of
consanguinity of the individual lending the money; or
(B) makes five or fewer property tax loans in any consecutive
12-month period from the individual's own funds.
(d) A property tax lender licensed under this chapter is not
required to be licensed under Chapter 156 or any other provision
of this code.
Added by Acts 2007, 80th Leg., R.S., Ch.
1220, Sec. 1, eff. September 1, 2007.
Sec. 351.0515. RESIDENTIAL MORTGAGE LOAN ORIGINATOR LICENSE
REQUIRED. (a) In this section, "Nationwide Mortgage Licensing
System and Registry" and "residential mortgage loan originator"
have the meanings assigned by Section 180.002.
(b) Unless exempt under Section 180.003, an individual who acts
as a residential mortgage loan originator in the making,
transacting, or negotiating of a property tax loan for a
principal dwelling must:
(1) be individually licensed to engage in that activity under
this chapter;
(2) be enrolled with the Nationwide Mortgage Licensing System
and Registry as required by Section 180.052; and
(3) comply with other applicable requirements of Chapter 180 and
rules adopted under that chapter.
(c) The finance commission shall adopt rules establishing
procedures for issuing, renewing, and enforcing an individual
license under this section. In adopting rules under this
subsection, the finance commission shall ensure that:
(1) the minimum eligibility requirements for issuance of an
individual license are the same as the requirements of Section
180.055;
(2) the minimum eligibility requirements for renewal of an
individual license are the same as the requirements of Section
180.059; and
(3) the applicant pays:
(A) an investigation fee in a reasonable amount determined by
the commissioner; and
(B) an annual license fee in an amount determined as provided by
Section 14.107.
(d) The finance commission may adopt rules under this chapter as
required to carry out the intentions of the federal Secure and
Fair Enforcement for Mortgage Licensing Act of 2008 (Pub. L. No.
110-289).
Added by Acts 2009, 81st Leg., R.S., Ch.
1104, Sec. 17, eff. June 19, 2009.
Sec. 351.052. ISSUANCE OF MORE THAN ONE LICENSE FOR PROPERTY TAX
LENDER. (a) The commissioner may issue more than one license to
a property tax lender on compliance with this chapter for each
license.
(b) A person who is required to hold a license under this
chapter must hold a separate license for each office at which
property tax loans are made, negotiated, serviced, held, or
collected under this chapter.
(c) A license is not required under this chapter for a place of
business:
(1) devoted to accounting or other recordkeeping; and
(2) at which property tax loans are not made, negotiated,
serviced, held, or collected under this chapter.
Added by Acts 2007, 80th Leg., R.S., Ch.
1220, Sec. 1, eff. September 1, 2007.
Sec. 351.053. AREA OF BUSINESS; PROPERTY TAX LOANS BY MAIL. (a)
A property tax lender is not limited to making property tax
loans to residents of the community in which the office for which
the license or other authority is granted is located.
(b) A property tax lender may make, negotiate, arrange, and
collect property tax loans by mail from a licensed office.
Added by Acts 2007, 80th Leg., R.S., Ch.
1220, Sec. 1, eff. September 1, 2007.
Sec. 351.054. NOTICE TO TAXING UNIT. (a) A transferee of a tax
lien must include with the sworn document filed with the
collector of a taxing unit under Section 32.06(a-1), Tax Code,
the information required by this section.
(b) If the transferee is licensed under this chapter, the
transferee shall include with the filing the licensee's license
number assigned by the commissioner.
(c) If the transferee is exempt from this chapter under Section
351.051(c)(1), the transferee shall include with the filing an
affidavit stating the entity's type of organization that
qualifies it for the exemption, any charter number assigned by
the governmental authority that issued the entity's charter, and
the address of the entity's main office.
(d) If the transferee is exempt from this chapter under Section
351.051(c)(2), the transferee shall include a certificate issued
by the commissioner indicating the entity's exemption. The
commissioner shall establish procedures for issuance of a
certificate under this subsection, application requirements, and
requirements regarding information that must be submitted with an
application.
Added by Acts 2007, 80th Leg., R.S., Ch.
1220, Sec. 1, eff. September 1, 2007.
SUBCHAPTER C. APPLICATION FOR AND ISSUANCE OF LICENSE
Sec. 351.101. APPLICATION REQUIREMENTS. (a) The application for
a license under this chapter must:
(1) be under oath;
(2) give the approximate location from which business is to be
conducted;
(3) identify the business's principal parties in interest; and
(4) contain other relevant information that the commissioner
requires for the findings required under Section 351.104.
(b) On the filing of one or more license applications, the
applicant shall pay to the commissioner an investigation fee not
to exceed $200.
(c) On the filing of each license application, the applicant
shall pay to the commissioner for the license's year of issuance
a license fee in an amount determined as provided by Section
14.107.
Added by Acts 2007, 80th Leg., R.S., Ch.
1220, Sec. 1, eff. September 1, 2007.
Sec. 351.102. BOND. (a) If the commissioner requires, an
applicant for a license under this chapter shall file with the
application a bond that is:
(1) in an amount not to exceed the total of:
(A) $50,000 for the first license; and
(B) $10,000 for each additional license;
(2) satisfactory to the commissioner; and
(3) issued by a surety company qualified to do business as a
surety in this state.
(b) The bond must be in favor of this state for the use of this
state and the use of a person who has a cause of action under
this chapter against the license holder.
(c) The bond must be conditioned on:
(1) the license holder's faithful performance under this chapter
and rules adopted under this chapter; and
(2) the payment of all amounts that become due to the state or
another person under this chapter during the calendar year for
which the bond is given.
(d) The aggregate liability of a surety to all persons damaged
by the license holder's violation of this chapter may not exceed
the amount of the bond.
(e) A license holder engaged in the business of making,
transacting, or negotiating a property tax loan for a principal
dwelling must meet the surety bond or recovery fund fee
requirement, as applicable, of the holder's residential mortgage
loan originator under Section 180.058.
Added by Acts 2007, 80th Leg., R.S., Ch.
1220, Sec. 1, eff. September 1, 2007.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
1104, Sec. 18, eff. June 19, 2009.
Sec. 351.103. INVESTIGATION OF APPLICATION. On the filing of an
application and, if required, a bond, and on payment of the
required fees, the commissioner shall conduct an investigation to
determine whether to issue the license.
Added by Acts 2007, 80th Leg., R.S., Ch.
1220, Sec. 1, eff. September 1, 2007.
Sec. 351.104. APPROVAL OR DENIAL OF APPLICATION. (a) The
commissioner shall approve the application and issue to the
applicant a license to make property tax loans under this chapter
if the commissioner finds that:
(1) the financial responsibility, experience, character, and
general fitness of the applicant are sufficient to:
(A) command the confidence of the public; and
(B) warrant the belief that the business will be operated
lawfully and fairly, within the purposes of this chapter; and
(2) the applicant has net assets of at least $25,000 available
for the operation of the business.
(b) If the commissioner does not find that the eligibility
requirements of Subsection (a) are met, the commissioner shall
notify the applicant.
(c) If an applicant requests a hearing on the application not
later than the 30th day after the date of notification under
Subsection (b), the applicant is entitled to a hearing not later
than the 60th day after the date of the request.
(d) The commissioner shall approve or deny the application not
later than the 60th day after the date of the filing of a
completed application with payment of the required fees, or if a
hearing is held, after the date of the completion of the hearing
on the application. The commissioner and the applicant may agree
to a later date in writing.
Added by Acts 2007, 80th Leg., R.S., Ch.
1220, Sec. 1, eff. September 1, 2007.
Sec. 351.105. DISPOSITION OF FEES ON DENIAL OF APPLICATION. If
the commissioner denies the application, the commissioner shall
retain the investigation fee and shall return to the applicant
the license fee submitted with the application.
Added by Acts 2007, 80th Leg., R.S., Ch.
1220, Sec. 1, eff. September 1, 2007.
SUBCHAPTER D. LICENSE
Sec. 351.151. NAME AND PLACE ON LICENSE. (a) A license must
state:
(1) the name of the license holder; and
(2) the address of the office from which the business is to be
conducted.
(b) A license holder may not conduct business under this chapter
under a name or at a place of business in this state other than
the name or office stated on the license.
Added by Acts 2007, 80th Leg., R.S., Ch.
1220, Sec. 1, eff. September 1, 2007.
Sec. 351.152. LICENSE DISPLAY. A license holder shall display a
license at the place of business provided on the license.
Added by Acts 2007, 80th Leg., R.S., Ch.
1220, Sec. 1, eff. September 1, 2007.
Sec. 351.153. MINIMUM ASSETS FOR LICENSE. A license holder
shall maintain for each office for which a license is held net
assets of at least $25,000 that are used or readily available for
use in conducting the business of that office.
Added by Acts 2007, 80th Leg., R.S., Ch.
1220, Sec. 1, eff. September 1, 2007.
Sec. 351.154. ANNUAL LICENSE FEE. Not later than December 1, a
license holder shall pay to the commissioner for each license
held an annual fee for the year beginning the next January 1, in
an amount determined as provided by Section 14.107.
Added by Acts 2007, 80th Leg., R.S., Ch.
1220, Sec. 1, eff. September 1, 2007.
Sec. 351.155. EXPIRATION OF LICENSE ON FAILURE TO PAY ANNUAL
FEE. If the annual fee for a license is not paid before the 16th
day after the date on which the written notice of delinquency of
payment has been given to the license holder, the license expires
on the later of:
(1) that day; or
(2) December 31 of the last year for which an annual fee was
paid.
Added by Acts 2007, 80th Leg., R.S., Ch.
1220, Sec. 1, eff. September 1, 2007.
Sec. 351.156. LICENSE SUSPENSION OR REVOCATION. After notice
and a hearing the commissioner may suspend or revoke a license if
the commissioner finds that:
(1) the license holder failed to pay the annual license fee, an
examination fee, an investigation fee, or another charge imposed
by the commissioner under this chapter;
(2) the license holder, knowingly or without the exercise of due
care, violated this chapter or Section 32.06 or 32.065, Tax Code,
or a rule adopted or an order issued under this chapter or
Section 32.06 or 32.065, Tax Code;
(3) a fact or condition exists that, if it had existed or had
been known to exist at the time of the original application for
the license, clearly would have justified the commissioner's
denial of the application; or
(4) the license holder has failed to ensure that an individual
acting as a residential mortgage loan originator, as defined by
Section 180.002, in the making, transacting, or negotiating of a
property tax loan for a principal dwelling is licensed under this
chapter in accordance with Section 351.0515.
Added by Acts 2007, 80th Leg., R.S., Ch.
1220, Sec. 1, eff. September 1, 2007.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
1104, Sec. 19, eff. June 19, 2009.
Sec. 351.157. CORPORATE CHARTER FORFEITURE. (a) A license
holder who violates this chapter is subject to revocation of the
holder's license and, if the license holder is a corporation,
forfeiture of its charter.
(b) When the attorney general is notified of a violation of this
chapter and revocation of a license, the attorney general shall
file suit in a district court in Travis County, if the license
holder is a corporation, for forfeiture of the license holder's
charter.
Added by Acts 2007, 80th Leg., R.S., Ch.
1220, Sec. 1, eff. September 1, 2007.
Sec. 351.158. LICENSE SUSPENSION OR REVOCATION FILED WITH PUBLIC
RECORDS. The decision of the commissioner on the suspension or
revocation of a license and the evidence considered by the
commissioner in making the decision shall be filed in the public
records of the commissioner.
Added by Acts 2007, 80th Leg., R.S., Ch.
1220, Sec. 1, eff. September 1, 2007.
Sec. 351.159. REINSTATEMENT OF SUSPENDED LICENSE; ISSUANCE OF
NEW LICENSE AFTER REVOCATION. The commissioner may reinstate a
suspended license or issue a new license on application to a
person whose license has been revoked if at the time of the
reinstatement or issuance no fact or condition exists that
clearly would have justified the commissioner's denial of an
original application for the license.
Added by Acts 2007, 80th Leg., R.S., Ch.
1220, Sec. 1, eff. September 1, 2007.
Sec. 351.160. SURRENDER OF LICENSE. A license holder may
surrender a license issued under this chapter by delivering to
the commissioner:
(1) the license; and
(2) a written notice of the license's surrender.
Added by Acts 2007, 80th Leg., R.S., Ch.
1220, Sec. 1, eff. September 1, 2007.
Sec. 351.161. EFFECT OF LICENSE SUSPENSION, REVOCATION, OR
SURRENDER. (a) The suspension, revocation, or surrender of a
license issued under this chapter does not affect the obligation
of a contract between the license holder and a debtor entered
into before the revocation, suspension, or surrender.
(b) Surrender of a license does not affect the license holder's
civil or criminal liability for an act committed before
surrender.
Added by Acts 2007, 80th Leg., R.S., Ch.
1220, Sec. 1, eff. September 1, 2007.
Sec. 351.162. MOVING AN OFFICE. (a) A license holder shall
give written notice to the commissioner before the 30th day
preceding the date the license holder moves an office from the
location provided on the license.
(b) The commissioner shall amend a license holder's license
accordingly.
Added by Acts 2007, 80th Leg., R.S., Ch.
1220, Sec. 1, eff. September 1, 2007.
Sec. 351.163. TRANSFER OR ASSIGNMENT OF LICENSE. A license may
be transferred or assigned only with the approval of the
commissioner.
Added by Acts 2007, 80th Leg., R.S., Ch.
1220, Sec. 1, eff. September 1, 2007.
Sec. 351.164. REPORTING REQUIREMENT. (a) Each year, a license
holder shall file with the commissioner a report that contains
relevant information concerning its transactions conducted under
this chapter.
(b) A report under this section must be:
(1) under oath; and
(2) in the form prescribed by the commissioner.
(c) A report under this section is confidential.
(d) Annually the commissioner shall prepare and publish a
consolidated analysis and recapitulation of reports filed under
this section.
Added by Acts 2007, 80th Leg., R.S., Ch.
1220, Sec. 1, eff. September 1, 2007.