Untitled Texas Attorney General Opinion ( 2010 )

ATTORNEY GENERAL OF TEXAS
GREG ABBOTT
July 26, 2010
The Honorable Burt Solomons Opinion No. GA-0787
Chair, Committee on State Affairs
Texas House of Representatives Re: Whether a property tax lien lender may
Post Office Box 2910 exercise a right of forced sale after a property
Austin, Texas 78768-2910 owner who has filed a deferment of taxes attains
the age of65 (RQ-0857-GA)
Dear Representative Solomons:
You ask about the application of Tax Code section 33.06, which allows deferred collection
of taxes on the residence homesteads of elderly or disabled persons, where "a property tax loan [is]
issued to an individual prior to [the individual] being 65 years of age.'" Specifically, you question
whether a property tax lender "with a property lien secured by a priority lien, with the power to force
sale, perfected prior to the owner's 65th birthday" has the right to continue collections and force a
sale under Tax Code sections 32.06 and 32.065 "after a property owner turns 65 years of age if the
property owner files a deferment of taxes under Texas Tax Code § 33.06."· Request Letter at 2.
Sections 32.06 and 32.065 of the Tax Code together establish the statutory authority for
property tax lending in this state, and chapter 3 51 of the Finance Code establishes the licensing
requirements and basic rules for property tax lenders. See TEx. FIN. CODE ANN. §§ 351.001-.164
(Vernon SUpp. 2009); TEx. TAX CODE ANN. §§ 32.06, .065 (Vernon Supp. 2009). Tax Code section
32.06 allows a person to "authorize another person to pay the taxes imposed by a taxing unit on the
person's real property." TEx. TAX CODE ANN. § 32.06(a-l) (Vernon Supp. 2009). Such payment
is referred to as a "property tax loan" or a "tax lien transfer." See TEx. FIN. CODE ANN. § 351.002(2)
(Vernon SUpp. 2009); 7 TEX. ADMIN. CODE § 89.502(2)-(3) (2010) (explaining that "property tax
loan" and "tax lien transfer" may be used synonymously).2 An individual who makes such loans is
lRequest Letter at 1 (available at http://www.attomeygeneral.gov).
2A "property tax loao" is ao advaoce of money:
(A) in connection with a traosfer oflien 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 arraoges for the
payment, with a property owner's written consent, of property taxes aod related
closing costs on behalf ofthe property owner inaccordaoce with Section32.06, Tax
(continued ... )
The Honorable Burt Solomons - Page 2 (GA-0787)
generally considered a "property tax lender" or a "transferee." See TEx. FIN. CODE ANN. §§
351. 051 (a) (Vernon Supp. 2009) (describing business of property tax lender), 351. 002( 1) (defining
"property tax lender" as "a person that engages in activity requiring a license under section
351.051"); TEx. TAX CODE ANN. § 32.06(a)(2) (VernonSupp. 2009) ('''Transferee' means a person
authorized to pay the taxes of another."); 7 TEx. ADMIN. CODE § 89.502 (1), (4) (2010) (explaining
that "property tax lender" and "transferee" may be used synonymously).' Once a property tax lender
makes an authorized property tax loan, a tax lien may be transferred from the taxing unit to the
property tax lender, for both delinquent and some nondelinquent taxes. TEx. TAX CODE ANN.
§ 32.06(a-2) (Vernon Supp. 2009); see id. §§ 32.01(a) (Vernon 2008) (explaining that on January
1 of each year, a tax lien attaches to property in favor of each taxing unit having power to tax the
property), 32:06(b) (Vernon SUpp. 2009) (describing the procedures the tax collector shall follow
in transferring the lien). Generally, ''the transferee of a tax lien ... is entitled to foreclose the
lien: (1) in the manner provided by law for foreclosure of tax liens; or (2) in the manner specified
in Section 51.002, Property Code, and Section 32.065." Id. § 32.06(c)(1).
The other provision about which you inquire, Tax Code section 33.06, allows an individual
to "defer collection of a tax, abate a suit to collect a delinquent tax, or abate a sale to foreclose a tax
lien if the individual: (1) is 65 years of age or older ... ; and (2) the tax was imposed against
property that the individual owns and occupies as a residence homestead." Id. § 33.06(a) (Vernon
2008). To obtain a deferral, an individual must file with the chief appraiser an affidavit stating these
facts. Id. § 33.06(b). To obtain an abatement of pending suit, the individual must file the affidavit
in the court in which the suit is pending, and to obtain an abatement of pending sale to foreclose the
tax lien, the individual must deliver the affidavit to the chief appraiser, the collector for the taxing
unit or the attorney representing that unit, and the officer charged with selling the property not later
than the fifth day before the date of the sale. Id. § 33.06(c)-(d). Once the affidavit has been properly
filed or delivered, a taxing unit may not file or, if already filed, must abate a suit to collect delinquent
taxes on the property, and the property may not be sold at a sale to foreclose the tax lien until the
181 st day after the date the individual no longer owns and occupies the property as a residence
homestead. Id. § 33.06(b)-(d).4
'( ... continued)
(C) that is secured by a special lien against property transferred from a taxing
unit to the property tax lender.
TEX. FIN. CODE ANN. § 351.002(2) (Vernon Supp. 2009).
'Section 351.051 requires a person to hold a license 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 .. " a charge, including interest, compensation, consideration, or another expense," TEx. FIN. CODE ANN. §
351.051 (a) (Vernon SUpp. 2009). That section also exempts certain fmaneial institutions from the definition of property
tax lender, individuals that make property tax loans only to certain family members, and individuals that make five or
fewer loans in any consecutive twelve-month period. Id. § 351.051(c).
'The deferral or abatement may be extended if the individual who initially qualified for it died but had a
surviving spouse fifty-five years of age or older and the property was the residence homestead of the surviving spouse
when the deceased spouse died. TEx. TAX CODE ANN. § 33.06(f) (Vernon 2008).
The Honorable Burt Solomons - Page 3 (GA-0787)
As you note in your request, subsection 32.065(c) of the Tax Code explains the rights of the
transferee of a tax lien, or the property tax lender, with regard to the transferred lien:
Notwithstanding any other provision of this code, a transferee ofa tax
lien . . . is subrogated to and is entitled to exercise any right or
remedy possessed by the transferring taxing unit, including or related
to foreclosure or judicial sale, but is prohibited from exercising a
remedy of foreclosure or judicial sale where the transferring taxing
unit would be prohibited from foreclosure or judicial sale.
Id § 32.065(c). In interpreting this statute, we try to give effect to the Legislature's intent by first
looking to the plain and common meaning of the statute's words. Fitzgerald v. Advanced Spine
Fixation Sys., 996 S.W.2d 864,865 (Tex. 1999). One Texas court has interpreted "subrogate" to
mean '''to put (a person) in the place of, or substitute (him) for, another in respect of a right or
claim. '" Westchester Fire Ins. Co. v. Admirallns. Co., 152 S.W.3d 172, 178-79 (Tex. App.-Fort
Worth 2004, pet. denied) (quoting A DICTIONARY OF MODERN LEGAL USAGE 525 (1987)); see also
First Nat 'I Bank o/Houston v. Ackerman, 8 S.W. 45,47 (Tex. 1888) (defining subrogation "to be
that change by which another person has been put in the place of a creditor, and which makes the
rights of the creditor ... pass to the person who, by being subrogated to him, enters into his right").
Thus, the property tax lender will have the same rights with regard to the tax lien as the taxing unit
possessed prior to the transfer of the lien. Likewise, if the taxing unit is prohibited from continued
collection efforts, foreclosure or sale, the property tax lender in your proposed hypothetical would
be prohibited from the same.
Tax Code section 33.06 establishes only two substantive requirements for an elderly
individual to be entitled to defer collection of a tax, abate a suit to collect a delinquent tax, or abate
a sale to foreclose a tax lien. See TEx. TAX CODE ANN. § 33.06(a) (2008). The individual must be
65 years old or older, and the tax must have been imposed against the individual's residence
homestead. Id. If these requirements are met and the individual properly files or delivers the
affidavit stating so, a taxing unit may not file or, if already filed, must abate a suit to collect
delinquent taxes on the property, and the property may not be sold at a sale to foreclose the tax lien
until the 181 st day after the date the individual no longer owns and occupies the property as a
residence homestead. Id. § 33.06(b)-(d); see Kubovy v. Cypress-Fairbanks Indep. Sch. Dist., 972
S.W.2d 130, 135 (Tex. App.-Houston [14th Dist.] 1998, no pet.) (abating post-judgment action
when defendant filed a section 33.06 affidavit after default judgment was entered but while court
retained plenary power). Important to your request, the plain language of section 33.06 does not
include an exception for taxes incurred or liens perfected prior to the individual's sixty-fifth birthday.
We will not read additional requirements into a statute that are not implicit on its face. See Leland
v. Brandal, 257 S.W.3d 204,207 (Tex. 2008). Thus, because a taxing unit must abate collection
efforts and may not sell the property to foreclose a tax lien once the requirements of section 33.06
have been met, even if the lien was perfected prior to the property owner's sixty-fifth birthday, a
property tax lender is likewise prohibited from doing so until the 181 st day after the date the
individual no longer owns and occupies the property as a residence homestead.
The Honorable Burt Solomons - Page 4 (GA-0787)
In further support of this conclusion, Tax Code section 32.06 requires a property tax lender
seeking to foreclose a tax lien under section 32.065 to confirm, in the application for the foreclosure,
"that the property owner has not requested a deferral of taxes authorized by Section 33.06." TEx.
TAX CODE ANN. § 32.06(c-I)(I )(D) (Vernon SUpp. 2009). Such a requirement implicitly suggests
that if the property owner has validly requested a deferral pursuantto section 33.06, the property tax·
lender may not continue foreclosure proceedings until that deferral is no longer active, regardless of
when the tax lien was perfected.
The Honorable Burt Solomons - Page 5 (GA-0787)
SUMMARY
If an individual age sixty-five years or older has appropriately
filed a deferment of taxes under section 33.06 of the Tax Code, a
property tax lender with a tax lien that was perfected prior to the
property owner's sixty-fifth birthday may not exercise a remedy of
foreclosure or judicial sale until the 181 st day after the date the
individual no longer owns and occupies the property as a residence
homestead.
ANDREW WEBER
First Assistant Attorney General
NANCY S. FULLER
Chair, Opinion Committee
Virginia K. Hoelscher
Assistant Attorney General, Opinion Committee