Legislative Blog

J.B. Williams, J.D.

4 bills that modify the Property Code

A Blog about 88th Legislature Laws

A Bit of Background

The following backgrounds help summarize the author's views on both the general topic: Texas and more specifically 88th Legislature Laws as it relates to that topic.

Brief Summary of Texas

Texas is truly a Republic. There are a multitude of items that to modify the state constitution must be modified. So there are times when Constitutional amendments are on the voting ballots. While I sometimes abhor the wording, the concept that all of those legally able to vote in Texas must vote on the change is a good one. And bills in Texas are generally short, making it easier for everyone to understand.

Summary of 88th Legislature Laws

The blogs here will discuss the laws passed by Congress and signed into law, as well as those, passed by Congress and approved by the voters to become law. There are a multitude of laws and each time I post blogs I will notate here the current effective date if it is different from prior blogs. I am currently posting bills that took effect immediately - those bills total 336. I am currently posting regarding larger bills, so each blog covers a single bill.

Blog Summary

HB 1558 - Allowing for extension on property subdivisions created before 1947.

HB 2196 - Modifies the rules governing trust, extending the potential life of a trust.

HB 2333 - A trust without a specific beneficiary can be created and run by trust enforcer(s).

SB 1768 - Clears up references to code that is now contained in a different form than previously done.

4 bills that modify the Property Code

Published: 2024-07-03

HB 1558

Extension or amendment of deed restrictions in certain older subdivisions

Older subdivision is a subdivision described by recorded map or plat filed before 1947.

The legislature finds the following:

1. an inability of owner to extend or amend property restrictions in older subdivisions, with no zoning regulations, creates uncertainty in living conditions and discourages investment;
2. owners in older subdivisions are reluctant or unable to provide proper maintenance, upkeep, and repairs to structures because of the inability to amend restrictions in response to changing circumstances;
3. these conditions will cause dilapidation of housing and other structures and cause unhealthy and unsanitary conditions in affected older subdivisions;
4. the existence of race-related covenant restrictions, regardless of the unenforceability, are offensive, repugnant, and harmful to members of racial and ethnic minority groups

The purpose is to provide a procedure for extending or amending restrictions in older subdivsions. The purpose is also to remove any restrictions relating to race, religion, or national origin that is void and unenforceable under the United States Constitution or Section 5.026.

This applies only to an older subdivision that:

1. is wholly or partially in a municipality with a population of two million or more (this includes Harris, Dallas, Tarrant and Bexas counties);
2. had original restrictions that:
   1. did not have an express procedure for successive extensions on restrictions;
   2. did not have an express procedure for amending restrictions;
   3. under common law of Texas, it could not be amended without unanimous consent of all owners or all owners of a specific section;
   4. may no longer be valid due to the inability to extend or amend the restrictions
3. has a single property owners' association in which all owners are eligible but not required to be members.

No amendment may create a property owners' association with mandatory membership.

If a dedicatory (deed related document) instrument provides a procedure for initial extension than that may be used for successive extension unless the instrument specifically forbids it. Extensions may be extended or amended by written ballot of owners wherein at least 66.6 percent agree. If amendment under the initial rules provides for a smaller percentage to modify, than that percentage controls.

HB 2196

Relating to trusts

Modifies the qualifying trust such that it may be created by an instrument transferring property to a trust or other agreement that is binding on the trustee is added. And allows revocation without consent of another person (added) except a spouse who is a settlor of the trust. Allows use and occupancy of the residential property as a settlor or beneficiary's principal residence at not cost, or (added) rent free and without charge, except (already there) taxes and other costs and expenses specified.

A beneficiary of a trust or the estate of a beneficiary may not be considered a settlor merely because they held a testamentary power of appointment; or exercised a testamentary general power of appointment in favor of the takers. If property is held in favor of takers, the assets are subject to claims of creditors of the beneficiaries if the beneficiaries own property is insufficient; and unless given to the beneficiaries estate not subject to administration as part of the beneficiary's estate, recovery by personal representatives of the beneficiary's estate, or payment of taxes or administrative expenses of beneficiary's estate.

It is basically saying that if someone inherits a trust and they die, then the trust is not a part of their estate unless it specifically was written to be so. Therefore the trust remains separate from their estate for all legal issues.

An interest in a trust may vest, if at all, not later than:

1. 200 years after the effective date or
2. 21 years after some life in being at the time of the effective date, plus a period of gestation; or
3. if the effective date is before 9/2/2021 then not later than 21 years after some life in begin at the time of the effective date, plus a period of gestation.

A trust may be pushed into a second trust that retains the name of the first trust, as well as the federal tax identification number of the first trust.

HB 2333

Noncharitable trusts without an ascertainable beneficiary

Permits the creation of a noncharitable trust without a definite or definitely ascertainable beneficiary. The noncharitable purpose may be seeking economic or noneconomic benefits.

A trust enforcer must enforce the purpose and terms of the trust. They are not a beneficiary of the trust but have the rights of a beneficiary. The trust enforcer shall exercise the authority granted under the trust, owing a fiduciary duty and are entitled to reasonable compensation for serving as the trust enforcer. They may consent to, waive, object to or petition an appropriate court concerning matters of the trust purpose or administration. If there are multiple trust enforcers, then any action must be decided by the majority of votes.

The property of the trust must be used for the purpose of the trust, unless the value of the property exceeds the purpose of the trust. Property found by a court to not be required of the trust shall be distributed:

1. as provided under the trust terms; or
2. if the trust does not provide for distribution, then to the settlor if then living or the settlor's successors in interest

This seems to provide for the creation of a trust that could last for the 300 years provided by HB 2196.

SB 1768

Correction or removal of certain obsolete provisions of the Property Code

A construction defect removes the portion referencing Section 401.004. A contractor removes the portion referencing Section 401.003; as well as the reference to Article 21.54 of the Insurance Code (which is now Chapter 2201). Structural failure removes reference to Section 401.002.

Property Code Section 27.003(a) removes the reference to Chapter 428. And Property Code Section 27.004 removes reference to Subtitle D, Title 16 (which appeared several times in this section.) Property Code Section 27.0042 (b) also removes reference to Subtitle D, Title 16. Property Code Section 74.3013(h) no longer references the Vernon's Texas Civil Statues, but references Chapter 51 and 52 of the Agriculture Code, Texas Nonprofit Corporation Law within the Business Organizations Code. And Property Code Section 202.002(b) no longer references the Community Homes for Disabled Persons Legislation, but references the Human Resources Code Chapter 123.

Bond requirements no longer reference Chapter 87 of the 56th Legislature, and instead reference Subchapter A, Chapter 3503 of the Insurance Code.

 

J.B. Williams, J.D.

4,312 federal laws were passed from 1995 through December 2016.
Along with 88,819 federal rules and regulations.