This is the third and last legislative update from the 81st Regular Session of the Texas Legislature, 2009, prepared by this firm and summarizes House and Senate Bills effective on September 1, 2009, that we consider are of interest to our clients. 1. Mortgage Fraud:House Bill 2840 amends Section 32.32 of the Penal Code to: (i) make it an offense to intentionally or knowingly make a materially false or misleading written statement in providing a real property appraisal for compensation; and, (ii) add the Texas Department of Housing and Community Affairs (TDHCA) to the list of agencies required to assist a Texas or federal prosecuting attorney or law enforcement agency in the investigation of an offense involving a mortgage loan. Our Comment:Depending on the value of the property, Section 32.32 provides that the offense may range from a Class C misdemeanor up to and including a felony of the first degree. House Bill 2840 also amends the Government Code to: (i) add the TDHCA to the list of authorized governmental agencies to which a person is required to report information regarding fraudulent activity (Section 402.031(a)(1)); (ii) add a TDHCA representative to the residential mortgage fraud task force (Section 402.032(c)); and, (iii) include the TDHCA among those state agencies authorized to share information that is confidential or otherwise restricted by law and that relates to the possible commission of corporate fraud or mortgage fraud by a person licensed or otherwise regulated by any of those agencies (Section 555.051(a)). 2. Recording a Property Owners’ Association Management Certificate: Senate Bill 1919 amends Section 209.004 of the Property Code to: (i) require the name and mailing address of the person managing a property owners’ association or the name and mailing address of the association’s designated representative to be included in the management certificate the association is required to record in the real property records; (ii) provide that, if a property owners’ association fails to record a management certificate or an amended management certificate, the purchaser, lender, or title insurance company or its agent in a transaction involving property in the association is not liable to the association for any amount due to the association on the date of a transfer to a “bona fide purchaser” and for any debt to or claim of the association that accrued before the date of a transfer to a bona fide purchaser; (iii) provide that a lien of a property owners’ association failing to file a management certificate or an amended management certificate, which lien is to secure an amount due to the association on the effective date of a transfer to a bona fide purchaser, is enforceable only for an amount incurred after the effective date of sale; and, (iv) define a “bona fide purchaser” to mean (x) a person acting in good faith who pays valuable consideration without notice or (y) a lender under a deed of trust. Senate Bill 1919 requires a property owners’ association that exists on September 1, 2009, to file the information required by amended Section 209.004 not later than May 1, 2010.

Complete Memorandum