HBA-TYH, ALS, ATS H.B. 1453 76(R)BILL ANALYSIS Office of House Bill AnalysisH.B. 1453 By: Smith Insurance 7/21/1999 Enrolled BACKGROUND AND PURPOSE Prior to the 76the Legislature, under the Tax Code, a homeowner was entitled to claim a homestead exemption from school ad valorem taxes. In addition, any person age 65 years or older was entitled to an additional exemption from school taxes on a residential homestead. To receive the exemption, a person claiming the exemption was required to apply for it by filing an exemption application form with the chief appraiser for each appraisal district in which the property subject to the claimed exemption was located. After considering the application, the chief appraiser determined whether to approve or disapprove the application. Even if the chief appraiser approved the application, the law required an investigation if any reason materialized indicating that an exemption previously allowed should be canceled. If the chief appraiser discovered that the property escaped taxes, the exemption was canceled and the school district was entitled to impose taxes, penalties, and interest on the property or value that escaped taxation. Many times, new homeowners and title companies were unaware of any improprieties concerning erroneous claims for homestead exemptions. Nonetheless, if a person purchased a residential homestead encumbered with delinquent taxes, penalties, and interest due to an invalid exemption, that person, rather than the former owner, was required to pay since the delinquent taxes, penalties, and interest were levied against the property, rather than the owner. H.B. 1453 allows the commissioner of insurance, for an owner policy on residential real property issued to a natural person, to adopt coverages that insure against ad valorem taxes, including penalties and interest, to be paid with respect to the property for a previous tax year. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Article 9.07A, Insurance Code, by adding Subsection (f), to authorize the commissioner of insurance, for an owner policy on residential real property issued to a natural person, to adopt coverages that insure against: (1) ad valorem taxes, including penalties and interest, to be paid with respect to the property for a previous tax year and that are delinquent on the effective date of the policy because of sale, diversion, or change of use, unless excluded because the insured has actual knowledge of the delinquent taxes; and (2) ad valorem taxes, including penalties and interest, to be paid with respect to the property for a previous tax year because of an exemption granted to a previous owner of the property under Section 11.13, Tax Code, or because of improvements not assessed for a previous tax year, unless excluded because the insured has actual knowledge of the delinquent taxes. SECTION 2. Effective date: September 1, 1999. SECTION 3. Makes application of Subsection (f), Article 9.07A, Insurance Code, prospective for an owner policy of title insurance that is delivered or issued for delivery on or after January 1, 2000. SECTION 4. Emergency clause.