Untitled Texas Attorney General Opinion ( 2014 )

GREG
0
ATTORNEY GENERAL OF TEXAS
ABBOTT
July 30, 2014
The Honorable Herb Hancock Opinion No. GA-1072
Kames County Attorney
210 West Calvert Re: Whether a taxing unit may reserve mineral
Kames City, Texas 78118 interests on property that is acquired through
tax foreclosure and then resold pursuant to
section 34.05 ofthe Tax Code (RQ-1182-GA)
Dear Mr. Hancock:
You ask whether a taxing unit may reserve mineral interests on property that is acquired
through tax foreclosure and then resold under section 34.05 of the Tax Code. 1 You explain that
Kames City initiated a tax foreclosure sale on a certain tract of land and then acquired the
property after it failed to receive a sufficient bid. Request Letter at 1; see TEX. TAX CODE ANN.
§ 34.01(j) (West Supp. 2013) (explaining what constitutes a sufficient bid for a tax foreclosure
sale property). You tell us that Kames City then "held the property in trust" for multiple taxing
entities until it sold the property to Kames County. Request Letter at 1. You state that the deed
of sale to Karnes County "did not include the mineral interests that were owned by the
[delinquent taxpayer] in the tax sale." ld. You question whether section 34.05 authorizes the
taxing unit, "on behalf of itself and the other participating taxing units, [to] reserve mineral
interests" on the property in the resale deed. ld.
Chapter 34 of the Tax Code governs the sale and acquisition of property subject to tax
foreclosure. See TEX. TAX CODE ANN. §§ 34.01-.23 (West 2008 & Supp. 2013). Under section
34.01, a property that fails to receive a sufficient bid at a tax foreclosure sale may be "bid off' to
the taxing unit that initiated the sale. Id § 34.0l(j) (West Supp. 2013). When a property is "bid
off," the taxing unit "takes title to the property for the use and benefit of itself and all other
taxing units that established tax liens in the suit." ld § 34.01(k). The deed to the taxing unit
"vests good and perfect title in the purchaser or the purchaser's assigns," which includes "all the
interest owned by the defendant, including the defendant's right to the use and possession of the
property, subject only to the defendant's right of redemption." ld § 34.01(k), (n). To acquire
'Letter from Honorable Herb Hancock, Kames Cnty. Att'y, to Honorable Greg Abbott, Tex. Att'y Gen. at 1
(Jan. 27, 2014), http://www.texasattomeygeneral.gov/opin ("Request Letter").
The Honorable Herb Hancock - Page 2 (GA-1072)
mineral interests 2 at a tax foreclosure sale, "those interests must have been taxed together with
the surface and thus have been similarly delinquent and subject to the foreclosed tax lien."
Pounds v. Jurgens, 296 S.W.3d 100, 108 (Tex. App.-Houston [14th Dist.] 2009, pet. denied).
After the property has been "bid off," section 34.05 authorizes the taxing unit to resell it
"at any time by public or private sale." TEX. TAX CODE ANN. § 34.05(a) (West Supp. 2013).
When the property is resold, section 34.05 provides that the deed must "convey[] to the
purchaser the right, title, and interest acquired or held by each taxing unit that was a party to the
judgment foreclosing tax liens on the property." ld. § 34.05(e), (k). This provision gives rise to
your question.
In Attorney General Opinion V-1302, this office addressed a similar question involving
the statutory predecessor to section 34.05. See Tex. Att'y Gen. Op. No. V-1302 (1951) at 1-2.
Former article 7345(b), section 9, provided that when a taxing unit resells property acquired at a
tax foreclosure sale and held on behalf of other taxing units, the purchaser at resale "shall receive
all of the right, title, and interest in said property as was acquired and is then held by said taxing
unit." 3 Construing that language, the opinion concluded that when a property is resold under
former article 7345(b), section 9 "all of the right, title, and interest in said property is to be
conveyed by the taxing unit and acquired by the purchaser. This precludes the retention by the
selling taxing unit of any mineral interest in the land." Tex. Att'y Gen. Op. No V-1302 (1951) at
2. When the Legislature recodified this language in section 34.05, it removed "all of' before
"the rifht, title, and interest," and changed the phrase "acquired and is then held" to "acquired or
held." We thus reexamine the authority of a taxing unit to reserve mineral interests on property
it acquired at a tax foreclosure sale when the property is resold under the current statutory
language of section 34.05.
Construction of any statute starts with a consideration of its plain language, which is the
best indicator ofthe Legislature's intent. In re Lee, 411 S.W.3d 445, 451 (Tex. 2013). "Words
and phrases shall be read in context and construed according to the rules of grammar and
common usage." TEX. Gov'T CODE. ANN. § 311.011(a) (West 2013). Section 34.05 refers to
"the right, title, and interest acquired or held," which plainly means all of the rights, title, and
interests acquired or held by each taxing uni~. See id. § 311.0 12(b) (providing the rule of
2
"A mineral estate consists of five interests: 1) the right to develop, 2) the right to lease, 3) the right to
receive bonus payments, 4) the right to receive delay rentals, and 5) the right to receive royalty payments." French
v. Chevron U.S.A., Inc., 896 S.W.2d 795,797 (Tex. 1995).
3
Act of June 5, 1947, 50th Leg., R.S., ch. 454, § 1, sec. 9, 1947 Tex. Gen. Laws 1061, 1061, repealed and
recodified by Act of May 26, 1979, 66th Leg., R.S., ch. 841, § 1, sec. 34.05, § 6(a)(l), 1979 Tex. Gen. Laws 2217,
2298-99,2329 (amended 2011) (current version at TEX. TAX CODE ANN.§ 34.05(e), (k) (West Supp. 2013)).
4
Compare Act of June 5, 1947, 50th Leg., R.S., ch. 454, § 1, sec. 9, 1947 Tex. Gen. Laws 1061, 1061
(repealed and recodified 1979), with TEX. TAX CODE ANN. § 34.05(e), (k) (West Supp. 2013).
The Honorable Herb Hancock - Page 3 (GA-l 072)
statutory construction that the singular includes the plural and vice versa); cf Tex. Att'y Gen.
Op. No. V-1302 (1951) at 2 (concluding that the statutory predecessor of section 34.05 required
the conveyance of all of the right, title, and interest in the property). The phrase "acquired or
held" can be read to suggest that the rights, title, and interests originally acquired by a taxing unit
at the tax foreclosure sale may be different from what is held by a taxing unit at the time the
property is resold. See Spradlin v. Jim Walter Homes, Inc., 34 S.W.3d 578, 581 (Tex. 2000)
(stating that the word "or" is typically disjunctive, "signifying a separation between two distinct
ideas"). Under that construction, the property interests originally acquired at the tax foreclosure
sale may not be the exact property interests that are conveyed at resale.
We do not answer here whether a taxing unit has authority, prior to a section 34.05 sale,
to convey mineral interests in property acquired in a tax foreclosure sale. We understand your
question to be whether, at the time of the section 34.05 sale, a taxing unit may reserve mineral
rights rather than convey all the property interests it holds at that time. Notwithstanding any
change in the nature of the taxing unit' s interests in the property that may have occurred between
acquisition and resale, the plain language of section 34.05 plainly requires that all rights, title,
and interests held by the taxing unit at the time the property is resold must be conveyed in the
deed. Section 34.05 contains no language authorizing a taxing unit, by itself or on behalf of
other taxing units, to reserve any interest when reselling a property it acquired at tax a
foreclosure sale.
It is well established that "where a power is granted, and the method of its exercise
prescribed, the prescribed method excludes all others, and must be followed." Cobra Oil & Gas
Corp. v. Sadler, 447 S.W.2d 887, 892 (Tex. 1969) (orig. proceeding) (citing Foster v. City of
Waco, 255 S.W. 1104, 1105 (Tex. 1923)). Section 34.05 authorizes a taxing unit to resell
property acquired at a tax foreclosure sale and provides a specific method for doing so that does
not allow for the reservation of any property interests in the resale deed. Thus, a court would
likely conclude that section 34.05 does not authorize a taxing unit to reserve mineral interests on
property it acquired at a tax foreclosure sale if it holds such interests at the time the property is
resold. 5
5
0n the facts as you have presented them, we cannot definitively determine in this instance whether the
mineral interests owned by the delinquent taxpayer at the tax foreclosure sale should have been included on the
resale deed. See Tex. Att'y Gen. Op. No. GA-0876 (20 11) at 1 (noting that questions of fact are not resolved in the
opinion process).
The Honorable Herb Hancock - Page 4 (GA-1072)
SUMMARY
A court would likely conclude that section 34.05 of the Tax
Code does not authorize a taxing unit to reserve mineral interests
on property acquired at a tax foreclosure sale if it holds such
interests at the time the property is resold under that section.
Very truly yours,
~BBOTT
Attorney General of Texas
DANIEL T. HODGE
First Assistant Attorney General
JAMES D. BLACKLOCK
Deputy Attorney General for Legal Counsel
VIRGINIA K. HOELSCHER
Chair, Opinion Committee
Stephen L. Tatum, Jr.
Assistant Attorney General, Opinion Committee