Untitled Texas Attorney General Opinion ( 1990 )

Ms. Tish Gonzalez Opinion No. JM-1198
Acting Executive
Administrator Re: Authority of the Texas
Texas Housing Agency Housing Agency to take and
P. 0. Box 13941 hold title to foreclosed
Austin, Texas 78711-3941 properties in its own name,
and related questions
(RQ-1897)
Dear Ms. Gonzalez:
You have requested that we address several questions
about the "single family mortgage revenue bond programs" of
the Texas Housing Agency. Your first question is:
Does Sec. 8(a)(5) [of the the Texas Housing
Agency Act, article 12691-6, V.T.C.S.] permit
[the agency] to take and hold title to fore-
closed properties in its own name?
The Texas Housing Agency is authorized to make mortgage
loans to private entities to help finance low and moderate
income housing developments, and to issue revenue bonds to
finance mortgage loans. V.T.C.S. art. 12691-6, §§ 9, 10.
You describe the single family mortgage revenue bond
programs as follows:
These programs typically have the following
structure: After obtaining approval to
proceed with the program and to issue bonds
to finance the program, the Texas Housing
Agency (‘THAI) locates mortgage companies to
originate mortgages to qualified buyers and
to service these mortgages after origination.
Such mortgage companies are called 'Lenders'
or 'Participants.' THA then issues bonds to
finance the program. The money paid for the
bonds goes to a trust fund which THA sets up,
supervised by a bank on behalf of THA (the
'Trustee'). As the Lenders originate mort-
gages, they sell these mortgages to the
Trustee, who buys them with the bond proceeds
on behalf of THA. It is currently the policy
of the Trustee to acquire the Notes and Deeds
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Ms. Tish Gonzalez - Page 2 (JM-1198)
of Trust which constitute the mortgages in
the trust's name on behalf of THA. Further,
when a mortgage goes into default and the
financed real estate is foreclosed upon, it
is presently the policy of the Trustee to
acquire the property in the Trustee's name on
behalf of THA.
Section S(5) of article 12691-6, V.T.C.S., states that the
Texas Housing Agency has the power
to acquire, own, rent, lease, hold, or dis-
'pose of any real, personal, or mixed pro-
perty, or any interest therein, in performing
its duties and exercising its powers under
this Act, by purchase, exchange, gift,
assignment, transfer, foreclosure, sale,
lease, or otherwise, including rights or
easements and to hold, manage, operate, or
improve real, personal, or mixed property.
Section S(6) of the statute authorizes the agency to "sell,
assign, lease, encumber, mortgage, or otherwise dispose Of"
property "owned by it," and to "release or relinquish any
right, title, claim, lien, interest, easement, or demand,
however acguired.11 We think those provisions make clear
that the Texas Housing Agency Act may hold title to the
properties in question in its own name.
You next ask about the pro riety of a bank holding
property *on behalf of" the THA. P From our examination of
the instruments you provided, it appears that the bank acts
both as a trustee for the bondholders and as agent for the
Texas Housing Agency in its dealings with the mortgage
companies. When an agent takes title to property "on behalf
of" the principal in the name of the agent, the agent holds
the property in trust for the benefit of the principal.
See State v. Eaaerman, 16 S.W. 1067 (Tex. 1891) (defining
``behalf``);see also Thomnson v. Schmitt, 274 S.W. 554 (Tex.
1925) (party may be an agent even if called a "trustee").
Thus, we think the legal relationship of the Texas Housing
Agency to the property is the same when title to property is
taken in the name of the bank acting on behalf of the agency
as when the agency takes title in its own name.
1. Your specific question is whether various documents
require that the Texas Housing Agency take and hold title to
foreclosed property 'in its own name. We do not interpret
such documents in the opinion process.
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Ms. Tish Gonzalez - Page 3 (JM-1198)
Your third question is:
Does Sec. 16 of Article 1269L-6 give the THA
the right at its option, ~g$ to pay any taxes
on real or personal property acquired through
foreclosure or sale under a Deed of Trust or
otherwise either by THA or by trustees who
acquire the properties only on behalf of THA?
Section 16 of the Texas Housing Agency Act provides:
The property of the agency, its income, and
operations are exempt from all taxes and
assessments imposed by the state and all
public agencies on property acquired or used
by the agency under the provisions of this
Act. The agency may, under its terms,
conditions, and rules, make payments to
public agencies in lieu of ad valorem taxes
on any property which the agency has acquired
through foreclosure or sale under a deed of
trust. It shall be the policy of the agency
to make these payments in lieu of taxes
whenever practicable with any money lawfully
available for this purpose, subject to the
provisions, requirements, and restrictions of
any bond resolution.
That provision makes the property of the agency, its income,
and its operations exempt from taxes and assessments imposed
by state or local taxing authorities. Property held on
behalf of the agency by agents for the Texas Housing Agency
would be property of the agency within the meaning of the
statute.
Next, you ask:
Assuming THA and Trustees acting on behalf of
[the agency] may refuse to pay such taxes, may
they refuse to pay the taxes even on pro-
perties held by the original buyer on January
1st of the given year and/or for some portion
of the year in which foreclosure occurred?
Section 32.07 of the Tax Code provides that property taxes
are the personal obligation of the person who owns or
acquires the property on January 1st of the year for which
the tax is imposed. But see Tax Code §§ 25.13, 32.07(b). A
lien to secure payment of the taxes attaches to the property
on January 1st of the year for which the tax is imposed.
Tex. Const. art. VIII, 5 15; Tax Code 5 32.01. The lien is
not extinguished by the subsequent acquisition of the
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Ms. Tish Gonzalez - Page 4 (JM-1198)
I
property by a governmental body in whose hands it is exempt
from taxes, but enforcement of the lien is suspended.
Childress Countv v. Stat,=, 92 S.W.2d 1011 (Tex. 1936):
Maverick Co ntv W ter ntrol Imurovement Dist. No. 1
&&.& 456 z.W.2da204 'TTex. Cit. App. - San Antonio 197;;
writ ref*d); State v. Bexar-Medina-Atascosa Counties Water
Imnrovement Dist. 310 S.W.2d 641 (Tex. Civ. App. - San
Antonio 1958, wri; ref'd); Attorney General Opinion JM-1085
(1989) . If the property is acquired by someone in whose
hands it is not exempt, the lien can then be enforced.
Childress Countv v. State, sunra.
You also ask whether the agency could use various funds
to pay taxes: since the agency is not liable for taxes on
property it owns, we need not reach those questions.
SUMMARY
The Texas Housing Agency may hold title to
foreclosed properties in its own name or in
the name of an agent acting on its behalf.
Such property is exempt from state and local
taxes. The agency is not liable for taxes
that accrued against property before the
agency acquired ownership of it, but the
property remains subject to a lien for the
unpaid taxes. .
JIM MATTOX
Attorney General of Texas
MARY KELLER
First Assistant Attorney General
LOU MCCRBARY
Executive Assistant Attorney General
JUDGE ZOLLIE STEAKLEY
Special Assistant Attorney General
RENEA HICKS
Special Assistant Attorney General
RICK GILPIN
Chairman, opinion Committee
Prepared by Sarah Woelk
Assistant Attorney General
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