The Attorney General of Texas
August 19, 1982
MARK WHITE
Attorney General
Mr. L. Alvis Vandygriff Opinion No. ~~-503
Supreme Court Building Comissioner
P. 0. BOY 12546
Austin. TX. 76711. 2546
Texas Savings and Loan Department Re: Whether savings and loan
5121475.2501 P. 0. Box 1089 company is an authorized agent
Telex 9101674-1367 Austin, Texas 78767 to receive tax bill under
Telecopier 5121475-0266 section 31.01 of the Texas
Property Tax Code
1607 Main St.. Suite 14W
Dallas. TX. 75201-4709 Dear Mr. Vandygriff:
2141742.6944
You have asked the following question:
4624 Alberta Ave., Suite 160
El Paso, TX. 79905-2793
Is a savings and loan association or other
9151533.3464 mortgage lender that is engaged in the practice of
collecting an escrow account as described herein
the 'authorized agent' to receive the original tax
1220 0alle.s Ave., Suite 202
notice or tax bill under standard mortgage lending
Houston, TX. 77002.6966
7131650.0666
arrangements in Texas?
You indicate that representatives of a "taxing unit," as defined
606 Broadway, Suite 312 in section 1.04(12) of the Texas Property Tax Code, have raised the
Lubbock, TX. 79401.3479
question as to whether the original tax notice or bill should be sent
6061747-5236
to the person in whose name the property is listed on the tax bill or
to the lending institution that has the responsibility to pay such
4309 N. Tenth, Suite B taxes on behalf of that person pursuant to its contractual agreement
McAkn, TX. 76501.1685 made with the borrower. Section 31.01(a) of the Texas Property Tax
5121662-4547
Code provides in part:
200 Main Plaza. Suite 400 the assessor for each taxing unit shall prepare
San Antonio, TX. 76205-2797 and mail a tax bill to each person in whose name
5121225-4191 the property is listed on the tax bill or to his
authorized agent....
An Equal Opportunityl
Affirmative Action Employer Pursuant to authority conferred by sections 5.07 and 31.Ol(c)(lO)
of the Property Tax Code the State Property Tax Board has adopted a
rule further defining this provision: Rule 237.03.00.038 provides in
part:
Current tax bills shall be issued to each person
in whose name the property is listed or to his
authorized agent by October 1 or as soon
p. 1812
Mr. L. Alvis Vandygriff - Page 2 (MW-503)
thereafter as practicable in the case of mortgaged
property where taxes are paid from an escrow
account controlled by the mortgagee (mortgage
holder), the notice requirements shall be
satisfied by sending the tax bill to the
mortgagee. Written authorization by the property
owner is not required in order to deliver the tax
bill to the mortgage company when the mortgage
company acknowledges that it has authority for
payment of taxes on the property.
36 T.A.C. 9155.38 (1982). You indicate that in the past, taxing units
provided a copy of the tax notice or bill to both the lender and
property owner. The Property Tax Code makes no provision for a fee or
charge for such notices. You now indicate that one taxing unit has
indicated that it will no longer provide two notices without charge,
but it will provide only one notice in the future. Accordingly, you
are concerned whether the lender, in your case, a state chartered
savings and loan association, is entitled to receive the original tax
bill or notice without charge as the "authorized agent" of the
property owner. The mortgagee would have authority to receive the tax
bill under the quoted administrative rule. This result is consistent
with the common law of agency.
The question of whether the lending institution is the
"authorized agent" depends on the lender's relationship with the
borrower. In the situation that you present, the state chartered
savings and loans association would qualify as the authorized agent
under the deed of trust. The deed of trust instrument between the
borrower and the lender contains the following provision which is
taken from the standard FNMA/FHLMC Uniform Instrument which provides:
Borrower shall pay to lender on the day monthly
installments of principal and interest are payable
under the Note, until the Note is paid in full, a
sum (herein 'Funds') equal to one-twelfth (l/12)
of the yearly taxes and assessments which may
attain priority over this Deed of Trust, and
ground rents on the Property, if any, plus
one-twelfth (l/12) of yearly premium installments
of hazard insurance, plus one-twelfth (l/12) of
yearly premium installments for mortgage
insurance, if any, all as reasonably estimated
initially and from time to time by Lender on the
basis of assessments and bills and reasonable
estimates thereof.... Lender shall apply the Funds
to pay said taxes, assessments, insurance premiums
and grounds rents....
p. 1813
. .
Mr. L. Alvis Vandygriff - Page 3 (MW-503)
We are aware that other deeds of trust forms in use in this state
contain similar versions of this language. In essence, under such
provisions, the borrower and lender have agreed that the borrower pay
in advance into an escrow account held by the lender and the lender
will assume the obligation and responsibility to pay taxes and other
enumerated obligations on the property. This is nothing more than the
application of the law of agency. Agency is a legal relation whereby
one party is authorized to act for the other. 3 Tex. Jur. 3d Agency
51. See also, Valley View Cattle Company v. Iowa Beef Processors, 548
F.2d 1219 (5th Cir. 1977); Sorenson V. Shupe Brothers Company, 517
S.W.2d 861, 864 (Tex. Civ. App. - Amarillo 1974, no writ); Roper v.
Compania De Perforaciones y Servicio, S.A., 315 S.W.Zd 30, 33 (Tex.
Civ. App. - Austin 1958, writ ref'd n.r.e.). An agency relationship
is created bv an exoress or imnlied contract. or bv oneration of law.
3 Tex. Jur..3d Agency s13. See also Valley View I Cattle
. Company v.
Iowa Beef Processors, supra; Green v. Hannon, 369 S.W.2d 853, 856
(Tex. Civ. App. - Texarkana 1963, writ ref'd n.r.e.).
The central element of an agency relationship is delegated
authority. The situation which you present involves such authority
created by an express contractual relationship set forth in the deed
of trust. The borrower has contractually agreed to pay the lender an
amount to cover the taxes and the lender has agreed to use such funds
to pay the taxes on the borrower's behalf. We believe that a state
chartered savings and loan association or other mortgage lender is the
authorized agent entitled to receive the original tax bill or notice
from the taxing unit where the deed of trust places the responsibility
for paying the taxes on the lender.
SUMMARY
A state chartered savings and loan association
or other mortgage lender is the authorized agent
entitled to receive the original tax bill from the
taxing unit where the deed of trust places the
responsibility for paying taxes on the mortgage
lender.
*m
WHITE
Attorney General of Texas
JOHN W. FAINTER, JR.
First Assistant Attorney General
p. 1814
Mr. L. Alvis Vandygriff - Page 4 (Mw-503)
RICHARD E. GRAY III
Executive Assistant Attorney General
Prepared by Thomas M. Pollan
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Susan L. Garrison, Chairman
Jon Bible
Rick Gilpin
Patricia Hinojosa
Jim Moellinger
Thomas M. Pollan
p. 1815