    OFF,CE OF THE ATTORNEY GENERAL. STATE OF TEXAS

   JOHN CORNYN




                                               April 20,200O



The Honorable Chris Harris                              Opinion No. X-0213
Chair, Senate Committee on Administration
Texas State Senate                                      Re: Whether the “fraudulent tiling” provisions
P.O. Box 12068                                          of the Business and Commerce Code apply to
Austin, Texas 78711                                     those transactions excepted under section 9.104
                                                        thereof (RQ-0154-K)


Dear Senator Harris:

        You have requested our opinion as to whether the “fraudulent tiling” provisions of section
9.412 of the Business and Commerce Code apply to those transactions excepted under section 9.104.
For reasons that appear below, we conclude that they do not apply.

        Your letter refers to sections 9.104 and 9.412, which are found in the present version of
chapter 9 of the Business and Commerce Code and are effective until July 1, 2001, as well as to
sections 9.109(d) and 9.5 185, which are part of an amended and renumbered chapter 9 that will take
effect on July 1,200l.    On July 1,2001, the provisions in section 9.104 will be found in section
9.109, and the provisions in section 9.412 will be foundin section 9.5185. See Act ofMay 17,1999,
76th Leg., R.S., ch. 414, $4 1 .Ol, 3.10,1999 Tex. Gen. Laws 2639,2650,2656,2711,2750.      In this
opinion, we refer to the present version of chapter 9.

        Section 9.412 of the Business and Commerce Code provides, in relevant part:

                        (a) A person may not intentionally or knowingly present for
                tiling or cause to be presented for filing a financing statement if the
                person knows that the financing statement:

                              (1) is forged;

                              (2) contains a material false statement; or

                              (3) is groundless.

TEX. Bus. & COM. CODE ANN. 5 9.412(a) (V ernon Supp. 2000). There follows a statement of
criminal penalties for violation of subsection (a) and a provision for civil relief of a property owner
injured thereby. See id. 5 9.412(b), (d).
The Honorable Chris Harris - Page 2               (X-0213)




         Section 9.412 was first enacted in 1995’ in response to a wave of spurious court filings by
individuals who were attempting to challenge the sovereignty of the government of the State of
Texas. See Tex. Att’y Gen. LO-98-016 (county clerk required to provide notice if fraudulent filing
is suspected); see also Tex. Att’y Gen. DM-389 (1996). The bill analysis for the 1997 amendment
to section 9.412 declares:

               [Individuals and organizations] have tiled fraudulent judgment liens
               issued by so-called “common law courts” and fraudulent documents
               purporting to create liens or claims on personal and real property with
               the secretary of state and many county and district court clerks
               throughout the state. Many of the tilings have been against the State
               of Texas and public officers and employees, as well as private
               individuals. These filings have clogged the channels of commerce
               and have amounted to harassment and intimidation of both public
               offtcials and ordinary citizens. This bill provides both civil and
               criminal remedies for those against whom such fraudulent filings
               have been made.

SENATE COMM. ON JURISPRUDENCE, BILL ANALYSIS,                Tex. H.B.   1185, 75th Leg.,   R.S., (1997).
Representatives of a number of financial trade associations have expressed concern that section
9.412 “could inadvertently create an opportunity for individuals to remove valid liens or claim
damages for consensual or valid transactions.       Absent a clear and careful reading of the definition
[of fraudulent tiling], this section can be used to destroy commerce in the state of Texas by
disrupting normal debtor/creditor    relationships.”    Letter from Karen M. Neeley, Independent
Bankers Ass’n of Texas, John Heasley, Texas Bankers Ass’n, J. Eric T. Sandberg, Texas Savings
& Community Bankers Ass’n, to Elizabeth Robinson, Chair, Opinion Committee, Office of the
Texas Attorney General, at 2 (Jan. 5,200O) (on tile with Gpinion Committee).

         Section 9.104 of the Business and Commerce Code, styled “Transactions Excluded From
Chapter,” provides that “tlhis chapter does not apply” to thirteen kinds of transactions described in
the section. You ask whether section 9.412 applies to these thirteen transactions. The answer is
clear. No part of chapter 9 is applicable to a transaction listed in section 9.104. Section 9.412 is a
part of chapter 9. As a result, section 9.412 is not applicable to a transaction listed in section 9.104.

      We conclude that the “fraudulent tiling” provisions of section 9.412 of the Business             and
Commerce Code do not apply to any transaction listed in section 9.104 thereof.




        ‘See Act of May 24,1995,74th Leg., RX, ch. 547,s 1, 1995 Tex. Gen. Laws 3316
The Honorable   Chris Harris - Page 3           (K-0213)




                                       SUMMARY


                         The “fraudulent tiling” provisions of section 9.412 of the
                Business and Commerce Code do not apply to any transaction listed
                in section 9.104 thereof.




                                              Attorney General of Texas



ANDY TAYLOR
First Assistant Attorney General

CLARK RENT ERVIN
Deputy Attorney General - General Counsel

ELIZABETH ROBINSON
Chair, Opinion Committee

Rick Gilpin
Assistant Attorney General - Opinion Committee
