         TEE    ATTORNEY    GENERAL
                   OF TEXAS

                      Dacaber 14, 1987




Mr. Earl Hale                      Opinion No. JM-834
Deputy Commissioner
Texas Savings and Loan             Re: Applicability of open
   Department                      beach disclosure reguire-
3601 North Lamar, Suite 201        ments, section 61.025 of
Austin, Texas 78705                the   Natural    Resources
                                   Code, to certain activi-
                                   ties of savings and loan
                                   associations (RQ-1092)
Dear Deputy Commissioner Hale:
     Section 61.025 of the Natural Resources Code was
enacted in 1985 and provides that a person who sells or
conveys an interest, other than a mineral, leasehold, or
security interest, in real property located essentially
seaward of the Gulf Intracoastal Waterway must provide a
specified notice to the purchaser stating, inter alia,
that any structure erected seaward of the vegetation line
(or that subsequently becomes seaward of the vegetation
line) is subject to a lawsuit by the state to remove the
structure.   YOU   ask   six   questions   regarding  the
applicability and scope of section 61.025 of the Natural
Resources Code. We will answer each of your questions in
turn.
     You first ask:
          Does the Disclosure Requirement apply to
       non-judicial foreclosure sales whereby the
       mortgaged properties are acquired by: (i)
       the mortgagee:  or (ii)  an unrelated third
       party?
     The disclosure requirements to which you refer are
set forth in section 61.025 of the Natural Resources Code,
which provides the following:
          (a) A person who sells or convevs an
       interest. other than a mineral. leasehold,
       or securitv interest. in real     oronerty



                              p. 4002
Mr.   Earl Hale - Page 2   (JM-834)




        located seaward of the Gulf Intracoastal
        Waterway to its southernmost point and then
        seaward of the longitudinal line also hOWlI
        as 97 degrees, 12', 19" which runs southerly
        to the international boundary from       the
        intersection of the centerline of the Gulf
        Intracoastal Waterway and the Brownsville
        Ship Channel must include in anv executorv
        contract for    convevance   the   following
                 .
        statement.
           The real property described in       this
        contract is located seaward of the Gulf
        Intracoastal Waterway to its southermost
        point and then seaward of the longitudinal
        line also known as 97 degrees, 12*, 19"
        which runs southerly to the. international
        boundary from the intersection of the cen-
        terline of the Gulf Intracoastal Waterway
        and the Brownsville Ship Channel. If     the
        property is in close proximity to a beach
        fronting the Gulf of Mexico, the purchaser
        is hereby advised that the public        has
        acquired a right of use or easement to or
        over the area of any public beach         by
        preqxiption, dedication, or presumption, or
        has retained a right by virtue of continuous
        right in the public since time immemorial,
        as recognized in law and custom.
            The extreme seaward boundary of natural
         vegetation that spreads continuously inland
         customarily marks the landward boundary of
         the public easement. If there is no clearly
         marked natural vegetation line, the landward
         boundary of the easement is as provided by
         Sections   61.016   and   61.017,    ,Natural
         Resources Code.
            State law prohibits any      obstruction,
         barrier, restraint, or interference with the
         use of  the public easement, including the
         placement of structures seaward of the land-
         ward boundary of the easement.    STRUCTURES
         ERECTED SEAWARD OF THE VEGETATION LINE (OR      -\
         OTHER APPLICABLE EASEMENT BOUNDARY) OR THAT
         BECOME SEAWARD OF THE VEGETATION LINE AS A
         RESULT OF NATURAL PROCESSES ARE SUBJECT TO A
         LAWSUIT BY THE STATE OF TEXAS TO REMOVE THE
         STRUCTURES.                                     ?




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      Mr. Earl Hale - Page 3    CM-834)




                The purchaser is hereby notified that the
             purchaser should seek the advice of an
             attorney or other qualified person before
             executing this contract or instrument of
             conveyance as to the relevance of these
             statutes and facts to the value of the
             property the purchaser is hereby purchasing
             or contracting to purchase.
                (b) If there   is no executory contract for
             conveyance, the   statement must be delivered
             to, and receipt   thereof acknowledged by, the
             purchaser prior   to closing the transaction.
                (c) Failure to include the statement in
             an executory contract for conveyance shall
             be grounds for the purchaser to terminate
             such contract, and upon termination any
             earnest money shall be returned to the party
             making the deposit.
                (d) Failure to provide this statement
             prior to closing, either in the executory
,-.          contract for conveyance or in a separate
             written statement,    shall   constitute  a
             deceptive act under Section 17.46, Business
             & Commerce Code.
                (e) This section, or the failure of a
             person to give     or receive the     notice
             required by this section, does not diminish
             or modify the beach access and use rights of
             the public acquired through statute or under
             common law. (Emphasis added.)
      Section 2 of the original 1985 act provides: "This Act
      applies only to a contract for conveyance or a conveyance
      executed on or after October 1, 1986." Acts 1985, 69th
      Leg., ch. 350, 52 at 2616.
           Essentially, you wish to know whether a nonjudicial
      foreclosure sale effects a sale or conveyance for purposes
      of subsection (a) of section 61.025 of the Natural
      Resources Code. We conclude that it does.
           Section 51.002 of the Property Code authorizes a
      mortgagee to sell real property pursuant to the powers
      granted in a deed of trust.      See aenerally Baggett,
      "Acceleration and Foreclosure on Texas Real Estate," 14
      Tex. Tech L. Rev. 695 (1983); Rant, "ULTA [Uniform Land



                                p.   4004
Mr.   Earl Hale - Page 4   (JI+834 )




Transactions Act] and Nonjudicial Mortgage Foreclosure in
Texas,I@ 12 St.   Mary's L.J. 1104 (1981); Cotellesse,
"Nonjudicial Foreclosure under a Deed of TNSt:        Some
Problems of Notice," 49 Tex. L. Rev. 1085 (1971).      The
section does not require a lawsuit and entry of a judgment
directing foreclosure: thus, Texas permits what is, in
effect,   nonjudicial     foreclosure.   Seam        al
        on v. Tucker   615 S.W.2d 881 (Tex. Civ. App.     I
Dallas 1981, writ rek'd n.r.e.); menta    v. Nusbauq    519
S.W.Zd 673 (Tex. Civ. App. - corpus Christi 1975,' writ
ref'd n.r.e.). The section requires that public sale be
held under certain conditions with notice being posted at
the county courthouse, filed with the county clerk, and
served by certified mail on each debtor who is obligated
to pay the debt.
     Section 61.025(a) of the Natural Resources Code
provides that ':[a]person who Sells
9th r th n a mineral. 1 as hold. or securltv interest, in
rea? przperty locatede &thin      designated areas] must
include h    anv executorv contract for convevance" a
specified statement. Subsection (b) provides: "If there
is no executory contract for conveyance, the statement
must be delivered to, and receipt thereof acknowledged by,
the purchaser prior to closing the transaction."         A
mortgage of real property is an executed contract in which
the legal or equitable owner of the property pledges the
title to the property as security for the performance of
an obligation, ordinarily a debt that is evidenced by a
promissory note.   porriss v. Pattersqn 261 S.W.2d 75%
(Tex. Civ. App. - Fort Worth 1953, writ ref'd n.r.e.);
Lushe
-First v.                       26O.S.W.2d 621 (Tex. Civ.
ADD. - Fort Worth 1953, wri& ref'd n.r.e.).      In other
words, a mortgage contract conveys a security interest.
Accordingly, the debtor/mortgagor need not provide a
section 61.025 notice to the creditor/mortgagee. You wish
to know, however, whether such a notice must be provided
by a trustee in a nonjudicial foreclosure sale when the
purchaser is either the mortgagee or a non-related third
pa*y.   The answer to your question is determined by the
nature of the interest conveyed by the nonjudicial fore-
closure sale.
     A purchaser at a foreclosure sale obtains only, such
title as the trustee has authority to convey.        First
So
u ther                    v. V   0 e, 533 S.W.2d 339 (Tex.
1976); Slauahter V.   ualls; 162 S.W.2d 671 (Tex. 1942).
If the interest conveyed is "an interest, other than a
mineral, leasehold,    or security    interest, in    real
property," then a section 61.025 notice must be provided



                           p. 4005
     Mr. Earl Hale - Page 5   (m-834 )




     by the trustee to the purchaser, regardless of whether the
     purchaser is the mortgagee/creditor or an unrelated third
     p---W.
          Second, you ask:
               If the Disclosure Requirement is found to
            be applicable, must the disclosures be set
            forth in the TNStee’S  or Substitute TNSt-
            ee's Deed or in a separate document?
          Section 61.025(a) of the Natural Resources Code
     requires that the specified notice be included "in any
     executory contract for       conveyance.I0 Subsection    (b)
     provides:   "If there is       no executory contract     for
     conveyance, the statement must be delivered to, and
     receipt thereof acknowledged by, the purchaser prior to
     closing the transaction." You ask whether the notice must
     be set forth in the TNStee’S    or Substitute Trustee's Deed
     or in a separate document.
          An "executed    contract" refers    to a    completed
     cont~ract,i.e., one in which the object of the contract is
,-   performed. B. L. Nelson & Associates. Inc.         iv
     Arovle, 535 S.W.2d 906 (Tex. Civ. App. - Fort W&t: t197Ef
     writ ref'd n.r.e.); General Electric Credit Corn. v. Firs&
     National Bank of Dumas, 432 S.W.Zd 737 (Tex. Civ. App. -
     Amarillo 1968, no writ).    It has also been said that,
     despite any doubts that may once have existed on the
     matter, it is now well settled that an executed contract
     also exists where the contract has been wholly performed
     on one side regardless of whether or not it has been
     performed on the other side. Guaenheim v. Hancock, 231
     S.W.2d 935 (Tex. Civ. App. - Amarillo 1950, writ ref'd
     n.r.e.); Lammers v. Wolfertz, 164 S.W. 1102 (Tex. Civ.
     APP. - San Antonio 1914, writ ref'd).       An "executory
     contract," on the other hand, is one that is still
     unperformed by both parties or one with respect to which
     something still remains to be done on both sides.      Id.
     For example, a contract for the sale of land is still
     executory where the deed conveying the property has not
     been delivered and accepted.   &cCall v. Whalev, 115 S.W.
     658 (Tex. Civ. App. 1908, no writ).
          A deed is an instrument in writing that conveys title
     to real estate.   &S Lockridae v. Mccommon, 38 S.W.     33
     (Tex. 1896): Wilson v. Beck, 286 S.W. 315 (Tex. CiV.  APP.
     - Dallas 1926, writ ref'd). The terms t'deed,'l"convey-
     ance," and "deed of conveyance" are frequently used
     interchangeably to denote an instrument in writing whereby



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Mr. Earl Hale - Page 6   (JM-834)




a grantor conveys to a grantee some right, title, or
interest in or to real property. Texas Electric Railway
Co. v. Neale, 244 S.W.2d 329 (Tex. Civ. App. - Waco 1951),
 ev'd on other armu      252 S.W.2d 451 (Tex. 1952).    An
instrument that fails t& operate as a present conveyance
may be COnStNed as a contract to convey.       Hanrick v.
Gurley, 54 S.W. 347 (Tex. 1899), on,           55 S.W. 119
(Tex. 1900)! mod. on other arounds      56 S.W.330 (Tex.
1900); un      . Texas Co, 89 S.W.Zd'260 (Tex. Civ. APP.
- Fort Worth lz35, writ dism#d by agreement). The words
t'soldand conveyed" and words of a similar meaning are
presumptively words of a present conveyance.      Snow v.
Prince, 13 S;W.2d 342 (Tex.-Comm'n App. 1929); Continental
Bpvaltv Co. v. Marshall 239 S.W.2d 837 (Tex. Civ. App. -
Texarkana 1951. no wriC1.    If it is manifest from the
whole instrument,    however,   that   further   acts   or
conveyances are contemplated by the parties, the writing
will be deemed an agreement to convey rather than a
conveyance. L      For example, a deed conveying real
property and reserving a lien for the unpaid purchase
money is an executory contract that will ripen into title
in the purchaser when the purchaser has performed the
obligation to pay the purchase price. Baker V. Marable,
396 S.W.2d 222 (Tex. Civ. App. - El Paso 1965, writ ref'd
n.r.e.); Bailey v. Burkitt, 201 S.W. 725 (Tex. Civ. App. -
Galveston 1918, no writ).
     The Property Code does not set forth         specific
language that must be contained in a Trustee's
Substitute TNstee*s   Deed. If the deed fairly can ::
construed as an executory contract, then, by the terms of
subsection (a) of section 61.025 of the Natural Resources
Code, the notice must be contained therein. If, however,
the deed is not executory in nature, subsection (b)
requires that notice must be delivered in a separate
document.
     Your third question is:
          If the Disclosure Requirement is found to
       be applicable, must disclosure be provided
       to the mortgagee (which has the potential to
       acquire any or all of the properties posted
       for non-judicial foreclosure sale) for each
       individual foreclosure or may the Disclosure
       Requirement be satisfied by either (i) one
       'master disclosure8 whereby the mortgagee
       acknowledges that the properties located in
       certain designated counties are subject to
       the Disclosure Requirement; or (ii) by a



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     Mr. Earl Hale - Page 7   (JM-834)




            monthly 'master disclosure' whereby     the
            mortgagee, on a monthly basis, acknowledges
            that certain    designated properties   are
            subject to the Disclosure Requirement?
     You ask about a situation in which a mortgagee purchases
     the security at a nonjudicial foreclosure sale.    Section
     61.025 of the Natural Resources Code evidences         the
     apparent legislative intent that notice must be provided
     for &    individual foreclosure. The statute specifically
     provides that the person who sells or conveys the real
     property interest must include the statutory notice *Iin
     a   executory contract for conveyance."      The required
     notice itself begins: "The real property described in
     this contract . . .(a (emphasis added). We think that the
     legislature intended that the sale of each parcel subject
     to foreclosure must be accompanied by a notice.

          Our conclusion that notice must be provided for each
     foreclosure is strengthened by the fact that Texas courts,
     in the absence of contractual provisions        permitting
     acceleration and foreclosure, have permitted partition and
,-   foreclosure:
            If the security is susceptible to sale in
            parcels, the Court should, with respect to
            each deed of trust separately, order a sale
            of as much of the security as may be
            necessary to satisfy the                  on
            the note secured thereby plus the expenses
            of sale and one-third of the court costs.
     Motor h Industria1 Finance Corn. v. Huahes, 302 S.W.2d
     386, 395 (Tex. 1957), affirming W arren v. Harrold, 49 S.W.
     364 (Tex. 1899). (Emphasis added.) If the deed of trust
     so provides, the trustee can sell the'security in its
     entirety, subject to a lien retained by the mortgagee, for
     the unmatured portion of the debt, or reserve the power to
     make additional partial foreclosures in the future.     See
     Dorah v. Younq, 129 S.W.2d 782, 784 (Tex. Civ. App. - San
     Antonio 1939, writ ref'd) (sale in entirety); Todd v.
     &p&, 127 S.W.2d 340, 342-43 (Tex. Civ. App. - El Paso
     1939, writ ref'd) (reserved power).        If we were to
P    conclude that notice is not required for each foreclosure,
     the.evident legislative intention to provide notice to
     each purchaser would be thwarted.
          We are required to give effect to the evident intent
     of the legislature when it enacts a provision. Minton v.




                              p. 4008
    Mr. Earl Hale - Page 8     (JM-834)

                                                                     -,

    p&,    545 S.W.2d 442 (Tex. 1976); Calvert v. Texa    PiDe
    Line Co. 517 S.W.2d 777 (Tex. 1974). We concludz that
    section il.025 of the Natural Resources Code requires    a       -Y
    notice for each parcel upon which there'is a foreclosure.
            Your fourth question is:
                 On a related matter, in the event such
              disclosures are provided to the mortgagee
              and the property is actually purchased by an
              unrelated third party either before the
              non-judicial foreclosure sale or at the
              non-judicial foreclosure sale, is the act of
              giving such a notice to the non-purchasing
              mortgagee a deceptive act under the Texas
              Deceptive      Trade      Practices-Consumer
              Protection Act, Tex. Bus. & Corn.Code Ann.
              17.41 St sea. (Vernon Supp. 1987)?
             Subsection (d) of section 61.025 of the Natural
        Resources Code provides:      "Failure to provide     this
        statement prior to closing, either in the executory
        contract for conveyance     or in    a separate    written
        statement, shall constitute a deceptive act under section
        17.46, Business & Commerce Code." You ask whether a
        deceptive trade practice is committed in an instance in
        which a section 61.025 notice has been provided to a
        non-purchasing mortgagee. We have examined section 17.46
        of the Business and Commerce Code and the cases and
        opinions decided under it. We fail to see in what way the
        Deceptive Trade Practices Act can be violated by giving
        notice to someone to whom the statute does not require
        that notice be given.   We assume that you intend to ask
        whether the failure to give notice to a purchasing
        unrelated third party, even though notice was given to the
        non-purchasing mortgagee, constitutes a violation of the
        Deceptive Trade Practices Act. Clearly, by the very terms
        of subsection (d), it does; the purchaser must be given
        notice and failure to do so constitutes a violation of the
        act.
             Your fifth question is:
                  With respect .to purchases by unrelated
               third parties at non-judicial foreclosure
.   .          sales, is it sufficient to obtain      the
               acknowledgment required by the statute at
               the time of the sale?
                                                                     ?




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Mr. Earl Hale - Page 9   (JM-834)




      Subsection (a) of section 61.025 requires that proper
notice be included in any executory contract for convey-
ante . Subsection (b) provides that, in the event that
there is no executory contract for conveyance, notice must
be delivered to the purchaser (and acknowledged thereby)
prior to closlna the t=wix$&m    . Obviously, by the very
terms of section   61.025, providing  notice and obtaining
acknowledgment at the time of the nonjudicial foreclosure
sale satisfies the requirements of the section.
     Your final question asks:
          Will a list of the counties deemed to
       'border' the    Gulf of    Mexico ever    be
       promulgated and published? In the interim,
       or in the event such a list will not be
       promulgated and published, is Harris County
       considered to 'border' the Gulf of Mexico?
     Your request for an opinion was submitted prior to
the adjournment of the 70th Legislature. The originally
enacted version of section 61.025 provided that the notice
requirements applied to Veal property . . . located in a
county that borders the Gulf of Mexico.@' Acts 1985, 69th
Leg., ch. 350, 51, at 2616.      The section was amended
during the 70th Legislature to address the concern that
you raise.   Now the notice requirements apply to real
property located
       seaward of the Gulf Intracoastal Waterway to
       its southernmost point and then seaward of
       the longitudinal line also known as 97
       degrees, 12', 19" which runs southerly to
       the   international boundary     from    the
       intersection of the centerline of the Gulf
       Intracoastal Waterway and the Brownsville
       Ship Channel.
Acts 1987, 70th beg., ch. 75, at 370.    Though we do not
make findings of fact in the opinion process, we note,
after examination of a map, that Harris County does not
fall within.the ambit of the section's boundaries.     For
purposes of section 61.025 of the Natural Resources Code,
then, Harris County does not border the Gulf of Mexico.




                         p. 4010
Mr. Earl Hale - Page 10 W-834)



                       SUMMARY

          1. If the interest in real property
       conveyed   pursuant    to        nonjudicial
       foreclosure sale is man inte:est, other than
       a mineral, leasehold, or security interest
       in real property," then a statement as
       specified by section 61.025 of the Natural
       Resources Code must be provided to the
       purchaser,   regardless   of   whether   the
       purchaser is the mortgagee or an unrelated
       third party.
          2. If the      Trustee ts  or  Substitute
       Trustee's Deed fairly can be characterized
       as an executory    contract  for conveyance,
       then the section 61.025 statement must be
       included therein.    If, on the other hand,
       the deed is not an executory contract, then
       the section     61.025 statement   must      be
       included in a separate document.
          3. Section    61.025   of  the Natural
       Resources Code applies to each individual
       nonjudicial foreclosure sale.
          4. The act of giving to a non-purchasing
       mortgagee a section 61.025 statement does
       not constitute a deceptive trade practice in
       violation of section 17.46 of the Business
       and Commerce Code.
          5. With    respect   to   purchases    by
       unrelated third    parties at    nonjudicial
       foreclosure sales, it is sufficient that the
       buyer obtain the acknowledgment required by
       the statute at any time prior to closing the
       transaction.
          6. Section    61.025   of   the Natural
       Resources Code does not apply to      real
       property located in Harris County.




                                   JIM     M ANT T 0 X
                                   Attorney General of Texas
                                                               --.




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Mr.   Earl Hale - Page 11    UM-834)



NARYKELLER
Executive Assistant Attorney General
JUDGE ZOLLIE STEAKLEY
Special Assistant Attorney General
RICK GILPIN
Chairman, Opinion Committee
Prepared by Jim Moellinger
Assistant Attorney General




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