85R20305 BEE-F     By: Kacal H.B. No. 3063       A BILL TO BE ENTITLED   AN ACT   relating to agricultural liens.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 70.401, Property Code, is amended by   amending Subdivision (4) and adding Subdivisions (5), (6), (7), and   (8) to read as follows:                (4)  "Company-owned crop" means an agricultural crop:                      (A)  that is in the possession of a warehouse or   contract purchaser located in this state and for which the   agricultural producer has received full payment;                      (B)  that is not an open storage crop; or                      (C)  for which the warehouse or the contract   purchaser tenders payment and the agricultural producer, without   coercion, defers payment.                (5)  "Contract purchaser" means a person who has agreed   under a contract to purchase an agricultural crop or otherwise pay   the agricultural producer for growing, producing, or harvesting the   agricultural crop.  The term includes [does not include] a person   who, as to the transaction in question, is licensed and bonded under   Chapter 14, Agriculture Code, or the United States Warehouse Act (7   U.S.C. Section 241 et seq.).                (6)  "Open storage crop" means an agricultural crop   that:                      (A)  an agricultural producer delivers or   transfers to:                            (i)  a warehouse for storage; or                            (ii)  a contract purchaser located in this   state;                      (B)  is not covered by a warehouse receipt; and                      (C)  is not owned by the lessee, owner, or   operator of the warehouse in which the crop is stored or the   contract purchaser to which the crop is delivered or transferred.                (7)  "Secured lender" means a person that:                      (A)  has loaned money to a warehouse or a contract   purchaser; and                      (B)  holds a perfected secured lien against a   company-owned crop.                (8)  "Warehouse" means a facility that stores or   handles any agricultural crop after the crop is harvested,   including a facility operated by a person who, as to the transaction   in question, is licensed and bonded under Chapter 14, Agriculture   Code, or the United States Warehouse Act (7 U.S.C. Section 241 et   seq.).  The term includes a person engaged in the business of   operating a warehouse.          SECTION 2.  Section 70.402, Property Code, is amended to   read as follows:          Sec. 70.402.  LIEN CREATED. (a)  An agricultural producer   who, under a contract with a contract purchaser, is to receive   consideration for selling an agricultural crop grown, produced, or   harvested by the producer has a lien against that crop for the   amount owed under the contract, or for the market [reasonable]   value of the crop on the date of transfer or delivery if there is no   agreement concerning the amount owed under the contract.          (b)  An agricultural producer who delivers or transfers an   agricultural crop grown, produced, or harvested by the producer to   a warehouse has a lien against that agricultural crop for the market   value of the agricultural crop:                (1)  on the date of delivery or transfer; or                (2)  if there is to be a series of deliveries to the   warehouse, on the date of the first delivery of the agricultural   crop to the warehouse.          (c)  A lien created under this subchapter is on every   agricultural crop, either in raw or processed form, that has been   transferred or delivered by the agricultural producer and is in the   possession of the warehouse or the contract purchaser, and if the   warehouse or the contract purchaser sells all or part of the crop,   on the proceeds of the sale.  If an open storage [the agricultural]   crop is commingled with a company-owned crop by a warehouse or a   contract purchaser after the crop has been transferred or   delivered, a lien created under this subchapter applies only to   that portion of the agricultural crop in the possession of the   warehouse or the contract purchaser [purchaser's inventory] in an   amount that is equal to the amount of the crop transferred or   delivered by the agricultural producer.          (d) [(c)]  For purposes of this subchapter, an agricultural   crop or processed form of an agricultural crop deposited by a   contract purchaser with a warehouse, whether or not a warehouse   receipt is given as security, is considered to be in the possession   of the contract purchaser and subject to the lien created by this   subchapter.          SECTION 3.  Section 70.403, Property Code, is amended to   read as follows:          Sec. 70.403.  WHEN LIEN ATTACHES.  A lien created under this   subchapter attaches on the date on which physical possession of the   agricultural crop is delivered or transferred by the agricultural   producer to the warehouse or to the contract purchaser or the   purchaser's agent, or if there is to be a series of deliveries [to   the contract purchaser or purchaser's agent], on the date of the   first delivery of the agricultural crop [to the contract purchaser   or purchaser's agent].          SECTION 4.  Section 70.404, Property Code, is amended to   read as follows:          Sec. 70.404.  APPLICABILITY OF OTHER LAW; EFFECT ON OTHER   LAW.  (a) Except as provided by Section 70.4045 of this code,   Chapter 9, Business & Commerce Code, including applicable filing   and perfection requirements, applies to a lien created under this   subchapter.          (b)  Except as provided by Subsection (c), to the extent of a   conflict, this subchapter controls over any other law.          (c)  This subchapter does not abridge the protections   afforded by any applicable law, including:                (1)  Chapter 14, Agriculture Code;                (2)  Chapter 7, Business & Commerce Code;                (3)  the United States Warehouse Act (7 U.S.C. Section   241 et seq.); or                (4)  common law, including the law of bailment.          SECTION 5.  Section 70.4045, Property Code, is amended to   read as follows:          Sec. 70.4045.  PERFECTION AND PRIORITY OF AGRICULTURAL LIEN   ON CROPS.  (a)  Notwithstanding Chapter 9, Business & Commerce Code,   a lien created under this subchapter is perfected at the time the   lien attaches under Section 70.403 and continues to be perfected if   a financing statement covering the agricultural crop is filed on or   before the 90th day after the date:                (1)  the physical possession of the crop is delivered   or transferred by the agricultural producer to the warehouse or the   contract purchaser or the purchaser's agent, if there is only one   delivery [under the contract]; or                (2)  of the last delivery of the crop to the warehouse   or the contract purchaser or the purchaser's agent, if there is a   series of deliveries [under the contract].          (b)  If a financing statement covering the agricultural crop   is not filed within the time prescribed by Subsection (a)(1) or (2),   as applicable, the lien is considered unperfected [on the date the   lien attached until the date the financing statement is filed or the   lien is perfected under Chapter 9, Business & Commerce Code].          (c)  Notwithstanding Chapter 9, Business & Commerce Code,   and except as provided by Subsection (d), a lien created and   perfected under this subchapter has priority over a conflicting   security interest in or lien on the agricultural crop or the   proceeds from the sale of the crop created by the warehouse or the   contract purchaser in favor of a third party, [other than a cotton   ginner's lien created under Section 70.003(d),] regardless of the   date the security interest or lien created by the warehouse or the   contract purchaser attached.  This subsection does not affect:                (1)  the validity or priority of a security interest or   lien:                      (A)  created and perfected to secure a loan   directly to the agricultural producer; or                      (B)  created and perfected under Chapter 9,   Business & Commerce Code, to secure a loan to a warehouse or a   contract purchaser on a company-owned crop in favor of a secured   lender;                (2)  the validity or priority of a cotton ginner's lien   created under Section 70.003(d); or                (3)  the rights of a holder of a negotiable warehouse   receipt.          (d)  Subsection (c) does not apply to a contract purchaser   who purchases an agricultural crop from an agricultural producer   under a marketing contract created under:                (1)  Section 52.016, Agriculture Code; or                (2)  regulations adopted by the United States   Department of Agriculture under Title 7 of the United States Code.          SECTION 6.  Section 70.406(a), Property Code, is amended to   read as follows:          (a)  A buyer in ordinary course of business of an   agricultural crop, including a person who buys any portion of an   agricultural crop from a warehouse or a contract purchaser, whether   or not the agricultural crop has been commingled, takes the   agricultural crop free of a lien created under this subchapter, and   the lien created by this subchapter does not pass to any subsequent   claimant of the agricultural crop.          SECTION 7.  Section 70.407(a), Property Code, is amended to   read as follows:          (a)  A lien created under this subchapter is discharged when:                (1)  the lienholder receives full payment for the   agricultural crop; or                (2)  payment is tendered by the warehouse or the    contract purchaser, as applicable, and the lienholder, without   coercion, defers payment.          SECTION 8.  Section 70.410, Property Code, is amended to   read as follows:          Sec. 70.410.  WAIVER OF CERTAIN RIGHTS PROHIBITED. An   agricultural producer's agreement with a warehouse or a contract   purchaser to waive the producer's right to seek a remedy provided by   this subchapter is void.          SECTION 9.  The changes in law made by this Act apply only to   an agricultural producer who delivers or transfers an agricultural   crop grown, produced, or harvested by the producer to a warehouse or   a contract purchaser on or after the effective date of this Act. An   agricultural producer who delivers or transfers an agricultural   crop grown, produced, or harvested by the producer to a warehouse or   a contract purchaser before the effective date of this Act is   governed by the law as it existed immediately before that date, and   that law is continued in effect for that purpose.          SECTION 10.  This Act takes effect September 1, 2017.