The Attorney General of Texas 

August 19, 1982 

MARK WHITE 

Attorney General 

Supreme Court Building 

P. 0. BOY 12546 

Austin. TX. 76711. 2546 

5121475.2501 

Telex 9101674-1367 

Telecopier 5121475-0266 

1607 Main St.. Suite 14W 

Dallas. TX. 75201-4709 

2141742.6944 

4624 Alberta Ave., Suite 160 

El Paso, TX. 79905-2793 

9151533.3464 

1220 0alle.s Ave., Suite 202 

Houston, TX. 77002.6966 

7131650.0666 

606 Broadway, Suite 312 

Lubbock, TX. 79401.3479 

6061747-5236 

4309 N. Tenth, Suite B 

McAkn, TX. 76501.1685 

5121662-4547 

200 Main Plaza. Suite 400 

San Antonio, TX. 76205-2797 

5121225-4191 

An Equal Opportunityl 

Affirmative Action Employer 

Mr. L. Alvis Vandygriff 

Comissioner 

Opinion No. ~~-503 

Texas Savings and Loan Department 

P. 0. Box 1089 

Austin, Texas 78767 

Re: Whether savings and loan 

company is an authorized agent 

to receive tax bill under 

section 31.01 of the Texas 

Property Tax Code 

Dear Mr. Vandygriff: 

You have asked the following question: 

Is a savings and loan association or other 

mortgage lender that is engaged in the practice of 

collecting an escrow account as described herein 

the 'authorized agent' to receive the original tax 

notice or tax bill under standard mortgage lending 

arrangements in Texas? 

You indicate that representatives of a "taxing unit," as defined 

in section 1.04(12) of the Texas Property Tax Code, have raised the 

question as to whether the original tax notice or bill should be sent 

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 

taxes on behalf of that person pursuant to its contractual agreement 

made with the borrower. Section 31.01(a) of the Texas Property Tax 

Code provides in part: 

the assessor for each taxing unit shall prepare 

and mail a tax bill to each person in whose name 

the property is listed on the tax bill or to his 

authorized agent.... 

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