SECTION 3.506. Attachment of Lien on Harvested Cotton

(a) An assessment lien established under the Texas Agriculture Code, §74.115, as amended by Senate Bill 631 (assessment lien) attaches and is perfected 60 days after the date the foundation mails notice of an assessment due and owing by a cotton grower certifying or reporting cotton production within an active eradication zone.

(b) The assessment lien attaches to cotton produced and harvested from acreage subject to the assessment that assessment year for the amount of the assessment which is due and unpaid, as defined by §3.501 of this title (relating to Definitions), for that assessment year.

(c) The assessment lien attaches only as to the first buyer of cotton and subsequent buyers take the cotton free of the assessment lien.

(d) A first buyer of cotton takes free of the assessment lien if the buyer receives a compliance certificate or other acceptable documentation as described in §3.505 of this title (relating to Compliance Certificates).

(e) A first buyer of cotton also takes free of the assessment lien if the buyer pays for the cotton with a check naming the department as a joint payee, or writes a separate check for the full amount of the unpaid assessment naming the department as the sole payee.

(f) In the event a check is issued naming the department as a joint payee:

(1) The grower should contact the department or the foundation for instructions on how to proceed to obtain an endorsement of the check and a release of lien.

(2) If a check is issued to a lender or other entity as well as the department and the grower, and the lender or other entity is entitled to all or a portion of the proceeds from the sale resulting in only a partial or no payment of the assessment, the grower must provide documentation adequate to establish the amount of the lien owed to the lender or other entity, prior to endorsement of the check by the department and release of the assessment lien by the Foundation.

(3) In addition to paying the assessment owed in full or providing documentation that a superior lien holder has claim to all or a portion of the proceeds from sale of the cotton, before the department will release an endorsed check to the grower and the foundation issues a release of lien, the grower shall verify that no other liens exist as to the cotton which is the subject of the assessment lien by executing an affidavit to that effect.

Source Note: The provisions of this §3.506 adopted to be effective October 1, 1999, 24 TexReg 7398