BILL ANALYSIS

Senate Research Center	H.B. 3949
	By: Raney (Whitmire)
	State Affairs
	5/17/2023
	Engrossed

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

H.B. 3949 amends current law relating to arbitration of certain controversies involving members of certain nonprofit entities.

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends the heading to Chapter 173, Civil Practice and Remedies Code, to read as follows:

CHAPTER 173. ARBITRATION OF CERTAIN CONTROVERSIES INVOLVING MEMBERS OF CERTAIN NONPROFIT ENTITIES

SECTION 2. Amends Section 173.002, Civil Practice and Remedies Code, as follows:

Sec. 173.002. SCOPE OF CHAPTER. (a) Creates this subsection from existing text. Provides that this chapter applies only to the arbitration of a controversy between members of an association or corporation or between a corporation and its members if the association or corporation meets certain criteria, including having been incorporated under certain statutes, including Subchapter C (Grand Lodges), Chapter 23, Business Organizations Code. Makes nonsubstantive changes.

(b) Provides that this chapter does not apply to the arbitration of a controversy between:

(1) members of:

(A) a property owners' association, as defined by Section 209.002 (Definitions), Property Code;

(B) a condominium council of owners, as defined by Section 81.002 (Definitions), Property Code; or

(C) a condominium unit owners' association organized under Section 82.101 (Organization of Unit Owners' Association), Property Code; or

(2) an association or council of owners described by Subdivision (1) and a member of that association or council of owners.

SECTION 3. Amends Section 173.003(c), Civil Practice and Remedies Code, as follows:

(c) Provides that a provision in the bylaws of a nonprofit corporation incorporated under the certain statutes, including Subchapter C, Chapter 23, Business Organizations Code, that requires a member of the corporation to arbitrate at common law a controversy that subsequently arises between members or between the corporation and its members is a valid, enforceable, and irrevocable agreement by a member of the corporation to arbitrate the controversy.

SECTION 4. Makes application of this Act prospective.

SECTION 5. Effective date: upon passage or September 1, 2023.