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AN ACT
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relating to arbitration of certain controversies involving members |
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of certain nonprofit entities. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. The heading to Chapter 173, Civil Practice and |
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Remedies Code, is amended to read as follows: |
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CHAPTER 173. ARBITRATION OF CERTAIN CONTROVERSIES INVOLVING |
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[BETWEEN] MEMBERS OF CERTAIN NONPROFIT ENTITIES |
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SECTION 2. Section 173.002, Civil Practice and Remedies |
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Code, is amended to read as follows: |
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Sec. 173.002. SCOPE OF CHAPTER. (a) This chapter applies |
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only to the arbitration of a controversy between members of an |
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association or corporation or between a corporation and its members |
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if the association or corporation [that] is: |
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(1) exempt from the payment of federal income taxes |
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under Section 501(a) of the Internal Revenue Code of 1986 by being |
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listed as an exempt organization under Section 501(c) of the code; |
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or |
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(2) incorporated under: |
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(A) the Texas Non-Profit Corporation Act |
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(Article 1396-1.01 et seq., Vernon's Texas Civil Statutes); or |
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(B) Subchapter C, Chapter 23, Business |
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Organizations Code. |
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(b) This chapter does not apply to the arbitration of a |
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controversy between: |
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(1) members of: |
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(A) a property owners' association, as defined by |
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Section 209.002, Property Code; |
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(B) a condominium council of owners, as defined |
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by Section 81.002, Property Code; or |
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(C) a condominium unit owners' association |
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organized under Section 82.101, Property Code; or |
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(2) an association or council of owners described by |
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Subdivision (1) and a member of that association or council of |
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owners. |
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SECTION 3. Section 173.003(c), Civil Practice and Remedies |
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Code, is amended to read as follows: |
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(c) A provision in the bylaws of a nonprofit corporation |
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incorporated under the Texas Non-Profit Corporation Act (Article |
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1396-1.01 et seq., Vernon's Texas Civil Statutes) or under |
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Subchapter C, Chapter 23, Business Organizations Code, that |
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requires a member of the corporation to arbitrate at common law a |
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controversy that subsequently arises between members or between the |
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corporation and its members is a valid, enforceable, and |
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irrevocable agreement by a member of the corporation to arbitrate |
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the controversy. |
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SECTION 4. The changes in law made by this Act apply only to |
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a controversy arising on or after the effective date of this Act. A |
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controversy arising before the effective date of this Act is |
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governed by the law in effect on the date the controversy arose, and |
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that law is continued in effect for that purpose. |
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SECTION 5. This Act takes effect immediately if it receives |
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a vote of two-thirds of all the members elected to each house, as |
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provided by Section 39, Article III, Texas Constitution. If this |
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Act does not receive the vote necessary for immediate effect, this |
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Act takes effect September 1, 2023. |
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______________________________ |
______________________________ |
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President of the Senate |
Speaker of the House |
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I certify that H.B. No. 3949 was passed by the House on May |
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11, 2023, by the following vote: Yeas 142, Nays 1, 2 present, not |
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voting. |
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______________________________ |
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Chief Clerk of the House |
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I certify that H.B. No. 3949 was passed by the Senate on May |
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24, 2023, by the following vote: Yeas 31, Nays 0. |
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______________________________ |
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Secretary of the Senate |
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APPROVED: _____________________ |
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Date |
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_____________________ |
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Governor |