By Eckels, Carona H.B. No. 156 A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to the adoption of the Uniform Condominium Act. 1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-4 SECTION 1. Title 7, Property Code, is amended by adding 1-5 Chapter 82 to read as follows: 1-6 CHAPTER 82. UNIFORM CONDOMINIUM ACT 1-7 SUBCHAPTER A. GENERAL PROVISIONS 1-8 Sec. 82.001. SHORT TITLE. This chapter may be cited as the 1-9 Uniform Condominium Act. 1-10 Sec. 82.002. APPLICABILITY. (a) This chapter applies to 1-11 all commercial, industrial, residential, and other types of 1-12 condominiums in this state for which the declaration is recorded on 1-13 or after January 1, 1994. A condominium for which the declaration 1-14 was recorded before January 1, 1994, may be governed exclusively 1-15 under this chapter if either: 1-16 (1) the owners of units vote to amend the declaration, 1-17 in accordance with the amendment process authorized by the 1-18 declaration, to have this chapter apply and that amendment is filed 1-19 for record in the condominium records in each county in which the 1-20 condominium is located; or 1-21 (2) a declaration or amendment of declaration was 1-22 recorded before January 1, 1994, and the declaration or amendment 1-23 states that this chapter will apply in its entirety on January 1, 1-24 1994. 2-1 (b) An amendment to a declaration under Subsection (a)(1) 2-2 that implements a vote of the unit owners to be governed by this 2-3 chapter may not affect the rights of a declarant or impose duties 2-4 on a declarant that are greater than or in addition to the 2-5 declarant's duties immediately before the date of the vote or 2-6 amendment. 2-7 (c) This section and the following sections apply to a 2-8 condominium in this state for which the declaration was recorded 2-9 before January 1, 1994: Sections 82.005, 82.006, 82.007, 82.053, 2-10 82.054, 82.102(a)(1)-(7) and (12)-(22), 82.111, 82.113, 82.114, 2-11 82.116, 82.157, and 82.161. The definitions prescribed by Section 2-12 82.003 apply to a condominium in this state for which the 2-13 declaration was recorded before January 1, 1994, to the extent the 2-14 definitions do not conflict with the declaration. The sections 2-15 listed in this subsection apply only with respect to events and 2-16 circumstances occurring on or after January 1, 1994, and do not 2-17 invalidate existing provisions of the declaration, bylaws, or plats 2-18 or plans of a condominium for which the declaration was recorded 2-19 before January 1, 1994. 2-20 (d) Chapter 81 does not apply to a condominium for which the 2-21 declaration was recorded on or after January 1, 1994, and does not 2-22 invalidate any amendment to the declaration, bylaws, or plats and 2-23 plans of any condominium for which the declaration was recorded 2-24 before January 1, 1994, if the amendment would be permitted by this 2-25 chapter. The amendment must be adopted in conformity with the 2-26 procedures and requirements specified by those instruments and by 2-27 Chapter 81. If the amendment grants to a person a right, power, or 3-1 privilege permitted by this chapter, all correlative obligations, 3-2 liabilities, and restrictions prescribed by this chapter also apply 3-3 to that person. 3-4 Sec. 82.003. DEFINITIONS. (a) In this chapter: 3-5 (1) "Affiliate of a declarant" means any person who 3-6 controls, is controlled by, or is under common control with a 3-7 declarant. A person "controls" a declarant if the person is a 3-8 general partner, officer, director, or employer of the declarant; 3-9 directly or indirectly or acting in concert with one or more other 3-10 persons, or through one or more subsidiaries, owns, controls, holds 3-11 with power to vote or holds proxies representing more than 20 3-12 percent of the voting interests in the declarant; determines in any 3-13 manner the election of a majority of the directors of the 3-14 declarant; or has contributed more than 20 percent of the capital 3-15 of the declarant. A person "is controlled by" a declarant if the 3-16 declarant is a general partner, officer, director, or employer of 3-17 the person; directly or indirectly or acting in concert with one or 3-18 more other persons, or through one or more subsidiaries, owns, 3-19 controls, holds with power to vote, or holds proxies representing 3-20 more than 20 percent of the voting interests in the person; 3-21 determines in any manner the election of a majority of the 3-22 directors of the person; or has contributed more than 20 percent of 3-23 the capital of the person. 3-24 (2) "Allocated interests" means the undivided interest 3-25 in the common elements, the common expense liability, and votes in 3-26 the association allocated to each unit. 3-27 (3) "Association" means the unit owners' association 4-1 organized under Section 82.101. 4-2 (4) "Board" means the board of directors or the body, 4-3 regardless of name, designated to act on behalf of the association. 4-4 (5) "Common elements" means all portions of a 4-5 condominium other than the units and includes both general and 4-6 limited common elements. 4-7 (6) "Common expense liability" means the liability for 4-8 common expenses allocated to each unit. 4-9 (7) "Common expenses" means expenditures made by or 4-10 financial liabilities of the association, together with any 4-11 allocations to reserves. 4-12 (8) "Condominium" means a form of real property with 4-13 portions of the real property designated for separate ownership or 4-14 occupancy, and the remainder of the real property designated for 4-15 common ownership or occupancy solely by the owners of those 4-16 portions. Real property is a condominium only if one or more of 4-17 the common elements are directly owned in undivided interests by 4-18 the unit owners. Real property is not a condominium if all of the 4-19 common elements are owned by a legal entity separate from the unit 4-20 owners, such as a corporation, even if the separate legal entity is 4-21 owned by the unit owners. 4-22 (9) "Conversion building" means a building that at any 4-23 time before creation of the condominium was occupied wholly or 4-24 partially by persons other than purchasers and persons who occupy 4-25 with the consent of purchasers. 4-26 (10) "Declarant" means a person, or group of persons 4-27 acting in concert, who: 5-1 (A) as part of a common promotional plan, offers 5-2 to dispose of the person's interest in a unit not previously 5-3 disposed of; or 5-4 (B) reserves or succeeds to any special 5-5 declarant right. 5-6 (11) "Declaration" means a recorded instrument, 5-7 however denominated, that creates a condominium, and any recorded 5-8 amendment to that instrument. 5-9 (12) "Development rights" means a right or combination 5-10 of rights reserved by a declarant in the declaration to: 5-11 (A) add real property to a condominium; 5-12 (B) create units, common elements, or limited 5-13 common elements within a condominium; 5-14 (C) subdivide units or convert units into common 5-15 elements; or 5-16 (D) withdraw real property from a condominium. 5-17 (13) "Disposition" means a voluntary transfer to a 5-18 purchaser of any legal or equitable interest in a unit but does not 5-19 include the transfer or release of a security interest. 5-20 (14) "General common elements" means common elements 5-21 that are not limited common elements. 5-22 (15) "Identifying number" means a symbol or address 5-23 that identifies only one unit in a condominium. 5-24 (16) "Leasehold condominium" means a condominium in 5-25 which all or a portion of the real property is subject to a lease 5-26 the expiration or termination of which will terminate the 5-27 condominium or reduce its size. 6-1 (17) "Limited common element" means a portion of the 6-2 common elements allocated by the declaration or by operation of 6-3 Section 82.052 for the exclusive use of one or more but less than 6-4 all of the units. 6-5 (18) "Plan" means a dimensional drawing that is 6-6 recordable in the real property records or the condominium plat 6-7 records and that horizontally and vertically identifies or 6-8 describes units and common elements that are contained in 6-9 buildings. 6-10 (19) "Plat" means a survey recordable in the real 6-11 property records or the condominium plat records and containing the 6-12 information required by Section 82.059. As used in this chapter, 6-13 "plat" does not have the same meaning as "plat" in Chapter 212 or 6-14 232, Local Government Code, or other statutes dealing with 6-15 municipal or county regulation of property development. 6-16 (20) "Purchaser" means a person, other than a 6-17 declarant, who by means of a voluntary transfer acquires a legal or 6-18 equitable interest in a unit other than a leasehold interest or as 6-19 security for an obligation. 6-20 (21) "Residential purposes" means recreational or 6-21 dwelling purposes, or both. 6-22 (22) "Special declarant rights" means rights reserved 6-23 for the benefit of a declarant to: 6-24 (A) complete improvements indicated on plats and 6-25 plans filed with the declaration; 6-26 (B) exercise any development right; 6-27 (C) make the condominium part of a larger 7-1 condominium or a planned community; 7-2 (D) maintain sales, management, and leasing 7-3 offices, signs advertising the condominium, and models; 7-4 (E) use easements through the common elements 7-5 for the purpose of making improvements within the condominium or 7-6 within real property that may be added to the condominium; or 7-7 (F) appoint or remove any officer or board 7-8 member of the association during any period of declarant control. 7-9 (23) "Unit" means a physical portion of the 7-10 condominium designated for separate ownership or occupancy, the 7-11 boundaries of which are described by the declaration. 7-12 (24) "Unit owner" means a declarant or other person 7-13 who owns a unit, or a lessee of a unit in a leasehold condominium 7-14 whose lease expires simultaneously with any lease the expiration or 7-15 termination of which will remove the unit from the condominium, but 7-16 does not include a person having an interest in a unit solely as 7-17 security for an obligation. 7-18 (b) Unless otherwise provided by the declaration or bylaws, 7-19 a term defined by Subsection (a) has the same meaning if used in a 7-20 declaration or bylaws. 7-21 Sec. 82.004. VARIATION BY AGREEMENT. Except as expressly 7-22 provided by this chapter, provisions of this chapter may not be 7-23 varied by agreement, and rights conferred by this chapter may not 7-24 be waived. A person may not act under a power of attorney or use 7-25 any other device to evade the limitations or prohibitions of this 7-26 chapter or the declaration. 7-27 Sec. 82.005. SEPARATE TITLES AND TAXATION. (a) If there is 8-1 a unit owner other than a declarant, each unit that has been 8-2 created, together with its interest in the common elements, 8-3 constitutes for all purposes a separate parcel of real property. 8-4 (b) If there is a unit owner other than a declarant, each 8-5 unit must be separately taxed and assessed, and no separate tax or 8-6 assessment may be rendered against common elements for which a 8-7 declarant has not reserved development rights. Any portion of the 8-8 common elements for which a declarant has reserved any development 8-9 right must be separately taxed and assessed against the declarant, 8-10 and the declarant alone is liable for payment of those taxes. 8-11 (c) If there is no unit owner other than a declarant, the 8-12 real property constituting the condominium may be taxed and 8-13 assessed in any manner provided by law. 8-14 (d) The laws relating to homestead exemptions from property 8-15 taxes apply to condominium units, which are entitled to homestead 8-16 exemptions in those cases in which the owner of a single family 8-17 dwelling would qualify. 8-18 Sec. 82.006. APPLICABILITY OF LOCAL ORDINANCES, REGULATIONS, 8-19 AND BUILDING CODES. A zoning, subdivision, building code, or other 8-20 real property use law, ordinance, or regulation may not prohibit 8-21 the condominium form of ownership or impose any requirement on a 8-22 condominium that it would not impose on a physically identical 8-23 development under a different form of ownership. Otherwise, this 8-24 chapter does not invalidate or modify any provision of any zoning, 8-25 subdivision, building code, or other real property use law, 8-26 ordinance, or regulation. 8-27 Sec. 82.007. CONDEMNATION. (a) If a unit is acquired by 9-1 condemnation, or if part of a unit is acquired by condemnation 9-2 leaving the unit owner with a remnant that may not practically or 9-3 lawfully be used for any purpose permitted by the declaration, the 9-4 condemnation award must compensate the unit owner for the unit and 9-5 its common element interest, whether or not any common element 9-6 interest is acquired. On acquisition, unless the decree provides 9-7 otherwise, the condemned unit's entire allocated interests are 9-8 automatically reallocated to the remaining units in proportion to 9-9 the respective allocated interests of those units before the 9-10 taking, and the association shall promptly prepare, execute, and 9-11 record an amendment to the declaration reflecting the 9-12 reallocations. A remnant of a unit remaining after part of a unit 9-13 is taken under this subsection is a common element. 9-14 (b) Except as provided by Subsection (a), if part of a unit 9-15 is acquired by condemnation, the award must compensate the unit 9-16 owner for the reduction in value of the unit and its common element 9-17 interest. On acquisition, the condemned unit's allocated interests 9-18 are reduced in proportion to the reduction in the size of the unit, 9-19 or on any other basis specified by the declaration, and the portion 9-20 of the allocated interests divested from the partially acquired 9-21 unit are automatically reallocated to that unit and the remaining 9-22 units in proportion to the respective allocated interests of those 9-23 units before the taking, with the partially acquired unit 9-24 participating in the reallocation on the basis of its reduced 9-25 allocated interests. 9-26 (c) If part of the common elements is acquired by 9-27 condemnation, the award must be paid to the association, as trustee 10-1 for the unit owners, and to persons holding liens on the condemned 10-2 property, as their interests may appear. The association shall 10-3 divide any portion of the award not used for any restoration or 10-4 repair of the remaining common elements among the unit owners in 10-5 proportion to their respective common element interests before the 10-6 taking, but the portion of the award attributable to the 10-7 acquisition of a limited common element must be equally divided 10-8 among the owners of the units to which that limited common element 10-9 was allocated at the time of acquisition, or in any manner the 10-10 declaration provides. 10-11 (d) The court decree shall be recorded in each county in 10-12 which any portion of the condominium is located. 10-13 Sec. 82.008. VENUE. Venue for an action to enforce a right 10-14 or obligation arising under the declaration, bylaws, or rules of 10-15 the association is in each county in which any part of the 10-16 condominium is located. 10-17 (Sections 82.009 to 82.050 reserved for expansion 10-18 SUBCHAPTER B. CREATION, ALTERATION, AND TERMINATION 10-19 OF CONDOMINIUMS 10-20 Sec. 82.051. CREATION OF CONDOMINIUM. (a) A condominium 10-21 may be created under this chapter only by recording a declaration 10-22 executed in the same manner as a deed by all persons who have an 10-23 interest in the real property that will be conveyed to unit owners 10-24 and by every lessor of a lease the expiration or termination of 10-25 which will terminate the condominium or reduce its size. The 10-26 declaration shall be recorded in each county in which any portion 10-27 of the condominium is located. 11-1 (b) A declarant may not convey an interest in a unit until 11-2 each holder of a mortgage on the unit immediately before conveyance 11-3 has executed a consent to declaration, and the consent has been 11-4 recorded, or is recorded concurrently with the conveyance, as part 11-5 of the declaration or an amendment to the declaration. 11-6 (c) If a recorded declaration is not properly executed, that 11-7 defect may be cured by a subsequent execution conforming to 11-8 Subsection (a). After an execution defect is cured by authority of 11-9 this subsection, the declaration is retroactively effective on the 11-10 date it was first recorded. 11-11 (d) A county clerk shall, without prior approval from any 11-12 other authority, record declarations and amendments to declarations 11-13 in the real property records, and a county clerk shall record 11-14 condominium plats or plans in the real property records or in books 11-15 maintained for that purpose, as a declarant may request. The book 11-16 for the condominium plat records shall be the same size and type as 11-17 the book for recording subdivision plats. 11-18 (e) This chapter does not affect or diminish the rights of 11-19 municipalities and counties to approve plats of subdivisions and 11-20 enforce building codes as may be authorized or required by law. 11-21 Sec. 82.052. UNIT BOUNDARIES. Except as otherwise provided 11-22 by the declaration or plat: 11-23 (1) if walls, floors, or ceilings are designated as 11-24 boundaries of a unit, then all lath, furring, wallboard, 11-25 plasterboard, plaster, paneling, tiles, wallpaper, paint, finished 11-26 flooring, and any other materials constituting part of the finished 11-27 surfaces are a part of the unit, and all other portions of the 12-1 walls, floors, or ceilings are a part of the common elements; 12-2 (2) if any chute, flue, duct, wire, conduit, bearing 12-3 wall, bearing column, or any other fixture is partially within and 12-4 partially outside the designated boundaries of a unit, then the 12-5 portion serving only that unit is a limited common element 12-6 allocated solely to that unit, and the portion serving more than 12-7 one unit or the common elements is a part of the general common 12-8 elements; 12-9 (3) subject to Subdivision (2), the spaces, interior 12-10 partitions, and other fixtures and improvements within the 12-11 boundaries of a unit are a part of the unit; and 12-12 (4) shutters, awnings, window boxes, doorsteps, 12-13 stoops, porches, balconies, patios, and exterior doors and windows 12-14 or other fixtures designed to serve a single unit, but located 12-15 outside the unit's boundaries, are limited common elements 12-16 allocated exclusively to that unit. 12-17 Sec. 82.053. CONSTRUCTION AND VALIDITY OF DECLARATION AND 12-18 BYLAWS. (a) The provisions of the declaration and bylaws are 12-19 severable. 12-20 (b) The rule against perpetuities may not be applied to 12-21 defeat any provision of the declaration, bylaws, or rules of the 12-22 association. 12-23 (c) If there is a conflict between the provisions of the 12-24 declaration and the bylaws, the declaration prevails except to the 12-25 extent the declaration is inconsistent with this chapter. 12-26 (d) Title to a unit and common elements is not made 12-27 unmarketable or otherwise affected by a provision of unrecorded 13-1 bylaws or by reason of an insubstantial failure of the declaration 13-2 to comply with this chapter. Whether a substantial failure impairs 13-3 marketability is not affected by this chapter. 13-4 Sec. 82.054. DESCRIPTION OF UNITS. A description of a unit 13-5 is a sufficient legal description of the unit and all rights, 13-6 obligations, and interests appurtenant to the unit that were 13-7 created by the declaration or bylaws if the description contains: 13-8 (1) the name of the condominium; 13-9 (2) the recording data for the declaration, including 13-10 any amendments, plats, and plans; 13-11 (3) the county in which the condominium is located; 13-12 and 13-13 (4) the identifying number of the unit. 13-14 Sec. 82.055. CONTENTS OF DECLARATION FOR ALL CONDOMINIUMS. 13-15 The declaration for a condominium must contain: 13-16 (1) the name of the condominium, which must include 13-17 the word "condominium" or be followed by the words "a condominium" 13-18 or a phrase that includes the word "condominium," and the name of 13-19 the association; 13-20 (2) the name of each county in which any part of the 13-21 condominium is located; 13-22 (3) a legally sufficient description of the real 13-23 property included in the condominium; 13-24 (4) a description of the boundaries of each unit 13-25 created by the declaration, including the unit's identifying 13-26 number; 13-27 (5) a statement of the maximum number of units that 14-1 the declarant reserves the right to create; 14-2 (6) a description of the limited common elements other 14-3 than those listed in Sections 82.052(2) and (4); 14-4 (7) a description of any real property, except real 14-5 property subject to development rights, that may be allocated 14-6 subsequently as limited common elements, together with a statement 14-7 that the property may be so allocated; 14-8 (8) an allocation to each unit of its allocated 14-9 interests; 14-10 (9) any restrictions on use, occupancy, or alienation 14-11 of the units; 14-12 (10) a description of and the recording data for 14-13 recorded easements and licenses appurtenant to or included in the 14-14 condominium or to which any portion of the condominium is or may 14-15 become subject by reservation in the declaration; 14-16 (11) the method of amending the declaration; 14-17 (12) a plat or plan or the recording data of a plat or 14-18 plan that has been recorded in the real property or condominium 14-19 plat records; 14-20 (13) a statement of the association's obligation under 14-21 Section 82.111(i) to rebuild or repair any part of the condominium 14-22 after a casualty or any other disposition of the proceeds of a 14-23 casualty insurance policy; 14-24 (14) a description of any development rights and other 14-25 special declarant rights reserved by the declarant, together with a 14-26 legally sufficient description of the real property to which each 14-27 of those rights applies, and a time limit within which each of 15-1 those rights must be exercised; 15-2 (15) if any development right may be exercised with 15-3 respect to different parcels of real property at different times, a 15-4 statement to that effect, together with: 15-5 (A) either a statement fixing the boundaries of 15-6 those portions and regulating the order in which those portions may 15-7 be subjected to the exercise of each development right, or a 15-8 statement that no assurances are made in those regards; and 15-9 (B) a statement as to whether, if any 15-10 development right is exercised in any portion of the real property 15-11 subject to that development right, that development right must be 15-12 exercised in all or in any other portion of the remainder of that 15-13 real property; 15-14 (16) all matters required by this chapter to be stated 15-15 in the declaration; and 15-16 (17) any other matters the declarant considers 15-17 appropriate. 15-18 Sec. 82.056. LEASEHOLD CONDOMINIUMS. (a) Any lease the 15-19 expiration or termination of which may terminate the condominium or 15-20 reduce its size must be recorded. The lessor shall sign the 15-21 declaration, and the declaration must state: 15-22 (1) the recording data for the lease; 15-23 (2) the date on which the lease is scheduled to 15-24 expire; 15-25 (3) a legally sufficient description of the real 15-26 property subject to the lease; 15-27 (4) any right of the unit owners to redeem the 16-1 reversion and the manner in which the unit owners may exercise that 16-2 right, or a statement that the unit owners do not have that right; 16-3 (5) any right of the unit owners to remove 16-4 improvements within a reasonable time after the expiration or 16-5 termination of the lease, or a statement that the unit owners do 16-6 not have that right; and 16-7 (6) any right of the unit owners to renew the lease 16-8 and the conditions of renewal, or a statement that the unit owners 16-9 do not have that right. 16-10 (b) After the declaration for a leasehold condominium is 16-11 recorded, neither the lessor nor the lessor's successor in interest 16-12 may terminate the leasehold interest of a unit owner who makes 16-13 timely payment of the unit owner's share of the rent and otherwise 16-14 complies with all covenants that, if violated, would entitle the 16-15 lessor to terminate the lease. A unit owner's leasehold interest 16-16 is not affected by failure of any other person to pay rent or 16-17 fulfill any other covenant. 16-18 (c) Acquisition of the leasehold interest of a unit owner by 16-19 the owner of the reversion or remainder does not merge the 16-20 leasehold and fee simple interests unless the leasehold interests 16-21 of all unit owners subject to that reversion or remainder are 16-22 acquired. 16-23 (d) If the expiration or termination of a lease decreases 16-24 the number of units in a condominium, the allocated interests shall 16-25 be reallocated as though those units had been taken by condemnation 16-26 unless otherwise provided by the declaration. Reallocation shall 16-27 be confirmed by an amendment to the declaration prepared, executed, 17-1 and recorded by the association. 17-2 Sec. 82.057. ALLOCATION OF COMMON ELEMENT INTERESTS, VOTES, 17-3 AND COMMON EXPENSE LIABILITIES. (a) The declaration shall 17-4 allocate a fraction or percentage of undivided interests in the 17-5 common elements and in the common expenses of the association, and 17-6 a portion of the votes in the association, to each unit and state 17-7 the formulas used to establish those allocations. These 17-8 allocations may not discriminate in favor of units owned by a 17-9 declarant. 17-10 (b) If units may be added to or withdrawn from the 17-11 condominium, the declaration must state the formulas to be used to 17-12 reallocate the allocated interests among all units included in the 17-13 condominium after the addition or withdrawal. 17-14 (c) The declaration may provide: 17-15 (1) that different allocations of votes must be made 17-16 to the units on particular matters specified in the declaration; 17-17 and 17-18 (2) for class voting on specified issues affecting the 17-19 class if necessary to protect valid interests of the class. 17-20 (d) A declarant may not use cumulative or class voting to 17-21 evade any limitation imposed on declarants by this chapter. Units 17-22 may not constitute a class because the units are owned by a 17-23 declarant. 17-24 (e) Except for minor variations due to rounding, the sums of 17-25 the undivided interests in the common elements and of the common 17-26 expense liabilities allocated at any time to all the units shall 17-27 each equal one if stated as fractions or 100 percent if stated as 18-1 percentages. If a discrepancy exists between an allocated interest 18-2 and the result derived from application of the pertinent formula, 18-3 the allocated interest prevails. 18-4 (f) The common elements are not subject to partition. Any 18-5 purported conveyance, judicial sale, or other voluntary or 18-6 involuntary transfer of an undivided interest in the common 18-7 elements without the unit to which that interest is allocated is 18-8 void. 18-9 Sec. 82.058. LIMITED COMMON ELEMENTS. (a) The limited 18-10 common elements and the provisions of the declaration relating to 18-11 the right to use the limited common elements may not be altered 18-12 without the consent of each affected unit owner and the owner's 18-13 first lien mortgagee. 18-14 (b) Except as otherwise provided by the declaration, a 18-15 limited common element may be reallocated by an amendment to the 18-16 declaration, executed by the unit owners between or among whose 18-17 units the reallocation is made. The persons executing the 18-18 amendment shall deliver it to the association, which shall record 18-19 it at the expense of the reallocating unit owners. 18-20 (c) A common element not previously allocated as a limited 18-21 common element may not be allocated except pursuant to the 18-22 declaration made in accordance with Section 82.055(7). The 18-23 allocation shall be made by amendment to the declaration. 18-24 Sec. 82.059. PLATS AND PLANS. (a) Plats and plans are a 18-25 part of the declaration and may be recorded as a part of the 18-26 declaration or separately. Each plat or plan must be legible and 18-27 contain a certification that the plat or plan contains all 19-1 information required by this section. 19-2 (b) Each plat must show: 19-3 (1) the name and a survey or general schematic map of 19-4 the entire condominium; 19-5 (2) the location and dimensions of all real property 19-6 not subject to development rights, or subject only to the 19-7 development right to withdraw, and the location and dimensions of 19-8 all existing improvements within that real property; 19-9 (3) a legally sufficient description of any real 19-10 property subject to development rights, labeled to identify the 19-11 rights applicable to each parcel; 19-12 (4) the extent of any encroachments by or on any 19-13 portion of the condominium; 19-14 (5) to the extent feasible, a legally sufficient 19-15 description of all easements serving or burdening any portion of 19-16 the condominium, and the location of any underground utility line 19-17 that is actually known by the declarant at the time of filing the 19-18 declaration to have been constructed outside a recorded easement; 19-19 (6) the location and dimensions of any vertical unit 19-20 boundaries not shown or projected on recorded plans and the unit's 19-21 identifying number; 19-22 (7) the location, with reference to established data, 19-23 of any horizontal unit boundaries not shown or projected on 19-24 recorded plans and the unit's identifying number; 19-25 (8) a legally sufficient description of any real 19-26 property in which the unit owners will own only an estate for 19-27 years, labeled as "leasehold real property"; 20-1 (9) the distance between noncontiguous parcels of real 20-2 property constituting the condominium; 20-3 (10) the location and dimensions of limited common 20-4 elements, other than those described by Sections 82.052(2) and (4); 20-5 (11) in the case of real property not subject to 20-6 development rights, all other matters required by law on land 20-7 surveys; and 20-8 (12) the distance and bearings locating each building 20-9 from all other buildings and from at least one boundary line of the 20-10 real property constituting the condominium. 20-11 (c) A plat may also show the intended location and 20-12 dimensions of a contemplated improvement to be constructed anywhere 20-13 within the condominium, which must be labeled either "MUST BE 20-14 BUILT" or "NEED NOT BE BUILT." 20-15 (d) To the extent not shown on the plats, plans must show: 20-16 (1) the location and dimensions of the vertical 20-17 boundaries of each unit, and the unit's identifying number; 20-18 (2) the horizontal unit boundaries, with reference to 20-19 established data, and the unit's identifying number; and 20-20 (3) any units, appropriately identified, in which the 20-21 declarant has reserved the right to create additional units or 20-22 common elements. 20-23 (e) Unless the declaration provides otherwise, the 20-24 horizontal boundaries of part of a unit located outside a building 20-25 have the same elevation as the horizontal boundaries of the inside 20-26 part and need not be depicted on the plats and plans. Interior 20-27 walls and partitions within a unit need not be included in the 21-1 plats or plans. 21-2 (f) On exercising any development right, the declarant shall 21-3 record either new plats and plans necessary to conform to the 21-4 requirements of this section or new certifications of plats and 21-5 plans previously recorded if those plats and plans otherwise 21-6 conform to the requirements of this section. 21-7 (g) An independent licensed surveyor or engineer shall 21-8 certify at least one plat, whether contained in one or more pages, 21-9 showing all perimeter land boundaries of the condominium, except 21-10 for additional real property, and showing the locations on the 21-11 ground of all buildings labeled "MUST BE BUILT" in relation to land 21-12 boundaries. Certification of any other plat or plan required by 21-13 this chapter shall be made by an independent licensed architect, 21-14 surveyor, or engineer. 21-15 Sec. 82.060. EXERCISE OF DEVELOPMENT RIGHT. (a) To 21-16 exercise a development right, the declarant must prepare, execute, 21-17 and record an amendment to the declaration and record new plats and 21-18 plans for that real property. The declarant is the unit owner of 21-19 any units created. The amendment to the declaration must assign an 21-20 identifying number to each new unit created and, except for 21-21 subdivision or conversion of units described by Subsection (b), 21-22 reallocate the allocated interest among all units. The amendment 21-23 must describe any limited common elements created, designating the 21-24 unit to which each is allocated. 21-25 (b) Development rights may be reserved within any real 21-26 property added to the condominium if the amendment adding the real 21-27 property includes the information required by Section 82.055 or 22-1 82.056, as appropriate, and the plats and plans include the 22-2 information required by Section 82.059(b). This provision does not 22-3 extend the time limit on the exercise of development rights imposed 22-4 by the declaration. Real property to be added is not part of a 22-5 condominium or subject to a declaration until the declaration is 22-6 amended to make the additional real property part of the 22-7 condominium. 22-8 (c) Whenever a declarant exercises a development right to 22-9 subdivide or convert a unit previously created into additional 22-10 units, common elements, or both: 22-11 (1) if the declarant converts the unit entirely to 22-12 common elements, the amendment to the declaration must reallocate 22-13 all the allocated interests of the unit among the other units as if 22-14 the unit had been taken by condemnation; and 22-15 (2) if the declarant subdivides the unit into two or 22-16 more units, whether or not any part of the unit is converted into 22-17 common elements, the amendment to the declaration must reallocate 22-18 all the allocated interests of the unit among the units created by 22-19 the subdivision in any reasonable manner prescribed by the 22-20 declarant. 22-21 (d) If the declaration provides that all or a portion of the 22-22 real property is subject to the development right of withdrawal: 22-23 (1) if all the real property is subject to withdrawal, 22-24 and the declaration does not describe separate portions of real 22-25 property subject to that right, none of the real property may be 22-26 withdrawn after a unit has been conveyed to a purchaser; and 22-27 (2) if a portion or portions are subject to 23-1 withdrawal, no portion may be withdrawn after a unit in that 23-2 portion has been conveyed to a purchaser. 23-3 Sec. 82.061. ALTERATIONS OF UNITS. (a) Subject to the 23-4 provisions of the declaration and other provisions of law, a unit 23-5 owner: 23-6 (1) may make improvements or alterations to the 23-7 owner's unit that do not impair the structural integrity or 23-8 mechanical systems or lessen the support of any portion of the 23-9 condominium; 23-10 (2) may not change the appearance of the common 23-11 elements or the exterior appearance of a unit or any other portion 23-12 of the condominium without prior written permission of the 23-13 association; and 23-14 (3) after acquiring an adjoining unit or an adjoining 23-15 part of an adjoining unit, with the prior written approval of the 23-16 association, may remove, alter, and create apertures in an 23-17 intervening partition, even if the partition in whole or in part is 23-18 a common element, if those acts do not impair the structural 23-19 integrity or mechanical systems or lessen the support of any 23-20 portion of the condominium. 23-21 (b) Removal of partitions or creation of apertures under 23-22 Subsection (a)(3) is not an alteration of boundaries. 23-23 Sec. 82.062. RELOCATION OF BOUNDARIES BETWEEN ADJOINING 23-24 UNITS. Subject to the declaration, the boundaries between 23-25 adjoining units may be relocated by an amendment to the declaration 23-26 on written application to the association by the owners of those 23-27 units. If the owners of the adjoining units have specified a 24-1 reallocation between their units of their allocated interests, the 24-2 application must state the proposed reallocations. Unless the 24-3 board determines not later than the 30th day after the date the 24-4 application is received that the reallocation is unreasonable, the 24-5 association shall prepare an amendment that identifies the units 24-6 involved, states the reallocation, is executed by the applying unit 24-7 owners, and contains words of conveyance between them. At the 24-8 expense of the applying unit owners, the association shall prepare 24-9 and record the amendment and plats or plans necessary to show the 24-10 altered boundaries between adjoining units, and the units' 24-11 dimensions and identifying numbers. 24-12 Sec. 82.063. SUBDIVISION OF UNITS. (a) If the declaration 24-13 expressly permits, a unit may be subdivided into two or more units. 24-14 Subject to the declaration, on written application of a unit owner 24-15 to subdivide a unit and after payment by the unit owner of the cost 24-16 of preparing and recording amendments and plats, the association 24-17 shall prepare, execute, and record an amendment to the declaration, 24-18 including the plats and plans, subdividing the unit. 24-19 (b) The amendment to the declaration must be executed by the 24-20 owner of the unit to be subdivided, assign an identifying number to 24-21 each unit created, and reallocate the allocated interests formerly 24-22 allocated to the subdivided unit to the new units in any reasonable 24-23 manner prescribed by the owner of the subdivided unit. 24-24 Sec. 82.064. EASEMENT FOR ENCROACHMENTS. To the extent that 24-25 a unit or common element encroaches on another unit or common 24-26 element, a valid easement for the encroachment exists. The 24-27 easement does not relieve a unit owner of liability in case of the 25-1 owner's wilful misconduct nor relieve a declarant or any other 25-2 person of liability for failure to adhere to the plats and plans. 25-3 Sec. 82.065. USE FOR SALES PURPOSES. The declaration may 25-4 permit a declarant to maintain sales, leasing, or management 25-5 offices and models in units or on common elements in the 25-6 condominium if the declaration specifies the rights of a declarant 25-7 with regard to the number, size, location, and relocation of the 25-8 offices and models. If the declaration fails to expressly permit 25-9 an office or model, a declarant may maintain no more than one unit 25-10 as a model and no more than one unit as an office for sales, 25-11 leasing, and management purposes at any one time. A sales, 25-12 leasing, or management office or model not designated as a unit by 25-13 the declaration is a common element and is subject to the exclusive 25-14 use of a declarant until the declarant ceases to be a unit owner or 25-15 until the declarant no longer uses the office or model for such 25-16 purposes, whichever occurs earlier. A declarant may modify the 25-17 exterior of a sales, leasing, or management office to conform to 25-18 the aesthetic exterior plan of the condominium. A declarant who 25-19 ceases to be a unit owner ceases to have any rights with regard to 25-20 an office or model unless it is removed within a reasonable time 25-21 from the condominium in accordance with a right to remove reserved 25-22 in the declaration. Subject to limitations in the declaration, a 25-23 declarant may maintain signs on the common elements that advertise 25-24 the condominium for sale or lease. This section is subject to 25-25 local ordinances and other state law. 25-26 Sec. 82.066. EASEMENT RIGHTS. Subject to the declaration, a 25-27 declarant has an easement through the common elements as may be 26-1 reasonably necessary for discharging the declarant's obligations or 26-2 exercising special declarant rights whether arising under this 26-3 chapter or reserved by the declaration. 26-4 Sec. 82.067. AMENDMENT OF DECLARATION. (a) Except as 26-5 provided by Subsection (b), a declaration, including the plats and 26-6 plans, may be amended only by vote or agreement of unit owners to 26-7 which at least 67 percent of the votes in the association are 26-8 allocated, or any larger majority the declaration specifies. A 26-9 declaration may specify a smaller number only if all of the units 26-10 are restricted exclusively to nonresidential use. An amendment to 26-11 a declaration may be adopted: 26-12 (1) by written ballot that states the exact wording or 26-13 substance of the amendment and that specifies the date by which a 26-14 ballot must be received to be counted; 26-15 (2) at a meeting of the members of the association 26-16 after written notice of the meeting has been delivered to an owner 26-17 of each unit stating that a purpose of the meeting is to consider 26-18 an amendment to the declaration; or 26-19 (3) by any method permitted by the declaration. 26-20 (b) The amendment procedures of this section do not apply to 26-21 amendments that may be executed by: 26-22 (1) a declarant under Section 82.051(c), 82.059(f), or 26-23 82.060 or Subsection (f); 26-24 (2) the association under Section 82.007, 82.056(d), 26-25 82.058(c), 82.062, or 82.063 or Subsection (f); or 26-26 (3) certain unit owners under Section 82.058(b), 26-27 82.062, 82.063(b), or 82.068(b). 27-1 (c) An action to challenge the validity of an amendment 27-2 adopted by the association under this section must be brought 27-3 before the first anniversary of the date the amendment is recorded. 27-4 (d) To be effective, an amendment to the declaration must be 27-5 recorded in each county in which any portion of the condominium is 27-6 located. 27-7 (e) Except as permitted or required by this chapter, an 27-8 amendment may not create or increase special declarant rights, 27-9 increase the number of units, change the boundaries of a unit, 27-10 alter or destroy a unit or limited common element, change a unit's 27-11 allocated interest, or change the use restrictions on a unit unless 27-12 the amendment is approved by 100 percent of the votes in the 27-13 association. Except as agreed to by the declarant, an amendment 27-14 may not increase or otherwise modify the obligations imposed by a 27-15 declaration on a declarant, or reduce or otherwise modify the 27-16 rights granted by a declaration to a declarant, including special 27-17 declarant rights. 27-18 (f) If permitted by the declaration, the board or the 27-19 declarant, if the declarant owns a unit that has never been 27-20 occupied, may without a vote of the unit owners or approval of the 27-21 association amend the declaration in any manner necessary to meet 27-22 the requirements of the Federal National Mortgage Association, the 27-23 Federal Home Loan Mortgage Corporation, the Federal Housing 27-24 Administration, or the Veterans Administration. 27-25 (g) Amendments to the declaration required by this chapter 27-26 to be recorded by the association must be prepared, executed, 27-27 recorded, and certified by an officer of the association designated 28-1 for that purpose or, in the absence of designation, by the 28-2 president of the association. 28-3 (h) An association may amend the declaration to authorize 28-4 the board: 28-5 (1) to bring an action to evict a tenant of a unit 28-6 owner for the tenant's violation of the declaration, bylaws, or 28-7 rules of the association; 28-8 (2) to bring an action to evict a tenant of a unit 28-9 owner who fails to pay the association for the cost of repairs to 28-10 common elements damaged substantially by the owner's tenant; or 28-11 (3) to collect rents from a tenant of a unit owner who 28-12 is at least 60 days' delinquent in the payment of any amount due to 28-13 the association. 28-14 Sec. 82.068. TERMINATION OF CONDOMINIUM. (a) Unless the 28-15 declaration provides otherwise and except for a taking of all the 28-16 units by condemnation, a condominium may be terminated only by the 28-17 agreement of 100 percent of the votes in the association and each 28-18 holder of a deed of trust or vendor's lien on a unit. The 28-19 declaration may not allow a termination by less than 80 percent of 28-20 the votes in the association if any unit is restricted exclusively 28-21 to residential uses. 28-22 (b) An agreement of unit owners to terminate a condominium 28-23 must be evidenced by the execution or ratification of a termination 28-24 agreement by the requisite number of unit owners. If, pursuant to 28-25 a termination agreement, the real property constituting the 28-26 condominium is to be sold following termination, the termination 28-27 agreement must set forth the terms of the sale. To be effective, 29-1 a termination agreement and all ratifications of the agreement must 29-2 be recorded in each county in which a portion of the condominium is 29-3 located. 29-4 (c) The association, on behalf of the unit owners, may 29-5 contract for the sale of real property in the condominium, but the 29-6 contract is not binding on the unit owners until it is approved 29-7 under Subsections (a) and (b). If the real property constituting 29-8 the condominium is to be sold following termination, on termination 29-9 title to that real property vests in the association as trustee for 29-10 the holders of all interests in the units, and the association has 29-11 all powers necessary and appropriate to effect the sale, including 29-12 the power to convey the interests of nonconsenting owners. Until 29-13 the sale has been concluded and the proceeds distributed, the 29-14 association shall continue to exist and retains the powers it had 29-15 before termination. Proceeds of the sale must be distributed to 29-16 unit owners and lienholders as their interests may appear, in 29-17 proportion to the respective interests of unit owners as provided 29-18 by Subsection (f). Unless the termination agreement specifies 29-19 differently, as long as the association holds title to the real 29-20 property, each unit owner and the owner's successors in interest 29-21 have an exclusive right to occupy the portion of the real property 29-22 that formerly constituted the owner's unit. During that period of 29-23 occupancy a unit owner and the owner's successors in interest 29-24 remain liable for all assessments and other obligations imposed on 29-25 unit owners by this chapter or the declaration. 29-26 (d) If the real property constituting the condominium is not 29-27 to be sold following termination, on termination title to the real 30-1 property vests in the unit owners as tenants in common in 30-2 proportion to their respective interests, and liens on the units 30-3 shift accordingly. While the tenancy in common exists, a unit 30-4 owner and the owner's successors in interest have an exclusive 30-5 right to occupy the portion of the real property that formerly 30-6 constituted the owner's unit. 30-7 (e) Following termination of the condominium, and after 30-8 payment of or provision for the claims of the association's 30-9 creditors, the assets of the association shall be distributed to 30-10 unit owners in proportion to their respective interests. The 30-11 proceeds of sale described by Subsection (c) and held by the 30-12 association as trustee are not assets of the association. 30-13 (f) The interest of a unit owner referred to in Subsections 30-14 (c), (d), and (e) is, except as provided by Subsection (g), the 30-15 fair market value of the owner's unit, limited common elements, and 30-16 common element interest immediately before the termination, as 30-17 determined by one or more independent appraisers selected by the 30-18 association. The decision of the independent appraisers shall be 30-19 distributed to the unit owners and becomes final unless disapproved 30-20 by unit owners of units to which 25 percent of the votes in the 30-21 association are allocated not later than the 30th day after the 30-22 date of distribution. The proportion of a unit owner's interest to 30-23 that of all unit owners is determined by dividing the fair market 30-24 value of the unit owner's unit and common element interest by the 30-25 total fair market values of all the units and common elements. 30-26 (g) If a unit or a limited common element is destroyed to 30-27 the extent that an appraisal of the fair market value before the 31-1 destruction cannot be made, the interest of a unit owner is the 31-2 owner's common element interest immediately before the termination. 31-3 (h) Foreclosure or enforcement of a lien or encumbrance 31-4 against the entire condominium does not of itself terminate the 31-5 condominium, and foreclosure or enforcement of a lien or 31-6 encumbrance against a portion of the condominium does not withdraw 31-7 that portion from the condominium, unless the portion is 31-8 withdrawable real property or unless the mortgage being foreclosed 31-9 was recorded before the date the declaration was recorded and the 31-10 mortgagee did not consent in writing to the declaration. 31-11 (i) By agreement of the same percentage of unit owners that 31-12 is required to terminate the condominium, the unit owners may 31-13 rescind a termination agreement and reinstate the declaration in 31-14 effect immediately before the election to terminate. To be 31-15 effective, the rescission agreement must be in writing, executed by 31-16 the unit owners who desire to rescind, and recorded in each county 31-17 in which any portion of the condominium is located. 31-18 Sec. 82.069. RIGHTS OF SECURED LENDERS. The declaration may 31-19 require that all or a specified number or percentage of the 31-20 mortgagees or beneficiaries of deeds of trust encumbering the units 31-21 approve specified actions of the unit owners or the association as 31-22 a condition to the effectiveness of those actions, but a 31-23 requirement for approval may not operate to: 31-24 (1) deny or delegate control over the general 31-25 administrative affairs of the association by the unit owners or the 31-26 board; or 31-27 (2) prevent the association or the board from: 32-1 (A) commencing, intervening in, or settling any 32-2 litigation or proceeding; or 32-3 (B) receiving and distributing insurance 32-4 proceeds under Section 82.111. 32-5 (Sections 82.070 to 82.100 reserved for expansion 32-6 SUBCHAPTER C. CONDOMINIUM MANAGEMENT 32-7 Sec. 82.101. ORGANIZATION OF UNIT OWNERS' ASSOCIATION. A 32-8 unit owners' association must be organized as a profit or nonprofit 32-9 corporation. The declarant may not convey a unit until the 32-10 secretary of state has issued a certificate of incorporation under 32-11 Article 3.03, Texas Business Corporation Act, or Article 3.03, 32-12 Texas Non-Profit Corporation Act (Article 1396-3.03, Vernon's Texas 32-13 Civil Statutes). The membership of the association at all times 32-14 consists exclusively of all the unit owners or, following 32-15 termination of the condominium, all former unit owners entitled to 32-16 distribution of proceeds, or the owners' heirs, successors, or 32-17 assigns. 32-18 Sec. 82.102. POWERS OF UNIT OWNERS' ASSOCIATION. (a) 32-19 Unless otherwise provided by the declaration, the association, 32-20 acting through its board, may: 32-21 (1) adopt and amend bylaws; 32-22 (2) adopt and amend budgets for revenues, 32-23 expenditures, and reserves, and collect assessments for common 32-24 expenses from unit owners; 32-25 (3) hire and terminate managing agents and other 32-26 employees, agents, and independent contractors; 32-27 (4) institute, defend, intervene in, settle, or 33-1 compromise litigation or administrative proceedings in its own name 33-2 on behalf of itself or two or more unit owners on matters affecting 33-3 the condominium; 33-4 (5) make contracts and incur liabilities relating to 33-5 the operation of the condominium; 33-6 (6) regulate the use, maintenance, repair, 33-7 replacement, modification, and appearance of the condominium; 33-8 (7) adopt and amend rules regulating the use, 33-9 occupancy, leasing or sale, maintenance, repair, modification, and 33-10 appearance of units and common elements, to the extent the 33-11 regulated actions affect common elements or other units; 33-12 (8) cause additional improvements to be made as a part 33-13 of the common elements; 33-14 (9) acquire, hold, encumber, and convey in its own 33-15 name any right, title, or interest to real or personal property, 33-16 except common elements of the condominium; 33-17 (10) grant easements, leases, licenses, and 33-18 concessions through or over the common elements; 33-19 (11) impose and receive payments, fees, or charges for 33-20 the use, rental, or operation of the common elements and for 33-21 services provided to unit owners; 33-22 (12) impose interest and late charges for late 33-23 payments of assessments, returned check charges, and, if notice and 33-24 an opportunity to be heard are given, reasonable fines for 33-25 violations of the declaration, bylaws, and rules of the 33-26 association; 33-27 (13) adopt and amend rules regulating the collection 34-1 of delinquent assessments and the application of payments; 34-2 (14) adopt and amend rules regulating the termination 34-3 of utility service to a unit, the owner of which is delinquent in 34-4 the payment of an assessment that is used, in whole or in part, to 34-5 pay the cost of that utility; 34-6 (15) impose reasonable charges for preparing, 34-7 recording, or copying declaration amendments, resale certificates, 34-8 or statements of unpaid assessments; 34-9 (16) enter a unit for bona fide emergency purposes 34-10 when conditions present an imminent risk of harm or damage to the 34-11 common elements, another unit, or the occupants; 34-12 (17) assign its right to future income, including the 34-13 right to receive common expense assessments, but only to the extent 34-14 the declaration so provides; 34-15 (18) suspend the voting privileges of or the use of 34-16 certain general common elements by an owner delinquent for more 34-17 than 30 days in the payment of assessments; 34-18 (19) purchase insurance and fidelity bonds it 34-19 considers appropriate or necessary; 34-20 (20) exercise any other powers conferred by the 34-21 declaration or bylaws; 34-22 (21) exercise any other powers that may be exercised 34-23 in this state by a corporation of the same type as the association; 34-24 and 34-25 (22) exercise any other powers necessary and proper 34-26 for the government and operation of the association. 34-27 (b) The declaration may not impose limitations on the power 35-1 of the association to deal with the declarant that are more 35-2 restrictive than the limitations imposed on the power of the 35-3 association to deal with other persons. 35-4 (c) To be enforceable, a bylaw or rule of the association 35-5 must not be arbitrary or capricious. 35-6 (d) Before an association may charge the unit owner for 35-7 property damage for which the unit owner is liable or levy a fine 35-8 for violation of the declaration, bylaws, or rules, the association 35-9 shall give to the unit owner a written notice that: 35-10 (1) describes the violation or property damage and 35-11 states the amount of the proposed fine or damage charge; 35-12 (2) states that not later than the 30th day after the 35-13 date of the notice, the unit owner may request a hearing before the 35-14 board to contest the fine or damage charge; and 35-15 (3) allows the unit owner a reasonable time, by a 35-16 specified date, to cure the violation and avoid the fine unless the 35-17 unit owner was given notice and a reasonable opportunity to cure a 35-18 similar violation within the preceding 12 months. 35-19 (e) The association may give a copy of the notice required 35-20 by Subsection (d) to an occupant of the unit. The association must 35-21 give notice of a levied fine or damage charge to the unit owner not 35-22 later than the 30th day after the date of levy. 35-23 Sec. 82.103. BOARD MEMBERS AND OFFICERS. (a) Except as 35-24 provided by the declaration, bylaws, or this chapter, the board 35-25 shall act in all instances on behalf of the association if in the 35-26 good-faith judgment of the board the action is reasonable. Each 35-27 officer or member of the board is liable as a fiduciary of the unit 36-1 owners for the officer's or member's acts or omissions. All acts 36-2 of the association must be by and through the board unless 36-3 otherwise provided by the declaration or bylaws or by law. 36-4 (b) The board may not act on behalf of the association to 36-5 amend the declaration except as permitted by this chapter, to 36-6 terminate the condominium, to elect members of the board, or to 36-7 determine the qualifications, powers and duties, or terms of office 36-8 of board members. The board may fill a vacancy in its membership 36-9 for the unexpired portion of a term. 36-10 (c) Subject to Subsection (d), the declaration may provide 36-11 for a period of declarant control of the association during which a 36-12 declarant, or persons designated by the declarant, may appoint and 36-13 remove the officers and members of the board. Regardless of the 36-14 period provided by the declaration, a period of declarant control 36-15 terminates not later than the 120th day after conveyance of 75 36-16 percent of the units that may be created to unit owners other than 36-17 a declarant. Transfer of special declarant rights does not 36-18 terminate the period of declarant control. A declarant may 36-19 voluntarily surrender the right to appoint and remove officers and 36-20 members of the board before termination of the period, but in that 36-21 event the declarant may require, for the duration of the period 36-22 that the declarant would otherwise control, that specified actions 36-23 of the association or board be approved by the declarant before 36-24 they become effective. 36-25 (d) Not later than the 120th day after conveyance of 50 36-26 percent of the units that may be created to unit owners other than 36-27 a declarant, not less than one-third of the members of the board 37-1 must be elected by unit owners other than the declarant. 37-2 (e) Not later than the termination of a period of declarant 37-3 control, the unit owners shall elect a board of at least three 37-4 members who need not be unit owners. The board shall elect the 37-5 officers before the 31st day after the date declarant control 37-6 terminates. The persons elected shall take office on election. 37-7 (f) An officer or director of the association is not liable 37-8 to the association or any unit owner for monetary damages for an 37-9 act or omission occurring in the person's capacity as an officer or 37-10 director unless: 37-11 (1) the officer or director breached a fiduciary duty 37-12 to the association or a unit owner; 37-13 (2) the officer or director received an improper 37-14 benefit; or 37-15 (3) the act or omission was in bad faith, involved 37-16 intentional misconduct, or was one for which liability is expressly 37-17 provided by statute. 37-18 (g) Subsection (f) does not diminish a limitation of 37-19 liability provided an officer or director of the association by the 37-20 declaration, bylaws, articles of incorporation of the association, 37-21 or other laws. 37-22 Sec. 82.104. TRANSFER OF SPECIAL DECLARANT RIGHTS. (a) 37-23 Special declarant rights created or reserved under this chapter may 37-24 not be transferred except by an instrument evidencing the transfer 37-25 recorded in each county in which any portion of the condominium is 37-26 located. The instrument is not effective unless executed by the 37-27 transferee. 38-1 (b) On transfer of any special declarant right, a transferor 38-2 is not relieved of an obligation or liability arising before the 38-3 transfer. A transferor is not liable for an act or omission or a 38-4 breach of an obligation arising from the exercise of a special 38-5 declarant right by a successor declarant who is not an affiliate of 38-6 the transferor. 38-7 (c) Unless otherwise provided by a mortgage instrument or 38-8 deed of trust, in case of foreclosure of a mortgage, tax sale, 38-9 judicial sale, sale by a trustee under a deed of trust, or sale 38-10 under Bankruptcy Code or receivership proceedings, of a unit owned 38-11 by a declarant or of real property in a condominium subject to 38-12 development rights, a person acquiring title to all the real 38-13 property being foreclosed or sold may request to succeed to all 38-14 special declarant rights or only to rights reserved by the 38-15 declaration to maintain models, offices, and signs. The judgment 38-16 or instrument conveying title may provide for transfer of only the 38-17 special declarant rights requested. 38-18 (d) On foreclosure, tax sale, judicial sale, sale by a 38-19 trustee under a deed of trust, or sale under Bankruptcy Code or 38-20 receivership proceedings of all units and other real property in a 38-21 condominium owned by a declarant: 38-22 (1) the declarant ceases to have any special declarant 38-23 rights; and 38-24 (2) the period of declarant control terminates unless 38-25 the judgment or instrument conveying title provides for transfer of 38-26 all special declarant rights held by that declarant to a successor 38-27 declarant. 39-1 (e) The liabilities and obligations of a person who succeeds 39-2 to special declarant rights are as follows: 39-3 (1) a successor to a special declarant right who is an 39-4 affiliate of a declarant is subject to all obligations and 39-5 liabilities imposed on the transferor by this chapter or by the 39-6 declaration; 39-7 (2) a successor to a special declarant right, other 39-8 than a successor described by Subdivision (3) or (4), who is not an 39-9 affiliate of a declarant, is subject to all obligations and 39-10 liabilities imposed on the transferor by this chapter or by the 39-11 declaration; 39-12 (3) a successor to only a right reserved by the 39-13 declaration to maintain models, offices, and signs, who is not an 39-14 affiliate of a declarant, may not exercise any other special 39-15 declarant right, and is not subject to any liability or obligation 39-16 as a declarant, except the obligation to provide a condominium 39-17 information statement and any liability arising as a result; and 39-18 (4) a successor to all special declarant rights held 39-19 by the successor's transferor who is not an affiliate of that 39-20 declarant and who succeeded to those rights pursuant to a deed in 39-21 lieu of foreclosure or a judgment or instrument conveying title to 39-22 units under Subsection (c) may declare the person's intention in a 39-23 recorded instrument to hold those rights solely for transfer to 39-24 another person; thereafter, until all special declarant rights are 39-25 transferred to a person acquiring title to any unit owned by the 39-26 successor, or until an instrument permitting exercise of all those 39-27 rights is recorded, the successor may not exercise any of those 40-1 rights other than any right held by the successor's transferor to 40-2 control the board as provided by Section 82.103(c) for the duration 40-3 of the period of declarant control, and an attempt to exercise 40-4 those rights is void; so long as a successor declarant may not 40-5 exercise special declarant rights under this subdivision, the 40-6 successor is not subject to any liability or obligation as a 40-7 declarant other than liability for acts and omissions under Section 40-8 82.103(a). 40-9 (f) This section does not subject a successor to a special 40-10 declarant right to any claims against or other obligations of a 40-11 transferor declarant, other than claims and obligations arising 40-12 under this chapter or the declaration. 40-13 Sec. 82.105. TERMINATION OF CONTRACTS AND LEASES OF 40-14 DECLARANT. An association in a residential or recreational 40-15 condominium may terminate, without penalty, contracts or leases 40-16 between the association and a declarant or an affiliate of a 40-17 declarant if: 40-18 (1) the contract is entered into by the association 40-19 while controlled by the declarant; 40-20 (2) the association terminates the contract or lease 40-21 before the first anniversary of the date a board elected by the 40-22 unit owners takes office; and 40-23 (3) the association gives at least 90 days' notice of 40-24 its intent to terminate the contract or lease to the other party. 40-25 Sec. 82.106. BYLAWS. (a) The administration and operation 40-26 of the condominium are governed by the bylaws, which must provide 40-27 for: 41-1 (1) the number of members on the board and the titles 41-2 of the officers of the association; 41-3 (2) election by the board of a president, treasurer, 41-4 secretary, and any other officers the bylaws specify; 41-5 (3) the qualifications, powers and duties, terms of 41-6 office, and the manner of electing and removing a board member or 41-7 officer and filling vacancies; 41-8 (4) the powers, if any, that the board or an officer 41-9 may delegate to other persons or to a managing agent; 41-10 (5) the designation of officers who are authorized to 41-11 prepare, execute, certify, and record amendments to the declaration 41-12 on behalf of the association; 41-13 (6) the method of amending the bylaws; and 41-14 (7) the manner of notice of meetings of the 41-15 association. 41-16 (b) Subject to the declaration, the bylaws may provide for 41-17 other matters the association considers desirable, necessary, or 41-18 appropriate. 41-19 Sec. 82.107. UPKEEP OF CONDOMINIUM. (a) Except as provided 41-20 by the declaration or Subsections (b) and (c), the association is 41-21 responsible for maintenance, repair, and replacement of the common 41-22 elements, and each unit owner is responsible for maintenance, 41-23 repair, and replacement of the owner's unit. Each unit owner shall 41-24 afford to the association and the other unit owners, and to their 41-25 agents or employees, access through the owner's unit reasonably 41-26 necessary for those purposes. If damage is inflicted on the common 41-27 elements or on any unit through which access is taken, the unit 42-1 owner responsible for the damage, or the association if it is 42-2 responsible, is liable for the prompt repair of the damage. 42-3 (b) Except as provided by the declaration, each unit owner 42-4 is responsible for the cost of maintenance, repair, and replacement 42-5 of any utility installation or equipment serving only the owner's 42-6 unit, without regard to whether the installation or equipment is 42-7 located wholly or partially outside the designated boundaries of 42-8 the unit. For purposes of this subsection, utility installations 42-9 and equipment include electricity, water, sewage, gas, water 42-10 heaters, heating and air conditioning equipment, and television 42-11 antennas. 42-12 (c) Except as provided by the declaration, each unit owner 42-13 is responsible for the cost of maintenance, repair, and replacement 42-14 of windows and doors serving only the owner's unit. 42-15 (d) Unless otherwise provided by the declaration, the 42-16 association may enter a unit, after giving notice to the owner and 42-17 occupant of the unit, to: 42-18 (1) prevent or terminate waste of water purchased by 42-19 the association as a common expense; or 42-20 (2) perform maintenance and repairs of the condominium 42-21 that, if not performed, may result in increased damage by water to 42-22 components of the condominium that the association maintains. 42-23 Sec. 82.108. MEETINGS. (a) Meetings of the association 42-24 must be held at least once each year. Unless the declaration 42-25 provides otherwise, special meetings of the association may be 42-26 called by the president, a majority of the board, or unit owners 42-27 having at least 20 percent of the votes in the association. Notice 43-1 of a meeting shall be given in accordance with the bylaws. 43-2 (b) Meetings of the association and board must be open to 43-3 unit owners, subject to the right of the board to adjourn a meeting 43-4 of the board and reconvene in closed executive session to consider 43-5 actions involving personnel, pending litigation, contract 43-6 negotiations, enforcement actions, matters involving the invasion 43-7 of privacy of individual unit owners, or matters that are to remain 43-8 confidential by request of the affected parties and agreement of 43-9 the board. The general nature of any business to be considered in 43-10 executive session must first be announced at the open meeting. 43-11 (c) Unless the declaration, bylaws, or articles of 43-12 incorporation of the association provide otherwise: 43-13 (1) a meeting of the board may be held by any method 43-14 of communication, including electronic and telephonic, by which 43-15 each director may hear and be heard by every other director; and 43-16 (2) in lieu of a meeting, the board may act by 43-17 unanimous written consents of directors, to be filed with the 43-18 minutes of board meetings. 43-19 Sec. 82.109. QUORUMS. (a) Unless the bylaws provide 43-20 otherwise, a quorum is present throughout any meeting of the 43-21 association if persons entitled to cast at least 20 percent of the 43-22 votes that may be cast for election of the board are present in 43-23 person or by proxy at the beginning of the meeting. The bylaws may 43-24 not reduce the standard for a quorum to less than 10 percent. 43-25 (b) Unless the bylaws specify a larger percentage, a quorum 43-26 is present throughout a meeting of the board if persons entitled to 43-27 cast at least 50 percent of the votes on the board are present at 44-1 the beginning of the meeting. 44-2 Sec. 82.110. VOTING AND PROXIES. (a) If only one of the 44-3 multiple owners of a unit is present at a meeting of the 44-4 association, that person may cast the vote or votes allocated to 44-5 that unit. If more than one of the multiple owners is present, the 44-6 vote or votes allocated to that unit may be cast only in accordance 44-7 with the owners' unanimous agreement unless the declaration 44-8 provides otherwise. Multiple owners are in unanimous agreement if 44-9 one of the multiple owners casts the votes allocated to a unit and 44-10 none of the other owners makes prompt protest to the person 44-11 presiding over the meeting. 44-12 (b) Votes allocated to a unit may be cast under a written 44-13 proxy duly executed by a unit owner. If a unit is owned by more 44-14 than one person, each owner of the unit may vote or register 44-15 protest to the casting of votes by the other owners of the unit 44-16 through a proxy duly executed by the unit owner. A unit owner may 44-17 not revoke a proxy given under this section except by giving actual 44-18 notice of revocation to the person presiding over a meeting of the 44-19 association. A proxy is void if it is not dated or if it purports 44-20 to be revocable without notice. A proxy terminates one year after 44-21 its date unless it specifies a shorter or longer time. 44-22 (c) Cumulative voting is not allowed. 44-23 Sec. 82.111. INSURANCE. (a) Beginning not later than the 44-24 time of the first conveyance of a unit to a person other than a 44-25 declarant, the association shall maintain, to the extent reasonably 44-26 available: 44-27 (1) property insurance on the insurable common 45-1 elements insuring against all risks of direct physical loss 45-2 commonly insured against, including fire and extended coverage, in 45-3 a total amount of at least 80 percent of the replacement cost or 45-4 actual cash value of the insured property as of the effective date 45-5 and at each renewal date of the policy; and 45-6 (2) commercial general liability insurance, including 45-7 medical payments insurance, in an amount determined by the board 45-8 but not less than any amount specified by the declaration covering 45-9 all occurrences commonly insured against for death, bodily injury, 45-10 and property damage arising out of or in connection with the use, 45-11 ownership, or maintenance of the common elements. 45-12 (b) If a building contains units having horizontal 45-13 boundaries described in the declaration, the insurance maintained 45-14 under Subsection (a)(1), to the extent reasonably available, must 45-15 include the units, but need not include improvements and 45-16 betterments installed by unit owners. 45-17 (c) If the insurance described by Subsections (a) and (b) is 45-18 not reasonably available, the association shall cause notice of 45-19 that fact to be delivered or mailed to all unit owners and 45-20 lienholders. The declaration may require the association to carry 45-21 any other insurance, and the association in any event may carry any 45-22 other insurance the board considers appropriate to protect the 45-23 condominium, the association, or the unit owners. This section 45-24 does not affect the right of a holder of a mortgage on a unit to 45-25 require a unit owner to acquire insurance in addition to that 45-26 provided by the association. 45-27 (d) Insurance policies carried under Subsection (a) must 46-1 provide that: 46-2 (1) each unit owner is an insured person under the 46-3 policy with respect to liability arising out of the person's 46-4 ownership of an undivided interest in the common elements or 46-5 membership in the association; 46-6 (2) the insurer waives its right to subrogation under 46-7 the policy against a unit owner; 46-8 (3) no action or omission of a unit owner, unless 46-9 within the scope of the unit owner's authority on behalf of the 46-10 association, will void the policy or be a condition to recovery 46-11 under the policy; and 46-12 (4) if, at the time of a loss under the policy, there 46-13 is other insurance in the name of a unit owner covering the same 46-14 property covered by the policy, the association's policy provides 46-15 primary insurance. 46-16 (e) A claim for any loss covered by the policy under 46-17 Subsection (a)(1) must be submitted by and adjusted with the 46-18 association. The insurance proceeds for that loss shall be payable 46-19 to an insurance trustee designated by the association for that 46-20 purpose, if the designation of an insurance trustee is considered 46-21 by the board to be necessary or desirable, or otherwise to the 46-22 association, and not to any unit owner or lienholder. 46-23 (f) The insurance trustee or the association shall hold 46-24 insurance proceeds in trust for unit owners and lienholders as 46-25 their interests may appear. Subject to Subsection (i), the 46-26 proceeds paid under a policy must be disbursed first for the repair 46-27 or restoration of the damaged common elements and units, and unit 47-1 owners and lienholders are not entitled to receive payment of any 47-2 portion of the proceeds unless there is a surplus of proceeds after 47-3 the property has been completely repaired or restored, or the 47-4 condominium is terminated. 47-5 (g) An insurance policy issued to the association does not 47-6 prevent a unit owner from obtaining insurance for the owner's own 47-7 benefit. 47-8 (h) The insurer issuing the policy may not cancel or refuse 47-9 to renew it less than 30 days after written notice of the proposed 47-10 cancellation or nonrenewal has been mailed to the association. 47-11 (i) Any portion of the condominium for which insurance is 47-12 required that is damaged or destroyed shall be promptly repaired or 47-13 replaced by the association unless the condominium is terminated, 47-14 repair or replacement would be illegal under any state or local 47-15 health or safety statute or ordinance, or at least 80 percent of 47-16 the unit owners, including each owner of a unit or assigned limited 47-17 common element that will not be rebuilt or repaired, vote to not 47-18 rebuild. A vote to not rebuild does not increase an insurer's 47-19 liability to loss payment obligation under a policy, and the vote 47-20 does not cause a presumption of total loss. The cost of repair or 47-21 replacement in excess of the insurance proceeds and reserves is a 47-22 common expense. If the entire condominium is not repaired or 47-23 replaced, any insurance proceeds attributable to the damaged common 47-24 elements shall be used to restore the damaged area to a condition 47-25 compatible with the remainder of the condominium, the insurance 47-26 proceeds attributable to units and limited common elements that are 47-27 not rebuilt shall be distributed to the owners of those units and 48-1 the owners of the units to which those limited common elements were 48-2 assigned, or to their mortgagees, as their interests may appear, 48-3 and the remainder of the proceeds shall be distributed to all the 48-4 unit owners as their interests may appear. If the unit owners vote 48-5 to not rebuild any unit, that unit's allocated interests shall be 48-6 automatically reallocated on the vote as if the unit had been 48-7 condemned, and the association shall prepare, execute, and record 48-8 an amendment to the declaration reflecting the reallocation. 48-9 Section 82.068 governs the distribution of insurance proceeds if 48-10 the condominium is terminated. 48-11 (j) The provisions of this section may be varied or waived 48-12 if all the units in a condominium are restricted to nonresidential 48-13 use. 48-14 Sec. 82.112. ASSESSMENTS FOR COMMON EXPENSES. (a) Until an 48-15 association makes a common expense assessment, a declarant shall 48-16 pay all the expenses of the condominium as the expenses accrue. 48-17 After an initial assessment by an association, assessments must be 48-18 made at least annually and must be based on a budget adopted at 48-19 least annually by the association. The association's reserves and 48-20 the unit owners' working capital contributions may not be used to 48-21 pay operational expenses until the declarant control terminates. 48-22 (b) From the date of the initial assessment until declarant 48-23 control terminates, or three years from a declarant's first 48-24 conveyance of a unit, whichever is earlier, the declarant shall 48-25 periodically pay to the association: 48-26 (1) an amount equal to all operational expenses of the 48-27 association, less the operational expense portion of the 49-1 assessments paid by unit owners other than declarant; or 49-2 (2) the common expense liability allocated to each 49-3 unit owned by the declarant. 49-4 (c) Common expenses shall be assessed against all units 49-5 conveyed, rented, or used as models or offices by the declarant and 49-6 against all units owned by a declarant after termination of a 49-7 declarant's control or three years from a declarant's first 49-8 conveyance of a unit, whichever is earlier, in accordance with the 49-9 common expense liability allocated to each unit. A past due 49-10 assessment or installment of an assessment may bear interest at a 49-11 lawful rate established by the association. 49-12 (d) Except as provided by the declaration and Section 49-13 82.107, a common expense for the maintenance, repair, or 49-14 replacement of a limited common element shall be assessed against 49-15 all the units as if it were for a general common element. 49-16 (e) If common expense liabilities are reallocated, common 49-17 expense assessments and an assessment installment not yet due shall 49-18 be recomputed in accordance with the reallocated common expense 49-19 liabilities. 49-20 (f) A declaration may allow the accumulation of reserve 49-21 funds for an unspecified period to provide for any anticipated 49-22 expense of the condominium. 49-23 (g) This section does not prevent a declarant from 49-24 collecting from a purchaser at closing the prorated amount of any 49-25 expenses, such as insurance or taxes, that the declarant has 49-26 prepaid to the association or directly to others on behalf of the 49-27 unit that is being purchased. 50-1 Sec. 82.113. ASSOCIATION'S LIEN FOR ASSESSMENTS. (a) An 50-2 assessment levied by the association against a unit or unit owner 50-3 is a personal obligation of the unit owner and is secured by a 50-4 continuing lien on the unit and on rents and insurance proceeds 50-5 received by the unit owner and relating to the owner's unit. In 50-6 this section, "assessments" means regular and special assessments, 50-7 dues, fees, charges, interest, late fees, fines, collection costs, 50-8 attorney's fees, and any other amount due to the association by the 50-9 unit owner or levied against the unit by the association, all of 50-10 which are enforceable as assessments under this section unless the 50-11 declaration provides otherwise. 50-12 (b) The association's lien for assessments has priority over 50-13 any other lien except: 50-14 (1) a lien for real property taxes and other 50-15 governmental assessments or charges against the unit unless 50-16 otherwise provided by Section 32.05, Tax Code; 50-17 (2) a lien or encumbrance recorded before the 50-18 declaration is recorded; 50-19 (3) a first vendor's lien or first deed of trust lien 50-20 recorded before the date on which the assessment sought to be 50-21 enforced becomes delinquent under the declaration, bylaws, or 50-22 rules; and 50-23 (4) unless the declaration provides otherwise, a lien 50-24 for construction of improvements to the unit or an assignment of 50-25 the right to insurance proceeds on the unit if the lien or 50-26 assignment is recorded or duly perfected before the date on which 50-27 the assessment sought to be enforced becomes delinquent under the 51-1 declaration, bylaws, or rules. 51-2 (c) The association's lien for assessments is created by 51-3 recordation of the declaration, which constitutes record notice and 51-4 perfection of the lien. Unless the declaration provides otherwise, 51-5 no other recordation of a lien or notice of lien is required. 51-6 (d) By acquiring a unit, a unit owner grants to the 51-7 association a power of sale in connection with the association's 51-8 lien. By written resolution, a board may appoint, from time to 51-9 time, an officer, agent, trustee, or attorney of the association to 51-10 exercise the power of sale on behalf of the association. Except as 51-11 provided by the declaration, an association shall exercise its 51-12 power of sale pursuant to Section 51.002. 51-13 (e) The association has the right to foreclose its lien 51-14 judicially or by nonjudicial foreclosure pursuant to the power of 51-15 sale created by this chapter or the declaration, except that the 51-16 association may not foreclose a lien for assessments consisting 51-17 solely of fines. Costs of foreclosure may be added to the amount 51-18 owed by the unit owner to the association. A unit owner may not 51-19 petition a court to set aside a sale solely because the purchase 51-20 price at the foreclosure sale was insufficient to fully satisfy the 51-21 owner's debt. 51-22 (f) The association may bid for and purchase the unit at 51-23 foreclosure sale as a common expense. The association may own, 51-24 lease, encumber, exchange, sell, or convey a unit. 51-25 (g) The owner of a unit used for residential purposes and 51-26 purchased by an association at a foreclosure sale of the 51-27 association's lien for assessments may redeem the unit not later 52-1 than the 90th day after the date of the foreclosure sale. To 52-2 redeem the unit, the owner must pay to the association all amounts 52-3 due the association at the time of the foreclosure sale, interest 52-4 from the date of foreclosure sale to the date of redemption at the 52-5 rate provided by the declaration for delinquent assessments, 52-6 reasonable attorney's fees and costs incurred by the association in 52-7 foreclosing the lien, any assessment levied against the unit by the 52-8 association after the foreclosure sale, and any reasonable cost 52-9 incurred by the association as owner of the unit, including costs 52-10 of maintenance and leasing. On redemption, the association shall 52-11 execute a deed to the redeeming unit owner. The exercise of the 52-12 right of redemption is not effective against a subsequent purchaser 52-13 or lender for value without notice of the redemption after the 52-14 redemption period expires unless the redeeming unit owner records 52-15 the deed from the association or an affidavit stating that the 52-16 owner has exercised the right of redemption. A unit that has been 52-17 redeemed remains subject to all liens and encumbrances on the unit 52-18 before foreclosure. All rents and other income collected from the 52-19 unit by the association from the date of foreclosure sale to the 52-20 date of redemption belong to the association, but the rents and 52-21 income shall be credited against the redemption amount. An 52-22 association purchasing a unit at a sale foreclosing its lien may 52-23 not transfer ownership of the unit during the redemption period to 52-24 a person other than a redeeming owner. 52-25 (h) If a unit owner defaults in the owner's monetary 52-26 obligations to the association, the association may notify other 52-27 lien holders of the default and the association's intent to 53-1 foreclose its lien. The association shall notify any holder of a 53-2 recorded lien or duly perfected mechanic's lien against a unit who 53-3 has given the association a written request for notification of the 53-4 unit owner's monetary default or the association's intent to 53-5 foreclose its lien. 53-6 (i) This section does not prohibit the association from 53-7 taking a deed in lieu of foreclosure or from filing suit to recover 53-8 a money judgment for sums that may be secured by the lien. 53-9 (j) At any time before a nonjudicial foreclosure sale, a 53-10 unit owner may avoid foreclosure by paying all amounts due the 53-11 association. 53-12 (k) If, on January 1, 1994, a unit is the homestead of the 53-13 unit owner and is subject to a declaration that does not contain a 53-14 valid assessment lien against the unit, the lien provided by this 53-15 section does not attach against the unit until the unit ceases to 53-16 be the homestead of the person owning it on January 1, 1994. 53-17 (l) Foreclosure of a tax lien attaching against a unit under 53-18 Chapter 32, Tax Code, does not discharge the association's lien for 53-19 assessments under this section or under a declaration for amounts 53-20 becoming due to the association after the date of foreclosure of 53-21 the tax lien. 53-22 (m) If a unit owner is delinquent in payment of assessments 53-23 to an association, at the request of the association a holder of a 53-24 recorded lien against the unit may provide the association with 53-25 information about the unit owner's debt secured by the holder's 53-26 lien against the unit and other relevant information. At the 53-27 request of a lien holder, the association may furnish the lien 54-1 holder with information about the condominium and the unit owner's 54-2 obligations to the association. 54-3 Sec. 82.114. ASSOCIATION RECORDS. (a) The association 54-4 shall keep: 54-5 (1) detailed financial records that comply with 54-6 generally accepted accounting principles and that are sufficiently 54-7 detailed to enable the association to prepare a resale certificate 54-8 under Section 82.157; 54-9 (2) the plans and specifications used to construct the 54-10 condominium except for buildings originally constructed before 54-11 January 1, 1994; 54-12 (3) the condominium information statement prepared 54-13 under Section 82.152 and any amendments; 54-14 (4) the name and mailing address of each unit owner; 54-15 (5) voting records, proxies, and correspondence 54-16 relating to amendments to the declaration; and 54-17 (6) minutes of meetings of the association and board. 54-18 (b) All financial and other records of the association shall 54-19 be reasonably available at its registered office or its principal 54-20 office in this state for examination by a unit owner and the 54-21 owner's agents. An attorney's files and records relating to the 54-22 association are not records of the association and are not subject 54-23 to inspection by unit owners or production in a legal proceeding. 54-24 (c) The association shall, as a common expense, annually 54-25 obtain an independent audit of the records. Copies of the audit 54-26 must be made available to the unit owners. An audit required by 54-27 this subsection shall be performed by a certified public accountant 55-1 if required by the bylaws or a vote of the board of directors or a 55-2 majority vote of the members of the association voting at a meeting 55-3 of the association. 55-4 (d) A declarant shall furnish copies to the association of 55-5 the information required by Subsection (a) on the date the first 55-6 unit is sold. 55-7 (e) Not later than the 30th day after the date of acquiring 55-8 an interest in a unit, the unit owner shall provide the association 55-9 with: 55-10 (1) the unit owner's mailing address, telephone 55-11 number, and driver's license number, if any; 55-12 (2) the name and address of the holder of any lien 55-13 against the unit, and any loan number; 55-14 (3) the name and telephone number of any person 55-15 occupying the unit other than the unit owner; and 55-16 (4) the name, address, and telephone number of any 55-17 person managing the unit as agent of the unit owner. 55-18 (f) A unit owner shall notify the association not later than 55-19 the 30th day after the date the owner has notice of a change in any 55-20 information required by Subsection (e), and shall provide the 55-21 information on request by the association from time to time. 55-22 Sec. 82.115. ASSOCIATION AS TRUSTEE. A third person dealing 55-23 with an association in the association's capacity as a trustee may 55-24 assume without inquiry the existence of trust powers and their 55-25 proper exercise by the association. A third person who lacks 55-26 actual knowledge that an association is exceeding or improperly 55-27 exercising its powers is fully protected in dealing with the 56-1 association as if the association possessed and properly exercised 56-2 the powers it purports to exercise. A third person is not bound to 56-3 ensure the proper application of trust assets paid or delivered to 56-4 an association in its capacity as trustee. 56-5 Sec. 82.116. MANAGEMENT CERTIFICATE. (a) An association 56-6 shall record in each county in which any portion of the condominium 56-7 is located a certificate, signed and acknowledged by an officer of 56-8 the association, stating: 56-9 (1) the name of the condominium; 56-10 (2) the name of the association; 56-11 (3) the location of the condominium; 56-12 (4) the recording data for the declaration; 56-13 (5) the mailing address of the association, or the 56-14 name and mailing address of the person or entity managing the 56-15 association; and 56-16 (6) other information the association considers 56-17 appropriate. 56-18 (b) The association shall record a management certificate 56-19 not later than the 30th day after the date the association has 56-20 notice of a change in any information in a recorded certificate 56-21 required by Subdivisions (a)(1)-(5). 56-22 (c) The association and its officers, directors, employees, 56-23 and agents are not subject to liability to any person for delay or 56-24 failure to record a management certificate, unless the delay or 56-25 failure is wilful or caused by gross negligence. 56-26 Sec. 82.117. OBLIGATIONS OF UNIT OWNERS. Without limiting 56-27 the obligations of the unit owners and except as provided by the 57-1 declaration, bylaws, rules of the association, or this chapter, the 57-2 unit owner: 57-3 (1) shall pay assessments, interest, and other charges 57-4 properly levied by the association against the owner or the owner's 57-5 unit, and shall pay regular periodic assessments without demand by 57-6 the association; 57-7 (2) shall comply with the declaration, bylaws, and 57-8 rules of the association, including any amendments; 57-9 (3) shall pay for damage to the condominium caused by 57-10 the negligence or wilful misconduct of the owner, an occupant of 57-11 the owner's unit, or the owner or occupant's family, guests, 57-12 employees, contractors, agents, or invitees; and 57-13 (4) is liable to the association for violations of the 57-14 declaration, bylaws, or rules of the association, including any 57-15 amendments, by the owner, an occupant of the owner's unit, or the 57-16 owner or occupant's family, guests, employees, agents, or invitees, 57-17 and for costs incurred by the association to obtain compliance, 57-18 including attorney's fees whether or not suit is filed. 57-19 (Sections 82.118 to 82.150 reserved for expansion 57-20 SUBCHAPTER D. PROTECTION OF PURCHASERS 57-21 Sec. 82.151. APPLICABILITY. (a) This subchapter applies to 57-22 each unit subject to this chapter, except as provided by Subsection 57-23 (b) or as modified or waived by the agreement of a purchaser of a 57-24 unit in a condominium in which all units are restricted to 57-25 nonresidential use. 57-26 (b) A condominium information statement or resale 57-27 certificate need not be prepared or delivered in the case of: 58-1 (1) a gratuitous disposition of a unit; 58-2 (2) a disposition pursuant to court order; 58-3 (3) a disposition by a government or governmental 58-4 agency; 58-5 (4) a disposition by foreclosure or deed in lieu of 58-6 foreclosure; or 58-7 (5) a disposition that may be canceled at any time, 58-8 for any reason, and without penalty. 58-9 Sec. 82.152. LIABILITY FOR CONDOMINIUM INFORMATION 58-10 STATEMENT. (a) Except as provided by Subsection (b), a declarant 58-11 shall prepare a condominium information statement before offering 58-12 to the public any interest in a unit. 58-13 (b) A declarant may transfer responsibility for preparation 58-14 of all or a part of the condominium information statement to a 58-15 successor declarant or to a person in the business of selling real 58-16 property who intends to offer units in the condominium for the 58-17 person's own account. On such transfer, the transferor shall 58-18 provide the transferee with any information necessary to enable the 58-19 transferee to prepare a condominium information statement. 58-20 (c) A declarant or other person in the business of selling 58-21 real property who offers a unit for the person's own account to a 58-22 purchaser shall provide a purchaser of a unit with a copy of the 58-23 condominium information statement, as amended, before conveyance of 58-24 the unit or the date of a contract of sale, whichever is earlier. 58-25 (d) The person preparing all or part of the condominium 58-26 information statement is liable for any false or misleading 58-27 statement or for any omission of material fact in the portion of 59-1 the condominium information statement that the person prepared. If 59-2 a declarant did not prepare any part of a condominium information 59-3 statement that the declarant delivers, the declarant is not liable 59-4 for any false or misleading statement or any omission of material 59-5 fact unless the declarant actually knew or should have known of the 59-6 statement or omission. 59-7 Sec. 82.153. CONDOMINIUM INFORMATION STATEMENTS IN GENERAL. 59-8 (a) A condominium information statement must contain or accurately 59-9 disclose: 59-10 (1) the name and principal address of the declarant 59-11 and of the condominium; 59-12 (2) a general description of the condominium that 59-13 includes the types of units and the maximum number of units; 59-14 (3) the minimum and maximum number of additional 59-15 units, if any, that may be included in the condominium; 59-16 (4) a brief narrative description of any development 59-17 rights reserved by a declarant and of any conditions relating to or 59-18 limitations upon the exercise of development rights; 59-19 (5) copies of the declaration, articles of 59-20 incorporation of the association, the bylaws, any rules of the 59-21 association, and amendments to any of them, and copies of leases 59-22 and contracts, other than loan documents, that are required by the 59-23 declarant to be signed by purchasers at closing; 59-24 (6) a projected or pro forma budget for the 59-25 association that complies with Subsection (b) for the first fiscal 59-26 year of the association following the date of the first conveyance 59-27 to a purchaser, identification of the person who prepared the 60-1 budget, and a statement of the budget's assumptions concerning 60-2 occupancy and inflation factors; 60-3 (7) a general description of each lien, lease, or 60-4 encumbrance on or affecting the title to the condominium after 60-5 conveyance by the declarant; 60-6 (8) a copy of each written warranty provided by the 60-7 declarant; 60-8 (9) a description of any unsatisfied judgments against 60-9 the association and any pending suits to which the association is a 60-10 party or which are material to the land title and construction of 60-11 the condominium of which a declarant has actual knowledge; 60-12 (10) a general description of the insurance coverage 60-13 provided for the benefit of unit owners; and 60-14 (11) current or expected fees or charges to be paid by 60-15 unit owners for the use of the common elements and other facilities 60-16 related to the condominium. 60-17 (b) A budget under Subsection (a)(6) must be prepared in 60-18 accordance with generally accepted accounting principles and a 60-19 consideration of the physical condition of the condominium and be 60-20 based on assumptions that, to the best of the declarant's knowledge 60-21 and belief, are reasonable. The budget must include: 60-22 (1) a statement of the amount included, or a statement 60-23 that no amount is included, in the budget as a reserve; and 60-24 (2) the projected monthly common expense assessment 60-25 for each type of unit. 60-26 (c) A declarant shall promptly amend the condominium 60-27 information statement to reflect a material and substantial change 61-1 in its contents. If the change may adversely affect a prospective 61-2 purchaser who has received a condominium information statement, the 61-3 declarant shall furnish a copy of the amendment to the prospective 61-4 purchaser before closing. 61-5 Sec. 82.154. CONDOMINIUMS WITH CONVERSION BUILDINGS. If a 61-6 building contains units that may be occupied for residential use, 61-7 the condominium information statement of a condominium containing 61-8 any conversion building must additionally contain: 61-9 (1) a dated statement by the declarant, based on a 61-10 report by an independent architect or engineer, describing the 61-11 present condition of all structural components and mechanical and 61-12 electrical installations material to the use and enjoyment of the 61-13 building; 61-14 (2) a dated statement by the declarant of the expected 61-15 useful life of each item reported in Subdivision (1) or a statement 61-16 that no representations are made in that regard; and 61-17 (3) a list of violations of building code or other 61-18 governmental regulations of which the declarant has received notice 61-19 and that have not been cured, together with the estimated cost of 61-20 curing those violations. 61-21 Sec. 82.155. CONDOMINIUM SECURITIES. A declarant satisfies 61-22 all requirements relating to preparation of a condominium 61-23 information statement if an interest in the condominium is 61-24 currently registered with the Securities and Exchange Commission of 61-25 the United States and if the declarant delivers to the purchaser a 61-26 copy of the public offering statement filed with the commission. 61-27 Sec. 82.156. PURCHASER'S RIGHT TO CANCEL. (a) If a 62-1 purchaser of a unit from a unit owner other than a declarant has 62-2 not received from the seller the declaration, bylaws, and 62-3 association rules required by Section 82.157 before the purchaser 62-4 executes a contract of sale or if the contract does not contain an 62-5 underlined or bold-print provision acknowledging the purchaser's 62-6 receipt of those documents and recommending that the purchaser read 62-7 those documents before executing the contract, the purchaser may 62-8 cancel the contract before the sixth day after the date the 62-9 purchaser receives those documents. If a purchaser has not 62-10 received a resale certificate before executing a contract of sale, 62-11 the purchaser may cancel the contract before the sixth day after 62-12 the date the purchaser receives the resale certificate or executes 62-13 a waiver under Section 82.157, whichever occurs first. 62-14 (b) If a purchaser from a declarant has not received the 62-15 condominium information statement before the purchaser executes a 62-16 contract of sale or if a contract does not contain an underlined or 62-17 bold-print provision acknowledging the purchaser's receipt of the 62-18 condominium information statement and recommending that the 62-19 purchaser read the condominium information statement before 62-20 executing the contract, the purchaser may cancel the contract 62-21 before the sixth day after the date the purchaser receives the 62-22 condominium information statement. 62-23 (c) If a purchaser elects to cancel a contract under 62-24 Subsection (a) or (b), the cancellation must be by hand-delivering 62-25 written notice of cancellation to the declarant or selling unit 62-26 owner or by mailing notice of cancellation by certified United 62-27 States mail, return receipt requested, to the offeror or the 63-1 offeror's agent for service of process within the five-day 63-2 cancellation period. Cancellation is without penalty, and all 63-3 payments made by the purchaser before cancellation must be 63-4 refunded. 63-5 (d) A selling unit owner may not require a purchaser to 63-6 close until the purchaser is given the declaration, bylaws, and any 63-7 association rules. A declarant may not require a purchaser to 63-8 close until a condominium information statement has been furnished 63-9 to the purchaser. 63-10 Sec. 82.157. RESALE OF UNIT. (a) Except as provided by 63-11 Subsection (c), if a unit owner other than a declarant intends to 63-12 sell a unit, before executing a contract or conveying the unit, the 63-13 unit owner must furnish to the purchaser a current copy of the 63-14 declaration, bylaws, any association rules, and a resale 63-15 certificate that must have been prepared not earlier than three 63-16 months before the date it is delivered to the purchaser. The 63-17 resale certificate must be issued by the association and must 63-18 contain the current operating budget of the association and 63-19 statements of: 63-20 (1) any right of first refusal or other restraint 63-21 contained in the declaration that restricts the right to transfer a 63-22 unit; 63-23 (2) the amount of the periodic common expense 63-24 assessment and the unpaid common expenses or special assessments 63-25 currently due and payable from the selling unit owner; 63-26 (3) other unpaid fees or amounts payable to the 63-27 association by the selling unit owner; 64-1 (4) capital expenditures, if any, approved by the 64-2 association for the next 12 months; 64-3 (5) the amount of reserves, if any, for capital 64-4 expenditures and of portions of those reserves designated by the 64-5 association for a specified project; 64-6 (6) any unsatisfied judgments against the association; 64-7 (7) the nature of any pending suits against the 64-8 association; 64-9 (8) insurance coverage provided for the benefit of 64-10 unit owners; 64-11 (9) whether the board has knowledge that any 64-12 alterations or improvements to the unit or to the limited common 64-13 elements assigned to that unit violate the declaration, bylaws, or 64-14 association rules; 64-15 (10) whether the board has received notice from a 64-16 governmental authority concerning violations of health or building 64-17 codes with respect to the unit, the limited common elements 64-18 assigned to that unit, or any other portion of the condominium; 64-19 (11) the remaining term of any leasehold estate that 64-20 affects the condominium and the provisions governing an extension 64-21 or renewal of the lease; and 64-22 (12) the name, mailing address, and telephone number 64-23 of the association's managing agent, if any. 64-24 (b) Not later than the 10th day after the date of receiving 64-25 a written request by a unit owner, an association shall furnish to 64-26 the selling unit owner or the owner's agent a resale certificate 64-27 signed and dated by an officer or authorized agent of the 65-1 association containing the information required by Subsection (a). 65-2 A selling unit owner or the owner's agent is not liable to the 65-3 purchaser for erroneous information provided by the association in 65-4 the certificate. If an association does not furnish a resale 65-5 certificate or any information required in the certificate within 65-6 the 10-day period, the unit owner may provide the purchaser with a 65-7 sworn affidavit signed by the unit owner in lieu of the 65-8 certificate. An affidavit must state that the unit owner requested 65-9 information from the association concerning its financial 65-10 condition, as required by this section, and that the association 65-11 did not timely provide a resale certificate or the information 65-12 required in the certificate. If a unit owner has furnished an 65-13 affidavit to a purchaser, the unit owner and the purchaser may 65-14 agree in writing to waive the requirement to furnish a resale 65-15 certificate. The association is not liable to a selling unit owner 65-16 for delay or failure to furnish a resale certificate, and an 65-17 officer or agent of the association is not liable for a delay or 65-18 failure to furnish a certificate unless the officer or agent 65-19 wilfully refuses to furnish the certificate or is grossly negligent 65-20 in not furnishing the resale certificate. Failure to provide a 65-21 resale certificate does not void a deed to a purchaser. 65-22 (c) If a properly executed resale certificate incorrectly 65-23 states the total of delinquent sums owed by the selling unit owner 65-24 to the association, the purchaser is not liable for payment of 65-25 additional delinquencies that are unpaid on the date the 65-26 certificate is prepared and that exceed the total sum stated in the 65-27 certificate. A unit owner or the owner's agent is not liable to a 66-1 purchaser for the failure or delay of the association to provide 66-2 the certificate in a timely manner. 66-3 (d) A resale certificate does not affect: 66-4 (1) an association's right to recover debts or claims 66-5 that arise or become due after the date the certificate is 66-6 prepared; or 66-7 (2) an association's lien on a unit securing payment 66-8 of future assessments. 66-9 (e) A purchaser, lender, or title insurer who relies on a 66-10 resale certificate is not liable for any debt or claim that is not 66-11 disclosed in the certificate. An association may not deny the 66-12 validity of any statement in the certificate. 66-13 Sec. 82.158. ESCROW OF DEPOSITS. A deposit made in 66-14 connection with the purchase or reservation of a unit from a 66-15 declarant shall be placed in escrow and held in this state in an 66-16 account designated for that purpose by a real estate broker, an 66-17 attorney, a title insurance company licensed in this state, an 66-18 independent bonded escrow company, or an institution whose accounts 66-19 are insured by a governmental agency or instrumentality until 66-20 delivered to the declarant at closing, delivered to the declarant 66-21 because of the purchaser's default under a contract to purchase the 66-22 unit, or refunded to the purchaser. Escrow deposits may be placed 66-23 in interest-bearing accounts, and the interest is payable as may be 66-24 agreed in writing between the declarant and the purchaser. 66-25 Sec. 82.159. RELEASE OF LIENS. Before conveying real 66-26 property to an association, a declarant shall have that real 66-27 property released from all liens the foreclosure of which would 67-1 deprive unit owners of any right of access to or easement of 67-2 support of the owners' units, and all other liens on that real 67-3 property unless the condominium information statement describes 67-4 certain real property that may be conveyed subject to liens in 67-5 specified amounts. 67-6 Sec. 82.160. CONVERSION BUILDINGS. (a) A declarant of a 67-7 condominium containing a conversion building shall give each 67-8 residential tenant or subtenant in possession of a portion of a 67-9 conversion building notice of the conversion at least 60 days 67-10 before the date the declarant will require the tenant or subtenant 67-11 in possession to vacate. The notice must state generally the 67-12 rights of tenants and subtenants under this section and shall be 67-13 hand-delivered to the unit or mailed by certified United States 67-14 mail, return receipt requested, to the tenant or subtenant at the 67-15 address of the unit or any other mailing address provided by the 67-16 tenant or subtenant. The declarant may not require a tenant or 67-17 subtenant to vacate on less than 60 days' notice, except for 67-18 nonpayment of rent, waste, or conduct that violates the rental 67-19 agreement or is illegal, and the terms of a tenancy may not be 67-20 altered during that period. Failure of a declarant to give notice 67-21 as required by this section is a defense to an action for 67-22 possession. 67-23 (b) If a notice of conversion specifies a date by which a 67-24 unit or proposed unit must be vacated and otherwise complies with 67-25 Section 24.005, the notice also constitutes legal notice to vacate 67-26 on that date for purposes of Section 24.005. A declarant may not 67-27 terminate a lease in violation of its terms. 68-1 (c) Unless expressly authorized by a rental agreement, a 68-2 declarant may not make substantial alterations to the interior of a 68-3 leased premises for purposes of a condominium conversion. 68-4 Sec. 82.161. EFFECT OF VIOLATIONS ON RIGHTS OF ACTION AND 68-5 ATTORNEY'S FEES. (a) If a declarant or any other person subject 68-6 to this chapter violates this chapter, the declaration, or the 68-7 bylaws, any person or class of persons adversely affected by the 68-8 violation has a claim for appropriate relief. 68-9 (b) The prevailing party in an action to enforce the 68-10 declaration, bylaws, or rules is entitled to reasonable attorney's 68-11 fees and costs of litigation from the nonprevailing party. 68-12 Sec. 82.162. LABELING OF PROMOTIONAL MATERIAL. If any 68-13 improvement contemplated in a condominium is labeled "NEED NOT BE 68-14 BUILT" on a plat or plan or is to be located within a portion of a 68-15 condominium with respect to which the declarant has reserved a 68-16 development right, no promotional material that describes or 68-17 depicts the improvement may be displayed or delivered to 68-18 prospective purchasers unless the description or depiction of the 68-19 improvement is conspicuously labeled or identified as "NEED NOT BE 68-20 BUILT." 68-21 Sec. 82.163. DECLARANT'S OBLIGATION TO COMPLETE AND RESTORE. 68-22 The declarant shall complete all improvements labeled "MUST BE 68-23 BUILT" on plats or plans. The declarant is subject to liability 68-24 for the prompt repair and restoration, to a condition compatible 68-25 with the remainder of the condominium, of any portion of the 68-26 condominium affected by the exercise of rights reserved pursuant to 68-27 or created under this chapter. 69-1 Sec. 82.164. LOANS AS ELIGIBLE INVESTMENTS. (a) A loan on 69-2 a condominium unit and the undivided interest in the common 69-3 elements is an eligible investment for a bank, savings and loan 69-4 association, trust company, life insurance company, or other 69-5 lending institution that is authorized to make real property loans, 69-6 and for an administrator, guardian, executor, trustee, individual, 69-7 partnership, corporation, or other fiduciary that is authorized to 69-8 make real property loans. In determining eligibility, the 69-9 existence of a prior lien for taxes, assessments, or other similar 69-10 charges not yet delinquent may not be considered in determining 69-11 whether a mortgage or deed of trust on the security is a first 69-12 lien. This section does not change any provision of law that would 69-13 otherwise be applicable that limits mortgage investments based on a 69-14 special fraction or percentage of the value of the mortgaged 69-15 property. 69-16 (b) An association's lien for assessments does not make a 69-17 condominium unit ineligible for loans for which the unit would 69-18 otherwise qualify. 69-19 SECTION 2. The heading to Chapter 81, Property Code, is 69-20 amended to read as follows: 69-21 CHAPTER 81. CONDOMINIUMS CREATED 69-22 BEFORE ADOPTION OF UNIFORM CONDOMINIUM ACT 69-23 SECTION 3. Subchapter A, Chapter 81, Property Code, is 69-24 amended by adding Section 81.0011 to read as follows: 69-25 Sec. 81.0011. APPLICABILITY. (a) This chapter applies only 69-26 to a condominium regime created before January 1, 1994. A 69-27 condominium regime created on or after January 1, 1994, is governed 70-1 by Chapter 82. 70-2 (b) A condominium regime created before January 1, 1994, to 70-3 which this chapter applies is also governed by Chapter 82 as 70-4 provided by Section 82.002. 70-5 SECTION 4. This Act takes effect January 1, 1994. 70-6 SECTION 5. The importance of this legislation and the 70-7 crowded condition of the calendars in both houses create an 70-8 emergency and an imperative public necessity that the 70-9 constitutional rule requiring bills to be read on three several 70-10 days in each house be suspended, and this rule is hereby suspended.