BILL ANALYSIS
H.B. 1661
By: Turner, S. (Ellis)
Jurisprudence
5-17-95
Senate Committee Report (Unamended)
BACKGROUND
The National Conference of Commissioners on Uniform State Laws made
several recommendations regarding statutory reform of common law
concerning unincorporated, nonprofit associations in three basic
areas: authority to acquire, hold, and transfer property,
especially real property; authority to sue and be sued as an
entity; and contract and tort liability of officers and members of
the association.
PURPOSE
As proposed, H.B. 1661 creates the Uniform Unincorporated Nonprofit
Association Act setting forth the regulations regarding the
acquisition, holding, encumbrance, and transfer of real and
personal property by a nonprofit association.
RULEMAKING AUTHORITY
It is the committee's opinion that rulemaking authority is granted
to the secretary of state under SECTION 12(g) of this bill.
SECTION BY SECTION ANALYSIS
SECTION 1. SHORT TITLE: Texas Uniform Unincorporated Nonprofit
Association Act.
SECTION 2. DEFINITIONS. Defines "member," "nonprofit association,"
"person," and "state."
SECTION 3. SUPPLEMENTARY GENERAL PRINCIPLES OF LAW AND EQUITY.
Provides that principles of law and equity supplement this Act
unless displaced by a particular provision of it.
SECTION 4. TERRITORIAL APPLICATION. Authorizes real and personal
property in this state to be acquired, held, encumbered, and
transferred by a nonprofit association (nonprofit).
SECTION 5. REAL AND PERSONAL PROPERTY; NONPROFIT ASSOCIATION AS
BENEFICIARY. (a) Authorizes a nonprofit in its name to acquire,
hold, encumber, or transfer an estate or interest in real or
personal property.
(b) Authorizes a nonprofit to be a beneficiary of a trust,
contract, or will.
SECTION 6. STATEMENT OF AUTHORITY AS TO REAL PROPERTY. (a)
Authorizes a nonprofit to transfer an estate or interest in real
property in the name of the nonprofit.
(b) Authorizes an estate or interest in real property in the
name of a nonprofit to be transferred by a person so
authorized in a statement of authority recorded in the county
clerk's office in the county in which a transfer of the
property would be recorded.
(c) Requires a statement of authority to set forth certain
information.
(d) Requires a statement of authority to be executed in the
same manner as a deed by a person who is not the person
authorized to transfer the estate or interest.
(e) Authorizes the county clerk to collect a fee for recording
a statement of authority in the amount authorized for
recording a transfer of real property.
(f) Requires an amendment of a statement of authority to meet
the requirements for execution and recording of an original
statement. Provides that a recorded statement of authority or
its most recent amendment is canceled by operation of law
within a certain time period.
(g) Provides that if the record title to real property is in
the name of a nonprofit and the statement of authority is
recorded in the county clerk's office of the county in which
a transfer of real property would be recorded, the authority
of the person named in a statement is conclusive in favor of
a person who gives value without notice that the person lacks
authority.
SECTION 7. LIABILITY IN TORT AND CONTRACT. (a) Provides that a
nonprofit is a legal entity separate from its members for the
purposes of determining its rights, duties, and liabilities in
contract and tort.
(b)-(d) Provide that a person is not liable for a breach of a
nonprofit's contract or for a tortious act or omission for
which a nonprofit is liable and that a tortious act or
omission of a member or a person for which the nonprofit is
liable is not imputed to a person merely because the person is
a member, is authorized to participate in the management of
the affairs of the nonprofit, or is considered to be a member
by the nonprofit.
(e) Authorizes a member of, or a person considered to be a
member by, a nonprofit to assert a claim against the
nonprofit. Authorizes a nonprofit to assert a claim against
a member or a person considered to be a member by the
nonprofit.
SECTION 8. CAPACITY TO ASSERT AND DEFEND; STANDING. (a) Authorizes
a nonprofit to institute, defend, intervene, or participate in a
judicial, administrative, or other governmental proceeding or in an
arbitration, mediation, or any other form of alternative dispute
resolution.
(b) Authorizes a nonprofit to assert a claim on behalf of its
members of the members have a standing to assert a claim in
their own right, the interest the nonprofit seeks to protect
are germane to its purposes, and neither the claim nor the
relief requires the participation of a member.
SECTION 9. EFFECT OF JUDGMENT OR ORDER. Provides that a judgment
or order against a nonprofit is not by itself a judgment or order
against a member or a person considered by the nonprofit to be a
member.
SECTION 10. DISPOSITION OF PERSONAL PROPERTY OF INACTIVE
NONPROFIT ASSOCIATION. (a) Authorizes a person in possession or
control of property of a nonprofit that has been inactive for more
than three years, or a shorter period as specified in a document,
to transfer the property under certain circumstances.
(b) Requires any distribution to be to another nonprofit with
similar charitable, religious, or educational purposes if a
nonprofit is classified under the Internal Revenue Code of
1986 as a 501(c)(3) organization or holds itself out as such.
SECTION 11. BOOKS AND RECORDS. (a) Requires a nonprofit to keep
books and records of account for at least three years after the end
of each fiscal year and to make them available to the members of
the association for inspection and copying upon request.
(b) Authorizes the attorney general to inspect, examine, and
make copies of the books and records and investigate the
association to determine if a violation has occurred.
SECTION 12. APPOINTMENT OF AGENT TO RECEIVE SERVICE OF PROCESS.
(a) Authorizes a nonprofit to file with the secretary of state a
statement appointing an agent authorized to receive service of
process.
(b) Requires a statement appointing an agent to set forth
certain information.
(c) Requires a statement appointing an agent to be signed by
a person authorized to manage the affairs of the nonprofit and
the agent appointed, who thereby accepts the appointment.
Authorizes the agent to resign by filing a resignation with
the secretary of state and giving notice to the nonprofit.
(d) Authorizes the secretary of state to collect a fee for
filing a statement appointing an agent, an amendment, or a
resignation in the amount charged for similar documents.
(e) Requires an amendment to a statement appointing an agent
to meet the requirements for execution of an original
statement.
(f) Authorizes a statement appointing an agent to be canceled
by filing with the secretary of state a notice of cancellation
executed by a person authorized to manage the affairs of the
nonprofit association. Requires a notice to contain certain
information.
(g) Authorizes the secretary of state to promulgate forms and
adopt procedural rules on filing documents under this section.
SECTION 13. CLAIM NOT ABATED BY CHANGE. Provides that a claim
for relief against a nonprofit does not abate merely because of a
change in its members or managers.
SECTION 14. SUMMONS AND COMPLAINT; SERVICE ON WHOM. Requires a
summons and complaint to be served on an agent authorized by
appointment to receive service of process, an officer, managing or
general agent, or a person authorized to participate in the
management of its affairs in an action or proceeding against a
nonprofit. Requires the nonprofit to provide to the attorney
general within 10 days of a request the names, addresses, and
telephone numbers of agents authorized to receive service of
process on behalf of the nonprofit and the persons authorized to
participate in the management of the nonprofit's affairs.
SECTION 15. UNIFORMITY OF APPLICATION AND CONSTRUCTION.
Requires this Act to be applied and construed to effectuate its
general purpose to make uniform the law with respect to the subject
of this Act among the states enacting it.
SECTION 16. TRANSITION CONCERNING REAL AND PERSONAL PROPERTY.
Authorizes a fiduciary, if, before the effective date of this Act,
an estate or interest in real or personal property was by the terms
of the transfer purportedly transferred to a nonprofit, but under
the law the estate or interest was vested in a fiduciary, such as
the nonprofit's management, to transfer before the effective date
of this Act, the estate interest to the nonprofit in its name, or
the nonprofit association may require that the estate or interest
be transferred in its name.
SECTION 17. SAVINGS CLAUSE. Makes application of this Act
prospective.
SECTION 18. EFFECT ON OTHER LAW. Provides that this Act
replaces existing law with respect to matters covered by this Act
but does not affect other law covering unincorporated nonprofit
associations.
SECTION 19. Effective date: September 1, 1995.
SECTION 20. Emergency clause.