BILL ANALYSIS
C.S.H.B. 2152
By: Bailey
May 4, 1995
Committee Report (Substituted)
BACKGROUND
Property owners' associations in certain counties have a special
relationship with the homeowners. A large number of such
communities are subjected to restrictive covenants which are
extremely difficult, if not impossible, to amend or modify. In
Houston, about 30 percent of all homes are rental properties,
making it difficult to track down the owners for their signatures.
Therefore, homeowners in these areas are unable to amend the
covenants to provide for such things as contract deputies to fight
crime.
This bill provides homeowners associations in certain counties with
the mechanism to accomplish their intended purpose via a fair and
equitable amendment process. Furthermore, associations with
jurisdiction over single-family detached dwellings and townhomes
should be given legislation to protect their interest similar to
the Texas Uniform Condominium Act, Title VII, of the Texas Property
Code.
PURPOSE
House Bill 2152 would: provide a less burdensome procedure for
extending the term of, adding to, or modifying residential real
estate restrictions by approval and circulation of a petition by a
property owners' association; provide for the removal of any
restriction or other provision relating to race, religion, or
national origin that is void and unenforceable under either the
United States Constitution or Section 5.026, Property Code; and
codify certain powers of property owners' associations or other
designated representatives.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not expressly
grant any additional rulemaking authority to a state officer,
department, agency, or institution.
SECTION BY SECTION ANALYSIS
SECTION 1 Clarifies the legislative intent, public policy, and
legislative findings of H.B. 2152.
SECTION 2 Amends Title 11, Property Code, by adding new Chapter
204 as follows:
Chapter 204. POWERS OF PROPERTY OWNERS' ASSOCIATION RELATING
TO RESTRICTIVE COVENANTS IN CERTAIN SUBDIVISIONS
Sec. 204.001. DEFINITIONS.
Defines the following terms: "restrictions",
"residential real estate subdivision", "subdivision",
"owner", "real property records", "lienholder",
"dedicatory instrument", "regular assessment", and
"special assessment".
Sec. 204.002. APPLICATION.
States that this chapter applies to certain residential
real estate subdivisions that are located in whole or
in part in a county of 2.8 million or more. Also, this
chapter applies to a restriction regardless of its
effective date. This chapter does not apply to portions
of a subdivision that are zoned for or that contain a
commercial structure, an industrial structure, an
apartment complex, or a condominium development governed
by Title 7, Property Code.
Sec. 204.003. PROVISIONS OF RESTRICTIVE COVENANTS PREVAIL IN
CERTAIN CIRCUMSTANCES.
An express designation in a document creating
restrictions applicable to a residential real estate
subdivision that provides for the extension of, addition
to, or modification of existing restrictions by a
designated number of owners of real property in the
subdivision prevails over the provisions of this
chapter.
Sec. 204.004. PROPERTY OWNERS' ASSOCIATION.
A property owners' association is a designated
representative of the owners of property in a
subdivision and may be referred to as a "homeowners
association," "community association," "civic
association," "civic club," "association," "committee,"
or similar term contained in the restrictions. The
association must be nonprofit and may be incorporated
as a Texas nonprofit corporation. The association's
board of directors or trustees must be elected or
appointed in accordance with the applicable provisions
of the restrictions and the association's articles of
incorporation or bylaws.
Sec. 204.005. EXTENSION OF, ADDITION TO, OR MODIFICATION OF
EXISTING RESTRICTIONS.
Subsection (a) gives a property owners' association
certain powers over petitions relating to restrictions.
Subsection (b) provides procedures for effecting certain
petitions relating to restrictions, including the need
for approval of at least 75 percent of the real property
owners in a subdivision (or a smaller amount in some
instances) and the requirement for filing of the
petition with the appropriate county clerk.
Subsection (c) provides that if a subdivision consisting
of multiple sections is represented by a single property
owners'association, then the approval requirement may
be satisfied by obtaining approval of at least 75
percent of the owners on a section-by-section basis or
of the total number of properties in the property
owners' association's jurisdiction.
Subsection (d) binds an approved petition on all
properties in the subdivision or section, as applicable.
Subsection (e) requires the property owners' association
to notify all record owners of property in the
subdivision in writing of the restrictions that are the
subject of the petition.
Sec. 204.006. CREATION OF PROPERTY OWNERS' ASSOCIATION.
Subsection (a) provides that if existing restrictions
applicable to a subdivision do not provide for a
property owners' association and require approval of
more than 60 percent of the owners to add to or modify
the original dedicating instrument, then a petition to
add to or modify the existing restrictions for the sole
purpose of creating and operating a property owners'
association is effective if:
(1) the petition committee has been formed as
prescribed by Section 201.005;
(2) the petition is approved by the owners of at
least 60 percent of the real property in the
subdivision; and
(3) the procedure employed in the circulation and
approval of the petition to add to or amend the
existing restrictions for the specified purpose
complies with the requirements of this chapter.
Subsection (b) provides that if the circulated petition
is not approved by the required percentage of owners
within one year of the creation of the petition
committee, the petition is void and another petition
committee may be formed.
Subsection (c) provides that if the petition is
approved, the petition is binding on all properties in
the subdivision or section.
Sec. 204.007. EFFECT ON LIENHOLDERS.
Subsection (a) binds extended, new, or changed
restrictions under this chapter on lienholders, with
certain exceptions.
Subsection (b) establishes circumstances involving
assessment fees under which the lienholder is not
entitled to notice of a petition. Also establishes
circumstances under which assessment fees are not
binding on a lienholder.
Subsection (c) binds an assessment increase upon a
person who acquires title to the property through
foreclosure.
Sec. 204.008. METHOD OF ADOPTION.
Establishes methods for adoption of extended, new, or
changed restrictions, including the following: (1) by
written ballot; (2) by vote at meeting; (3) by door-to-door circulation of a petition; (4) by a method
permitted by the existing restrictions; or (5) by a
combination of the methods described by this section.
Sec. 204.009. TEXAS NONPROFIT CORPORATIONS.
Subsection (a) provides that if the property owners'
association is a Texas nonprofit corporation, then the
instrument contemplates the interaction of the nonprofit
corporation, its articles of incorporation, and its
bylaws.
Subsection (b) states that the property owners'
association's powers and purposes are modified by those
enumerated in its articles of incorporation and bylaws.
Sec. 204.010. POWERS OF PROPERTY OWNERS' ASSOCIATION.
Subsection (a) delineates the powers of the property
owner's association, acting through its board of
directors.
Subsection (b) states that the powers listed in this
section are in addition to any other powers granted to
a property owners' association by this chapter or other
law.
Sec. 204.011. ARCHITECTURAL CONTROL COMMITTEE.
Subsection (a) applies this section to restrictions
regarding architectural control committees.
Subsection (b) determines when the architectural control
committee authority vests in the property owners'
association.
Subsection (c) determines when the authority of the
architectural control committee devests from the
property owners' association.
SECTION 3 Amends Title 11, Property Code, by adding Chapter 205
to read as follows:
CHAPTER 205. RESTRICTIVE COVENANTS APPLICABLE TO REVISED SUBDIVISIONS IN CERTAIN COUNTIES.
Sec. 205.001. DEFINITIONS.
In this chapter, "restrictions" and "subdivision" have
the meanings assigned by Section 201.003.
Sec. 205.002. APPLICABILITY.
This chapter applies only to a county with a population
of 65,000 or more.
Sec. 205.003. RESTRICTIONS APPLICABLE TO REVISED SUBDIVISIONS.
Subsection (a) provides that if all or part of a
subdivision plat is revised to provide for another
subdivision of land within all or part of the earlier
subdivision, the restrictions apply to the subdivision
before the revision apply to the newly created
subdivision.
Subsection (b) provides that the property owners of the
newly created subdivision must comply with the petition
procedures prescribed by Chapter 204 to modify the
restrictions.
SECTION 4 Emergency clause.
COMPARISON OF ORIGINAL TO SUBSTITUTE
The substitute replaces all references to "a designated
representative" with "a property owners' association." The
substitute replaces all references to "annual" assessment with
"regular" assessment.
In the definitions section (SECTION 2, Section 204.001), the
substitute deletes "property owners' association" and adds (3) to
define "regular assessment" and (4) to define "special assessment."
The substitute adds Subsection (c) to Section 204.002 to state that
this chapter does not apply to portions of a subdivision that are
zoned for or that contain a commercial structure, an industrial
structure, an apartment complex, or a condominium development
governed by Title 7, Property Code.
The substitute adds a new section as Section 204.003 which states
that a document creating restrictions applicable to a residential
subdivision that provides for the extension of, addition to, or
modification of existing restrictions by a designated number of
owners prevails over the provisions of this chapter. The
substitute also adds a new section as Section 204.004 to define a
property owners' association.
In Sections 204.005(b)(1) and 204.005(c), the substitute changes
"60" percent to "75" percent.
The substitute adds a new section as Section 204.006 to allow for
the creation of a property owners' association with the approval of
60 percent of the owners. A petition committee must be formed, and
the petition must be approved by at least 60 percent of the
property owners. If the petition is not approved within one year,
then the petition is void. If the petition is approved, then the
petition is binding on all properties within the subdivision.
In Section 204.010(a), the substitute inserts after "restrictions"
the phrase "or the association's articles of incorporation or
bylaws." Also, the substitute inserts after "directors" the phrase
"or trustees."
In Section 204.010(a), the substitute deletes (15) that reads
"suspend the voting privileges of or the use of certain general
common areas by a property owner delinquent for more than 60 days
in the payment of assessments;".
The substitute adds a new SECTION 3 which amends Title 11, Property
Code, by adding Chapter 205. The new chapter relates to
restrictive covenants applicable to revised subdivisions in
counties with a population of 65,000 or more. The new section
includes definitions of "restrictions" and "subdivision," and it
states that if all or part of a subdivision plat is revised to
provide for another subdivision of land within all or part of the
earlier subdivision, then the restrictions that apply to the
subdivision before the revision apply to the newly created
subdivision. The property owners of the newly created subdivision
must comply with the petition procedures prescribed by Chapter 204
to modify the restrictions.
SUMMARY OF COMMITTEE ACTION
H.B. 2152 was considered by the committee in a public hearing on
April 18, 1995.
The following persons testified in favor of the bill:
Representative Kevin Bailey;
Michael Gainer, representing the Cypress Creek United
Civic Association; and
Reyes Garcia, Jr., representing himself.
The following person testified neutrally on the bill:
Larry Niemann, representing the Texas Apartment
Association, the Texas Building Owners and Managers
Association, and the Texas Legislative Committee of
International Council of Shopping Centers.
The bill was left pending.
H.B. 2152 was considered by the committee in a public hearing on
May 2, 1995.
The committee considered a complete substitute for the bill. The
substitute was adopted without objection.
By the following vote, the motion that the bill be reported
favorably as substituted with the recommendation that it do pass
and be printed prevailed and the recommendation that the bill be
sent to the Committee on Local and Consent Calendars failed: 6
ayes, 1 nay, 0 pnv, 2 absent.
The vote by which H.B. 2152 was reported favorably as substituted
was reconsidered without objection.
The vote by which the committee substitute for the bill was adopted
was reconsidered without objection.
An amendment was offered to the substitute. The amendment to the
substitute was adopted without objection.
The substitute as amended was adopted without objection.
The Chair directed the clerk to incorporate the amendment into the
substitute.
The bill was reported favorably as substituted, with the
recommendation that it do pass and be printed and be sent to the
Committee on Local and Consent Calendars, by a record vote of 7
ayes, 0 nays, 0 pnv, 2 absent.