1-1 By: Turner of Harris, Greenberg H.B. No. 1661
1-2 (Senate Sponsor - Ellis)
1-3 (In the Senate - Received from the House May 4, 1995;
1-4 May 5, 1995, read first time and referred to Committee on
1-5 Jurisprudence; May 16, 1995, reported favorably by the following
1-6 vote: Yeas 7, Nays 0; May 16, 1995, sent to printer.)
1-7 A BILL TO BE ENTITLED
1-8 AN ACT
1-9 relating to the adoption of the Texas Uniform Unincorporated
1-10 Nonprofit Association Act.
1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12 SECTION 1. SHORT TITLE. This Act may be cited as the Texas
1-13 Uniform Unincorporated Nonprofit Association Act.
1-14 SECTION 2. DEFINITIONS. In this Act:
1-15 (1) "Member" means a person who, under the rules or
1-16 practices of a nonprofit association, may participate in the
1-17 selection of persons authorized to manage the affairs of the
1-18 nonprofit association or in the development of policy of the
1-19 nonprofit association.
1-20 (2) "Nonprofit association" means an unincorporated
1-21 organization, other than one created by a trust, consisting of
1-22 three or more members joined by mutual consent for a common,
1-23 nonprofit purpose. However, joint tenancy, tenancy in common, or
1-24 tenancy by the entireties does not by itself establish a nonprofit
1-25 association, even if the co-owners share use of the property for a
1-26 nonprofit purpose.
1-27 (3) "Person" means an individual, corporation,
1-28 business trust, estate, trust, partnership, limited liability
1-29 company, association, joint venture, government, governmental
1-30 subdivision, agency, or instrumentality, or any other legal or
1-31 commercial entity.
1-32 (4) "State" means a state of the United States, the
1-33 District of Columbia, the Commonwealth of Puerto Rico, or any
1-34 territory or insular possession subject to the jurisdiction of the
1-35 United States.
1-36 SECTION 3. SUPPLEMENTARY GENERAL PRINCIPLES OF LAW AND
1-37 EQUITY. Principles of law and equity supplement this Act unless
1-38 displaced by a particular provision of it.
1-39 SECTION 4. TERRITORIAL APPLICATION. Real and personal
1-40 property in this state may be acquired, held, encumbered, and
1-41 transferred by a nonprofit association, whether or not the
1-42 nonprofit association or a member has any other relationship to
1-43 this state.
1-44 SECTION 5. REAL AND PERSONAL PROPERTY; NONPROFIT ASSOCIATION
1-45 AS BENEFICIARY. (a) A nonprofit association in its name may
1-46 acquire, hold, encumber, or transfer an estate or interest in real
1-47 or personal property.
1-48 (b) A nonprofit association may be a beneficiary of a trust,
1-49 contract, or will.
1-50 SECTION 6. STATEMENT OF AUTHORITY AS TO REAL PROPERTY.
1-51 (a) A nonprofit association may execute and record a statement of
1-52 authority to transfer an estate or interest in real property in the
1-53 name of the nonprofit association.
1-54 (b) An estate or interest in real property in the name of a
1-55 nonprofit association may be transferred by a person so authorized
1-56 in a statement of authority recorded in the county clerk's office
1-57 in the county in which a transfer of the property would be
1-58 recorded.
1-59 (c) A statement of authority must set forth:
1-60 (1) the name of the nonprofit association;
1-61 (2) the address in this state, including the street
1-62 address, if any, of the nonprofit association, or, if the nonprofit
1-63 association does not have an address in this state, its address out
1-64 of state; and
1-65 (3) the name or title of a person authorized to
1-66 transfer an estate or interest in real property held in the name of
1-67 the nonprofit association.
1-68 (d) A statement of authority must be executed in the same
2-1 manner as a deed by a person who is not the person authorized to
2-2 transfer the estate or interest.
2-3 (e) The county clerk may collect a fee for recording a
2-4 statement of authority in the amount authorized for recording a
2-5 transfer of real property.
2-6 (f) An amendment, including a cancellation, of a statement
2-7 of authority must meet the requirements for execution and recording
2-8 of an original statement. Unless canceled earlier, a recorded
2-9 statement of authority or its most recent amendment is canceled by
2-10 operation of law on the fifth anniversary of the date of the most
2-11 recent recording.
2-12 (g) If the record title to real property is in the name of a
2-13 nonprofit association and the statement of authority is recorded in
2-14 the county clerk's office of the county in which a transfer of real
2-15 property would be recorded, the authority of the person named in a
2-16 statement of authority is conclusive in favor of a person who gives
2-17 value without notice that the person lacks authority.
2-18 SECTION 7. LIABILITY IN TORT AND CONTRACT. (a) A nonprofit
2-19 association is a legal entity separate from its members for the
2-20 purposes of determining and enforcing rights, duties, and
2-21 liabilities in contract and tort.
2-22 (b) A person is not liable for a breach of a nonprofit
2-23 association's contract merely because the person is a member, is
2-24 authorized to participate in the management of the affairs of the
2-25 nonprofit association, or is a person considered to be a member by
2-26 the nonprofit association.
2-27 (c) A person is not liable for a tortious act or omission
2-28 for which a nonprofit association is liable merely because the
2-29 person is a member, is authorized to participate in the management
2-30 of the affairs of the nonprofit association, or is a person
2-31 considered as a member by the nonprofit association.
2-32 (d) A tortious act or omission of a member or other person
2-33 for which a nonprofit association is liable is not imputed to a
2-34 person merely because the person is a member of the nonprofit
2-35 association, is authorized to participate in the management of the
2-36 affairs of the nonprofit association, or is a person considered as
2-37 a member by the nonprofit association.
2-38 (e) A member of, or a person considered to be a member by, a
2-39 nonprofit association may assert a claim against the nonprofit
2-40 association. A nonprofit association may assert a claim against a
2-41 member or a person considered to be a member by the nonprofit
2-42 association.
2-43 SECTION 8. CAPACITY TO ASSERT AND DEFEND; STANDING. (a) A
2-44 nonprofit association, in its name, may institute, defend,
2-45 intervene, or participate in a judicial, administrative, or other
2-46 governmental proceeding or in an arbitration, mediation, or any
2-47 other form of alternative dispute resolution.
2-48 (b) A nonprofit association may assert a claim in its name
2-49 on behalf of its members if one or more members of the nonprofit
2-50 association have standing to assert a claim in their own right, the
2-51 interests the nonprofit association seeks to protect are germane to
2-52 its purposes, and neither the claim asserted nor the relief
2-53 requested requires the participation of a member.
2-54 SECTION 9. EFFECT OF JUDGMENT OR ORDER. A judgment or order
2-55 against a nonprofit association is not by itself a judgment or
2-56 order against a member or a person considered by the nonprofit
2-57 association to be a member.
2-58 SECTION 10. DISPOSITION OF PERSONAL PROPERTY OF INACTIVE
2-59 NONPROFIT ASSOCIATION. (a) If a nonprofit association has been
2-60 inactive for three years or longer, or a shorter period as
2-61 specified in a document of the nonprofit association, a person in
2-62 possession or control of personal property of the nonprofit
2-63 association may transfer the custody of the property:
2-64 (1) if a document of a nonprofit association specifies
2-65 a person to whom transfer is to be made under these circumstances,
2-66 to that person; or
2-67 (2) if no person is so specified, to a nonprofit
2-68 association or nonprofit corporation pursuing broadly similar
2-69 purposes, or to a government or governmental subdivision, agency,
2-70 or instrumentality.
3-1 (b) Notwithstanding the above, if a nonprofit association is
3-2 classified under the Internal Revenue Code of 1986 as a 501(c)(3)
3-3 organization or is or holds itself out to be established or
3-4 operating for a charitable, religious, or educational purpose, as
3-5 defined in Section 501(c)(3) of the Internal Revenue Code of 1986,
3-6 then any distribution must be to another nonprofit association or
3-7 nonprofit corporation with similar charitable, religious, or
3-8 educational purposes.
3-9 SECTION 11. BOOKS AND RECORDS. (a) A nonprofit association
3-10 shall keep correct and complete books and records of account for at
3-11 least three years after the end of each fiscal year and shall make
3-12 them available to the members of the association for inspection and
3-13 copying upon request.
3-14 (b) The attorney general may inspect, examine, and make
3-15 copies of the books, records, and other documents the attorney
3-16 general deems necessary and investigate the association to
3-17 determine if a violation of any law of this state has occurred.
3-18 SECTION 12. APPOINTMENT OF AGENT TO RECEIVE SERVICE OF
3-19 PROCESS. (a) A nonprofit association may file in the office of
3-20 the secretary of state a statement appointing an agent authorized
3-21 to receive service of process.
3-22 (b) A statement appointing an agent must set forth:
3-23 (1) the name of the nonprofit association;
3-24 (2) the federal tax identification number of the
3-25 nonprofit association, if applicable;
3-26 (3) the address in this state, including the street
3-27 address, if any, of the nonprofit association, or, if the nonprofit
3-28 association does not have an address in this state, its address out
3-29 of state; and
3-30 (4) the name of the person in this state authorized to
3-31 receive service of process and the person's address, including the
3-32 street address, in this state.
3-33 (c) A statement appointing an agent must be signed by a
3-34 person authorized to manage the affairs of the nonprofit
3-35 association. The statement must also be signed by the person
3-36 appointed agent, who thereby accepts the appointment. The
3-37 appointed agent may resign by filing a resignation in the office of
3-38 the secretary of state and giving notice to the nonprofit
3-39 association.
3-40 (d) The secretary of state may collect a fee for filing a
3-41 statement appointing an agent to receive service of process, an
3-42 amendment, a cancellation, or a resignation in the amount charged
3-43 for filing similar documents.
3-44 (e) An amendment to a statement appointing an agent to
3-45 receive service of process must meet the requirements for execution
3-46 of an original statement.
3-47 (f) A statement appointing an agent may be canceled by
3-48 filing with the secretary of state a written notice of cancellation
3-49 executed by a person authorized to manage the affairs of the
3-50 nonprofit association. A notice of cancellation must contain the
3-51 name of the nonprofit association; the federal tax identification
3-52 number of the nonprofit association, if applicable; the date of
3-53 filing of its statement appointing the agent; and a current street
3-54 address of the nonprofit association in this state, and outside
3-55 this state, if applicable.
3-56 (g) The secretary of state may promulgate forms and adopt
3-57 procedural rules on filing documents under this section.
3-58 SECTION 13. CLAIM NOT ABATED BY CHANGE. A claim for relief
3-59 against a nonprofit association does not abate merely because of a
3-60 change in its members or persons authorized to manage the affairs
3-61 of the nonprofit association.
3-62 SECTION 14. SUMMONS AND COMPLAINT; SERVICE ON WHOM. In an
3-63 action or proceeding against a nonprofit association, a summons and
3-64 complaint must be served on an agent authorized by appointment to
3-65 receive service of process, an officer, a managing or general
3-66 agent, or a person authorized to participate in the management of
3-67 its affairs, in accordance with the Civil Practice and Remedies
3-68 Code. Within 10 days of a request by the attorney general to an
3-69 officer or board member of a nonprofit association or to the
3-70 nonprofit association, the nonprofit association shall provide to
4-1 the attorney general the names, current addresses, and telephone
4-2 numbers of:
4-3 (1) agents authorized to receive service of process on
4-4 behalf of the nonprofit association; and
4-5 (2) the officers, managing or general agents, and
4-6 other persons authorized to participate in the management of the
4-7 affairs of the nonprofit association.
4-8 SECTION 15. UNIFORMITY OF APPLICATION AND CONSTRUCTION.
4-9 This Act shall be applied and construed to effectuate its general
4-10 purpose to make uniform the law with respect to the subject of this
4-11 Act among states enacting it.
4-12 SECTION 16. TRANSITION CONCERNING REAL AND PERSONAL
4-13 PROPERTY. If, before the effective date of this Act, an estate or
4-14 interest in real or personal property was by the terms of the
4-15 transfer purportedly transferred to a nonprofit association, but
4-16 under the law the estate or interest was vested in a fiduciary such
4-17 as officers of the nonprofit association to hold the estate or
4-18 interest for members of the nonprofit association, on or after the
4-19 effective date of this Act the fiduciary may transfer the estate or
4-20 interest to the nonprofit association in its name, or the nonprofit
4-21 association, by appropriate proceedings, may require that the
4-22 estate or interest be transferred to it in its name.
4-23 SECTION 17. SAVING CLAUSE. This Act does not affect an
4-24 action or proceeding commenced or a right accrued before this Act
4-25 takes effect.
4-26 SECTION 18. EFFECT ON OTHER LAW. This Act replaces existing
4-27 law with respect to matters covered by this Act but does not affect
4-28 other law covering unincorporated nonprofit associations.
4-29 SECTION 19. EFFECTIVE DATE. This Act takes effect September
4-30 1, 1995.
4-31 SECTION 20. EMERGENCY. The importance of this legislation
4-32 and the crowded condition of the calendars in both houses create an
4-33 emergency and an imperative public necessity that the
4-34 constitutional rule requiring bills to be read on three several
4-35 days in each house be suspended, and this rule is hereby suspended.
4-36 * * * * *