1-1 By: Ellis S.B. No. 1864
1-2 (In the Senate - Filed March 14, 1997; March 24, 1997, read
1-3 first time and referred to Committee on Jurisprudence;
1-4 April 10, 1997, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 5, Nays 0; April 10, 1997,
1-6 sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 1864 By: Ellis
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to the powers of certain property owners' associations.
1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12 SECTION 1. Section 204.008, Property Code, is amended to
1-13 read as follows:
1-14 Sec. 204.008. Method of Adoption. An extension, addition
1-15 to, or modification of restrictions proposed by a property owners'
1-16 association may be adopted:
1-17 (1) by a written ballot that states the substance of
1-18 the amendment and specifies the date by which a ballot must be
1-19 received to be counted;
1-20 (2) at a meeting of the members represented by the
1-21 property owners' association if written notice of the meeting
1-22 stating the purpose of the meeting is delivered to each owner of
1-23 property in the subdivision not later than the 10th day before the
1-24 date the meeting is scheduled;
1-25 (3) by door-to-door circulation of a petition by the
1-26 property owners' association or a person authorized by the property
1-27 owners' association;
1-28 (4) by a method permitted by the existing
1-29 restrictions; or
1-30 (5) by a combination of the methods described by this
1-31 section.
1-32 SECTION 2. Section 204.010, Property Code, is amended to
1-33 read as follows:
1-34 Sec. 204.010. Powers of Property Owners' Association.
1-35 (a) Unless otherwise provided by the restrictions or the
1-36 association's articles of incorporation or bylaws, the property
1-37 owners' association, acting through its board of directors or
1-38 trustees, may:
1-39 (1) adopt and amend bylaws;
1-40 (2) adopt and amend budgets for revenues,
1-41 expenditures, and reserves and collect regular assessments or
1-42 special assessments for common expenses from property owners;
1-43 (3) hire and terminate managing agents and other
1-44 employees, agents, and independent contractors;
1-45 (4) institute, defend, intervene in, settle, or
1-46 compromise litigation or administrative proceedings on matters
1-47 affecting the subdivision;
1-48 (5) make contracts and incur liabilities relating to
1-49 the operation of the subdivision and the property owners'
1-50 association;
1-51 (6) regulate the use, maintenance, repair,
1-52 replacement, modification, and appearance of the common areas of
1-53 the subdivision;
1-54 (7) make additional improvements to be included as a
1-55 part of the common area;
1-56 (8) grant easements, leases, licenses, and concessions
1-57 through or over the common area;
1-58 (9) impose and receive reasonable payments, fees, or
1-59 charges for the use, rental, or operation of the common area and
1-60 for services provided to property owners;
1-61 (10) impose and receive reasonable interest, late
1-62 charges, and, if applicable, returned check charges for late
1-63 payments of regular assessments or special assessments;
1-64 (11) [if notice and an opportunity to be heard are
2-1 given,] collect reimbursement of reasonable [actual] attorney's
2-2 fees and other reasonable costs incurred by the property owners'
2-3 association in enforcing [relating to violations of the
2-4 subdivision's] restrictions or the property owners' association's
2-5 bylaws and rules that the owner has allegedly violated if, before
2-6 incurring attorney's fees:
2-7 (A) the association sends to the property owner,
2-8 by certified mail return receipt requested at the owner's last
2-9 known address as shown in the association's records, a notice of a
2-10 meeting of the board during which the owner will be given the
2-11 opportunity to be heard on the issue of the alleged violation; and
2-12 (B) the notice is mailed as provided by
2-13 Subsection (c) to the property owner and informs the owner of the
2-14 owner's right to appear and be heard regarding the alleged
2-15 violation;
2-16 (12) charge costs, fees, and other charges authorized
2-17 under this section to an owner's assessment account and collect
2-18 the costs, fees, and other charges in any manner provided in the
2-19 restrictions for the collection of assessments;
2-20 (13) adopt and amend rules regulating the collection
2-21 of delinquent assessments and the application of payments;
2-22 (14) impose reasonable charges for preparing,
2-23 recording, or copying amendments to the restrictions, resale
2-24 certificates, or statements of unpaid assessments;
2-25 (15) purchase insurance and fidelity bonds, including
2-26 directors' and officers' liability insurance, that the board
2-27 considers appropriate or necessary;
2-28 (16) if the restrictions allow for an annual increase
2-29 in the maximum regular assessment without a vote of the membership,
2-30 delay [assess] the increase in annual assessments allowed under the
2-31 restrictions, accumulate the increase, and assess all or part of
2-32 any accumulated increase in a subsequent year subject to the
2-33 approval of a majority of association members who are present in
2-34 person or represented by proxy at an annual or special meeting of
2-35 the association membership [annually or accumulate and assess the
2-36 increase after a number of years];
2-37 (17) subject to the requirements of the Texas
2-38 Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's
2-39 Texas Civil Statutes) and by majority vote of its board of
2-40 directors, indemnify a director or officer of the property owners'
2-41 association who was, is, or may be made a named defendant or
2-42 respondent in a proceeding because the person is or was a director;
2-43 (18) if the restrictions vest the architectural
2-44 control authority in the property owners' association or if the
2-45 authority is vested in the property owners' association under
2-46 Section 204.011:
2-47 (A) implement written architectural control
2-48 guidelines for its own use or record the guidelines in the real
2-49 property records of the applicable county; and
2-50 (B) modify the guidelines as the needs of the
2-51 subdivision change;
2-52 (19) exercise other powers conferred by the
2-53 restrictions, its articles of incorporation, or its bylaws;
2-54 (20) exercise other powers that may be exercised in
2-55 this state by a corporation of the same type as the property
2-56 owners' association; and
2-57 (21) exercise other powers necessary and proper for
2-58 the governance and operation of the property owners' association.
2-59 (b) Unless otherwise provided by the restrictions or the
2-60 association's articles of incorporation or bylaws, the property
2-61 owners' association, acting through its board of directors or
2-62 trustees, may, under Subsection (a)(9):
2-63 (1) except as provided by Subdivision (2), impose and
2-64 receive reasonable fees or charges for a service only after
2-65 obtaining approval of a majority of those association members who
2-66 are present in person or represented by proxy at an annual or
2-67 special meeting of the association;
2-68 (2) continue to impose and receive reasonable fees or
2-69 charges through January 15, 1998, for a service for which the fees
3-1 or charges were first imposed between August 28, 1995, and
3-2 September 1, 1997; and
3-3 (3) continue to impose and receive fees or charges
3-4 that were first imposed during that time period after January 15,
3-5 1998, if the fees and charges are approved by a majority of those
3-6 association members who are present in person or represented by
3-7 proxy at an annual or special meeting of the association held
3-8 before January 15, 1998.
3-9 (c) Except as provided by this subsection, the notice
3-10 provided by Subsection (a)(11)(B) must be mailed to the property
3-11 owner not later than the 30th day before the date of a scheduled
3-12 board meeting. Notice may be mailed less than 30 days before the
3-13 date of a scheduled board meeting for an alleged violation that
3-14 necessitates immediate judicial action.
3-15 (d) Powers enumerated by this section are in addition to any
3-16 other powers granted to a property owners' association by this
3-17 chapter or other law. This section does not limit a property
3-18 owners' association's rights or powers as stated in the
3-19 restrictions or the association's articles of incorporation or
3-20 bylaws.
3-21 SECTION 3. This Act takes effect September 1, 1997.
3-22 SECTION 4. The importance of this legislation and the
3-23 crowded condition of the calendars in both houses create an
3-24 emergency and an imperative public necessity that the
3-25 constitutional rule requiring bills to be read on three several
3-26 days in each house be suspended, and this rule is hereby suspended.
3-27 * * * * *