HBA-DMD H.B. 2460 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2460 By: Yarbrough Business & Industry 3/25/1999 Introduced BACKGROUND AND PURPOSE Over the last decade, there has been a significant growth in the number of property owners' associations (association) in Texas. In 1987, the Texas Supreme Court ruled to allow an association to place a lien and foreclose on a property if the homeowner fails to pay association dues. Currently, these associations are without oversight and regulation. If a homeowner wishes to pursue legal action against an association, the only viable recourse is to pursue legal action in district court, which is often beyond the means of the common homeowner. H.B. 2460 sets forth that the justice court has original jurisdiction of disputes between property owners and associations. This bill requires an association to establish a dispute resolution committee to conduct hearings on disputes relating to a fine or penalty imposed on a property owner by the association and to adopt rules relating to hearings conducted by a dispute resolution committee. It also requires the association to furnish to the owner a current copy of the restrictive covenants applying to the subdivision, a current copy of the bylaws and rules of the property owners' association, and a resale certificate within a certain time period. H.B. 2460 authorizes an owner, if an association does not timely furnish the information, to seek certain judicial remedies. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 27.031, Government Code, as follows: Sec. 27.031. JURISDICTION. (a)(4) Sets forth that in addition to the jurisdiction and powers provided by the constitution and other law, the justice court has original jurisdiction of disputes between property owners and property owners' associations (association), including the enforcement of a lien for failure to pay association dues, in cases in which the amount in controversy is otherwise within the justice court's jurisdiction. (b) Establishes Subsection (a)(4) as an exception to a suit for the enforcement of a lien on land over which a justice court does not have jurisdiction. SECTION 2. Amends Section 41.001, Property Code, by adding Subsection (d), as follows: (d) Provides that an obligation to pay association fees for maintenance and ownership of common facilities and services is not an encumbrance that may be properly fixed on or executed against homestead property. Defines "property owners' association." SECTION 3. Amends Chapter 202, Property Code, by adding Sections 202.006 and 202.007, as follows: Sec. 202.006. MEMBERSHIP IN PROPERTY OWNERS' ASSOCIATION. Prohibits a dedicatory instrument adopted on or after September 1, 1999, from requiring an owner of real property located within the area covered by the dedicatory instrument to join an association. Sec. 202.007. HEARING BEFORE PROPERTY OWNERS' ASSOCIATION. Requires an association to establish a dispute resolution committee to conduct hearings on disputes relating to a fine or penalty imposed on a property owner by the association. Requires an association to adopt rules relating to hearings conducted by a dispute resolution committee. Specifies the provisions of the rules. SECTION 4. Amends Title 11, Property Code, by adding Chapter 207, as follows: CHAPTER 207. DISCLOSURE OF INFORMATION BY PROPERTY OWNERS' ASSOCIATIONS Sec. 207.001. DEFINITIONS. Defines "restrictions," "subdivision," "owner," "dedicatory instrument," "property owners' association," "restrictive covenant," "regular assessment," "special assessment," and "resale certificate." Sec. 207.002. APPLICABILITY. Sets forth that this chapter applies to a subdivision whose association is entitled to levy regular or special assessments that are secured by a continuing lien on property in the subdivision. Sec. 207.003. DELIVERY OF SUBDIVISION INFORMATION TO OWNER. (a) Requires the association, no later than 10 days after a written request for subdivision information is received from an owner, to furnish to the owner a current copy of the restrictive covenants applying to the subdivision, a current copy of the bylaws and rules of the association, and a resale certificate that complies with Subsection (b). (b) Provides that a resale certificate under Subsection (a) must contain the current operating budget of the association and must state certain provisions. Sec. 207.004. OWNER'S REMEDIES. (a) Authorizes an owner, if an association does not timely furnish information in accordance with Section 207.003, to seek certain judicial remedies. (b) Provides that the association is not liable to an owner selling property in the subdivision for delay or failure to furnish a resale certificate, and an officer or agent of the association is not liable for a delay or failure to furnish a certificate. (c) Prohibits an association from denying the validity of any statement in the certificate. (d) Sets forth that a resale certificate does not affect the right of an association to recover debts or claims that arise or become due after the date the resale certificate is prepared, or a lien on a property securing payment of future assessments held by the association. (e) Provides that a purchaser, lender, or title insurer who relies on a resale certificate is not liable for any debt or claim that is not disclosed in the certificate. SECTION 5.Effective date: September 1, 1999. Makes application of Sections 27.031 and 41.001(d) of this Act prospective. SECTION 6.Emergency clause.