1-1     By:  Danburg (Senate Sponsor - Gallegos)              H.B. No. 1956
 1-2           (In the Senate - Received from the House May 5, 1999;
 1-3     May 6, 1999, read first time and referred to Committee on
 1-4     Intergovernmental Relations; May 13, 1999, reported favorably by
 1-5     the following vote:  Yeas 5, Nays 0; May 13, 1999, sent to
 1-6     printer.)
 1-7                            A BILL TO BE ENTITLED
 1-8                                   AN ACT
 1-9     relating to the amendment or termination of restrictive covenants
1-10     affecting real property in certain historic neighborhoods.
1-11           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12           SECTION 1.  The purpose of this legislation is to assist
1-13     certain historic neighborhoods for which historic neighborhood
1-14     preservation associations exist in promoting a common scheme for
1-15     preservation of historic property by providing protection from the
1-16     piecemeal amendment and termination and establishing procedures for
1-17     the  comprehensive amendment and termination of restrictive
1-18     covenants applicable to individual properties located in historic
1-19     neighborhoods.
1-20           SECTION 2.  Title 11, Property Code, is amended by adding
1-21     Chapter 207 to read as follows:
1-22      CHAPTER 207.  AMENDMENT AND TERMINATION OF RESTRICTIVE COVENANTS
1-23                          IN HISTORIC NEIGHBORHOODS
1-24           Sec. 207.001.  DEFINITIONS.  In this chapter:
1-25                 (1)  "Owner" and "real property records" have the
1-26     meanings assigned by Section 201.003.
1-27                 (2)  "Dedicatory instrument," "property owners'
1-28     association," "petition," and "restrictive covenant" have the
1-29     meanings assigned by Section 202.001.
1-30                 (3)  "Regular assessment" and "special assessment" have
1-31     the meanings assigned by Section 204.001.
1-32                 (4)  "Apartment complex" has the meaning assigned by
1-33     Section 204.002(c).
1-34                 (5)  "Historic neighborhood" means:
1-35                       (A)  an area incorporated as a separate
1-36     municipality before 1900 and subsequently annexed into another
1-37     municipality;
1-38                       (B)  an area described by a municipal map or
1-39     subdivision plat filed in real property records of the county in
1-40     which the area is located before 1900; or
1-41                       (C)  an area designated as a historic district or
1-42     similar designation by the municipality in which the area is
1-43     located, the Texas Historical Commission, or the National Register
1-44     of Historic Places.
1-45           Sec. 207.002.  APPLICABILITY.  (a)  This chapter applies only
1-46     to a historic neighborhood that is located in whole or in part in a
1-47     municipality with a population of 1.6 million or more located in a
1-48     county with a population of 2.8 million or more.
1-49           (b)  This chapter applies to a restrictive covenant
1-50     regardless of the date on which it was created.
1-51           (c)  This chapter applies to property in the area of a
1-52     historic neighborhood that is zoned for or that contains a
1-53     commercial structure, an industrial structure, an apartment
1-54     complex, or a condominium development covered by Title 7 only if
1-55     the owner of the property signed a restrictive covenant that
1-56     includes the property in a common scheme for preservation of
1-57     historic property as described by Section 207.004.
1-58           Sec. 207.003.  HISTORIC NEIGHBORHOOD PRESERVATION
1-59     ASSOCIATION.  (a)  A historic neighborhood preservation association
1-60     must:
1-61                 (1)  be a Texas nonprofit corporation or limited
1-62     liability company organized, in part, to encourage the preservation
1-63     of property in a historic neighborhood; and
1-64                 (2)  open its membership to all owners of property in
 2-1     the historic neighborhood.
 2-2           (b)  A historic neighborhood preservation association may be
 2-3     composed of only a portion of the owners of property in the
 2-4     historic neighborhood.
 2-5           (c)  A historic neighborhood preservation association may be
 2-6     a property owners' association or an organization that is qualified
 2-7     as a charitable organization under Section 501(c)(3) of the
 2-8     Internal Revenue Code of 1986.
 2-9           (d)  A statement in the articles of incorporation or
2-10     association, bylaws, regulations, or operating agreement of the
2-11     historic neighborhood preservation association is prima facie
2-12     evidence of compliance with Subsection (a).
2-13           Sec. 207.004.  COMMON SCHEME FOR PRESERVATION OF PROPERTY IN
2-14     HISTORIC NEIGHBORHOOD.  (a)  A common scheme for preservation of
2-15     historic property exists in a historic neighborhood if:
2-16                 (1)  the restrictive covenants were created by
2-17     individual dedicatory instruments signed by an owner of one or more
2-18     separately owned parcels or tracts in the historic neighborhood;
2-19     and
2-20                 (2)  the restrictive covenants authorize a historic
2-21     neighborhood preservation association to enforce the restrictive
2-22     covenants.
2-23           (b)  A common scheme for preservation of historic property
2-24     does not include property that is not subject to restrictive
2-25     covenants that authorize a historic neighborhood preservation
2-26     association to enforce the restrictive covenants.
2-27           (c)  Restrictive covenants included in a common scheme for
2-28     preservation of historic property exist for the benefit of all
2-29     owners of property subject to the common scheme for preservation as
2-30     if each owner were referenced in each dedicatory instrument.
2-31           (d)  Each owner of property subject to a common scheme for
2-32     preservation of historic property may enforce restrictive covenants
2-33     on other property included in the common scheme for preservation.
2-34           Sec. 207.005.  AMENDMENT OR TERMINATION OF RESTRICTIVE
2-35     COVENANTS UNDER COMMON SCHEME FOR PRESERVATION.  (a)  A restrictive
2-36     covenant applicable to property that is included in a common scheme
2-37     for preservation of historic property may not be amended or
2-38     terminated except as provided by this section.
2-39           (b)  A historic neighborhood preservation association may
2-40     approve and submit to a vote of the owners of property that is
2-41     included in a common scheme for preservation of historic property
2-42     an amendment of the restrictive covenants or the termination of all
2-43     or part of the restrictive covenants included in the common scheme
2-44     for preservation of historic property.
2-45           (c)  The amendment or termination of a restrictive covenant
2-46     is effective and applies to each separately owned parcel or tract
2-47     subject to the common scheme for preservation of historic property
2-48     if the owners of at least 75 percent of the parcels or tracts who
2-49     vote on the issue in accordance with Section 207.006 vote in favor
2-50     of the amendment or termination of the restrictive covenant.
2-51           (d)  A document certifying that 75 percent of the owners
2-52     voting on the issue approved the amendment or termination of the
2-53     restrictive covenant must be recorded by the historic neighborhood
2-54     preservation association in the real property records of the county
2-55     in which the historic neighborhood is located. The document is
2-56     prima facie evidence that the requisite percentage of votes was
2-57     attained and the required formalities for the action were taken.
2-58           Sec. 207.006.  METHOD OF VOTING.  (a)  An amendment or
2-59     termination of a restrictive covenant must be voted on:
2-60                 (1)  by a written ballot that states the substance of
2-61     the amendment or termination of the restrictive covenant and
2-62     specifies the date by which the historic neighborhood preservation
2-63     association must receive a ballot for the ballot to be counted;
2-64                 (2)  at a meeting of the historic neighborhood
2-65     preservation association;
2-66                 (3)  by circulation of a petition by the historic
2-67     neighborhood preservation association or a person authorized by the
2-68     historic neighborhood preservation association; or
2-69                 (4)  by any combination of methods described by this
 3-1     subsection.
 3-2           (b)  If the vote occurs at a meeting of the historic
 3-3     neighborhood preservation association under Subsection (a)(2), the
 3-4     historic neighborhood preservation association shall:
 3-5                 (1)  before the meeting, deliver written notice of the
 3-6     meeting stating the purpose of the meeting to each owner of
 3-7     property subject to the common scheme for preservation of historic
 3-8     property; and
 3-9                 (2)  provide each owner of property subject to the
3-10     common scheme for preservation with the opportunity to appear and
3-11     vote at the meeting.
3-12           (c)  The historic neighborhood preservation association shall
3-13     provide for the mailing to each owner, as applicable:
3-14                 (1)  the ballot under Subsection (a)(1);
3-15                 (2)  notice of the meeting under Subsection (a)(2); or
3-16                 (3)  the petition under Subsection (a)(3).
3-17           (d)  The vote of multiple owners of a property may be
3-18     reflected by signature or vote of one of the owners.
3-19           (e)  The historic neighborhood preservation association shall
3-20     record a copy of the ballot or petition, as applicable, in the real
3-21     property records of the county in which the historic neighborhood
3-22     is located before the vote of the owners.
3-23           Sec. 207.007.  REGULAR AND SPECIAL ASSESSMENTS.  The
3-24     procedure established by this chapter for the amendment of
3-25     restrictive covenants may not be used to establish a regular or
3-26     special assessment.
3-27           Sec. 207.008.  BUILDING LINES.  The procedure established by
3-28     this chapter for the amendment of restrictive covenants may not be
3-29     used to modify a building line established by a restrictive
3-30     covenant, municipal map, or subdivision plat.
3-31           Sec. 207.009.  DEFENSE TO ENFORCEMENT OF RESTRICTIVE
3-32     COVENANT.  An owner may not assert as a defense to the enforcement
3-33     of a restrictive covenant that is part of a common scheme for
3-34     preservation of historic property that the owner or a predecessor
3-35     in title signed a blank signature page or similar procedural defect
3-36     if the signature page was attached to a dedicatory instrument
3-37     adopted by a historic neighborhood preservation association and:
3-38                 (1)  the dedicatory instrument has been recorded for
3-39     more than two years; or
3-40                 (2)  the restrictive covenant is referenced in the
3-41     owner's title insurance policy obtained by the owner when the
3-42     property was purchased.
3-43           SECTION 3.  The importance of this legislation and the
3-44     crowded condition of the calendars in both houses create an
3-45     emergency and an imperative public necessity that the
3-46     constitutional rule requiring bills to be read on three several
3-47     days in each house be suspended, and this rule is hereby suspended,
3-48     and that this Act take effect and be in force from and after its
3-49     passage, and it is so enacted.
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