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. 3-50 * * * * *