By Solomons H.B. No. 2224 Substitute the following for H.B. No. 2224: By Solomons C.S.H.B. No. 2224 A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to requiring disclosure notices for the sale of real 1-3 property governed by a property owners' association and requiring 1-4 the filing of dedicatory instruments governing property owners' 1-5 associations. 1-6 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-7 SECTION 1. Subchapter A, Chapter 5, Property Code, is 1-8 amended by adding Section 5.012 to read as follows: 1-9 Sec. 5.012. NOTICE OF OBLIGATIONS RELATED TO MEMBERSHIP IN 1-10 PROPERTY OWNERS' ASSOCIATION. (a) A seller of residential real 1-11 property that is subject to membership in a property owners' 1-12 association and that comprises not more than one dwelling unit 1-13 located in this state shall give to the purchaser of the property a 1-14 written notice that reads substantially similar to the following: 1-15 NOTICE OF MEMBERSHIP IN PROPERTY OWNERS' ASSOCIATION 1-16 CONCERNING THE PROPERTY AT (street address) 1-17 (name of residential community) 1-18 As a purchaser of property in the residential community in 1-19 which this property is located, you are obligated to be a member of 1-20 a property owners' association. Restrictive covenants governing 1-21 the use and occupancy of the property and a dedicatory instrument 1-22 governing the establishment, maintenance, and operation of this 1-23 residential community have been or will be recorded in the Real 1-24 Property Records of the county in which the property is located. 2-1 Copies of the restrictive covenants and dedicatory instrument may 2-2 be obtained from the county clerk. 2-3 You are obligated to pay assessments to the property owners' 2-4 association. The amount of the assessments is subject to change. 2-5 Your failure to pay the assessments could result in a lien on and 2-6 the foreclosure of your property 2-7 Date:__________ _____________________________________________ 2-8 Signature of Purchaser 2-9 (b) The seller shall deliver the notice to the purchaser 2-10 before the date the executory contract binds the purchaser to 2-11 purchase the property. The notice may be given separately, as part 2-12 of the contract during negotitations, or as part of any other 2-13 notice the seller delivers to the purchaser. If the notice is 2-14 included as part of the executory contract or another notice, the 2-15 title of the notice prescribed by this section, the references to 2-16 the street address and date in the notice, and the purchaser's 2-17 signature on the notice may be omitted. 2-18 (c) This section does not apply to a transfer: 2-19 (1) under a court order or foreclosure sale; 2-20 (2) by a trustee in bankruptcy; 2-21 (3) to a mortgagee by a mortgagor or successor in 2-22 interest or to a beneficiary of a deed of trust by a trustor or 2-23 successor in interest; 2-24 (4) by a mortgagee or a beneficiary under a deed of 2-25 trust who has acquired the land at a sale conducted under a power 2-26 of sale under a deed of trust or a sale under a court-ordered 2-27 foreclosure or has acquired the land by a deed in lieu of 3-1 foreclosure; 3-2 (5) by a fiduciary in the course of the administration 3-3 of a decedent's estate, guardianship, conservatorship, or trust; 3-4 (6) from one co-owner to another co-owner of an 3-5 undivided interest in the real property; 3-6 (7) to a spouse or a person in the lineal line of 3-7 consanguinity of the seller; 3-8 (8) to or from a governmental entity; 3-9 (9) of only a mineral interest, leasehold interest, or 3-10 security interest; or 3-11 (10) of a real property interest in a condominium. 3-12 (d) If an executory contract is entered into without the 3-13 seller providing the notice required by this section, the purchaser 3-14 may terminate the contract for any reason within the earlier of: 3-15 (1) seven days after the date the purchaser receives 3-16 the notice; or 3-17 (2) the date the transfer occurs as provided by the 3-18 executory contract. 3-19 (e) The purchaser's right to terminate the executory 3-20 contract under Subsection (d) is the purchaser's exclusive remedy 3-21 for the seller's failure to provide the notice required by this 3-22 section. 3-23 SECTION 2. Chapter 202, Property Code, is amended by adding 3-24 Section 202.006 to read as follows: 3-25 Sec. 202.006. PUBLIC RECORDS. (a) Each county clerk shall 3-26 maintain suitable records called "Property Owners' Association 3-27 Records" in which the clerk shall record dedicatory instruments 4-1 governing property owners' associations. 4-2 (b) A property owners' association shall file the dedicatory 4-3 instrument in the real property records of each county in which the 4-4 property to which the dedicatory instrument relates is located. 4-5 SECTION 3. (a) Except as provided by Subsection (b) of this 4-6 section, this Act takes effect September 1, 1999. 4-7 (b) Section 5.012, Property Code, as added by this Act, 4-8 takes effect January 1, 2000, and applies only to an executory 4-9 contract that is binding on a seller and purchaser on or after 4-10 January 1, 2000. 4-11 SECTION 4. (a) On or before December 1, 1999, the county 4-12 clerk of each county shall establish the "Property Owners' 4-13 Association Records" for the county as prescribed by Section 4-14 202.006, Property Code, as added by this Act. 4-15 (b) Not later than January 1, 2000, each property owners' 4-16 association shall present for recording with the county clerk as 4-17 prescribed by Section 202.006, Property Code, as added by this Act, 4-18 each dedicatory instrument governing the association that has not 4-19 been previously recorded in the real property records of the 4-20 county. 4-21 SECTION 5. The importance of this legislation and the 4-22 crowded condition of the calendars in both houses create an 4-23 emergency and an imperative public necessity that the 4-24 constitutional rule requiring bills to be read on three several 4-25 days in each house be suspended, and this rule is hereby suspended.