1-1     By:  Solomons (Senate Sponsor - Shapiro)              H.B. No. 2224
 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 State
 1-4     Affairs; May 13, 1999, reported adversely, with favorable Committee
 1-5     Substitute by the following vote:  Yeas 7, Nays 0; May 13, 1999,
 1-6     sent to printer.)
 1-7     COMMITTEE SUBSTITUTE FOR H.B. No. 2224                 By:  Shapiro
 1-8                            A BILL TO BE ENTITLED
 1-9                                   AN ACT
1-10     relating to requiring disclosure notices for the sale of real
1-11     property governed by a property owners' association and requiring
1-12     the filing of dedicatory instruments governing property owners'
1-13     associations.
1-14           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-15           SECTION 1.  Subchapter A, Chapter 5, Property Code, is
1-16     amended by adding Section 5.012 to read as follows:
1-17           Sec. 5.012.  NOTICE OF OBLIGATIONS RELATED TO MEMBERSHIP IN
1-18     PROPERTY OWNERS' ASSOCIATION.  (a)  A seller of residential real
1-19     property that is subject to membership in a property owners'
1-20     association and that comprises not more than one dwelling unit
1-21     located in this state shall give to the purchaser of the property a
1-22     written notice that reads substantially similar to the following:
1-23            NOTICE OF MEMBERSHIP IN PROPERTY OWNERS' ASSOCIATION
1-24                 CONCERNING THE PROPERTY AT (street address)
1-25                       (name of residential community)
1-26           As a purchaser of property in the residential community in
1-27     which this property is located, you are obligated to be a member of
1-28     a property owners' association.  Restrictive covenants governing
1-29     the use and occupancy of the property and a dedicatory instrument
1-30     governing the establishment, maintenance, and operation of this
1-31     residential community have been or will be recorded in the Real
1-32     Property Records of the county in which the property is located.
1-33     Copies of the restrictive covenants and dedicatory instrument may
1-34     be obtained from the county clerk.
1-35           You are obligated to pay assessments to the property owners'
1-36     association.  The amount of the assessments is subject to change.
1-37     Your failure to pay the assessments could result in a lien on and
1-38     the foreclosure of your property.
1-39           You are encouraged to obtain from the seller a resale
1-40     certificate that provides important information regarding the
1-41     property and the financial condition of the property owners'
1-42     association.
1-43     Date:                      ______________________________________
1-44                                        Signature of Purchaser
1-45           (b)  The seller shall deliver the notice to the purchaser
1-46     before the date the executory contract binds the purchaser to
1-47     purchase the property.  The notice may be given separately, as part
1-48     of the contract during negotiations, or as part of any other notice
1-49     the seller delivers to the purchaser.  If the notice is included as
1-50     part of the executory contract or another notice, the title of the
1-51     notice prescribed by this section, the references to the street
1-52     address and date in the notice, and the purchaser's signature on
1-53     the notice may be omitted.
1-54           (c)  This section does not apply to a transfer:
1-55                 (1)  under a court order or foreclosure sale;
1-56                 (2)  by a trustee in bankruptcy;
1-57                 (3)  to a mortgagee by a mortgagor or successor in
1-58     interest or to a beneficiary of a deed of trust by a trustor or
1-59     successor in interest;
1-60                 (4)  by a mortgagee or a beneficiary under a deed of
1-61     trust who has acquired the land at a sale conducted under a power
1-62     of sale under a deed of trust or a sale under a court-ordered
1-63     foreclosure or has acquired the land by a deed in lieu of
1-64     foreclosure;
 2-1                 (5)  by a fiduciary in the course of the administration
 2-2     of a decedent's estate, guardianship, conservatorship, or trust;
 2-3                 (6)  from one co-owner to another co-owner of an
 2-4     undivided interest in the real property;
 2-5                 (7)  to a spouse or a person in the lineal line of
 2-6     consanguinity of the seller;
 2-7                 (8)  to or from a governmental entity;
 2-8                 (9)  of only a mineral interest, leasehold interest, or
 2-9     security interest; or
2-10                 (10)  of a real property interest in a condominium.
2-11           (d)  If an executory contract is entered into without the
2-12     seller providing the notice required by this section, the purchaser
2-13     may terminate the contract for any reason within the earlier of:
2-14                 (1)  seven days after the date the purchaser receives
2-15     the notice; or
2-16                 (2)  the date the transfer occurs as provided by the
2-17     executory contract.
2-18           (e)  The purchaser's right to terminate the executory
2-19     contract under Subsection (d) is the purchaser's exclusive remedy
2-20     for the seller's failure to provide the notice required by this
2-21     section.
2-22           SECTION 2.  Chapter 202, Property Code, is amended by adding
2-23     Section 202.006 to read as follows:
2-24           Sec. 202.006.  PUBLIC RECORDS.  A property owners'
2-25     association shall file the dedicatory instrument governing the
2-26     property owners' association in the real property records of each
2-27     county in which the property to which the dedicatory instrument
2-28     relates is located.
2-29           SECTION 3.  (a)  Except as provided by Subsection (b) of this
2-30     section, this Act takes effect September 1, 1999.
2-31           (b)  Section 5.012, Property Code, as added by this Act,
2-32     takes effect January 1, 2000, and applies only to an executory
2-33     contract that is binding on a seller and purchaser on or after
2-34     January 1, 2000.
2-35           SECTION 4.  Not later than January 1, 2000, each property
2-36     owners' association shall present for recording with the county
2-37     clerk as prescribed by Section 202.006, Property Code, as added by
2-38     this Act, each dedicatory instrument governing the association that
2-39     has not been previously recorded in the real property records of
2-40     the county.
2-41           SECTION 5.  The importance of this legislation and the
2-42     crowded condition of the calendars in both houses create an
2-43     emergency and an imperative public necessity that the
2-44     constitutional rule requiring bills to be read on three several
2-45     days in each house be suspended, and this rule is hereby suspended.
2-46                                  * * * * *