By Yarbrough                                          H.B. No. 2460
         76R8651 PAM-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the governance of property owners' associations, to
 1-3     certain procedures involving the relationship between property
 1-4     owners and property owners' associations, and to property owners'
 1-5     association liens for assessments.
 1-6           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-7           SECTION 1.  Section 27.031, Government Code, is amended to
 1-8     read as follows:
 1-9           Sec. 27.031.  JURISDICTION.  (a)  In addition to the
1-10     jurisdiction and powers provided by the constitution and other law,
1-11     the justice court has original jurisdiction of:
1-12                 (1)  civil matters in which exclusive jurisdiction is
1-13     not in the district or county court and in which the amount in
1-14     controversy is not more than $5,000, exclusive of interest;
1-15                 (2)  cases of forcible entry and detainer; [and]
1-16                 (3)  foreclosure of mortgages and enforcement of liens
1-17     on personal property in cases in which the amount in controversy is
1-18     otherwise within the justice court's jurisdiction; and
1-19                 (4)  disputes between property owners and property
1-20     owners' associations, including the enforcement of a lien for
1-21     failure to pay property owners' association dues, in cases in which
1-22     the amount in controversy is otherwise within the justice court's
1-23     jurisdiction.
1-24           (b)  A justice court does not have jurisdiction of:
 2-1                 (1)  a suit in behalf of the state to recover a
 2-2     penalty, forfeiture, or escheat;
 2-3                 (2)  a suit for divorce;
 2-4                 (3)  a suit to recover damages for slander or
 2-5     defamation of character;
 2-6                 (4)  a suit for trial of title to land; or
 2-7                 (5)  except as provided by Subsection (a)(4), a suit
 2-8     for the enforcement of a lien on land.
 2-9           SECTION 2.  Section 41.001, Property Code, is amended by
2-10     adding Subsection (d) to read as follows:
2-11           (d)  An obligation to pay property owners' association fees
2-12     for maintenance and ownership of common facilities and services is
2-13     not an encumbrance that may be properly fixed on or executed
2-14     against homestead property.  In this subsection, "property owners'
2-15     association" has the meaning assigned by Section 202.001.
2-16           SECTION 3.  Chapter 202, Property Code, is amended by adding
2-17     Sections 202.006 and 202.007 to read as follows:
2-18           Sec. 202.006.  MEMBERSHIP IN PROPERTY OWNERS' ASSOCIATION.  A
2-19     dedicatory instrument adopted on or after September 1, 1999, may
2-20     not require an owner of real property located within the area
2-21     covered by the dedicatory instrument to join a property owners'
2-22     association.
2-23           Sec. 202.007.  HEARING BEFORE PROPERTY OWNERS' ASSOCIATION.
2-24     (a)  A property owners' association shall establish a dispute
2-25     resolution committee to conduct hearings on disputes relating to a
2-26     fine or penalty imposed on a property owner by the association.
2-27           (b)  A property owners' association shall adopt rules
 3-1     relating to hearings conducted by a dispute resolution committee.
 3-2     The rules must:
 3-3                 (1)  provide a property owner with notice of a hearing
 3-4     as provided by Rule 21a, Texas Rules of Civil Procedure;
 3-5                 (2)  provide for the recording of a hearing by a court
 3-6     reporter or by audio or video recording;
 3-7                 (3)  require the property owners' association to retain
 3-8     a record of a hearing for at least two years after the  date  of
 3-9     the final determination of the matter in dispute; and
3-10                 (4)  allow a property owner to appeal the decision of
3-11     the dispute resolution committee to the entire board of the
3-12     property owners' association before the association may institute
3-13     any legal proceeding, including an alternative dispute resolution
3-14     procedure, relating to the fine or penalty in dispute.
3-15           SECTION 4.  Title 11, Property Code, is amended by adding
3-16     Chapter 207 to read as follows:
3-17         CHAPTER 207.  DISCLOSURE OF INFORMATION BY PROPERTY OWNERS'
3-18                                ASSOCIATIONS
3-19           Sec. 207.001.  DEFINITIONS.  In this chapter:
3-20                 (1)  "Restrictions," "subdivision," and "owner" have
3-21     the meanings assigned by Section 201.003.
3-22                 (2)  "Dedicatory instrument," "property owners'
3-23     association," and "restrictive covenant" have the meanings assigned
3-24     by Section 202.001.
3-25                 (3)  "Regular assessment" and "special assessment" have
3-26     the meanings assigned by Section 204.001.
3-27                 (4)  "Resale certificate" means a written statement
 4-1     issued, signed, and dated by an officer or authorized agent of a
 4-2     property owners' association that contains the information
 4-3     specified by Section 207.003(b).
 4-4           Sec. 207.002.  APPLICABILITY.  This chapter applies to a
 4-5     subdivision whose property owners' association is entitled to levy
 4-6     regular or special assessments that are secured by a continuing
 4-7     lien on property in the subdivision.
 4-8           Sec. 207.003.  DELIVERY OF SUBDIVISION INFORMATION TO OWNER.
 4-9     (a)  Not later than the 10th day after the date a written request
4-10     for subdivision information is received from an owner, the property
4-11     owners' association shall furnish to the owner:
4-12                 (1)  a current copy of the restrictive covenants
4-13     applying to the subdivision;
4-14                 (2)  a current copy of the bylaws and rules of the
4-15     property owners' association; and
4-16                 (3)  a resale certificate that complies with Subsection
4-17     (b).
4-18           (b)  A resale certificate under Subsection (a) must contain
4-19     the current operating budget of the property owners' association
4-20     and must state:
4-21                 (1)  any right of first refusal or other restraint in
4-22     the restrictive covenants that restricts the owner's right to
4-23     transfer the owner's property;
4-24                 (2)  the frequency and amount of any regular
4-25     assessment;
4-26                 (3)  the amount of any unpaid regular or special
4-27     assessment or any other unpaid fees currently due and payable by
 5-1     the owner;
 5-2                 (4)  any capital expenditures approved by the property
 5-3     owners' association for the next 12 months;
 5-4                 (5)  the amount of any reserves for capital
 5-5     expenditures and any portions of those reserves designated by the
 5-6     property owners' association for a specified project;
 5-7                 (6)  any unsatisfied judgments against the property
 5-8     owners' association;
 5-9                 (7)  the nature of any pending suits against the
5-10     property owners' association;
5-11                 (8)  any insurance coverage provided for the benefit of
5-12     property owners;
5-13                 (9)  whether the property owners' association has
5-14     knowledge that any alterations or improvements to the owner's
5-15     property violate the restrictive covenants applying to the
5-16     subdivision or the bylaws or rules of the property owners'
5-17     association;
5-18                 (10)  whether the property owners' association has
5-19     received notice from a governmental authority concerning violations
5-20     of health or building codes with respect to the owner's property or
5-21     any common areas owned by the association;
5-22                 (11)  whether the subdivision is built on leased land;
5-23     and
5-24                 (12)  the name, mailing address, and telephone number
5-25     of the association's managing agent, if any.
5-26           Sec. 207.004.  OWNER'S REMEDIES.  (a)  If a property owners'
5-27     association does not timely furnish information in accordance with
 6-1     Section 207.003, the owner may seek:
 6-2                 (1)  a court order directing the property owners'
 6-3     association to furnish the required information;
 6-4                 (2)  a judgment against the property owners'
 6-5     association for not more than $1,000;
 6-6                 (3)  a judgment against the property owners'
 6-7     association for court costs and attorney's fees; or
 6-8                 (4)  a judgment authorizing the owner or the owner's
 6-9     assignee to deduct the amount awarded under Subdivision (2) or (3)
6-10     from any future regular or special assessments payable to the
6-11     property owners' association.
6-12           (b)  The property owners' association is not liable to an
6-13     owner selling property in the subdivision for delay or failure to
6-14     furnish a resale certificate, and an officer or agent of the
6-15     association is not liable for a delay or failure to furnish a
6-16     certificate.
6-17           (c)  A property owners' association may not deny the validity
6-18     of any statement in the certificate.
6-19           (d)  A resale certificate does not affect:
6-20                 (1)  the right of a property owners' association to
6-21     recover debts or claims that arise or become due after the date the
6-22     resale certificate is prepared; or
6-23                 (2)  a lien on a property securing payment of future
6-24     assessments held by the association.
6-25           (e)  A purchaser, lender, or title insurer who relies on a
6-26     resale certificate is not liable for any debt or claim that is not
6-27     disclosed in the certificate.
 7-1           SECTION 5.  (a)  This Act takes effect September 1, 1999.
 7-2           (b)  The change in law made by this Act to Section 27.031,
 7-3     Government Code, applies only to actions filed on or after the
 7-4     effective date of this Act.  An action filed before the effective
 7-5     date of this Act is governed by the law in effect at the time the
 7-6     action was filed, and the former law is continued in effect for
 7-7     that purpose.
 7-8           (c)  The change in law made by this Act by the addition of
 7-9     Section 41.001(d), Property Code, does not apply to a cause of
7-10     action that accrued before the effective date of this Act.  A cause
7-11     of action that accrued before the effective date of this Act is
7-12     governed by the law in effect when the cause of action accrued, and
7-13     the former law is continued in effect for that purpose.
7-14           SECTION 6.  The importance of this legislation and the
7-15     crowded condition of the calendars in both houses create an
7-16     emergency and an imperative public necessity that the
7-17     constitutional rule requiring bills to be read on three several
7-18     days in each house be suspended, and this rule is hereby suspended.