By Coleman H.B. No. 3298
Line and page numbers may not match official copy.
Bill not drafted by TLC or Senate E&E.
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the powers of property owners' associations.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Sections 204.001 and 204.002, Property Code, are
1-5 amended to read as follows:
1-6 Sec. 204.001. Definitions. In this chapter:
1-7 (1) "Restrictions," "residential real estate
1-8 subdivision," "subdivision," "owner," "real property records," and
1-9 "lienholder" have the meanings assigned by Section 201.003.
1-10 (2) "Dedicatory instrument," "petition," and
1-11 "restrictive covenant" have the meanings assigned by Section
1-12 202.001.
1-13 (3) "Regular assessment" means an assessment, charge,
1-14 fee, or dues that each owner of property within a subdivision is
1-15 required to pay to the property owners' association on a regular
1-16 basis and that are to be used by the association for the benefit of
1-17 the subdivision in accordance with the original, extended, added,
1-18 or modified restrictions.
1-19 (4) "Special assessment" means an assessment, charge,
1-20 fee, or dues that each owner of property within a subdivision is
1-21 required to pay to the property owners' association, after a vote
2-1 of the membership, for the purpose of paying for the costs of
2-2 capital improvements to the common areas that are incurred or will
2-3 be incurred by the association during the fiscal year. A special
2-4 assessment may be assessed before or after the association incurs
2-5 the capital improvement costs.
2-6 (5) "Unrestricted Subdivision" means a subdivision
2-7 which was formerly burdened by restrictions limiting all or at
2-8 least a majority of the land area, excluding streets and public
2-9 areas, to residential use, but the restrictions have lapsed or
2-10 terminated as to some or all the subdivision. The entirety of the
2-11 subdivision is subject to this chapter.
2-12 (6) "Lapsed Restrictions" means restrictions which are
2-13 no longer in effect due to the passing of the stated term of years
2-14 or the termination date in the restrictions.
2-15 (7) "Chapter 201 Subdivision" means a subdivision
2-16 which utilized the procedures of Chapter 201 to create, modify or
2-17 extend restrictions and the created, modifies or extended
2-18 restrictions burden only a portion of the subdivision due to the
2-19 application of Section 201.009(b). The entirety of the subdivision
2-20 is subject to this chapter.
2-21 (8) "Subdivision" and "Residential real estate
2-22 subdivision" have the same meaning, and include subdivisions
2-23 reflected on recorded maps or plats approved by applicable
2-24 governmental authorities, subdivisions created by unrecorded maps
2-25 or plats (even if created in violation of applicable governmental
3-1 rules and regulations), subdivisions created by separate
3-2 conveyances of lots by metes and bounds descriptions, and any other
3-3 method of division of real property.
3-4 (9) "Restrictions" include restrictive covenants
3-5 contained in separate deeds to real property in a subdivision, in a
3-6 recorded map or plat, in a separate master document applicable to
3-7 the subdivision, or any other instrument sufficient to establish
3-8 restrictive covenants under applicable law.
3-9 Sec. 204.002. Application. (a) This chapter applies only
3-10 to a residential real estate subdivision including a Chapter 201
3-11 subdivision and an unrestricted subdivision, excluding a
3-12 condominium development governed by Title 7, Property Code, that is
3-13 located in whole or in part in a county with a population of 2.8
3-14 million or more.
3-15 (b) This chapter applies to a restriction regardless of its
3-16 effective date.
3-17 (c) This chapter does not apply to portions of a subdivision
3-18 that are zoned for or that contain a commercial structure, an
3-19 industrial structure, an apartment complex, or a condominium
3-20 development governed by Title 7, Property Code. For purposes of
3-21 this subsection, "apartment complex" means two or more dwellings in
3-22 one or more buildings that are owned by the same owner, located on
3-23 the same lot or tract, and managed by the same owner, agent, or
3-24 management company.
3-25 (d) This chapter applies without regard to the prior use of
4-1 Chapter 201 to create, modify or extend restrictions over a portion
4-2 of a subdivision.
4-3 SECTION 2. Section 204.004(c), Government Code, is amended
4-4 to read as follows:
4-5 (c) The association's board of directors or trustees must be
4-6 elected or appointed in accordance with the applicable provisions
4-7 of the restrictions, if any, and the association's articles of
4-8 incorporation or bylaws.
4-9 SECTION 3. Sections 204.005 through 204.009, Government
4-10 Code, are amended to read as follows:
4-11 Sec. 204.005. CREATION OF, Extension of, Addition to, or
4-12 Modification of Existing Restrictions. (a) A property owners'
4-13 association has authority to approve and circulate a petition
4-14 relating to the creation of, extension of, addition to, or
4-15 modification of existing restrictions. A property owners'
4-16 association is not required to comply with Sections
4-17 201.009-201.012.
4-18 (b) A petition to create, extend, add to, or modify existing
4-19 restrictions approved and circulated by a property owners'
4-20 association is effective if:
4-21 (1) the petition is approved by the owners, excluding
4-22 lienholders, contract purchasers, and the owners of mineral
4-23 interests, of at least 75 percent of the real property in the
4-24 subdivision or a smaller percentage required by the original
4-25 dedicatory instrument; and
5-1 (2) the petition is filed as a dedicatory instrument
5-2 with the county clerk of the county in which the subdivision is
5-3 located.
5-4 (c) If a subdivision consisting of multiple sections, each
5-5 with its own restrictions, is represented by a single property
5-6 owners' association, the approval requirement may be satisfied by
5-7 obtaining approval of at least 75 percent of the owners on a
5-8 section-by-section basis or of the total number of properties in
5-9 the property owners' association's jurisdiction.
5-10 (d) If approved, the petition is binding on all properties
5-11 in the subdivision or section, as applicable.
5-12 (e) A property owners' association that circulates a
5-13 petition must notify all record owners of property in the
5-14 subdivision in writing of the proposed creation of restrictions or,
5-15 extension, addition to, or modification of the existing
5-16 restrictions. Notice may be hand-delivered to residences within
5-17 the subdivision or sent by regular mail to the owner's last known
5-18 mailing address as reflected in the ownership records maintained by
5-19 the property owners' association, or in the records of the relevant
5-20 central appraisal district. The approval of multiple owners of a
5-21 property may be reflected by the signature of a single co-owner.
5-22 Sec. 204.006. Creation of Property Owners' Association.
5-23 (a) If existing restrictions applicable to a subdivision do not
5-24 provide for a property owners' association and require approval of
5-25 more than 60 percent of the owners to add to or modify the original
6-1 dedicating instrument, a petition to add to or modify the existing
6-2 restrictions for the sole purpose of creating and operating a
6-3 property owners' association with mandatory membership, mandatory
6-4 regular or special assessments, and equivalent voting rights for
6-5 each of the owners in the subdivision is effective if:
6-6 (1) a petition committee has been formed as prescribed
6-7 by Section 201.005;
6-8 (2) the petition is approved by the owners, excluding
6-9 lienholders, contract purchasers, and the owners of mineral
6-10 interests, of at least 60 percent of the real property in the
6-11 subdivision; and
6-12 (3) the procedure employed in the circulation and
6-13 approval of the petition to create restrictions, or add to or amend
6-14 the existing restrictions for the specified purpose complies with
6-15 the requirements of this chapter.
6-16 (b) If the circulated petition is not approved by the
6-17 required percentage of owners within one year of the creation of
6-18 the petition committee, the petition is void and another petition
6-19 committee may be formed.
6-20 (c) If the petition is approved, the petition is binding on
6-21 all properties in the subdivision or section, as applicable.
6-22 (d) Subsections (a), (b) and (c) do not apply to
6-23 unrestricted subdivisions or Chapter 201 subdivisions. For the
6-24 purpose of creating restrictions in unrestricted subdivisions, an
6-25 entity is deemed to be a property owners association with powers
7-1 under this Chapter if:
7-2 (1) the entity is a Texas Non Profit Corporation,
7-3 (2) the articles of incorporation or bylaws of the
7-4 entity state that the entity is (i) a designated representative of
7-5 owners of property in the unrestricted subdivision, or (ii) a
7-6 "homeowner association," "community association," "civic
7-7 association," or "civic club" for the unrestricted subdivision.
7-8 (3) membership in the entity is open to all owners of
7-9 property in the unrestricted subdivision, and
7-10 (4) As of the date the entity exercises rights under
7-11 this Chapter, the entity has membership of owners of at least %
7-12 of the unrestricted subdivision, determined by either number of
7-13 lots, number of separately owned parcels or square footage,
7-14 excluding streets and public areas.
7-15 Sec. 204.007. Effect on Lienholders. (a) [Extensions]
7-16 Creation of restrictions, or extensions of, additions to, or
7-17 modifications of restrictions under this chapter are binding on a
7-18 lienholder, excluding restrictions relating to regular or special
7-19 assessment increases if the assessment is not subordinated to
7-20 purchase money or home improvement liens.
7-21 (b) If the assessment lien of the property owners'
7-22 association is subordinate to purchase money or home improvement
7-23 liens, the lienholder is not entitled to notice of the proposed
7-24 dedicatory instrument and the lienholder is bound by the instrument
7-25 if the instrument is approved. If the assessment lien is not
8-1 subordinated, a lienholder who is not a signatory to the dedicatory
8-2 instrument and whose lien was established before the effective date
8-3 of the dedicatory instrument is not bound by the portion of the
8-4 dedicatory instrument that increases the amount of the regular or
8-5 special assessment during any period of ownership by the
8-6 lienholder.
8-7 (c) A person who acquires title to the property at a
8-8 foreclosure sale or by deed from a foreclosing lienholder is bound
8-9 by the assessment increase.
8-10 Sec. 204.008. Method of Adoption. [An] Creation of
8-11 restrictions, or the extension, addition to, or modification of
8-12 restrictions proposed by a property owners' association may be
8-13 adopted:
8-14 (1) by a written ballot that states the substance of
8-15 the amendment and specifies the date by which a ballot must be
8-16 received to be counted;
8-17 (2) at a meeting of the members represented by the
8-18 property owners' association if written notice of the meeting
8-19 stating the purpose of the meeting is delivered to each owner of
8-20 property in the subdivision;
8-21 (3) by door-to-door circulation of a petition by the
8-22 property owners' association or a person authorized by the property
8-23 owners' association;
8-24 (4) by a method permitted by the existing
8-25 restrictions; or
9-1 (5) by a combination of the methods described by this
9-2 section.
9-3 Sec. 204.009. Texas Nonprofit Corporations. (a) If the
9-4 property owners' association is referenced in the created,
9-5 existing, extended, added to, or modified restrictions as a Texas
9-6 nonprofit corporation, the instrument contemplates the interaction
9-7 of a nonprofit corporation, its articles of incorporation, and its
9-8 bylaws.
9-9 (b) The property owners' association has the powers and
9-10 shall promote the purposes enumerated in the articles of
9-11 incorporation and bylaws. These powers and purposes necessarily
9-12 modify the express provisions of the restrictions to include the
9-13 referenced powers and purposes.
9-14 SECTION 4. Chapter 204, Government Code, is amended by
9-15 adding new Section 204.012 to read as follows:
9-16 Sec. 204.012. REINSTATEMENT OF LAPSED RESTRICTIONS. (a) An
9-17 unrestricted subdivision may reinstate its lapsed restrictions by a
9-18 petition to reinstate the lapsed restrictions if:
9-19 (1) a petition committee has been formed as prescribed
9-20 by Section 201.005;
9-21 (2) the petition is approved by the owners, excluding
9-22 lienholders, contract purchasers, and the owners of mineral
9-23 interests, of at least 60 percent of the real property in the
9-24 subdivision; and
9-25 (3) the procedure employed in the circulation and
10-1 approval of the petition to create restrictions, or add to or amend
10-2 the existing restrictions for the specified purpose complies with
10-3 the requirements of this chapter.
10-4 (b) If the circulated petition is not approved by the
10-5 required percentage of owners within one year of the creation of
10-6 the petition committee, the petition is void and another petition
10-7 committee may be formed.
10-8 (c) If the petition is approved, the petition is binding on
10-9 all properties in the subdivision or section, as applicable. The
10-10 provisions of subsections 204.005 do not apply to reinstatement of
10-11 lapsed restrictions.
10-12 (d) The reinstated restrictions shall have an initial term
10-13 of 10 years and automatic renewals of 10 years each, subject to a
10-14 vote to amend or terminate the restrictions of the owners of at
10-15 least 60% of the real property in the subdivision.
10-16 (e) Other than reinstating the lapsed restrictions for the
10-17 term set forth in subsection 204.012(d), the restrictions may not
10-18 be modified except as follows:
10-19 (1) to remove any illegal or unconstitutional
10-20 provisions, including those relating to race;
10-21 (2) to create a formal property owners association
10-22 with mandatory membership and equivalent voting rights for each
10-23 owner, which voting rights may be subject to payment of applicable
10-24 dues or assessments but without any mandatory assessments;
10-25 (3) to provide that both use and structures shall be
11-1 residential; or
11-2 (4) to clarify any ambiguous provisions, as determined
11-3 by the petition committee.
11-4 (f) This subsection also applies to a Chapter 201
11-5 subdivision which acted prior to the termination of its former
11-6 restrictions to extent, modify or create restrictions under Chapter
11-7 201, as if the restrictions had lapsed. The restrictions which
11-8 would have lapsed, but for the Chapter 201 petition, shall be the
11-9 restrictions to be reinstated, not the Chapter 201 petition
11-10 restrictions. The Chapter 201 petition restrictions shall continue
11-11 in effect, unless provided to the contrary in the petition provided
11-12 for in subsection 204.012(a) above.
11-13 SECTION 5. EMERGENCY. The importance of this legislation
11-14 and the crowded condition of the calendars in both houses create an
11-15 emergency and an imperative public necessity that the
11-16 constitutional rule requiring bills to be read on three several
11-17 days in each house be suspended, and this rule is hereby suspended,
11-18 and that this Act take effect and be in force from and after its
11-19 passage, and it is so enacted.