AN ACT 1-1 relating to the disclosure of certain information by a property 1-2 owners' association. 1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-4 SECTION 1. Title 11, Property Code, is amended by adding 1-5 Chapter 207 to read as follows: 1-6 CHAPTER 207. DISCLOSURE OF INFORMATION BY PROPERTY OWNERS' 1-7 ASSOCIATIONS 1-8 Sec. 207.001. DEFINITIONS. In this chapter: 1-9 (1) "Restrictions" has the meaning assigned by Section 1-10 201.003. 1-11 (2) "Dedicatory instrument," "property owners' 1-12 association," and "restrictive covenant" have the meanings assigned 1-13 by Section 202.001. 1-14 (3) "Owner" means a person who owns record title to 1-15 property in a subdivision or the personal representative of an 1-16 individual who owns record title to property in a subdivision. 1-17 (4) "Regular assessment" and "special assessment" have 1-18 the meanings assigned by Section 204.001. 1-19 (5) "Resale certificate" means a written statement 1-20 issued, signed, and dated by an officer or authorized agent of a 1-21 property owners' association that contains the information 1-22 specified by Section 207.003(b). 1-23 (6) "Subdivision" means all land that has been divided 1-24 into two or more parts and that is or was burdened by restrictions 2-1 limiting at least the majority of the land area burdened by 2-2 restrictions, excluding streets and public areas, to residential 2-3 use only, if the instrument or instruments creating the 2-4 restrictions are recorded in the deed or real property records of a 2-5 county. 2-6 Sec. 207.002. APPLICABILITY. This chapter applies to a 2-7 subdivision with a property owners' association that is entitled to 2-8 levy regular or special assessments. 2-9 Sec. 207.003. DELIVERY OF SUBDIVISION INFORMATION TO OWNER. 2-10 (a) Not later than the 10th day after the date a written request 2-11 for subdivision information is received from an owner, owner's 2-12 agent, or title insurance company or its agent acting on behalf of 2-13 the owner, the property owners' association shall deliver to the 2-14 owner, owner's agent, or title insurance company or its agent: 2-15 (1) a current copy of the restrictions applying to the 2-16 subdivision; 2-17 (2) a current copy of the bylaws and rules of the 2-18 property owners' association; and 2-19 (3) a resale certificate that complies with Subsection 2-20 (b). 2-21 (b) A resale certificate under Subsection (a) must contain: 2-22 (1) a statement of any right of first refusal or other 2-23 restraint contained in the restrictions or restrictive covenants 2-24 that restricts the owner's right to transfer the owner's property; 2-25 (2) the frequency and amount of any regular 2-26 assessments; 3-1 (3) the amount of any special assessment that is due 3-2 after the date the resale certificate is prepared; 3-3 (4) the total of all amounts due and unpaid to the 3-4 property owners' association that are attributable to the owner's 3-5 property; 3-6 (5) capital expenditures, if any, approved by the 3-7 property owners' association for the property owners' association's 3-8 current fiscal year; 3-9 (6) the amount of reserves, if any, for capital 3-10 expenditures; 3-11 (7) the property owners' association's current 3-12 operating budget and balance sheet; 3-13 (8) the total of any unsatisfied judgments against the 3-14 property owners' association; 3-15 (9) the style and cause number of any pending lawsuit 3-16 in which the property owners' association is a defendant; 3-17 (10) a copy of a certificate of insurance showing the 3-18 property owners' association's property and liability insurance 3-19 relating to the common areas and common facilities; 3-20 (11) a description of any conditions on the owner's 3-21 property that the property owners' association board has actual 3-22 knowledge are in violation of the restrictions applying to the 3-23 subdivision or the bylaws or rules of the property owners' 3-24 association; 3-25 (12) a summary or copy of notices received by the 3-26 property owners' association from any governmental authority 4-1 regarding health or housing code violations existing on the 4-2 preparation date of the certificate relating to the owner's 4-3 property or any common areas or common facilities owned or leased 4-4 by the property owners' association; 4-5 (13) the amount of any administrative transfer fee 4-6 charged by the property owners' association for a change of 4-7 ownership of property in the subdivision; 4-8 (14) the name, mailing address, and telephone number 4-9 of the property owners' association's managing agent, if any; and 4-10 (15) a statement indicating whether the restrictions 4-11 allow foreclosure of a property owners' association's lien on the 4-12 owner's property for failure to pay assessments. 4-13 (c) A property owners' association may charge a reasonable 4-14 fee to assemble, copy, and deliver the information required by this 4-15 section and may charge a reasonable fee to prepare and deliver an 4-16 update of a resale certificate. 4-17 (d) The property owners' association shall deliver the 4-18 information required by Subsection (a) to the person specified in 4-19 the written request. A written request that does not specify the 4-20 name and location to which the information is to be sent is not 4-21 effective. The property owners' association may deliver the 4-22 information required by Subsection (a) and any update to the resale 4-23 certificate by mail, hand delivery, or alternative delivery means 4-24 specified in the written request. 4-25 (e) Unless required by a dedicatory instrument, neither a 4-26 property owners' association or its agent is required to inspect a 5-1 property before issuing a resale certificate or an update to a 5-2 resale certificate. 5-3 Sec. 207.004. OWNER'S REMEDIES FOR FAILURE BY PROPERTY 5-4 OWNERS' ASSOCIATION TO TIMELY DELIVER INFORMATION. (a) If a 5-5 property owners' association does not timely deliver information in 5-6 accordance with Section 207.003, the owner, owner's agent, or title 5-7 insurance company or its agent acting on behalf of the owner may 5-8 submit a second request for the information. 5-9 (b) If a property owners' association fails to deliver the 5-10 information required under Section 207.003 before the seventh day 5-11 after the second request for the information was mailed by 5-12 certified mail, return receipt requested, or hand delivered, 5-13 evidenced by receipt, the owner: 5-14 (1) may seek one or any combination of the following: 5-15 (A) a court order directing the property owners' 5-16 association to furnish the required information; 5-17 (B) a judgment against the property owners' 5-18 association for not more than $500; 5-19 (C) a judgment against the property owners' 5-20 association for court costs and attorney's fees; or 5-21 (D) a judgment authorizing the owner or the 5-22 owner's assignee to deduct the amounts awarded under Paragraphs (B) 5-23 and (C) from any future regular or special assessments payable to 5-24 the property owners' association; and 5-25 (2) may provide a buyer under contract to purchase the 5-26 owner's property an affidavit that states that the owner, owner's 6-1 agent, or title insurance company or its agent acting on behalf of 6-2 the owner made, in accordance with this chapter, two written 6-3 requests to the property owners' association for the information 6-4 described in Section 207.003 and that the association did not 6-5 timely provide the information. 6-6 (c) If the owner provides a buyer under contract to purchase 6-7 the owner's property an affidavit in accordance with Subsection 6-8 (b)(2): 6-9 (1) the buyer, lender, or title insurance company or 6-10 its agent is not liable to the property owners' association for: 6-11 (A) any money that is due and unpaid to the 6-12 property owners' association on the date the affidavit was 6-13 prepared; and 6-14 (B) any debt to the property owners' association 6-15 or claim by the property owners' association that accrued before 6-16 the date the affidavit was prepared; and 6-17 (2) the property owners' association's lien to secure 6-18 the amounts due the property owners' association on the owner's 6-19 property on the date the affidavit was prepared shall automatically 6-20 terminate. 6-21 Sec. 207.005. EFFECT OF RESALE CERTIFICATE; LIABILITY. 6-22 (a) A property owners' association may not deny the validity of 6-23 any statement in the resale certificate. The property owners' 6-24 association's lien to secure undisclosed amounts due the property 6-25 owners' association on the date the resale certificate is prepared 6-26 shall automatically terminate as a lien securing the undisclosed 7-1 amount. A buyer, buyer's agent, owner, owner's agent, lender, and 7-2 title insurance company and its agent are not liable for any debt 7-3 or claim existing on the preparation date of the resale certificate 7-4 that is not disclosed in the resale certificate. 7-5 (b) A resale certificate does not affect: 7-6 (1) the right of a property owners' association to 7-7 recover debts or claims that arise or become due after the date the 7-8 resale certificate is prepared; or 7-9 (2) a lien on a property securing payment of future 7-10 assessments held by the property owners' association. 7-11 (c) The owner's agent and the title insurance company and 7-12 its agent are not liable to a buyer for any delay or failure by the 7-13 property owners' association in delivering the information required 7-14 by Section 207.003. 7-15 (d) Except as provided by Section 207.004, the property 7-16 owners' association is not liable to an owner selling property in 7-17 the subdivision for delay or failure to deliver the information 7-18 required by Section 207.003. An officer or agent of the property 7-19 owners' association is not liable for a delay or failure to furnish 7-20 a resale certificate. 7-21 SECTION 2. This Act takes effect September 1, 1999. 7-22 SECTION 3. The importance of this legislation and the 7-23 crowded condition of the calendars in both houses create an 7-24 emergency and an imperative public necessity that the 7-25 constitutional rule requiring bills to be read on three several 7-26 days in each house be suspended, and this rule is hereby suspended. _______________________________ _______________________________ President of the Senate Speaker of the House I hereby certify that S.B. No. 434 passed the Senate on April 13, 1999, by a viva-voce vote; and that the Senate concurred in House amendments on May 28, 1999, by a viva-voce vote. _______________________________ Secretary of the Senate I hereby certify that S.B. No. 434 passed the House, with amendments, on May 26, 1999, by a non-record vote. _______________________________ Chief Clerk of the House Approved: _______________________________ Date _______________________________ Governor