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