1-1     By:  Brown                                             S.B. No. 434
 1-2           (In the Senate - Filed February 8, 1999; February 9, 1999,
 1-3     read first time and referred to Committee on State Affairs;
 1-4     April 6, 1999, reported adversely, with favorable Committee
 1-5     Substitute by the following vote:  Yeas 8, Nays 0; April 6, 1999,
 1-6     sent to printer.)
 1-7     COMMITTEE SUBSTITUTE FOR S.B. No. 434                    By:  Brown
 1-8                            A BILL TO BE ENTITLED
 1-9                                   AN ACT
1-10     relating to the disclosure of certain information by a property
1-11     owners' association.
1-12           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13           SECTION 1.  Title 11, Property Code, is amended by adding
1-14     Chapter 207 to read as follows:
1-15         CHAPTER 207.  DISCLOSURE OF INFORMATION BY PROPERTY OWNERS'
1-16                                ASSOCIATIONS
1-17           Sec. 207.001.  DEFINITIONS.  In this chapter:
1-18                 (1)  "Restrictions" has the meaning assigned by Section
1-19     201.003.
1-20                 (2)  "Dedicatory instrument," "property owners'
1-21     association," and "restrictive covenant" have the meanings assigned
1-22     by Section 202.001.
1-23                 (3)  "Owner" means a person who owns record title to
1-24     property in a subdivision or the personal representative of an
1-25     individual who owns record title to property in a subdivision.
1-26                 (4)  "Regular assessment" and "special assessment" have
1-27     the meanings assigned by Section 204.001.
1-28                 (5)  "Resale certificate" means a written statement
1-29     issued, signed, and dated by an officer or authorized agent of a
1-30     property owners' association that contains the information
1-31     specified by Section 207.003(b).
1-32                 (6)  "Subdivision" means all land that has been divided
1-33     into two or more parts and that is or was burdened by restrictions
1-34     limiting at least the majority of the land area burdened by
1-35     restrictions, excluding streets and public areas, to residential
1-36     use only, if the instrument or instruments creating the
1-37     restrictions are recorded in the deed or real property records of a
1-38     county.
1-39           Sec. 207.002.  APPLICABILITY.  This chapter applies to a
1-40     subdivision with a property owners' association that is entitled to
1-41     levy regular or special assessments.
1-42           Sec. 207.003.  DELIVERY OF SUBDIVISION INFORMATION TO OWNER.
1-43     (a)  Not later than the 10th day after the date a written request
1-44     for subdivision information is received from an owner, owner's
1-45     agent, or title insurance company or its agent acting on behalf of
1-46     the owner, the property owners' association shall deliver to the
1-47     owner, owner's agent, or title insurance company or its agent:
1-48                 (1)  a current copy of the restrictions applying to the
1-49     subdivision;
1-50                 (2)  a current copy of the bylaws and rules of the
1-51     property owners' association; and
1-52                 (3)  a resale certificate that complies with Subsection
1-53     (b).
1-54           (b)  A resale certificate under Subsection (a) must contain:
1-55                 (1)  a statement of any right of first refusal or other
1-56     restraint contained in the restrictions or restrictive covenants
1-57     that restricts the owner's right to transfer the owner's property;
1-58                 (2)  the frequency and amount of any regular
1-59     assessments;
1-60                 (3)  the amount of any special assessment that is due
1-61     after the date the resale certificate is prepared;
1-62                 (4)  the total of all amounts due and unpaid to the
1-63     property owners' association that are attributable to the owner's
1-64     property;
 2-1                 (5)  capital expenditures, if any, approved by the
 2-2     property owners' association for the property owners' association's
 2-3     current fiscal year;
 2-4                 (6)  the amount of reserves, if any, for capital
 2-5     expenditures;
 2-6                 (7)  the property owners' association's current
 2-7     operating budget and balance sheet;
 2-8                 (8)  the total of any unsatisfied judgments against the
 2-9     property owners' association;
2-10                 (9)  the style and cause number of any pending lawsuit
2-11     in which the property owners' association is a defendant;
2-12                 (10)  a copy of a certificate of insurance showing the
2-13     property owners' association's property and liability insurance
2-14     relating to the common areas and common facilities;
2-15                 (11)  a description of any conditions on the owner's
2-16     property that the property owners' association board has actual
2-17     knowledge are in violation of the restrictions applying to the
2-18     subdivision or the bylaws or rules of the property owners'
2-19     association;
2-20                 (12)  a summary or copy of notices received by the
2-21     property owners' association from any governmental authority
2-22     regarding health or housing code violations existing on the
2-23     preparation date of the certificate relating to the owner's
2-24     property or any common areas or common facilities owned or leased
2-25     by the property owners' association;
2-26                 (13)  the amount of any administrative transfer fee
2-27     charged by the property owners' association for a change of
2-28     ownership of property in the subdivision;
2-29                 (14)  the name, mailing address, and telephone number
2-30     of the property owners' association's managing agent, if any; and
2-31                 (15)  a statement indicating whether the restrictions
2-32     allow foreclosure of a property owners' association's lien on the
2-33     owner's property for failure to pay assessments.
2-34           (c)  A property owners' association may charge a reasonable
2-35     fee to assemble, copy, and deliver the information required by this
2-36     section and may charge a reasonable fee to prepare and deliver an
2-37     update of a resale certificate.
2-38           (d)  The property owners' association shall deliver the
2-39     information required by Subsection (a) to the person specified in
2-40     the written request.  A written request that does not specify the
2-41     name and location to which the information is to be sent is not
2-42     effective.  The property owners' association may deliver the
2-43     information required by Subsection (a) and any update to the resale
2-44     certificate by mail, hand delivery, or alternative delivery means
2-45     specified in the written request.
2-46           (e)  Unless required by a dedicatory instrument, neither a
2-47     property owners' association or its agent is required to inspect a
2-48     property before issuing a resale certificate or an update to a
2-49     resale certificate.
2-50           Sec. 207.004.  OWNER'S REMEDIES FOR FAILURE BY PROPERTY
2-51     OWNERS' ASSOCIATION TO TIMELY DELIVER INFORMATION.  (a)  If a
2-52     property owners' association does not timely deliver information in
2-53     accordance with Section 207.003, the owner, owner's agent, or title
2-54     insurance company or its agent acting on behalf of the owner may
2-55     submit a second request for the information.
2-56           (b)  If a property owners' association fails to deliver the
2-57     information required under Section 207.003 before the 7th day after
2-58     the second request for the information was mailed by certified
2-59     mail, return receipt requested, or hand delivered, evidenced by
2-60     receipt, the owner:
2-61                 (1)  may seek one or any combination of the following:
2-62                       (A)  a court order directing the property owners'
2-63     association to furnish the required information;
2-64                       (B)  a judgment against the property owners'
2-65     association for not more than $500;
2-66                       (C)  a judgment against the property owners'
2-67     association for court costs and attorney's fees; or
2-68                       (D)  a judgment authorizing the owner or the
2-69     owner's assignee to deduct the amounts awarded under Paragraphs (B)
 3-1     and (C) from any future regular or special assessments payable to
 3-2     the property owners' association; and
 3-3                 (2)  may provide a buyer under contract to purchase the
 3-4     owner's property an affidavit that states that the owner, owner's
 3-5     agent, or title insurance company or its agent acting on behalf of
 3-6     the owner made, in accordance with this chapter, two written
 3-7     requests to the property owners' association for the information
 3-8     described in Section 207.003 and that the association did not
 3-9     timely provide the information.
3-10           (c)  If the owner provides a buyer under contract to purchase
3-11     the owner's property an affidavit in accordance with Subsection
3-12     (b)(2):
3-13                 (1)  the buyer, lender, or title insurance company or
3-14     its agent is not liable to the property owners' association for:
3-15                       (A)  any money that is due and unpaid to the
3-16     property owners' association on the date the affidavit was
3-17     prepared; and
3-18                       (B)  any debt to the property owners' association
3-19     or claim by the property owners' association that accrued before
3-20     the date the affidavit was prepared; and
3-21                 (2)  the property owners' association's lien to secure
3-22     the amounts due the property owners' association on the owner's
3-23     property on the date the affidavit was prepared shall automatically
3-24     terminate.
3-25           Sec. 207.005.  EFFECT OF RESALE CERTIFICATE; LIABILITY.
3-26     (a)  A property owners' association may not deny the validity of
3-27     any statement in the resale certificate.  The property owners'
3-28     association's lien to secure undisclosed amounts due the property
3-29     owners' association on the date the resale certificate is prepared
3-30     shall automatically terminate as a lien securing the undisclosed
3-31     amount.  A buyer, buyer's agent, owner, owner's agent, lender, and
3-32     title insurance company and its agent are not liable for any debt
3-33     or claim existing on the preparation date of the resale certificate
3-34     that is not disclosed in the resale certificate.
3-35           (b)  A resale certificate does not affect:
3-36                 (1)  the right of a property owners' association to
3-37     recover debts or claims that arise or become due after the date the
3-38     resale certificate is prepared; or
3-39                 (2)  a lien on a property securing payment of future
3-40     assessments held by the property owners' association.
3-41           (c)  The owner's agent and the title insurance company and
3-42     its agent are not liable to a buyer for any delay or failure by the
3-43     property owners' association in delivering the information required
3-44     by Section 207.003.
3-45           (d)  Except as provided by Section 207.004, the property
3-46     owners' association is not liable to an owner selling property in
3-47     the subdivision for delay or failure to deliver the information
3-48     required by Section 207.003.  An officer or agent of the property
3-49     owners' association is not liable for a delay or failure to furnish
3-50     a resale certificate.
3-51           SECTION 2.  This Act takes effect September 1, 1999.
3-52           SECTION 3.  The importance of this legislation and the
3-53     crowded condition of the calendars in both houses create an
3-54     emergency and an imperative public necessity that the
3-55     constitutional rule requiring bills to be read on three several
3-56     days in each house be suspended, and this rule is hereby suspended.
3-57                                  * * * * *