By: Carona, Ellis S.B. No. 699
A BILL TO BE ENTITLED
AN ACT
1-1 relating to residential subdivisions that require membership in a
1-2 property 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. TEXAS PLANNED COMMUNITY ACT
1-7 SUBCHAPTER A. GENERAL PROVISIONS
1-8 Sec. 207.001. SHORT TITLE. This chapter may be cited as the
1-9 Texas Planned Community Act.
1-10 Sec. 207.002. DEFINITIONS. In this chapter:
1-11 (1) "Board" means the governing body of a property
1-12 owners' association.
1-13 (2) "Builder" means any person in the business of
1-14 constructing residential dwellings for sale to a consumer on any
1-15 property located in a residential subdivision.
1-16 (3) "Declarant" means:
1-17 (A) a person designated in the restrictions or a
1-18 dedicatory instrument as the declarant; or
1-19 (B) a person who succeeds to the special rights,
1-20 preferences, or privileges of the signatory as designated in the
1-21 original restrictions or dedicatory instrument.
1-22 (4) "Declaration" means an instrument filed in the
1-23 real property records of a county that includes restrictive
1-24 covenants governing a residential subdivision.
2-1 (5) "Dedicatory instrument" means each governing
2-2 instrument covering the establishment, maintenance, and operation
2-3 of a residential subdivision. The term includes restrictions or
2-4 similar instruments subjecting property to restrictive covenants,
2-5 bylaws, or similar instruments governing the administration or
2-6 operation of a property owners' association, to properly adopted
2-7 rules and regulations of the property owners' association, and to
2-8 all lawful amendments to the covenants, bylaws, rules, or
2-9 regulations.
2-10 (6) "Lienholder" means a person who holds a valid
2-11 vendor's lien or deed of trust lien secured by property located in
2-12 a residential subdivision.
2-13 (7) "Lot" means any designated parcel of land located
2-14 in a residential subdivision.
2-15 (8) "Member" means a member of the association, as
2-16 defined in the restrictions for a residential subdivision, or a lot
2-17 owner in the subdivision if the restrictions contain no definition.
2-18 (9) "Owner" means a person who holds record title to
2-19 property in a residential subdivision and includes the personal
2-20 representative of a person who holds record title to property in a
2-21 residential subdivision.
2-22 (10) "Petition" means an instrument, regardless of the
2-23 designation or title of the instrument, prepared to accomplish one
2-24 or more of the purposes authorized by this chapter.
2-25 (11) "Property owners' association" or "association"
2-26 means an incorporated or unincorporated association that:
3-1 (A) is designated as the representative of the
3-2 owners of property in a residential subdivision;
3-3 (B) has a membership primarily consisting of the
3-4 owners of the property covered by the dedicatory instrument for the
3-5 residential subdivision; and
3-6 (C) manages or regulates the residential
3-7 subdivision for the benefit of the owners of property in the
3-8 residential subdivision.
3-9 (12) "Regular assessment" means an assessment, charge,
3-10 fee, or dues that each owner of property within a residential
3-11 subdivision is required to pay to the property owners' association
3-12 on a regular basis and that is designated for use by the property
3-13 owners' association for the benefit of the residential subdivision
3-14 as provided by the restrictions.
3-15 (13) "Residential subdivision" or "subdivision" means
3-16 a subdivision, planned unit development, townhouse regime, or
3-17 similar planned development in which all land has been divided into
3-18 two or more parts and is or was subject to restrictions that:
3-19 (A) limit a majority of the land subject to the
3-20 dedicatory instruments, excluding streets and public areas, to
3-21 residential use only;
3-22 (B) are recorded in the real property records of
3-23 the county in which the residential subdivision is located; and
3-24 (C) require membership in a property owners'
3-25 association that has authority to impose regular or special
3-26 assessments on the property in the subdivision.
4-1 (14) "Restrictions" means one or more restrictive
4-2 covenants contained or incorporated by reference in a properly
4-3 recorded map, plat, replat, declaration, or other instrument filed
4-4 in the real property records or map or plat records. The term
4-5 includes any amendment or extension of the restrictions.
4-6 (15) "Restrictive covenant" means any covenant,
4-7 condition, or restriction contained in a dedicatory instrument,
4-8 whether mandatory, prohibitive, permissive, or administrative.
4-9 (16) "Special assessment" means an assessment, charge,
4-10 fee, or dues, other than a regular assessment, that each owner of
4-11 property located in a residential subdivision is required to pay to
4-12 the property owners' association, according to procedures required
4-13 by the dedicatory instruments, for:
4-14 (A) defraying, in whole or in part, the cost,
4-15 whether incurred before or after the assessment, of any
4-16 construction or reconstruction, unexpected repair, or replacement
4-17 of a capital improvement in common areas owned by the property
4-18 owners' association, including the necessary fixtures and personal
4-19 property related to the common areas;
4-20 (B) maintenance and improvement of common areas
4-21 owned by the property owners' association; or
4-22 (C) other purposes of the property owners'
4-23 association as stated in its articles of incorporation or the
4-24 dedicatory instrument for the residential subdivision.
4-25 Sec. 207.003. APPLICABILITY OF CHAPTER. (a) This chapter
4-26 applies only to a residential subdivision that is or was subject to
5-1 restrictions or provisions in a declaration that authorize the
5-2 property owners' association to collect regular or special
5-3 assessments on property in the subdivision.
5-4 (b) This chapter applies only to a property owners'
5-5 association that requires or required mandatory membership in the
5-6 association for all owners of residential property within the
5-7 subdivision subject to the association's dedicatory instruments.
5-8 (c) This chapter applies to a property owners' association
5-9 regardless of whether the entity is designated as a "homeowners'
5-10 association," "community association," or similar designation in
5-11 the restrictions or dedicatory instrument.
5-12 (d) This chapter does not apply to a condominium development
5-13 governed by Chapter 82.
5-14 (Sections 207.004 to 207.030 reserved for expansion
5-15 SUBCHAPTER B. AMENDMENT AND EXTENSION
5-16 OF RESTRICTIVE COVENANTS
5-17 Sec. 207.031. AMENDMENT OR EXTENSION OF EXISTING
5-18 RESTRICTIONS. (a) Subject to the limitations in a dedicatory
5-19 instrument applicable during a period of declarant control and in
5-20 addition to the powers and methods provided in an existing
5-21 dedicatory instrument or the restrictions, a property owners'
5-22 association may circulate and approve a petition relating to an
5-23 amendment or extension of existing restrictions. If an existing
5-24 dedicatory instrument for a residential subdivision contains
5-25 procedures for modifying, extending, or continuing the restrictions
5-26 and the procedures require less than 100 percent approval of the
6-1 property owners in the residential subdivision to modify, extend,
6-2 or continue the restrictions, the percentage approval required by
6-3 the restrictions prevails over the percentage required by
6-4 Subsection (c) or (d).
6-5 (b) If existing or expired restrictions for a residential
6-6 subdivision do not contain procedures for modifying, extending, or
6-7 continuing the restrictions or require 100 percent approval of the
6-8 property owners at any time in order to modify, extend, or continue
6-9 the restrictions, the property owners' association for the
6-10 subdivision may circulate and approve a petition relating to an
6-11 amendment, extension, or continuation of the restrictions. The
6-12 petition must comply with the limitations or prohibitions in a
6-13 dedicatory instrument applicable during a period of declarant
6-14 control.
6-15 (c) Except as provided by Subsection (a), a petition
6-16 described by Subsection (a) or (b) is effective if:
6-17 (1) the petition is approved by the owners, excluding
6-18 lienholders, purchasers under an executory contract, and owners of
6-19 mineral interests, of at least 66 percent of the lots in the
6-20 residential subdivision;
6-21 (2) the petition does not amend or extend a provision
6-22 that, under the restrictions, may not be amended or extended until
6-23 a certain event occurs;
6-24 (3) the petition is recorded as a dedicatory
6-25 instrument in the real property records of the county in which the
6-26 subdivision is located; and
7-1 (4) a copy of the recorded petition is provided to all
7-2 owners of lots in the subdivision.
7-3 (d) If a residential subdivision that consists of multiple
7-4 sections, each with its own restrictions, is represented by a
7-5 single property owners' association, the approval requirement is
7-6 satisfied by obtaining approval of at least 66 percent of the
7-7 owners of lots in each section or 66 percent of the total number of
7-8 lots in the association's jurisdiction.
7-9 (e) If approved, the petition is binding on all lots in the
7-10 residential subdivision or section, as applicable.
7-11 (f) A property owners' association that circulates a
7-12 petition must notify all record owners of property in the
7-13 residential subdivision in writing of the proposed amendment or
7-14 extension of the existing restrictions. Notice may be
7-15 hand-delivered to residents in the subdivision or sent by first
7-16 class mail to the owner's last known mailing address as reflected
7-17 in the ownership records maintained by the association. The
7-18 approval of multiple owners of a lot may be reflected by the
7-19 signature of a single co-owner.
7-20 (g) A petition under this section must contain:
7-21 (1) a statement of the purpose of the petition;
7-22 (2) a copy of the proposed amendment language;
7-23 (3) a summary of the anticipated effect of the
7-24 amendments;
7-25 (4) the date the petition was first placed in
7-26 circulation;
8-1 (5) the name and telephone number of a person
8-2 designated by the property owners' association to answer questions
8-3 about the petition and proposed amendments;
8-4 (6) the date by which a response to the petition is
8-5 due;
8-6 (7) the address to which a response is to be sent;
8-7 (8) the date on which the amendments will become
8-8 effective; and
8-9 (9) the date on which the petition will expire if it
8-10 is not approved.
8-11 (h) Not later than the 10th day after the petition expires
8-12 or is adopted, the property owners' association shall hand deliver
8-13 or send a notice to each owner by first class mail to the owner's
8-14 last known mailing address according to the association's records.
8-15 The notice must include a copy of the amendment, a statement that
8-16 the petition was approved or expired, a summary of the effects of
8-17 the approval if approved, and the effective date of any amendments.
8-18 (i) A petition under this section expires on the earlier of:
8-19 (1) the date specified in the petition; or
8-20 (2) one year after the date on which the petition was
8-21 first put into circulation.
8-22 (j) An action to challenge the validity of a dedicatory
8-23 instrument adopted by a property owners' association under this
8-24 section must be brought before the first anniversary of the date
8-25 the dedicatory instrument is recorded.
8-26 (k) Any lien recorded before a dedicatory instrument is
9-1 adopted by a property owners' association under this section is
9-2 subject to the dedicatory instrument at the time the instrument is
9-3 recorded in the real property records.
9-4 Sec. 207.032. TEXAS NONPROFIT CORPORATION. If a property
9-5 owners' association is a Texas nonprofit corporation, the
9-6 provisions of the Texas Non-Profit Corporation Act (Article
9-7 1396-1.01 et seq., Vernon's Texas Civil Statutes) apply to the
9-8 association, except to the extent that the provisions conflict with
9-9 this chapter.
9-10 (Sections 207.033 to 207.060 reserved for expansion
9-11 SUBCHAPTER C. MANAGEMENT OF ASSOCIATION
9-12 Sec. 207.061. POWERS OF PROPERTY OWNERS' ASSOCIATION.
9-13 (a) Unless otherwise provided by the restrictions or the articles
9-14 of incorporation or bylaws of the property owners' association, the
9-15 association board may:
9-16 (1) adopt and amend bylaws;
9-17 (2) adopt and amend budgets for revenues,
9-18 expenditures, and reserves;
9-19 (3) collect regular assessments or special assessments
9-20 for common expenses from property owners;
9-21 (4) hire and terminate managing agents and other
9-22 employees, agents, and independent contractors;
9-23 (5) institute, defend, intervene in, settle, or
9-24 compromise litigation or administrative proceedings in the name of
9-25 the association or on behalf of the association or two or more
9-26 property owners on matters affecting the subdivision;
10-1 (6) make contracts and incur liabilities relating to
10-2 the operation of the subdivision and the association;
10-3 (7) regulate the use, maintenance, repair,
10-4 replacement, modification, and appearance of the subdivision;
10-5 (8) adopt and amend rules that are not inconsistent
10-6 with recorded restrictions and that regulate the use, maintenance,
10-7 repair, modification, and appearance of property in the
10-8 subdivision, to the extent the rules affect subdivision property in
10-9 general or other residents in the subdivision;
10-10 (9) make additional improvements to the common areas
10-11 of the subdivision;
10-12 (10) acquire, hold, encumber, and convey in the name
10-13 of the association any right, title, or interest to real or
10-14 personal property;
10-15 (11) grant easements, leases, licenses, and
10-16 concessions through or over common areas;
10-17 (12) impose and receive payments, fees, or charges for
10-18 the use, rental, or operation of common areas and for services
10-19 provided to property owners;
10-20 (13) impose returned check charges and interest and
10-21 late charges for delinquent amounts due the association;
10-22 (14) impose reasonable fines for a violation of the
10-23 restrictions or the bylaws or rules of the association if notice
10-24 and an opportunity to be heard are provided under Subsection (e);
10-25 (15) adopt and amend rules relating to the collection
10-26 of delinquent amounts due the association and the application of
11-1 the payments;
11-2 (16) impose reasonable charges for preparing,
11-3 recording, or copying association records, including restrictions,
11-4 amendments, resale certificates, statements of delinquent amounts
11-5 due the association, and releases;
11-6 (17) assign the association's right to future income,
11-7 including the right to receive regular or special assessments, if:
11-8 (A) notice of the proposed assignment is mailed
11-9 to all association members; and
11-10 (B) at least two-thirds of the association
11-11 members who vote in person or by proxy at an association meeting
11-12 vote to approve the assignment;
11-13 (18) suspend the voting privileges of and the use of
11-14 common areas by an owner who is delinquent for more than 30 days in
11-15 the payment of amounts due the association;
11-16 (19) purchase insurance and fidelity bonds, including
11-17 directors' and officers' liability insurance, that the association
11-18 considers appropriate or necessary;
11-19 (20) subject to the requirements and limitations of
11-20 the Texas Non-Profit Corporation Act (Article 1396-1.01 et seq.,
11-21 Vernon's Texas Civil Statutes), indemnify a director, officer, or
11-22 committee member of the association who was, is, or may be named a
11-23 defendant or respondent in a proceeding in the person's capacity as
11-24 a director, officer, or committee member;
11-25 (21) if the restrictions vest architectural control
11-26 authority in the association or if the authority is vested in the
12-1 association under Section 207.063:
12-2 (A) implement written architectural control
12-3 guidelines that are consistent with recorded restrictions
12-4 regardless of whether the guidelines are recorded in the real
12-5 property records of the applicable county; and
12-6 (B) modify the guidelines as the association
12-7 finds necessary;
12-8 (22) exercise other powers conferred by the dedicatory
12-9 instruments;
12-10 (23) exercise other powers that may be exercised in
12-11 this state by a corporation of the same type as the association;
12-12 and
12-13 (24) exercise any other powers necessary and proper
12-14 for the operation of the association.
12-15 (b) An association board may exercise the powers granted in
12-16 this section only if a majority of owners who are present in person
12-17 or by proxy at a general membership meeting of the association vote
12-18 in favor of granting the powers to the board. This section does
12-19 not affect the powers of the association or its board to exercise
12-20 powers granted by the association's dedicatory instruments or other
12-21 applicable law. Notice of the meeting must be sent not later than
12-22 the 30th day before the date of the meeting and must inform the
12-23 owner that one of the purposes of the meeting is to consider
12-24 granting the board powers authorized by statute on the approval of
12-25 the association membership.
12-26 (c) Without the consent of the declarant, a dedicatory
13-1 instrument may not be amended to impose restrictions on a declarant
13-2 that are more restrictive than restrictions on other owners.
13-3 (d) An arbitrary or capricious bylaw or rule of the property
13-4 owners' association is not enforceable.
13-5 (e) Before a property owners' association may suspend an
13-6 owner's right to use a common area or file a suit against an owner,
13-7 other than a suit to foreclose under an association's lien, the
13-8 association or its agent must give written notice to the owner by
13-9 hand delivery or by certified mail, return receipt requested, at
13-10 the owner's last known address as reflected in the association's
13-11 records. The notice must describe the violation that is the basis
13-12 for the suspension action and any unpaid amount due to the
13-13 association by the owner. The notice must state that the owner has
13-14 the right to request a hearing before a board-appointed committee,
13-15 or before the board if the board does not appoint a committee, not
13-16 later than the 10th day after the date the owner receives the
13-17 notice to discuss and verify facts and resolve the matter in issue.
13-18 If a hearing is to be held before a committee, the notice must
13-19 state that the owner has the right to appeal the committee's
13-20 decision to the board by written notice to the board not later than
13-21 the 10th day after the date the owner receives notice of the
13-22 committee's decision. An owner who requests a hearing under this
13-23 subsection must submit the request in writing and deliver the
13-24 request to the association not later than the 10th day after the
13-25 date the owner receives notice of the suspension action under this
13-26 subsection or not later than the 10th day after the date the owner
14-1 receives notice of the committee's decision, as appropriate. The
14-2 association shall hold a hearing under this subsection not later
14-3 than the 30th day after the date the board receives the owner's
14-4 request for a hearing. The owner and the association may make an
14-5 audio recording of the meeting. This subsection does not apply if
14-6 the association files a suit seeking a temporary restraining order
14-7 or temporary injunctive relief or files a suit that includes
14-8 foreclosure as a cause of action. If a suit is filed relating to a
14-9 matter to which this subsection applies, a party to the suit may
14-10 file a motion to compel mediation. An owner is not liable for
14-11 attorney's fees incurred by the association relating to a matter
14-12 described by the notice unless the hearing requested by the owner
14-13 is held or attempted to be held in good faith by the association
14-14 within the period prescribed by this section. An owner or property
14-15 owners' association may use alternative dispute resolution
14-16 services.
14-17 (f) Before a property owners' association may charge an
14-18 owner for property damage or levy a fine for a violation of the
14-19 restrictions or the bylaws or rules of the association, the
14-20 association must give to the owner written notice that:
14-21 (1) describes the violation or property damage and
14-22 states the amount of the proposed fine or damage charge;
14-23 (2) states that the owner may request a hearing before
14-24 the board to verify facts or contest the fine or damage charge not
14-25 later than the 10th day after the date:
14-26 (A) the association deposited the notice to the
15-1 owner in the mail if the notice is mailed; or
15-2 (B) the owner received the notice if the notice
15-3 is hand-delivered; and
15-4 (3) grants the owner a reasonable period, by a
15-5 specified date, to cure the violation and avoid the fine unless the
15-6 owner was given notice and a reasonable opportunity to cure a
15-7 similar violation within the preceding 12 months.
15-8 (g) A property owners' association may collect reimbursement
15-9 of reasonable attorney's fees and other reasonable costs incurred
15-10 by the association relating to collecting amounts due the
15-11 association or enforcing restrictions or the bylaws or rules of the
15-12 association only if the owner is provided a written notice that
15-13 attorney's fees and costs will be charged to the owner if the
15-14 delinquency or violation continues after a date certain.
15-15 Attorney's fees that are incurred by the association before the
15-16 notice is provided to the owner may not be charged to the owner.
15-17 Attorney's fees and other costs incurred by the association
15-18 collected from the owner shall be paid directly to the association
15-19 or its management company or jointly to the association or its
15-20 management company and the attorney representing the association.
15-21 The attorney must furnish to the association an invoice for
15-22 services provided. This subsection does not apply to a
15-23 counterclaim of an association in a lawsuit brought against the
15-24 association by a property owner.
15-25 (h) In addition to the notice under Subsections (e), (f),
15-26 and (g), the property owners' association may give a copy of the
16-1 notice required by Subsection (e), (f), or (g) to an occupant of
16-2 the property. The association must give notice of the fine levied
16-3 or damage charged to the lot owner not later than the 30th day
16-4 after the date the fine or charge is imposed.
16-5 (i) A rule adopted or amended by a board is not effective
16-6 until the 30th day after the date a copy of the rule is mailed or
16-7 delivered to the owners, posted in a prominent public place within
16-8 the area of the property owners' association, or published in a
16-9 newspaper with general circulation in the area of the association.
16-10 (j) Directors may be removed from office as provided by the
16-11 dedicatory instruments or, if the dedicatory instruments do not
16-12 provide for the removal of a director, as provided by the Texas
16-13 Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's
16-14 Texas Civil Statutes).
16-15 Sec. 207.062. ASSESSMENTS. (a) An association board may
16-16 impose and increase regular and special assessments as provided by
16-17 the dedicatory instruments of the association.
16-18 (b) If a dedicatory instrument limits annual assessment
16-19 increases to a fixed percentage or dollar amount, the increase may
16-20 be accumulated and assessed in future years.
16-21 (c) If a dedicatory instrument sets a maximum dollar amount
16-22 for regular assessments or limits annual increases in regular
16-23 assessments to a fixed percentage or dollar amount, a majority of
16-24 lot owners may set the regular assessments at any amount,
16-25 regardless of the limits set in the dedicatory instruments, by:
16-26 (1) voting in person or by proxy at a regular or
17-1 special meeting of the association membership at which a quorum is
17-2 present under Subsection (d); or
17-3 (2) voting by mail ballot under Subsection (e).
17-4 (d) A vote to set regular assessments at a meeting of the
17-5 association membership under Subsection (c)(1) may occur only if
17-6 notice of the proposed increase in regular assessments is included
17-7 in the notice of the meeting. The meeting may not be held before
17-8 the 30th day after the date the notice of the meeting is mailed or
17-9 hand-delivered to the owners.
17-10 (e) A vote to change an assessment amount by mail ballot
17-11 under Subsection (c)(2) without an association membership meeting
17-12 may occur only if all members of the board unanimously support the
17-13 assessment change and the mail ballot includes a statement
17-14 indicating the board's unanimous support. The mail ballot must
17-15 state the date by which all ballots must be postmarked and mailed
17-16 to the association. The date by which a ballot must be postmarked
17-17 may not be before the 30th day after the date the ballot is mailed
17-18 to the association membership. The ballots may not be counted
17-19 before the seventh day after the required postmark date.
17-20 Sec. 207.063. ARCHITECTURAL CONTROL COMMITTEE. (a) This
17-21 section applies to restrictions providing for the creation and
17-22 operation of an architectural control committee with the power to
17-23 approve or deny applications for proposed original construction or
17-24 the modification of a building, structure, or improvement. Unless
17-25 otherwise provided by the dedicatory instruments, an association
17-26 board may serve as an architectural control committee.
18-1 (b) Unless the restrictions applicable to a residential
18-2 subdivision vest the architectural control authority in the
18-3 property owners' association on an earlier date, the architectural
18-4 control authority automatically vests in the association if:
18-5 (1) the term of the architectural control committee
18-6 authority expires as prescribed by the restrictions;
18-7 (2) a residence on the last available residential
18-8 building site in the subdivision is completed and sold;
18-9 (3) the person designated as the architectural control
18-10 committee in the restrictions assigns, in writing, authority to the
18-11 association; or
18-12 (4) the declarant, the declarant's designee, or any
18-13 person named in the dedicatory instrument as the architectural
18-14 control committee ceases to exercise its authority for more than
18-15 one year under the restrictions or provisions contained in a
18-16 dedicatory instrument relating to the architectural control
18-17 committee.
18-18 (c) If the architectural control committee authority is
18-19 vested in the property owners' association under Subsection (b),
18-20 the association retains that authority until:
18-21 (1) the restrictions are modified to reflect
18-22 otherwise; or
18-23 (2) the restrictions are terminated.
18-24 (d) The declarant, the property owners' association, the
18-25 architectural control committee, or an owner of property subject to
18-26 a dedicatory instrument may enforce a restrictive covenant that
19-1 relates to architectural control, construction on a lot, and use
19-2 restrictions on a lot contained in the dedicatory instrument.
19-3 Sec. 207.064. MEETINGS. (a) A property owners' association
19-4 shall hold a general meeting of the membership at least once each
19-5 year. Unless a dedicatory instrument provides less restrictive
19-6 requirements, a special meeting of the association's membership may
19-7 be called by the presiding officer of the board, a majority of the
19-8 board, or at least 10 percent of the property owners who are
19-9 members of the association.
19-10 (b) Meetings of the property owners' association membership
19-11 and board must be open to property owners, subject to the right of
19-12 the board to adjourn a board meeting and reconvene in closed
19-13 executive session to consider actions involving personnel,
19-14 threatened or pending litigation, contract negotiations,
19-15 enforcement actions, matters involving the invasion of privacy of
19-16 individual owners, or matters that are to remain confidential by
19-17 request of the affected parties and agreement of the board. The
19-18 general nature of any business to be considered in executive
19-19 session must first be announced at the open meeting.
19-20 (c) Unless a dedicatory instrument of the property owners'
19-21 association provides otherwise:
19-22 (1) a board meeting may be held by any method of
19-23 communication, including electronic and telephonic communication,
19-24 if:
19-25 (A) notice of the meeting is provided as
19-26 prescribed by Subsection (e);
20-1 (B) each director may hear and be heard by every
20-2 other director; and
20-3 (C) the meeting does not involve voting on a
20-4 fine, damage assessment, appeal from a denial of architectural
20-5 control approval, or suspension of a right of a particular
20-6 association member before the member has an opportunity to attend
20-7 the board meeting to present the member's position, including any
20-8 defense, on the issue; and
20-9 (2) the board may act by unanimous written consent of
20-10 all the directors, without a meeting, if:
20-11 (A) the board action does not involve voting on
20-12 a fine, damage assessment, appeal from a denial of architectural
20-13 control approval, or suspension of a right of a particular
20-14 association member before the member has an opportunity to attend
20-15 the board meeting to present the member's position, including any
20-16 defense, on the issue; and
20-17 (B) a record of the board action is filed with
20-18 the minutes of board meetings.
20-19 (d) Notice of a meeting of the property owners' association
20-20 membership must be given as provided by the bylaws, or, if the
20-21 bylaws do not provide for notice, notice must be given to each
20-22 owner in the same manner that notice is given to members of a
20-23 nonprofit corporation under Section A, Article 2.11, Texas
20-24 Non-Profit Corporation Act (Article 1396-2.11, Vernon's Texas Civil
20-25 Statutes).
20-26 (e) Notice of a meeting of the property owners' association
21-1 board must be given as provided by the bylaws, or, if the bylaws do
21-2 not provide for notice, notice must be given to each board member
21-3 in the same manner that notice is given to members of the board of
21-4 a nonprofit corporation under Section B, Article 2.19, Texas
21-5 Non-Profit Corporation Act (Article 1396-2.19, Vernon's Texas Civil
21-6 Statutes).
21-7 (f) A property owners' association, on the written request
21-8 of a property owner, shall inform the owner of the time and place
21-9 of the next regular or special meeting of the board. If the
21-10 association representative to whom the request is made does not
21-11 know the time and place of the meeting, the association promptly
21-12 shall obtain the information and disclose it to the owner or inform
21-13 the owner where the information may be obtained.
21-14 (g) If notice of the meeting has specified that one of the
21-15 purposes of the meeting is to consider the adoption, amendment, or
21-16 repeal of association rules, rules may be adopted, amended, or
21-17 repealed by a majority vote of the members voting. If the board
21-18 receives a petition signed by at least 10 percent of all owners
21-19 requesting a meeting to consider the adoption, amendment, or repeal
21-20 of association rules, the board shall call a meeting of the general
21-21 membership not later than the 30th day after the date the board
21-22 receives the petition. The notice of the meeting must state that
21-23 one of the purposes of the meeting is to consider the adoption,
21-24 amendment, or repeal of association rules.
21-25 (h) If an owner makes a written request to a board for
21-26 compliance with this section and provides the board with a copy of
22-1 this section and Section 207.130, the property owners' association
22-2 shall be liable to the owner under Section 207.130(a) if the board
22-3 knowingly continues to violate this section.
22-4 Sec. 207.065. VOTING AND PROXIES. (a) If a lot is owned by
22-5 more than one person, only one of the owners may vote. If more
22-6 than one of the multiple owners is present, the vote allocated to
22-7 that lot may be cast only in accordance with the owners' unanimous
22-8 agreement unless the restrictions or the bylaws or articles of
22-9 incorporation of the property owners' association provide
22-10 otherwise. Multiple owners are considered to be in unanimous
22-11 agreement if one of the owners votes and no other owner promptly
22-12 protests to the person presiding over the meeting. If multiple
22-13 owners of a lot attempt to vote in person or by proxy on behalf of
22-14 all the owners, the vote will not be counted.
22-15 (b) Votes allocated to a lot may be cast under a written
22-16 proxy executed by a lot owner unless prohibited by the bylaws of
22-17 the association. If more than one proxy is submitted for a single
22-18 lot, only the proxy with the most recent date is valid. A lot
22-19 owner may revoke a proxy under this section by providing written
22-20 notice of the revocation to the person presiding over the meeting
22-21 or by attending and voting in person at the meeting. A proxy is
22-22 void if it is not dated or if it purports to be revocable without
22-23 notice. A proxy terminates 11 months after the date it is executed
22-24 unless it specifies a shorter or longer period.
22-25 (c) Cumulative voting is not permitted.
22-26 (d) An owner who arrives at an association meeting after the
23-1 meeting commences and who is eligible to vote under the dedicatory
23-2 instruments may cast a vote on all issues considered at the meeting
23-3 after the owner arrives.
23-4 Sec. 207.066. ASSOCIATION RECORDS. (a) The property
23-5 owners' association shall keep:
23-6 (1) financial records that are sufficiently detailed
23-7 to enable:
23-8 (A) an accountant to prepare financial
23-9 statements that comply with generally accepted accounting
23-10 principles; and
23-11 (B) the association to prepare a resale
23-12 certificate under Section 207.091;
23-13 (2) a management certificate prepared under Section
23-14 207.068 and any amendments to the certificate;
23-15 (3) the name and mailing address of each property
23-16 owner;
23-17 (4) voting records, proxies, and correspondence
23-18 relating to amendments to the dedicatory instruments for at least
23-19 four years after the date of the amendment;
23-20 (5) invoices furnished by an attorney under Section
23-21 207.061(g) for at least four years after the date the invoice is
23-22 furnished; and
23-23 (6) minutes of meetings of the association and board.
23-24 (b) On an owner's written request, the property owners'
23-25 association shall furnish to the owner at the owner's expense a
23-26 copy of the restrictions and the bylaws and rules of the
24-1 association not later than the 10th day after the date the request
24-2 is received by the association. The association may charge a
24-3 reasonable fee for the documents and the copies and may pay
24-4 compensation to whoever prepares or gathers the documents or
24-5 copies.
24-6 (c) An owner, owner's agent, and title insurance company or
24-7 its agent are not liable to a purchaser for a delay or failure of
24-8 the property owners' association to provide to the owner copies of
24-9 documents requested by the owner. If an association fails to
24-10 furnish the information required by Subsection (b) within the
24-11 period prescribed by that subsection, the owner or the owner's
24-12 agent or a title company or its agent acting on behalf of the owner
24-13 may submit a second request for the information. The second
24-14 request must be delivered by certified mail, return receipt
24-15 requested, or by hand delivery with a receipt for delivery. If the
24-16 association fails to furnish the information required by Subsection
24-17 (b) before the seventh day after the date the second request for
24-18 information is delivered, the association is subject to civil
24-19 penalties under Section 207.130(a) for failure to timely furnish
24-20 copies of the documents requested.
24-21 (d) If an owner makes a written request for copies of
24-22 documents and states the purpose of the request, the owner or the
24-23 owner's agent, including the owner's accountant or attorney, may
24-24 examine and copy at the owner's expense at any reasonable time and
24-25 for any proper purpose, the books and records of the property
24-26 owners' association relevant to that purpose.
25-1 (e) The property owners' association shall, as a common
25-2 expense, obtain the accounting services required by this section
25-3 and by the dedicatory instruments. Copies of the reports shall be
25-4 made available to the owners.
25-5 (f) A declarant shall furnish to the property owners'
25-6 association copies of the information required by Subsection
25-7 (a) on the date the first lot in the declarant's residential
25-8 subdivision is sold.
25-9 Sec. 207.067. FINANCIAL REPORT; AUDIT OR REVIEW. (a) An
25-10 association shall obtain an annual audit or review of the
25-11 association's financial records by a certified public accountant or
25-12 public accountant unless, at a general or special membership
25-13 meeting of the association, the owners who are in attendance in
25-14 person or by proxy vote against having the audit or review or vote
25-15 to have the association's records for the fiscal year reviewed by
25-16 the board or a board-appointed committee.
25-17 (b) This section applies regardless of the provisions in a
25-18 dedicatory instrument regarding audit and review of association
25-19 financial records.
25-20 Sec. 207.068. MANAGEMENT CERTIFICATES. (a) A property
25-21 owners' association shall record in each county in which any
25-22 portion of the residential subdivision is located a management
25-23 certificate, signed and acknowledged by an officer of the
25-24 association, stating:
25-25 (1) the name of the subdivision;
25-26 (2) the name of the association;
26-1 (3) the recording data for the subdivision;
26-2 (4) the recording data for the declaration;
26-3 (5) the mailing address of the association or the name
26-4 and mailing address of the person managing the association; and
26-5 (6) other information the association considers
26-6 appropriate.
26-7 (b) The property owners' association shall record an amended
26-8 management certificate not later than the 30th day after the date
26-9 the association has notice of a change in any information in the
26-10 recorded certificate required by Subsection (a).
26-11 (c) The property owners' association and its officers,
26-12 directors, employees, and agents are not subject to liability to
26-13 any person for a delay in recording or failure to record a
26-14 management certificate, unless the delay or failure is wilful or
26-15 caused by gross negligence.
26-16 Sec. 207.069. BOARD MEMBER EDUCATION. (a) A board member
26-17 of an association may not vote as a board member under the
26-18 association's dedicatory instruments after the sixth month after
26-19 the board member first attends a board meeting as an elected board
26-20 member unless the board member has viewed a videotape or attended a
26-21 class approved by the attorney general for the purpose of educating
26-22 board members on their obligations and rights under this chapter
26-23 and other laws relating to property owners' associations.
26-24 (b) If a board member views a videotape or attends a class
26-25 described by Subsection (a), the board member must furnish to the
26-26 association a signed statement to be filed in the association's
27-1 permanent records listing:
27-2 (1) the name of the videotape and the date the board
27-3 member viewed the tape; or
27-4 (2) the name and sponsor of the class and the date the
27-5 board member attended the class.
27-6 (c) If a board member's right to vote has lapsed because the
27-7 member failed to comply with Subsection (a), the board member's
27-8 right to vote shall be reinstated automatically when the board
27-9 member complies with this section.
27-10 (Sections 207.070 to 207.090 reserved for expansion
27-11 SUBCHAPTER D. PROTECTION OF PURCHASERS
27-12 Sec. 207.091. FURNISHING OF SUBDIVISION INFORMATION.
27-13 (a) Not later than the 10th day after the date a written request
27-14 for subdivision information is received from the owner or the
27-15 owner's agent or a title company or its agent acting on behalf of
27-16 the owner, the property owners' association shall furnish:
27-17 (1) a current copy of the restrictions applying to the
27-18 subdivision;
27-19 (2) a current copy of the bylaws and rules of the
27-20 association; and
27-21 (3) a resale certificate that complies with Subsection
27-22 (b).
27-23 (b) A resale certificate furnished by the property owners'
27-24 association under Subsection (a) must contain:
27-25 (1) a statement of any right of first refusal or other
27-26 restraint contained in the restrictions that limits the owner's
28-1 right to transfer the lot;
28-2 (2) the amount and frequency of any regular
28-3 assessment;
28-4 (3) the amount of any special assessment that is due
28-5 after the date the resale certificate is prepared;
28-6 (4) the total of all amounts due and unpaid to the
28-7 association by the lot owner relating to the lot;
28-8 (5) capital expenditures, if any, approved by the
28-9 association for the association's current fiscal year;
28-10 (6) the amount of reserves, if any, for capital
28-11 expenditures;
28-12 (7) the association's current operating budget and
28-13 balance sheet;
28-14 (8) the total of any unsatisfied judgments against the
28-15 association;
28-16 (9) the style and cause number of any pending lawsuit
28-17 in which the association is a defendant;
28-18 (10) a copy of a certificate of insurance showing the
28-19 association's property and liability insurance relating to the
28-20 common areas and common facilities;
28-21 (11) a description of any conditions on the lot that
28-22 the association board has actual knowledge are in violation of the
28-23 restrictions, bylaws, and rules;
28-24 (12) a summary or copy of notices received by the
28-25 association from any governmental authority regarding health or
28-26 housing code violations existing on the date the certificate is
29-1 furnished relating to the lot or any common areas or common
29-2 facilities owned or leased by the association;
29-3 (13) the amount of any administrative transfer fee
29-4 charged by the association for a change of lot ownership;
29-5 (14) the name, mailing address, and telephone number
29-6 of the association's managing agent, if any; and
29-7 (15) a statement indicating whether the restrictions
29-8 allow foreclosure of an association lien on a lot for failure to
29-9 pay assessments.
29-10 (c) Unless required by a dedicatory instrument, a property
29-11 owners' association or its agent is not required to inspect
29-12 property before furnishing a resale certificate or an update to the
29-13 resale certificate.
29-14 (d) The property owners' association shall furnish the
29-15 information required by this section to the person specified in the
29-16 request for subdivision information. The association is not
29-17 required to furnish the information if the request does not specify
29-18 the name and address of the person to whom the information is to be
29-19 furnished.
29-20 (e) The property owners' association may furnish the
29-21 information required by this section by depositing the information
29-22 in the United States mail, by hand delivering the information, or
29-23 by an alternate means of delivery specified in the request.
29-24 (f) A property owners' association may charge a reasonable
29-25 fee to prepare and furnish the information required by this
29-26 section, including an update of a resale certificate.
30-1 Sec. 207.092. SECOND REQUEST FOR INFORMATION; AFFIDAVIT OF
30-2 COMPLIANCE. (a) If a property owners' association fails to
30-3 furnish the information required by Section 207.091 within the
30-4 period prescribed by that section, the owner or the owner's agent
30-5 or a title company or its agent acting on behalf of the owner may
30-6 submit a second written request for the information. The second
30-7 request must be delivered by certified mail, return receipt
30-8 requested, or by hand delivery with a receipt for delivery.
30-9 (b) If the property owners' association fails to furnish the
30-10 information required by Section 207.091 before the seventh day
30-11 after the date the second request for information is delivered, the
30-12 owner may provide the purchaser under a contract to purchase the
30-13 owner's property an affidavit stating that:
30-14 (1) the owner or the owner's agent or a title company
30-15 or its agent acting on behalf of the owner made two written
30-16 requests as provided by law to the property owners' association for
30-17 the property information; and
30-18 (2) the property owners' association failed to furnish
30-19 the information within the period prescribed by law.
30-20 (c) If the owner provides the purchaser with an affidavit
30-21 described by this section:
30-22 (1) the purchaser, lender, and title company and its
30-23 agent are not liable for:
30-24 (A) any amounts due and unpaid by the owner to
30-25 the property owners' association as of the date the owner prepared
30-26 the affidavit; and
31-1 (B) any claims by the association that accrued
31-2 before the date the owner prepared the affidavit; and
31-3 (2) any property owners' association lien on the
31-4 property purchased that secures the payment of amounts due and
31-5 unpaid by the owner as of the date the owner prepared the affidavit
31-6 automatically terminates as a lien securing payment of those
31-7 amounts.
31-8 Sec. 207.093. EFFECT OF RESALE CERTIFICATE; LIABILITY.
31-9 (a) A property owners' association that prepares a resale
31-10 certificate under Section 207.091 may not deny the validity of any
31-11 statement in the resale certificate.
31-12 (b) If the property owners' association fails to disclose
31-13 any amounts due to the association or a claim by the association
31-14 existing as of the date the resale certificate was prepared, a
31-15 purchaser and the purchaser's agent, the owner and the owner's
31-16 agent, the lender, and the title company and its agent are not
31-17 liable to the association for the undisclosed amounts due or the
31-18 undisclosed claim. The property owners' association lien to secure
31-19 undisclosed amounts due to the association as of the date the
31-20 resale certificate was prepared automatically terminates as a lien
31-21 securing the undisclosed amount.
31-22 (c) A resale certificate does not affect:
31-23 (1) the property owners' association's right to
31-24 recover amounts that become due or claims that arise after the date
31-25 the resale certificate is prepared; or
31-26 (2) the property owners' association's lien on
32-1 property securing the payment of future assessments.
32-2 (d) The owner and the owner's agent and the title company
32-3 and its agent are not liable to the purchaser for the property
32-4 owners' association's delay in furnishing or failure to furnish the
32-5 information required by Section 207.091.
32-6 (e) Except as provided by Section 207.130, the property
32-7 owners' association is not liable to the owner for the
32-8 association's delay in furnishing or failure to furnish the
32-9 information required by Section 207.091. An officer or agent of
32-10 the property owners' association is not liable for the
32-11 association's delay in furnishing or failure to furnish a resale
32-12 certificate under Section 207.091.
32-13 (Sections 207.094 to 207.120 reserved for expansion
32-14 SUBCHAPTER E. PROPERTY OWNERS' ASSOCIATION LIEN
32-15 FOR ASSESSMENTS
32-16 Sec. 207.121. DEFINITION. In this subchapter, "assessment"
32-17 means a regular or special assessment, fee, charge, late fee, fine,
32-18 collection cost, attorney's fees, dues, interest, or any other
32-19 amount due to the property owners' association from the lot owner
32-20 or levied against the owner's property in the subdivision by the
32-21 property owners' association.
32-22 Sec. 207.122. ESTABLISHMENT OF LIEN. (a) Unless the
32-23 restrictions prohibit a lien, an assessment levied by a property
32-24 owners' association against property is a personal obligation of
32-25 the lot owner and is secured by a continuing lien on the property
32-26 and on rent and insurance proceeds received by the lot owner
33-1 relating to the property.
33-2 (b) If, on January 1, 2000, a lot is the homestead of the
33-3 lot owner and is subject to restrictions that do not contain a
33-4 valid assessment lien against the property, the lien provided by
33-5 this subchapter does not attach against the property until the lot
33-6 ceases to be the homestead of the person owning the lot on January
33-7 1, 2000.
33-8 Sec. 207.123. PRIORITY OF LIEN. (a) Unless otherwise
33-9 provided in the dedicatory instrument or restrictions, the lien of
33-10 a property owners' association under this chapter for an assessment
33-11 has priority over any other lien except:
33-12 (1) a lien for property taxes and other governmental
33-13 assessments or charges against the property unless otherwise
33-14 provided by statute;
33-15 (2) a lien or encumbrance recorded before the
33-16 restrictions or the dedicatory instrument is recorded; and
33-17 (3) a first lien securing the purchase of a lot,
33-18 including the improvements and the initial construction of a
33-19 dwelling on a lot recorded before the date on which the assessment
33-20 sought to be enforced becomes delinquent under the restrictions or
33-21 the dedicatory instrument.
33-22 (b) The priority of liens prescribed by Subsection (a) does
33-23 not affect the priority of a lien recorded before January 1, 2000.
33-24 Sec. 207.124. PERFECTION OF LIEN. A property owners'
33-25 association's lien for assessments is perfected by the enactment of
33-26 this chapter or by recording the restrictions if the restrictions
34-1 are recorded before the enactment of this chapter. Unless the
34-2 restrictions provide otherwise, no other recording of a lien or
34-3 notice of lien is required.
34-4 Sec. 207.125. POWER OF SALE IF NONJUDICIAL FORECLOSURE IS
34-5 PERMITTED. (a) By acquiring property in a residential subdivision
34-6 governed by a dedicatory instrument that expressly allows
34-7 nonjudicial foreclosure, a lot owner grants to the property owners'
34-8 association a power of sale in connection with the association's
34-9 lien under this subchapter.
34-10 (b) If a dedicatory instrument of a property owners'
34-11 association expressly allows nonjudicial foreclosure, the
34-12 association may by written resolution appoint an officer, agent,
34-13 trustee, or attorney to exercise the power of sale on its behalf.
34-14 Sec. 207.126. EXCHANGE OF INFORMATION. (a) If a lot owner
34-15 is delinquent in paying an assessment to a property owners'
34-16 association, a holder of a lien recorded against the property may
34-17 provide the association, at the association's request, information
34-18 regarding the owner's debt secured by the holder's lien and other
34-19 relevant information. At the request of a lienholder, the
34-20 association may furnish the lienholder with information about the
34-21 property and the property owner's obligations to the association.
34-22 (b) If a lot owner defaults in the owner's monetary
34-23 obligations to the property owners' association, the association
34-24 may notify other lienholders of the default and the association's
34-25 intent to foreclose its lien. The association shall notify any
34-26 holder of a recorded lien or perfected mechanic's lien against the
35-1 property who has given the association a written request for notice
35-2 of the property owner's default or the association's intent to
35-3 foreclose.
35-4 Sec. 207.127. FORECLOSURE OF LIEN. (a) A property owners'
35-5 association has the right to foreclose its lien under:
35-6 (1) a dedicatory instrument that was recorded at the
35-7 time of the purchase of the lot by the property owner;
35-8 (2) a court order in a suit or countersuit seeking
35-9 judicial foreclosure;
35-10 (3) a court order in an application for expedited
35-11 foreclosure using the same procedures provided by the Texas Rules
35-12 of Civil Procedure for the foreclosure of a home equity lien only
35-13 if the dedicatory instrument expressly permits nonjudicial
35-14 foreclosure; or
35-15 (4) a court order foreclosing a lien under this
35-16 chapter.
35-17 (b) Before a property owners' association may institute
35-18 foreclosure proceedings against an owner's lot, the association or
35-19 its agent must send the owner written notice, by certified mail,
35-20 return receipt requested, at the last known address as reflected in
35-21 the association's records. The notice may be sent with any other
35-22 notice related to the foreclosure proceeding. The notice must
35-23 state that:
35-24 (1) the owner may avoid the foreclosure by paying all
35-25 amounts due before the time of foreclosure;
35-26 (2) the owner may redeem the property before the 91st
36-1 day after the date the association mails written notice of the sale
36-2 to the owner under Section 207.128;
36-3 (3) to redeem the property, the owner must pay all
36-4 amounts due, which may be significantly more than the redemption
36-5 costs before foreclosure as a result of the costs associated with
36-6 foreclosure and deed transfers after foreclosure;
36-7 (4) the owner may within 10 days of receipt of the
36-8 notice request in writing a hearing before a board-appointed
36-9 committee, or before the board if the board does not appoint a
36-10 committee, to discuss and verify facts and resolve the matter in
36-11 issue; and
36-12 (5) if the owner requests a hearing under Subdivision
36-13 (4) and if the hearing is before a committee, the owner may appeal
36-14 the committee's decision to the board by written notice delivered
36-15 to the board not later than the 10th day after the date the owner
36-16 receives notice of the committee's decision.
36-17 (c) An owner may request a hearing before the property
36-18 owners' association may institute foreclosure proceedings. An
36-19 owner who requests a hearing under Subsection (b) must submit the
36-20 request in writing to the association representative designated in
36-21 the notice by hand delivering the request or delivering the request
36-22 by certified mail, return receipt requested, not later than the
36-23 10th day after the date the association delivers or deposits in the
36-24 mail the notice to the owner under Subsection (b). The association
36-25 shall hold the hearing not later than the 30th day after the date
36-26 the board receives the owner's request for a hearing. The owner
37-1 and the association may make an audio recording of the meeting. An
37-2 owner is not liable for attorney's fees incurred by the association
37-3 relating to a matter described by the notice in Subsection (b)
37-4 unless the hearing requested by the owner is held or attempted to
37-5 be held in good faith by the association within the period
37-6 described by this section.
37-7 (d) An owner or association may use alternative dispute
37-8 resolution services.
37-9 (e) If a foreclosure suit is filed, a party to the suit may
37-10 file a motion to compel mediation.
37-11 (f) Before a property owners' association may institute
37-12 nonjudicial foreclosure proceedings against an owner's property,
37-13 the association or its agent must send the owner written notice, by
37-14 certified mail, return receipt requested, containing:
37-15 (1) a statement that the owner has the right to elect
37-16 either expedited foreclosure under Subsection (a)(3) or nonjudicial
37-17 foreclosure under Subsection (a)(1) if nonjudicial foreclosure is
37-18 authorized in a dedicatory instrument;
37-19 (2) a description of the methods of foreclosure
37-20 provided in the dedicatory instrument and the approximate amount of
37-21 the attorney's fees and costs for which the owner would be liable
37-22 under each foreclosure method, assuming the foreclosure is
37-23 uncontested;
37-24 (3) a statement that the owner must, not later than
37-25 the 10th day after the date the owner receives the association's
37-26 notice, send a written notice to elect a specific foreclosure
38-1 method to the association or its agent by hand delivery to an
38-2 association representative designated in the notice or by certified
38-3 mail, return receipt requested, at the return address indicated in
38-4 the association's notice, stating the owner's elected method; and
38-5 (4) a statement that, unless the owner elects in a
38-6 timely manner, the association may foreclose in any manner
38-7 available to the association under Subsection (a).
38-8 (g) If the lot owner notifies the property owners'
38-9 association or its agent of an election of a foreclosure method
38-10 under Subsection (f), the association may foreclose only in the
38-11 manner the owner elects. If notice of election is not provided by
38-12 the owner in a timely manner, the association may foreclose in any
38-13 manner available to it under Subsection (a).
38-14 (h) At any time before a foreclosure sale, a lot owner may
38-15 avoid foreclosure by paying all amounts due the property owners'
38-16 association, including foreclosure-related costs incurred by the
38-17 association. An owner is not liable for attorney's fees incurred
38-18 by the association relating to a foreclosure proceeding unless the
38-19 hearing requested under Subsection (c) is held or attempted to be
38-20 held in good faith by the association within the period prescribed
38-21 by Subsection (c).
38-22 (i) The property owners' association may bid for and
38-23 purchase the property at the foreclosure sale as a common expense.
38-24 Subject to Section 207.129, the association may own, lease,
38-25 encumber, exchange, sell, or convey the property.
38-26 (j) If the foreclosure sales price exceeds the amount due to
39-1 the property owners' association, the association shall refund the
39-2 excess proceeds to the owner.
39-3 (k) A court may not set aside a sale on petition of a lot
39-4 owner solely because the purchase price at the foreclosure sale is
39-5 insufficient to fully satisfy the owner's debt.
39-6 (l) A property owners' association may not foreclose a lien
39-7 for an assessment consisting solely of fines or attorney's fees
39-8 associated solely with fines.
39-9 (m) This section does not prevent an owner from filing an
39-10 action to enjoin a wrongful foreclosure or an action for damages
39-11 for wrongful foreclosure by a property owners' association.
39-12 Sec. 207.128. NOTICE OF FORECLOSURE SALE. (a) A property
39-13 owners' association that conducts a foreclosure sale under Section
39-14 207.127 must send to the lot owner, by certified mail, return
39-15 receipt requested, written notice of the sale and of the property
39-16 owner's right of redemption under Section 207.129 not later than
39-17 the 30th day after the date of the foreclosure sale. If a property
39-18 owners' association fails to send the notice in a timely manner,
39-19 the foreclosure sale is invalid.
39-20 (b) The notice must be sent by certified mail, return
39-21 receipt requested, to the property owner's last known mailing
39-22 address, as reflected in the records of the property owners'
39-23 association.
39-24 (c) Not later than the 30th day after the date the
39-25 association sends the notice required by Subsection (a), the
39-26 association must record an affidavit in the real property records
40-1 of the county in which the lot is located, stating the date on
40-2 which the notice was sent and containing a legal description of the
40-3 lot. Any person is entitled to rely conclusively on the
40-4 information contained in the recorded affidavit. If the
40-5 association records its foreclosure deed and fails to record an
40-6 affidavit in compliance with this subsection, the foreclosure is
40-7 invalid.
40-8 Sec. 207.129. RIGHT OF REDEMPTION AFTER FORECLOSURE.
40-9 (a) The owner of property in a residential subdivision may redeem
40-10 the property from any purchaser at a sale foreclosing a property
40-11 owners' association's assessment lien not later than the 90th day
40-12 after the date the association mails written notice of the sale to
40-13 the owner under Section 207.128.
40-14 (b) A person who purchases property at a sale foreclosing a
40-15 property owners' association's assessment lien may not transfer
40-16 ownership of the property to a person other than a redeeming owner
40-17 during the redemption period.
40-18 (c) To redeem property purchased by the property owners'
40-19 association at foreclosure sale, the owner must pay to the
40-20 association:
40-21 (1) all amounts due the association at the time of the
40-22 foreclosure sale;
40-23 (2) interest from the date of the foreclosure sale to
40-24 the date of redemption on all amounts owed the association at the
40-25 rate stated in the dedicatory instruments for delinquent
40-26 assessments, or if no rate is stated, at an annual interest rate of
41-1 10 percent;
41-2 (3) costs incurred by the association in foreclosing
41-3 the lien and conveying the property to the redeeming owner,
41-4 including reasonable attorney's fees;
41-5 (4) any assessment levied against the property by the
41-6 association after the date of the foreclosure sale;
41-7 (5) any reasonable cost incurred by the association,
41-8 including mortgage payments and costs of repair, maintenance, and
41-9 leasing of the property; and
41-10 (6) the purchase price paid by the association at the
41-11 foreclosure sale less any amounts due the association under
41-12 Subdivision (1) that were satisfied out of foreclosure sale
41-13 proceeds.
41-14 (d) To redeem property purchased at the foreclosure sale by
41-15 a person other than the property owners' association, the owner:
41-16 (1) must pay to the association:
41-17 (A) all amounts due the association at the time
41-18 of the foreclosure sale less the foreclosure sales price received
41-19 by the association from the purchaser;
41-20 (B) interest from the date of the foreclosure
41-21 sale through the date of redemption on all amounts owed the
41-22 association at the rate stated in the dedicatory instruments for
41-23 delinquent assessments, or if no rate is stated, at an annual
41-24 interest rate of 10 percent;
41-25 (C) costs incurred by the association in
41-26 foreclosing the lien and conveying the property to the redeeming
42-1 owner, including reasonable attorney's fees; and
42-2 (D) any unpaid assessments levied against the
42-3 property by the association after the date of the foreclosure sale;
42-4 and
42-5 (2) must pay to the person who purchased the property
42-6 at the foreclosure sale:
42-7 (A) any assessments levied against the property
42-8 by the association after the date of the foreclosure sale and paid
42-9 by the purchaser;
42-10 (B) the purchase price paid by the purchaser at
42-11 the foreclosure sale;
42-12 (C) interest from the date of foreclosure to the
42-13 date of redemption on the purchase price amount at an annual
42-14 interest rate of 10 percent; and
42-15 (D) any reasonable cost incurred by the
42-16 purchaser, including costs of repair, maintenance, and leasing of
42-17 the property.
42-18 (e) If a lot owner redeems the property under this section,
42-19 the purchaser of the property at foreclosure shall immediately
42-20 execute and deliver to the owner a deed transferring the property
42-21 to the redeeming property owner.
42-22 (f) If, before the expiration of the redemption period, the
42-23 redeeming lot owner fails to record the deed from the foreclosing
42-24 purchaser or fails to record an affidavit stating that the owner
42-25 has redeemed the property, the owner's right of redemption as
42-26 against a bona fide purchaser or lender for value expires after the
43-1 redemption period.
43-2 (g) If the property owners' association purchases the
43-3 property at foreclosure, all rent and other income collected by the
43-4 association from the date of the foreclosure sale to the date of
43-5 redemption shall be credited toward the amount owed the association
43-6 under Subsection (c), and if there are excess proceeds, they shall
43-7 be refunded to the owner. If a person other than the association
43-8 purchases the property at foreclosure, all rent and other income
43-9 collected by the purchaser from the date of the foreclosure sale to
43-10 the date of redemption shall be credited toward the amount owed the
43-11 purchaser under Subsection (d), and if there are excess proceeds,
43-12 those proceeds shall be refunded to the owner.
43-13 (h) If a person other than the property owners' association
43-14 is the purchaser at the foreclosure sale, before executing a deed
43-15 transferring the property to the redeeming owner, the purchaser
43-16 shall obtain an affidavit from the association or its authorized
43-17 agent stating that all amounts owed the association under
43-18 Subsection (d) have been paid. The association shall provide the
43-19 purchaser with the affidavit not later than the 10th day after the
43-20 date the association receives all amounts owed to the association
43-21 under Subsection (d). Failure of a purchaser to comply with this
43-22 subsection does not affect the validity of a redemption by a
43-23 redeeming owner.
43-24 (i) Property that is redeemed remains subject to all liens
43-25 and encumbrances on the property before foreclosure. Any lease
43-26 entered into by the purchaser of property at a sale foreclosing an
44-1 assessment lien of a property owners' association is subject to the
44-2 right of redemption provided by this section and the owner's right
44-3 to reoccupy the property immediately after the redemption.
44-4 (j) If a lot owner makes partial payment of amounts due to
44-5 the association at any time before the redemption period expires
44-6 but fails to pay all amounts necessary to redeem the lot before the
44-7 redemption period expires, the association shall refund any partial
44-8 payments to the property owner by mailing payment to the owner's
44-9 last known address as shown in the association's records not later
44-10 than the 30th day after the expiration date of the redemption
44-11 period.
44-12 Sec. 207.130. REMEDIES FOR VIOLATIONS. (a) If a property
44-13 owners' association fails to furnish a resale certificate requested
44-14 by an owner under Section 207.091 within the time period prescribed
44-15 by Section 207.092, or if the association fails to furnish the
44-16 documents requested by the owner under Section 207.066(b) within
44-17 the period required by Section 207.066(c), or if the board
44-18 knowingly continues to violate an open meetings requirement of
44-19 Section 207.064 after the notice prescribed by Section 207.064(h)
44-20 has been given to the board, the owner may seek:
44-21 (1) a court order directing the property owners'
44-22 association to furnish the required information;
44-23 (2) a judgment against the property owners'
44-24 association for not more than $500;
44-25 (3) a judgment against the property owners'
44-26 association for attorney's fees and court costs; or
45-1 (4) a judgment authorizing the owner or the owner's
45-2 assignee to deduct the amount awarded under Subdivision (2) or (3)
45-3 from any future regular or special assessments payable to the
45-4 property owners' association.
45-5 (b) A property owners' association is liable to an owner for
45-6 a civil penalty of not more than $1,000 if the association in bad
45-7 faith files a suit against an owner.
45-8 (c) A property owners' association or a lot owner who is
45-9 adversely affected by a violation of the dedicatory instruments by
45-10 the association's board or another owner may seek judicial
45-11 enforcement of the dedicatory instruments.
45-12 (d) The attorney general may file a suit to enforce this
45-13 chapter on behalf of the owner.
45-14 (e) This chapter does not prohibit a property owners'
45-15 association or a lot owner from exercising other remedies provided
45-16 by law.
45-17 Sec. 207.131. EFFECT OF TAX LIEN FORECLOSURE. Foreclosure
45-18 of a tax lien under Chapter 32, Tax Code, does not discharge a
45-19 property owners' association's lien for an assessment under this
45-20 subchapter or under a dedicatory instrument or restrictions for
45-21 amounts that become due to the association after the date of
45-22 foreclosure of the tax lien.
45-23 SECTION 2. (a) This Act takes effect January 1, 2000,
45-24 except that Section 207.069, Property Code, as added by this Act,
45-25 takes effect July 1, 2000.
45-26 (b) The changes in law made by Subchapter E, Chapter 207,
46-1 Property Code, as added by this Act, apply only to property for
46-2 which an assessment becomes due on or after the effective date of
46-3 this Act. Property for which an assessment was due before the
46-4 effective date of this Act is covered by the law in effect when the
46-5 assessment became due, and the former law is continued in effect
46-6 for that purpose.
46-7 (c) The attorney general shall approve videotapes and
46-8 classes as provided by Section 207.069, Property Code, as added by
46-9 this Act, on or before July 1, 2000.
46-10 SECTION 3. The importance of this legislation and the
46-11 crowded condition of the calendars in both houses create an
46-12 emergency and an imperative public necessity that the
46-13 constitutional rule requiring bills to be read on three several
46-14 days in each house be suspended, and this rule is hereby suspended.