76R15961 PAM-F By Carona, et al. S.B. No. 699 Substitute the following for S.B. No. 699: By Solomons C.S.S.B. No. 699 A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to residential subdivisions that require membership in a 1-3 property owners' association. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. Title 11, Property Code, is amended by adding 1-6 Chapter 207 to read as follows: 1-7 CHAPTER 207. TEXAS PLANNED COMMUNITY ACT 1-8 SUBCHAPTER A. GENERAL PROVISIONS 1-9 Sec. 207.001. SHORT TITLE. This chapter may be cited as the 1-10 Texas Planned Community Act. 1-11 Sec. 207.002. DEFINITIONS. In this chapter: 1-12 (1) "Assessment" means a regular assessment, special 1-13 assessment, or other amount a property owner is required to pay a 1-14 property owners' association under the dedicatory instrument or by 1-15 law. 1-16 (2) "Board" means the governing body of a property 1-17 owners' association. 1-18 (3) "Builder" means any person in the business of 1-19 constructing residential dwellings for sale to a consumer on any 1-20 property located in a residential subdivision. 1-21 (4) "Declarant" means: 1-22 (A) a person designated in the restrictions or a 1-23 dedicatory instrument as the declarant; or 2-1 (B) a person who succeeds to the special rights, 2-2 preferences, or privileges of the signatory as designated in the 2-3 original restrictions or dedicatory instrument. 2-4 (5) "Declaration" means an instrument filed in the 2-5 real property records of a county that includes restrictive 2-6 covenants governing a residential subdivision. 2-7 (6) "Dedicatory instrument" means each governing 2-8 instrument covering the establishment, maintenance, and operation 2-9 of a residential subdivision. The term includes restrictions or 2-10 similar instruments subjecting property to restrictive covenants, 2-11 bylaws, or similar instruments governing the administration or 2-12 operation of a property owners' association, to properly adopted 2-13 rules and regulations of the property owners' association, and to 2-14 all lawful amendments to the covenants, bylaws, rules, or 2-15 regulations. 2-16 (7) "Lienholder" means a person who holds a valid 2-17 vendor's lien or deed of trust lien secured by property located in 2-18 a residential subdivision. 2-19 (8) "Lot" means any designated parcel of land located 2-20 in a residential subdivision, including any improvements on the 2-21 designated parcel. 2-22 (9) "Member" means a member of the association, as 2-23 defined in the restrictions for a residential subdivision, or a lot 2-24 owner in the subdivision if the restrictions contain no definition. 2-25 (10) "Owner" means a person who holds record title to 2-26 property in a residential subdivision and includes the personal 2-27 representative of a person who holds record title to property in a 3-1 residential subdivision. 3-2 (11) "Petition" means an instrument, regardless of the 3-3 designation or title of the instrument, prepared to accomplish one 3-4 or more of the purposes authorized by this chapter. 3-5 (12) "Property owners' association" or "association" 3-6 means an incorporated or unincorporated association that: 3-7 (A) is designated as the representative of the 3-8 owners of property in a residential subdivision; 3-9 (B) has a membership primarily consisting of the 3-10 owners of the property covered by the dedicatory instrument for the 3-11 residential subdivision; and 3-12 (C) manages or regulates the residential 3-13 subdivision for the benefit of the owners of property in the 3-14 residential subdivision. 3-15 (13) "Regular assessment" means an assessment, charge, 3-16 fee, or dues that each owner of property within a residential 3-17 subdivision is required to pay to the property owners' association 3-18 on a regular basis and that is designated for use by the property 3-19 owners' association for the benefit of the residential subdivision 3-20 as provided by the restrictions. 3-21 (14) "Residential subdivision" or "subdivision" means 3-22 a subdivision, planned unit development, townhouse regime, or 3-23 similar planned development in which all land has been divided into 3-24 two or more parts and is subject to restrictions that: 3-25 (A) limit a majority of the land subject to the 3-26 dedicatory instruments, excluding streets, common areas, and public 3-27 areas, to residential use for single-family homes, townhomes, or 4-1 duplexes only; 4-2 (B) are recorded in the real property records of 4-3 the county in which the residential subdivision is located; and 4-4 (C) require membership in a property owners' 4-5 association that has authority to impose regular or special 4-6 assessments on the property in the subdivision. 4-7 (15) "Restrictions" means one or more restrictive 4-8 covenants contained or incorporated by reference in a properly 4-9 recorded map, plat, replat, declaration, or other instrument filed 4-10 in the real property records or map or plat records. The term 4-11 includes any amendment or extension of the restrictions. 4-12 (16) "Restrictive covenant" means any covenant, 4-13 condition, or restriction contained in a dedicatory instrument, 4-14 whether mandatory, prohibitive, permissive, or administrative. 4-15 (17) "Special assessment" means an assessment, charge, 4-16 fee, or dues, other than a regular assessment, that each owner of 4-17 property located in a residential subdivision is required to pay to 4-18 the property owners' association, according to procedures required 4-19 by the dedicatory instruments, for: 4-20 (A) defraying, in whole or in part, the cost, 4-21 whether incurred before or after the assessment, of any 4-22 construction or reconstruction, unexpected repair, or replacement 4-23 of a capital improvement in common areas owned by the property 4-24 owners' association, including the necessary fixtures and personal 4-25 property related to the common areas; 4-26 (B) maintenance and improvement of common areas 4-27 owned by the property owners' association; or 5-1 (C) other purposes of the property owners' 5-2 association as stated in its articles of incorporation or the 5-3 dedicatory instrument for the residential subdivision. 5-4 (18) "Title insurance company" means a title insurance 5-5 company, a title insurance agent, or a direct operation as those 5-6 terms are defined by Article 9.02, Insurance Code. 5-7 Sec. 207.003. APPLICABILITY OF CHAPTER. (a) This chapter 5-8 applies only to a residential subdivision that is subject to 5-9 restrictions or provisions in a declaration that authorize the 5-10 property owners' association to collect regular or special 5-11 assessments on all or a majority of the property in the 5-12 subdivision. 5-13 (b) This chapter applies only to a property owners' 5-14 association that requires mandatory membership in the association 5-15 for all or a majority of the owners of residential property within 5-16 the subdivision subject to the association's dedicatory 5-17 instruments. 5-18 (c) This chapter applies to a property owners' association 5-19 regardless of whether the entity is designated as a "homeowners' 5-20 association," "community association," or similar designation in 5-21 the restrictions or dedicatory instrument. 5-22 (d) This chapter does not apply to a condominium development 5-23 governed by Chapter 82. 6-1 (Sections 207.004 to 207.030 reserved for expansion 6-2 SUBCHAPTER B. AMENDMENT AND EXTENSION 6-3 OF RESTRICTIVE COVENANTS 6-4 Sec. 207.031. AMENDMENT OR EXTENSION OF EXISTING 6-5 RESTRICTIONS. (a) Subject to the limitations in a dedicatory 6-6 instrument applicable during a period of declarant control and in 6-7 addition to the powers and methods provided in an existing 6-8 dedicatory instrument or the restrictions, the board of a property 6-9 owners' association may circulate a petition relating to an 6-10 amendment or extension of existing restrictions. A property 6-11 owners' association is not required to comply with Chapter 201 in 6-12 amending or extending restrictions under this chapter. A property 6-13 owners' association may not circulate a petition that: 6-14 (1) does not comply with the limitations or 6-15 prohibitions in the dedicatory instrument applicable during a 6-16 period of declarant control; or 6-17 (2) proposes to amend or extend restrictions before 6-18 the occurrence of a certain event that may not, under the 6-19 restrictions, be amended or extended unless that event occurs. 6-20 (b) A petition under this section must contain: 6-21 (1) a statement of the purpose of the petition; 6-22 (2) a copy of the proposed language for the amendment 6-23 or extension; 6-24 (3) a summary of the anticipated effect of the 6-25 amendment or extension; 6-26 (4) the date the board first voted to place the 6-27 petition into circulation; 7-1 (5) the telephone number to call to obtain answers to 7-2 questions relating to the petition or proposed amendment or 7-3 extension; 7-4 (6) the date by which a response to the petition is 7-5 due; 7-6 (7) the address to which a response must be sent; 7-7 (8) the date on which the amendment or extension will 7-8 become effective; and 7-9 (9) the date on which the petition will expire if it 7-10 is not approved. 7-11 (c) A petition under this section expires on the earlier of: 7-12 (1) the date specified in the petition; or 7-13 (2) the first anniversary of the date the petition is 7-14 first circulated. 7-15 (d) Not later than the 10th day after the date the board 7-16 votes to circulate a petition, the property owners' association 7-17 shall mail a copy of the petition by first-class mail to each owner 7-18 at the owner's last known mailing address according to the 7-19 association's records. The board members and any representative of 7-20 the board may not solicit approval of the petition door-to-door 7-21 before the 10th day after the date the petition is mailed to each 7-22 owner under this subsection. 7-23 (e) A petition is approved if: 7-24 (1) at least two-thirds of the record lot owners sign 7-25 a written acknowledgement approving the petition if the existing 7-26 restrictions do not contain procedures for modifying, extending, or 7-27 continuing the restrictions or require 100 percent approval of the 8-1 record lot owners; or 8-2 (2) the record lot owners in the number required by 8-3 existing restrictions for approval of a petition sign a written 8-4 acknowledgement approving the petition. 8-5 (f) A single co-owner may approve a petition or revoke an 8-6 approval. An owner may revoke an approval at any time before the 8-7 petition is approved by sending written notice of the revocation to 8-8 the address specified in the petition for submitting responses. 8-9 (g) If a residential subdivision that consists of multiple 8-10 sections, each with its own restrictions, is represented by a 8-11 single property owners' association, the approval requirement under 8-12 Subsection (e)(1) is satisfied by obtaining the approval of at 8-13 least two-thirds of the total number of lot owners in each section 8-14 or two-thirds of the total number of lots in the association's 8-15 jurisdiction. 8-16 (h) If approved, the petition is binding on all lots in the 8-17 residential subdivision or section, as applicable. 8-18 (i) Not later than the 30th day after the date the petition 8-19 is approved or expires, the property owners' association must: 8-20 (1) record the approved petition as a dedicatory 8-21 instrument in the real property records of the county in which the 8-22 subdivision is located; and 8-23 (2) send a notice to each owner by hand delivery or 8-24 first-class mail at the owner's last known mailing address as 8-25 reflected in the association's records that includes: 8-26 (A) a copy of any approved amendment or 8-27 extension; 9-1 (B) a statement indicating whether the petition 9-2 was approved or expired; 9-3 (C) a summary of the effect of any approval; and 9-4 (D) the effective date of any amendment or 9-5 extension. 9-6 (j) An action to challenge the validity of a restriction 9-7 adopted by the property owners' association under this section must 9-8 be brought before the second anniversary of the date the 9-9 restriction is recorded. 9-10 Sec. 207.032. TEXAS NONPROFIT CORPORATION. If a property 9-11 owners' association is a Texas nonprofit corporation, the 9-12 provisions of the Texas Non-Profit Corporation Act (Article 9-13 1396-1.01 et seq., Vernon's Texas Civil Statutes) apply to the 9-14 association, except to the extent that the provisions conflict with 9-15 this chapter. 9-16 (Sections 207.033 to 207.060 reserved for expansion 9-17 SUBCHAPTER C. MANAGEMENT OF ASSOCIATION 9-18 Sec. 207.061. POWERS OF PROPERTY OWNERS' ASSOCIATION. (a) 9-19 Unless otherwise provided by the restrictions or the articles of 9-20 incorporation or bylaws of the property owners' association, the 9-21 association board may: 9-22 (1) adopt and amend bylaws; 9-23 (2) adopt and amend budgets for revenues, 9-24 expenditures, and reserves; 9-25 (3) collect from property owners regular assessments 9-26 or special assessments authorized by the association for common 9-27 expenses; 10-1 (4) hire and terminate managing agents and other 10-2 employees, agents, and independent contractors; 10-3 (5) institute, defend, intervene in, settle, or 10-4 compromise litigation or administrative proceedings in the name of 10-5 the association or on behalf of the association or two or more 10-6 property owners on matters affecting the subdivision; 10-7 (6) make contracts and incur liabilities relating to 10-8 the operation of the subdivision and the association; 10-9 (7) regulate the use, maintenance, repair, 10-10 replacement, modification, and appearance of the subdivision; 10-11 (8) adopt and amend rules that are not inconsistent 10-12 with recorded restrictions and that regulate the use, maintenance, 10-13 repair, modification, and appearance of property in the 10-14 subdivision, to the extent the rules affect subdivision property in 10-15 general or other residents in the subdivision; 10-16 (9) make additional improvements to the common areas 10-17 of the subdivision; 10-18 (10) acquire, hold, encumber, and convey in the name 10-19 of the association any right, title, or interest to real or 10-20 personal property; 10-21 (11) grant easements, leases, licenses, and 10-22 concessions through or over common areas; 10-23 (12) impose and receive payments, fees, or charges for 10-24 the use, rental, or operation of common areas and for services 10-25 provided to property owners; 10-26 (13) impose returned check charges and interest and 10-27 late charges for delinquent amounts due the association; 11-1 (14) impose reasonable fines for a violation of the 11-2 restrictions or the bylaws or rules of the association if the fines 11-3 are approved by a majority of the members of the association and 11-4 notice and an opportunity to be heard are provided under Subsection 11-5 (d); 11-6 (15) adopt and amend rules relating to the collection 11-7 of delinquent amounts due the association and the application of 11-8 the payments; 11-9 (16) impose reasonable charges for preparing, 11-10 recording, or copying association records, including restrictions, 11-11 amendments, resale certificates, statements of delinquent amounts 11-12 due the association, and releases; 11-13 (17) assign the association's right to future income, 11-14 including the right to receive regular or special assessments, if: 11-15 (A) notice of the proposed assignment is mailed 11-16 to all association members; and 11-17 (B) at least two-thirds of the association 11-18 members who vote in person or by proxy at an association meeting 11-19 vote to approve the assignment; 11-20 (18) suspend the voting privileges of and the use of 11-21 common areas by an owner who is delinquent for more than 30 days in 11-22 the payment of amounts due the association; 11-23 (19) purchase insurance and fidelity bonds, including 11-24 directors' and officers' liability insurance, that the association 11-25 considers appropriate or necessary; 11-26 (20) subject to the requirements and limitations of 11-27 the Texas Non-Profit Corporation Act (Article 1396-1.01 et seq., 12-1 Vernon's Texas Civil Statutes), indemnify a director, officer, or 12-2 committee member of the association who was, is, or may be named a 12-3 defendant or respondent in a proceeding in the person's capacity as 12-4 a director, officer, or committee member; 12-5 (21) if the restrictions vest architectural control 12-6 authority in the association or if the authority is vested in the 12-7 association under Section 207.063: 12-8 (A) implement written architectural control 12-9 guidelines that are consistent with recorded restrictions 12-10 regardless of whether the guidelines are recorded in the real 12-11 property records of the applicable county; and 12-12 (B) modify the guidelines as the association 12-13 finds necessary; 12-14 (22) exercise other powers conferred by the dedicatory 12-15 instruments; 12-16 (23) exercise other powers that may be exercised in 12-17 this state by a corporation of the same type as the association; 12-18 and 12-19 (24) exercise any other powers necessary and proper 12-20 for the operation of the association. 12-21 (b) Except as provided by Section 207.062, this section does 12-22 not affect the powers of the association or its board to exercise 12-23 powers granted by the association's dedicatory instruments or other 12-24 applicable law and does not affect any specific limitations on the 12-25 powers of the association or its board. An express grant of power 12-26 without any limitation on that power is not a limitation of power. 12-27 (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) Before a property owners' association may suspend an 13-4 owner's right to use a common area, file a suit against an owner, 13-5 other than a suit to foreclose under an association's lien, charge 13-6 an owner for property damage, or levy a fine for a violation of the 13-7 restrictions or bylaws or rules of the association, the association 13-8 or its agent must give written notice to the owner by hand delivery 13-9 or by certified mail, return receipt requested, at the owner's last 13-10 known address as reflected in the association's records. The 13-11 notice must describe the violation or property damage that is the 13-12 basis for the suspension action, charge, or fine and state any 13-13 amount due to the association by the owner. The association must 13-14 provide the property owner a reasonable period to cure the 13-15 violation and avoid the fine or suspension unless the owner was 13-16 given notice and a reasonable opportunity to cure a similar 13-17 violation within the preceding 12 months. If the property owner is 13-18 entitled to an opportunity to cure the violation, the notice must 13-19 specify that right and the date by which the violation must be 13-20 cured to avoid the fine or suspension. The notice must state that 13-21 the owner has the right to submit a written request for a hearing 13-22 to discuss and verify facts and resolve the matter in issue before 13-23 a board-appointed committee, or before the board if the board does 13-24 not appoint a committee, not later than the 20th day after the date 13-25 the association delivers the notice or deposits the notice in the 13-26 mail. If a hearing is to be held before a committee, the notice 13-27 must state that the owner has the right to appeal the committee's 14-1 decision to the board by written notice to the board not later than 14-2 the 10th day after the date the association delivers the notice of 14-3 the committee's decision or deposits the notice in the mail. The 14-4 association shall hold a hearing under this subsection not later 14-5 than the 30th day after the date the board receives the owner's 14-6 request for a hearing and shall notify the owner of the date, time, 14-7 and place of the hearing not later than the 10th day before the 14-8 date of the hearing. The board or the owner may request a 14-9 postponement, and, if requested, a postponement shall be granted 14-10 for a period of not more than 10 days. Additional postponements 14-11 may be granted by agreement of the parties. The owner or the 14-12 association may make an audio recording of the meeting. This 14-13 subsection does not apply if the association files a suit seeking a 14-14 temporary restraining order or temporary injunctive relief or files 14-15 a suit that includes foreclosure as a cause of action. If a suit 14-16 is filed relating to a matter to which this subsection applies, a 14-17 party to the suit may file a motion to compel mediation. This 14-18 subsection does not apply to a temporary suspension of a person's 14-19 right to use common areas if the temporary suspension is the result 14-20 of a violation that occurred in a common area and involved a 14-21 significant and immediate risk of harm to others in the 14-22 subdivision. The temporary suspension is effective until the board 14-23 makes a final determination on the suspension action after 14-24 following the procedures prescribed by this subsection. An owner 14-25 is not liable for attorney's fees incurred by the association 14-26 relating to a matter described by the notice if the attorney's fees 14-27 are incurred before the conclusion of the hearing or, if the owner 15-1 does not request a hearing, before the date by which the owner must 15-2 request a hearing under this subsection. The owner's presence is 15-3 not required to hold a hearing under this subsection. An owner or 15-4 property owners' association may use alternative dispute resolution 15-5 services. 15-6 (e) A property owners' association may collect reimbursement 15-7 of reasonable attorney's fees and other reasonable costs incurred 15-8 by the association relating to collecting amounts, including 15-9 damages, due the association for enforcing restrictions or the 15-10 bylaws or rules of the association only if the owner is provided a 15-11 written notice that attorney's fees and costs will be charged to 15-12 the owner if the delinquency or violation continues after a date 15-13 certain. In an action to which Subsection (d) applies, 15-14 reimbursement of attorney's fees are limited as provided by that 15-15 subsection. Attorney's fees and other costs incurred by the 15-16 association collected from the owner shall be paid directly to the 15-17 association or its management company or jointly to the association 15-18 or its management company and the attorney representing the 15-19 association. On written request from the owner, the association 15-20 shall provide copies of invoices for attorney's fees and other 15-21 costs relating to the matter for which the association seeks 15-22 reimbursement of fees and costs. The notice provisions of this 15-23 subsection do not apply to a counterclaim of an association in a 15-24 lawsuit brought against the association by a property owner. 15-25 (f) In addition to the notice under Subsection (d), the 15-26 property owners' association may give a copy of the notice required 15-27 by Subsection (d) to an occupant of the property. The association 16-1 must give notice of the fine levied or damage charged to the lot 16-2 owner not later than the 30th day after the date the fine or charge 16-3 is imposed. 16-4 (g) A rule adopted or amended by a board is not effective 16-5 until the 30th day after the date a copy of the rule is mailed or 16-6 delivered to the owners, posted in a prominent public place within 16-7 the area of the property owners' association, or published in a 16-8 newspaper with general circulation in the area of the association. 16-9 An emergency rule adopted to protect the health and safety of 16-10 residents of the subdivision is effective immediately after 16-11 notification is given to the owners. 16-12 (h) To the extent of any conflict, the restrictions 16-13 governing the subdivision prevail over any provision in the 16-14 articles of incorporation, bylaws, or rules of the property owners' 16-15 association. 16-16 (i) Directors may be removed from office as provided by the 16-17 dedicatory instruments or, if the dedicatory instruments do not 16-18 provide for the removal of a director, as provided by the Texas 16-19 Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's 16-20 Texas Civil Statutes). 16-21 Sec. 207.062. ASSESSMENTS. (a) An association board may 16-22 impose and increase regular and special assessments as provided by 16-23 the dedicatory instruments of the association. 16-24 (b) If the restrictions set a maximum dollar amount for 16-25 regular assessments, a majority of lot owners voting under this 16-26 subsection may set the regular assessments at any amount, 16-27 regardless of the limits set in the dedicatory instruments, by: 17-1 (1) voting in person or by proxy at a regular or 17-2 special meeting of the association membership at which a quorum is 17-3 present under Subsection (c); or 17-4 (2) voting by mail ballot under Subsection (d). 17-5 (c) A vote to set regular assessments at a meeting of the 17-6 association membership under Subsection (b)(1) may occur only if 17-7 notice of the proposed increase in regular assessments is included 17-8 in the notice of the meeting. The meeting may not be held before 17-9 the 30th day after the date the notice of the meeting is mailed or 17-10 hand-delivered to the owners. 17-11 (d) A vote to change an assessment amount by mail ballot 17-12 under Subsection (b)(2) may occur only if all members of the board 17-13 unanimously support the assessment change and the mail ballot 17-14 includes a statement indicating the board's unanimous support. The 17-15 mail ballot must state the date by which all ballots must be 17-16 postmarked and mailed to the association. The date by which a 17-17 ballot must be postmarked may not be before the 30th day after the 17-18 date the ballot is mailed to the association membership. The 17-19 ballots may not be counted before the seventh day after the 17-20 required postmark date. 17-21 (e) If the restrictions limit increases in the annual 17-22 regular assessments to a specific percentage or dollar amount, a 17-23 regular assessment may be increased to any amount by the vote of at 17-24 least two-thirds of all lot owners. The voting procedures provided 17-25 by Subsection (b) apply to this subsection. 17-26 Sec. 207.063. ARCHITECTURAL CONTROL COMMITTEE. (a) This 17-27 section applies to restrictions providing for the creation and 18-1 operation of an architectural control committee with the power to 18-2 approve or deny applications for proposed original construction or 18-3 the modification of a building, structure, or improvement. Unless 18-4 otherwise provided by the dedicatory instruments, an association 18-5 board may serve as an architectural control committee. 18-6 (b) Unless the restrictions applicable to a residential 18-7 subdivision vest the architectural control authority in the 18-8 property owners' association on an earlier date, the architectural 18-9 control authority automatically vests in the association if: 18-10 (1) the term of the architectural control committee 18-11 authority expires as prescribed by the restrictions; 18-12 (2) a residence on the last available residential 18-13 building site in the subdivision is completed and sold; 18-14 (3) the person designated as the architectural control 18-15 committee in the restrictions assigns, in writing, authority to the 18-16 association; or 18-17 (4) the declarant, the declarant's designee, or any 18-18 person named in the dedicatory instrument as the architectural 18-19 control committee ceases to exercise its authority for more than 18-20 one year under the restrictions or provisions contained in a 18-21 dedicatory instrument relating to the architectural control 18-22 committee. 18-23 (c) If the architectural control committee authority is 18-24 vested in the property owners' association under Subsection (b), 18-25 the association retains that authority until: 18-26 (1) the restrictions are modified to reflect 18-27 otherwise; or 19-1 (2) the restrictions are terminated. 19-2 (d) The declarant, the property owners' association, the 19-3 architectural control committee, or an owner of property subject to 19-4 a dedicatory instrument may enforce a restrictive covenant that 19-5 relates to architectural control, construction on a lot, and use 19-6 restrictions on a lot contained in the dedicatory instrument. 19-7 Sec. 207.064. MEETINGS. (a) A property owners' association 19-8 shall hold a general meeting of the membership at least once each 19-9 year. Unless a dedicatory instrument provides less restrictive 19-10 requirements, a special meeting of the association's membership may 19-11 be called by the presiding officer of the board, a majority of the 19-12 board, or at least 10 percent of the property owners who are 19-13 members of the association. 19-14 (b) Meetings of the property owners' association membership 19-15 and board must be open to property owners, subject to the right of 19-16 the board to adjourn a board meeting and reconvene in closed 19-17 executive session to consider actions involving personnel, 19-18 threatened or pending litigation, contract negotiations, 19-19 enforcement actions, matters involving the invasion of privacy of 19-20 individual owners, or matters that are to remain confidential by 19-21 request of the affected parties and agreement of the board. The 19-22 general nature of any business to be considered in executive 19-23 session must first be announced at the open meeting. 19-24 (c) Unless a dedicatory instrument of the property owners' 19-25 association provides otherwise: 19-26 (1) a board meeting may be held by any method of 19-27 communication, including electronic and telephonic communication, 20-1 if: 20-2 (A) notice of the meeting is provided as 20-3 prescribed by Subsection (e); 20-4 (B) each director may hear and be heard by every 20-5 other director; and 20-6 (C) the meeting does not involve voting on a 20-7 fine, damage assessment, appeal from a denial of architectural 20-8 control approval, or suspension of a right of a particular 20-9 association member before the member has an opportunity to attend 20-10 the board meeting to present the member's position, including any 20-11 defense, on the issue; and 20-12 (2) the board may act by unanimous written consent of 20-13 all the directors, without a meeting, if: 20-14 (A) the board action does not involve voting on 20-15 a fine, damage assessment, appeal from a denial of architectural 20-16 control approval, or suspension of a right of a particular 20-17 association member before the member has an opportunity to attend 20-18 the board meeting to present the member's position, including any 20-19 defense, on the issue; and 20-20 (B) a record of the board action is filed with 20-21 the minutes of board meetings. 20-22 (d) Notice of a meeting of the property owners' association 20-23 membership must be given as provided by the bylaws, or, if the 20-24 bylaws do not provide for notice, notice must be given to each 20-25 owner in the same manner that notice is given to members of a 20-26 nonprofit corporation under Section A, Article 2.11, Texas 20-27 Non-Profit Corporation Act (Article 1396-2.11, Vernon's Texas Civil 21-1 Statutes). 21-2 (e) Notice of a meeting of the property owners' association 21-3 board must be given as provided by the bylaws, or, if the bylaws do 21-4 not provide for notice, notice must be given to each board member 21-5 in the same manner that notice is given to members of the board of 21-6 a nonprofit corporation under Section B, Article 2.19, Texas 21-7 Non-Profit Corporation Act (Article 1396-2.19, Vernon's Texas Civil 21-8 Statutes). 21-9 (f) A property owners' association, on the written request 21-10 of a property owner, shall inform the owner of the time and place 21-11 of the next regular or special meeting of the board. If the 21-12 association representative to whom the request is made does not 21-13 know the time and place of the meeting, the association promptly 21-14 shall obtain the information and disclose it to the owner or inform 21-15 the owner where the information may be obtained. 21-16 (g) If the notice of the board meeting has specified that 21-17 one of the purposes of the meeting is to consider the adoption, 21-18 amendment, or repeal of association rules, rules may be adopted, 21-19 amended, or repealed by a majority vote of the members voting after 21-20 any period of declarant control under the dedicatory instruments 21-21 has ceased. If the board receives a petition signed by at least 10 21-22 percent of all owners requesting a meeting to consider the 21-23 adoption, amendment, or repeal of association rules, the board 21-24 shall call a meeting of the general membership not later than the 21-25 30th day after the date the board receives the petition. The 21-26 notice of the meeting must state that one of the purposes of the 21-27 meeting is to consider the adoption, amendment, or repeal of 22-1 association rules. 22-2 (h) If an owner makes a written request to a board for 22-3 compliance with this section, the property owners' association 22-4 shall be liable to the owner as provided by Section 207.128 if the 22-5 board knowingly continues to violate this section. 22-6 Sec. 207.065. VOTING AND PROXIES. (a) If a lot is owned by 22-7 more than one person, only one of the owners may vote. If more 22-8 than one of the multiple owners is present, the vote allocated to 22-9 that lot may be cast only in accordance with the owners' unanimous 22-10 agreement unless the restrictions or the bylaws or articles of 22-11 incorporation of the property owners' association provide 22-12 otherwise. Multiple owners are considered to be in unanimous 22-13 agreement if one of the owners votes and no other owner promptly 22-14 protests to the person presiding over the meeting. If multiple 22-15 owners of a lot attempt to vote in person or by proxy on behalf of 22-16 all the owners, the vote will not be counted. 22-17 (b) Votes allocated to a lot may be cast under a written 22-18 proxy executed by a lot owner unless prohibited by the bylaws of 22-19 the association. If more than one proxy is submitted for a single 22-20 lot, only the proxy with the most recent date is valid. A lot 22-21 owner may revoke a proxy under this section by providing written 22-22 notice of the revocation to the person presiding over the meeting 22-23 or by attending and voting in person at the meeting. A proxy is 22-24 void if it is not dated or if it purports to be revocable without 22-25 notice. A proxy terminates 11 months after the date it is executed 22-26 unless it specifies a shorter or longer period. 22-27 (c) Cumulative voting is not permitted. 23-1 (d) An owner who arrives at an association meeting after the 23-2 meeting commences and who is eligible to vote under the dedicatory 23-3 instruments may cast a vote on all issues considered at the meeting 23-4 after the owner arrives. 23-5 Sec. 207.066. ASSOCIATION RECORDS. (a) The property 23-6 owners' association shall keep: 23-7 (1) financial records that are sufficiently detailed 23-8 to enable: 23-9 (A) an accountant to prepare financial 23-10 statements that comply with generally accepted accounting 23-11 principles; and 23-12 (B) the association to prepare a resale 23-13 certificate under Section 207.091; 23-14 (2) a management certificate prepared under Section 23-15 207.068 and any amendments to the certificate; 23-16 (3) the name and mailing address of each property 23-17 owner; 23-18 (4) voting records, proxies, and correspondence 23-19 relating to amendments to the dedicatory instruments for at least 23-20 four years after the date of the amendment; 23-21 (5) invoices furnished for attorney's fees and other 23-22 costs under Section 207.061(e) for at least four years after the 23-23 date the invoice is furnished; and 23-24 (6) minutes of meetings of the association and board. 23-25 (b) On an owner's written request, the property owners' 23-26 association shall furnish to the owner at the owner's expense a 23-27 copy of the restrictions and the bylaws and rules of the 24-1 association showing the recording information on each document 24-2 recorded not later than the 10th day after the date the request is 24-3 received by the association. The association may charge a 24-4 reasonable fee for the documents and the copies and may pay 24-5 compensation to whoever prepares or gathers the documents or 24-6 copies. 24-7 (c) An owner, owner's agent, and title insurance company or 24-8 its agent are not liable to a purchaser for a delay or failure of 24-9 the property owners' association to provide to the owner copies of 24-10 documents requested by the owner. If an association fails to 24-11 furnish the information required by Subsection (b) within the 24-12 period prescribed by that subsection, the owner or the owner's 24-13 agent or a title insurance company or its agent acting on behalf of 24-14 the owner may submit a second request for the information. The 24-15 second request must be delivered by certified mail, return receipt 24-16 requested, or by hand delivery with a receipt for delivery. If the 24-17 association fails to furnish the information required by Subsection 24-18 (b) before the seventh day after the date the second request for 24-19 information is delivered, the association is subject to civil 24-20 penalties under Section 207.128 for failure to timely furnish 24-21 copies of the documents requested. 24-22 (d) If an owner makes a written request for copies of 24-23 documents and states the purpose of the request, the owner or the 24-24 owner's agent, including the owner's accountant or attorney, may 24-25 examine and copy at the owner's expense at any reasonable time and 24-26 for any proper purpose, the books and records of the property 24-27 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 Section 207.067 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 (b) on 25-7 the date the first lot in the declarant's residential subdivision 25-8 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 (c) During a period of declarant control, consent of the 25-21 declarant is required to waive the requirement for an audit or 25-22 review prescribed by the dedicatory instruments. 25-23 Sec. 207.068. MANAGEMENT CERTIFICATES. (a) A property 25-24 owners' association shall record in each county in which any 25-25 portion of the residential subdivision is located a management 25-26 certificate, signed and acknowledged by an officer of the 25-27 association, stating: 26-1 (1) the name of the subdivision; 26-2 (2) the name of the association; 26-3 (3) the recording data for the subdivision; 26-4 (4) the recording data for the declaration; 26-5 (5) the mailing address of the association or the name 26-6 and mailing address of the person managing the association; and 26-7 (6) other information the association considers 26-8 appropriate. 26-9 (b) The property owners' association shall record an amended 26-10 management certificate not later than the 30th day after the date 26-11 the association has notice of a change in any information in the 26-12 recorded certificate required by Subsection (a). 26-13 (c) The property owners' association and its officers, 26-14 directors, employees, and agents are not subject to liability to 26-15 any person for a delay in recording or failure to record a 26-16 management certificate, unless the delay or failure is wilful or 26-17 caused by gross negligence. 26-18 Sec. 207.069. BOARD MEMBER EDUCATION. (a) A board member 26-19 of an association may not vote as a board member under the 26-20 association's dedicatory instruments after the sixth month after 26-21 the board member first attends a board meeting as an elected board 26-22 member unless the board member has viewed a videotape or attended a 26-23 class approved by the attorney general for the purpose of educating 26-24 board members on their obligations and rights under this chapter 26-25 and other laws relating to property owners' associations. 26-26 (b) If a board member views a videotape or attends a class 26-27 described by Subsection (a), the board member must furnish to the 27-1 association a signed statement to be filed in the association's 27-2 permanent records listing: 27-3 (1) the name of the videotape and the date the board 27-4 member viewed the tape; or 27-5 (2) the name and sponsor of the class and the date the 27-6 board member attended the class. 27-7 (c) If a board member's right to vote has lapsed because the 27-8 member failed to comply with Subsection (a), the board member's 27-9 right to vote shall be reinstated automatically when the board 27-10 member complies with this section. 27-11 (Sections 207.070 to 207.090 reserved for expansion 27-12 SUBCHAPTER D. PROTECTION OF PURCHASERS 27-13 Sec. 207.091. FURNISHING OF SUBDIVISION INFORMATION. (a) 27-14 Not later than the 10th day after the date a written request for 27-15 subdivision information is received from an owner, the owner's 27-16 agent, or a title insurance company or its agent acting on behalf 27-17 of the owner, the property owners' association shall deliver to the 27-18 owner or the owner's agent or the title insurance company or its 27-19 agent: 27-20 (1) a current copy of the restrictions applying to the 27-21 subdivision; 27-22 (2) a current copy of the bylaws and rules of the 27-23 association; and 27-24 (3) a resale certificate that complies with Subsection 27-25 (b). 27-26 (b) A resale certificate furnished by the property owners' 27-27 association under Subsection (a) must contain: 28-1 (1) a statement of any right of first refusal or other 28-2 restraint contained in the restrictions that limits the owner's 28-3 right to transfer the owner's property; 28-4 (2) the amount and frequency of any regular 28-5 assessment; 28-6 (3) the amount of any special assessment that is due 28-7 after the date the resale certificate is prepared; 28-8 (4) the total of all amounts due and unpaid to the 28-9 association attributable to the owner's property; 28-10 (5) capital expenditures, if any, approved by the 28-11 association for the association's current fiscal year; 28-12 (6) the amount of reserves, if any, for capital 28-13 expenditures; 28-14 (7) the association's current operating budget and 28-15 balance sheet; 28-16 (8) the total of any unsatisfied judgments against the 28-17 association; 28-18 (9) the style and cause number of any pending lawsuit 28-19 in which the association is a defendant; 28-20 (10) a copy of a certificate of insurance showing the 28-21 association's property and liability insurance relating to the 28-22 common areas and common facilities; 28-23 (11) a description of any conditions on the owner's 28-24 property that the association board has actual knowledge are in 28-25 violation of the subdivision restrictions or the bylaws or rules of 28-26 the association; 28-27 (12) a summary or copy of notices received by the 29-1 association from any governmental authority regarding health or 29-2 housing code violations existing on the date the certificate is 29-3 prepared relating to the owner's property or any common areas or 29-4 common facilities owned or leased by the association; 29-5 (13) the amount of any administrative transfer fee 29-6 charged by the association for a change of ownership of property in 29-7 the subdivision; 29-8 (14) the name, mailing address, and telephone number 29-9 of the association's managing agent, if any; and 29-10 (15) a statement indicating whether the restrictions 29-11 allow foreclosure of the association's lien on an owner's property 29-12 for failure to pay assessments. 29-13 (c) The property owners' association may charge a reasonable 29-14 fee to: 29-15 (1) assemble, copy, and deliver the information 29-16 required by this section; and 29-17 (2) prepare and deliver an update of a resale 29-18 certificate. 29-19 (d) The property owners' association shall deliver the 29-20 information required by Subsection (a) to the person specified in 29-21 the written request. The written request must specify the person 29-22 to whom and location to which the information must be sent. The 29-23 association may deliver the information required by Subsection (a) 29-24 and any update to a resale certificate by mail, hand delivery, or 29-25 alternative delivery means as specified in the written request. 29-26 (e) Unless required by the dedicatory instrument, a property 29-27 owners' association or its agent is not required to inspect a 30-1 property before issuing a resale certificate or an update to a 30-2 resale certificate. 30-3 Sec. 207.092. SECOND REQUEST FOR INFORMATION; AFFIDAVIT OF 30-4 COMPLIANCE. (a) If a property owners' association fails to 30-5 deliver the information as provided by Section 207.091, the owner, 30-6 the owner's agent, or a title insurance company or its agent acting 30-7 on behalf of the owner may submit a second written request for the 30-8 information. The request must be mailed by certified mail, return 30-9 receipt requested, or be delivered by hand with a receipt for 30-10 delivery. 30-11 (b) If the property owners' association fails to deliver the 30-12 information required under Section 207.091 before the seventh day 30-13 after the date the second request for the information is mailed or 30-14 delivered, the owner may: 30-15 (1) pursue the remedies provided by Section 30-16 207.128(c); or 30-17 (2) provide the purchaser under a contract to purchase 30-18 the owner's property an affidavit stating that: 30-19 (A) the owner, the owner's agent, or a title 30-20 insurance company or its agent acting on behalf of the owner made 30-21 two written requests as provided by this subchapter to the property 30-22 owners' association for the information described by Section 30-23 207.091; and 30-24 (B) the property owners' association failed to 30-25 timely provide the information. 30-26 (c) If the owner provides the purchaser under a contract to 30-27 purchase the owner's property with an affidavit as provided by 31-1 Subsection (b)(2): 31-2 (1) the purchaser, lender, and title insurance company 31-3 or its agent are not liable to the association for: 31-4 (A) any money due and unpaid to the property 31-5 owners' association on the date the affidavit was prepared; and 31-6 (B) any other debt to the association that 31-7 accrued before the date the affidavit was prepared; and 31-8 (2) any property owners' association lien to secure 31-9 amounts due to the association on the date the affidavit was 31-10 prepared automatically terminates. 31-11 Sec. 207.093. EFFECT OF RESALE CERTIFICATE; LIABILITY. 31-12 (a) A property owners' association may not deny the validity of 31-13 any statement in a resale certificate. The property owners' 31-14 association lien to secure undisclosed amounts due to the 31-15 association on the date the resale certificate is prepared 31-16 automatically terminates as a lien securing the undisclosed amount. 31-17 The purchaser, purchaser's agent, owner, owner's agent, lender, and 31-18 title insurance company and its agent are not liable for any debt 31-19 or claim existing on the date a resale certificate was prepared if 31-20 the debt or claim is not disclosed in the resale certificate. 31-21 (b) A resale certificate does not affect: 31-22 (1) the property owners' association's right to 31-23 recover amounts that become due or claims that arise after the date 31-24 the resale certificate is prepared; or 31-25 (2) the property owners' association's lien on 31-26 property securing the payment of future assessments. 31-27 (c) The owner, the owner's agent, and the title insurance 32-1 company and its agent are not liable to the purchaser for the 32-2 property owners' association's delay in delivering or failure to 32-3 deliver the information required by Section 207.091. 32-4 (d) Except as provided by Section 207.128, the property 32-5 owners' association is not liable to the owner for the 32-6 association's delay in delivering or failure to deliver the 32-7 information required by Section 207.091. An officer or agent of 32-8 the property owners' association is not liable for the 32-9 association's delay in delivering or failure to deliver a resale 32-10 certificate under Section 207.091. 32-11 (Sections 207.094 to 207.120 reserved for expansion 32-12 SUBCHAPTER E. PROPERTY OWNERS' ASSOCIATION LIEN 32-13 FOR ASSESSMENTS 32-14 Sec. 207.121. OWNER'S PERSONAL OBLIGATION; ASSOCIATION LIEN 32-15 REQUIREMENTS. (a) A lot owner is not personally liable for 32-16 assessments that accrue before title to the lot is transferred to 32-17 the lot owner or after title to the lot is transferred from the lot 32-18 owner to another person. Unless otherwise provided in the 32-19 dedicatory instruments, a lot owner is personally liable for 32-20 association assessments that accrue during the period the owner 32-21 holds title to the lot. 32-22 (b) A property owners' association has a lien against an 32-23 owner's lot and may foreclose the lien only if the association is 32-24 granted that authority in the restrictions. Unless otherwise 32-25 provided in the restrictions, on the date the owner acquires title 32-26 to the lot, any lien of the association existing under the 32-27 restrictions secures accrued and unpaid assessments on or after the 33-1 date the owner acquires title to the lot. 33-2 Sec. 207.122. PERFECTION OF ASSOCIATION LIEN. A property 33-3 owners' association's lien for assessments is perfected by 33-4 recording the restrictions in the real property records of the 33-5 county in which the property subject to the restrictions is 33-6 located. Unless the restrictions provide otherwise, no other 33-7 recording of a lien or notice of lien is required to perfect the 33-8 lien. 33-9 Sec. 207.123. POWER OF SALE IF NONJUDICIAL FORECLOSURE IS 33-10 PERMITTED. (a) By acquiring property in a residential subdivision 33-11 governed by a dedicatory instrument that expressly allows 33-12 nonjudicial foreclosure or foreclosure under a deed of trust, a lot 33-13 owner grants to the property owners' association a power of sale in 33-14 connection with the foreclosure of the association's lien. 33-15 (b) If a dedicatory instrument of a property owners' 33-16 association expressly allows nonjudicial foreclosure or foreclosure 33-17 under a deed of trust, the association may by written resolution 33-18 appoint an officer, agent, trustee, or attorney to exercise the 33-19 power of sale on its behalf. 33-20 Sec. 207.124. EXCHANGE OF INFORMATION. (a) If a lot owner 33-21 is delinquent in paying an assessment to a property owners' 33-22 association, a holder of a lien recorded against the property may 33-23 provide the association, at the association's request, information 33-24 regarding the owner's debt secured by the holder's lien and other 33-25 relevant information. At the request of a lienholder, the 33-26 association may furnish the lienholder with information about the 33-27 property and the property owner's obligations to the association. 34-1 (b) If a lot owner defaults in the owner's monetary 34-2 obligations to the property owners' association, the association 34-3 may notify other lienholders of the default and the association's 34-4 intent to foreclose its lien. The association shall notify any 34-5 holder of a recorded lien or perfected mechanic's lien against the 34-6 property who has given the association a written request for notice 34-7 of the property owner's default or the association's intent to 34-8 foreclose. 34-9 Sec. 207.125. FORECLOSURE OF LIEN. (a) A property owners' 34-10 association has the right to foreclose its lien on a lot under: 34-11 (1) a dedicatory instrument that: 34-12 (A) provides for a lien; 34-13 (B) grants authority to foreclose the lien; and 34-14 (C) was recorded at the time the owner acquired 34-15 title to the lot; or 34-16 (2) a court order foreclosing the lien. 34-17 (b) Before a property owners' association may institute 34-18 foreclosure proceedings against an owner's lot, the association or 34-19 its agent must send the owner written notice, by certified mail, 34-20 return receipt requested, at the last known address as reflected in 34-21 the association's records and at the address of the owner as 34-22 reflected in the records of the appraisal district for the county 34-23 in which the lot is located. The notice may be sent with any other 34-24 notice related to the foreclosure proceeding. The notice must 34-25 include a copy of this subchapter and state that: 34-26 (1) the owner may avoid the foreclosure by paying all 34-27 amounts due before the time of foreclosure; 35-1 (2) the owner may redeem the property before the 91st 35-2 day after the date the association mails written notice of the sale 35-3 to the owner under Section 207.127; 35-4 (3) to redeem the property, the owner must pay all 35-5 amounts due, which may be significantly more than the redemption 35-6 costs before foreclosure as a result of the costs associated with 35-7 foreclosure and deed transfers after foreclosure; 35-8 (4) unless a hearing was held or requested by the 35-9 owner under Subsection (c) relating to the amounts that are the 35-10 basis for the foreclosure, the owner within 20 days after the date 35-11 the association delivers the notice or deposits the notice in the 35-12 mail may request in writing a hearing before a board-appointed 35-13 committee, or before the board if the board does not appoint a 35-14 committee, to discuss and verify facts and resolve the matter in 35-15 issue; and 35-16 (5) if the owner requests a hearing under Subdivision 35-17 (4) and if the hearing is before a committee, the owner may appeal 35-18 the committee's decision to the board by written notice delivered 35-19 to the board not later than the 10th day after the date the 35-20 association delivers the notice of the committee's decision or 35-21 deposits the notice in the mail. 35-22 (c) An owner may request a hearing before the property 35-23 owners' association may institute foreclosure proceedings. An 35-24 owner who requests a hearing under Subsection (b) must submit the 35-25 request in writing to the association representative designated in 35-26 the notice by hand delivering the request or delivering the request 35-27 by certified mail, return receipt requested, not later than the 36-1 20th day after the date the association delivers or deposits in the 36-2 mail the notice to the owner under Subsection (b). The hearing 36-3 shall be held not later than the 30th day after the date the board 36-4 receives the owner's request for a hearing. The board or the owner 36-5 may request a postponement, and, if requested, a postponement shall 36-6 be granted for a period of not more than 10 days. Additional 36-7 postponements may be granted by agreement of the parties. The 36-8 owner or the association may make an audio recording of the 36-9 meeting. An owner is not liable for attorney's fees incurred by 36-10 the association relating to a matter described by the notice in 36-11 Subsection (b) if the attorney's fees are incurred before the 36-12 conclusion of the hearing or, if the owner does not request a 36-13 hearing, before the date by which the owner must request a hearing 36-14 under this subsection. The owner's presence is not required to 36-15 hold a hearing under this subsection. 36-16 (d) An owner or association may use alternative dispute 36-17 resolution services. 36-18 (e) If a foreclosure suit is filed, a party to the suit may 36-19 file a motion to compel mediation. 36-20 (f) At any time before a foreclosure sale, a lot owner may 36-21 avoid foreclosure by paying all amounts due the property owners' 36-22 association, including foreclosure-related costs incurred by the 36-23 association. An owner is not liable for attorney's fees incurred 36-24 by the association relating to a foreclosure proceeding if the 36-25 attorney's fees are incurred before the conclusion of the hearing 36-26 requested under Subsection (c) or, if the owner does not request a 36-27 hearing, before the date by which the owner must request a hearing 37-1 under Subsection (c). 37-2 (g) The property owners' association may bid for and 37-3 purchase the property at the foreclosure sale as a common expense. 37-4 Subject to Section 207.127, the association may own, lease, 37-5 encumber, exchange, sell, or convey the property. 37-6 (h) If the foreclosure sales price exceeds the amount due to 37-7 the property owners' association, the association shall refund the 37-8 excess proceeds to the owner. 37-9 (i) A court may not set aside a sale on petition of a lot 37-10 owner solely because the purchase price at the foreclosure sale is 37-11 insufficient to fully satisfy the owner's debt. 37-12 (j) A property owners' association may not foreclose a lien 37-13 for an assessment consisting solely of fines or attorney's fees 37-14 associated solely with fines. 37-15 (k) This section does not prevent an owner from filing an 37-16 action to enjoin a wrongful foreclosure or an action for damages 37-17 for wrongful foreclosure by a property owners' association. 37-18 Sec. 207.126. NOTICE AFTER FORECLOSURE SALE. (a) A 37-19 property owners' association that conducts a foreclosure sale of an 37-20 owner's lot must send to the lot owner, by certified mail, return 37-21 receipt requested, not later than the 30th day after the date of 37-22 the foreclosure sale a written notice stating the date and time the 37-23 sale occurred and informing the lot owner of the owner's right to 37-24 redeem the property under Section 207.127. 37-25 (b) The notice must be sent by certified mail, return 37-26 receipt requested, to the property owner's last known mailing 37-27 address, as reflected in the records of the property owners' 38-1 association. 38-2 (c) Not later than the 30th day after the date the 38-3 association sends the notice required by Subsection (a), the 38-4 association must record an affidavit in the real property records 38-5 of the county in which the lot is located, stating the date on 38-6 which the notice was sent and containing a legal description of the 38-7 lot. Any person is entitled to rely conclusively on the 38-8 information contained in the recorded affidavit. 38-9 Sec. 207.127. RIGHT OF REDEMPTION AFTER FORECLOSURE. (a) 38-10 The owner of property in a residential subdivision may redeem the 38-11 property from any purchaser at a sale foreclosing a property 38-12 owners' association's assessment lien not later than the 90th day 38-13 after the date the association mails written notice of the sale to 38-14 the owner under Section 207.126. 38-15 (b) A person who purchases property at a sale foreclosing a 38-16 property owners' association's assessment lien may not transfer 38-17 ownership of the property to a person other than a redeeming owner 38-18 during the redemption period. 38-19 (c) To redeem property purchased by the property owners' 38-20 association at foreclosure sale, the owner must pay to the 38-21 association: 38-22 (1) all amounts due the association at the time of the 38-23 foreclosure sale; 38-24 (2) interest from the date of the foreclosure sale to 38-25 the date of redemption on all amounts owed the association at the 38-26 rate stated in the dedicatory instruments for delinquent 38-27 assessments, or if no rate is stated, at an annual interest rate of 39-1 10 percent; 39-2 (3) costs incurred by the association in foreclosing 39-3 the lien and conveying the property to the redeeming owner, 39-4 including reasonable attorney's fees; 39-5 (4) any assessment levied against the property by the 39-6 association after the date of the foreclosure sale; 39-7 (5) any reasonable cost incurred by the association, 39-8 including mortgage payments and costs of repair, maintenance, and 39-9 leasing of the property; and 39-10 (6) the purchase price paid by the association at the 39-11 foreclosure sale less any amounts due the association under 39-12 Subdivision (1) that were satisfied out of foreclosure sale 39-13 proceeds. 39-14 (d) To redeem property purchased at the foreclosure sale by 39-15 a person other than the property owners' association, the owner: 39-16 (1) must pay to the association: 39-17 (A) all amounts due the association at the time 39-18 of the foreclosure sale less the foreclosure sales price received 39-19 by the association from the purchaser; 39-20 (B) interest from the date of the foreclosure 39-21 sale through the date of redemption on all amounts owed the 39-22 association at the rate stated in the dedicatory instruments for 39-23 delinquent assessments, or if no rate is stated, at an annual 39-24 interest rate of 10 percent; 39-25 (C) costs incurred by the association in 39-26 foreclosing the lien and conveying the property to the redeeming 39-27 owner, including reasonable attorney's fees; and 40-1 (D) any unpaid assessments levied against the 40-2 property by the association after the date of the foreclosure sale; 40-3 and 40-4 (2) must pay to the person who purchased the property 40-5 at the foreclosure sale: 40-6 (A) any assessments levied against the property 40-7 by the association after the date of the foreclosure sale and paid 40-8 by the purchaser; 40-9 (B) the purchase price paid by the purchaser at 40-10 the foreclosure sale; 40-11 (C) interest from the date of foreclosure to the 40-12 date of redemption on the purchase price amount at an annual 40-13 interest rate of 10 percent; and 40-14 (D) any reasonable cost incurred by the 40-15 purchaser, including costs of repair, maintenance, and leasing of 40-16 the property. 40-17 (e) If a lot owner redeems the property under this section, 40-18 the purchaser of the property at foreclosure shall immediately 40-19 execute and deliver to the owner a deed transferring the property 40-20 to the redeeming property owner. 40-21 (f) If, before the expiration of the redemption period, the 40-22 redeeming lot owner fails to record the deed from the foreclosing 40-23 purchaser or fails to record an affidavit stating that the owner 40-24 has redeemed the property, the owner's right of redemption as 40-25 against a bona fide purchaser or lender for value expires after the 40-26 redemption period. 40-27 (g) If the property owners' association purchases the 41-1 property at foreclosure, all rent and other income collected by the 41-2 association from the date of the foreclosure sale to the date of 41-3 redemption shall be credited toward the amount owed the association 41-4 under Subsection (c), and if there are excess proceeds, they shall 41-5 be refunded to the owner. If a person other than the association 41-6 purchases the property at foreclosure, all rent and other income 41-7 collected by the purchaser from the date of the foreclosure sale to 41-8 the date of redemption shall be credited toward the amount owed the 41-9 purchaser under Subsection (d), and if there are excess proceeds, 41-10 those proceeds shall be refunded to the owner. 41-11 (h) If a person other than the property owners' association 41-12 is the purchaser at the foreclosure sale, before executing a deed 41-13 transferring the property to the redeeming owner, the purchaser 41-14 shall obtain an affidavit from the association or its authorized 41-15 agent stating that all amounts owed the association under 41-16 Subsection (d) have been paid. The association shall provide the 41-17 purchaser with the affidavit not later than the 10th day after the 41-18 date the association receives all amounts owed to the association 41-19 under Subsection (d). Failure of a purchaser to comply with this 41-20 subsection does not affect the validity of a redemption by a 41-21 redeeming owner. 41-22 (i) Property that is redeemed remains subject to all liens 41-23 and encumbrances on the property before foreclosure. Any lease 41-24 entered into by the purchaser of property at a sale foreclosing an 41-25 assessment lien of a property owners' association is subject to the 41-26 right of redemption provided by this section and the owner's right 41-27 to reoccupy the property immediately after the redemption. 42-1 (j) If a lot owner makes partial payment of amounts due to 42-2 the association at any time before the redemption period expires 42-3 but fails to pay all amounts necessary to redeem the lot before the 42-4 redemption period expires, the association shall refund any partial 42-5 payments to the property owner by mailing payment to the owner's 42-6 last known address as shown in the association's records not later 42-7 than the 30th day after the expiration date of the redemption 42-8 period. 42-9 (k) If a lot owner sends by certified mail, return receipt 42-10 requested, a written request to redeem the lot on or before the 42-11 last day of the redemption period, the lot owner's right of 42-12 redemption is extended until the 10th day after the date the 42-13 association and any third party foreclosure purchaser provides 42-14 written notice to the owner of the amounts that must be paid to 42-15 redeem the lot. 42-16 (l) After the redemption period and any extended redemption 42-17 period provided by Subsection (k) expires, the association or third 42-18 party foreclosure purchaser shall record an affidavit in the real 42-19 property records of the county in which the lot is located stating 42-20 that the owner did not redeem the lot during the redemption period 42-21 or any extended redemption period. 42-22 Sec. 207.128. REMEDIES FOR ASSOCIATION VIOLATIONS. (a) 42-23 Except as provided by Subsection (b), a property owners' 42-24 association is liable to an owner if the owner notifies the 42-25 association in writing of an alleged material violation of this 42-26 chapter and the association fails to comply with this chapter 42-27 before the 31st day after the date the owner provides notice under 43-1 this subsection. 43-2 (b) The property owners' association is liable to the owner 43-3 if: 43-4 (1) the association fails to furnish a resale 43-5 certificate requested by an owner under Section 207.091 within the 43-6 period prescribed by Section 207.092; 43-7 (2) the association fails to furnish the documents 43-8 requested by the owner under Section 207.066(b) within the period 43-9 prescribed by Section 207.066(c); or 43-10 (3) the board knowingly continues to violate an open 43-11 meetings requirement of Section 207.064 after the notice prescribed 43-12 by Section 207.064(h) has been given to the board. 43-13 (c) If the association is liable to the owner under 43-14 Subsection (a) or (b), the owner is entitled to one or more of the 43-15 following remedies: 43-16 (1) a court order directing the property owners' 43-17 association to comply with this chapter; 43-18 (2) a judgment against the property owners' 43-19 association for not more than $500; 43-20 (3) a judgment against the property owners' 43-21 association for attorney's fees and court costs; or 43-22 (4) a judgment authorizing the owner or the owner's 43-23 assignee to deduct the amount awarded under Subdivision (2) or (3) 43-24 from any future regular or special assessments payable to the 43-25 property owners' association. 43-26 (d) If the association is liable to the owner under 43-27 Subsection (a) and the association is unable to comply with this 44-1 chapter within the 30-day period prescribed by Subsection (a), the 44-2 owner is entitled only to the remedies described by Subsections 44-3 (c)(2)-(4). 44-4 (e) In addition to the remedies provided by Subsection (c), 44-5 an owner may recover a civil penalty of not more than $1,000 from 44-6 the association if the association in bad faith files a suit 44-7 against an owner. 44-8 (f) A property owners' association or a lot owner who is 44-9 adversely affected by a violation of the dedicatory instruments by 44-10 the association's board or another owner may seek judicial 44-11 enforcement of the dedicatory instruments. 44-12 (g) The attorney general may file a suit to enforce this 44-13 chapter on behalf of the owner. 44-14 (h) This chapter does not prohibit a property owners' 44-15 association or a lot owner from exercising other remedies provided 44-16 by law. 44-17 Sec. 207.129. EFFECT OF TAX LIEN FORECLOSURE. Foreclosure 44-18 of a tax lien under Chapter 32, Tax Code, does not discharge a 44-19 property owners' association's lien for an assessment under this 44-20 subchapter or under a dedicatory instrument or restrictions for 44-21 amounts that become due to the association after the date of 44-22 foreclosure of the tax lien. 44-23 SECTION 2. Chapter 204, Property Code, is amended by adding 44-24 Section 204.012 to read as follows: 44-25 Sec. 204.012. EFFECT OF REPEAL OF LAW. (a) An extension 44-26 of, addition to, or modification of restrictions or a dedicatory 44-27 instrument adopted in reliance on this chapter as this chapter 45-1 existed immediately before January 1, 2000, is not affected by the 45-2 repeal of Sections 204.003, 204.005, 204.007, 204.008, 204.009, 45-3 204.010, and 204.011. 45-4 (b) A petition to extend, add to, or modify restrictions 45-5 that is first placed into circulation before January 1, 2000, is 45-6 not affected by the repeal of the sections described by Subsection 45-7 (a) if: 45-8 (1) before January 1, 2000, at least 10 owners have 45-9 approved the petition; 45-10 (2) the approval of the number of lot owners required 45-11 to approve the extension, addition, or modification is obtained 45-12 before January 1, 2001; and 45-13 (3) the approved petition is recorded in the real 45-14 property records of the county in which the affected property is 45-15 located on or before February 1, 2001. 45-16 SECTION 3. Subchapter A, Chapter 5, Property Code, is 45-17 amended by adding Section 5.012 to read as follows: 45-18 Sec. 5.012. NOTICE OF OBLIGATIONS RELATED TO MEMBERSHIP IN 45-19 PROPERTY OWNERS' ASSOCIATION. (a) A seller of residential real 45-20 property that is subject to membership in a property owners' 45-21 association and that comprises not more than one dwelling unit 45-22 located in this state shall give to the purchaser of the property a 45-23 written notice that reads substantially similar to the following: 45-24 NOTICE OF MEMBERSHIP IN PROPERTY OWNERS' ASSOCIATION 45-25 CONCERNING THE PROPERTY AT (street address) 45-26 As a purchaser of property in the residential community in 45-27 which this property is located, you are obligated to be a member of 46-1 a property owners' association. Restrictive covenants governing 46-2 the use and occupancy of the property and a dedicatory instrument 46-3 governing the establishment, maintenance, and operation of this 46-4 residential community have been or will be recorded in the Real 46-5 Property Records of the county in which the property is located. 46-6 You may obtain copies of the restrictive covenants and dedicatory 46-7 instrument from the county clerk or the seller may obtain copies of 46-8 those documents from the property owners' association. 46-9 You are obligated to pay assessments to the property owners' 46-10 association. The amount of the assessments is subject to change. 46-11 Your failure to pay the assessments could result in a lien on and 46-12 the foreclosure of your property. 46-13 You are encouraged to obtain from the seller a resale 46-14 certificate that provides important information regarding the 46-15 property and the financial condition of the property owners' 46-16 association. 46-17 Date:__________ _____________________________________________ 46-18 Signature of Purchaser 46-19 (b) The seller shall deliver the notice to the purchaser 46-20 before the date the executory contract binds the purchaser to 46-21 purchase the property. The notice may be given separately, as part 46-22 of the contract during negotiations, or as part of any other notice 46-23 the seller delivers to the purchaser. If the notice is included as 46-24 part of the executory contract or another notice, the title of the 46-25 notice prescribed by this section, the references to the street 46-26 address and date in the notice, and the purchaser's signature on 46-27 the notice may be omitted. 47-1 (c) This section does not apply to a transfer: 47-2 (1) under a court order or foreclosure sale; 47-3 (2) by a trustee in bankruptcy; 47-4 (3) to a mortgagee by a mortgagor or successor in 47-5 interest or to a beneficiary of a deed of trust by a trustor or 47-6 successor in interest; 47-7 (4) by a mortgagee or a beneficiary under a deed of 47-8 trust who has acquired the land at a sale conducted under a power 47-9 of sale under a deed of trust or a sale under a court-ordered 47-10 foreclosure or has acquired the land by a deed in lieu of 47-11 foreclosure; 47-12 (5) by a fiduciary in the course of the administration 47-13 of a decedent's estate, guardianship, conservatorship, or trust; 47-14 (6) from one co-owner to another co-owner of an 47-15 undivided interest in the real property; 47-16 (7) to a spouse or a person in the lineal line of 47-17 consanguinity of the seller; 47-18 (8) to or from a governmental entity; 47-19 (9) of only a mineral interest, leasehold interest, or 47-20 security interest; or 47-21 (10) of a real property interest in a condominium. 47-22 (d) If an executory contract is entered into without the 47-23 seller providing the notice required by this section, the purchaser 47-24 may terminate the contract for any reason within the earlier of: 47-25 (1) seven days after the date the purchaser receives 47-26 the notice; or 47-27 (2) the date the transfer occurs as provided by the 48-1 executory contract. 48-2 (e) The purchaser's right to terminate the executory 48-3 contract under Subsection (d) is the purchaser's exclusive remedy 48-4 for the seller's failure to provide the notice required by this 48-5 section. 48-6 SECTION 4. Sections 204.003, 204.005, 204.007, 204.008, 48-7 204.009, 204.010, and 204.011, Property Code, are repealed. 48-8 SECTION 5. (a) This Act takes effect January 1, 2000, 48-9 except that Section 207.069, Property Code, as added by this Act, 48-10 takes effect July 1, 2000. 48-11 (b) The changes in law made by Subchapter E, Chapter 207, 48-12 Property Code, as added by this Act, apply only to property for 48-13 which an assessment becomes due on or after the effective date of 48-14 this Act. Property for which an assessment was due before the 48-15 effective date of this Act is covered by the law in effect when the 48-16 assessment became due, and the former law is continued in effect 48-17 for that purpose. 48-18 (c) The attorney general shall establish procedures for 48-19 approving and begin approving videotapes and classes as provided by 48-20 Section 207.069, Property Code, as added by this Act, on or before 48-21 July 1, 2000. 48-22 (d) Section 5.012, Property Code, as added by this Act, 48-23 applies only to an executory contract that is binding on a seller 48-24 and purchaser on or after January 1, 2000. 48-25 SECTION 6. The importance of this legislation and the 48-26 crowded condition of the calendars in both houses create an 48-27 emergency and an imperative public necessity that the 49-1 constitutional rule requiring bills to be read on three several 49-2 days in each house be suspended, and this rule is hereby suspended.