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.