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.