By:  Carona                                            S.B. No. 699
         Line and page numbers may not match official copy.
         Bill not drafted by TLC or Senate E&E.
                                A BILL TO BE ENTITLED
                                       AN ACT
 1-1     relating to residential subdivisions with mandatory membership in
 1-2     homeowner associations.
 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-4           SECTION 1.  Title 11, Property Code, is amended by adding
 1-5     Chapter 207 to read as follows:
 1-6                  CHAPTER 207.  TEXAS PLANNED COMMUNITY ACT
 1-7                      SUBCHAPTER A.  GENERAL PROVISIONS
 1-8           Sec. 207.001.  SHORT TITLE.  This chapter may be cited as the
 1-9     Texas Planned Community Act.
1-10           Sec. 207.002.  DEFINITIONS.  In this chapter:
1-11                 (1)  "Association" means the property owners'
1-12     association organized under Section 207.012.
1-13                 (2)  "Board" means the board of directors or the body,
1-14     regardless of name, designated to act on behalf of the association.
1-15                 (3)  "Builder" means any person or entity in the
1-16     business of constructing a residential dwelling on any lot within a
1-17     residential real estate subdivision for sale to a consumer.
1-18                 (4)  "Declarant" means the person:
1-19                       (A)  designated in the restrictions or a
1-20     dedicatory instrument as the declarant; or
1-21                       (B)  who succeeds to the special rights,
1-22     preferences, or privileges designated in the original restrictions
 2-1     or dedicatory instrument as belonging to the signatory.
 2-2                 (5)  "Declaration" means restrictions as defined in
 2-3     Subdivision (15) of this section.
 2-4                 (6)  "Dedicatory instrument" means each governing
 2-5     instrument covering the establishment, maintenance, and operation
 2-6     of a residential subdivision, planned unit development, townhouse
 2-7     regime, or any similar planned development.  The term includes
 2-8     restrictions, declarations, or similar instruments subjecting
 2-9     property to restrictive covenants, bylaws, or similar instruments
2-10     governing the administration or operation of a property owners'
2-11     association, to properly adopted rules and regulations of the
2-12     property owners' association, or to all lawful amendments to the
2-13     covenants, bylaws, rules, or regulations.
2-14                 (7)  "Lienholder" means a person that holds a valid
2-15     vendor's lien or deed of trust lien secured by property within the
2-16     subdivision.
2-17                 (8)  "Owner" means a person that owns record title to
2-18     property in a subdivision, or the personal representative of an
2-19     individual who owns record title to subdivision property.
2-20                 (9)  "Petition" means one or more instruments,
2-21     regardless of the designation or title, by which one or more of the
2-22     purposes authorized by this chapter are sought to be accomplished.
2-23                 (10)  "Property," "real property", "lot," or "tract"
2-24     means a lot or tract in a residential real estate subdivision.
2-25                 (11)  "Property owners' association" means an
2-26     incorporated or unincorporated association designated as the
 3-1     representative of the owners of property in a subdivision and whose
 3-2     members consist primarily or the owners of the property covered by
 3-3     the dedicatory instrument and through which the owners, or the
 3-4     board of directors or similar governing body, manage or regulate
 3-5     the residential subdivision, planned unit development, or townhouse
 3-6     regime, or similar planned development.
 3-7                 (12)  "Real property records" means the applicable
 3-8     records of a county clerk in which conveyances of real property are
 3-9     recorded.
3-10                 (13)  "Regular assessment" means an assessment, charge,
3-11     fee, or dues that each owner of property within a subdivision is
3-12     required to pay to the property owners' association on a regular
3-13     basis and that is to be used by the property owners' association
3-14     for the benefit of the subdivision in accordance with the
3-15     restrictions, as amended or extended.
3-16                 (14)  "Residential subdivision" or "subdivision" means
3-17     all land that has been divided into two or more parts and that is
3-18     or was burdened by restrictions which (i) limit at least a majority
3-19     of the land area burdened by restrictions, excluding streets and
3-20     public areas, to residential use only, (ii) are recorded in the
3-21     deed or property records of a county, and (iii) require membership
3-22     in a property owners' association which has authority to impose
3-23     regular or special assessments on the lots in the subdivision.
3-24                 (15)  "Restrictions" means one or more restrictive
3-25     covenants contained or incorporated by reference in a properly
3-26     recorded map, plat, replat, declaration, or other instrument filed
 4-1     in the county real property records, map or plat records, or deed
 4-2     records.
 4-3                 (16)  "Restrictive covenant" means any covenant,
 4-4     condition, or restriction contained in a dedicatory instrument,
 4-5     whether mandatory, prohibitive, permissive, or administrative.
 4-6                 (17)  "Special assessment" means an assessment, charge,
 4-7     fee, or dues that each owner of property within a subdivision is
 4-8     required to pay to the property owners' association, after a vote
 4-9     of the membership, for the purpose of defraying, in whole or in
4-10     part, the cost of any construction or reconstruction, unexpected
4-11     repair, or replacement of a capital improvement on common areas
4-12     owned by the property owners' association, including the necessary
4-13     fixtures and personal property related to the common areas, or for
4-14     maintenance and improvement of common areas owned by the property
4-15     owners' association or for carrying out other purposes of the
4-16     property owners' association as stated in its articles of
4-17     incorporation or its dedicatory instrument.  A special assessment
4-18     may be assessed before or after the property owners' association
4-19     incurs the costs that require the special assessment.
4-20           Sec. 207.003.  APPLICATION.  (a)  Subject to Subsections (b),
4-21     (c), and (d) of this section, this chapter applies only to a
4-22     residential subdivision that is or was burdened by restrictions or
4-23     provisions in a declaration that:
4-24                 (1)  limit at least a majority of the land area
4-25     burdened by the dedicatory instruments, excluding streets and
4-26     public areas, to residential use only;
 5-1                 (2)  are recorded in the deed or property records of a
 5-2     county;
 5-3                 (3)  require membership in a property owners'
 5-4     association for property owners of residential lots in the
 5-5     subdivision; and
 5-6                 (4)  grant the property owners' association authority
 5-7     to collect regular or special assessments on lots in the
 5-8     subdivision.
 5-9           (b)  This chapter applies only to a property owners'
5-10     association that requires mandatory membership in the association
5-11     for all owners of residential property within the subdivision
5-12     covered by the dedicatory instrument.
5-13           (c)  This chapter applies only to a property owners'
5-14     association, as defined by Section 207.002, regardless of whether
5-15     the organization is given a different name, such as "homeowners
5-16     association" or "community association," in the restrictions or
5-17     dedicatory instrument.
5-18           (d)  This chapter does not apply to condominium developments
5-19     that are governed by Chapter 82, Property Code.
5-20              (Section 207.004-207.009 reserved for expansion
5-21                 SUBCHAPTER B.  CONSTRUCTION AND ENFORCEMENT
5-22                          OF RESTRICTIVE COVENANTS
5-23           Sec. 207.010.  RESTRICTIVE COVENANTS.  (a)  An express
5-24     designation in a document creating restrictions applicable to a
5-25     residential subdivision that provides for the extension of,
5-26     addition to, or modification of existing restrictions by a
 6-1     designated number of owners of property in the subdivision that is
 6-2     less than 100% prevails over the provisions of Sections 207.011 (b)
 6-3     and (c).
 6-4           (b)  The provisions of Section 207.011 (b) and (c) prevail
 6-5     if:
 6-6                 (1)  an express designation in the document creating
 6-7     restrictions applicable to a residential real estate subdivision
 6-8     provides for the extension of, addition to, or modification of
 6-9     existing restrictions by 100% of the owners of property in the
6-10     subdivision; or
6-11                 (2)  the document creating restrictions applicable to a
6-12     residential real estate subdivision does not provide for the
6-13     extension of, addition to, or modification of existing
6-14     restrictions.
6-15           Sec. 207.011.  AMENDMENT OR EXTENSION OF EXISTING
6-16     RESTRICTIONS.  (a)  Subject to the limitations in a dedicatory
6-17     instrument applicable during a period of declarant control, and in
6-18     addition to the powers and methods contained in an existing
6-19     dedicatory instrument or the restrictions, a property owners'
6-20     association has authority to circulate and approve a petition
6-21     relating to an amendment or extension of existing restrictions.
6-22           (b)  Subject to the limitations in subsection (a), a petition
6-23     to amend or extend existing restrictions circulated and approved by
6-24     a property owners' association is effective if:
6-25                 (1)  the petition is approved by the owners, excluding
6-26     lienholders, contract purchasers, and the owners of mineral
 7-1     interests, of at least 75 percent of the lots or tracts in the
 7-2     residential real estate subdivision;
 7-3                 (2)  the petition does not amend or extend a particular
 7-4     provision which may not, under the declaration or restrictions, be
 7-5     amended or extended until a certain event or events occur;
 7-6                 (3)  the petition is recorded as a dedicatory
 7-7     instrument with the county clerk of the county in which the
 7-8     subdivision is located; and
 7-9                 (4)  a copy of the recorded dedicatory instrument is
7-10     provided to all owners of lots or tracts in the subdivision.
7-11           (c)  If a residential subdivision that consists of multiple
7-12     sections, each with its own restrictions, is represented by a
7-13     single property owners' association, the approval requirement may
7-14     be satisfied by obtaining approval of at least 75 percent of the
7-15     owners of lots or tracts in each section or 75 percent of the total
7-16     number of lots or tracts in the association's jurisdiction.
7-17           (d)  If approved, the petition is binding on all lots or
7-18     tracts in the subdivision or section, as applicable.
7-19           (e)  A property owners' association that circulates a
7-20     petition must notify all record owners of property in the
7-21     residential real estate subdivision in writing of the proposed
7-22     amendment or extension of the existing restrictions.  Notice may be
7-23     hand-delivered to residences within the subdivision or sent by
7-24     regular mail to the owner's last known mailing address as reflected
7-25     in the ownership records maintained by the association.  The
7-26     approval of multiple owners of a property may be reflected by the
 8-1     signature of a single co-owner.
 8-2           (f)  An action to challenge the validity of a dedicatory
 8-3     instrument adopted by a property owners' association under this
 8-4     section must be brought before the first anniversary of the date
 8-5     the dedicatory instrument is recorded.
 8-6           (g)  Any lien recorded before a dedicatory instrument is
 8-7     adopted by a property owners' association under this section is
 8-8     automatically subject to the dedicatory instrument at the time the
 8-9     instrument is recorded in the real property records.
8-10           Sec. 207.012.  TEXAS NONPROFIT CORPORATION.  If a property
8-11     owners' association is a Texas nonprofit corporation, the
8-12     provisions of the Texas Nonprofit Corporation Act (Article
8-13     1396-1.01 et seq., Vernon's Texas Civil Statutes) shall apply to
8-14     the association, except to the extent the provisions conflict with
8-15     this chapter.
8-16              (Section 207.013-207.019 reserved for expansion
8-17                SUBCHAPTER C.  MANAGEMENT OF THE ASSOCIATION
8-18           Sec. 207.020.  POWERS OF PROPERTY OWNERS' ASSOCIATION.
8-19     (a)  Unless otherwise provided by the declaration, restrictions,
8-20     articles of incorporation, or bylaws of the association, the
8-21     association acting through its board may:
8-22                 (1)  adopt and amend bylaws;
8-23                 (2)  adopt and amend budgets for revenues,
8-24     expenditures, and reserves and collect regular assessments or
8-25     special assessments for common expenses from property owners;
8-26                 (3)  hire and terminate managing agents and other
 9-1     employees, agents, and independent contractors;
 9-2                 (4)  institute, defend, intervene in, settle, or
 9-3     compromise litigation or administrative proceedings in its own name
 9-4     or on behalf of itself or two or more property owners on matters
 9-5     affecting the subdivision;
 9-6                 (5)  make contracts and incur liabilities relating to
 9-7     the operation of the subdivision and the property owners'
 9-8     association;
 9-9                 (6)  regulate the use, maintenance, repair,
9-10     replacement, modification, and appearance of the subdivision;
9-11                 (7)  adopt and amend rules regulating the use,
9-12     maintenance, repair, modification, and appearance of property, to
9-13     the extent the regulated actions affect other property;
9-14                 (8)  make additional improvements to the common area of
9-15     the subdivision;
9-16                 (9)  acquire, hold, encumber, and convey in its own
9-17     name any right, title, or interest to real or personal property;
9-18                 (10)  grant easements, leases, licenses, and
9-19     concessions through or over common areas;
9-20                 (11)  impose and receive payments, fees, or charges for
9-21     the use, rental, or operation of common areas and for services
9-22     provided to property owners;
9-23                 (12)  impose interest and late charges for delinquent
9-24     amounts due the association, returned check charges, and, if notice
9-25     and an opportunity to be heard are given under Subdivision (e),
9-26     reasonable fines for violations of the declaration, bylaws, and
 10-1    rules of the association;
 10-2                (13)  adopt and amend rules regulating the collection
 10-3    of delinquent amounts due the association and the application of
 10-4    payments;
 10-5                (14)  impose reasonable charges for preparing,
 10-6    recording, or copying declarations, restrictions, amendments,
 10-7    resale certificates, statements of delinquent amounts due the
 10-8    association, releases, and other association records;
 10-9                (15)  assign its right to future income, including the
10-10    right to receive regular assessments, after notice of the proposed
10-11    assignment has been mailed to all association members and if at
10-12    least two-thirds of the association members who vote in person or
10-13    by proxy at an association meeting to approve the assignment;
10-14                (16)  suspend the voting privileges of and the use of
10-15    common areas by an owner delinquent for more than 30 days in the
10-16    payment of amounts due the association;
10-17                (17)  purchase insurance and fidelity bonds, including
10-18    directors' and officers' liability insurance, that it considers
10-19    appropriate or necessary;
10-20                (18)  may, subject to the requirements and limitations
10-21    of the Texas Non-Profit Corporation Act (Article 1396-1.01 et seq.,
10-22    Vernon's Texas Civil Statutes) and by majority vote of its board of
10-23    directors, indemnify a director, officer or committee member of the
10-24    property owners' association who was, is, or may be made a named
10-25    defendant or respondent in a proceeding because the person is or
10-26    was a director, officer or committee member;
 11-1                (19)  may, if the restrictions vest the architectural
 11-2    control authority in the property owners' association or if the
 11-3    authority is vested in the association under Section 207.022,
 11-4    implement written architectural control guidelines regardless of
 11-5    whether the guidelines are to be recorded in the real property
 11-6    records of the applicable county; and may modify the guidelines as
 11-7    the property owners' association finds necessary;
 11-8                (20)  exercise other powers conferred by the dedicatory
 11-9    instruments;
11-10                (21)  exercise other powers that may be exercised in
11-11    this state by a corporation of the same type as the property
11-12    owners' association; and
11-13                (22)  exercise any other powers necessary and proper
11-14    for operation of the association.
11-15          (b)  A dedicatory instrument may not impose limitations on
11-16    the power of the association to deal with the declarant that are
11-17    more restrictive than the limitations imposed on the power of the
11-18    association to deal with other persons.
11-19          (c)  To be enforceable, a bylaw or rule of the association
11-20    must not be arbitrary or capricious.
11-21          (d)  Before an association may suspend an owner's right to
11-22    use a common area or file a suit against an owner that does not
11-23    seek foreclosure, the association or its agent shall give written
11-24    notice to the owner by hand delivery or certified mail return
11-25    receipt requested to the owner's last known address as shown in the
11-26    association's records, stating that the owner has the right to
 12-1    request a hearing before a board-appointed committee, or the board
 12-2    itself if there is no committee, to discuss and verify facts and
 12-3    attempt a resolution of the matter in issue.  The request by the
 12-4    owner shall be in writing and delivered to the association no later
 12-5    than the 10th day after the association's notice to the owner was
 12-6    hand delivered to the owner or deposited in the U.S. mail to the
 12-7    owner.  If an owner requests the opportunity to have a hearing
 12-8    before the board or committee, the hearing shall be no later than
 12-9    30 days after the board's receipt of the owner's request for a
12-10    hearing.  The owner and the association may audio tape the meeting.
12-11    This subsection shall not apply to the filing of a suit with a
12-12    simultaneous application for a temporary restraining order or a
12-13    suit that includes foreclosure as a cause of action.  Suits
12-14    involving foreclosure are subject to requirements of Subchapter E.
12-15          (e)  Before an association may charge a property owner for
12-16    property damage or levy a fine for violation of the declaration,
12-17    bylaws, or rules, the association shall give to the owner a written
12-18    notice that:
12-19                (1)  describes the violation or property damage and
12-20    states the amount of the proposed fine or damage charge;
12-21                (2)  states that not later than the 10th day after (i)
12-22    the date the association's notice was deposited in the U.S. mail if
12-23    the notice is mailed, or (ii) the owner's receipt of the notice if
12-24    the notice is hand delivered, the owner may request a hearing
12-25    before the board to verify facts or contest the fine or damage
12-26    charge; and
 13-1                (3)  allows the owner a reasonable time, by a specified
 13-2    date, to cure the violation and avoid the fine unless the owner was
 13-3    given notice and a reasonable opportunity to cure a similar
 13-4    violation within the preceding 12 months.
 13-5          (f)  An association may collect reimbursement of reasonable
 13-6    attorney's fees and other reasonable enforcement costs incurred by
 13-7    the association relating to collection of amounts due the
 13-8    association or violations of the association's declaration, bylaws
 13-9    or rules only if the owner has first been furnished a written
13-10    notice that attorney's fees and enforcement costs will be charged
13-11    to the owner in the event the delinquency or violation continues
13-12    after a date certain.  Attorney's fees that are in connection with
13-13    the delinquency or violation and that are incurred by the
13-14    association prior to giving the notice to the owner may not be
13-15    charged to the owner.  This restriction does not apply to a
13-16    counterclaim of an association in a lawsuit brought against the
13-17    association by a property owner.
13-18          (g)  The association may give a copy of the notice required
13-19    by Subsection (d), (e) and (f) to an occupant of the property.  The
13-20    association must give notice of a levied fine or damage charge to
13-21    the property owner no later than the 30th day after the date of the
13-22    levy or charge.
13-23          Sec. 207.021.  ASSESSMENTS.  (a)  An association acting
13-24    through its board may impose and increase regular assessments in
13-25    accordance with
13-26                (1)  the dedicatory instruments of the association, or
 14-1                (2)  this section if a dedicatory instrument sets a
 14-2    maximum fixed dollar amount, unrelated to value, for regular
 14-3    assessments and contains no provision to increase the regular
 14-4    assessments over the maximum fixed dollar amount other than by
 14-5    amendment of the dedicatory instrument.
 14-6          (b)  On or after the first day of January immediately
 14-7    following the first year that the maximum regular assessment set in
 14-8    a dedicatory instrument is levied, a property owners' association
 14-9    may adjust the assessment to reflect increases in the Consumer
14-10    Price Index for All Urban Consumers published monthly by the Bureau
14-11    of Labor Statistics, United States Department of Labor (CPI), or
14-12    its successor in function, using the first month of the calendar
14-13    year that ended immediately before the date on which the adjustment
14-14    is to be made as the base amount.  The association shall take the
14-15    index numbers from the CPI in accordance with Subsections (c)
14-16    through (e).
14-17          (c)  The adjustment in the regular assessment shall be
14-18    determined by multiplying the maximum fixed dollar regular
14-19    assessment by a fraction, the numerator of which is the index
14-20    number for the first month of the calendar year that ended
14-21    immediately before the date on which the adjustment is to be made
14-22    and the denominator of which is the index number for the first
14-23    month of the first year the maximum fixed dollar regular assessment
14-24    is reached.  If the product is greater than the maximum fixed
14-25    dollar regular assessment authorized in the dedicatory instrument
14-26    or restrictions, each property owner shall pay the greater amount
 15-1    as the regular assessment until the time of the next regular
 15-2    assessment adjustment.  If the product is less than the maximum
 15-3    fixed dollar regular assessment authorized in the dedicatory
 15-4    instrument or restrictions, the regular assessment may not be
 15-5    adjusted and each property owner shall pay the maximum fixed dollar
 15-6    regular assessment authorized in the dedicatory instrument or
 15-7    restrictions until the time of the next adjustment.  The
 15-8    association may not adjust the regular assessment under this
 15-9    section more than one time each year.
15-10          (d)  If publication of the Consumer Price Index or any
15-11    successor publication is discontinued, the adjustments described in
15-12    Subsection (c) shall be made by using the statistics of the Bureau
15-13    of Labor Statistics, United States Department of Labor, that are
15-14    the most similar to the Consumer Price Index.  If the Bureau of
15-15    Labor Statistics, United States Department of Labor, ceases to
15-16    exist or does not publish statistics relating to the purchasing
15-17    power of the consumer dollar, the assessment adjustments described
15-18    by this section shall be made using the most nearly comparable
15-19    statistics published by a recognized financial authority selected
15-20    by the property owners' association.
15-21          (e)  If the property owners' association does not increase
15-22    the regular assessment determined by Subsection (c) for a
15-23    particular year, the increase may be accumulated and assessed in
15-24    future years.  If a dedicatory instrument contains a maximum
15-25    regular assessment and allows for an increase without a vote of the
15-26    membership, the association may assess the increase annually or
 16-1    accumulate and assess the increase after a number of years.
 16-2          Sec. 207.022.  ARCHITECTURAL CONTROL.  (a)  This section
 16-3    applies to restrictions providing for the creation and operation of
 16-4    an architectural control committee with the power to approve or
 16-5    deny applications for proposed original construction or
 16-6    modification of a building, structure, or improvement.  Unless
 16-7    otherwise provided by the dedicatory instruments, an association's
 16-8    board may serve as an architectural control committee.
 16-9          (b)  Unless the restrictions applicable to a residential real
16-10    estate subdivision vest the architectural control authority in the
16-11    property owners' association before either of the following events,
16-12    the architectural control authority automatically vests in the
16-13    association if:
16-14                (1)  the term of the architectural control committee
16-15    authority expires as prescribed by the restrictions;
16-16                (2)  a residence on the last available residential
16-17    building site in the subdivision is completed and sold;
16-18                (3)  the person or entity designated as the
16-19    architectural control committee in the restrictions assigns, in
16-20    writing, authority to the association; or
16-21                (4)  the declarant, the declarant's designees, or any
16-22    person named in the dedicatory instrument as the architectural
16-23    control committee cease to exercise its authority for more than one
16-24    year under the restrictions or provisions contained in a dedicatory
16-25    instrument relating to the architectural control committee.
16-26          (c)  If the architectural control committee authority is
 17-1    vested in the property owners' association under Subsection (b),
 17-2    the association has that authority until:
 17-3                (1)  the restrictions are modified to reflect
 17-4    otherwise; or
 17-5                (2)  the restrictions are terminated.
 17-6          (d)  The declarant, the property owners' association, the
 17-7    architectural control committee, or an owner of property subject to
 17-8    a dedicatory instrument sought to be enforced may enforce a
 17-9    restrictive covenant that relates to architectural control,
17-10    construction on a lot, and use restrictions on a lot contained in
17-11    the dedicatory instrument.
17-12          Sec. 207.023.  MEETINGS.  (a)  A meeting of the association
17-13    must be held at least once each year.  Unless a dedicatory
17-14    instrument provides less restrictive requirements, a special
17-15    meeting of the association may be called by the president, a
17-16    majority of the board, or property owners having at least 10
17-17    percent of the votes in the association.
17-18          (b)  Meetings of the association and board must be open to
17-19    property owners, subject to the right of the board to adjourn a
17-20    board meeting and reconvene in closed executive session to consider
17-21    actions involving personnel, pending litigation, contract
17-22    negotiations, enforcement actions, matters involving the invasion
17-23    of privacy of individual owners, or matters that are to remain
17-24    confidential by request of the affected parties and agreement of
17-25    the board.  The general nature of any business to be considered in
17-26    executive session must first be announced at the open meeting.
 18-1          (c)  Unless a dedicatory instrument of the association
 18-2    provides otherwise:
 18-3                (1)  a board meeting may be held by any method of
 18-4    communication, including electronic and telephonic, if:
 18-5                      (A)  notice of the meeting has been given in
 18-6    accordance with Subsection (e);
 18-7                      (B)  each director may hear and be heard by every
 18-8    other director; and
 18-9                      (C)  the meeting does not involve voting on a
18-10    fine, damage assessment, appeal from a denial of architectural
18-11    control approval, or suspension of a right of a particular
18-12    association member before the member has an opportunity to attend a
18-13    board meeting to present the member's position, including any
18-14    defense, on the issue; and
18-15                (2)  the board may act by unanimous written consent of
18-16    all the directors, without a meeting, if:
18-17                      (A)  the board action does not involve voting on
18-18    a fine, damage assessment, appeal from a denial of architectural
18-19    control approval, or suspension of a right of a particular
18-20    association member before the member has an opportunity to attend a
18-21    board meeting to present the member's position, including any
18-22    defense, on the issue; and
18-23                      (B)  a record of the board action is filed with
18-24    the minutes of board meetings.
18-25          (d)  Notice of a meeting of the association must be given as
18-26    provided by the bylaws, or, if the bylaws do not provide for
 19-1    notice, notice must be given to each owner in the same manner in
 19-2    which notice is given to members of a nonprofit corporation under
 19-3    Section A, Article 2.11, Texas Non-Profit Corporation Act (Article
 19-4    1396-2.11, Vernon's Texas Civil Statutes).
 19-5          (e)  Notice of a meeting of the board must be given as
 19-6    provided by the bylaws, or, if the bylaws do not provide for
 19-7    notice, notice must be given to each board member in the same
 19-8    manner in which notice is given to members of the board of a
 19-9    nonprofit corporation under Section B, Article 2.19, Texas
19-10    Non-Profit Corporation Act (Article 1396-2.19, Vernon's Texas Civil
19-11    Statutes).
19-12          (f)  A property owners' association, on the written request
19-13    of a property owner, shall inform the owner of the time and place
19-14    of the next regular or special meeting of the board.  If the
19-15    association representative to whom the request is made does not
19-16    know the time and place of the meeting, the association promptly
19-17    shall obtain the information and disclose it to the owner or inform
19-18    the owner where the information may be obtained.
19-19          Sec. 207.024.  VOTING AND PROXIES.  (a)  If a lot is owned by
19-20    more than one person, only one of the lot owners may vote in person
19-21    or by proxy. If more than one of the multiple owners is present,
19-22    the vote or votes allocated to that lot may be cast only in
19-23    accordance with the owners' unanimous agreement unless the
19-24    declaration, bylaws, or articles of incorporation provide
19-25    otherwise.  Multiple owners are considered to be in unanimous
19-26    agreement if one of the multiple owners casts the votes allocated
 20-1    to a lot and none of the other owners makes prompt protest to the
 20-2    person presiding over the meeting.  If multiple owners of a lot
 20-3    attempt to vote in per person or by proxy on behalf of all the
 20-4    owners of the lot, the first lot owner listed in the deed under
 20-5    which the owners acquired title shall be the only owner entitled to
 20-6    cast the vote for the lot.  Any one of multiple owners of a lot may
 20-7    register a protest, in person or by proxy, concerning the validity
 20-8    of another owner's right to cast a vote for all owners of the lot.
 20-9          (b)  Votes allocated to a lot may be cast under a written
20-10    proxy duly executed by a lot owner.  A lot owner may not revoke a
20-11    proxy given under this section except by giving actual notice of
20-12    revocation to the person presiding over a meeting of the
20-13    association.  A proxy is void if it is not dated or if it purports
20-14    to be revocable without notice.  A proxy terminates 11 months after
20-15    its date unless it specifies a shorter or longer time.
20-16          (c)  Cumulative voting is not allowed.
20-17          Sec. 207.025.  ASSOCIATION RECORDS.  (a)  The association
20-18    shall keep:
20-19                (1)  financial records that are sufficiently detailed
20-20    to enable an accountant to prepare financial statements that comply
20-21    with generally accepted accounting principles and to enable the
20-22    association to prepare a resale certificate under Section 207.031;
20-23                (2)  information statement prepared under Section
20-24    207.030 and any amendments to the statement;
20-25                (3)  the name and mailing address of each property
20-26    owner;
 21-1                (4)  voting records, proxies, and correspondence
 21-2    relating to amendments to the dedicatory instruments for at least
 21-3    four years; and
 21-4                (5)  minutes of meetings of the association and board.
 21-5          (b)  Upon an owner's written request, the association shall
 21-6    furnish to the owner a copy of the declaration, restrictions,
 21-7    bylaws and any rules of the association at the owner's expense and
 21-8    no later than the 10th day after the request is received by the
 21-9    association.
21-10          (c)  Upon an owner's written request stating the purpose of
21-11    the request, an owner or the owner's agent (including the owner's
21-12    accountant or attorney) has the right to examine and copy at any
21-13    reasonable time and for any proper purpose, the books and records
21-14    of the association relevant to that purpose at the owner's expense.
21-15    An attorney's files and records relating to the association are not
21-16    records of the association and are not subject to inspection by
21-17    owners or production in a legal proceeding.
21-18          (d)  The association shall, as a common expense, obtain the
21-19    accounting services required by this section and by the dedicatory
21-20    instruments.  Copies of the reports shall be made available to the
21-21    owners.
21-22                (1)  If the subdivision contains 50 or more lots, the
21-23    association shall annually obtain a year-end financial report and
21-24    an audit of the association's financial records, performed by a
21-25    certified public accountant or public accountant, who is
21-26    independent of the association.
 22-1                (2)  If the subdivision contains less than 50 but more
 22-2    than 15 lots, the association shall annually obtain a review or an
 22-3    audit of the association's financial records, performed by a
 22-4    certified public accountant or public accountant who is independent
 22-5    of the association.
 22-6                (3)  If the subdivision contains 15 or less lots, the
 22-7    association annually may waive the requirement of this subsection
 22-8    if the waiver is approved by two-thirds of the members voting at a
 22-9    meeting of the association.  This waiver does not waive the
22-10    requirements of the dedicatory instruments.
22-11          (e)  A declarant shall furnish copies to the association of
22-12    the information required by Subsection (a)  on the date the first
22-13    lot is sold.
22-14          Sec. 207.026.  MANAGEMENT CERTIFICATES.  (a)  An association
22-15    shall record in each county in which any portion of the subdivision
22-16    is located a certificate, signed and acknowledged by an officer of
22-17    the association, stating:
22-18                (1)  the name of the subdivision;
22-19                (2)  the name of the association;
22-20                (3)  the recording data for the subdivision;
22-21                (4)  the recording data for the declaration;
22-22                (5)  the mailing address of the association, or the
22-23    name and mailing address of the person or entity managing the
22-24    association; and
22-25                (6)  other information the association considers
22-26    appropriate.
 23-1          (b)  The association shall record a management certificate
 23-2    not later than the 30th day after the date the association has
 23-3    notice of a change in any information in a recorded certificate
 23-4    required by Subdivisions (a) of this section.
 23-5          (c)  The association and its officers, directors, employees,
 23-6    and agents are not subject to liability to any person for delay or
 23-7    failure to record a management certificate, unless the delay or
 23-8    failure is willful or caused by gross negligence.
 23-9             (Sections 207.027-207.030 reserved for expansion
23-10                  SUBCHAPTER D.  PROTECTION OF PURCHASERS
23-11          Sec. 207.031.  RESALE CERTIFICATES.  (a)  If a property
23-12    owner, including a declarant or builder, intends to sell a lot, the
23-13    owner shall furnish to the purchaser a current copy of the
23-14    declaration, restrictions, bylaws, any association rules, and a
23-15    resale certificate  before executing a contract or conveying the
23-16    lot.  The resale certificate must have been prepared not earlier
23-17    than three months before the date it is delivered to the purchaser.
23-18          (b)  The resale certificate shall be issued by the
23-19    association and must contain:
23-20                (1)  a statement of any right of first refusal or other
23-21    restraint contained in the declaration or restrictions that
23-22    restricts the right to transfer a lot;
23-23                (2)  the amount of the regular assessment and how often
23-24    it becomes due;
23-25                (3)  the amount of any special assessment that is due
23-26    after the preparation date of the resale certificate for the
 24-1    owner's lot;
 24-2                (4)  the total of all amounts due and unpaid to the
 24-3    association by the selling lot owner;
 24-4                (5)  capital expenditures, if any, approved by the
 24-5    association for the current fiscal year of the association;
 24-6                (6)  the amount of reserves, if any, for capital
 24-7    expenditures;
 24-8                (7)  the association's current operating budget and
 24-9    balance sheet;
24-10                (8)  the total of any unsatisfied judgments against the
24-11    association;
24-12                (9)  the style and cause number of any pending lawsuit
24-13    in which the association is a defendant;
24-14                (10)  a certificate of insurance showing the
24-15    association's property and liability insurance relating to the
24-16    common areas and common facilities;
24-17                (11)  whether the board has actual knowledge that any
24-18    alterations or improvements to the lot violate the dedicatory
24-19    instruments;
24-20                (12)  a summary or copy of notices received by the
24-21    association from any governmental authority regarding health or
24-22    housing code violations, existing on the date of the certificate,
24-23    with respect to the lot or the association's common areas or common
24-24    facilities;
24-25                (13)  the amount of any administrative transfer fee
24-26    charged by the association upon change of lot ownership;
 25-1                (14)  the name, mailing address, and telephone number
 25-2    of the association's managing agent, if any;
 25-3          (c)  Not later than the 10th day after the date of receiving
 25-4    a written request by a property owner, an association shall furnish
 25-5    to the selling owner or the owner's agent a resale certificate
 25-6    signed and dated by an officer or authorized agent of the
 25-7    association containing the information required by Subsection (b).
 25-8    A selling owner or the owner's agent is not liable to the purchaser
 25-9    for erroneous information provided by the association in the
25-10    certificate.  If an association does not furnish a resale
25-11    certificate or any information required in the certificate within
25-12    the 10-day period, the owner may provide the purchaser with a sworn
25-13    affidavit signed by the owner in lieu of the certificate.  An
25-14    affidavit must state that the owner requested information from the
25-15    association concerning its financial condition, as required by this
25-16    section, and that the association did not timely provide a resale
25-17    certificate or the information required in the certificate.  If an
25-18    owner has furnished an affidavit to a purchaser, the owner and the
25-19    purchaser may agree in writing to waive the requirement to furnish
25-20    a resale certificate.  The association and its agents are not
25-21    liable to a selling owner for delay or failure to furnish a resale
25-22    certificate unless the association or its agent willfully refuses
25-23    to furnish the certificate or is grossly negligent in not
25-24    furnishing the resale certificate.  Failure to provide a resale
25-25    certificate does not void a deed to a purchaser.
25-26          (d)  If a properly executed resale certificate incorrectly
 26-1    states the total of delinquent sums owed by the selling owner to
 26-2    the association, the purchaser is not liable for payment of
 26-3    additional delinquencies that are unpaid on the date the
 26-4    certificate is prepared and that exceed the total sum stated in the
 26-5    certificate.  An owner or the owner's agent is not liable to a
 26-6    purchaser for the failure or delay of the association to provide
 26-7    the certificate in a timely manner.
 26-8          (e)  A resale certificate does not affect:
 26-9                (1)  an association's right to recover debts or claims
26-10    that arise or become due after the date the certificate is
26-11    prepared; or
26-12                (2)  an association's lien on a lot securing payment of
26-13    monies owed to the association after the preparation date of the
26-14    certificate.
26-15          (f)  A purchaser, lender, or title insurer who relies on a
26-16    resale certificate is not liable for any debt or claim that is not
26-17    disclosed in the certificate.  An association may not deny the
26-18    validity of any statement in the certificate.  A selling owner or
26-19    the owner's agent is not liable to the purchaser for erroneous
26-20    information provided by the association in the certificate.
26-21          (g)  A property owners' association or its authorized agent
26-22    shall be allowed to charge a reasonable fee for the preparation of
26-23    a resale certificate and any update of the certificate prior to a
26-24    closing of a sale.
26-25          Sec. 207.032.  PURCHASER'S RIGHT TO CANCEL.  (a)  If a
26-26    purchaser of a lot from a property owner has not received from the
 27-1    seller the declaration, restrictions, bylaws, and any association
 27-2    rules required by Section 207.031 before the purchaser executes a
 27-3    contract of sale or if the contract does not contain an underlined
 27-4    or bold-print provision acknowledging the purchaser's receipt of
 27-5    those documents and recommending that the purchaser read those
 27-6    documents before executing the contract, the purchaser may cancel
 27-7    the contract before the sixth day after the date the purchaser
 27-8    receives those documents.  If a purchaser has not received a resale
 27-9    certificate before executing a contract of sale, the purchaser may
27-10    cancel the contract before the sixth day after the date the
27-11    purchaser receives the resale certificate or executes a waiver
27-12    under Section 207.031 whichever occurs first.
27-13          (b)  If a purchaser elects to cancel a contract under
27-14    Subsection (a), the cancellation must be by hand-delivering written
27-15    notice of cancellation to the declarant or selling lot owner or by
27-16    mailing notice of cancellation by certified United States mail,
27-17    return receipt requested, to the offeror or the offeror's agent for
27-18    service of process within the five-day cancellation period.
27-19    Cancellation is without penalty, and all payments made by the
27-20    purchaser before cancellation must be refunded.
27-21          (c)  A selling owner may not require a purchaser to close
27-22    until the purchaser is given the declaration, restrictions, bylaws,
27-23    and rules of the association, to the extent they exist.
27-24          (d)  After a sale is consummated, the failure of the seller
27-25    to have furnished a resale certificate to the buyer is not grounds
27-26    for recission of the sale.
 28-1          Sec. 207.033.  OBLIGATIONS OF PROPERTY OWNERS.  (a)  In
 28-2    addition to the obligations of property owners as provided by the
 28-3    declaration, bylaws, rules of the association, or this chapter, a
 28-4    property owner:
 28-5                (1)  shall pay assessments, interest, and other charges
 28-6    properly levied by the association against the owner or the owner's
 28-7    property, and shall pay regular periodic assessments without demand
 28-8    by the association;
 28-9                (2)  shall comply with the declaration, bylaws, and
28-10    rules of the association, including any amendments;
28-11                (3)  shall pay for damage to the common area cause by
28-12    the negligence or willful misconduct of the owner, an occupant of
28-13    the owner's property, or the owner or occupant's family, guests,
28-14    employees, contractors, agents, or invitees; and
28-15                (4)  is liable to the association for violations of the
28-16    declaration, bylaws, or rules of the association, including any
28-17    amendments, by the owner, an occupant of the owner's property, or
28-18    the owner or occupant's family, guests, employees, agents, or
28-19    invitees, and for costs incurred by the association to obtain
28-20    compliance, subject to the restriction on attorney's fees in
28-21    Section 207.020(f).
28-22          (b)  No later than the 30th day after the date an owner
28-23    acquires an interest in a residential property in a subdivision,
28-24    the owner shall provide the property owners' association with:
28-25                (1)  the owner's mailing address and telephone number;
28-26                (2)  the name and telephone number of any person
 29-1    occupying the residential dwelling on the property other than the
 29-2    owner; and
 29-3                (3)  the name, address and telephone number of any
 29-4    person managing the property as agent of the property owner.
 29-5          (c)  An owner shall notify the property owners' association
 29-6    in writing of any change in the information required by this
 29-7    section not later than the 30th day after the event causing the
 29-8    change in information.  The association may charge the owner for
 29-9    actual costs and administrative expenses incurred by the
29-10    association in obtaining the information if the owner fails to do
29-11    so within the prescribed time period.
29-12            (Sections 207.034 - 207.040 reserved for expansion
29-13             SUBCHAPTER E.  PROPERTY OWNERS' ASSOCIATION LIEN
29-14                              FOR ASSESSMENTS
29-15          Sec. 207.041.  DEFINITION OF ASSESSMENT.  In this subchapter,
29-16    "assessment" means regular and special assessments, fee, charge,
29-17    late fee, fine, collection cost, or attorney's fees, dues,
29-18    interest, or any other amount due to the property owners'
29-19    association from the property owner or levied against the owner's
29-20    property in the subdivision by the property owners' association.
29-21          Sec. 207.042.  ESTABLISHMENT OF LIEN.  (a)  Unless the
29-22    restrictions provide otherwise, an assessment levied by a property
29-23    owners' association against property is a personal obligation of
29-24    the property owner and is secured by a continuing lien on the
29-25    property and on rent and insurance proceeds received by the
29-26    property owner relating to the property.
 30-1          (b)  If on January 1, 2000, a lot is the homestead of the
 30-2    property owner and is subject to restrictions that do not contain a
 30-3    valid assessment lien against the property, the lien provided by
 30-4    this subchapter does not attach against the property until the lot
 30-5    ceases to be the homestead of the person owning the lot on January
 30-6    1, 2000.
 30-7          Sec. 207.043.  PRIORITY OF LIEN.  Unless otherwise provided
 30-8    in the dedicatory instrument or restrictions, the lien of a
 30-9    property owner's association for an assessment has priority over
30-10    any other lien except:
30-11                (1)  a valid lien for property taxes and other
30-12    governmental assessments or charges against the property unless
30-13    otherwise provided by statute;
30-14                (2)  a valid lien or encumbrance recorded before the
30-15    restrictions or the dedicatory instrument is recorded; and
30-16                (3)  a first lien securing the purchase of a lot,
30-17    including the improvements and the initial construction of a
30-18    dwelling on a lot recorded before the date on which the assessment
30-19    sought to be enforced becomes delinquent under the restrictions or
30-20    the dedicatory instrument.
30-21          Sec. 207.044.  PERFECTION OF LIEN.  The association's lien
30-22    for assessments is perfected by the enactment of this chapter or by
30-23    the recordation of the declaration if the declaration was recorded
30-24    prior to the enactment of this chapter.  Unless the declaration
30-25    provides otherwise, no other recordation of a lien or notice of
30-26    lien is required.
 31-1          Sec. 207.045.  POWER OF SALE.  (a)  By acquiring property in
 31-2    a subdivision governed by a dedicatory instrument, a property owner
 31-3    grants to the property owners' association a power of sale in
 31-4    connection with the association's lien under this subchapter.
 31-5          (b)  By written resolution, the property owners' association
 31-6    may appoint an officer, agent, trustee, or attorney to exercise the
 31-7    power of sale on its behalf under Section 207.047.
 31-8          Sec. 207.046.  EXCHANGE OF INFORMATION.  (a)  If a property
 31-9    owner is delinquent in paying an assessment to a property owners'
31-10    association, a holder of a lien recorded against the property may
31-11    provide the association, at the association's request, information
31-12    regarding the owner's debt secured by the holder's lien and other
31-13    relevant information.  At the request of a lien holder, the
31-14    association may furnish the lien holder with information about the
31-15    property and the property owner's obligations to the association.
31-16          (b)  If a property owner defaults in the owner's monetary
31-17    obligations to the property owners' association, the association
31-18    may notify other lienholders of the default and the association's
31-19    intent to foreclose its lien.  The association shall notify any
31-20    holder of a recorded lien or perfected mechanic's lien against the
31-21    property who has given the association a written request for notice
31-22    of the property owner's default or the association's intent to
31-23    foreclose.
31-24          Sec. 207.047.  FORECLOSURE OF LIEN.  (a)  A property owners'
31-25    association has the right to foreclose its lien under the power of
31-26    sale created by:
 32-1                (1)  the restrictions or a dedicatory instrument that
 32-2    was recorded at the time of purchase of the lot by the property
 32-3    owner whose lot is being foreclosed upon;
 32-4                (2)  a court order in a suit or countersuit seeking
 32-5    judicial foreclosure; or
 32-6                (3)  a court order in an application for expedited
 32-7    foreclosure under a procedure parallel to the foreclosure of a home
 32-8    equity lien under Texas Rules of Civil Procedure, Part VII, Section
 32-9    1, Procedures Related to Home Equity Loan Foreclosure.  The Texas
32-10    Supreme Court shall promulgate the rules of civil procedure no
32-11    later than January 1, 2001.
32-12          (b)  Before an association may institute foreclosure
32-13    proceedings against an owner's lot, the association or its agent
32-14    must send the owner a written notice, certified mail return receipt
32-15    requested, containing:
32-16                (1)  a statement that the owner has the right to elect
32-17    either expedited foreclosure under Subsection (a)(3), or
32-18    nonjudicial foreclosure under Subsection (a)(1) if nonjudicial
32-19    foreclosure is authorized in a dedicatory instrument;
32-20                (2)  a description of the methods of foreclosure in
32-21    Subdivision (1) and the approximate attorneys fees and costs for
32-22    which the owner would be liable under each of those foreclosure
32-23    methods, assuming an uncontested foreclosure;
32-24                (3)  a statement that in order to make an election, the
32-25    owner must, within 30 days after the receipt of the association's
32-26    notice to the owner, send a written notice to the association or
 33-1    its agent by certified mail return receipt requested to the return
 33-2    address indicated in the association's notice, stating the owner's
 33-3    election of the method of foreclosure; and
 33-4                (4)  a statement that unless the owner exercises his
 33-5    right to make an election in a timely manner, the association may
 33-6    foreclose in any manner available to it under Subsection (a).
 33-7          (c)  If the property owner notifies the association or its
 33-8    agent of an election of manner of foreclosure, the association may
 33-9    only foreclose in the manner the owner elected.  If notice of
33-10    election is not provided by the owner in a timely manner, the
33-11    association may foreclose in any manner available to it under
33-12    Subsection (a).
33-13          (d)  At any time before a foreclosure sale, a property owner
33-14    may avoid foreclosure by paying all amounts due the property
33-15    owners' association, including foreclosure-related costs incurred
33-16    by the association.
33-17          (e)  The property owners' association may bid for and
33-18    purchase the property at the foreclosure sale as a common expense.
33-19    Subject to the redemption provisions of Subsection 207.049, the
33-20    association may own, lease, encumber, exchange, sell, or convey the
33-21    property.
33-22          (f)  A court may not set aside a sale on petition of a
33-23    property owner solely because the purchase price at the foreclosure
33-24    sale was insufficient to fully satisfy the owner's debt.
33-25          (g)  An association may not foreclose a lien for an
33-26    assessment consisting solely of fines.
 34-1          (h)  This section does not prevent an owner from filing an
 34-2    action to enjoin a wrongful foreclosure or an action for damages
 34-3    for wrongful foreclosure.
 34-4          Sec. 207.048.  NOTICE OF FORECLOSURE SALE.  (a)  A property
 34-5    owners' association that conducts a foreclosure sale under Section
 34-6    207.047 must send the property owner written notice of the sale and
 34-7    of the property owner's right of redemption under Section 207.049
 34-8    not later than 14 days after the date of the foreclosure sale.
 34-9          (b)  The notice shall be mailed to the property owner's last
34-10    known mailing address, certified mail, return receipt requested,
34-11    according to the records of the property owners' association.
34-12          Sec. 207.049.  RIGHT OF REDEMPTION.  (a)  The owner of
34-13    property in a residential subdivision may redeem the property from
34-14    any purchaser at a sale foreclosing a lien of a property owners'
34-15    association not later than the 90th day after the date the
34-16    association mails written notice of the sale to the owner under
34-17    Section 207.048.
34-18          (b)  A person who purchases property at a sale foreclosing a
34-19    property owners' association's assessment lien may not transfer
34-20    ownership of the property to a person other than a redeeming owner
34-21    during the redemption period.
34-22          (c)  To redeem property purchased by the association at
34-23    foreclosure sale, the owner must pay to the association:
34-24                (1)  all amounts due the association at the time of the
34-25    foreclosure sale;
34-26                (2)  interest from the date of foreclosure sale to the
 35-1    date of redemption on all amounts owed the association at the rate
 35-2    stated in the dedicatory instruments for delinquent assessments, or
 35-3    if no rate is stated, an interest rate of 10% per annum;
 35-4                (3)  costs incurred by the association in foreclosing
 35-5    the lien and reconveying the property to the owner, including
 35-6    reasonable attorney's fees;
 35-7                (4)  any assessment levied against the property by the
 35-8    association after the foreclosure sale;
 35-9                (5)  any reasonable cost incurred by the association,
35-10    including mortgage payments and costs of repair, maintenance, and
35-11    leasing; and
35-12                (6)  the purchase price paid by the association at the
35-13    foreclosure sale less any amounts due the association under
35-14    subdivision (c)(1) that were satisfied out of foreclosure sale
35-15    proceeds.
35-16          (d)  To redeem property purchased at the foreclosure sale by
35-17    a person other than the association, the owner:
35-18                (1)  must pay to the association:
35-19                      (A)  all amounts due the association at the time
35-20    of foreclosure sale less the foreclosure sales price received by
35-21    the association from the purchaser.  If the foreclosure sales price
35-22    exceeds the amount due to the association, the association must
35-23    refund the excess proceeds to the owner's;
35-24                      (B)  interest from the date of foreclosure sale
35-25    through the date of redemption on all amounts owed the association
35-26    at the rate stated in the dedicatory instruments for delinquent
 36-1    assessments, or if no rate is stated, an interest rate of 10
 36-2    percent per annum;
 36-3                      (C)  costs incurred by the association in
 36-4    foreclosing the lien and facilitating the reconveyance of the
 36-5    property to the owner, including reasonable attorney's fees;
 36-6                      (D)  any unpaid assessments levied against the
 36-7    property by the association after the foreclosure sale; and
 36-8                (2)  must pay to the person who purchased the property
 36-9    at the foreclosure sale:
36-10                      (A)  any assessments levied against the property
36-11    by the association after the foreclosure sale and paid by the
36-12    purchaser;
36-13                      (B)  the purchase price paid by the purchaser at
36-14    the foreclosure sale;
36-15                      (C)  interest from the date of foreclosure to the
36-16    date of redemption on the purchase price amount at a rate of 10
36-17    percent per annum; and
36-18                      (D)  any reasonable cost incurred by the
36-19    purchaser, including costs of repair, maintenance, and leasing.
36-20          (e)  If a property owner redeems the property under this
36-21    section, the purchaser of the property at foreclosure shall
36-22    immediately execute and deliver to the owner a deed transferring
36-23    the property to the redeeming property owner.
36-24          (f)  If, prior to the expiration of the redemption period,
36-25    the redeeming property owner fails to record the deed from the
36-26    foreclosing purchaser or fails to record an affidavit stating that
 37-1    the owner has redeemed the property, the owner's right of
 37-2    redemption as against a bona fide purchaser or lender for value
 37-3    shall expire after the 90-day redemption period.
 37-4          (g)  If the association purchases the property at
 37-5    foreclosure, all rent and other income collected by the association
 37-6    from the date of foreclosure sale to the date of redemption shall
 37-7    be credited toward the amount owed the association under Subsection
 37-8    (c), and if there are excess proceeds, they shall be refunded to
 37-9    the owner.  If a person other than the association purchases the
37-10    property at foreclosure, all rent and other income collected by the
37-11    purchaser from the date of foreclosure to the date of redemption
37-12    shall be credited toward the amount owed the purchaser under
37-13    Subsection (d), and if there are excess proceeds, they shall be
37-14    refunded to the owner.
37-15          (h)  If a person other than the association is the purchaser
37-16    at the foreclosure sale, prior to executing a deed transferring the
37-17    property to the redeeming owner as provided in Subsection (e), the
37-18    purchaser shall obtain a sworn written statement from the
37-19    association or its authorized agent stating that all amounts owed
37-20    the association under Subsection (d) have been paid.  The
37-21    association shall provide the purchaser the statement no later than
37-22    the 10th day after the association receives all amounts owed to the
37-23    association under Subsection (d).
37-24          (i)  Property that has been redeemed remains subject to all
37-25    liens and encumbrances on the property before foreclosure.  Any
37-26    lease entered into by the purchaser of property at a sale
 38-1    foreclosing an assessment lien of a property owners' association
 38-2    shall be subject to the right of redemption contained in this
 38-3    section and the owner's right to reoccupy the property immediately
 38-4    after the redemption.
 38-5          Sec. 207.050.  OTHER REMEDIES OF ASSOCIATION AND OWNER.  This
 38-6    subchapter does not prohibit the property owners' association or a
 38-7    property owner from exercising other lawful remedies.
 38-8          Sec. 207.051.  EFFECT OF TAX LIEN FORECLOSURE.  Foreclosure
 38-9    of a tax lien under Chapter 32, Tax Code, does not discharge a
38-10    property owners' association's lien for an assessment under this
38-11    subchapter or under dedicatory instrument or restrictions for
38-12    amounts that become due to the association after the date of
38-13    foreclosure of the tax lien.
38-14          Sec. 207.052.  EFFECT OF VIOLATIONS ON RIGHTS OF ACTION AND
38-15    ATTORNEY'S FEES.  (a)  If a declarant or any other person subject
38-16    to this chapter violates this chapter, the declaration, or the
38-17    bylaws, any person or class of persons adversely affected by the
38-18    violation has a claim for appropriate relief.
38-19          (b)  Subject to Section 207.020(f), the prevailing party in
38-20    litigation to enforce the dedicatory instruments is entitled to
38-21    reasonable attorney's fees and costs of litigation from the
38-22    nonprevailing party.
38-23          (c)  If an association's board or managing agent is found by
38-24    a court to have willfully, knowingly, and in bad faith pursued a
38-25    course of action against an owner in violation of the declaration,
38-26    restrictions, bylaws, rules or this chapter to the detriment of the
 39-1    owner, the court may assess a civil penalty against the association
 39-2    of up to $1,000 for the benefit of the owner.
 39-3          SECTION 2.  (a)  This Act takes effect January 1, 2000.
 39-4          (b)  The changes in law made by Subchapter E, Chapter 207,
 39-5    Property Code, as added by this Act, apply only to property for
 39-6    which an assessment becomes due on or after the effective date of
 39-7    this Act.  Property for which an assessment was due before the
 39-8    effective date of this Act is covered by the law in effect when the
 39-9    assessment became due, and the former law is continued in effect
39-10    for that purpose.
39-11          SECTION 3.  The importance of this legislation and the
39-12    crowded condition of the calendars in both houses create an
39-13    emergency and an imperative public necessity that the
39-14    constitutional rule requiring bills to be read on three several
39-15    days in each house be suspended, and this rule is hereby suspended.