1-1 By: Carona S.B. No. 699 1-2 (In the Senate - Filed February 25, 1999; March 1, 1999, read 1-3 first time and referred to Committee on State Affairs; 1-4 April 6, 1999, reported adversely, with favorable Committee 1-5 Substitute by the following vote: Yeas 8, Nays 0; April 6, 1999, 1-6 sent to printer.) 1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 699 By: Shapleigh 1-8 A BILL TO BE ENTITLED 1-9 AN ACT 1-10 relating to residential subdivisions that require membership in a 1-11 property owners' association. 1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-13 SECTION 1. Title 11, Property Code, is amended by adding 1-14 Chapter 207 to read as follows: 1-15 CHAPTER 207. TEXAS PLANNED COMMUNITY ACT 1-16 SUBCHAPTER A. GENERAL PROVISIONS 1-17 Sec. 207.001. SHORT TITLE. This chapter may be cited as the 1-18 Texas Planned Community Act. 1-19 Sec. 207.002. DEFINITIONS. In this chapter: 1-20 (1) "Board" means the governing body of a property 1-21 owners' association. 1-22 (2) "Builder" means any person in the business of 1-23 constructing residential dwellings for sale to a consumer on any 1-24 property located in a residential subdivision. 1-25 (3) "Declarant" means: 1-26 (A) a person designated in the restrictions or a 1-27 dedicatory instrument as the declarant; or 1-28 (B) a person who succeeds to the special rights, 1-29 preferences, or privileges of the signatory as designated in the 1-30 original restrictions or dedicatory instrument. 1-31 (4) "Declaration" means an instrument filed in the 1-32 real property records of a county that includes restrictive 1-33 covenants governing a residential subdivision. 1-34 (5) "Dedicatory instrument" means each governing 1-35 instrument covering the establishment, maintenance, and operation 1-36 of a residential subdivision. The term includes restrictions or 1-37 similar instruments subjecting property to restrictive covenants, 1-38 bylaws, or similar instruments governing the administration or 1-39 operation of a property owners' association, to properly adopted 1-40 rules and regulations of the property owners' association, and to 1-41 all lawful amendments to the covenants, bylaws, rules, or 1-42 regulations. 1-43 (6) "Lienholder" means a person who holds a valid 1-44 vendor's lien or deed of trust lien secured by property located in 1-45 a residential subdivision. 1-46 (7) "Lot" means any designated parcel of land located 1-47 in a residential subdivision. 1-48 (8) "Owner" means a person who holds record title to 1-49 property in a residential subdivision and includes the personal 1-50 representative of a person who holds record title to property in a 1-51 residential subdivision. 1-52 (9) "Petition" means an instrument, regardless of the 1-53 designation or title of the instrument, prepared to accomplish one 1-54 or more of the purposes authorized by this chapter. 1-55 (10) "Property owners' association" or "association" 1-56 means an incorporated or unincorporated association that: 1-57 (A) is designated as the representative of the 1-58 owners of property in a residential subdivision; 1-59 (B) has a membership primarily consisting of the 1-60 owners of the property covered by the dedicatory instrument for the 1-61 residential subdivision; and 1-62 (C) manages or regulates the residential 1-63 subdivision for the benefit of the owners of property in the 1-64 residential subdivision. 2-1 (11) "Regular assessment" means an assessment, charge, 2-2 fee, or dues that each owner of property within a residential 2-3 subdivision is required to pay to the property owners' association 2-4 on a regular basis and that is designated for use by the property 2-5 owners' association for the benefit of the residential subdivision 2-6 as provided by the restrictions. 2-7 (12) "Residential subdivision" or "subdivision" means 2-8 a subdivision, planned unit development, townhouse regime, or 2-9 similar planned development in which all land has been divided into 2-10 two or more parts and is or was subject to restrictions that: 2-11 (A) limit a majority of the land subject to the 2-12 dedicatory instruments, excluding streets and public areas, to 2-13 residential use only; 2-14 (B) are recorded in the real property records of 2-15 the county in which the residential subdivision is located; and 2-16 (C) require membership in a property owners' 2-17 association that has authority to impose regular or special 2-18 assessments on the property in the subdivision. 2-19 (13) "Restrictions" means one or more restrictive 2-20 covenants contained or incorporated by reference in a properly 2-21 recorded map, plat, replat, declaration, or other instrument filed 2-22 in the real property records or map or plat records. The term 2-23 includes any amendment or extension of the restrictions. 2-24 (14) "Restrictive covenant" means any covenant, 2-25 condition, or restriction contained in a dedicatory instrument, 2-26 whether mandatory, prohibitive, permissive, or administrative. 2-27 (15) "Special assessment" means an assessment, charge, 2-28 fee, or dues, other than a regular assessment, that each owner of 2-29 property located in a residential subdivision is required to pay to 2-30 the property owners' association, according to procedures required 2-31 by the dedicatory instruments, for: 2-32 (A) defraying, in whole or in part, the cost, 2-33 whether incurred before or after the assessment, of any 2-34 construction or reconstruction, unexpected repair, or replacement 2-35 of a capital improvement in common areas owned by the property 2-36 owners' association, including the necessary fixtures and personal 2-37 property related to the common areas; 2-38 (B) maintenance and improvement of common areas 2-39 owned by the property owners' association; or 2-40 (C) other purposes of the property owners' 2-41 association as stated in its articles of incorporation or the 2-42 dedicatory instrument for the residential subdivision. 2-43 Sec. 207.003. APPLICABILITY OF CHAPTER. (a) This chapter 2-44 applies only to a residential subdivision that is or was subject to 2-45 restrictions or provisions in a declaration that authorize the 2-46 property owners' association to collect regular or special 2-47 assessments on property in the subdivision. 2-48 (b) This chapter applies only to a property owners' 2-49 association that requires or required mandatory membership in the 2-50 association for all owners of residential property within the 2-51 subdivision subject to the association's dedicatory instruments. 2-52 (c) This chapter applies to a property owners' association 2-53 regardless of whether the entity is designated as a "homeowners' 2-54 association," "community association," or similar designation in 2-55 the restrictions or dedicatory instrument. 2-56 (d) This chapter does not apply to a condominium development 2-57 governed by Chapter 82. 2-58 (Sections 207.004 to 207.030 reserved for expansion 2-59 SUBCHAPTER B. AMENDMENT AND EXTENSION 2-60 OF RESTRICTIVE COVENANTS 2-61 Sec. 207.031. AMENDMENT OR EXTENSION OF EXISTING 2-62 RESTRICTIONS. (a) Subject to the limitations in a dedicatory 2-63 instrument applicable during a period of declarant control and in 2-64 addition to the powers and methods provided in an existing 2-65 dedicatory instrument or the restrictions, a property owners' 2-66 association may circulate and approve a petition relating to an 2-67 amendment or extension of existing restrictions. If an existing 2-68 dedicatory instrument for a residential subdivision contains 2-69 procedures for modifying, extending, or continuing the restrictions 3-1 and the procedures require less than 100 percent approval of the 3-2 property owners in the residential subdivision to modify, extend, 3-3 or continue the restrictions, the percentage approval required by 3-4 the restrictions prevails over the percentage required by 3-5 Subsection (c) or (d). 3-6 (b) If existing or expired restrictions for a residential 3-7 subdivision do not contain procedures for modifying, extending, or 3-8 continuing the restrictions or require 100 percent approval of the 3-9 property owners at any time in order to modify, extend, or continue 3-10 the restrictions, the property owners' association for the 3-11 subdivision may circulate and approve a petition relating to an 3-12 amendment, extension, or continuation of the restrictions. The 3-13 petition must comply with the limitations or prohibitions in a 3-14 dedicatory instrument applicable during a period of declarant 3-15 control. 3-16 (c) Except as provided by Subsection (a), a petition 3-17 described by Subsection (a) or (b) is effective if: 3-18 (1) the petition is approved by the owners, excluding 3-19 lienholders, purchasers under an executory contract, and owners of 3-20 mineral interests, of at least 66 percent of the lots in the 3-21 residential subdivision; 3-22 (2) the petition does not amend or extend a provision 3-23 that, under the restrictions, may not be amended or extended until 3-24 a certain event occurs; 3-25 (3) the petition is recorded as a dedicatory 3-26 instrument in the real property records of the county in which the 3-27 subdivision is located; and 3-28 (4) a copy of the recorded petition is provided to all 3-29 owners of lots in the subdivision. 3-30 (d) If a residential subdivision that consists of multiple 3-31 sections, each with its own restrictions, is represented by a 3-32 single property owners' association, the approval requirement is 3-33 satisfied by obtaining approval of at least 66 percent of the 3-34 owners of lots in each section or 66 percent of the total number of 3-35 lots in the association's jurisdiction. 3-36 (e) If approved, the petition is binding on all lots in the 3-37 residential subdivision or section, as applicable. 3-38 (f) A property owners' association that circulates a 3-39 petition must notify all record owners of property in the 3-40 residential subdivision in writing of the proposed amendment or 3-41 extension of the existing restrictions. Notice may be 3-42 hand-delivered to residents in the subdivision or sent by first 3-43 class mail to the owner's last known mailing address as reflected 3-44 in the ownership records maintained by the association. The 3-45 approval of multiple owners of a lot may be reflected by the 3-46 signature of a single co-owner. 3-47 (g) An action to challenge the validity of a dedicatory 3-48 instrument adopted by a property owners' association under this 3-49 section must be brought before the first anniversary of the date 3-50 the dedicatory instrument is recorded. 3-51 (h) Any lien recorded before a dedicatory instrument is 3-52 adopted by a property owners' association under this section is 3-53 subject to the dedicatory instrument at the time the instrument is 3-54 recorded in the real property records. 3-55 Sec. 207.032. TEXAS NONPROFIT CORPORATION. If a property 3-56 owners' association is a Texas nonprofit corporation, the 3-57 provisions of the Texas Non-Profit Corporation Act (Article 3-58 1396-1.01 et seq., Vernon's Texas Civil Statutes) apply to the 3-59 association, except to the extent that the provisions conflict with 3-60 this chapter. 3-61 (Sections 207.033 to 207.060 reserved for expansion 3-62 SUBCHAPTER C. MANAGEMENT OF ASSOCIATION 3-63 Sec. 207.061. POWERS OF PROPERTY OWNERS' ASSOCIATION. 3-64 (a) Unless otherwise provided by the restrictions or the articles 3-65 of incorporation or bylaws of the property owners' association, the 3-66 association board may: 3-67 (1) adopt and amend bylaws; 3-68 (2) adopt and amend budgets for revenues, 3-69 expenditures, and reserves; 4-1 (3) collect regular assessments or special assessments 4-2 for common expenses from property owners; 4-3 (4) hire and terminate managing agents and other 4-4 employees, agents, and independent contractors; 4-5 (5) institute, defend, intervene in, settle, or 4-6 compromise litigation or administrative proceedings in the name of 4-7 the association or on behalf of the association or two or more 4-8 property owners on matters affecting the subdivision; 4-9 (6) make contracts and incur liabilities relating to 4-10 the operation of the subdivision and the association; 4-11 (7) regulate the use, maintenance, repair, 4-12 replacement, modification, and appearance of the subdivision; 4-13 (8) adopt and amend rules that are not inconsistent 4-14 with recorded restrictions and that regulate the use, maintenance, 4-15 repair, modification, and appearance of property in the 4-16 subdivision, to the extent the rules affect subdivision property in 4-17 general or other residents in the subdivision; 4-18 (9) make additional improvements to the common areas 4-19 of the subdivision; 4-20 (10) acquire, hold, encumber, and convey in the name 4-21 of the association any right, title, or interest to real or 4-22 personal property; 4-23 (11) grant easements, leases, licenses, and 4-24 concessions through or over common areas; 4-25 (12) impose and receive payments, fees, or charges for 4-26 the use, rental, or operation of common areas and for services 4-27 provided to property owners; 4-28 (13) impose returned check charges and interest and 4-29 late charges for delinquent amounts due the association; 4-30 (14) impose reasonable fines for a violation of the 4-31 restrictions or the bylaws or rules of the association if notice 4-32 and an opportunity to be heard are provided under Subsection (e); 4-33 (15) adopt and amend rules relating to the collection 4-34 of delinquent amounts due the association and the application of 4-35 the payments; 4-36 (16) impose reasonable charges for preparing, 4-37 recording, or copying association records, including restrictions, 4-38 amendments, resale certificates, statements of delinquent amounts 4-39 due the association, and releases; 4-40 (17) assign the association's right to future income, 4-41 including the right to receive regular or special assessments, if: 4-42 (A) notice of the proposed assignment is mailed 4-43 to all association members; and 4-44 (B) at least two-thirds of the association 4-45 members who vote in person or by proxy at an association meeting 4-46 vote to approve the assignment; 4-47 (18) suspend the voting privileges of and the use of 4-48 common areas by an owner who is delinquent for more than 30 days in 4-49 the payment of amounts due the association; 4-50 (19) purchase insurance and fidelity bonds, including 4-51 directors' and officers' liability insurance, that the association 4-52 considers appropriate or necessary; 4-53 (20) subject to the requirements and limitations of 4-54 the Texas Non-Profit Corporation Act (Article 1396-1.01 et seq., 4-55 Vernon's Texas Civil Statutes), indemnify a director, officer, or 4-56 committee member of the association who was, is, or may be named a 4-57 defendant or respondent in a proceeding in the person's capacity as 4-58 a director, officer, or committee member; 4-59 (21) if the restrictions vest architectural control 4-60 authority in the association or if the authority is vested in the 4-61 association under Section 207.063: 4-62 (A) implement written architectural control 4-63 guidelines that are consistent with recorded restrictions 4-64 regardless of whether the guidelines are recorded in the real 4-65 property records of the applicable county; and 4-66 (B) modify the guidelines as the association 4-67 finds necessary; 4-68 (22) exercise other powers conferred by the dedicatory 4-69 instruments; 5-1 (23) exercise other powers that may be exercised in 5-2 this state by a corporation of the same type as the association; 5-3 and 5-4 (24) exercise any other powers necessary and proper 5-5 for the operation of the association. 5-6 (b) An association board may exercise the powers granted in 5-7 this section only if a majority of owners who are present in person 5-8 or by proxy at a general membership meeting of the association vote 5-9 in favor of granting the powers to the board. This section does 5-10 not affect the powers of the association or its board to exercise 5-11 powers granted by the association's dedicatory instruments. Notice 5-12 of the meeting must be sent not later than the 30th day before the 5-13 date of the meeting and must inform the owner that one of the 5-14 purposes of the meeting is to consider granting the board powers 5-15 authorized by statute on the approval of the association 5-16 membership. 5-17 (c) Without the consent of the declarant, a dedicatory 5-18 instrument may not be amended to impose restrictions on a declarant 5-19 that are more restrictive than restrictions on other owners. 5-20 (d) An arbitrary or capricious bylaw or rule of the property 5-21 owners' association is not enforceable. 5-22 (e) Before a property owners' association may suspend an 5-23 owner's right to use a common area or file a suit against an owner, 5-24 other than a suit to foreclose under an association's lien, the 5-25 association or its agent must give written notice to the owner by 5-26 hand delivery or by certified mail, return receipt requested, at 5-27 the owner's last known address as reflected in the association's 5-28 records. The notice must describe the violation that is the basis 5-29 for the suspension action and any unpaid amount due to the 5-30 association by the owner. The notice must state that the owner has 5-31 the right to request a hearing before a board-appointed committee, 5-32 or before the board if the board does not appoint a committee, not 5-33 later than the 10th day after the date the owner receives the 5-34 notice to discuss and verify facts and resolve the matter in issue. 5-35 If a hearing is to be held before a committee, the notice must 5-36 state that the owner has the right to appeal the committee's 5-37 decision to the board by written notice to the board not later than 5-38 the 10th day after the date the owner receives notice of the 5-39 committee's decision. An owner who requests a hearing under this 5-40 subsection must submit the request in writing and deliver the 5-41 request to the association not later than the 10th day after the 5-42 date the owner receives notice of the suspension action under this 5-43 subsection or not later than the 10th day after the date the owner 5-44 receives notice of the committee's decision, as appropriate. The 5-45 association shall hold a hearing under this subsection not later 5-46 than the 30th day after the date the board receives the owner's 5-47 request for a hearing. The owner and the association may make an 5-48 audio recording of the meeting. This subsection does not apply if 5-49 the association files a suit seeking a temporary restraining order 5-50 or temporary injunctive relief or files a suit that includes 5-51 foreclosure as a cause of action. If a suit is filed relating to a 5-52 matter to which this subsection applies, a party to the suit may 5-53 file a motion to compel mediation. An owner is not liable for 5-54 attorney's fees incurred by the association relating to a matter 5-55 described by the notice unless the hearing requested by the owner 5-56 is held or attempted to be held in good faith by the association 5-57 within the period prescribed by this section. 5-58 (f) Before a property owners' association may charge an 5-59 owner for property damage or levy a fine for a violation of the 5-60 restrictions or the bylaws or rules of the association, the 5-61 association must give to the owner written notice that: 5-62 (1) describes the violation or property damage and 5-63 states the amount of the proposed fine or damage charge; 5-64 (2) states that the owner may request a hearing before 5-65 the board to verify facts or contest the fine or damage charge not 5-66 later than the 10th day after the date: 5-67 (A) the association deposited the notice to the 5-68 owner in the mail if the notice is mailed; or 5-69 (B) the owner received the notice if the notice 6-1 is hand-delivered; and 6-2 (3) grants the owner a reasonable period, by a 6-3 specified date, to cure the violation and avoid the fine unless the 6-4 owner was given notice and a reasonable opportunity to cure a 6-5 similar violation within the preceding 12 months. 6-6 (g) A property owners' association may collect reimbursement 6-7 of reasonable attorney's fees and other reasonable costs incurred 6-8 by the association relating to collecting amounts due the 6-9 association or enforcing restrictions or the bylaws or rules of the 6-10 association only if the owner is provided a written notice that 6-11 attorney's fees and costs will be charged to the owner if the 6-12 delinquency or violation continues after a date certain. 6-13 Attorney's fees that are incurred by the association before the 6-14 notice is provided to the owner may not be charged to the owner. 6-15 Attorney's fees and other costs incurred by the association 6-16 collected from the owner shall be paid directly to the association 6-17 or its management company or jointly to the association or its 6-18 management company and the attorney representing the association. 6-19 The attorney must furnish to the association an invoice for 6-20 services provided. This subsection does not apply to a 6-21 counterclaim of an association in a lawsuit brought against the 6-22 association by a property owner. 6-23 (h) In addition to the notice under Subsections (e), (f), 6-24 and (g), the property owners' association may give a copy of the 6-25 notice required by Subsection (e), (f), or (g) to an occupant of 6-26 the property. The association must give notice of the fine levied 6-27 or damage charged to the lot owner not later than the 30th day 6-28 after the date the fine or charge is imposed. 6-29 (i) A rule adopted or amended by a board is not effective 6-30 until the 30th day after the date a copy of the rule is mailed or 6-31 delivered to the owners. 6-32 (j) Directors may be removed from office as provided by the 6-33 dedicatory instruments or, if the dedicatory instruments do not 6-34 provide for the removal of a director, as provided by the Texas 6-35 Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's 6-36 Texas Civil Statutes). 6-37 Sec. 207.062. ASSESSMENTS. (a) An association board may 6-38 impose and increase regular and special assessments as provided by 6-39 the dedicatory instruments of the association. 6-40 (b) If a dedicatory instrument limits annual assessment 6-41 increases to a fixed percentage or dollar amount, the increase may 6-42 be accumulated and assessed in future years. 6-43 (c) If a dedicatory instrument sets a maximum dollar amount 6-44 for regular assessments or limits annual increases in regular 6-45 assessments to a fixed percentage or dollar amount, a majority of 6-46 lot owners may set the regular assessments at any amount, 6-47 regardless of the limits set in the dedicatory instruments, by: 6-48 (1) voting in person or by proxy at a regular or 6-49 special meeting of the association membership at which a quorum is 6-50 present under Subsection (d); or 6-51 (2) voting by mail ballot under Subsection (e). 6-52 (d) A vote to set regular assessments at a meeting of the 6-53 association membership under Subsection (c)(1) may occur only if 6-54 notice of the proposed increase in regular assessments is included 6-55 in the notice of the meeting. The meeting may not be held before 6-56 the 30th day after the date the notice of the meeting is mailed or 6-57 hand-delivered to the owners. 6-58 (e) A vote to change an assessment amount by mail ballot 6-59 under Subsection (c)(2) without an association membership meeting 6-60 may occur only if all members of the board unanimously support the 6-61 assessment change and the mail ballot includes a statement 6-62 indicating the board's unanimous support. The mail ballot must 6-63 state the date by which all ballots must be postmarked and mailed 6-64 to the association. The date by which a ballot must be postmarked 6-65 may not be before the 30th day after the date the ballot is mailed 6-66 to the association membership. The ballots may not be counted 6-67 before the seventh day after the required postmark date. 6-68 Sec. 207.063. ARCHITECTURAL CONTROL COMMITTEE. (a) This 6-69 section applies to restrictions providing for the creation and 7-1 operation of an architectural control committee with the power to 7-2 approve or deny applications for proposed original construction or 7-3 the modification of a building, structure, or improvement. Unless 7-4 otherwise provided by the dedicatory instruments, an association 7-5 board may serve as an architectural control committee. 7-6 (b) Unless the restrictions applicable to a residential 7-7 subdivision vest the architectural control authority in the 7-8 property owners' association on an earlier date, the architectural 7-9 control authority automatically vests in the association if: 7-10 (1) the term of the architectural control committee 7-11 authority expires as prescribed by the restrictions; 7-12 (2) a residence on the last available residential 7-13 building site in the subdivision is completed and sold; 7-14 (3) the person designated as the architectural control 7-15 committee in the restrictions assigns, in writing, authority to the 7-16 association; or 7-17 (4) the declarant, the declarant's designee, or any 7-18 person named in the dedicatory instrument as the architectural 7-19 control committee ceases to exercise its authority for more than 7-20 one year under the restrictions or provisions contained in a 7-21 dedicatory instrument relating to the architectural control 7-22 committee. 7-23 (c) If the architectural control committee authority is 7-24 vested in the property owners' association under Subsection (b), 7-25 the association retains that authority until: 7-26 (1) the restrictions are modified to reflect 7-27 otherwise; or 7-28 (2) the restrictions are terminated. 7-29 (d) The declarant, the property owners' association, the 7-30 architectural control committee, or an owner of property subject to 7-31 a dedicatory instrument may enforce a restrictive covenant that 7-32 relates to architectural control, construction on a lot, and use 7-33 restrictions on a lot contained in the dedicatory instrument. 7-34 Sec. 207.064. MEETINGS. (a) A property owners' association 7-35 shall hold a general meeting of the membership at least once each 7-36 year. Unless a dedicatory instrument provides less restrictive 7-37 requirements, a special meeting of the association's membership may 7-38 be called by the presiding officer of the board, a majority of the 7-39 board, or at least 10 percent of the property owners who are 7-40 members of the association. 7-41 (b) Meetings of the property owners' association membership 7-42 and board must be open to property owners, subject to the right of 7-43 the board to adjourn a board meeting and reconvene in closed 7-44 executive session to consider actions involving personnel, 7-45 threatened or pending litigation, contract negotiations, 7-46 enforcement actions, matters involving the invasion of privacy of 7-47 individual owners, or matters that are to remain confidential by 7-48 request of the affected parties and agreement of the board. The 7-49 general nature of any business to be considered in executive 7-50 session must first be announced at the open meeting. 7-51 (c) Unless a dedicatory instrument of the property owners' 7-52 association provides otherwise: 7-53 (1) a board meeting may be held by any method of 7-54 communication, including electronic and telephonic communication, 7-55 if: 7-56 (A) notice of the meeting is provided as 7-57 prescribed by Subsection (e); 7-58 (B) each director may hear and be heard by every 7-59 other director; and 7-60 (C) the meeting does not involve voting on a 7-61 fine, damage assessment, appeal from a denial of architectural 7-62 control approval, or suspension of a right of a particular 7-63 association member before the member has an opportunity to attend 7-64 the board meeting to present the member's position, including any 7-65 defense, on the issue; and 7-66 (2) the board may act by unanimous written consent of 7-67 all the directors, without a meeting, if: 7-68 (A) the board action does not involve voting on 7-69 a fine, damage assessment, appeal from a denial of architectural 8-1 control approval, or suspension of a right of a particular 8-2 association member before the member has an opportunity to attend 8-3 the board meeting to present the member's position, including any 8-4 defense, on the issue; and 8-5 (B) a record of the board action is filed with 8-6 the minutes of board meetings. 8-7 (d) Notice of a meeting of the property owners' association 8-8 membership must be given as provided by the bylaws, or, if the 8-9 bylaws do not provide for notice, notice must be given to each 8-10 owner in the same manner that notice is given to members of a 8-11 nonprofit corporation under Section A, Article 2.11, Texas 8-12 Non-Profit Corporation Act (Article 1396-2.11, Vernon's Texas Civil 8-13 Statutes). 8-14 (e) Notice of a meeting of the property owners' association 8-15 board must be given as provided by the bylaws, or, if the bylaws do 8-16 not provide for notice, notice must be given to each board member 8-17 in the same manner that notice is given to members of the board of 8-18 a nonprofit corporation under Section B, Article 2.19, Texas 8-19 Non-Profit Corporation Act (Article 1396-2.19, Vernon's Texas Civil 8-20 Statutes). 8-21 (f) A property owners' association, on the written request 8-22 of a property owner, shall inform the owner of the time and place 8-23 of the next regular or special meeting of the board. If the 8-24 association representative to whom the request is made does not 8-25 know the time and place of the meeting, the association promptly 8-26 shall obtain the information and disclose it to the owner or inform 8-27 the owner where the information may be obtained. 8-28 (g) If notice of the meeting has specified that one of the 8-29 purposes of the meeting is to consider the adoption, amendment, or 8-30 repeal of association rules, rules may be adopted, amended, or 8-31 repealed by a majority vote of the owners present in person or by 8-32 proxy. If the board receives a petition signed by at least 10 8-33 percent of all owners requesting a meeting to consider the 8-34 adoption, amendment, or repeal of association rules, the board 8-35 shall call a meeting of the general membership not later than the 8-36 30th day after the date the board receives the petition. The 8-37 notice of the meeting must state that one of the purposes of the 8-38 meeting is to consider the adoption, amendment, or repeal of 8-39 association rules. 8-40 Sec. 207.065. VOTING AND PROXIES. (a) If a lot is owned by 8-41 more than one person, only one of the owners may vote in person or 8-42 by proxy. If more than one of the multiple owners is present, the 8-43 vote allocated to that lot may be cast only in accordance with the 8-44 owners' unanimous agreement unless the restrictions or the bylaws 8-45 or articles of incorporation of the property owners' association 8-46 provide otherwise. Multiple owners are considered to be in 8-47 unanimous agreement if one of the owners votes and no other owner 8-48 promptly protests to the person presiding over the meeting. If 8-49 multiple owners of a lot attempt to vote in person or by proxy on 8-50 behalf of all the owners, the vote will not be counted. 8-51 (b) Votes allocated to a lot may be cast under a written 8-52 proxy executed by a lot owner. If more than one proxy is submitted 8-53 for a single lot, only the proxy with the most recent date is 8-54 valid. A lot owner may revoke a proxy under this section by 8-55 providing written notice of the revocation to the person presiding 8-56 over the meeting or by attending and voting in person at the 8-57 meeting. A proxy is void if it is not dated or if it purports to 8-58 be revocable without notice. A proxy terminates 11 months after 8-59 the date it is executed unless it specifies a shorter or longer 8-60 period. 8-61 (c) Cumulative voting is not permitted. 8-62 (d) An owner who arrives at an association meeting after the 8-63 meeting commences and who is eligible to vote under the dedicatory 8-64 instruments may cast a vote on all issues considered at the meeting 8-65 after the owner arrives. 8-66 Sec. 207.066. ASSOCIATION RECORDS. (a) The property 8-67 owners' association shall keep: 8-68 (1) financial records that are sufficiently detailed 8-69 to enable: 9-1 (A) an accountant to prepare financial 9-2 statements that comply with generally accepted accounting 9-3 principles; and 9-4 (B) the association to prepare a resale 9-5 certificate under Section 207.091; 9-6 (2) a management certificate prepared under Section 9-7 207.068 and any amendments to the certificate; 9-8 (3) the name and mailing address of each property 9-9 owner; 9-10 (4) voting records, proxies, and correspondence 9-11 relating to amendments to the dedicatory instruments for at least 9-12 four years after the date of the amendment; 9-13 (5) invoices furnished by an attorney under Section 9-14 207.061(g) for at least four years after the date the invoice is 9-15 furnished; and 9-16 (6) minutes of meetings of the association and board. 9-17 (b) If an owner makes a written request for copies of 9-18 documents and states the purpose of the request, the owner or the 9-19 owner's agent, including the owner's accountant or attorney, may 9-20 examine and copy at the owner's expense at any reasonable time and 9-21 for any proper purpose, the books and records of the property 9-22 owners' association relevant to that purpose. 9-23 (c) The property owners' association shall, as a common 9-24 expense, obtain the accounting services required by this section 9-25 and by the dedicatory instruments. Copies of the reports shall be 9-26 made available to the owners. 9-27 (d) A declarant shall furnish to the property owners' 9-28 association copies of the information required by Subsection 9-29 (a) on the date the first lot in the declarant's residential 9-30 subdivision is sold. 9-31 Sec. 207.067. FINANCIAL REPORT; AUDIT OR REVIEW. (a) An 9-32 association shall obtain an annual audit or review of the 9-33 association's financial records by a certified public accountant or 9-34 public accountant unless, at a general or special membership 9-35 meeting of the association, the owners who are in attendance in 9-36 person or by proxy vote against having the audit or review or vote 9-37 to have the association's records for the fiscal year reviewed by 9-38 the board or a board-appointed committee. 9-39 (b) This section applies regardless of the provisions in a 9-40 dedicatory instrument regarding audit and review of association 9-41 financial records. 9-42 Sec. 207.068. MANAGEMENT CERTIFICATES. (a) A property 9-43 owners' association shall record in each county in which any 9-44 portion of the residential subdivision is located a management 9-45 certificate, signed and acknowledged by an officer of the 9-46 association, stating: 9-47 (1) the name of the subdivision; 9-48 (2) the name of the association; 9-49 (3) the recording data for the subdivision; 9-50 (4) the recording data for the declaration; 9-51 (5) the mailing address of the association or the name 9-52 and mailing address of the person managing the association; and 9-53 (6) other information the association considers 9-54 appropriate. 9-55 (b) The property owners' association shall record an amended 9-56 management certificate not later than the 30th day after the date 9-57 the association has notice of a change in any information in the 9-58 recorded certificate required by Subsection (a). 9-59 (c) The property owners' association and its officers, 9-60 directors, employees, and agents are not subject to liability to 9-61 any person for a delay in recording or failure to record a 9-62 management certificate, unless the delay or failure is wilful or 9-63 caused by gross negligence. 9-64 Sec. 207.069. BOARD MEMBER EDUCATION. (a) A board member 9-65 of an association may not vote as a board member under the 9-66 association's dedicatory instruments after the sixth month after 9-67 the board member first attends a board meeting as an elected board 9-68 member unless the board member has viewed a videotape or attended a 9-69 class approved by the attorney general for the purpose of educating 10-1 board members on their obligations and rights under this chapter 10-2 and other laws relating to property owners' associations. 10-3 (b) If a board member views a videotape or attends a class 10-4 described by Subsection (a), the board member must furnish to the 10-5 association a signed statement to be filed in the association's 10-6 permanent records listing: 10-7 (1) the name of the videotape and the date the board 10-8 member viewed the tape; or 10-9 (2) the name and sponsor of the class and the date the 10-10 board member attended the class. 10-11 (c) If a board member's right to vote has lapsed because the 10-12 member failed to comply with Subsection (a), the board member's 10-13 right to vote shall be reinstated automatically when the board 10-14 member complies with this section. 10-15 (Sections 207.070 to 207.090 reserved for expansion 10-16 SUBCHAPTER D. PROTECTION OF PURCHASERS 10-17 Sec. 207.091. FURNISHING OF SUBDIVISION INFORMATION. 10-18 (a) Not later than the 10th day after the date a written request 10-19 for subdivision information is received from the owner or the 10-20 owner's agent or a title company or its agent acting on behalf of 10-21 the owner, the property owners' association shall furnish: 10-22 (1) a current copy of the restrictions applying to the 10-23 subdivision; 10-24 (2) a current copy of the bylaws and rules of the 10-25 association; and 10-26 (3) a resale certificate that complies with Subsection 10-27 (b). 10-28 (b) A resale certificate furnished by the property owners' 10-29 association under Subsection (a) must contain: 10-30 (1) a statement of any right of first refusal or other 10-31 restraint contained in the restrictions that limits the owner's 10-32 right to transfer the lot; 10-33 (2) the amount and frequency of any regular 10-34 assessment; 10-35 (3) the amount of any special assessment that is due 10-36 after the date the resale certificate is prepared; 10-37 (4) the total of all amounts due and unpaid to the 10-38 association by the lot owner relating to the lot; 10-39 (5) capital expenditures, if any, approved by the 10-40 association for the association's current fiscal year; 10-41 (6) the amount of reserves, if any, for capital 10-42 expenditures; 10-43 (7) the association's current operating budget and 10-44 balance sheet; 10-45 (8) the total of any unsatisfied judgments against the 10-46 association; 10-47 (9) the style and cause number of any pending lawsuit 10-48 in which the association is a defendant; 10-49 (10) a copy of a certificate of insurance showing the 10-50 association's property and liability insurance relating to the 10-51 common areas and common facilities; 10-52 (11) a description of any conditions on the lot that 10-53 the association board has actual knowledge are in violation of the 10-54 restrictions, bylaws, and rules; 10-55 (12) a summary or copy of notices received by the 10-56 association from any governmental authority regarding health or 10-57 housing code violations existing on the date the certificate is 10-58 furnished relating to the lot or any common areas or common 10-59 facilities owned or leased by the association; 10-60 (13) the amount of any administrative transfer fee 10-61 charged by the association for a change of lot ownership; 10-62 (14) the name, mailing address, and telephone number 10-63 of the association's managing agent, if any; and 10-64 (15) a statement indicating whether the restrictions 10-65 allow foreclosure of an association lien on a lot for failure to 10-66 pay assessments. 10-67 (c) Unless required by a dedicatory instrument, a property 10-68 owners' association or its agent is not required to inspect 10-69 property before furnishing a resale certificate or an update to the 11-1 resale certificate. 11-2 (d) The property owners' association shall furnish the 11-3 information required by this section to the person specified in the 11-4 request for subdivision information. The association is not 11-5 required to furnish the information if the request does not specify 11-6 the name and address of the person to whom the information is to be 11-7 furnished. 11-8 (e) The property owners' association may furnish the 11-9 information required by this section by depositing the information 11-10 in the United States mail, by hand delivering the information, or 11-11 by an alternate means of delivery specified in the request. 11-12 (f) A property owners' association may charge a reasonable 11-13 fee to prepare and furnish the information required by this 11-14 section, including an update of a resale certificate. 11-15 Sec. 207.092. SECOND REQUEST FOR INFORMATION; AFFIDAVIT OF 11-16 COMPLIANCE. (a) If a property owners' association fails to 11-17 furnish the information required by Section 207.091 within the 11-18 period prescribed by that section, the owner or the owner's agent 11-19 or a title company or its agent acting on behalf of the owner may 11-20 submit a second written request for the information. The second 11-21 request must be delivered by certified mail, return receipt 11-22 requested, or by hand delivery with a receipt for delivery. 11-23 (b) If the property owners' association fails to furnish the 11-24 information required by Section 207.091 before the seventh day 11-25 after the date the second request for information is delivered, the 11-26 owner may provide the purchaser under a contract to purchase the 11-27 owner's property an affidavit stating that: 11-28 (1) the owner or the owner's agent or a title company 11-29 or its agent acting on behalf of the owner made two written 11-30 requests as provided by law to the property owners' association for 11-31 the property information; and 11-32 (2) the property owners' association failed to furnish 11-33 the information within the period prescribed by law. 11-34 (c) If the owner provides the purchaser with an affidavit 11-35 described by this section: 11-36 (1) the purchaser, lender, and title company and its 11-37 agent are not liable for: 11-38 (A) any amounts due and unpaid by the owner to 11-39 the property owners' association as of the date the owner prepared 11-40 the affidavit; and 11-41 (B) any claims by the association that accrued 11-42 before the date the owner prepared the affidavit; and 11-43 (2) any property owners' association lien on the 11-44 property purchased that secures the payment of amounts due and 11-45 unpaid by the owner as of the date the owner prepared the affidavit 11-46 automatically terminates as a lien securing payment of those 11-47 amounts. 11-48 Sec. 207.093. EFFECT OF RESALE CERTIFICATE; LIABILITY. 11-49 (a) A property owners' association that prepares a resale 11-50 certificate under Section 207.091 may not deny the validity of any 11-51 statement in the resale certificate. 11-52 (b) If the property owners' association fails to disclose 11-53 any amounts due to the association or a claim by the association 11-54 existing as of the date the resale certificate was prepared, a 11-55 purchaser and the purchaser's agent, the owner and the owner's 11-56 agent, the lender, and the title company and its agent are not 11-57 liable to the association for the undisclosed amounts due or the 11-58 undisclosed claim. The property owners' association lien to secure 11-59 undisclosed amounts due to the association as of the date the 11-60 resale certificate was prepared automatically terminates as a lien 11-61 securing the undisclosed amount. 11-62 (c) A resale certificate does not affect: 11-63 (1) the property owners' association's right to 11-64 recover amounts that become due or claims that arise after the date 11-65 the resale certificate is prepared; or 11-66 (2) the property owners' association's lien on 11-67 property securing the payment of future assessments. 11-68 (d) The owner and the owner's agent and the title company 11-69 and its agent are not liable to the purchaser for the property 12-1 owners' association's delay in furnishing or failure to furnish the 12-2 information required by Section 207.091. 12-3 (e) Except as provided by Section 207.130, the property 12-4 owners' association is not liable to the owner for the 12-5 association's delay in furnishing or failure to furnish the 12-6 information required by Section 207.091. An officer or agent of 12-7 the property owners' association is not liable for the 12-8 association's delay in furnishing or failure to furnish a resale 12-9 certificate under Section 207.091. 12-10 (Sections 207.094 to 207.120 reserved for expansion 12-11 SUBCHAPTER E. PROPERTY OWNERS' ASSOCIATION LIEN 12-12 FOR ASSESSMENTS 12-13 Sec. 207.121. DEFINITION. In this subchapter, "assessment" 12-14 means a regular or special assessment, fee, charge, late fee, fine, 12-15 collection cost, attorney's fees, dues, interest, or any other 12-16 amount due to the property owners' association from the lot owner 12-17 or levied against the owner's property in the subdivision by the 12-18 property owners' association. 12-19 Sec. 207.122. ESTABLISHMENT OF LIEN. (a) Unless the 12-20 restrictions prohibit a lien, an assessment levied by a property 12-21 owners' association against property is a personal obligation of 12-22 the lot owner and is secured by a continuing lien on the property 12-23 and on rent and insurance proceeds received by the lot owner 12-24 relating to the property. 12-25 (b) If, on January 1, 2000, a lot is the homestead of the 12-26 lot owner and is subject to restrictions that do not contain a 12-27 valid assessment lien against the property, the lien provided by 12-28 this subchapter does not attach against the property until the lot 12-29 ceases to be the homestead of the person owning the lot on January 12-30 1, 2000. 12-31 Sec. 207.123. PRIORITY OF LIEN. (a) Unless otherwise 12-32 provided in the dedicatory instrument or restrictions, the lien of 12-33 a property owners' association under this chapter for an assessment 12-34 has priority over any other lien except: 12-35 (1) a lien for property taxes and other governmental 12-36 assessments or charges against the property unless otherwise 12-37 provided by statute; 12-38 (2) a lien or encumbrance recorded before the 12-39 restrictions or the dedicatory instrument is recorded; and 12-40 (3) a first lien securing the purchase of a lot, 12-41 including the improvements and the initial construction of a 12-42 dwelling on a lot recorded before the date on which the assessment 12-43 sought to be enforced becomes delinquent under the restrictions or 12-44 the dedicatory instrument. 12-45 (b) The priority of liens prescribed by Subsection (a) does 12-46 not affect the priority of a lien recorded before January 1, 2000. 12-47 Sec. 207.124. PERFECTION OF LIEN. A property owners' 12-48 association's lien for assessments is perfected by the enactment of 12-49 this chapter or by recording the restrictions if the restrictions 12-50 are recorded before the enactment of this chapter. Unless the 12-51 restrictions provide otherwise, no other recording of a lien or 12-52 notice of lien is required. 12-53 Sec. 207.125. POWER OF SALE IF NONJUDICIAL FORECLOSURE IS 12-54 PERMITTED. (a) By acquiring property in a residential subdivision 12-55 governed by a dedicatory instrument that expressly allows 12-56 nonjudicial foreclosure, a lot owner grants to the property owners' 12-57 association a power of sale in connection with the association's 12-58 lien under this subchapter. 12-59 (b) If a dedicatory instrument of a property owners' 12-60 association expressly allows nonjudicial foreclosure, the 12-61 association may by written resolution appoint an officer, agent, 12-62 trustee, or attorney to exercise the power of sale on its behalf. 12-63 Sec. 207.126. EXCHANGE OF INFORMATION. (a) If a lot owner 12-64 is delinquent in paying an assessment to a property owners' 12-65 association, a holder of a lien recorded against the property may 12-66 provide the association, at the association's request, information 12-67 regarding the owner's debt secured by the holder's lien and other 12-68 relevant information. At the request of a lienholder, the 12-69 association may furnish the lienholder with information about the 13-1 property and the property owner's obligations to the association. 13-2 (b) If a lot owner defaults in the owner's monetary 13-3 obligations to the property owners' association, the association 13-4 may notify other lienholders of the default and the association's 13-5 intent to foreclose its lien. The association shall notify any 13-6 holder of a recorded lien or perfected mechanic's lien against the 13-7 property who has given the association a written request for notice 13-8 of the property owner's default or the association's intent to 13-9 foreclose. 13-10 Sec. 207.127. FORECLOSURE OF LIEN. (a) A property owners' 13-11 association has the right to foreclose its lien under: 13-12 (1) a dedicatory instrument that was recorded at the 13-13 time of the purchase of the lot by the property owner; 13-14 (2) a court order in a suit or countersuit seeking 13-15 judicial foreclosure; 13-16 (3) a court order in an application for expedited 13-17 foreclosure using the same procedures provided by the Texas Rules 13-18 of Civil Procedure for the foreclosure of a home equity lien only 13-19 if the dedicatory instrument expressly permits nonjudicial 13-20 foreclosure; or 13-21 (4) a court order foreclosing a lien under this 13-22 chapter. 13-23 (b) Before a property owners' association may institute 13-24 foreclosure proceedings against an owner's lot, the association or 13-25 its agent must send the owner written notice, by certified mail, 13-26 return receipt requested, at the last known address as reflected in 13-27 the association's records. The notice may be sent with any other 13-28 notice related to the foreclosure proceeding. The notice must 13-29 state that: 13-30 (1) the owner may avoid the foreclosure by paying all 13-31 amounts due before the time of foreclosure; 13-32 (2) the owner may redeem the property before the 91st 13-33 day after the date the association mails written notice of the sale 13-34 to the owner under Section 207.128; 13-35 (3) to redeem the property, the owner must pay all 13-36 amounts due, which may be significantly more than the redemption 13-37 costs before foreclosure as a result of the costs associated with 13-38 foreclosure and deed transfers after foreclosure; 13-39 (4) the owner may request a hearing before a 13-40 board-appointed committee, or before the board if the board does 13-41 not appoint a committee, to discuss and verify facts and resolve 13-42 the matter in issue; and 13-43 (5) if the owner requests a hearing under Subdivision 13-44 (4) and if the hearing is before a committee, the owner may appeal 13-45 the committee's decision to the board by written notice delivered 13-46 to the board not later than the 10th day after the date the owner 13-47 receives notice of the committee's decision. 13-48 (c) An owner may request a hearing before the property 13-49 owners' association may institute foreclosure proceedings. An 13-50 owner who requests a hearing under Subsection (b) must submit the 13-51 request in writing to the association representative designated in 13-52 the notice by hand delivering the request or delivering the request 13-53 by certified mail, return receipt requested, not later than the 13-54 10th day after the date the association delivers or deposits in the 13-55 mail the notice to the owner under Subsection (b). The association 13-56 shall hold the hearing not later than the 30th day after the date 13-57 the board receives the owner's request for a hearing. The owner 13-58 and the association may make an audio recording of the meeting. 13-59 (d) If a foreclosure suit is filed, a party to the suit may 13-60 file a motion to compel mediation. 13-61 (e) Before a property owners' association may institute 13-62 nonjudicial foreclosure proceedings against an owner's property, 13-63 the association or its agent must send the owner written notice, by 13-64 certified mail, return receipt requested, containing: 13-65 (1) a statement that the owner has the right to elect 13-66 either expedited foreclosure under Subsection (a)(3) or nonjudicial 13-67 foreclosure under Subsection (a)(1) if nonjudicial foreclosure is 13-68 authorized in a dedicatory instrument; 13-69 (2) a description of the methods of foreclosure 14-1 provided in the dedicatory instrument and the approximate amount of 14-2 the attorney's fees and costs for which the owner would be liable 14-3 under each foreclosure method, assuming the foreclosure is 14-4 uncontested; 14-5 (3) a statement that the owner must, not later than 14-6 the 10th day after the date the owner receives the association's 14-7 notice, send a written notice to elect a specific foreclosure 14-8 method to the association or its agent by hand delivery to an 14-9 association representative designated in the notice or by certified 14-10 mail, return receipt requested, at the return address indicated in 14-11 the association's notice, stating the owner's elected method; and 14-12 (4) a statement that, unless the owner elects in a 14-13 timely manner, the association may foreclose in any manner 14-14 available to the association under Subsection (a). 14-15 (f) If the lot owner notifies the property owners' 14-16 association or its agent of an election of a foreclosure method 14-17 under Subsection (e), the association may foreclose only in the 14-18 manner the owner elects. If notice of election is not provided by 14-19 the owner in a timely manner, the association may foreclose in any 14-20 manner available to it under Subsection (a). 14-21 (g) At any time before a foreclosure sale, a lot owner may 14-22 avoid foreclosure by paying all amounts due the property owners' 14-23 association, including foreclosure-related costs incurred by the 14-24 association. An owner is not liable for attorney's fees incurred 14-25 by the association relating to a foreclosure proceeding unless the 14-26 hearing requested under Subsection (c) is held or attempted to be 14-27 held in good faith by the association within the period prescribed 14-28 by Subsection (c). 14-29 (h) The property owners' association may bid for and 14-30 purchase the property at the foreclosure sale as a common expense. 14-31 Subject to Section 207.129, the association may own, lease, 14-32 encumber, exchange, sell, or convey the property. 14-33 (i) If the foreclosure sales price exceeds the amount due to 14-34 the property owners' association, the association shall refund the 14-35 excess proceeds to the owner. 14-36 (j) A court may not set aside a sale on petition of a lot 14-37 owner solely because the purchase price at the foreclosure sale is 14-38 insufficient to fully satisfy the owner's debt. 14-39 (k) A property owners' association may not foreclose a lien 14-40 for an assessment consisting solely of fines or attorney's fees 14-41 associated solely with fines. 14-42 (l) This section does not prevent an owner from filing an 14-43 action to enjoin a wrongful foreclosure or an action for damages 14-44 for wrongful foreclosure by a property owners' association. 14-45 Sec. 207.128. NOTICE OF FORECLOSURE SALE. (a) A property 14-46 owners' association that conducts a foreclosure sale under Section 14-47 207.127 must send to the lot owner, by certified mail, return 14-48 receipt requested, written notice of the sale and of the property 14-49 owner's right of redemption under Section 207.129 not later than 14-50 the 30th day after the date of the foreclosure sale. If a property 14-51 owners' association fails to send the notice in a timely manner, 14-52 the foreclosure sale is invalid. 14-53 (b) The notice must be sent by certified mail, return 14-54 receipt requested, to the property owner's last known mailing 14-55 address, as reflected in the records of the property owners' 14-56 association. 14-57 (c) Not later than the 30th day after the date the 14-58 association sends the notice required by Subsection (a), the 14-59 association must record an affidavit in the real property records 14-60 of the county in which the lot is located, stating the date on 14-61 which the notice was sent and containing a legal description of the 14-62 lot. Any person is entitled to rely conclusively on the 14-63 information contained in the recorded affidavit. If the 14-64 association records its foreclosure deed and fails to record an 14-65 affidavit in compliance with this subsection, the foreclosure is 14-66 invalid. 14-67 Sec. 207.129. RIGHT OF REDEMPTION AFTER FORECLOSURE. 14-68 (a) The owner of property in a residential subdivision may redeem 14-69 the property from any purchaser at a sale foreclosing a property 15-1 owners' association's assessment lien not later than the 90th day 15-2 after the date the association mails written notice of the sale to 15-3 the owner under Section 207.128. 15-4 (b) A person who purchases property at a sale foreclosing a 15-5 property owners' association's assessment lien may not transfer 15-6 ownership of the property to a person other than a redeeming owner 15-7 during the redemption period. 15-8 (c) To redeem property purchased by the property owners' 15-9 association at foreclosure sale, the owner must pay to the 15-10 association: 15-11 (1) all amounts due the association at the time of the 15-12 foreclosure sale; 15-13 (2) interest from the date of the foreclosure sale to 15-14 the date of redemption on all amounts owed the association at the 15-15 rate stated in the dedicatory instruments for delinquent 15-16 assessments, or if no rate is stated, at an annual interest rate of 15-17 10 percent; 15-18 (3) costs incurred by the association in foreclosing 15-19 the lien and conveying the property to the redeeming owner, 15-20 including reasonable attorney's fees; 15-21 (4) any assessment levied against the property by the 15-22 association after the date of the foreclosure sale; 15-23 (5) any reasonable cost incurred by the association, 15-24 including mortgage payments and costs of repair, maintenance, and 15-25 leasing of the property; and 15-26 (6) the purchase price paid by the association at the 15-27 foreclosure sale less any amounts due the association under 15-28 Subdivision (1) that were satisfied out of foreclosure sale 15-29 proceeds. 15-30 (d) To redeem property purchased at the foreclosure sale by 15-31 a person other than the property owners' association, the owner: 15-32 (1) must pay to the association: 15-33 (A) all amounts due the association at the time 15-34 of the foreclosure sale less the foreclosure sales price received 15-35 by the association from the purchaser; 15-36 (B) interest from the date of the foreclosure 15-37 sale through the date of redemption on all amounts owed the 15-38 association at the rate stated in the dedicatory instruments for 15-39 delinquent assessments, or if no rate is stated, at an annual 15-40 interest rate of 10 percent; 15-41 (C) costs incurred by the association in 15-42 foreclosing the lien and conveying the property to the redeeming 15-43 owner, including reasonable attorney's fees; and 15-44 (D) any unpaid assessments levied against the 15-45 property by the association after the date of the foreclosure sale; 15-46 and 15-47 (2) must pay to the person who purchased the property 15-48 at the foreclosure sale: 15-49 (A) any assessments levied against the property 15-50 by the association after the date of the foreclosure sale and paid 15-51 by the purchaser; 15-52 (B) the purchase price paid by the purchaser at 15-53 the foreclosure sale; 15-54 (C) interest from the date of foreclosure to the 15-55 date of redemption on the purchase price amount at an annual 15-56 interest rate of 10 percent; and 15-57 (D) any reasonable cost incurred by the 15-58 purchaser, including costs of repair, maintenance, and leasing of 15-59 the property. 15-60 (e) If a lot owner redeems the property under this section, 15-61 the purchaser of the property at foreclosure shall immediately 15-62 execute and deliver to the owner a deed transferring the property 15-63 to the redeeming property owner. 15-64 (f) If, before the expiration of the redemption period, the 15-65 redeeming lot owner fails to record the deed from the foreclosing 15-66 purchaser or fails to record an affidavit stating that the owner 15-67 has redeemed the property, the owner's right of redemption as 15-68 against a bona fide purchaser or lender for value expires after the 15-69 redemption period. 16-1 (g) If the property owners' association purchases the 16-2 property at foreclosure, all rent and other income collected by the 16-3 association from the date of the foreclosure sale to the date of 16-4 redemption shall be credited toward the amount owed the association 16-5 under Subsection (c), and if there are excess proceeds, they shall 16-6 be refunded to the owner. If a person other than the association 16-7 purchases the property at foreclosure, all rent and other income 16-8 collected by the purchaser from the date of the foreclosure sale to 16-9 the date of redemption shall be credited toward the amount owed the 16-10 purchaser under Subsection (d), and if there are excess proceeds, 16-11 those proceeds shall be refunded to the owner. 16-12 (h) If a person other than the property owners' association 16-13 is the purchaser at the foreclosure sale, before executing a deed 16-14 transferring the property to the redeeming owner, the purchaser 16-15 shall obtain an affidavit from the association or its authorized 16-16 agent stating that all amounts owed the association under 16-17 Subsection (d) have been paid. The association shall provide the 16-18 purchaser with the affidavit not later than the 10th day after the 16-19 date the association receives all amounts owed to the association 16-20 under Subsection (d). Failure of a purchaser to comply with this 16-21 subsection does not affect the validity of a redemption by a 16-22 redeeming owner. 16-23 (i) Property that is redeemed remains subject to all liens 16-24 and encumbrances on the property before foreclosure. Any lease 16-25 entered into by the purchaser of property at a sale foreclosing an 16-26 assessment lien of a property owners' association is subject to the 16-27 right of redemption provided by this section and the owner's right 16-28 to reoccupy the property immediately after the redemption. 16-29 (j) If a lot owner makes partial payment of amounts due to 16-30 the association at any time before the redemption period expires 16-31 but fails to pay all amounts necessary to redeem the lot before the 16-32 redemption period expires, the association shall refund any partial 16-33 payments to the property owner by mailing payment to the owner's 16-34 last known address as shown in the association's records not later 16-35 than the 30th day after the expiration date of the redemption 16-36 period. 16-37 Sec. 207.130. REMEDIES FOR VIOLATIONS. (a) If a property 16-38 owners' association fails to furnish the information required by 16-39 Section 207.091 within the period prescribed by Section 207.092, 16-40 the owner may seek: 16-41 (1) a court order directing the property owners' 16-42 association to furnish the required information; 16-43 (2) a judgment against the property owners' 16-44 association for not more than $500; 16-45 (3) a judgment against the property owners' 16-46 association for attorney's fees and court costs; or 16-47 (4) a judgment authorizing the owner or the owner's 16-48 assignee to deduct the amount awarded under Subdivision (2) or (3) 16-49 from any future regular or special assessments payable to the 16-50 property owners' association. 16-51 (b) A property owners' association is liable to an owner for 16-52 a civil penalty of not more than $1,000 if the association in bad 16-53 faith files a suit against an owner. 16-54 (c) A property owners' association or a lot owner who is 16-55 adversely affected by a violation of the dedicatory instruments by 16-56 the association's board or another owner may seek judicial 16-57 enforcement of the dedicatory instruments. 16-58 (d) The attorney general may file a suit to enforce this 16-59 chapter on behalf of the owner. 16-60 (e) This chapter does not prohibit a property owners' 16-61 association or a lot owner from exercising other remedies provided 16-62 by law. 16-63 Sec. 207.131. EFFECT OF TAX LIEN FORECLOSURE. Foreclosure 16-64 of a tax lien under Chapter 32, Tax Code, does not discharge a 16-65 property owners' association's lien for an assessment under this 16-66 subchapter or under a dedicatory instrument or restrictions for 16-67 amounts that become due to the association after the date of 16-68 foreclosure of the tax lien. 16-69 SECTION 2. (a) This Act takes effect January 1, 2000, 17-1 except that Section 207.069, Property Code, as added by this Act, 17-2 takes effect July 1, 2000. 17-3 (b) The changes in law made by Subchapter E, Chapter 207, 17-4 Property Code, as added by this Act, apply only to property for 17-5 which an assessment becomes due on or after the effective date of 17-6 this Act. Property for which an assessment was due before the 17-7 effective date of this Act is covered by the law in effect when the 17-8 assessment became due, and the former law is continued in effect 17-9 for that purpose. 17-10 (c) The attorney general shall approve videotapes and 17-11 classes as provided by Section 207.069, Property Code, as added by 17-12 this Act, on or before July 1, 2000. 17-13 SECTION 3. The importance of this legislation and the 17-14 crowded condition of the calendars in both houses create an 17-15 emergency and an imperative public necessity that the 17-16 constitutional rule requiring bills to be read on three several 17-17 days in each house be suspended, and this rule is hereby suspended. 17-18 * * * * *