HBA-TBM S.B. 1834 77(R) BILL ANALYSIS Office of House Bill AnalysisS.B. 1834 By: Lindsay Business & Industry 5/18/2001 Engrossed BACKGROUND AND PURPOSE Currently, property owners' associations have authority to foreclose on a homeowner's property if there are unpaid or late dues, fees, and fines. The property is then sold for just enough to cover the dues, fees, or fines, along with any attorney's fees or court costs. Senate Bill 1834 requires an association to set a minimum bid price that must be in an amount sufficient to recover the amount owed, and prohibits an association from selling the property for less than the minimum bid price. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS Senate Bill 1834 amends the Property Code to provide that a property owners' association (association) that forecloses a lien on real property to secure payment of assessments due the association by the property owner (owner) is required to establish a minimum bid price and is prohibited from selling the property for less than the minimum bid price. The bill sets forth provisions relating to the establishment of the bid price and notice of the sale. The bill requires the association to mail a preforeclosure notice to the owner not later than the 60th day before the date the notice of sale is mailed to the owner and sets forth the contents of the notice. The bill sets forth the responsibilities of the owner and the association with regard to the foreclosure. The bill sets forth provisions requiring the association to contact the owner in person at the owner's residence and by telephone if the property to be sold is the principal residence of the owner. The bill sets forth provisions regarding causes of action against the association for setting a bid price that is less than what is needed by the association to recover the amount owed. The bill sets forth provisions governing circumstances in which the association fails to sell the property and if the owner continues to use the property as the principal place of residence if the property is not sold at the foreclosure sale. The bill specifies the method used to distribute the proceeds of a sale of the property to a party other than the association. Assessments continue to accrue against the property after a foreclosure sale, regardless of who owns the property. EFFECTIVE DATE On passage, or if the Act does not receive the necessary vote, the Act takes effect September 1, 2001. The Act applies to a foreclosure sale conducted on or after January 1, 2001.