By Coleman H.B. No. 1580
77R1131 AJA-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the creation of restrictions, the extension of,
1-3 addition to, or modification of existing restrictions, and the
1-4 reinstatement of expired restrictions in certain residential
1-5 subdivisions.
1-6 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-7 SECTION 1. Section 204.001, Property Code, is amended by
1-8 amending Subdivision (1) and adding Subdivisions (5)-(7) to read as
1-9 follows:
1-10 (1) "Owner [Restrictions," "residential real estate
1-11 subdivision," "subdivision," "owner]," "real property records," and
1-12 "lienholder" have the meanings assigned by Section 201.003.
1-13 (5) "Residential real estate subdivision" or
1-14 "subdivision" means:
1-15 (A) all land encompassed within one or more maps
1-16 or plats of land that is divided into two or more parts regardless
1-17 of whether the map or plat is recorded or the division of land
1-18 violated applicable law; and
1-19 (B) any other area of land that is divided into
1-20 two or more parts by any other means.
1-21 (6) "Restrictions" has the meaning assigned by Section
1-22 201.003 and includes restrictive covenants contained in separate
1-23 deeds to real property in a subdivision.
1-24 (7) "Unrestricted subdivision" means a subdivision
2-1 that was formerly burdened by restrictions that limited all or at
2-2 least a majority of the land area, excluding streets and public
2-3 areas, to residential use and that are no longer in effect for all
2-4 or part of the subdivision.
2-5 SECTION 2. Section 204.002(a), Property Code, is amended to
2-6 read as follows:
2-7 (a) This chapter applies only to a residential real estate
2-8 subdivision, excluding a condominium development governed by Title
2-9 7, Property Code, that is located in whole or in part in a county
2-10 with a population of 2.8 million or more. For purposes of this
2-11 chapter, a residential real estate subdivision includes an
2-12 unrestricted subdivision and a subdivision that created, modified,
2-13 or extended restrictions under Chapter 201 that burden only a
2-14 portion of the subdivision as provided by Section 201.009(b).
2-15 SECTION 3. Section 204.005, Property Code, is amended to
2-16 read as follows:
2-17 Sec. 204.005. CREATION OF RESTRICTIONS AND EXTENSION OF,
2-18 ADDITION TO, OR MODIFICATION OF EXISTING RESTRICTIONS. (a) A
2-19 property owners' association has authority to approve and circulate
2-20 a petition relating to the creation of restrictions or the
2-21 extension of, addition to, or modification of existing
2-22 restrictions. A property owners' association is not required to
2-23 comply with Sections 201.009-201.012.
2-24 (b) A petition to create restrictions or extend, add to, or
2-25 modify existing restrictions approved and circulated by a property
2-26 owners' association is effective if:
2-27 (1) the petition is approved by the owners, excluding
3-1 lienholders, contract purchasers, and the owners of mineral
3-2 interests, of at least 75 percent of the real property in the
3-3 subdivision or a smaller percentage required by the original
3-4 dedicatory instrument; and
3-5 (2) the petition is filed as a dedicatory instrument
3-6 with the county clerk of the county in which the subdivision is
3-7 located.
3-8 (c) If a subdivision consisting of multiple sections, each
3-9 with its own restrictions, is represented by a single property
3-10 owners' association, the approval requirement may be satisfied by
3-11 obtaining approval of at least 75 percent of the owners on a
3-12 section-by-section basis or of the total number of properties in
3-13 the property owners' association's jurisdiction.
3-14 (d) If approved, the petition is binding on all properties
3-15 in the subdivision or section, as applicable.
3-16 (e) A property owners' association that circulates a
3-17 petition must notify all record owners of property in the
3-18 subdivision in writing of the proposed creation of restrictions or
3-19 extension of, addition to, or modification of [the] existing
3-20 restrictions. Notice may be hand-delivered to residences within
3-21 the subdivision or sent by regular mail to the owner's last known
3-22 mailing address as reflected in the ownership records maintained by
3-23 the property owners' association or in the records of the
3-24 appropriate appraisal district. The approval of multiple owners of
3-25 a property may be reflected by the signature of a single co-owner.
3-26 SECTION 4. The heading to Section 204.006, Property Code, is
3-27 amended to read as follows:
4-1 Sec. 204.006. CREATION OF PROPERTY OWNERS' ASSOCIATION:
4-2 SUBDIVISIONS GENERALLY.
4-3 SECTION 5. Section 204.006, Property Code, is amended by
4-4 adding Subsection (d) to read as follows:
4-5 (d) This section does not apply to an unrestricted
4-6 subdivision or a subdivision that created, modified, or extended
4-7 restrictions under Chapter 201 that burden only a portion of the
4-8 subdivision as provided by Section 201.009(b).
4-9 SECTION 6. Chapter 204, Property Code, is amended by adding
4-10 Section 204.0065 to read as follows:
4-11 Sec. 204.0065. DESIGNATED PROPERTY OWNERS' ASSOCIATION IN
4-12 UNRESTRICTED SUBDIVISIONS. For the purpose of creating
4-13 restrictions under this chapter in an unrestricted subdivision, an
4-14 entity is considered a property owners' association under this
4-15 chapter if:
4-16 (1) the entity is a Texas nonprofit corporation;
4-17 (2) the articles of incorporation or bylaws of the
4-18 entity state that the entity is:
4-19 (A) a designated representative of the property
4-20 owners in the unrestricted subdivision; or
4-21 (B) designated as the "homeowners' association,"
4-22 "community association," "civic association," or "civic club" for
4-23 the unrestricted subdivision;
4-24 (3) membership in the entity is open to all property
4-25 owners in the unrestricted subdivision; and
4-26 (4) on the date the entity initiates an action under
4-27 this chapter, the membership of the entity consists of owners of at
5-1 least 50 percent of the number of lots or separately owned parcels
5-2 in the unrestricted subdivision or 50 percent of the amount of
5-3 square footage within all of the lots or separately owned parcels
5-4 in the unrestricted subdivision, excluding streets and public
5-5 areas.
5-6 SECTION 7. Section 204.007(a), Property Code, is amended to
5-7 read as follows:
5-8 (a) Restrictions created, extended, added to, or modified
5-9 [Extensions of, additions to, or modifications of restrictions]
5-10 under this chapter are binding on a lienholder, excluding
5-11 restrictions relating to regular or special assessment increases if
5-12 the assessment is not subordinated to purchase money or home
5-13 improvement liens.
5-14 SECTION 8. Section 204.008, Property Code, is amended to
5-15 read as follows:
5-16 Sec. 204.008. METHOD OF ADOPTION. Restrictions [An
5-17 extension, addition to, or modification of restrictions] proposed
5-18 by a property owners' association as provided by this chapter may
5-19 be adopted:
5-20 (1) by a written ballot that states the substance of
5-21 the amendment and specifies the date by which a ballot must be
5-22 received to be counted;
5-23 (2) at a meeting of the members represented by the
5-24 property owners' association if written notice of the meeting
5-25 stating the purpose of the meeting is delivered to each owner of
5-26 property in the subdivision;
5-27 (3) by door-to-door circulation of a petition by the
6-1 property owners' association or a person authorized by the property
6-2 owners' association;
6-3 (4) by a method permitted by the existing
6-4 restrictions; or
6-5 (5) by a combination of the methods described by this
6-6 section.
6-7 SECTION 9. Section 204.009(a), Property Code, is amended to
6-8 read as follows:
6-9 (a) If the property owners' association is referenced [in
6-10 the existing, extended, added to, or modified restrictions] as a
6-11 Texas nonprofit corporation in existing restrictions or in
6-12 restrictions created, extended, added to, or modified under this
6-13 chapter, the instrument contemplates the interaction of a nonprofit
6-14 corporation, its articles of incorporation, and its bylaws.
6-15 SECTION 10. Chapter 204, Property Code, is amended by adding
6-16 Section 204.012 to read as follows:
6-17 Sec. 204.012. REINSTATEMENT OF EXPIRED RESTRICTIONS. (a)
6-18 An unrestricted subdivision may reinstate expired restrictions by
6-19 petition if:
6-20 (1) a petition committee is formed as provided by
6-21 Section 201.005;
6-22 (2) the petition is approved by the owners, excluding
6-23 lienholders, contract purchasers, and owners of mineral interests,
6-24 of at least 60 percent of the real property in the subdivision; and
6-25 (3) the procedure used in the circulation and approval
6-26 of the petition to reinstate the expired restrictions complies with
6-27 the requirements of this chapter, excluding Section 204.005(b).
7-1 (b) If the petition is not approved by the required
7-2 percentage of owners on or before the first anniversary of the date
7-3 the petition committee was created, the petition is void and
7-4 another petition committee may be formed.
7-5 (c) If the petition is approved, the petition is binding on
7-6 all properties in the subdivision or section, as applicable.
7-7 (d) Expired restrictions reinstated under this section are
7-8 effective for 10 years and may be automatically renewed for 10-year
7-9 terms unless the owners of at least 60 percent of the real property
7-10 in the subdivision vote to amend or terminate the restrictions.
7-11 (e) Expired restrictions reinstated under this section may
7-12 be modified only to:
7-13 (1) establish 10-year terms as provided by Subsection
7-14 (d);
7-15 (2) remove an unlawful provision, including an
7-16 unlawful provision relating to race;
7-17 (3) create a formal property owners' association that
7-18 provides for mandatory membership and equivalent voting rights for
7-19 each member;
7-20 (4) restrict the use of the real property in the
7-21 subdivision to residential use; or
7-22 (5) clarify ambiguous provisions as identified by the
7-23 petition committee.
7-24 (f) The voting rights granted under Subsection (e)(3) may be
7-25 contingent on the payment of association dues or assessments. The
7-26 association created under Subsection (e)(3) may not impose
7-27 mandatory assessments.
8-1 (g) A subdivision that created, modified, or extended
8-2 restrictions under Chapter 201 that burden only a portion of the
8-3 subdivision as provided by Section 201.009(b) before the former
8-4 restrictions expired may use the procedures provided by this
8-5 section to reinstate the former restrictions. Unless the petition
8-6 to reinstate the former restrictions provides otherwise, the
8-7 restrictions created, extended, or modified under Chapter 201
8-8 continue in effect.
8-9 SECTION 11. This Act takes effect immediately if it receives
8-10 a vote of two-thirds of all the members elected to each house, as
8-11 provided by Section 39, Article III, Texas Constitution. If this
8-12 Act does not receive the vote necessary for immediate effect, this
8-13 Act takes effect September 1, 2001.