1-1 AN ACT
1-2 relating to residential subdivisions that require membership in a
1-3 property owners' association.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Title 11, Property Code, is amended by adding
1-6 Chapter 209 to read as follows:
1-7 CHAPTER 209. TEXAS RESIDENTIAL PROPERTY OWNERS PROTECTION ACT
1-8 Sec. 209.001. SHORT TITLE. This chapter may be cited as the
1-9 Texas Residential Property Owners Protection Act.
1-10 Sec. 209.002. DEFINITIONS. In this chapter:
1-11 (1) "Assessment" means a regular assessment, special
1-12 assessment, or other amount a property owner is required to pay a
1-13 property owners' association under the dedicatory instrument or by
1-14 law.
1-15 (2) "Board" means the governing body of a property
1-16 owners' association.
1-17 (3) "Declaration" means an instrument filed in the
1-18 real property records of a county that includes restrictive
1-19 covenants governing a residential subdivision.
1-20 (4) "Dedicatory instrument" means each governing
1-21 instrument covering the establishment, maintenance, and operation
1-22 of a residential subdivision. The term includes restrictions or
1-23 similar instruments subjecting property to restrictive covenants,
1-24 bylaws, or similar instruments governing the administration or
1-25 operation of a property owners' association, to properly adopted
2-1 rules and regulations of the property owners' association, and to
2-2 all lawful amendments to the covenants, bylaws, rules, or
2-3 regulations.
2-4 (5) "Lot" means any designated parcel of land located
2-5 in a residential subdivision, including any improvements on the
2-6 designated parcel.
2-7 (6) "Owner" means a person who holds record title to
2-8 property in a residential subdivision and includes the personal
2-9 representative of a person who holds record title to property in a
2-10 residential subdivision.
2-11 (7) "Property owners' association" or "association"
2-12 means an incorporated or unincorporated association that:
2-13 (A) is designated as the representative of the
2-14 owners of property in a residential subdivision;
2-15 (B) has a membership primarily consisting of the
2-16 owners of the property covered by the dedicatory instrument for the
2-17 residential subdivision; and
2-18 (C) manages or regulates the residential
2-19 subdivision for the benefit of the owners of property in the
2-20 residential subdivision.
2-21 (8) "Regular assessment" means an assessment, a
2-22 charge, a fee, or dues that each owner of property within a
2-23 residential subdivision is required to pay to the property owners'
2-24 association on a regular basis and that is designated for use by
2-25 the property owners' association for the benefit of the residential
2-26 subdivision as provided by the restrictions.
3-1 (9) "Residential subdivision" or "subdivision" means a
3-2 subdivision, planned unit development, townhouse regime, or similar
3-3 planned development in which all land has been divided into two or
3-4 more parts and is subject to restrictions that:
3-5 (A) limit a majority of the land subject to the
3-6 dedicatory instruments, excluding streets, common areas, and public
3-7 areas, to residential use for single-family homes, townhomes, or
3-8 duplexes only;
3-9 (B) are recorded in the real property records of
3-10 the county in which the residential subdivision is located; and
3-11 (C) require membership in a property owners'
3-12 association that has authority to impose regular or special
3-13 assessments on the property in the subdivision.
3-14 (10) "Restrictions" means one or more restrictive
3-15 covenants contained or incorporated by reference in a properly
3-16 recorded map, plat, replat, declaration, or other instrument filed
3-17 in the real property records or map or plat records. The term
3-18 includes any amendment or extension of the restrictions.
3-19 (11) "Restrictive covenant" means any covenant,
3-20 condition, or restriction contained in a dedicatory instrument,
3-21 whether mandatory, prohibitive, permissive, or administrative.
3-22 (12) "Special assessment" means an assessment, a
3-23 charge, a fee, or dues, other than a regular assessment, that each
3-24 owner of property located in a residential subdivision is required
3-25 to pay to the property owners' association, according to procedures
3-26 required by the dedicatory instruments, for:
4-1 (A) defraying, in whole or in part, the cost,
4-2 whether incurred before or after the assessment, of any
4-3 construction or reconstruction, unexpected repair, or replacement
4-4 of a capital improvement in common areas owned by the property
4-5 owners' association, including the necessary fixtures and personal
4-6 property related to the common areas;
4-7 (B) maintenance and improvement of common areas
4-8 owned by the property owners' association; or
4-9 (C) other purposes of the property owners'
4-10 association as stated in its articles of incorporation or the
4-11 dedicatory instrument for the residential subdivision.
4-12 Sec. 209.003. APPLICABILITY OF CHAPTER. (a) This chapter
4-13 applies only to a residential subdivision that is subject to
4-14 restrictions or provisions in a declaration that authorize the
4-15 property owners' association to collect regular or special
4-16 assessments on all or a majority of the property in the
4-17 subdivision.
4-18 (b) This chapter applies only to a property owners'
4-19 association that requires mandatory membership in the association
4-20 for all or a majority of the owners of residential property within
4-21 the subdivision subject to the association's dedicatory
4-22 instruments.
4-23 (c) This chapter applies to a residential property owners'
4-24 association regardless of whether the entity is designated as a
4-25 "homeowners' association," "community association," or similar
4-26 designation in the restrictions or dedicatory instrument.
5-1 (d) This chapter does not apply to a condominium development
5-2 governed by Chapter 82.
5-3 Sec. 209.004. MANAGEMENT CERTIFICATES. (a) A property
5-4 owners' association shall record in each county in which any
5-5 portion of the residential subdivision is located a management
5-6 certificate, signed and acknowledged by an officer or the managing
5-7 agent of the association, stating:
5-8 (1) the name of the subdivision;
5-9 (2) the name of the association;
5-10 (3) the recording data for the subdivision;
5-11 (4) the recording data for the declaration;
5-12 (5) the mailing address of the association or the name
5-13 and mailing address of the person managing the association; and
5-14 (6) other information the association considers
5-15 appropriate.
5-16 (b) The property owners' association shall record an amended
5-17 management certificate not later than the 30th day after the date
5-18 the association has notice of a change in any information in the
5-19 recorded certificate required by Subsection (a).
5-20 (c) The property owners' association and its officers,
5-21 directors, employees, and agents are not subject to liability to
5-22 any person for a delay in recording or failure to record a
5-23 management certificate, unless the delay or failure is wilful or
5-24 caused by gross negligence.
5-25 Sec. 209.005. ASSOCIATION RECORDS. (a) A property owners'
5-26 association shall make the books and records of the association,
6-1 including financial records, reasonably available to an owner in
6-2 accordance with Section B, Article 2.23, Texas Non-Profit
6-3 Corporation Act (Article 1396-2.23, Vernon's Texas Civil Statutes).
6-4 (b) An attorney's files and records relating to the
6-5 association, excluding invoices requested by an owner under Section
6-6 209.008(d), are not:
6-7 (1) records of the association;
6-8 (2) subject to inspection by the owner; or
6-9 (3) subject to production in a legal proceeding.
6-10 Sec. 209.006. NOTICE REQUIRED BEFORE ENFORCEMENT ACTION.
6-11 (a) Before a property owners' association may suspend an owner's
6-12 right to use a common area, file a suit against an owner other than
6-13 a suit to collect a regular or special assessment or foreclose
6-14 under an association's lien, charge an owner for property damage,
6-15 or levy a fine for a violation of the restrictions or bylaws or
6-16 rules of the association, the association or its agent must give
6-17 written notice to the owner by certified mail, return receipt
6-18 requested.
6-19 (b) The notice must:
6-20 (1) describe the violation or property damage that is
6-21 the basis for the suspension action, charge, or fine and state any
6-22 amount due the association from the owner; and
6-23 (2) inform the owner that the owner:
6-24 (A) is entitled to a reasonable period to cure
6-25 the violation and avoid the fine or suspension unless the owner was
6-26 given notice and a reasonable opportunity to cure a similar
7-1 violation within the preceding six months; and
7-2 (B) may request a hearing under Section 209.007
7-3 on or before the 30th day after the date the owner receives the
7-4 notice.
7-5 Sec. 209.007. HEARING BEFORE BOARD; ALTERNATIVE DISPUTE
7-6 RESOLUTION. (a) If the owner is entitled to an opportunity to
7-7 cure the violation, the owner has the right to submit a written
7-8 request for a hearing to discuss and verify facts and resolve the
7-9 matter in issue before a committee appointed by the board of the
7-10 property owners' association or before the board if the board does
7-11 not appoint a committee.
7-12 (b) If a hearing is to be held before a committee, the
7-13 notice prescribed by Section 209.006 must state that the owner has
7-14 the right to appeal the committee's decision to the board by
7-15 written notice to the board.
7-16 (c) The association shall hold a hearing under this section
7-17 not later than the 30th day after the date the board receives the
7-18 owner's request for a hearing and shall notify the owner of the
7-19 date, time, and place of the hearing not later than the 10th day
7-20 before the date of the hearing. The board or the owner may request
7-21 a postponement, and, if requested, a postponement shall be granted
7-22 for a period of not more than 10 days. Additional postponements
7-23 may be granted by agreement of the parties. The owner or the
7-24 association may make an audio recording of the meeting.
7-25 (d) The notice and hearing provisions of Section 209.006 and
7-26 this section do not apply if the association files a suit seeking a
8-1 temporary restraining order or temporary injunctive relief or files
8-2 a suit that includes foreclosure as a cause of action. If a suit
8-3 is filed relating to a matter to which those sections apply, a
8-4 party to the suit may file a motion to compel mediation. The
8-5 notice and hearing provisions of Section 209.006 and this section
8-6 do not apply to a temporary suspension of a person's right to use
8-7 common areas if the temporary suspension is the result of a
8-8 violation that occurred in a common area and involved a significant
8-9 and immediate risk of harm to others in the subdivision. The
8-10 temporary suspension is effective until the board makes a final
8-11 determination on the suspension action after following the
8-12 procedures prescribed by this section.
8-13 (e) An owner or property owners' association may use
8-14 alternative dispute resolution services.
8-15 Sec. 209.008. ATTORNEY'S FEES. (a) A property owners'
8-16 association may collect reimbursement of reasonable attorney's fees
8-17 and other reasonable costs incurred by the association relating to
8-18 collecting amounts, including damages, due the association for
8-19 enforcing restrictions or the bylaws or rules of the association
8-20 only if the owner is provided a written notice that attorney's fees
8-21 and costs will be charged to the owner if the delinquency or
8-22 violation continues after a date certain.
8-23 (b) An owner is not liable for attorney's fees incurred by
8-24 the association relating to a matter described by the notice under
8-25 Section 209.006 if the attorney's fees are incurred before the
8-26 conclusion of the hearing under Section 209.007 or, if the owner
9-1 does not request a hearing under that section, before the date by
9-2 which the owner must request a hearing. The owner's presence is
9-3 not required to hold a hearing under Section 209.007.
9-4 (c) All attorney's fees, costs, and other amounts collected
9-5 from an owner shall be deposited into an account maintained at a
9-6 financial institution in the name of the association or its
9-7 managing agent. Only members of the association's board or its
9-8 managing agent or employees of its managing agent may be
9-9 signatories on the account.
9-10 (d) On written request from the owner, the association shall
9-11 provide copies of invoices for attorney's fees and other costs
9-12 relating only to the matter for which the association seeks
9-13 reimbursement of fees and costs.
9-14 (e) The notice provisions of Subsection (a) do not apply to
9-15 a counterclaim of an association in a lawsuit brought against the
9-16 association by a property owner.
9-17 (f) If the dedicatory instrument or restrictions of an
9-18 association allow for nonjudicial foreclosure, the amount of
9-19 attorney's fees that a property owners' association may include in
9-20 a nonjudicial foreclosure sale for an indebtedness covered by a
9-21 property owners' association's assessment lien is limited to the
9-22 greater of:
9-23 (1) one-third of the amount of all actual costs and
9-24 assessments, excluding attorney's fees, plus interest and court
9-25 costs, if those amounts are permitted to be included by law or by
9-26 the restrictive covenants governing the property; or
10-1 (2) $2,500.
10-2 (g) Subsection (f) does not prevent a property owners'
10-3 association from recovering or collecting attorney's fees in excess
10-4 of the amounts prescribed by Subsection (f) by other means provided
10-5 by law.
10-6 Sec. 209.009. FORECLOSURE SALE PROHIBITED IN CERTAIN
10-7 CIRCUMSTANCES. A property owners' association may not foreclose a
10-8 property owners' association's assessment lien if the debt securing
10-9 the lien consists solely of:
10-10 (1) fines assessed by the association; or
10-11 (2) attorney's fees incurred by the association solely
10-12 associated with fines assessed by the association.
10-13 Sec. 209.010. NOTICE AFTER FORECLOSURE SALE. (a) A
10-14 property owners' association that conducts a foreclosure sale of an
10-15 owner's lot must send to the lot owner not later than the 30th day
10-16 after the date of the foreclosure sale a written notice stating the
10-17 date and time the sale occurred and informing the lot owner of the
10-18 owner's right to redeem the property under Section 209.011.
10-19 (b) The notice must be sent by certified mail, return
10-20 receipt requested, to the lot owner's last known mailing address,
10-21 as reflected in the records of the property owners' association.
10-22 (c) Not later than the 30th day after the date the
10-23 association sends the notice required by Subsection (a), the
10-24 association must record an affidavit in the real property records
10-25 of the county in which the lot is located, stating the date on
10-26 which the notice was sent and containing a legal description of the
11-1 lot. Any person is entitled to rely conclusively on the
11-2 information contained in the recorded affidavit.
11-3 (d) The notice requirements of this section also apply to
11-4 the sale of an owner's lot by a sheriff or constable conducted as
11-5 provided by a judgment obtained by the property owners'
11-6 association.
11-7 Sec. 209.011. RIGHT OF REDEMPTION AFTER FORECLOSURE. (a) A
11-8 property owners' association or other person who purchases occupied
11-9 property at a sale foreclosing a property owners' association's
11-10 assessment lien must commence and prosecute a forcible entry and
11-11 detainer action under Chapter 24 to recover possession of the
11-12 property.
11-13 (b) The owner of property in a residential subdivision may
11-14 redeem the property from any purchaser at a sale foreclosing a
11-15 property owners' association's assessment lien not later than the
11-16 180th day after the date the association mails written notice of
11-17 the sale to the owner under Section 209.010.
11-18 (c) A person who purchases property at a sale foreclosing a
11-19 property owners' association's assessment lien may not transfer
11-20 ownership of the property to a person other than a redeeming lot
11-21 owner during the redemption period.
11-22 (d) To redeem property purchased by the property owners'
11-23 association at the foreclosure sale, the lot owner must pay to the
11-24 association:
11-25 (1) all amounts due the association at the time of the
11-26 foreclosure sale;
12-1 (2) interest from the date of the foreclosure sale to
12-2 the date of redemption on all amounts owed the association at the
12-3 rate stated in the dedicatory instruments for delinquent
12-4 assessments or, if no rate is stated, at an annual interest rate of
12-5 10 percent;
12-6 (3) costs incurred by the association in foreclosing
12-7 the lien and conveying the property to the redeeming lot owner,
12-8 including reasonable attorney's fees;
12-9 (4) any assessment levied against the property by the
12-10 association after the date of the foreclosure sale;
12-11 (5) any reasonable cost incurred by the association,
12-12 including mortgage payments and costs of repair, maintenance, and
12-13 leasing of the property; and
12-14 (6) the purchase price paid by the association at the
12-15 foreclosure sale less any amounts due the association under
12-16 Subdivision (1) that were satisfied out of foreclosure sale
12-17 proceeds.
12-18 (e) To redeem property purchased at the foreclosure sale by
12-19 a person other than the property owners' association, the lot
12-20 owner:
12-21 (1) must pay to the association:
12-22 (A) all amounts due the association at the time
12-23 of the foreclosure sale less the foreclosure sales price received
12-24 by the association from the purchaser;
12-25 (B) interest from the date of the foreclosure
12-26 sale through the date of redemption on all amounts owed the
13-1 association at the rate stated in the dedicatory instruments for
13-2 delinquent assessments or, if no rate is stated, at an annual
13-3 interest rate of 10 percent;
13-4 (C) costs incurred by the association in
13-5 foreclosing the lien and conveying the property to the redeeming
13-6 lot owner, including reasonable attorney's fees;
13-7 (D) any unpaid assessments levied against the
13-8 property by the association after the date of the foreclosure sale;
13-9 and
13-10 (E) taxable costs incurred in a proceeding
13-11 brought under Subsection (a); and
13-12 (2) must pay to the person who purchased the property
13-13 at the foreclosure sale:
13-14 (A) any assessments levied against the property
13-15 by the association after the date of the foreclosure sale and paid
13-16 by the purchaser;
13-17 (B) the purchase price paid by the purchaser at
13-18 the foreclosure sale;
13-19 (C) the amount of the deed recording fee;
13-20 (D) the amount paid by the purchaser as ad
13-21 valorem taxes, penalties, and interest on the property after the
13-22 date of the foreclosure sale; and
13-23 (E) taxable costs incurred in a proceeding
13-24 brought under Subsection (a).
13-25 (f) If a lot owner redeems the property under this section,
13-26 the purchaser of the property at foreclosure shall immediately
14-1 execute and deliver to the owner a deed transferring the property
14-2 to the redeeming lot owner. If a purchaser fails to comply with
14-3 this section, the lot owner may file a cause of action against the
14-4 purchaser and may recover reasonable attorney's fees from the
14-5 purchaser if the lot owner is the prevailing party in the action.
14-6 (g) If, before the expiration of the redemption period, the
14-7 redeeming lot owner fails to record the deed from the foreclosing
14-8 purchaser or fails to record an affidavit stating that the lot
14-9 owner has redeemed the property, the lot owner's right of
14-10 redemption as against a bona fide purchaser or lender for value
14-11 expires after the redemption period.
14-12 (h) The purchaser of the property at the foreclosure sale or
14-13 a person to whom the person who purchased the property at the
14-14 foreclosure sale transferred the property may presume conclusively
14-15 that the lot owner did not redeem the property unless the lot owner
14-16 files in the real property records of the county in which the
14-17 property is located:
14-18 (1) a deed from the purchaser of the property at the
14-19 foreclosure sale; or
14-20 (2) an affidavit that:
14-21 (A) states that the lot owner has redeemed the
14-22 property; and
14-23 (B) contains a legal description of the
14-24 property.
14-25 (i) If the property owners' association purchases the
14-26 property at foreclosure, all rent and other income collected by the
15-1 association from the date of the foreclosure sale to the date of
15-2 redemption shall be credited toward the amount owed the association
15-3 under Subsection (d), and if there are excess proceeds, they shall
15-4 be refunded to the lot owner. If a person other than the
15-5 association purchases the property at foreclosure, all rent and
15-6 other income collected by the purchaser from the date of the
15-7 foreclosure sale to the date of redemption shall be credited toward
15-8 the amount owed the purchaser under Subsection (e), and if there
15-9 are excess proceeds, those proceeds shall be refunded to the lot
15-10 owner.
15-11 (j) If a person other than the property owners' association
15-12 is the purchaser at the foreclosure sale, before executing a deed
15-13 transferring the property to the redeeming lot owner, the purchaser
15-14 shall obtain an affidavit from the association or its authorized
15-15 agent stating that all amounts owed the association under
15-16 Subsection (e) have been paid. The association shall provide the
15-17 purchaser with the affidavit not later than the 10th day after the
15-18 date the association receives all amounts owed to the association
15-19 under Subsection (e). Failure of a purchaser to comply with this
15-20 subsection does not affect the validity of a redemption by a
15-21 redeeming lot owner.
15-22 (k) Property that is redeemed remains subject to all liens
15-23 and encumbrances on the property before foreclosure. Any lease
15-24 entered into by the purchaser of property at a sale foreclosing an
15-25 assessment lien of a property owners' association is subject to the
15-26 right of redemption provided by this section and the lot owner's
16-1 right to reoccupy the property immediately after the redemption.
16-2 (l) If a lot owner makes partial payment of amounts due the
16-3 association at any time before the redemption period expires but
16-4 fails to pay all amounts necessary to redeem the property before
16-5 the redemption period expires, the association shall refund any
16-6 partial payments to the lot owner by mailing payment to the owner's
16-7 last known address as shown in the association's records not later
16-8 than the 30th day after the expiration date of the redemption
16-9 period.
16-10 (m) If a lot owner sends by certified mail, return receipt
16-11 requested, a written request to redeem the property on or before
16-12 the last day of the redemption period, the lot owner's right of
16-13 redemption is extended until the 10th day after the date the
16-14 association and any third party foreclosure purchaser provides
16-15 written notice to the lot owner of the amounts that must be paid to
16-16 redeem the property.
16-17 (n) After the redemption period and any extended redemption
16-18 period provided by Subsection (m) expires, the association or third
16-19 party foreclosure purchaser shall record an affidavit in the real
16-20 property records of the county in which the property is located
16-21 stating that the lot owner did not redeem the property during the
16-22 redemption period or any extended redemption period.
16-23 (o) The association or the person who purchased the property
16-24 at the foreclosure sale may file an affidavit in the real property
16-25 records of the county in which the property is located that states
16-26 the date the citation was served in a suit under Subsection (a) and
17-1 contains a legal description of the property. Any person may rely
17-2 conclusively on the information contained in the affidavit.
17-3 (p) The rights of a lot owner under this section also apply
17-4 if the sale of the lot owner's property is conducted by a constable
17-5 or sheriff as provided by a judgment obtained by the property
17-6 owners' association.
17-7 SECTION 2. S.B. No. 507, 77th Legislature, Regular Session,
17-8 2001, is enacted in honor of Wenonah Blevins and may be
17-9 unofficially referred to as the Wenonah Blevins Residential
17-10 Property Owners Protection Act.
17-11 SECTION 3. This Act takes effect January 1, 2002.
S.B. No. 507
_______________________________ _______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 507 passed the Senate on
April 2, 2001, by a viva-voce vote; May 18, 2001, Senate refused to
concur in House amendments and requested appointment of Conference
Committee; May 21, 2001, House granted request of the Senate;
May 27, 2001, Senate adopted Conference Committee Report by the
following vote: Yeas 17, Nays 1, one present not voting.
_______________________________
Secretary of the Senate
I hereby certify that S.B. No. 507 passed the House, with
amendments, on May 16, 2001, by a non-record vote; May 21, 2001,
House granted request of the Senate for appointment of Conference
Committee; May 27, 2001, House adopted Conference Committee Report
by a non-record vote.
_______________________________
Chief Clerk of the House
Approved:
_______________________________
Date
_______________________________
Governor