78R4376 AJA-D
By: Coleman H.B. No. 1866
A BILL TO BE ENTITLED
AN ACT
relating to the creation of restrictions, the extension of,
addition to, or modification of existing restrictions, and the
reinstatement of expired restrictions in certain residential
subdivisions.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 201.007(a), Property Code, is amended to
read as follows:
(a) A petition filed under this chapter must contain or be
supplemented by one or more instruments containing:
(1) the name of the subdivision;
(2) a reference to the real property records or map or
plat records where the instrument or instruments that contain any
restriction sought to be extended, added to, or modified are
recorded or, in the case of the creation of a restriction, a
reference to the place where the map or other document identifying
the subdivision is recorded;
(3) a verbatim statement of any provisions for
extension of the term of, or addition to, the restriction;
(4) if a restriction is being amended or modified, the
text of the proposed instrument creating the amendment or
modification, together with a comparison of the original
restriction that is affected indicating by appropriate deletion and
insertion the change to the restriction that is proposed to be
amended or modified;
(5) if a restriction is being created, the text of the
proposed instrument creating the restriction;
(6) original acknowledged signatures of the required
number of owners as provided by Section 201.006; and
(7) [alternate boxes, clearly identified in a
conspicuous manner next to the place for signing the petition, that
enable each record owner to mark the appropriate box to show the
exercise of the owner's option of either including or excluding the
owner's property from being burdened by the restrictions being
extended, created, added to, or modified;
[(8)] a statement that owners who do not sign the
petition must file suit under Section 201.010 before the 181st day
after the date on which the certificate called for by Section
201.008(e) is filed in order to challenge the procedures followed
in extending, creating, adding to, or modifying a restriction [;
and
[(9) a statement that owners who do not sign the
petition may delete their property from the operation of the
extended, created, added to, or modified restriction by filing a
statement described in the fourth listed category in Section
201.009(b) before one year after the date on which the owner
receives actual notice of the filing of the petition authorized by
this chapter].
SECTION 2. Section 201.009(b), Property Code, is amended to
read as follows:
(b) A restriction added, modified, created, or extended
under this chapter does not affect or encumber property within the
subdivision that is included within one of the following
categories:
(1) property exclusively dedicated for use by the
public or for use by utilities;
(2) [property of an owner who elected in the petition
to exclude the property from the restriction;
[(3)] property of an owner who did not sign the petition
and has not received actual notice of the filing of the petition;
and
(3) [(4) property of an owner who did not sign the
petition and who files, before one year after the date on which the
owner received actual notice of the filing of the petition, an
acknowledged statement describing the owner's property by
reference to the recorded map or plat of the subdivision and stating
that the owner elects to have the property deleted and excluded from
the operation of the extended, modified, changed, or created
restriction; and
[(5)] property owned by a minor or a person judicially
declared to be incompetent at the time the certificate is filed,
unless:
(A) actual notice of the filing of the petition
is given to a guardian of the minor or incompetent person, and the
guardian has not filed the statement described in the fourth listed
category in this subsection;
(B) a predecessor in title to the minor or
incompetent person signed a petition that was filed while the
property was owned by the predecessor; or
(C) the incompetent person signed a petition that
was filed before the judicial declaration of the person's
incompetency.
SECTION 3. Section 204.001, Property Code, is amended by
amending Subdivision (1) and adding Subdivisions (5)-(7) to read as
follows:
(1) "Owner [Restrictions," "residential real estate
subdivision," "subdivision," "owner]," "real property records,"
and "lienholder" have the meanings assigned by Section 201.003.
(5) "Residential real estate subdivision" or
"subdivision" means:
(A) all land encompassed within one or more maps
or plats of land that is divided into two or more parts regardless
of whether the map or plat is recorded or the division of land
violated applicable law; and
(B) any other area of land that is divided into
two or more parts by any other means.
(6) "Restrictions" has the meaning assigned by Section
201.003 and includes restrictive covenants contained in separate
deeds to real property in a subdivision.
(7) "Unrestricted subdivision" means a subdivision
that has never been burdened by restrictions or that was formerly
burdened by restrictions that limited all or at least a majority of
the land area, excluding streets and public areas, to residential
use and that are no longer in effect for all or part of the
subdivision.
SECTION 4. Section 204.002(a), Property Code, is amended to
read as follows:
(a) This chapter applies only to a residential real estate
subdivision, excluding a condominium development governed by Title
7, Property Code, that is located in whole or in part in a county
with a population of 2.8 million or more. For purposes of this
chapter, a residential real estate subdivision includes an
unrestricted subdivision and a subdivision that created, modified,
or extended restrictions under Chapter 201 that burden only a
portion of the subdivision as provided by Section 201.009(b).
SECTION 5. Section 204.005, Property Code, is amended to
read as follows:
Sec. 204.005. CREATION OF RESTRICTIONS AND EXTENSION OF,
ADDITION TO, OR MODIFICATION OF EXISTING RESTRICTIONS BY PROPERTY
OWNERS' ASSOCIATION. (a) A property owners' association has
authority to approve and circulate a petition relating to the
creation of restrictions or the extension of, addition to, or
modification of existing restrictions. A property owners'
association is not required to comply with Sections
201.009-201.012.
(b) A petition to create restrictions or extend, add to, or
modify existing restrictions approved and circulated by a property
owners' association is effective if:
(1) the petition is approved by the owners, excluding
lienholders, contract purchasers, [and the] owners of mineral
interests, and persons who own residential lots in the subdivision
but who, according to the records of the appraisal district for the
subdivision, reside outside the subdivision, of at least 75 percent
of the real property in the subdivision or a smaller percentage
required by the original dedicatory instrument; and
(2) the petition is filed as a dedicatory instrument
with the county clerk of the county in which the subdivision is
located.
(c) If a subdivision consisting of multiple sections, each
with its own restrictions, is represented by a single property
owners' association, the approval requirement may be satisfied by
obtaining approval of at least 75 percent of the owners on a
section-by-section basis or of the total number of properties in
the property owners' association's jurisdiction.
(d) If approved, the petition is binding on all properties
in the subdivision or section, as applicable.
(e) A property owners' association that circulates a
petition must notify all record owners of property in the
subdivision in writing of the proposed creation of restrictions or
extension of, addition to, or modification of [the] existing
restrictions. Notice may be hand-delivered to residences within the
subdivision or sent by regular mail to the owner's last known
mailing address as reflected in the ownership records maintained by
the property owners' association or in the records of the
appropriate appraisal district. The approval of multiple owners of
a property may be reflected by the signature of a single co-owner.
SECTION 6. The heading to Section 204.006, Property Code,
is amended to read as follows:
Sec. 204.006. CREATION OF PROPERTY OWNERS' ASSOCIATION:
SUBDIVISIONS GENERALLY.
SECTION 7. Section 204.006, Property Code, is amended by
adding Subsection (d) to read as follows:
(d) This section does not apply to an unrestricted
subdivision or a subdivision that created, modified, or extended
restrictions under Chapter 201 that burden only a portion of the
subdivision as provided by Section 201.009(b).
SECTION 8. Chapter 204, Property Code, is amended by adding
Section 204.0065 to read as follows:
Sec. 204.0065. DESIGNATED PROPERTY OWNERS' ASSOCIATION IN
UNRESTRICTED SUBDIVISIONS. For the purpose of creating
restrictions under this chapter in an unrestricted subdivision, an
entity is considered a property owners' association under this
chapter if:
(1) the entity is a Texas nonprofit corporation;
(2) the articles of incorporation or bylaws of the
entity state that the entity is:
(A) a designated representative of the property
owners in the unrestricted subdivision; or
(B) designated as the "homeowners' association,"
"community association," "civic association," or "civic club" for
the unrestricted subdivision;
(3) membership in the entity is open to all property
owners in the unrestricted subdivision; and
(4) on the date the entity initiates an action under
this chapter, the membership of the entity consists of owners of at
least 50 percent of the number of lots or separately owned parcels
in the unrestricted subdivision or 50 percent of the amount of
square footage within all of the lots or separately owned parcels in
the unrestricted subdivision, excluding streets and public areas.
SECTION 9. Section 204.007(a), Property Code, is amended to
read as follows:
(a) Restrictions created, extended, added to, or modified
[Extensions of, additions to, or modifications of restrictions]
under this chapter are binding on a lienholder, excluding
restrictions relating to regular or special assessment increases if
the assessment is not subordinated to purchase money or home
improvement liens.
SECTION 10. Section 204.008, Property Code, is amended to
read as follows:
Sec. 204.008. METHOD OF ADOPTION. Restrictions [An
extension, addition to, or modification of restrictions] proposed
by a property owners' association as provided by this chapter may be
adopted:
(1) by a written ballot that states the substance of
the amendment and specifies the date by which a ballot must be
received to be counted;
(2) at a meeting of the members represented by the
property owners' association if written notice of the meeting
stating the purpose of the meeting is delivered to each owner of
property in the subdivision;
(3) by door-to-door circulation of a petition by the
property owners' association or a person authorized by the property
owners' association;
(4) by a method permitted by the existing
restrictions; or
(5) by a combination of the methods described by this
section.
SECTION 11. Section 204.009(a), Property Code, is amended
to read as follows:
(a) If the property owners' association is referenced [in
the existing, extended, added to, or modified restrictions] as a
Texas nonprofit corporation in existing restrictions or in
restrictions created, extended, added to, or modified under this
chapter, the instrument contemplates the interaction of a nonprofit
corporation, its articles of incorporation, and its bylaws.
SECTION 12. Chapter 204, Property Code, is amended by
adding Section 204.012 to read as follows:
Sec. 204.012. CREATION OF OR REINSTATEMENT OF RESTRICTIONS
BY PETITION COMMITTEE IN UNRESTRICTED SUBDIVISIONS. (a) An
unrestricted subdivision may create restrictions or reinstate
expired restrictions by petition if:
(1) a petition committee is formed as provided by
Section 201.005;
(2) the petition is approved by the owners, excluding
lienholders, contract purchasers, owners of mineral interests, and
persons who own residential lots in the subdivision but who,
according to the records of the appraisal district for the
subdivision, reside outside the subdivision, of at least:
(A) 60 percent of the real property in the
subdivision for reinstatement of expired restrictions; or
(B) 75 percent of the real property in the
subdivision for creation of restrictions; and
(3) the procedure used in the circulation and approval
of the petition complies with the requirements of this chapter,
excluding Section 204.005(b).
(b) If the petition is not approved by the required
percentage of owners on or before the first anniversary of the date
the petition committee was created, the petition is void and
another petition committee may be formed.
(c) If the petition is approved, the petition is binding on
all properties in the subdivision or section, as applicable.
(d) Expired restrictions reinstated under this section are
effective for 10 years and may be automatically renewed for 10-year
terms unless the owners of at least 60 percent of the real property
in the subdivision vote to amend or terminate the restrictions.
(e) Expired restrictions reinstated under this section may
be modified only to:
(1) establish 10-year terms as provided by Subsection
(d);
(2) remove an unlawful provision, including an
unlawful provision relating to race;
(3) create a formal property owners' association that
provides for mandatory membership and equivalent voting rights for
each member;
(4) restrict the use of the real property in the
subdivision to residential use; or
(5) clarify ambiguous provisions as identified by the
petition committee.
(f) The voting rights granted under Subsection (e)(3) may be
contingent on the payment of association dues or assessments. The
association created under Subsection (e)(3) may not impose
mandatory assessments.
(g) A subdivision that created, modified, or extended
restrictions under Chapter 201 that burden only a portion of the
subdivision as provided by Section 201.009(b) before the former
restrictions expired may use the procedures provided by this
section to reinstate the former restrictions. Unless the petition
to reinstate the former restrictions provides otherwise, the
restrictions created, extended, or modified under Chapter 201
continue in effect.
SECTION 13. This Act takes effect immediately if it
receives a vote of two-thirds of all the members elected to each
house, as provided by Section 39, Article III, Texas Constitution.
If this Act does not receive the vote necessary for immediate
effect, this Act takes effect September 1, 2003.