79R5431 KCR-D
By: Carona S.B. No. 892
A BILL TO BE ENTITLED
AN ACT
relating to the operation of property owners' associations;
providing an administrative penalty.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The chapter heading for Chapter 203, Property
Code, is amended to read as follows:
CHAPTER 203. ENFORCEMENT OF PROVISIONS RELATING TO LAND USE
RESTRICTIONS OR PROPERTY OWNERS' ASSOCIATIONS IN CERTAIN COUNTIES
SECTION 2. Section 203.003, Property Code, is amended to
read as follows:
Sec. 203.003. ENFORCEMENT AUTHORITY OF COUNTY ATTORNEY
[AUTHORIZED TO ENFORCE RESTRICTIONS]. (a) The county attorney
may:
(1) sue in a court of competent jurisdiction to enjoin
or abate a violation of this title by a property owners' association
or an owner or a violation [violations] of a restriction contained
or incorporated by reference in a properly recorded plan, plat,
replat, or other instrument affecting a real property subdivision
located in the county, regardless of the date on which the
instrument was recorded; and
(2) recover from a property owners' association or an
owner that violates this title a reasonable penalty as determined
by the court not to exceed:
(A) $250 for each violation by an association;
and
(B) $250 for each violation by an owner.
(b) The county attorney may not enforce a restriction
relating to race or any other restriction that violates the state or
federal constitution.
SECTION 3. Section 207.001, Property Code, is amended to
read as follows:
Sec. 207.001. DEFINITIONS. In this chapter:
(1) ["Restrictions" has the meaning assigned by
Section 201.003.
[(2)] "Dedicatory instrument," "property owners'
association," and "restrictive covenant" have the meanings
assigned by Section 209.002 [202.001].
(2) [(3)] "Owner" means a person who owns record title
to property in a subdivision or the personal representative of an
individual who owns record title to property in a subdivision.
(3) [(4)] "Regular assessment" and "special
assessment" have the meanings assigned by Section 209.002
[204.001].
(4) [(5)] "Resale certificate" means a written
statement issued, signed, and dated by an officer or authorized
agent of a property owners' association that contains the
information specified by Section 207.003(b).
(5) "Residential subdivision" and "subdivision" have
the meanings assigned by Section 209.002.
[(6) "Subdivision" means all land that has been
divided into two or more parts and that is or was burdened by
restrictions limiting at least the majority of the land area
burdened by restrictions, excluding streets and public areas, to
residential use only, if the instrument or instruments creating the
restrictions are recorded in the deed or real property records of a
county.]
SECTION 4. Section 207.002, Property Code, is amended to
read as follows:
Sec. 207.002. APPLICABILITY. This chapter applies only to
a subdivision to which Chapter 209 applies [with a property owners'
association that is entitled to levy regular or special
assessments].
SECTION 5. The heading to Section 207.003, Property Code,
is amended to read as follows:
Sec. 207.003. DELIVERY OF SUBDIVISION INFORMATION TO OWNER;
RESALE OF PROPERTY.
SECTION 6. Section 207.003, Property Code, is amended by
amending Subsection (a) and adding Subsection (f) to read as
follows:
(a) Not later than the 10th day after the date a written
request for subdivision information is received from an owner,
owner's agent, or title insurance company or its agent acting on
behalf of the owner, the property owners' association shall deliver
to the owner, owner's agent, or title insurance company or its
agent:
(1) a current copy of the restrictive covenants
[restrictions] applying to the subdivision; and
(2) [a current copy of the bylaws and rules of the
property owners' association; and
[(3)] a resale certificate that complies with
Subsections [Subsection] (b) and (f).
(f) Except as provided by Section 207.004, an owner that
sells the owner's property in the subdivision must, before
executing a sales contract or conveying the property, provide the
purchaser:
(1) a current copy of the restrictive covenants; and
(2) a resale certificate:
(A) issued by the association; and
(B) prepared not earlier than three months before
the date it is delivered to the purchaser.
SECTION 7. Section 209.005, Property Code, is amended by
adding Subsections (c), (d), (e), and (f) to read as follows:
(c) Records of an owner's payment or nonpayment of regular
assessments and special assessments, fees, fines, or any other sums
that have been charged to an owner are not subject to inspection by
any other owner who is not a member of the association's board or an
owner's representative or to production in a legal proceeding,
unless:
(1) the express written approval of the owner whose
records are the subject of the request for inspection is submitted
to the association; or
(2) a court orders the inspection or production.
(d) Salary or payroll records of an association employee
that disclose the employee's amount of salary or income are not
subject to inspection by an owner who is not a member of the
association's board or an owner's representative unless a court
orders the inspection.
(e) The association shall retain records as follows:
(1) articles of incorporation, bylaws, restrictive
covenants, and all amendments to the articles of incorporation,
bylaws, and covenants shall be retained permanently;
(2) financial books and records shall be retained for
five years;
(3) owner account records shall be retained for five
years;
(4) a contract shall be retained for five years after
expiration of the term of the contract;
(5) minutes of meetings of the board shall be retained
for seven years;
(6) tax returns and audit records shall be retained
for seven years; and
(7) any other records not specified above shall be
retained for five years.
(f) This section does not apply to a property owners'
association that is subject to Chapter 552, Government Code.
SECTION 8. Chapter 209, Property Code, is amended by adding
Section 209.0051 to read as follows:
Sec. 209.0051. ASSOCIATION AND BOARD MEETINGS. (a) A
property owners' association shall meet at least once each year.
Unless the declaration, restrictions, bylaws, or articles of
incorporation provide otherwise, a special meeting of the
association may be called by the president of the board, a majority
of the board, or by owners having at least 10 percent of the votes in
the association.
(b) Meetings of the association and the board must be open
to the owners, subject to the right of the board to adjourn a
meeting of the board and reconvene in closed executive session to
consider actions involving personnel, pending litigation, contract
negotiations, enforcement actions, matters involving the invasion
of privacy of an owner, or matters that are to remain confidential
by request of the affected parties and agreement of the board. The
general nature of any business to be considered in executive
session must first be announced at the open meeting.
(c) Unless the declaration, restrictions, bylaws, or
articles of incorporation provide otherwise:
(1) a meeting of the board may be held by any method of
communication, including electronic and telephonic, if:
(A) notice of the meeting has been given in
accordance with Subsection (e);
(B) each member of the board may hear and be heard
by every other member of the board; and
(C) the meeting does not involve the board's
voting on:
(i) a fine, damage assessment, or appeal
from a denial of architectural control approval; or
(ii) suspension of a member of the
association's right before the member has an opportunity to attend
a meeting of the board to present the member's position, including
any defense, on the issue; and
(2) the board, without a meeting, may act by unanimous
written consent of all the members of the board if:
(A) the board action does not involve voting on:
(i) a fine, damage assessment, or appeal
from a denial of architectural control approval; or
(ii) suspension of a member of the
association's right before the member has an opportunity to attend
a meeting of the board to present the member's position, including
any defense, on the issue; and
(B) a record of the board action is filed with the
minutes of meetings of the board.
(d) Notice of a regular or special meeting of the
association must be given as provided by the restrictions, bylaws,
or articles of incorporation or, if those instruments do not
provide for notice, notice must be given to each owner in the same
manner in which notice is given to members of a nonprofit
corporation under Section A, Article 2.11, Texas Non-Profit
Corporation Act (Article 1396-2.11, Vernon's Texas Civil
Statutes).
(e) Notice of a meeting of the board must be given as
provided by the restrictions, bylaws, or articles of incorporation
or, if those instruments do not provide for notice, notice must be
given to each board member in the same manner in which notice is
given to members of the board of a nonprofit corporation under
Section B, Article 2.19, Texas Non-Profit Corporation Act (Article
1396-2.19, Vernon's Texas Civil Statutes).
(f) An association, on the written request of an owner,
shall inform the owner of the time and place of the next regular or
special meeting of the association or board. If the association
representative to whom the request is made does not know the time
and place of the meeting, the association shall promptly obtain the
information and disclose it to the owner or inform the owner where
the information may be obtained.
(g) This section does not apply to an association subject to
Chapter 551, Government Code.
SECTION 9. Section 209.009, Property Code, is amended to
read as follows:
Sec. 209.009. FORECLOSURE SALE PROHIBITED IN CERTAIN
CIRCUMSTANCES. (a) A property owners' association may not
foreclose a property owners' association's assessment lien if the
debt securing the lien consists solely of:
(1) fines assessed by the association; [or]
(2) attorney's fees incurred by the association solely
associated with fines assessed by the association; or
(3) debt that is not more than 90 days delinquent.
(b) Subsection (a)(3) does not apply to an association in
which an assessment is due on a monthly basis.
SECTION 10. Chapter 209, Property Code, is amended by
adding Sections 209.012 and 209.013 to read as follows:
Sec. 209.012. CONFLICTS OF INTEREST. A person who is a
member of the board of a property owners' association or related
within the third degree by consanguinity or within the second
degree by affinity to a member of the board may not be compensated
for providing legal representation or management services to the
association.
Sec. 209.013. SUSPENSION OF VOTING PRIVILEGES. A property
owners' association may not suspend an owner's voting privileges in
the association because of the owner's overdue assessments or
failure to cure a violation of a deed restriction unless:
(1) the assessments are more than 60 days overdue; or
(2) the violation of the deed restriction remains
uncured after notice and opportunity for a hearing under Sections
209.006 and 209.007 or after the violation has been otherwise
mediated or adjudicated.
SECTION 11. (a) Section 203.003, Property Code, as amended
by this Act, applies only to a violation of Title 11, Property Code,
that occurs on or after the effective date of this Act. A violation
that occurs before the effective date of this Act is governed by the
law in effect immediately before that date, and that law is
continued in effect for that purpose.
(b) Except as provided by Subsection (c) of this section,
Section 207.003, Property Code, as amended by this Act, applies
only to information requested on or after the effective date of this
Act.
(c) Section 207.003(f), Property Code, as added by this Act,
applies only to a sale or conveyance of property on or after the
effective date of this Act. A sale or conveyance of property before
the effective date of this Act is governed by the law in effect
immediately before that date, and that law is continued in effect
for that purpose.
(d) Section 209.009, Property Code, as amended by this Act,
applies only to foreclosure proceedings initiated on or after the
effective date of this Act. Foreclosure proceedings initiated
before the effective date of this Act are governed by the law in
effect immediately before that date, and that law is continued in
effect for that purpose.
(e) Section 209.012, Property Code, as added by this Act,
does not apply to legal representation or management services
provided under a contract entered into before the effective date of
this Act.
(f) Section 209.013, Property Code, as added by this Act,
applies only to a vote taken on or after the effective date of this
Act. A vote taken before the effective date of this Act is governed
by the law in effect immediately before that date, and that law is
continued in effect for that purpose.
SECTION 12. This Act takes effect September 1, 2005.