By: Solomons	H.B. No. 222

	A BILL TO BE ENTITLED
	AN ACT
	relating to property owners' associations.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Section 212.002, Local Government Code, is
	amended to read as follows:
	Sec. 212.002. RULES.  After a public hearing on the matter,
	the governing body of a municipality may adopt rules governing
	plats and subdivisions of land within the municipality's
	jurisdiction to promote the health, safety, morals, or general
	welfare of the municipality and the safe, orderly, and healthful
	development of the municipality.  A municipality may not adopt a
	rule that requires the creation of a property owners' association
	as a condition of approving a plat.
	SECTION 2.  Section 5.012(a), Property Code, is amended to
	read as follows:
	(a)  A seller of residential real property that is subject to
	membership in a property owners' association and that comprises not
	more than one dwelling unit located in this state shall give to the
	purchaser of the property a written notice that reads substantially
	similar to the following:
	As a purchaser of property in the residential community in
	which this property is located, you are obligated to be a member of
	a property owners' association. Restrictive covenants governing
	the use and occupancy of the property and a dedicatory instrument
	governing the establishment, maintenance, and operation of this
	residential community have been or will be recorded in the Real
	Property Records of the county in which the property is located.
	The restrictive covenants and information about the association are
	filed with the Texas Real Estate Commission and are available on its
	website.  [Copies of the restrictive covenants and dedicatory
	instrument may be obtained from the county clerk.]
	NOTICE OF MEMBERSHIP IN PROPERTY OWNERS' ASSOCIATION
	CONCERNING THE PROPERTY AT (street address) (name of residential
	community)
	You are obligated to pay assessments to the property owners'
	association. The amount of the assessments is subject to change.
	Your failure to pay the assessments could result in a lien on and
	the foreclosure of your property.
	Date:  _______________ _____________________________
	Signature of Purchaser
	SECTION 3.  Section 5.027, Property Code, is amended to read
	as follows:
	Sec. 5.027.  Right of Refusal to Purchase Property by
	Property Owners' Association.  To the extent that a restriction in a
	deed, declaration or dedicatory instrument applicable to a
	residential property reserves the right of refusal to a property,
	the restriction is void.  This section applies to a property owners'
	association or condominium owners' association that is entitled to
	levy regular or special assessments.
	SECTION 4.  Chapter 5, Property Code, is amended by adding
	new Section 5.028 to read as follows:
	Sec. 5.028.  Transfer Fees Prohibited.  To the extent that a
	restriction in a deed, declaration, dedicatory instrument, or
	covenant applicable to a residential property imposes a fee for or
	because of the transfer or sale of the property, the restriction is
	void.
	SECTION 5.  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 202.001.
	(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.
	(4)  "Regular assessment" and "special assessment"
	have the meanings assigned by Section 204.001.
	(5)  "Commission" means the Texas Real Estate
	Commission ["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)].
	(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 6.  Section 207.003, Property Code is amended to
	read as follows:
	Sec. 207.003.  DELIVERY OF SUBDIVISION INFORMATION TO THE
	TEXAS REAL ESTATE COMMISSION [OWNER].  (a)  A property owner's
	association shall annually file the following information with the
	commission  [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 restrictions applying to the
	subdivision;
	(2)  a current copy of the bylaws and rules of the
	property owners' association; and
	(3)  information [a resale certificate] that complies
	with Subsection (b).
	(b)  The information [A resale certificate] under Subsection
	(a)(3) [Subsection (a)] must contain:
	(1)  a statement of any right of first refusal or other
	restraint contained in the restrictions or restrictive covenants
	that restricts an [the] owner's right to transfer the owner's
	property in the subdivision;
	(2)  the frequency and amount of any regular
	assessments imposed on each lot in the subdivision;
	(3)  [the amount of any unpaid special assessment that
	is due after the date the resale certificate is prepared;
	[(4)  the total of all amounts due and unpaid to the
	property owners' association that are attributable to the owner's
	property;
	[(5)  capital expenditures, if any, approved by the
	property owners' association for the property owners' association's
	current fiscal year;
	[(6)  the amount of reserves, if any, for capital
	expenditures;
	(7)]  the property owners' association's current
	operating budget and balance sheet, including any capital
	expenditures for the current fiscal year and the amount of reserves
	for capital expenditures;
	(4) [(8)]  the total of any unsatisfied judgments
	against the property owners' association;
	(5) [(9)]  the style and cause number of any pending
	lawsuit in which the property owners' association is a party
	[defendant];
	(6) [(10)]  a copy of a current certificate of
	insurance showing the property owners' association's property and
	liability insurance relating to the common areas and common
	facilities;
	(7) [(11)  a description of any conditions on the
	owner's property that the property owners' association board has
	actual knowledge are in violation of the restrictions applying to
	the subdivision or the bylaws or rules of the property owners'
	association;
	[(12)  a summary or copy of notices received by the
	property owners' association from any governmental authority
	regarding health or housing code violations existing on the
	preparation date of the certificate relating to the owner's
	property or any common areas or common facilities owned or leased by
	the property owners' association;
	(13)]  the amount of any fee or charge [administrative
	transfer fee charged] by the property owners' association for a
	change of ownership of property in the subdivision;
	(8) [(14)]  the name, mailing address, and telephone
	number of the property owners' association's managing agent, if
	any; and
	(9) [(15)]  a statement indicating whether the
	restrictions allow foreclosure of a property owners' association's
	lien on an [the] owner's property for failure to pay assessments.
	(c)  A property owners' association shall promptly file new
	or amended information with the commission whenever the information
	under subsection (b) materially changes prior to the next annual
	filing may charge a reasonable fee to assemble, copy, and deliver
	the information required by this section and may charge a
	reasonable fee to prepare and deliver an update of a resale
	certificate.
	(d)  The commission shall post the information filed under
	this section on its website in a manner that enables the public to
	view the information in a searchable format.
	(e)  The commission may adopt rules to implement this
	section. By rule the commission may charge a property owners'
	association an amount equal to the lesser of:
	(1)  the amount necessary to cover the commission's
	cost for implementing this section; or
	(2)  $50.
	(f)  If a property owners' association fails to timely file
	the information required by this section, the commission may impose
	an administrative fine not to exceed $2,500.  [The property owners'
	association shall deliver the information required by Subsection
	(a) to the person specified in the written request. A written
	request that does not specify the name and location to which the
	information is to be sent is not effective. The property owners'
	association may deliver the information required by Subsection (a)
	and any update to the resale certificate by mail, hand delivery, or
	alternative delivery means specified in the written request.
	(e)  Unless required by a dedicatory instrument, neither a
	property owners' association or its agent is required to inspect a
	property before issuing a resale certificate or an update to a
	resale certificate.]
	SECTION 7.  Chapter 207, Property Code is amended by adding a
	new Section 207.0035 to read as follows:
	Sec. 207.0035.  (a)  Not later than the 5th day after the
	date a written request for the following 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)  the amount of any unpaid special assessment
	against the owner's property;
	(2)  the total of all amounts due and unpaid to the
	property owners' association that are attributable to the owner's
	property;
	(3)  a description of any conditions on the owner's
	property which the property owners' association board has actual
	knowledge are in violation of the restrictions applying to the
	subdivision or the bylaws or rules of the property owners'
	association; and
	(4)  a summary or copy of notices received by the
	property owners' association from any governmental authority
	regarding existing health or housing code violations relating to
	the owner's property.
	(b)  The property owners' association shall deliver the
	information required by Subsection (a) to the person specified in
	the written request.  A written request that does not specify the
	name and location to which the information is to be sent is not
	effective.  The property owners' association may deliver the
	information required by Subsection (a) by mail, hand delivery,
	facsimile, electronic mail, or alternative delivery means
	specified in the written request.
	SECTION 8.  Section 207.004, Property Code is amended to
	read as follows:
	Sec. 207.004.  OWNER'S REMEDIES FOR FAILURE BY PROPERTY
	OWNERS' ASSOCIATION TO TIMELY DELIVER INFORMATION.  (a)  [If a
	property owners' association does not timely deliver information in
	accordance with Section 207.003, the owner, owner's agent, or title
	insurance company or its agent acting on behalf of the owner may
	submit a second request for the information.
	(b)]  If a property owners' association fails to timely
	deliver the information required under Section 207.0035 [207.003
	before the seventh day after the second request for the information
	was mailed by certified mail, return receipt requested, or hand
	delivered, evidenced by receipt,] the owner:
	(1)  may seek one or any combination of the following:
	(A)  a court order directing the property owners'
	association to furnish the required information;
	(B)  a judgment against the property owners'
	association for not more than $1,000 [500];
	(C)  a judgment against the property owners'
	association for court costs and attorney's fees; or
	(D)  a judgment authorizing the owner or the
	owner's assignee to deduct the amounts awarded under Paragraphs (B)
	and (C) from any future regular or special assessments payable to
	the property owners' association; and
	(2)  may provide a buyer under contract to purchase the
	owner's property an affidavit that states that the owner, owner's
	agent, or title insurance company or its agent acting on behalf of
	the owner made, a [in accordance with this chapter,] [two] written
	request[s] to the property owners' association for the information
	described in Section 207.0035 [207.003] and that the association
	did not timely provide the information.
	(b) [(c)]  If the owner provides a buyer under contract to
	purchase the owner's property an affidavit in accordance with
	Subsection (a)[(b)](2):
	(1)  the buyer, lender, or title insurance company or
	its agent is not liable to the property owners' association for:
	(A)  any money that is due and unpaid to the
	property owners' association on the date the affidavit was
	prepared; and
	(B)  any debt to the property owners' association
	or claim by the property owners' association that accrued before
	the date the affidavit was prepared; and
	(2)  the property owners' association's lien to secure
	the amounts due the property owners' association on the owner's
	property on the date the affidavit was prepared shall automatically
	terminate.
	SECTION 9.  Section 207.005, Property Code, is amended to
	read as follows:
	Sec. 207.005.  EFFECT OF INFORMATION PROVIDED [RESALE
	CERTIFICATE]; LIABILITY.  (a)  A property owners' association may
	not deny the validity of any statement included in the information
	required under Section 207.0035 [in the resale certificate]. The
	property owners' association's lien to secure undisclosed amounts
	due the property owners' association on the date the information
	[resale certificate] is prepared shall automatically terminate as a
	lien securing the undisclosed amount. A buyer, buyer's agent,
	owner, owner's agent, lender, and title insurance company and its
	agent are not liable for any debt or claim existing on the
	preparation date of the information [resale certificate] that is
	not disclosed in the information [resale certificate].
	(b)  Statements in the information do [A resale certificate
	does] not affect:
	(1)  the right of a property owners' association to
	recover debts or claims that arise or become due after the date the
	information [resale certificate] is prepared; or
	(2)  a lien on a property securing payment of future
	assessments held by the property owners' association.
	(c)  The owner's agent and the title insurance company and
	its agent are not liable to a buyer for any delay or failure by the
	property owners' association in delivering the information
	required by Section 207.0035 [207.003].
	(d)  Except as provided by Section 207.004, the property
	owners' association is not liable to an owner selling property in
	the subdivision for delay or failure to deliver the information
	required by Section 207.0035 [207.003]. An officer or agent of the
	property owners' association is not liable for a delay or failure to
	furnish the information required by Section 027.0035 [a resale
	certificate].
	SECTION 10.  Chapter 209, Property Code, is amended by
	adding Section 209.0045 to read as follows:
	Sec. 209.0045.  BYLAWS.  (a)  The administration and
	operation of a property owners' association are governed by the
	bylaws.  The bylaws must provide for:
	(1)  the qualifications and number of directors of the
	association, which number may not be less than three;
	(2)  the qualifications and titles of the officers of
	the association, which officers must include a president,
	secretary, and treasurer;
	(3)  terms of office for directors;
	(4)  the manner of electing and removing a board member
	or officer and of filling vacancies;
	(5)  the powers, if any, that the board or an officer
	may delegate to another person or to a managing agent;
	(6)  the method of amending the bylaws; and
	(7)  the manner of notice of meetings of the
	association.
	(b)  The bylaws may not expand the powers of the association
	beyond those powers specifically granted in the dedicatory
	instrument.
	SECTION 11.  Chapter 209, Property Code, is amended by
	adding a new Section 209.0055 to read as follows:
	Sec. 209.0055.  REASONABLE RULES.  To be enforceable against
	an owner or an occupant of an owner's lot, a bylaw or rule adopted by
	the board:
	(1)  may not regulate the use of a lot by a resident or
	the behavior of a resident on the resident's lot, except to the
	extent the use or behavior adversely affects the appearance or use
	and enjoyment of a common area or another lot;
	(2)  may not require the owner to construct or
	substantially modify an improvement on the owner's lot that is not
	required by the restrictions;
	(3)  must be reasonable and directly related to the
	purpose for which the rule was adopted;
	(4)  must be enforced in a manner that is not arbitrary
	or capricious;
	(5)  must be worded with sufficient clarity to inform
	an owner or occupant of any act or omission required for compliance;
	and
	(6)  may not be contrary to the restrictions.
	SECTION 12.  Chapter 209, Property Code, is amended by
	adding a new section 209.0056 to read as follows:
	Sec. 209.0056.  PROTECTION FROM FINES.  A fine levied by the
	association must be reasonable in light of the nature, frequency,
	and effect of the violation.  If the association allows fines for a
	continuing violation to accumulate, the association must establish
	a maximum fine amount, not to exceed ten times the amount of the
	initial fine, at which point the total fine is capped.
	SECTION 13.  Section 209.006, Property Code, is amended by
	adding new subsections (c) and (d) to read as follows:
	Sec. 209.006.  (c)  When pursuing a violation of the
	restrictions, bylaws or rules of the association, the board shall
	not act in an arbitrary, capricious, or discriminatory manner.
	(d)  In evaluating a violation, the board may not take action
	if it determines that under the particular circumstances:
	(1)  the association's position is not sufficiently
	strong to justify taking any or further action;
	(2)  the provision being enforced may be inconsistent
	with applicable law;
	(3)  the violation is not of such a material or visible
	nature as to be objectionable to a reasonable person or to justify
	expending the association's resources; or
	(4)  enforcement is not in the association's best
	interests, based on hardship, expense, or other reasonable
	criteria.
	SECTION 14.  Chapter 209, Property Code is amended by adding
	a new Section 209.0065 to read as follows:
	Sec. 209.0065.  PAYMENT PLAN FOR DEBT.  If the owner of a lot
	against which an assessment or assessments are delinquent requests
	a payment plan, the association must accept a plan that is
	reasonable under the circumstances.  Factors to consider may
	include the amount of the delinquent assessment or assessments,
	employment status and income, assets and liabilities, credit score,
	number of dependents, and current and anticipated expenses.
	SECTION 15.  (a)  Section 212.002, Local Government Code, as
	amended by this Act, applies to a rule adopted before, on, or after
	the effective date of this Act.
	(b)  Sections 5.027 and 5.028, Property Code, as added by
	this Act, apply to a restriction in a deed, declaration or
	dedicatory instrument adopted before, on, or after the effective
	date of this Act.
	(c)  The Texas Real Estate Commission shall adopt rules,
	procedures, fines and fees relating to the receipt and posting of
	information under Chapter 207, Property Code, as amended by this
	Act.
	(d)  Not later than March 1, 2008, each property owners'
	association shall file the information required under Section
	207.003, Property Code, as amended by this Act.
	(e)  Section 209.0055, Property Code, as added by this Act,
	applies to a rule adopted before, on, or after the effective date of
	this Act.
	(f)  Section 209.0056, Property Code, as added by this Act,
	applies to fine levied on or after the effective date of this Act.
	(g)  Sections 209.006(c) and (d), Property Code, as added by
	this Act, apply only to enforcement actions initiated on or after
	the effective date of this Act.
	(h)  Section 209.0065, Property Code, as added by this Act,
	applies to an assessment imposed on or after the effective date of
	this Act.
	SECTION 16.  Sections 3 and 4 of this Act take 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, Sections 3 and 4 of this Act takes effect
	September 1, 2007.  All other sections of this Act take effect
	September 1, 2007.