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A BILL TO BE ENTITLED
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AN ACT
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relating to property owners' associations. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 212.002, Local Government Code, is |
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amended to read as follows: |
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Sec. 212.002. RULES. After a public hearing on the matter, |
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the governing body of a municipality may adopt rules governing |
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plats and subdivisions of land within the municipality's |
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jurisdiction to promote the health, safety, morals, or general |
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welfare of the municipality and the safe, orderly, and healthful |
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development of the municipality. A municipality may not adopt a |
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rule that requires the creation of a property owners' association |
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as a condition of approving a plat. |
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SECTION 2. Section 5.012(a), Property Code, is amended to |
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read as follows: |
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(a) A seller of residential real property that is subject to |
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membership in a property owners' association and that comprises not |
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more than one dwelling unit located in this state shall give to the |
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purchaser of the property a written notice that reads substantially |
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similar to the following: |
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As a purchaser of property in the residential community in |
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which this property is located, you are obligated to be a member of |
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a property owners' association. Restrictive covenants governing |
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the use and occupancy of the property and a dedicatory instrument |
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governing the establishment, maintenance, and operation of this |
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residential community have been or will be recorded in the Real |
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Property Records of the county in which the property is located. |
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The restrictive covenants and information about the association are |
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filed with the Texas Real Estate Commission and are available on its |
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website. [Copies of the restrictive covenants and dedicatory
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instrument may be obtained from the county clerk.] |
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NOTICE OF MEMBERSHIP IN PROPERTY OWNERS' ASSOCIATION |
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CONCERNING THE PROPERTY AT (street address) (name of residential |
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community) |
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You are obligated to pay assessments to the property owners' |
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association. The amount of the assessments is subject to change. |
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Your failure to pay the assessments could result in a lien on and |
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the foreclosure of your property. |
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Date: _______________ |
_____________________________ |
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SECTION 3. Section 5.027, Property Code, is amended to read |
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as follows: |
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Sec. 5.027. Right of Refusal to Purchase Property by |
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Property Owners' Association. To the extent that a restriction in a |
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deed, declaration or dedicatory instrument applicable to a |
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residential property reserves the right of refusal to a property, |
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the restriction is void. This section applies to a property owners' |
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association or condominium owners' association that is entitled to |
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levy regular or special assessments. |
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SECTION 4. Chapter 5, Property Code, is amended by adding |
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new Section 5.028 to read as follows: |
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Sec. 5.028. Transfer Fees Prohibited. To the extent that a |
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restriction in a deed, declaration, dedicatory instrument, or |
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covenant applicable to a residential property imposes a fee for or |
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because of the transfer or sale of the property, the restriction is |
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void. |
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SECTION 5. Section 207.001, Property Code, is amended to |
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read as follows: |
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Sec. 207.001. DEFINITIONS. In this chapter: |
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(1) "Restrictions" has the meaning assigned by Section |
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201.003. |
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(2) "Dedicatory instrument," "property owners' |
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association," and "restrictive covenant" have the meanings |
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assigned by Section 202.001. |
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(3) "Owner" means a person who owns record title to |
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property in a subdivision or the personal representative of an |
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individual who owns record title to property in a subdivision. |
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(4) "Regular assessment" and "special assessment" |
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have the meanings assigned by Section 204.001. |
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(5) "Commission" means the Texas Real Estate |
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Commission ["Resale certificate" means a written statement issued,
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signed, and dated by an officer or authorized agent of a property
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owners' association that contains the information specified by
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Section 207.003(b)]. |
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(6) "Subdivision" means all land that has been divided |
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into two or more parts and that is or was burdened by restrictions |
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limiting at least the majority of the land area burdened by |
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restrictions, excluding streets and public areas, to residential |
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use only, if the instrument or instruments creating the |
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restrictions are recorded in the deed or real property records of a |
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county. |
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SECTION 6. Section 207.003, Property Code is amended to |
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read as follows: |
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Sec. 207.003. DELIVERY OF SUBDIVISION INFORMATION TO THE |
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TEXAS REAL ESTATE COMMISSION [OWNER]. (a) A property owner's |
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association shall annually file the following information with the |
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commission [Not later than the 10th day after the date a written
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request for subdivision information is received from an owner,
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owner's agent, or title insurance company or its agent acting on
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behalf of the owner, the property owners' association shall deliver
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to the owner, owner's agent, or title insurance company or its
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agent]: |
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(1) a current copy of the restrictions applying to the |
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subdivision; |
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(2) a current copy of the bylaws and rules of the |
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property owners' association; and |
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(3) information [a resale certificate] that complies |
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with Subsection (b). |
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(b) The information [A resale certificate] under Subsection |
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(a)(3) [Subsection (a)] must contain: |
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(1) a statement of any right of first refusal or other |
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restraint contained in the restrictions or restrictive covenants |
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that restricts an [the] owner's right to transfer the owner's |
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property in the subdivision; |
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(2) the frequency and amount of any regular |
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assessments imposed on each lot in the subdivision; |
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(3) [the amount of any unpaid special assessment that
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is due after the date the resale certificate is prepared;
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[(4) the total of all amounts due and unpaid to the
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property owners' association that are attributable to the owner's
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property;
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[(5) capital expenditures, if any, approved by the
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property owners' association for the property owners' association's
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current fiscal year;
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[(6) the amount of reserves, if any, for capital
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expenditures;
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(7)] the property owners' association's current |
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operating budget and balance sheet, including any capital |
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expenditures for the current fiscal year and the amount of reserves |
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for capital expenditures; |
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(4) [(8)] the total of any unsatisfied judgments |
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against the property owners' association; |
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(5) [(9)] the style and cause number of any pending |
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lawsuit in which the property owners' association is a party |
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[defendant]; |
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(6) [(10)] a copy of a current certificate of |
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insurance showing the property owners' association's property and |
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liability insurance relating to the common areas and common |
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facilities; |
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(7) [(11) a description of any conditions on the
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owner's property that the property owners' association board has
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actual knowledge are in violation of the restrictions applying to
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the subdivision or the bylaws or rules of the property owners'
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association;
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[(12) a summary or copy of notices received by the
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property owners' association from any governmental authority
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regarding health or housing code violations existing on the
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preparation date of the certificate relating to the owner's
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property or any common areas or common facilities owned or leased by
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the property owners' association;
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(13)] the amount of any fee or charge [administrative
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transfer fee charged] by the property owners' association for a |
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change of ownership of property in the subdivision; |
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(8) [(14)] the name, mailing address, and telephone |
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number of the property owners' association's managing agent, if |
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any; and |
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(9) [(15)] a statement indicating whether the |
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restrictions allow foreclosure of a property owners' association's |
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lien on an [the] owner's property for failure to pay assessments. |
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(c) A property owners' association shall promptly file new |
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or amended information with the commission whenever the information |
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under subsection (b) materially changes prior to the next annual |
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filing may charge a reasonable fee to assemble, copy, and deliver
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the information required by this section and may charge a
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reasonable fee to prepare and deliver an update of a resale
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certificate. |
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(d) The commission shall post the information filed under |
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this section on its website in a manner that enables the public to |
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view the information in a searchable format. |
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(e) The commission may adopt rules to implement this |
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section. By rule the commission may charge a property owners' |
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association an amount equal to the lesser of: |
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(1) the amount necessary to cover the commission's |
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cost for implementing this section; or |
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(2) $50. |
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(f) If a property owners' association fails to timely file |
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the information required by this section, the commission may impose |
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an administrative fine not to exceed $2,500. [The property owners'
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association shall deliver the information required by Subsection
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(a) to the person specified in the written request. A written
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request that does not specify the name and location to which the
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information is to be sent is not effective. The property owners'
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association may deliver the information required by Subsection (a)
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and any update to the resale certificate by mail, hand delivery, or
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alternative delivery means specified in the written request.
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(e) Unless required by a dedicatory instrument, neither a
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property owners' association or its agent is required to inspect a
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property before issuing a resale certificate or an update to a
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resale certificate.] |
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SECTION 7. Chapter 207, Property Code is amended by adding a |
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new Section 207.0035 to read as follows: |
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Sec. 207.0035. (a) Not later than the 5th day after the |
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date a written request for the following information is received |
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from an owner, owner's agent, or title insurance company or its |
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agent acting on behalf of the owner, the property owners' |
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association shall deliver to the owner, owner's agent, or title |
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insurance company or its agent: |
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(1) the amount of any unpaid special assessment |
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against the owner's property; |
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(2) the total of all amounts due and unpaid to the |
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property owners' association that are attributable to the owner's |
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property; |
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(3) a description of any conditions on the owner's |
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property which the property owners' association board has actual |
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knowledge are in violation of the restrictions applying to the |
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subdivision or the bylaws or rules of the property owners' |
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association; and |
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(4) a summary or copy of notices received by the |
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property owners' association from any governmental authority |
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regarding existing health or housing code violations relating to |
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the owner's property. |
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(b) The property owners' association shall deliver the |
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information required by Subsection (a) to the person specified in |
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the written request. A written request that does not specify the |
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name and location to which the information is to be sent is not |
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effective. The property owners' association may deliver the |
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information required by Subsection (a) by mail, hand delivery, |
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facsimile, electronic mail, or alternative delivery means |
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specified in the written request. |
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SECTION 8. Section 207.004, Property Code is amended to |
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read as follows: |
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Sec. 207.004. OWNER'S REMEDIES FOR FAILURE BY PROPERTY |
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OWNERS' ASSOCIATION TO TIMELY DELIVER INFORMATION. (a) [If a
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property owners' association does not timely deliver information in
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accordance with Section 207.003, the owner, owner's agent, or title
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insurance company or its agent acting on behalf of the owner may
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submit a second request for the information. |
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(b)] If a property owners' association fails to timely |
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deliver the information required under Section 207.0035 [207.003
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before the seventh day after the second request for the information
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was mailed by certified mail, return receipt requested, or hand
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delivered, evidenced by receipt,] the owner: |
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(1) may seek one or any combination of the following: |
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(A) a court order directing the property owners' |
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association to furnish the required information; |
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(B) a judgment against the property owners' |
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association for not more than $1,000 [500]; |
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(C) a judgment against the property owners' |
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association for court costs and attorney's fees; or |
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(D) a judgment authorizing the owner or the |
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owner's assignee to deduct the amounts awarded under Paragraphs (B) |
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and (C) from any future regular or special assessments payable to |
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the property owners' association; and |
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(2) may provide a buyer under contract to purchase the |
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owner's property an affidavit that states that the owner, owner's |
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agent, or title insurance company or its agent acting on behalf of |
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the owner made, a [in accordance with this chapter,] [two] written |
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request[s] to the property owners' association for the information |
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described in Section 207.0035 [207.003] and that the association |
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did not timely provide the information. |
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(b) [(c)] If the owner provides a buyer under contract to |
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purchase the owner's property an affidavit in accordance with |
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Subsection (a)[(b)](2): |
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(1) the buyer, lender, or title insurance company or |
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its agent is not liable to the property owners' association for: |
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(A) any money that is due and unpaid to the |
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property owners' association on the date the affidavit was |
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prepared; and |
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(B) any debt to the property owners' association |
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or claim by the property owners' association that accrued before |
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the date the affidavit was prepared; and |
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(2) the property owners' association's lien to secure |
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the amounts due the property owners' association on the owner's |
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property on the date the affidavit was prepared shall automatically |
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terminate. |
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SECTION 9. Section 207.005, Property Code, is amended to |
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read as follows: |
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Sec. 207.005. EFFECT OF INFORMATION PROVIDED [RESALE
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CERTIFICATE]; LIABILITY. (a) A property owners' association may |
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not deny the validity of any statement included in the information |
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required under Section 207.0035 [in the resale certificate]. The |
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property owners' association's lien to secure undisclosed amounts |
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due the property owners' association on the date the information |
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[resale certificate] is prepared shall automatically terminate as a |
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lien securing the undisclosed amount. A buyer, buyer's agent, |
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owner, owner's agent, lender, and title insurance company and its |
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agent are not liable for any debt or claim existing on the |
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preparation date of the information [resale certificate] that is |
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not disclosed in the information [resale certificate]. |
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(b) Statements in the information do [A resale certificate
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does] not affect: |
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(1) the right of a property owners' association to |
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recover debts or claims that arise or become due after the date the |
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information [resale certificate] is prepared; or |
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(2) a lien on a property securing payment of future |
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assessments held by the property owners' association. |
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(c) The owner's agent and the title insurance company and |
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its agent are not liable to a buyer for any delay or failure by the |
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property owners' association in delivering the information |
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required by Section 207.0035 [207.003]. |
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(d) Except as provided by Section 207.004, the property |
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owners' association is not liable to an owner selling property in |
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the subdivision for delay or failure to deliver the information |
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required by Section 207.0035 [207.003]. An officer or agent of the |
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property owners' association is not liable for a delay or failure to |
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furnish the information required by Section 027.0035 [a resale
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certificate]. |
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SECTION 10. Chapter 209, Property Code, is amended by |
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adding Section 209.0045 to read as follows: |
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Sec. 209.0045. BYLAWS. (a) The administration and |
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operation of a property owners' association are governed by the |
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bylaws. The bylaws must provide for: |
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(1) the qualifications and number of directors of the |
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association, which number may not be less than three; |
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(2) the qualifications and titles of the officers of |
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the association, which officers must include a president, |
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secretary, and treasurer; |
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(3) terms of office for directors; |
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(4) the manner of electing and removing a board member |
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or officer and of filling vacancies; |
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(5) the powers, if any, that the board or an officer |
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may delegate to another person or to a managing agent; |
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(6) the method of amending the bylaws; and |
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(7) the manner of notice of meetings of the |
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association. |
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(b) The bylaws may not expand the powers of the association |
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beyond those powers specifically granted in the dedicatory |
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instrument. |
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SECTION 11. Chapter 209, Property Code, is amended by |
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adding a new Section 209.0055 to read as follows: |
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Sec. 209.0055. REASONABLE RULES. To be enforceable against |
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an owner or an occupant of an owner's lot, a bylaw or rule adopted by |
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the board: |
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(1) may not regulate the use of a lot by a resident or |
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the behavior of a resident on the resident's lot, except to the |
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extent the use or behavior adversely affects the appearance or use |
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and enjoyment of a common area or another lot; |
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(2) may not require the owner to construct or |
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substantially modify an improvement on the owner's lot that is not |
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required by the restrictions; |
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(3) must be reasonable and directly related to the |
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purpose for which the rule was adopted; |
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(4) must be enforced in a manner that is not arbitrary |
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or capricious; |
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(5) must be worded with sufficient clarity to inform |
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an owner or occupant of any act or omission required for compliance; |
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and |
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(6) may not be contrary to the restrictions. |
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SECTION 12. Chapter 209, Property Code, is amended by |
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adding a new section 209.0056 to read as follows: |
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Sec. 209.0056. PROTECTION FROM FINES. A fine levied by the |
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association must be reasonable in light of the nature, frequency, |
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and effect of the violation. If the association allows fines for a |
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continuing violation to accumulate, the association must establish |
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a maximum fine amount, not to exceed ten times the amount of the |
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initial fine, at which point the total fine is capped. |
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SECTION 13. Section 209.006, Property Code, is amended by |
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adding new subsections (c) and (d) to read as follows: |
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Sec. 209.006. (c) When pursuing a violation of the |
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restrictions, bylaws or rules of the association, the board shall |
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not act in an arbitrary, capricious, or discriminatory manner. |
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(d) In evaluating a violation, the board may not take action |
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if it determines that under the particular circumstances: |
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(1) the association's position is not sufficiently |
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strong to justify taking any or further action; |
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(2) the provision being enforced may be inconsistent |
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with applicable law; |
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(3) the violation is not of such a material or visible |
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nature as to be objectionable to a reasonable person or to justify |
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expending the association's resources; or |
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(4) enforcement is not in the association's best |
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interests, based on hardship, expense, or other reasonable |
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criteria. |
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SECTION 14. Chapter 209, Property Code is amended by adding |
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a new Section 209.0065 to read as follows: |
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Sec. 209.0065. PAYMENT PLAN FOR DEBT. If the owner of a lot |
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against which an assessment or assessments are delinquent requests |
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a payment plan, the association must accept a plan that is |
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reasonable under the circumstances. Factors to consider may |
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include the amount of the delinquent assessment or assessments, |
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employment status and income, assets and liabilities, credit score, |
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number of dependents, and current and anticipated expenses. |
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SECTION 15. (a) Section 212.002, Local Government Code, as |
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amended by this Act, applies to a rule adopted before, on, or after |
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the effective date of this Act. |
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(b) Sections 5.027 and 5.028, Property Code, as added by |
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this Act, apply to a restriction in a deed, declaration or |
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dedicatory instrument adopted before, on, or after the effective |
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date of this Act. |
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(c) The Texas Real Estate Commission shall adopt rules, |
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procedures, fines and fees relating to the receipt and posting of |
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information under Chapter 207, Property Code, as amended by this |
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Act. |
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(d) Not later than March 1, 2008, each property owners' |
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association shall file the information required under Section |
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207.003, Property Code, as amended by this Act. |
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(e) Section 209.0055, Property Code, as added by this Act, |
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applies to a rule adopted before, on, or after the effective date of |
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this Act. |
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(f) Section 209.0056, Property Code, as added by this Act, |
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applies to fine levied on or after the effective date of this Act. |
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(g) Sections 209.006(c) and (d), Property Code, as added by |
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this Act, apply only to enforcement actions initiated on or after |
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the effective date of this Act. |
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(h) Section 209.0065, Property Code, as added by this Act, |
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applies to an assessment imposed on or after the effective date of |
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this Act. |
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SECTION 16. Sections 3 and 4 of this Act take effect |
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immediately if it receives a vote of two-thirds of all the members |
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elected to each house, as provided by Section 39, Article III, Texas |
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Constitution. If this Act does not receive the vote necessary for |
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immediate effect, Sections 3 and 4 of this Act takes effect |
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September 1, 2007. All other sections of this Act take effect |
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September 1, 2007. |