|
|
|
A BILL TO BE ENTITLED
|
|
AN ACT
|
|
relating to the operation of condominium associations. |
|
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
|
SECTION 1. Section 82.102, Property Code, is amended by |
|
amending Subsection (a) and adding Subsection (f) to read as |
|
follows: |
|
(a) Unless otherwise provided by the declaration, the |
|
association, acting through its board, may: |
|
(1) adopt and amend bylaws; |
|
(2) adopt and amend budgets for revenues, |
|
expenditures, and reserves, and collect assessments for common |
|
expenses from unit owners; |
|
(3) hire and terminate managing agents and other |
|
employees, agents, and independent contractors; |
|
(4) institute, defend, intervene in, settle, or |
|
compromise litigation or administrative proceedings in its own name |
|
on behalf of itself or two or more unit owners on matters affecting |
|
the condominium; |
|
(5) make contracts and incur liabilities relating to |
|
the operation of the condominium; |
|
(6) regulate the use, maintenance, repair, |
|
replacement, modification, and appearance of the condominium; |
|
(7) adopt and amend rules regulating the use, |
|
occupancy, leasing or sale, maintenance, repair, modification, and |
|
appearance of units and common elements, to the extent the |
|
regulated actions affect common elements or other units; |
|
(8) cause additional improvements to be made as a part |
|
of the common elements; |
|
(9) acquire, hold, encumber, and convey in its own |
|
name any right, title, or interest to real or personal property, |
|
except common elements of the condominium; |
|
(10) grant easements, leases, licenses, and |
|
concessions through or over the common elements; |
|
(11) impose and receive payments, fees, or charges for |
|
the use, rental, or operation of the common elements and for |
|
services provided to unit owners; |
|
(12) impose interest and late charges for late |
|
payments of assessments, returned check charges, and, if notice and |
|
an opportunity to be heard are given in accordance with Subsection |
|
(d), reasonable fines for violations of the declaration, bylaws, |
|
and rules of the association; |
|
(13) adopt and amend rules regulating the collection |
|
of delinquent assessments and the application of payments; |
|
(14) adopt and amend rules regulating the termination |
|
of utility service to a unit, the owner of which is delinquent in |
|
the payment of an assessment that is used, in whole or in part, to |
|
pay the cost of that utility; |
|
(15) impose reasonable charges for preparing, |
|
recording, or copying declaration amendments, resale certificates, |
|
or statements of unpaid assessments; |
|
(16) enter a unit for bona fide emergency purposes |
|
when conditions present an imminent risk of harm or damage to the |
|
common elements, another unit, or the occupants; |
|
(17) [assign its right to future income, including the
|
|
right to receive common expense assessments, but only to the extent
|
|
the declaration so provides;
|
|
[(18)] suspend the voting privileges of or the use of |
|
certain general common elements by an owner delinquent for more |
|
than 30 days in the payment of assessments; |
|
(18) [(19)] purchase insurance and fidelity bonds it |
|
considers appropriate or necessary; |
|
(19) [(20)] exercise any other powers conferred by the |
|
declaration or bylaws; |
|
(20) [(21)] exercise any other powers that may be |
|
exercised in this state by a corporation of the same type as the |
|
association; and |
|
(21) [(22)] exercise any other powers necessary and |
|
proper for the government and operation of the association. |
|
(f) The association by resolution of the board of directors |
|
may borrow money unless prohibited by the declaration, articles of |
|
incorporation, bylaws, rules, or other restrictions. If the board |
|
of directors issues a resolution under this subsection, the |
|
association may assign the association's right to future income, |
|
including the right to receive common expense assessments and |
|
assign the association's lien rights, as collateral for the loan |
|
authorized by the resolution. The association shall comply with |
|
any member approval requirement in the association's declaration, |
|
articles of incorporation, bylaws, rules, or other restrictions for |
|
borrowing money, except that not more than 67 percent of all |
|
outstanding votes are required to approve an authorization to |
|
borrow money. |
|
SECTION 2. Sections 82.111(c) and (i), Property Code, are |
|
amended to read as follows: |
|
(c) If the insurance described by Subsections (a) and (b) is |
|
not reasonably available, the association shall cause notice of |
|
that fact to be delivered or mailed to all unit owners and |
|
lienholders. The declaration may require the association to carry |
|
any other insurance, and the association in any event may carry any |
|
other insurance the board considers appropriate to protect the |
|
condominium, the association, or the unit owners. Insurance |
|
policies carried under Subsection (a) may provide for commercially |
|
reasonable deductibles as the board considers appropriate or |
|
necessary. This section does not affect the right of a holder of a |
|
mortgage on a unit to require a unit owner to acquire insurance in |
|
addition to that provided by the association. |
|
(i) Any portion of the condominium for which insurance is |
|
required that is damaged or destroyed shall be promptly repaired or |
|
replaced by the association unless the condominium is terminated, |
|
repair or replacement would be illegal under any state or local |
|
health or safety statute or ordinance, or at least 80 percent of the |
|
unit owners, including each owner of a unit or assigned limited |
|
common element that will not be rebuilt or repaired, vote to not |
|
rebuild. A vote to not rebuild does not increase an insurer's |
|
liability to loss payment obligation under a policy, and the vote |
|
does not cause a presumption of total loss. The cost of repair or |
|
replacement in excess of the insurance proceeds and reserves is a |
|
common expense. Costs of repair or replacement incurred before any |
|
insurance proceeds are available, or that are within the |
|
association's deductible, shall be paid as determined by resolution |
|
of the board of directors of the association, or, if the board does |
|
not approve a resolution, the costs are a common expense. A |
|
resolution regarding payment of costs under this subsection is |
|
considered a dedicatory instrument and must be recorded in each |
|
location in which the declaration is recorded. If the entire |
|
condominium is not repaired or replaced, any insurance proceeds |
|
attributable to the damaged common elements shall be used to |
|
restore the damaged area to a condition compatible with the |
|
remainder of the condominium, the insurance proceeds attributable |
|
to units and limited common elements that are not rebuilt shall be |
|
distributed to the owners of those units and the owners of the units |
|
to which those limited common elements were assigned, or to their |
|
mortgagees, as their interests may appear, and the remainder of the |
|
proceeds shall be distributed to all the unit owners as their |
|
interests may appear. If the unit owners vote to not rebuild any |
|
unit, that unit's allocated interests shall be automatically |
|
reallocated on the vote as if the unit had been condemned, and the |
|
association shall prepare, execute, and record an amendment to the |
|
declaration reflecting the reallocation. Section 82.068 governs |
|
the distribution of insurance proceeds if the condominium is |
|
terminated. |
|
SECTION 3. Section 82.113(g), Property Code, is amended to |
|
read as follows: |
|
(g) The owner of a unit [used for residential purposes and] |
|
purchased [by an association] at a foreclosure sale of the |
|
association's lien for assessments may redeem the unit not later |
|
than the 90th day after the date of the foreclosure sale. If the |
|
association is the purchaser [To redeem the unit], the owner must |
|
pay to the association to redeem the unit all amounts due the |
|
association at the time of the foreclosure sale, interest from the |
|
date of foreclosure sale to the date of redemption at the rate |
|
provided by the declaration for delinquent assessments, reasonable |
|
attorney's fees and costs incurred by the association in |
|
foreclosing the lien, any assessment levied against the unit by the |
|
association after the foreclosure sale, and any reasonable cost |
|
incurred by the association as owner of the unit, including costs of |
|
maintenance and leasing. If a party other than the association is |
|
the purchaser, the redeeming owner must pay to the purchaser of the |
|
unit at the foreclosure sale an amount equal to the amount bid at |
|
the sale, interest on the bid amount computed from the date of the |
|
foreclosure sale to the date of redemption at the rate of six |
|
percent, any assessment paid by the purchaser after the date of |
|
foreclosure, and any reasonable costs incurred by the purchaser as |
|
the owner of the unit, including costs of maintenance and leasing. |
|
The redeeming owner must also pay to the association all |
|
assessments that are due as of the date of the redemption and |
|
reasonable attorney's fees and costs incurred by the association in |
|
foreclosing the lien. On redemption, the purchaser of the unit at |
|
the foreclosure sale [association] shall execute a deed with no |
|
warranty to the redeeming unit owner. The exercise of the right of |
|
redemption is not effective against a subsequent purchaser or |
|
lender for value without notice of the redemption after the |
|
redemption period expires unless the redeeming unit owner records |
|
the deed from the purchaser of the unit at the foreclosure sale |
|
[association] or an affidavit stating that the owner has exercised |
|
the right of redemption. A unit that has been redeemed remains |
|
subject to all liens and encumbrances on the unit before |
|
foreclosure. All rents and other income collected from the unit by |
|
the purchaser of the unit at the foreclosure sale [association] |
|
from the date of foreclosure sale to the date of redemption belong |
|
to the purchaser of the unit at the foreclosure sale [association], |
|
but the rents and income shall be credited against the redemption |
|
amount. The purchaser of [An association purchasing] a unit at a |
|
sale foreclosing an association's assessment [its] lien may not |
|
transfer ownership of the unit during the redemption period to a |
|
person other than a redeeming owner. |
|
SECTION 4. (a) The change in law made by this Act to Section |
|
82.111(i), Property Code, applies only to payment of costs incurred |
|
on or after the effective date of this Act. Payment of costs |
|
incurred before the effective date of this Act are governed by the |
|
law in effect immediately before the effective date of this Act, and |
|
that law is continued in effect for that purpose. |
|
(b) Section 82.113(g), Property Code, as amended by this |
|
Act, applies only to a condominium unit sold at a foreclosure sale |
|
on or after the effective date of this Act. A unit sold at a |
|
foreclosure sale before the effective date of this Act is governed |
|
by the law in effect immediately before the effective date of this |
|
Act, and that law is continued in effect for that purpose. |
|
SECTION 5. This Act takes effect September 1, 2009. |