81R5305 AJA-F

By: Farrar H.B. No. 3321

A BILL TO BE ENTITLED

AN ACT

relating to creation, re-creation, extension, renewal, or modification of or addition to deed restrictions in certain areas.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 201.001, Property Code, is amended by adding Subsections (e), (f), and (g) to read as follows:

(e) The following areas are "residential real estate subdivisions" for which restrictions may be created, regardless of whether restrictions previously applied to the area, or expired restrictions may be re-created under this chapter:

(1) a contiguous area, excluding streets, alleys, and public areas, that is at least 50 percent of an area within a municipality or its extraterritorial jurisdiction depicted on a recorded map or plat if the land encompassed within the maps or plats is or was burdened by restrictions limiting all or at least a majority of the land area covered by the map or plat, excluding streets and public areas, to residential use only;

(2) a contiguous area, excluding streets, alleys, and public areas, that is at least 50 percent of an area within a municipality or its extraterritorial jurisdiction that has been divided into two or more parts and that is or was burdened by restrictions limiting at least a 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; or

(3) an area designated as a historic, preservation, or conservation district or any other official designation the purpose of which is to preserve the historically primarily residential character of the area, when the designation is granted by a municipality.

(f) The following areas are "residential real estate subdivisions" for which unexpired restrictions may be extended, renewed, added to, or modified under this chapter:

(1) all land encompassed within one or more maps or plats of land that is divided into two or more parts if the maps or plats cover land within a city, town, or village, or within the extraterritorial jurisdiction of a city, town, or village and are recorded in the deed, map, or real property records of a county, and the land encompassed within the maps or plats is or was burdened by restrictions limiting all or at least a majority of the land area covered by the map or plat, excluding streets and public areas, to residential use only; or

(2) all land located within a city, town, or village, or within the extraterritorial jurisdiction of a city, town, or village that has been divided into two or more parts and that is or was burdened by restrictions limiting at least a 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.

(g) For the purposes of Subsection (e), an area is at least 50 percent of a larger area if the smaller area contains at least 50 percent of the area, originally platted lots, or separately owned parcels, tracts, or building sites contained in the larger area.

SECTION 2. Section 201.002(b), Property Code, is amended to read as follows:

(b) The purpose of this chapter is to provide a procedure for extending the term of, renewal of, creation of, re-creation of, additions to, or modification of restrictions and to provide for the removal of any restriction or other provision relating to race, religion, or national origin that is void and unenforceable under either the United States Constitution or Section 5.026.

SECTION 3. Chapter 201, Property Code, is amended by adding Section 201.0021 to read as follows:

Sec. 201.0021. CONSTRUCTION. This chapter and any documentation made in connection with an attempt to comply with this chapter shall be liberally construed to effectuate the intent of this chapter and the documentation, consistent with Section 201.002.

SECTION 4. Section 201.004, Property Code, is amended to read as follows:

Sec. 201.004. EXTENSION, RENEWAL, CREATION, RE-CREATION, MODIFICATION OF, OR ADDITION TO, RESTRICTIONS. (a) A petition may be filed under this chapter to:

(1) extend or renew an unexpired restriction;

(2) create or re-create a restriction;

(3) add to or modify an existing restriction; or

(4) modify an existing provision in an instrument creating a restriction that provides for extension of those restrictions.

(b) A petition is not effective to extend, renew, create, re-create, add to, or modify a restriction unless the petition is filed with the county clerk's office in the county where the subdivision is located before the second anniversary of the date the committee files with the county clerk the notice required by Section 201.005(a).

(c) If a petition meeting the requirements of this chapter is filed with the county clerk within the required period, the provisions of the petition extending, renewing, creating, re-creating, adding to, or modifying a restriction apply to and burden all of the property in the subdivision except property excluded under Section 201.009. If a petition contains provisions extending or renewing the term of a restriction, the petition may provide for an initial extension or renewal period of not more than 10 years and additional automatic extensions of the term for not more than 10 years each. The extension, renewal, creation, re-creation, or modification of, or addition to, a restriction takes effect on the later of the dates the petition is filed with the county clerk or a date specified in the petition.

SECTION 5. Sections 201.005(b) and (c), Property Code, are amended to read as follows:

(b) A notice filed under this chapter must contain:

(1) a statement that a petition committee has been formed for the extension of the term of, creation, re-creation, or renewal of, addition to, or modification of one or more restrictions, as applicable;

(2) the name and residential address of each member of the committee;

(3) the name of the subdivision to which the restrictions apply and a reference to the real property records or map or plat records where the instrument or instruments that contain the restrictions sought to be extended, renewed, added to, or modified are recorded or, if the creation or re-creation of a restriction is proposed, a reference to the place where the map or other document, if any, is recorded;

(4) a general statement of the matters to be included in the petition;

(5) if the creation or re-creation of a restriction for a subdivision is proposed, a copy of the proposed petition creating the restriction; and

(6) if the amendment or modification of a restriction is proposed, a copy of the proposed instrument creating the amendment or modification, containing the original restriction that is affected and indicating by appropriate deletion and insertion the change to the restriction that is proposed to be amended or modified.

(c) At least one [Each] member of the committee must sign and acknowledge the notice before a notary or other official authorized to take acknowledgments. The signatures of the other members of the committee are not required to be notarized. The signature of one owner of a tract or lot binds all owners of the tract or lot for the purpose of establishment of the petition committee.

SECTION 6. Sections 201.006(a), (b), and (d), Property Code, are amended to read as follows:

(a) A petition may be circulated, approved, signed, [acknowledged,] and filed by or on behalf of owners at any time during the circulating committee's existence. The petition must conform to the requirements of Section 201.007. A signature on the petition is not required to be notarized.

(b) The petition may be filed not later than one year after the date on which the notice required by Section 201.005(a) is filed. The petition must be approved [signed and acknowledged] by owners who own, in the aggregate:

(1) a majority of the total number of lots in the subdivision, in order to extend, renew, [or] create, or re-create restrictions;

(2) a majority of the total number of separately owned parcels, tracts, or building sites in the subdivision, whether or not the parcels, tracts, or building sites contain part or all of one or more platted lots or combinations of lots, in order to extend, renew, [or] create, or re-create restrictions;

(3) a majority of the square footage within all of the lots in the subdivision, excluding any area dedicated or used exclusively for roadways or public purposes or by utilities, in order to extend, renew, [or] create, or re-create restrictions;

(4) at least 75 percent of the total number of lots in the subdivision, in order to modify or add to existing restrictions;

(5) at least 75 percent of the total number of separately owned parcels, tracts, or building sites in the subdivision, whether or not the parcels, tracts, or building sites contain part or all of one or more platted lots or combination of lots, in order to modify or add to existing restrictions; or

(6) at least 75 percent of the square footage within all of the lots in the subdivision, excluding any area dedicated or used exclusively for roadways or public purposes or by utilities, in order to modify or add to existing restrictions.

(d) The petition is effective if approved [signed and acknowledged] by the required number of owners of any one of the classifications of property specified in Subsection (b) and is filed as provided by Subsection (f).

SECTION 7. Section 201.007, Property Code, is amended to read as follows:

Sec. 201.007. CONTENTS OF PETITION. (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, renewed, added to, or modified are recorded or, in the case of the creation or re-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 or re-created, the text of the proposed instrument creating the restriction or of the restriction being re-created;

(6) original [acknowledged] signatures of the required number of owners as provided by Section 201.006;

(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, renewed, created, re-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, renewing, creating, re-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, renewed, created, re-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.

(b) If a restriction being added to, modified, [or] extended, or re-created contains any provision relating to race, religion, or national origin that is void and unenforceable under either the United States Constitution or Section 5.026, the void and unenforceable restriction shall, by the provisions of the petition, be declared to be deleted from the restriction as if the provision had never been contained in the restriction.

(c) Each petition filed under this chapter must contain an assertion from the signing owners that they own record title to property within the subdivision, and the legal description and street address of the property of each signing owner must be shown beside or above the signature. If there is more than one [record] owner of a tract or lot, the signature of one [each record] owner of the tract or lot binds all owners of the tract or lot for the purpose of approving the petition. If the owner of a tract or lot is married, the signature of the spouse of the record owner binds the record owner, even if the spouse is not a record owner, if the signing spouse asserts on the petition that the signing spouse has a community property interest in the tract or lot [must sign the petition before the property can be counted as a part of the number required by Section 201.006].

SECTION 8. Sections 201.008(a) and (c), Property Code, are amended to read as follows:

(a) Not later than the 60th day after the date on which a petition that meets the requirements of this chapter is filed, the committee shall give notice directed to all persons who then are record owners of property in the subdivision. The notice must contain:

(1) the name of the subdivision covered by the petition;

(2) a copy of the petition;

(3) a statement that the proper number of property owners in the subdivision have approved [signed and acknowledged] the petition; and

(4) the date the petition was filed with the county clerk.

(c) If the committee acts in good faith in determining ownership and giving notice as required by this section, the failure to give personal notice to an owner does not affect the application of an extension, renewal, modification, [or] creation, or re-creation of, or addition to, a restriction under this chapter to the property of a person who signed the petition.

SECTION 9. Sections 201.009(b), (c), (d), and (e), Property Code, are amended to read as follows:

(b) A restriction added, modified, created, re-created, [or] extended, or renewed 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;

(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, renewed, modified, added [changed], [or] created, or re-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.

(c) The county clerk shall file a statement described in the fourth listed category in Subsection (b) in the same manner as the petition and certificate. Substantial compliance by an owner with the requirements for the statement prevents the owner's property from being burdened by an extended, renewed, created, re-created, added to, or modified restriction if the statement is filed within the time required.

(d) A lienholder whose lien was established before the effective date of a petition is not bound by the petition unless the lienholder signs it and it is later filed. If such a lienholder who does not sign the filed petition later acquires title to the property in the subdivision through foreclosure, the acquisition is free of the restrictions added, modified, created, re-created, [or] extended, or renewed by the petition. However, if any other person acquires the title to the property at a foreclosure sale, that person takes the property subject to the restriction added, modified, created, re-created, [or] extended, or renewed by the petition, if any prior owner of the foreclosed property signed and acknowledged the petition.

(e) Notwithstanding any other provision of this chapter, property that is excluded in any manner from the operation of restrictions that are modified, added to, [or] created, or re-created by a petition under this chapter is, unless the petition expressly provides otherwise, subject to those restrictions, if any, affecting the excluded property as the restrictions existed immediately before the effective date of the petition, and those restrictions are continued in effect to the extent originally applicable to the excluded property. After the filing of such a petition, those restrictions may be added to, modified, [or] extended, or renewed by a specified percentage of the owners of real property interests in accordance with this chapter or the instruments evidencing the restrictions as they existed immediately before the effective date of the petition, if otherwise still applicable. Any petition filed under this chapter that creates, re-creates, adds to, or modifies restrictions may provide for the subsequent addition to or extension, renewal, creation, or modification of, the resulting restrictions by a specified percentage of the owners of real property interests in the subdivision as set forth in the instruments evidencing the continued restrictions. This subsection does not abrogate, alter, affect, or impair the rights of a lienholder under Subsection (d) to not be bound by a petition adopted under this chapter when the lienholder subsequently acquires title to the excluded property through foreclosure.

SECTION 10. Sections 201.010(a) and (d), Property Code, are amended to read as follows:

(a) If an owner and the owner's predecessors in interest neither signed the petition nor filed the statement described in the fourth listed category in Section 201.009(b), the owner may file a suit for declaratory judgment in a court of competent jurisdiction:

(1) to challenge the completeness or regularity of the procedures leading to the recordation of a certificate, if the suit is filed before the 181st day after the date on which the certificate is filed with the county clerk; or

(2) to exclude the owner's property from the operation of the extended, renewed, modified, added to, [or] created, or re-created restriction.

(d) The remedies in this section are exclusive of all others in actions brought to challenge a restriction extended, renewed, modified, added to, [or] created, or re-created under this chapter. The filing of an action for the first listed purpose in Subsection (a) does not prevent the restriction from taking effect in accordance with its terms pending a final judgment.

SECTION 11. Section 201.011, Property Code, is amended to read as follows:

Sec. 201.011. PROHIBITION OF CLAIM OF LACK OF MUTUALITY. If a petition procedure is completed under this chapter, the owners of property within the subdivision whose property is covered by the petition may not raise in any judicial proceeding the issue that the restrictions added, modified, created, re-created, [or] extended, or renewed under this chapter are not enforceable on the grounds that the restrictions are not applicable to all of the property in the subdivision.

SECTION 12. Section 201.013, Property Code, is amended to read as follows:

Sec. 201.013. CUMULATIVE EFFECT. The procedure prescribed by this chapter for adding to, modifying, creating, re-creating, [or] extending, or renewing the term of a restriction is cumulative and not in lieu of other methods of adding to, modifying, creating, re-creating, [or] extending, or renewing a restriction.

SECTION 13. Chapter 201, Property Code, is amended by adding Sections 201.014 and 201.015 to read as follows:

Sec. 201.014. JOINDER TO RESTRICTIONS. Property not affected by the creation, re-creation, extension, renewal, addition to, or modification of a restriction under this chapter for a reason provided by Section 201.009 or 201.010 or property outside the subdivision but within the boundaries of the map or plat within which the subdivision is located as described by Section 201.001(e) may be subjected to the restriction by filing in the real property records of the county in which the property is located an acknowledged joinder statement signed by one owner of the property electing to restrict the property identified in the statement, referencing the recording information for the relevant petition or certificate of compliance and stating the owner's intent to be bound by or subject to the restriction.

Sec. 201.015. RATIFICATION OF CERTAIN ACTIONS. An attempt before September 1, 2009, to create, re-create, extend, renew, add to, or modify a restriction under this chapter that did not satisfy the requirements of the chapter as they existed at the time the attempt was made is ratified on September 1, 2009, if the attempt would satisfy the requirements of this chapter as they existed on September 1, 2009.

SECTION 14. Section 201.003(2), Property Code, is repealed.

SECTION 15. 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, 2009.