81R10964 UM-D

By: Vo H.B. No. 3946

A BILL TO BE ENTITLED

AN ACT

relating to establishing the office of property owners' association ombudsman.

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

SECTION 1. Title 11, Property Code, is amended by adding Chapter 212 to read as follows:

CHAPTER 212. OFFICE OF PROPERTY OWNERS' ASSOCIATION OMBUDSMAN

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 212.001. DEFINITIONS. In this chapter:

(1) "Homeowner" means a person who holds record title to property in a residential subdivision and includes the personal representative of a person who holds record title to property in a residential subdivision.

(2) "Office" means the office of property owners' association ombudsman established under this chapter.

(3) "Ombudsman" means the individual who has been appointed to the office of property owners' association ombudsman.

(4) "Property owners' association" has the meaning assigned by Section 209.002.

(5) "Residential subdivision" has the meaning assigned by Section 209.002.

(6) "Restrictive covenant" has the meaning assigned by Section 209.002.

Sec. 212.002. OFFICE OF PROPERTY OWNERS' ASSOCIATION OMBUDSMAN. The independent office of property owners' association ombudsman is established to provide a simple, affordable, and neutral forum for the resolution of disputes between homeowners and property owners' associations in residential subdivisions that are subject to restrictive covenants that authorize a property owners' association to collect regular or special assessments on all or a majority of property in the subdivision.

Sec. 212.003. SUNSET PROVISION. The office is subject to Chapter 325, Government Code (Texas Sunset Act). Unless continued in existence as provided by that chapter, the office is abolished September 1, 2023.

Sec. 212.004. RULES. The ombudsman may adopt rules as necessary to implement this chapter.

Sec. 212.005. PUBLIC INTEREST INFORMATION. (a) The office shall prepare information of public interest describing the functions of the office.

(b) The office shall make the information available to the public and appropriate state agencies.

Sec. 212.006. ACCESS TO PROGRAMS AND FACILITIES. (a) The office shall prepare and maintain a written plan that describes how a person who does not speak English can be provided reasonable access to the office's programs.

(b) The office shall comply with federal and state laws for program and facility accessibility.

[Sections 212.007-212.050 reserved for expansion]

SUBCHAPTER B. OMBUDSMAN

Sec. 212.051. APPOINTMENT; TERM. (a) The governor, with the advice and consent of the senate, shall appoint a property owners' association ombudsman to serve as the executive director of the office. The ombudsman serves a two-year term that expires on February 1 of each odd-numbered year.

(b) The governor shall appoint the ombudsman without regard to the race, color, disability, sex, religion, age, or national origin of the appointee.

Sec. 212.052. QUALIFICATIONS. To be eligible to serve as ombudsman, a person must possess the knowledge and experience necessary to practice mediation and other methods of dispute resolution.

Sec. 212.053. BUSINESS INTEREST; SERVICE AS OMBUDSMAN. A person is not eligible for appointment as ombudsman if the person or the person's spouse is employed by or participates in the management of a property owners' association or a business engaged in residential construction, real estate sales, or property management.

Sec. 212.054. LOBBYING ACTIVITIES. A person may not serve as ombudsman or act as general counsel to the office if the person is required to register as a lobbyist under Chapter 305, Government Code, because of the person's activities for compensation related to the operation of the office.

Sec. 212.055. GROUNDS FOR REMOVAL. (a) It is a ground for removal from office if the ombudsman:

(1) does not have at the time of appointment or maintain during service as ombudsman the qualifications required by Section 212.052;

(2) violates a prohibition established by Section 212.053, 212.054, 212.056, or 212.102; or

(3) cannot, because of illness or disability, discharge the ombudsman's duties for a substantial part of the ombudsman's term.

(b) The validity of an action of the office is not affected by the fact that the action is taken when a ground for removal of the ombudsman exists.

Sec. 212.056. PROHIBITED REPRESENTATION OR EMPLOYMENT. A former ombudsman may not represent any person or receive compensation for services rendered on behalf of any person regarding a case pending before the office before the second anniversary of the date the person ceases to serve as ombudsman.

Sec. 212.057. ADMINISTRATION OF OFFICE. The ombudsman shall administer and enforce this chapter, including preparing and submitting to the legislature a budget for the office and approving expenditures for professional services, travel, per diem, and other actual and necessary expenses incurred in administering the office.

[Sections 212.058-212.100 reserved for expansion]

SUBCHAPTER C. PERSONNEL

Sec. 212.101. OFFICE PERSONNEL. (a) The ombudsman shall employ professional, technical, and other employees necessary to implement this chapter.

(b) Compensation for an employee shall be set under the General Appropriations Act as provided by the legislature.

Sec. 212.102. TRADE ASSOCIATIONS. (a) In this section, "trade association" means a cooperative and voluntarily joined association of business or professional competitors designed to assist its members and its industry or profession in dealing with mutual business or professional problems and in promoting their common interest.

(b) A person may not serve as ombudsman or be an employee of the office employed in a "bona fide executive, administrative, or professional capacity" as that phrase is used for purposes of establishing an exemption to the overtime provisions of the federal Fair Labor Standards Act of 1938 (29 U.S.C. Section 201 et seq.) if the person is:

(1) an officer, employee, or paid consultant of a trade association in the field of residential construction, real estate sales, or property management; or

(2) the spouse of an officer, manager, or paid consultant of a trade association in the field of residential construction, real estate sales, or property management.

Sec. 212.103. CAREER LADDER PROGRAM; PERFORMANCE EVALUATIONS. (a) The ombudsman or the ombudsman's designee shall develop an intra-agency career ladder program. The program must require intra-agency posting of all nonentry level positions concurrently with any public posting.

(b) The ombudsman or the ombudsman's designee shall develop a system of annual performance evaluations. All merit pay for office employees must be based on the system established under this subsection.

Sec. 212.104. QUALIFICATIONS AND STANDARDS OF CONDUCT. The office shall provide to the ombudsman and office employees, as often as necessary, information regarding their:

(1) qualifications for office or employment under this chapter; and

(2) responsibilities under applicable laws relating to standards of conduct for state officers or employees.

[Sections 212.105-212.150 reserved for expansion]

SUBCHAPTER D. REGISTRATION OF ASSOCIATIONS; FEES

Sec. 212.151. DUTY TO REGISTER. Each property owners' association shall register annually with the office, providing:

(1) the name and contact information for the association;

(2) the name and contact information for any management company for the association;

(3) the location of each recorded governing document;

(4) the number of homeowners and the number of lots in the subdivision governed by the association; and

(5) any other information required by the ombudsman.

Sec. 212.152. FEE. Each property owners' association shall submit to the office with the association's registration under Section 212.151 a fee equal to $4.00 multiplied by the number of lots located in the subdivision governed by the association.

[Sections 212.153-212.200 reserved for expansion]

SUBCHAPTER E. POWERS AND DUTIES

Sec. 212.201. DUTIES OF OFFICE. The office shall:

(1) prepare, maintain, and make available to the public:

(A) informational brochures regarding the operation of property owners' associations, the law applicable to deed restrictions and property owners' associations, and the rights of homeowners with respect to property owners' associations, including information regarding a property owners' association's right to foreclose a lien on homeowner's property for unpaid assessments and the right of the homeowner to redeem the property;

(B) disclosure forms and any other forms that may assist owners of property in deed-restricted subdivisions; and

(C) a list of free and low-cost mediation programs that may be available to mediate disputes between homeowners and property owners' associations; and

(2) promote the availability of the materials prepared under Subdivision (1) and other services provided by the office.

Sec. 212.202. HOMEOWNER PETITION FOR INVESTIGATION OF ALLEGED VIOLATION. (a) A homeowner who is affected by an alleged violation by a property owners' association or an agent of the homeowner's rights under the law may submit a petition to the ombudsman, in the form prescribed by the ombudsman, requesting that the ombudsman investigate the alleged violation.

(b) In performing an investigation under this section, the ombudsman may hold hearings, take testimony, subpoena witnesses, and issue subpoenas for the production of relevant books, records, or documents.

(c) Except as provided by Subsection (d) or (e), not later than the 90th day after the date the office receives a petition under this section, the office shall provide the petitioning homeowner and the responding association with a statement of facts and legal conclusions regarding the allegations made in the petition.

(d) If the ombudsman determines that additional time is needed to complete the investigation or to provide the statement of facts and legal conclusions under this section, the office may provide the statement of facts and legal conclusions not later than the 180th day after the date the office receives the petition, if the office notifies the petitioning homeowner and the responding association of the need for the extension before the expiration of the time for providing the statement under Subsection (c).

(e) Except as provided by this subsection, the ombudsman shall complete an investigation concerning an election supervised by the ombudsman under this chapter not later than the 15th day after the date on which the petition is received by the office. For good cause, the ombudsman may extend the time for completing the investigation under this subsection by not more than 15 days.

Sec. 212.203. OMBUDSMAN PARTICIPATION IN MEDIATION. The ombudsman may offer to participate in any mediation of a dispute between a homeowner and a property owners' association.

Sec. 212.204. SUPERVISION OF ASSOCIATION ELECTIONS. The ombudsman may offer to supervise a property owners' association election, including a vote to elect or recall board members or to decide a ballot proposition.

Sec. 212.205. OMBUDSMAN'S POWERS AND DUTIES NOT IMPAIRED. An offer by the ombudsman to participate in a mediation or supervise an election under this chapter, or the ombudsman's participation in a mediation or supervision of an election, does not disqualify the ombudsman from exercising any power or duty of the ombudsman under this chapter, except that the ombudsman and the parties to a dispute may, by written agreement, provide that the ombudsman is required to maintain confidentiality of communications regarding the mediation or election or adhere to other conditions regarding action by the ombudsman.

Sec. 212.206. ENFORCEMENT ACTION BY ATTORNEY GENERAL OR DISTRICT OR COUNTY ATTORNEY. (a) If an investigation by the ombudsman results in a recommendation by the ombudsman that the attorney general or a district or county attorney pursue litigation concerning a property owners' association or the association's agent, the ombudsman shall notify each petitioning homeowner and each association board member of the recommendation.

(b) This section does not limit the authority of the attorney general or a district or county attorney to take any action with respect to a violation of a law or restrictive covenant or limit a homeowner's right to seek any remedy provided by law.

(c) The attorney general shall enforce the ombudsman's subpoenas and decisions regarding association elections supervised by the ombudsman under this chapter or a determination by the ombudsman that a violation of law justifies the removal of an association board member, officer, manager, or other agent.

(d) If the attorney general determines that a property owners' association has violated or threatened to violate a homeowner's rights, the attorney general may seek temporary, preliminary, or final injunctions, independent audits, removal of directors, statutory penalties, or any other relief or penalty provided by law.

Sec. 212.207. ANNUAL REPORT. The ombudsman shall publish annually on the office's Internet website a report regarding:

(1) the number, type, and size of property owners' associations in this state;

(2) how state law affects the operation and management of associations;

(3) investigations of violations under this chapter that result in a finding against an association by the ombudsman;

(4) how often homeowners use options for mediation or arbitration, the costs incurred by homeowners in using those options, and the decisions and awards resulting from those mediation and arbitration procedures;

(5) the number of judicial and nonjudicial foreclosure proceedings initiated by associations and the number of those foreclosures completed by the associations and the reason for the initiation of the proceedings; and

(6) any other issues the ombudsman considers of concern to homeowners and associations.

SECTION 2. As soon as practicable after the effective date of this Act, the governor shall appoint a property owners' association ombudsman in accordance with Chapter 212, Property Code, as added by this Act, to a term expiring February 1, 2011.

SECTION 3. This Act takes effect September 1, 2009.