By: West S.B. No. 237

(In the Senate - Filed November 10, 2008; February 11, 2009, read first time and referred to Committee on Intergovernmental Relations; March 30, 2009, reported adversely, with favorable Committee Substitute by the following vote: Yeas 4, Nays 0; March 30, 2009, sent to printer.)

COMMITTEE SUBSTITUTE FOR S.B. No. 237 By: West

A BILL TO BE ENTITLED

AN ACT

relating to certain procedures and requirements for the operation of property owners' associations.

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

SECTION 1. Chapter 209, Property Code, is amended by adding Sections 209.0041 through 209.0046 and 209.0051 to read as follows:

Sec. 209.0041. AMENDMENT OF DECLARATION. (a) In this section, "development period" means a period stated in a declaration during which a declarant reserves:

(1) a right to facilitate the development, construction, and marketing of the subdivision;

(2) a right to direct the size, shape, and composition of the subdivision; or

(3) any other right customarily reserved by a declarant for the benefit of developers and builders.

(b) This section applies only to a residential subdivision in which property owners are subject to mandatory regular or special assessments.

(c) This section applies to a declaration regardless of the date on which the declaration was created.

(d) This section does not apply to the amendment of a declaration during a development period.

(e) To the extent of any conflict with another provision of this title, this section prevails.

(f) Unless a declaration creating a residential subdivision provides a lower percentage, the declaration and any subsequently enacted declarations may be amended on a vote of 67 percent of the total votes allocated to owners of property in the subdivision. If the declaration provides a lower percentage, the percentage in the declaration controls.

(g) All ballots cast in an election that results in the amendment of a declaration under this section shall be deposited in the county clerk's office of each county in which the declaration is recorded and are subject to inspection by the public. A county clerk shall retain ballots deposited with the clerk under this subsection until the fourth anniversary of the date the ballots were deposited. A county clerk may not charge a fee for the deposit of ballots under this subsection.

Sec. 209.0042. TABULATION OF VOTES. (a) In any matter subject to a vote of the members of the property owners' association, the association shall utilize a neutral third party to tabulate the votes:

(1) if the association schedules the election with less than 30 days' notice; or

(2) for an election scheduled with notice of 30 days or more, if the association receives written requests from at least 25 percent of the owners of property in the subdivision or 50 owners of property in the subdivision, whichever is less:

(A) at least 10 days before the date of the meeting at which the vote will be taken; or

(B) if no meeting is to be held, at least 10 days before the deadline to cast a vote.

(b) For the purposes of this section, a person is considered a neutral third party if the person is anyone other than a candidate for office, a current or former member or officer of the board of directors, an attorney who represents the property owners' association, or a representative of the association's management company, or a person related to one of those persons within the second degree by consanguinity or affinity, as determined under Chapter 573, Government Code.

(c) This section does not apply to a property owners' association if:

(1) membership in the property owners' association is mandatory for owners or for a defined class of owners of private real property in a defined geographic area in a county with a population of 2.8 million or more or in a county adjacent to a county with a population of 2.8 million or more;

(2) the property owners' association has the power to make mandatory special assessments for capital improvements or mandatory regular assessments; and

(3) the amount of the mandatory special or regular assessments is or has ever been based wholly or partly on the value at which the state or a local governmental body assesses the property for purposes of ad valorem taxation under Section 20, Article VIII, Texas Constitution.

Sec. 209.0043. RIGHT TO VOTE. A provision of a dedicatory instrument that would disqualify a property owner from voting in an association election of board members or on any matter concerning the rights or responsibilities of the owner is void.

Sec. 209.0044. BOARD MEMBERSHIP. (a) A provision of a dedicatory instrument that restricts a property owner's right to run for a position on the board of the property owners' association is void.

(b) A property owners' association board may make information available to members of the association regarding a candidate for a position on the board regarding:

(1) any amount owed to the association by the candidate that is six months or more overdue;

(2) any violation of a restrictive covenant of which notice was delivered to a board candidate under Section 209.006 more than 30 days before the date of the election; and

(3) any lawsuits to which both the property owners' association or any of its directors or agents and the board candidate are a party.

(c) A person may not serve as a board member of a property owners' association if the person has been convicted of an offense involving moral turpitude. A property owners' association or its agent shall obtain from the computerized criminal history system maintained by the Department of Public Safety and made available to the public through the department's Internet website all criminal history record information relating to each person who declares a candidacy for a position on the board.

(d) A property owners' association board member may not be elected to a term of longer than three years.

Sec. 209.0045. CONDUCT OF ELECTION. If a physical polling place is open for association members to vote, the polling place for an association election must be open from 7 a.m. to 7 p.m. on any day on which an election is held on an issue on which all the members of the association are polled.

Sec. 209.0046. 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 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.

Sec. 209.0051. OPEN MEETINGS. (a) Each meeting of the board or a committee of a property owners' association shall be open to every member of the association and shall be held in a county in which the property to which the association relates is located.

(b) A property owners' association shall give written notice to every member of the property owners' association of the date, hour, place, and subject of each regular or special meeting of the board or a committee of the property owners' association. The notice must include a written agenda that states in clear and precise language the item or items to be addressed and considered at the meeting and shall be posted:

(1) at least 72 hours before the start of the meeting; and

(2) in a conspicuous manner or place reasonably designed to provide notice to the association members.

(c) A property owners' association shall prepare and keep minutes or make a tape recording of each meeting of the board or a committee of the property owners' association. The minutes must:

(1) state the subject of each deliberation; and

(2) indicate each vote, order, decision, or other action taken.

(d) The minutes of the board or a committee meeting of a property owners' association shall be made available for inspection and copying by a member of the property owners' association not later than the seventh day after the date of the meeting.

SECTION 2. Subsection (a), Section 211.002, Property Code, is amended to read as follows:

(a) This chapter applies only to a residential real estate subdivision or any unit or parcel of a subdivision to which another chapter in this title that provides a procedure under which a subdivision's restrictions may be amended does not apply [located in whole or in part within an unincorporated area of a county if the county has a population of less than 65,000].

SECTION 3. (a) Section 209.0043 and Subsection (a), Section 209.0044, Property Code, as added by this Act, apply to a deed restriction enacted before, on, or after the effective date of this Act.

(b) Subsections (c) and (d), Section 209.0044, Property Code, as added by this Act, apply only to a board member of a property owners' association elected on or after the effective date of this Act. A board member elected before the effective date of this Act is subject to the law as it existed immediately before the effective date of this Act, and that law is continued in effect for that purpose.

SECTION 4. This Act takes effect January 1, 2010.

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