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A BILL TO BE ENTITLED
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AN ACT
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relating to the operation of 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 5.006(a), Property Code, is amended to |
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read as follows: |
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(a) In an action based on breach of a restrictive covenant |
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pertaining to real property, the court shall allow to a prevailing |
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party [who asserted the action] reasonable attorney's fees in |
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addition to the party's costs and claim. |
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SECTION 2. Section 5.012, Property Code, is amended by |
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amending Subsection (a) and adding Subsections (f) and (g) to read |
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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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NOTICE OF MEMBERSHIP IN PROPERTY OWNERS' ASSOCIATION CONCERNING THE |
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PROPERTY AT (street address) (name of residential community) |
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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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Copies of the restrictive covenants and dedicatory instrument may |
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be obtained from the county clerk. |
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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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Section 207.003, Property Code, entitles an owner to receive |
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copies of restrictions, bylaws, and a resale certificate from a |
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property owners' association. A resale certificate contains |
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information including, but not limited to, statements specifying |
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the amount and frequency of regular assessments, the property |
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owners' association's operating budget and balance sheet, and the |
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style and cause number of lawsuits to which the property owners' |
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association is a party. These documents must be made available to |
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you by the seller on your request. |
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Date: ____________________________________________ |
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Signature of Purchaser |
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(f) On the purchaser's request for a resale certificate from |
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the seller, the seller shall: |
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(1) promptly deliver a copy of a current resale |
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certificate if one has been issued for the property under Chapter |
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207; or |
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(2) if the seller does not have a current resale |
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certificate: |
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(A) request the property owners' association or |
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its agent to issue a resale certificate under Chapter 207; and |
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(B) promptly deliver a copy of the resale |
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certificate to the purchaser on receipt of the resale certificate |
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from the property owners' association or its agent. |
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(g) The seller or the purchaser, as agreed to by the |
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parties, shall pay the fee to the property owners' association or |
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its agent for issuing the resale certificate under Chapter 207. |
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SECTION 3. Chapter 202, Property Code, is amended by adding |
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Sections 202.008 and 202.010 to read as follows: |
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Sec. 202.008. RIGHT OF FIRST REFUSAL PROHIBITED. (a) In |
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this section, "development period" means a period stated in a |
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declaration during which a declarant reserves: |
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(1) a right to facilitate the development, |
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construction, and marketing of the subdivision; |
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(2) a right to direct the size, shape, and composition |
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of the subdivision; or |
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(3) any other right customarily reserved by a |
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declarant for the benefit of developers and builders. |
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(b) To the extent a restrictive covenant provides a right of |
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first refusal for the sale or lease of a residential unit or |
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residential lot in favor of the property owners' association or the |
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association's members, the covenant is void. |
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(c) This section does not apply to a restrictive covenant |
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that provides a right of first refusal in favor of a developer or |
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builder during the development period. |
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Sec. 202.010. REGULATION OF SOLAR ENERGY DEVICES. (a) In |
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this section, "solar energy device" has the meaning assigned by |
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Section 171.107, Tax Code. |
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(b) Except as otherwise provided by this section, a property |
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owners' association may not include or enforce a provision in a |
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dedicatory instrument that prohibits or restricts a property owner |
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from installing a solar energy device. |
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(c) A provision that violates Subsection (b) is void. |
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(d) This section does not prohibit the inclusion or |
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enforcement of a provision in a dedicatory instrument that |
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prohibits a solar energy device that: |
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(1) threatens the public health or safety; |
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(2) violates a law; |
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(3) is located on property owned or maintained by the |
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property owners' association; |
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(4) is located on property owned in common by the |
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members of the property owners' association; |
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(5) is located in an area on the property owner's |
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property other than: |
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(A) on the roof of the home; or |
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(B) in a fenced yard or patio maintained by the |
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property owner; or |
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(6) is mounted on a device that is taller or more |
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visually obtrusive than is necessary for the solar energy device to |
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operate at not less than 90 percent of its rated efficiency. |
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SECTION 4. Section 207.003(b), Property Code, is amended to |
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read as follows: |
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(b) A resale certificate under 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 the owner's right to transfer the owner's property; |
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(2) the frequency and amount of any regular |
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assessments; |
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(3) the amount of any special assessment that is due |
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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; |
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(8) the total of any unsatisfied judgments against the |
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property owners' association; |
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(9) the style and cause number of any pending lawsuit |
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in which the property owners' association is a party, other than a |
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lawsuit relating to unpaid property taxes of an individual member |
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of the association [defendant]; |
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(10) a copy of a certificate of insurance showing the |
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property owners' association's property and liability insurance |
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relating to the common areas and common facilities; |
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(11) a description of any conditions on the owner's |
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property that 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; |
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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 administrative transfer fee |
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charged by the property owners' association for a change of |
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ownership of property in the subdivision; |
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(14) the name, mailing address, and telephone number |
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of the property owners' association's managing agent, if any; [and] |
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(15) a statement indicating whether the restrictions |
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allow foreclosure of a property owners' association's lien on the |
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owner's property for failure to pay assessments; and |
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(16) a statement of all fees associated with the |
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transfer of ownership, including a description of each fee, to whom |
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each fee is paid, and the amount of each fee. |
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SECTION 5. Chapter 209, Property Code, is amended by adding |
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Sections 209.0041 through 209.0044 to read as follows: |
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Sec. 209.0041. AMENDMENT OF DECLARATION. (a) This section |
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applies only to a residential subdivision in which property owners |
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are subject to mandatory regular or special assessments. |
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(b) This section applies to a declaration regardless of the |
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date on which the declaration was created. |
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(c) This section does not apply to the amendment of a |
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declaration during a development period, as defined by Section |
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202.008. |
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(d) To the extent of any conflict with another provision of |
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this title, this section prevails. |
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(e) Unless a declaration creating a residential subdivision |
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provides a lower percentage, the declaration and any subsequently |
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enacted declarations may be amended on a vote of 67 percent of the |
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total votes allocated to owners of property in the subdivision. If |
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the declaration provides a lower percentage, the percentage in the |
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declaration controls. |
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(f) All ballots cast in an election that results in the |
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amendment of a declaration under this section shall be deposited in |
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the county clerk's office of each county in which the declaration is |
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recorded and are subject to inspection by the public. A county |
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clerk shall retain ballots deposited with the clerk under this |
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subsection until the fourth anniversary of the date the ballots |
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were deposited. A county clerk may not charge a fee for the deposit |
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of ballots under this subsection. |
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Sec. 209.0042. TABULATION OF VOTES. (a) In any matter |
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subject to a vote of the members of the property owners' |
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association, the association shall utilize a neutral third party to |
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tabulate the votes: |
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(1) if the association schedules the election with |
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less than 30 days' notice; or |
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(2) for an election scheduled with notice of 30 days or |
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more, if the association receives written requests from at least 25 |
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percent of the owners of property in the subdivision or 50 owners of |
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property in the subdivision, whichever is less: |
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(A) at least 10 days before the date of the |
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meeting at which the vote will be taken; or |
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(B) if no meeting is to be held, at least 10 days |
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before the deadline to cast a vote. |
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(b) For the purposes of this section, a person is considered |
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a neutral third party if the person is anyone other than a candidate |
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for an association office, a current or former member or officer of |
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the board of directors, an attorney who represents the property |
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owners' association, or a representative of the association's |
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management company, or a person related to one of those persons |
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within the second degree by consanguinity or affinity, as |
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determined under Chapter 573, Government Code. |
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(c) This section does not apply to a property owners' |
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association if: |
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(1) membership in the property owners' association is |
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mandatory for owners or for a defined class of owners of private |
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real property in a defined geographic area in a county with a |
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population of 2.8 million or more or in a county adjacent to a |
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county with a population of 2.8 million or more; |
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(2) the property owners' association has the power to |
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make mandatory special assessments for capital improvements or |
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mandatory regular assessments; and |
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(3) the amount of the mandatory special or regular |
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assessments is or has ever been based in whole or in part on the |
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value at which the state or a local governmental body assesses the |
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property for purposes of ad valorem taxation under Section 20, |
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Article VIII, Texas Constitution. |
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Sec. 209.0043. RIGHT TO VOTE. A provision of a dedicatory |
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instrument that would disqualify a property owner from voting in an |
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association election of board members or on any matter concerning |
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the rights or responsibilities of the owner is void. |
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Sec. 209.0044. BOARD MEMBERSHIP. (a) A provision of a |
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dedicatory instrument that restricts a property owner's right to |
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run for a position on the board of the property owners' association |
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is void. |
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(b) A property owners' association board may make |
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information available to members of the association regarding a |
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candidate for a position on the board regarding: |
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(1) any amount owed to the association by the |
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candidate that is six months or more overdue; |
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(2) any violation of a restrictive covenant of which |
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notice was delivered to a board candidate under Section 209.006 |
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more than 30 days before the date of the election; and |
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(3) any lawsuits to which both the property owners' |
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association or any of its directors or agents and the board |
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candidate are a party. |
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SECTION 6. Section 209.005, Property Code, is amended by |
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amending Subsection (a) and adding Subsection (c) to read as |
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follows: |
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(a) A property owners' association shall make the books and |
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records of the association, including financial records, |
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reasonably available to an owner in accordance with Section B, |
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Article 2.23, Texas Non-Profit Corporation Act (Article 1396-2.23, |
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Vernon's Texas Civil Statutes), or a successor to that statute. |
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(c) If a property owners' association subject to Subsection |
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(a) fails to comply with Subsection (a), an owner may seek one or |
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more of the following remedies: |
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(1) a court order directing the property owners' |
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association to provide the required information; |
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(2) a judgment against the property owners' |
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association for a penalty of not more than $1,500; |
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(3) a judgment against the property owners' |
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association for court costs and attorney's fees incurred in |
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connection with seeking a remedy under this section; or |
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(4) a judgment authorizing the owner or the owner's |
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assignee to deduct the amounts awarded under Subdivisions (2) and |
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(3) from any future regular or special assessments payable to the |
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property owners' association. |
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SECTION 7. Section 209.006, Property Code, is amended by |
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amending Subsection (b) and adding Subsections (c) and (d) to read |
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as follows: |
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(b) The notice must: |
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(1) describe the violation or property damage that is |
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the basis for the suspension action, charge, or fine and state any |
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amount due the association from the owner; [and] |
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(2) inform the owner that the owner: |
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(A) is entitled to a reasonable period to cure |
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the violation and avoid the fine or suspension unless the owner was |
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given notice and a reasonable opportunity to cure a similar |
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violation within the preceding six months; and |
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(B) may request a hearing under Section 209.007 |
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on or before the 30th day after the date notice was delivered to the |
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owner; and |
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(3) specify a date certain by which the owner must cure |
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the violation [receives the notice]. |
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(c) Notice under Subsection (b) must be personally |
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delivered, sent by certified mail with a return receipt requested, |
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or delivered by the United States Postal Service with signature |
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confirmation service to the owner at the owner's last known address |
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as shown on the association's records. |
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(d) The date specified in the notice under Subsection (b)(3) |
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must provide a reasonable period for the owner to cure the |
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violation. |
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SECTION 8. Chapter 209, Property Code, is amended by adding |
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Sections 209.0061 through 209.0064 and Section 209.0091 to read as |
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follows: |
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Sec. 209.0061. ASSESSMENT OF FINES. (a) A fine assessed by |
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the property owners' association must be reasonable in the context |
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of the nature, frequency, and effect of the violation. If the |
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association allows fines for a continuing violation to accumulate |
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against a lot or an owner, the association must establish a maximum |
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fine amount for a continuing violation at which point the total fine |
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amount is capped. |
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(b) If a lot occupant other than the owner violates a |
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provision of the dedicatory instrument, the property owners' |
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association, in addition to exercising any of the association's |
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powers against the owner, may assess a fine directly against the |
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nonowner occupant in the same manner as provided for an owner but |
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may not require payment from both the owner and a nonowner occupant |
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for the same violation. |
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(c) If the property owners' association assesses a fine |
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against a nonowner occupant under this section, the notice |
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provisions of Section 209.006 and the hearing provisions of Section |
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209.007 apply to the nonowner occupant in the same manner as those |
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provisions apply to an owner. |
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Sec. 209.0062. ALTERNATIVE PAYMENT SCHEDULE FOR CERTAIN |
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ASSESSMENTS. (a) A property owners' association shall adopt |
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reasonable guidelines to establish an alternative payment schedule |
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by which an owner may make partial payments to the property owners' |
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association for delinquent regular or special assessments or any |
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other amount owed to the association. |
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(b) A property owners' association is not required to allow |
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a payment plan that extends more than 12 months from the date of the |
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owner's request for a payment plan or to enter into a payment plan |
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with an owner who failed to honor the terms of a previous payment |
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plan. |
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(c) The property owners' association shall file the |
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association's guidelines under this section in the real property |
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records of each county in which the subdivision is located. |
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Sec. 209.0063. PRIORITY OF PAYMENTS. Unless otherwise |
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provided in writing by the property owner, a payment received by a |
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property owners' association from the owner shall be applied to the |
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owner's debt in the following order of priority: |
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(1) any delinquent assessment; |
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(2) any current assessment; |
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(3) any attorney's fees incurred by the association |
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associated solely with assessments or any other charge that could |
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provide the basis for foreclosure; |
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(4) any fines assessed by the association; |
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(5) any attorney's fees incurred by the association |
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that are not subject to Subdivision (3); and |
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(6) any other amount owed to the association. |
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Sec. 209.0064. COLLECTIONS. A property owners' association |
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must bring suit or otherwise initiate against an owner a collection |
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action authorized by the dedicatory instruments or other law on or |
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before the 10th anniversary of the date on which the cause of action |
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for collection of the debt accrues. Section 16.004, Civil Practice |
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and Remedies Code, does not apply to the collection of a debt owed |
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by an owner to a property owners' association. |
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Sec. 209.0091. JUDICIAL FORECLOSURE REQUIRED. (a) Except |
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as provided by Subsection (b), a property owners' association may |
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not foreclose a property owners' association's assessment lien |
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unless the association first obtains a court judgment foreclosing |
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the lien and providing for issuance of an order of sale. |
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(b) Judicial foreclosure is not required under this section |
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if the owner of the property that is subject to foreclosure agrees |
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in writing to waive judicial foreclosure under this section. |
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SECTION 9. Section 209.010(a), Property Code, is amended to |
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read as follows: |
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(a) A property owners' association that conducts a |
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foreclosure sale of an owner's lot must send to the lot owner not |
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later than the 30th day after the date of the foreclosure sale: |
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(1) a written notice stating the date and time the sale |
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occurred and informing the lot owner of the owner's right to redeem |
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the property under Section 209.011; and |
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(2) a copy of Section 209.011. |
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SECTION 10. Section 211.002(a), Property Code, is amended |
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to read as follows: |
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(a) This chapter applies only to a residential real estate |
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subdivision or any unit or parcel of a subdivision to which another |
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chapter in this title that provides a procedure under which a |
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subdivision's restrictions may be amended does not apply [located
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in whole or in part within an unincorporated area of a county if the
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county has a population of less than 65,000]. |
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SECTION 11. Section 202.004(c), Property Code, is repealed. |
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SECTION 12. (a) Section 5.006(a), Property Code, as amended |
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by this Act, and the repeal by this Act of Section 202.004(c), |
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Property Code, apply only to an action filed on or after the |
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effective date of this Act. An action filed before the effective |
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date of this Act is governed by the law in effect immediately before |
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the effective date of this Act, and that law is continued in effect |
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for that purpose. |
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(b) Section 5.012, Property Code, as amended by this Act, |
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applies only to a sale of property that occurs on or after the |
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effective date of this Act. For the purposes of this section, a |
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sale of property occurs before the effective date of this Act if the |
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executory contract binding the purchaser to purchase the property |
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is executed before that date. A sale of property that occurs before |
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the effective date of this Act is governed by the law in effect |
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immediately before that date, and that law is continued in effect |
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for that purpose. |
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(c) Sections 202.008, 202.010, 209.0043, and 209.0044(a), |
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Property Code, as added by this Act, apply to a deed restriction |
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enacted before, on, or after the effective date of this Act. |
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(d) Section 209.005(c), Property Code, as added by this Act, |
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applies only to a property owners' association's failure to comply |
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with Section 209.005(a), Property Code, on or after the effective |
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date of this Act. A property owners' association's failure to |
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comply with that section before the effective date of this Act is |
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governed by the law in effect immediately before the effective date |
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of this Act, and that law is continued in effect for that purpose. |
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(e) Sections 209.0061, 209.0062, and 209.0064, Property |
|
Code, as added by this Act, apply only to an assessment or other |
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debt that becomes due on or after the effective date of this Act. An |
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assessment or other debt that becomes due before the effective date |
|
of this Act is governed by the law in effect immediately before the |
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effective date of this Act, and that law is continued in effect for |
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that purpose. |
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(f) Section 209.0063, Property Code, as added by this Act, |
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applies only to a payment received by a property owners' |
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association on or after the effective date of this Act. A payment |
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received by a property owners' association before the effective |
|
date of this Act is governed by the law in effect immediately before |
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the effective date of this Act, and that law is continued in effect |
|
for that purpose. |
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(g) Section 209.0091, Property Code, as added by this Act, |
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applies only to foreclosure of a lien that attaches on or after the |
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effective date of this Act. Foreclosure of a lien that attaches |
|
before the effective date of this Act is governed by the law in |
|
effect immediately before that date, and that law is continued in |
|
effect for that purpose. |
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SECTION 13. This Act takes effect January 1, 2010. |