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A BILL TO BE ENTITLED
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AN ACT
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relating to the registration, monitoring, and investigation of and |
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handling of funds by property owners' association boards; providing |
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administrative penalties. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 14.101, Finance Code, is amended to read |
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as follows: |
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Sec. 14.101. GENERAL DUTIES OF COMMISSIONER. The |
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commissioner shall enforce this chapter, Subtitles B and C of Title |
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4 of this code, [and] Chapter 394 of this code, and Chapters 82 and |
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209, Property Code, as provided by Sections 82.1033 and 209.0043, |
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Property Code, in person or through an assistant commissioner, |
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examiner, or other employee of the office. |
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SECTION 2. Section 14.201, Finance Code, is amended to read |
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as follows: |
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Sec. 14.201. INVESTIGATION AND ENFORCEMENT AUTHORITY. |
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Investigative and enforcement authority under this subchapter |
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applies only to this chapter, Subtitles B and C of Title 4 of this |
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code, [and] Chapter 394 of this code, and Chapters 82 and 209, |
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Property Code, as provided by Sections 82.1033 and 209.0043, |
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Property Code. |
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SECTION 3. Section 14.2015(a), Finance Code, is amended to |
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read as follows: |
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(a) Except as provided by Subsection (b), information or |
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material obtained or compiled by the commissioner in relation to an |
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examination or investigation by the commissioner or the |
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commissioner's representative of a license holder or registrant |
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under Subtitle B or C, Title 4, of this code, [or] Chapter 394 of |
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this code, or Chapter 82 or 209, Property Code, is confidential and |
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may not be disclosed by the commissioner or an officer or employee |
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of the Office of Consumer Credit Commissioner, including: |
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(1) information obtained from a license holder or |
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registrant under Subtitle B or C, Title 4, of this code, [or] |
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Chapter 394 of this code, or Chapter 82 or 209, Property Code; |
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(2) work performed by the commissioner or the |
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commissioner's representative on information obtained from a |
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license holder or registrant for the purposes of an examination or |
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investigation conducted under Subtitle B or C, Title 4, of this |
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code, [or] Chapter 394 of this code, or Chapter 82 or 209, Property |
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Code; |
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(3) a report on an examination or investigation of a |
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license holder or registrant conducted under Subtitle B or C, Title |
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4, of this code, [or] Chapter 394 of this code, or Chapter 82 or 209, |
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Property Code; and |
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(4) any written communications between the license |
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holder or registrant, as applicable, and the commissioner or the |
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commissioner's representative relating to or referencing an |
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examination or investigation conducted under Subtitle B or C, Title |
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4, of this code, [or] Chapter 394 of this code, or Chapter 82 or 209, |
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Property Code. |
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SECTION 4. Section 14.202(a), Finance Code, is amended to |
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read as follows: |
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(a) On receipt of a written complaint or other reasonable |
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cause to believe that a person is violating a statute listed by |
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Section 14.201, the commissioner may require the person to furnish |
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information regarding a specific loan, retail transaction, or |
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business practice or the person's performance of a duty described |
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by Section 82.1033 or 209.0043, Property Code, to which the |
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violation relates. |
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SECTION 5. Section 82.003(a), Property Code, is amended by |
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adding Subdivisions (4-a) and (4-b) to read as follows: |
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(4-a) "Commission" means the Finance Commission of |
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Texas. |
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(4-b) "Commissioner" means the consumer credit |
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commissioner. |
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SECTION 6. Subchapter C, Chapter 82, Property Code, is |
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amended by adding Sections 82.1031, 82.1032, 82.1033, 82.1034, and |
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82.1035 to read as follows: |
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Sec. 82.1031. BOARD REGISTRATION REQUIRED. (a) A board of |
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a unit owners' association may not act on behalf of the association |
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unless the board is registered with the commissioner as provided by |
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this section. |
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(b) An application for registration must contain: |
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(1) the information required to be included in a |
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management certificate under Section 82.116; and |
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(2) any other information required by the commission |
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by rule. |
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(c) An applicant shall promptly supplement or amend an |
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application to report any material mistake or omission or any |
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actual or expected change in any document or information contained |
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in the application. |
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(d) The application must be sworn to and accompanied by an |
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initial registration fee in an amount set by the commission by rule. |
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Sec. 82.1032. RENEWAL OF REGISTRATION. A unit owners' |
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association board must renew the board's registration annually by |
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filing a report with the commissioner. The report must be in a form |
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prescribed by the commission by rule and: |
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(1) be accompanied by a renewal fee in an amount set by |
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the commission by rule; |
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(2) contain a financial statement for the unit owners' |
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association for the fiscal year preceding the date the report is |
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filed; |
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(3) disclose the total amount of assessments received |
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by the association during the 12 months preceding the date of the |
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renewal report from or on behalf of unit owners; |
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(4) disclose, to the best of the registrant's |
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knowledge, the gross funds accumulated during the 12 months |
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preceding the date of the renewal report by the association; and |
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(5) provide any other information that the |
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commissioner reasonably requires in order to perform the |
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commissioner's duty under this section. |
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Sec. 82.1033. MONITORING AND INVESTIGATION BY |
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COMMISSIONER. (a) The commissioner shall receive written |
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complaints against any person or unit owners' association board |
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with respect to a violation of Section 82.1034. |
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(b) If the commissioner receives a written complaint |
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against a person or unit owners' association board under this |
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section or otherwise has reasonable cause to believe that a person |
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or unit owners' association board has breached or is breaching a |
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fiduciary duty arising from Section 82.1034, the commissioner shall |
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investigate the person or unit owners' association board. |
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(c) Following an investigation conducted under Subsection |
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(b), if the commissioner finds that a person or unit owners' |
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association board has breached or is breaching a fiduciary duty |
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arising from Section 82.1034, the commissioner shall issue a cease |
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and desist order and, if applicable, impose an administrative |
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penalty, as provided by Section 14.208, Finance Code. |
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(d) Except as provided by this section, this chapter does |
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not authorize the commissioner to issue a cease and desist order or |
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take other affirmative action against a person or unit owners' |
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association board for any reason, including a complaint arising |
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from the imposition of an assessment or the foreclosure of a lien. |
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Sec. 82.1034. DEPOSITORY ACCOUNT. (a) Within a reasonable |
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time after receipt, a unit owners' association board shall deposit |
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all money paid to the board by or on behalf of a unit owner pursuant |
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to an assessment for common expenses with a financial institution |
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in a depository account established for the benefit of the |
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association and insured by the Federal Deposit Insurance |
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Corporation. The board, on the commissioner's request, shall |
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inform the commissioner of the name, business address, and |
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telephone number of the financial institution at which the board |
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maintains the account under this section and the account number of |
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the account. |
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(b) Money held in a depository account by a unit owners' |
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association board is the property of the association and not of the |
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board or the board's designee. |
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(c) A unit owners' association board shall disburse money |
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paid by or on behalf of a unit owner only to pay for common expenses |
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as provided by the declaration, articles of incorporation, bylaws, |
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or rules of the association. |
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(d) A unit owners' association board may not commingle money |
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in a depository account established under this section with money |
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of other persons. |
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(e) A unit owners' association board shall annually |
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reconcile a depository account under this section. If the board or |
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the board's designee has more than one depository account, each |
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depository account must be individually reconciled. |
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(f) If a unit owners' association board discovers, or has a |
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reasonable suspicion of, embezzlement or other unlawful |
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appropriation of money held in a depository account under this |
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section, the board immediately shall notify the commissioner by a |
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method approved by the commission by rule. Unless the commission by |
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rule provides otherwise, the board shall notify the commissioner of |
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remedial action that the board intends to take with regard to the |
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unlawful appropriation or suspected unlawful appropriation not |
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later than the fifth day after the date on which the board notifies |
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the commissioner of the appropriation. |
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(g) On the commissioner's request, a unit owners' |
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association board shall, before transferring a depository account |
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from one financial institution to another, inform the commissioner |
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of the name, business address, and telephone number of the |
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institution to which the account will be transferred and, as soon as |
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practicable after the transfer of a depository account under this |
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subsection, inform the commissioner of the account number at the |
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transferee institution. |
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Sec. 82.1035. REGULATION BY CONSUMER CREDIT COMMISSIONER: |
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EXEMPTION. Sections 82.1031, 82.1032, 82.1033, and 82.1034 do not |
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apply to a unit owners' association that consists of 15 or fewer |
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units. |
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SECTION 7. Section 209.002, Property Code, is amended by |
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adding Subdivisions (2-a) and (2-b) to read as follows: |
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(2-a) "Commission" means the Finance Commission of |
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Texas. |
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(2-b) "Commissioner" means the consumer credit |
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commissioner. |
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SECTION 8. Chapter 209, Property Code, is amended by adding |
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Sections 209.0041, 209.0042, 209.0043, 209.0044, and 209.0045 to |
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read as follows: |
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Sec. 209.0041. BOARD REGISTRATION REQUIRED. (a) A board of |
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a property owners' association may not act on behalf of the |
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association unless the board is registered with the commissioner as |
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|
provided by this section. |
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(b) An application for registration must contain: |
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(1) the information required to be included in a |
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management certificate under Section 209.004; and |
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(2) any other information required by the commission |
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by rule. |
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(c) An applicant shall promptly supplement or amend an |
|
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application to report any material mistake or omission or any |
|
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actual or expected change in any document or information contained |
|
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in the application. |
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(d) The application must be sworn to and accompanied by an |
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initial registration fee in an amount set by the commission by rule. |
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Sec. 209.0042. RENEWAL OF REGISTRATION. A property owners' |
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association board must renew the board's registration annually by |
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filing a report with the commissioner. The report must be in a form |
|
|
prescribed by the commission by rule and: |
|
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(1) be accompanied by a renewal fee in an amount set by |
|
|
the commission by rule; |
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(2) contain a financial statement for the property |
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owners' association for the fiscal year preceding the date the |
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renewal report is filed; |
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(3) disclose the total amount of assessments received |
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by the association during the 12 months preceding the date of the |
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renewal report from or on behalf of property owners; |
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(4) disclose, to the best of the registrant's |
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knowledge, the gross funds accumulated during the 12 months |
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preceding the date of the renewal report by the association; and |
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(5) provide any other information that the |
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commissioner reasonably requires in order to perform the |
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commissioner's duty under this section. |
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Sec. 209.0043. MONITORING AND INVESTIGATION BY |
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COMMISSIONER. (a) The commissioner shall receive written |
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complaints against any person or property owners' association board |
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with respect to a violation of Section 209.0044. |
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(b) If the commissioner receives a written complaint |
|
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against a person or property owners' association board under this |
|
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section or otherwise has reasonable cause to believe that a person |
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or property owners' association board has breached or is breaching |
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a fiduciary duty arising from Section 209.0044, the commissioner |
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shall investigate the person or property owners' association board. |
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(c) Following an investigation conducted under Subsection |
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(b), if the commissioner finds that a person or property owners' |
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association board has breached or is breaching a fiduciary duty |
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arising from Section 209.0044, the commissioner shall issue a cease |
|
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and desist order and, if applicable, impose an administrative |
|
|
penalty, as provided by Section 14.208, Finance Code. |
|
|
(d) Except as provided by this section, this chapter does |
|
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not authorize the commissioner to issue a cease and desist order or |
|
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take other affirmative action against a person or property owners' |
|
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association board for any reason, including a complaint arising |
|
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from the imposition of an assessment or the foreclosure of a lien. |
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Sec. 209.0044. DEPOSITORY ACCOUNT. (a) Within a |
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reasonable time after receipt, a property owners' association board |
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shall deposit all money paid to the board by or on behalf of a |
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property owner pursuant to an assessment for common expenses with a |
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financial institution in a depository account established for the |
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benefit of the association and insured by the Federal Deposit |
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Insurance Corporation. The board, on the commissioner's request, |
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shall inform the commissioner of the name, business address, and |
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telephone number of the financial institution at which the board |
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maintains the account under this section and the account number of |
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the account. |
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(b) Money held in a depository account by a property owners' |
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association board is the property of the association and not of the |
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board or the board's designee. |
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(c) A property owners' association board shall disburse |
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money paid by or on behalf of an owner only to pay for common |
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expenses as provided by the dedicatory instruments of the |
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association. |
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(d) A property owners' association board may not commingle |
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money in a depository account established under this section with |
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money of other persons. |
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(e) A property owners' association board shall annually |
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reconcile a depository account under this section. If the board or |
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the board's designee has more than one depository account, each |
|
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depository account must be individually reconciled. |
|
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(f) If a property owners' association board discovers, or |
|
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has a reasonable suspicion of, embezzlement or other unlawful |
|
|
appropriation of money held in a depository account under this |
|
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section, the board immediately shall notify the commissioner by a |
|
|
method approved by the commission by rule. Unless the commission by |
|
|
rule provides otherwise, the board shall notify the commissioner of |
|
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remedial action that the board intends to take with regard to the |
|
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unlawful appropriation or suspected unlawful appropriation not |
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later than the fifth day after the date on which the board notifies |
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the commissioner of the appropriation. |
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(g) On the commissioner's request, a property owners' |
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association board shall, before transferring a depository account |
|
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from one financial institution to another, inform the commissioner |
|
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of the name, business address, and telephone number of the |
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institution to which the account will be transferred and, as soon as |
|
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practicable after the transfer of a depository account under this |
|
|
subsection, inform the commissioner of the account number at the |
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transferee institution. |
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|
Sec. 209.0045. REGULATION BY CONSUMER CREDIT COMMISSIONER: |
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EXEMPTION. Sections 209.0041, 209.0042, 209.0043, and 209.0044 do |
|
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not apply to a property owners' association that consists of 15 or |
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fewer lots or units. |
|
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SECTION 9. (a) The changes in law made by this Act apply to |
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a unit owners' association or property owners' association |
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regardless of whether the unit owners' association or property |
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owners' association was created before, on, or after the effective |
|
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date of this Act. |
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(b) The changes in law made by this Act apply to a unit |
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owners' association or property owners' association beginning |
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January 1, 2012. |
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SECTION 10. This Act takes effect September 1, 2011. |