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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 82.003(a)(11), Property Code, is amended |
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to read as follows: |
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(11) "Declaration" means an [a recorded] instrument, |
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however denominated, that creates a condominium, and any [recorded] |
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amendment to that instrument. |
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SECTION 2. Section 82.102, Property Code, is amended by |
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amending Subsection (a) and adding Subsection (f) to read as |
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follows: |
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(a) Unless otherwise provided by the declaration, the |
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association, acting through its board, may: |
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(1) adopt and amend bylaws; |
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(2) adopt and amend budgets for revenues, |
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expenditures, and reserves, and collect assessments for common |
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expenses from unit owners; |
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(3) hire and terminate managing agents and other |
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employees, agents, and independent contractors; |
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(4) institute, defend, intervene in, settle, or |
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compromise litigation or administrative proceedings in its own name |
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on behalf of itself or two or more unit owners on matters affecting |
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the condominium; |
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(5) make contracts and incur liabilities relating to |
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the operation of the condominium; |
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(6) regulate the use, maintenance, repair, |
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replacement, modification, and appearance of the condominium; |
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(7) adopt and amend rules regulating the use, |
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occupancy, leasing or sale, maintenance, repair, modification, and |
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appearance of units and common elements, to the extent the |
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regulated actions affect common elements or other units; |
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(8) cause additional improvements to be made as a part |
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of the common elements; |
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(9) acquire, hold, encumber, and convey in its own |
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name any right, title, or interest to real or personal property, |
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except common elements of the condominium; |
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(10) grant easements, leases, licenses, and |
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concessions through or over the common elements; |
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(11) impose and receive payments, fees, or charges for |
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the use, rental, or operation of the common elements and for |
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services provided to unit owners; |
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(12) impose interest and late charges for late |
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payments of assessments, returned check charges, and, if notice and |
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an opportunity to be heard are given, reasonable fines for |
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violations of the declaration, bylaws, and rules of the |
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association; |
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(13) adopt and amend rules regulating the collection |
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of delinquent assessments and the application of payments; |
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(14) adopt and amend rules regulating the termination |
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of utility service to a unit, the owner of which is delinquent in |
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the payment of an assessment that is used, in whole or in part, to |
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pay the cost of that utility; |
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(15) impose reasonable charges for preparing, |
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recording, or copying declaration amendments, resale certificates, |
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or statements of unpaid assessments; |
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(16) enter a unit for bona fide emergency purposes |
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when conditions present an imminent risk of harm or damage to the |
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common elements, another unit, or the occupants; |
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(17) [assign its right to future income, including the
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right to receive common expense assessments, but only to the extent
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the declaration so provides;
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[(18)] suspend the voting privileges of or the use of |
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certain general common elements by an owner delinquent for more |
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than 30 days in the payment of assessments; |
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(18) [(19)] purchase insurance and fidelity bonds it |
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considers appropriate or necessary; |
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(19) [(20)] exercise any other powers conferred by the |
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declaration or bylaws; |
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(20) [(21)] exercise any other powers that may be |
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exercised in this state by a corporation of the same type as the |
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association; and |
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(21) [(22)] exercise any other powers necessary and |
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proper for the government and operation of the association. |
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(f) The association by resolution of the board of directors |
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may borrow money unless prohibited by the declaration, certificate |
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of formation, bylaws, or rules. If the board of directors approves |
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a resolution under this subsection, the association may assign the |
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association's right to future income, including the right to |
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receive common expense assessments and assign the association's |
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lien rights, as collateral for the loan authorized by the |
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resolution. The association shall comply with any member approval |
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requirement in the association's declaration, certificate of |
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formation, bylaws, or rules for borrowing money, except that not |
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more than 67 percent of all outstanding votes are required to |
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approve an authorization to borrow money. |
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SECTION 3. Sections 82.111(c) and (i), Property Code, are |
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amended to read as follows: |
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(c) If the insurance described by Subsections (a) and (b) is |
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not reasonably available, the association shall cause notice of |
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that fact to be delivered or mailed to all unit owners and |
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lienholders. The declaration may require the association to carry |
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any other insurance, and the association in any event may carry any |
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other insurance the board considers appropriate to protect the |
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condominium, the association, or the unit owners. Insurance |
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policies carried under Subsections (a) and (b) may provide for |
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deductibles as the board considers appropriate or necessary. This |
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section does not affect the right of a holder of a mortgage on a unit |
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to require a unit owner to acquire insurance in addition to that |
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provided by the association. |
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(i) Any portion of the condominium for which insurance is |
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required that is damaged or destroyed shall be promptly repaired or |
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replaced by the association unless the condominium is terminated, |
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repair or replacement would be illegal under any state or local |
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health or safety statute or ordinance, or at least 80 percent of the |
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unit owners, including each owner of a unit or assigned limited |
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common element that will not be rebuilt or repaired, vote to not |
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rebuild. A vote to not rebuild does not increase an insurer's |
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liability to loss payment obligation under a policy, and the vote |
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does not cause a presumption of total loss. Costs of repair or |
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replacement incurred before any insurance proceeds are available |
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that are within the association's deductible, or that are in excess |
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of the insurance proceeds and reserves, shall be paid as determined |
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by resolution of the board of directors of the association, or, if |
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the board does not approve a resolution, the costs are a common |
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expense. A resolution regarding payment of costs under this |
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subsection is considered a dedicatory instrument and must be |
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recorded in accordance with Section 202.006. [The cost of repair or
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replacement in excess of the insurance proceeds and reserves is a
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common expense.] If the entire condominium is not repaired or |
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replaced, any insurance proceeds attributable to the damaged common |
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elements shall be used to restore the damaged area to a condition |
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compatible with the remainder of the condominium, the insurance |
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proceeds attributable to units and limited common elements that are |
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not rebuilt shall be distributed to the owners of those units and |
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the owners of the units to which those limited common elements were |
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assigned, or to their mortgagees, as their interests may appear, |
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and the remainder of the proceeds shall be distributed to all the |
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unit owners as their interests may appear. If the unit owners vote |
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to not rebuild any unit, that unit's allocated interests shall be |
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automatically reallocated on the vote as if the unit had been |
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condemned, and the association shall prepare, execute, and record |
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an amendment to the declaration reflecting the reallocation. |
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Section 82.068 governs the distribution of insurance proceeds if |
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the condominium is terminated. |
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SECTION 4. Section 82.113(g), Property Code, is amended to |
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read as follows: |
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(g) The owner of a unit [used for residential purposes and] |
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purchased [by an association] at a foreclosure sale of the |
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association's lien for assessments may redeem the unit not later |
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than the 90th day after the date of the foreclosure sale. If the |
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association is the purchaser [To redeem the unit], the owner must |
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pay to the association to redeem the unit all amounts due the |
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association at the time of the foreclosure sale, interest from the |
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date of foreclosure sale to the date of redemption at the rate |
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provided by the declaration for delinquent assessments, reasonable |
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attorney's fees, and all costs incurred by the association in |
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foreclosing the lien and in connection with the redemption process, |
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any assessment levied against the unit by the association after the |
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foreclosure sale, and any reasonable cost incurred by the |
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association as owner of the unit, including costs of maintenance, |
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[and] leasing, mortgage payments, taxes, and insurance. If a party |
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other than the association is the purchaser of the unit at the |
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foreclosure sale, the redeeming owner must pay to the purchaser an |
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amount equal to the amount bid at the sale, interest on the bid |
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amount computed from the date of the foreclosure sale to the date of |
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redemption at the rate of six percent, any assessment paid by the |
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purchaser after the date of foreclosure, and any reasonable costs |
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incurred by the purchaser as the owner of the unit, including costs |
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of maintenance, leasing, mortgage payments, taxes, and insurance. |
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The redeeming owner must also pay to the association all |
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assessments that are due as of the date of the redemption and |
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reasonable attorney's fees and all costs incurred by the |
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association in foreclosing the lien. On redemption, the purchaser |
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of the unit at the foreclosure sale [association] shall execute a |
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deed with special warranty to the redeeming unit owner. The |
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exercise of the right of redemption is not effective against a |
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subsequent purchaser or lender for value without notice of the |
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redemption after the redemption period expires unless the redeeming |
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unit owner records the deed from the purchaser of the unit at the |
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foreclosure sale [association] or an affidavit stating that the |
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owner has exercised the right of redemption. A unit that has been |
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redeemed remains subject to all liens and encumbrances on the unit |
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before foreclosure. All rents and other income collected from the |
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unit by the purchaser of the unit at the foreclosure sale |
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[association] from the date of foreclosure sale to the date of |
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redemption belong to the purchaser of the unit at the foreclosure |
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sale [association], but the rents and income shall be credited |
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against the redemption amount. The purchaser of [An association
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purchasing] a unit at a sale foreclosing an association's |
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assessment [its] lien may not transfer ownership of the unit during |
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the redemption period to a person other than a redeeming owner. |
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SECTION 5. Section 202.004, Property Code, is amended by |
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adding Subsections (d) and (e) to read as follows: |
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(d) In evaluating an alleged or potential violation of a |
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restrictive covenant, a property owners' association board or |
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another person with a right or duty to enforce a dedicatory |
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instrument may, notwithstanding any provision in a dedicatory |
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instrument, elect to not enforce the restrictive covenant if the |
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board or other person, in the board's or other person's reasonable |
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judgment, determines: |
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(1) the association's or other person's position is |
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not sufficiently strong to justify taking any action or further |
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action; |
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(2) the provision alleged to have been violated may be |
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inconsistent with applicable law; |
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(3) the alleged violation is not of such a material or |
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visible nature as to be objectionable to a reasonable person or to |
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justify expending the property owners' association's or other |
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person's resources; |
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(4) enforcement of the provision is not in the |
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association's or other person's best interests, based on hardship, |
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expense, or other reasonable criteria; or |
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(5) the facts of the particular circumstances, such as |
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topography of the owner's land or unforeseen circumstances unique |
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to the particular owner, justify the election to not enforce the |
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restrictive covenant. |
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(e) An election to not enforce a restrictive covenant under |
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Subsection (d) may not be considered a waiver of authority to |
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enforce any dedicatory instrument provision in the future. |
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SECTION 6. Section 207.003, Property Code, is amended by |
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amending Subsections (a), (b), (c), and (f) and adding Subsection |
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(a-1) to read as follows: |
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(a) Not later than the 10th business day after the date a |
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written request for subdivision information is received from an |
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owner or an[,] owner's agent, a purchaser of property in a |
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subdivision or the purchaser's agent, or a title insurance company |
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or its agent acting on behalf of the owner or purchaser, the |
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property owners' association shall deliver to the owner or the[,] |
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owner's agent, the purchaser or the purchaser's agent, or the title |
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insurance company or its agent: |
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(1) a current copy of the restrictions applying to the |
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subdivision; |
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(2) a current copy of the bylaws and rules of the |
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property owners' association; and |
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(3) a resale certificate that complies with Subsection |
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(b). |
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(a-1) For a request from a purchaser of property in a |
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subdivision or the purchaser's agent, the property owners' |
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association may require the purchaser or purchaser's agent to |
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provide to the association, before the association delivers the |
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items listed in Subsection (a), reasonable evidence that the |
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purchaser has a contractual or other right to acquire property in |
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the subdivision. |
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(b) A resale certificate under Subsection (a) must: |
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(1) be in writing; |
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(2) be issued, signed, and dated by an officer or |
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authorized agent of the property owners' association; and |
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(3) contain: |
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(A) [(1)] a statement of any right of first |
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refusal, other than a right of first refusal that is prohibited by |
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statute, and any [or] other restraint contained in the restrictions |
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or restrictive covenants that restricts the owner's right to |
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transfer the owner's property; |
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(B) [(2)] the frequency and amount of any regular |
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assessments; |
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(C) [(3)] the amount of any special assessment |
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that has been approved as of [is due after] the date the resale |
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certificate is prepared; |
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(D) [(4)] the total of all amounts due and unpaid |
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to the property owners' association that are attributable to the |
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owner's property; |
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(E) [(5)] capital expenditures, if any, approved |
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by the property owners' association for the property owners' |
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association's current fiscal year; |
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(F) [(6)] the amount of reserves, if any, for |
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capital expenditures; |
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(G) [(7)] the property owners' association's |
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current operating budget and balance sheet; |
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(H) [(8)] the total of any unsatisfied judgments |
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against the property owners' association; |
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(I) [(9)] the style and cause number of any |
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pending lawsuit in which the property owners' association is a |
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defendant, other than a lawsuit relating to unpaid property taxes |
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of an individual member of the association; |
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(J) [(10)] a copy of a certificate of insurance |
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showing the property owners' association's property and liability |
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insurance relating to the common areas and common facilities; |
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(K) [(11)] a description of any conditions on the |
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owner's property that the property owners' association board has |
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actual knowledge are in violation of the restrictions applying to |
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the subdivision or the bylaws or rules of the property owners' |
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association; |
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(L) [(12)] a summary or copy of notices received |
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by the 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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(M) [(13)] the amount of any administrative |
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transfer fee charged by the property owners' association for a |
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change of ownership of property in the subdivision; |
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(N) [(14)] the name, mailing address, and |
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telephone number of the property owners' association's managing |
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agent, if any; [and] |
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(O) [(15)] a statement indicating whether the |
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restrictions allow foreclosure of a property owners' association's |
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lien on the owner's property for failure to pay assessments; and |
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(P) 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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(c) A property owners' association may charge a reasonable |
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fee to assemble, copy, and deliver the information required by this |
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section and may charge a reasonable fee to prepare and deliver an |
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update of a resale certificate under Subsection (f). The person |
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requesting a resale certificate or an update of a resale |
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certificate is responsible for the payment of any fee charged for |
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the resale certificate or the update of the certificate. |
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(f) Not later than the seventh business day after the date a |
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written request for an update of [to] a resale certificate |
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delivered under Subsection (a) is received from a person entitled |
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to request a resale certificate under Subsection (a) [an owner,
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owner's agent, or title insurance company or its agent acting on
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behalf of the owner], the property owners' association shall |
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deliver to the requestor [owner, owner's agent, or title insurance
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company or its agent] an updated resale certificate that contains |
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the following information: |
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(1) if a right of first refusal or other restraint on |
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sale is contained in the restrictions, a statement of whether the |
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property owners' association waives the restraint on sale; |
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(2) the status of any unpaid special assessments, |
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dues, or other payments attributable to the owner's property; and |
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(3) any changes to the information provided in the |
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resale certificate issued under Subsection (a). |
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SECTION 7. Section 209.002, Property Code, is amended by |
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amending Subdivisions (3), (5), and (9) and adding Subdivision |
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(3-a) to read as follows: |
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(3) "Declarant" means: |
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(A) any person or group of persons acting in |
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concert that: |
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(i) as part of a common promotional plan, |
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offers to dispose of the person's or group's interest in a |
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subdivision; and |
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(ii) files a declaration; and |
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(B) one or more successors to a person or group |
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described by Paragraph (A) to whom the person's or group's rights as |
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a declarant under the declaration are transferred by a written |
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instrument evidencing the transfer that is recorded in the real |
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property records of each county in which the declaration is |
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recorded. |
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(3-a) "Declaration" means an instrument filed in the |
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real property records of a county that creates the original |
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[includes] restrictive covenants for a [governing a residential] |
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subdivision, as amended or supplemented. |
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(5) "Lot" means any designated parcel of land [located
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in a residential subdivision], including any improvements on the |
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designated parcel. |
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(9) "Residential subdivision" or "subdivision" means |
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a subdivision, planned unit development, townhouse regime, or |
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similar planned development in which all land has been divided into |
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two or more lots [parts] and is subject to restrictions that: |
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(A) limit a majority of the land subject to the |
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dedicatory instruments, excluding streets, common areas, and |
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public areas, to residential use for single-family homes, |
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townhomes, or duplexes only; |
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(B) are recorded in the real property records of |
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the county in which the residential subdivision is located; and |
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(C) require membership in a property owners' |
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association that has authority to impose regular or special |
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assessments on the property in the subdivision. |
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SECTION 8. Section 209.003, Property Code, is amended by |
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amending Subsection (d) and adding Subsection (e) to read as |
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follows: |
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(d) This chapter does not apply to a condominium development |
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governed wholly or partly by Chapter 82. |
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(e) The following provisions of this chapter do not apply to |
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a property owners' association that is a mixed use master |
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association that existed before January 1, 1974, and that does not |
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have the authority under a dedicatory instrument or other governing |
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document to impose fines: |
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(1) Section 209.005; |
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(2) Section 209.0051; |
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(3) Section 209.006; and |
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(4) Section 209.0062. |
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SECTION 9. Chapter 209, Property Code, is amended by adding |
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Section 209.0041 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, or a mixed-use |
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subdivision that contains residential units, in which property |
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owners 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. For purposes of this |
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subsection, "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; and |
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(2) a right to direct the size, shape, and composition |
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of the subdivision. |
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(d) Subject to Section 209.013, the declaration and any |
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subsequently enacted declarations may be amended at any time on a |
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vote of at least 67 percent of the total votes entitled to be cast |
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with respect to the declaration amendment. If the declaration |
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provides a lower percentage, the percentage in the declaration |
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controls. During the development period, amendments to the |
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declaration require the joinder of the developer. |
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(e) This section does not preclude amendment of a |
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declaration under other statutory authority. |
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SECTION 10. Section 209.005, Property Code, is amended to |
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read as follows: |
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Sec. 209.005. ASSOCIATION RECORDS. (a) Except as provided |
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by Subsection (b) or Section 209.003, this section applies to all |
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property owners' associations and controls over other law not |
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specifically applicable to a property owners' association. |
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(b) This section does not apply to a property owners' |
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association that is subject to Chapter 552, Government Code, by |
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application of Section 552.0036, Government Code. |
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(c) Notwithstanding a provision in a dedicatory instrument, |
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a [A] property owners' association shall make the books and records |
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of the association, including financial records, open to and |
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reasonably available for examination by [to] an owner, a person |
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designated in a writing signed by the owner as the owner's agent, or |
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an owner's attorney or certified public accountant, in accordance |
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with this section. An owner is entitled to obtain from the |
|
association copies of information contained in the books and |
|
records [Section B, Article 2.23, Texas Non-Profit Corporation Act
|
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(Article 1396-2.23, Vernon's Texas Civil Statutes)]. |
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(d) Except as provided by this subsection, an [(a-1)
A
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property owners' association described by Section 552.0036(2),
|
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Government Code, shall make the books and records of the
|
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association, including financial records, reasonably available to
|
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any person requesting access to the books or records in accordance
|
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with Chapter 552, Government Code.
Subsection (a) does not apply to
|
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a property owners' association to which this subsection applies.
|
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[(b) An] attorney's files and records relating to the |
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association, excluding invoices requested by an owner under Section |
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209.008(d), are not[:
|
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[(1)] records of the association and are not[;
|
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[(2)] subject to inspection by the owner[;] or |
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[(3) subject to] production in a legal proceeding. If |
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a document in an attorney's files and records relating to the |
|
association would be responsive to a legally authorized request to |
|
inspect or copy association documents, the document shall be |
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produced by using the copy from the attorney's files and records if |
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the association has not maintained a separate copy of the document. |
|
This subsection does not require production of a document that |
|
constitutes attorney work product or that is privileged as an |
|
attorney-client communication. |
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(e) An owner or the owner's authorized representative |
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described by Subsection (c) must submit a written request for |
|
access or information under Subsection (c) by certified mail, with |
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sufficient detail describing the association's books and records |
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requested, to the mailing address of the association or authorized |
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representative as reflected on the most current management |
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certificate filed under Section 209.004. The request must contain |
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an election either to inspect the books and records before |
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obtaining copies or to have the property owners' association |
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forward copies of the requested books and records and: |
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(1) if an inspection is requested, the association, on |
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or before the 10th business day after the date the association |
|
receives the request, shall send written notice of dates during |
|
normal business hours that the owner may inspect the requested |
|
books and records to the extent those books and records are in the |
|
possession, custody, or control of the association; or |
|
(2) if copies of identified books and records are |
|
requested, the association shall, to the extent those books and |
|
records are in the possession, custody, or control of the |
|
association, produce the requested books and records for the |
|
requesting party on or before the 10th business day after the date |
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the association receives the request, except as otherwise provided |
|
by this section. |
|
(f) If the property owners' association is unable to produce |
|
the books or records requested under Subsection (e) on or before the |
|
10th business day after the date the association receives the |
|
request, the association must provide to the requestor written |
|
notice that: |
|
(1) informs the requestor that the association is |
|
unable to produce the information on or before the 10th business day |
|
after the date the association received the request; and |
|
(2) states a date by which the information will be sent |
|
or made available for inspection to the requesting party that is not |
|
later than the 15th business day after the date notice under this |
|
subsection is given. |
|
(g) If an inspection is requested or required, the |
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inspection shall take place at a mutually agreed on time during |
|
normal business hours, and the requesting party shall identify the |
|
books and records for the association to copy and forward to the |
|
requesting party. |
|
(h) A property owners' association may produce books and |
|
records requested under this section in hard copy, electronic, or |
|
other format reasonably available to the association. |
|
(i) A property owners' association board must adopt a |
|
records production and copying policy that prescribes the costs the |
|
association will charge for the compilation, production, and |
|
reproduction of information requested under this section. The |
|
prescribed charges may include all reasonable costs of materials, |
|
labor, and overhead, but may not exceed the costs that would be |
|
applicable for an item under 70 T.A.C. Section 70.3. Labor costs |
|
and overhead costs related to inspection of documents may not |
|
exceed 1-1/2 times the applicable amount prescribed by 70 T.A.C. |
|
Section 70.3. The policy required by this subsection must be |
|
recorded as a dedicatory instrument in accordance with Section |
|
202.006. An association may not charge an owner for the |
|
compilation, production, or reproduction of information requested |
|
under this section unless the policy prescribing those costs has |
|
been recorded as required by this subsection. An owner is |
|
responsible for costs related to the compilation, production, and |
|
reproduction of the requested information in the amounts prescribed |
|
by the policy adopted under this subsection. The association may |
|
require advance payment of the estimated costs of compilation, |
|
production, and reproduction of the requested information. If the |
|
estimated costs are lesser or greater than the actual costs, the |
|
association shall submit a final invoice to the owner on or before |
|
the 30th business day after the date the information is delivered to |
|
the requestor. If the final invoice includes additional amounts |
|
due from the owner, the additional amounts, if not reimbursed to the |
|
association before the 30th business day after the date the invoice |
|
is sent to the owner, may be added to the owner's account as an |
|
assessment. If the estimated costs exceeded the final invoice |
|
amount, the owner is entitled to a refund, and the refund shall be |
|
issued to the owner not later than the 30th business day after the |
|
date the invoice is sent to the owner. |
|
(j) A property owners' association must estimate costs |
|
under this section using amounts prescribed by the policy adopted |
|
under Subsection (i). |
|
(k) Except as provided by Subsection (l) and to the extent |
|
the information is provided in meeting minutes, the association is |
|
not required to release or allow inspection of any books or records |
|
that identify the dedicatory instrument violation history of an |
|
individual owner of an association, an owner's personal financial |
|
information, including records of payment or nonpayment of amounts |
|
due the association, an owner's contact information, other than the |
|
owner's address, or information related to an employee of the |
|
association, including personnel files. Information may be |
|
released in an aggregate or summary manner that would not identify |
|
an individual property owner. |
|
(l) The books and records described by Subsection (k) shall |
|
be released or made available for inspection if: |
|
(1) the express written approval of the owner whose |
|
records are the subject of the request for inspection is provided to |
|
the association; or |
|
(2) a court orders the release of the books and records |
|
or orders that the books and records be made available for |
|
inspection. |
|
(m) A property owners' association composed of more than 14 |
|
lots shall adopt and comply with a document retention policy that |
|
includes, at a minimum, the following requirements: |
|
(1) certificates of formation, bylaws, restrictive |
|
covenants, and all amendments to the certificates of formation, |
|
bylaws, and covenants shall be retained permanently; |
|
(2) financial books and records shall be retained for |
|
seven years; |
|
(3) account records of current owners shall be |
|
retained for five years; |
|
(4) contracts with a term of one year or more shall be |
|
retained for four years after the expiration of the contract term; |
|
(5) minutes of meetings of the owners and the board |
|
shall be retained for seven years; and |
|
(6) tax returns and audit records shall be retained |
|
for seven years. |
|
(n) A member of a property owners' association who is denied |
|
access to or copies of association books or records to which the |
|
member is entitled under this section may file a petition with the |
|
justice of the peace of a justice precinct in which all or part of |
|
the property that is governed by the association is located |
|
requesting relief in accordance with this subsection. If the |
|
justice of the peace finds that the member is entitled to access to |
|
or copies of the records, the justice of the peace may grant one or |
|
more of the following remedies: |
|
(1) a judgment ordering the property owners' |
|
association to release or allow access to the books or records; |
|
(2) a judgment against the property owners' |
|
association for court costs and attorney's fees incurred in |
|
connection with seeking a remedy under this section; or |
|
(3) a judgment authorizing the owner or the owner's |
|
assignee to deduct the amounts awarded under Subdivision (2) from |
|
any future regular or special assessments payable to the property |
|
owners' association. |
|
(o) If the property owners' association prevails in an |
|
action under Subsection (n), the association is entitled to a |
|
judgment for court costs and attorney's fees incurred by the |
|
association in connection with the action. |
|
(p) On or before the 10th business day before the date a |
|
person brings an action against a property owners' association |
|
under this section, the person must send written notice to the |
|
association of the person's intent to bring the action. The notice |
|
must: |
|
(1) be sent certified mail, return receipt requested, |
|
or delivered by the United States Postal Service with signature |
|
confirmation service; and |
|
(2) describe with sufficient detail the books and |
|
records being requested. |
|
(q) For the purposes of this section, "business day" means a |
|
day other than Saturday, Sunday, or a state or federal holiday. |
|
SECTION 11. Chapter 209, Property Code, is amended by |
|
adding Sections 209.0051, 209.0056, 209.00593, and 209.00594 to |
|
read as follows: |
|
Sec. 209.0051. OPEN BOARD MEETINGS. (a) This section does |
|
not apply to a property owners' association that is subject to |
|
Chapter 551, Government Code, by application of Section 551.0015, |
|
Government Code. |
|
(b) In this section, "board meeting" means a deliberation |
|
between a quorum of the voting board of the property owners' |
|
association, or between a quorum of the voting board and another |
|
person, during which property owners' association business is |
|
considered and the board takes formal action. The term does not |
|
include the gathering of a quorum of the board at a social function |
|
unrelated to the business of the association or the attendance by a |
|
quorum of the board at a regional, state, or national convention, |
|
ceremonial event, or press conference, if formal action is not |
|
taken and any discussion of association business is incidental to |
|
the social function, convention, ceremonial event, or press |
|
conference. |
|
(c) Regular and special board meetings must be open to |
|
owners, subject to the right of the board to adjourn a board meeting |
|
and reconvene in closed executive session to consider actions |
|
involving personnel, pending or threatened litigation, contract |
|
negotiations, enforcement actions, confidential communications |
|
with the association's attorney, matters involving the invasion of |
|
privacy of individual owners, or matters that are to remain |
|
confidential by request of the affected parties and agreement of |
|
the board. Following an executive session, any decision made in the |
|
executive session must be summarized orally and placed in the |
|
minutes, in general terms, without breaching the privacy of |
|
individual owners, violating any privilege, or disclosing |
|
information that was to remain confidential at the request of the |
|
affected parties. The oral summary must include a general |
|
explanation of expenditures approved in executive session. |
|
(c-1) Except for a meeting held by electronic or telephonic |
|
means under Subsection (h), a board meeting must be held in a county |
|
in which all or part of the property in the subdivision is located |
|
or in a county adjacent to that county. |
|
(d) The board shall keep a record of each regular or special |
|
board meeting in the form of written minutes of the meeting. The |
|
board shall make meeting records, including approved minutes, |
|
available to a member for inspection and copying on the member's |
|
written request to the property owners' association's managing |
|
agent at the address appearing on the most recently filed |
|
management certificate or, if there is not a managing agent, to the |
|
board. |
|
(e) Members shall be given notice of the date, hour, place, |
|
and general subject of a regular or special board meeting, |
|
including a general description of any matter to be brought up for |
|
deliberation in executive session. The notice shall be: |
|
(1) mailed to each property owner not later than the |
|
10th day or earlier than the 60th day before the date of the |
|
meeting; or |
|
(2) provided at least 72 hours before the start of the |
|
meeting by: |
|
(A) posting the notice in a conspicuous manner |
|
reasonably designed to provide notice to association members: |
|
(i) in a place located on the association's |
|
common property or, with the property owner's consent, on other |
|
conspicuously located privately owned property within the |
|
subdivision; or |
|
(ii) on any Internet website maintained by |
|
the association or other Internet media; and |
|
(B) sending the notice by e-mail to each owner |
|
who has registered an e-mail address with the association. |
|
(f) It is an owner's duty to keep an updated e-mail address |
|
registered with the property owners' association under Subsection |
|
(e)(2)(B). |
|
(g) If the board recesses a regular or special board meeting |
|
to continue the following regular business day, the board is not |
|
required to post notice of the continued meeting if the recess is |
|
taken in good faith and not to circumvent this section. If a |
|
regular or special board meeting is continued to the following |
|
regular business day, and on that following day the board continues |
|
the meeting to another day, the board shall give notice of the |
|
continuation in at least one manner prescribed by Subsection |
|
(e)(2)(A) within two hours after adjourning the meeting being |
|
continued. |
|
(h) A board may meet by any method of communication, |
|
including electronic and telephonic, without prior notice to owners |
|
under Subsection (e), if each director may hear and be heard by |
|
every other director, or the board may take action by unanimous |
|
written consent to consider routine and administrative matters or a |
|
reasonably unforeseen emergency or urgent necessity that requires |
|
immediate board action. The board may not, without prior notice to |
|
owners under Subsection (e), consider or vote on fines, damage |
|
assessments, initiation of foreclosure actions, initiation of |
|
enforcement actions, excluding temporary restraining orders or |
|
violations involving a threat to health or safety, increases in |
|
assessments, levying of special assessments, appeals from a denial |
|
of architectural control approval, or a suspension of a right of a |
|
particular owner before the owner has an opportunity to attend a |
|
board meeting to present the owner's position, including any |
|
defense, on the issue. Any action taken without notice to owners |
|
under Subsection (e) must be summarized orally, including an |
|
explanation of any known actual or estimated expenditures approved |
|
at the meeting, and documented in the minutes of the next regular or |
|
special board meeting. |
|
(i) This section applies to a meeting of a property owners' |
|
association board during the development period, as defined by |
|
Section 209.0041, only if the meeting is conducted for the purpose |
|
of: |
|
(1) adopting or amending the governing documents, |
|
including declarations, bylaws, rules, and regulations of the |
|
association; |
|
(2) increasing the amount of regular assessments of |
|
the association or adopting or increasing a special assessment; |
|
(3) electing non-developer board members of the |
|
association or establishing a process by which those members are |
|
elected; or |
|
(4) changing the voting rights of members of the |
|
association. |
|
(j) An action taken by a board at a meeting held in violation |
|
of this section is voidable. |
|
Sec. 209.0056. BOARD REPRESENTATION. The declaration may |
|
provide for a period of declarant control of the association during |
|
which period a declarant, or persons designated by the declarant, |
|
may appoint and remove members of the board and the officers of the |
|
association. Regardless of the period of declarant control |
|
prescribed by the declaration, at least one-third of the board |
|
members must be elected by owners other than the declarant on or |
|
before the 120th day after the date on which 75 percent of the lots |
|
that may be created and made subject to the declaration are conveyed |
|
to owners other than a declarant. If the declaration does not |
|
include the number of lots that may be created and made subject to |
|
the declaration, at least one-third of the members of the board must |
|
be elected by owners other than the declarant not later than the |
|
10th anniversary of the date the declaration was recorded. |
|
Sec. 209.00593. VOTING; QUORUM. (a) The voting rights of |
|
an owner may be cast or given: |
|
(1) in person or by proxy at a meeting of the property |
|
owners' association; |
|
(2) by absentee ballot in accordance with this |
|
section; |
|
(3) by any method of representative or delegated |
|
voting provided by a dedicatory instrument; or |
|
(4) by electronic ballot in accordance with this |
|
section. |
|
(b) Ballots, including any written or printed evidence of |
|
any vote cast or given as provided by Subsection (a), must be |
|
preserved until the period for requesting a recount under Section |
|
209.00594 has expired. |
|
(c) An absentee or electronic ballot: |
|
(1) may be counted as an owner present and voting for |
|
the purpose of establishing a quorum only for items appearing on the |
|
ballot; |
|
(2) may be withdrawn by an owner if the owner attends a |
|
meeting at which votes on the ballot items are cast; and |
|
(3) may not be counted, except for quorum purposes, on |
|
the final vote of a proposal if the motion was amended at the |
|
meeting to be different from the exact language on the absentee or |
|
electronic ballot. |
|
(d) A solicitation for votes by absentee or electronic |
|
ballot must include: |
|
(1) an absentee or electronic ballot that contains |
|
each proposed action and provides an opportunity to vote for or |
|
against each proposed action; |
|
(2) instructions for delivery of the completed |
|
absentee or electronic ballot, including the delivery location; and |
|
(3) the following language: "By casting your vote via |
|
absentee or electronic ballot you will forgo the opportunity to |
|
consider and vote on any action from the floor on these proposals, |
|
if a meeting is held. This means that if there are amendments to |
|
these proposals your votes will not be counted on the final vote on |
|
these measures. If you desire to retain this ability, please attend |
|
any meeting in person. You may submit an absentee or electronic |
|
ballot and later choose to attend any meeting in person, in which |
|
case any in-person vote will prevail." |
|
(e) For the purposes of this section, "electronic ballot" |
|
means a ballot: |
|
(1) conveyed in an electronic manner and format |
|
prescribed by the property owners' association board; |
|
(2) for which the identity of the property owner |
|
submitting the ballot can be reasonably established; and |
|
(3) for which the property owner may receive a receipt |
|
of the electronic transmission and receipt of the owner's ballot. |
|
(f) If an electronic ballot is posted on an Internet |
|
website, a notice shall be provided to each owner that contains |
|
instructions on obtaining access to the posting on the website. |
|
(g) The property owners' association board has the sole |
|
authority to prescribe or cause to be prescribed all proxy and |
|
ballot forms. |
|
(h) This section supersedes any contrary provision in a |
|
dedicatory instrument. |
|
(i) Except as provided by Subsection (j) or Section 209.003, |
|
this section applies to all property owners' associations and |
|
controls over any other law not specifically applicable to a |
|
property owners' association. |
|
(j) This section does not apply to a property owners' |
|
association that is subject to Chapter 552, Government Code, by |
|
application of Section 552.0036, Government Code. |
|
Sec. 209.00594. RECOUNT OF VOTES. (a) This section does |
|
not apply to a property owners' association that is subject to |
|
Chapter 552, Government Code, by application of Section 552.0036, |
|
Government Code. |
|
(b) Any owner may, not later than the 15th day after the date |
|
of the meeting at which the election was held, require a recount of |
|
the votes. A demand for a recount must be submitted in writing |
|
either: |
|
(1) by certified mail, return receipt requested, or by |
|
delivery by the United States Postal Service with signature |
|
confirmation service to the association's mailing address on the |
|
latest management certificate filed under Section 209.004; or |
|
(2) in person to the association's managing agent as |
|
reflected on the latest management certificate filed under Section |
|
209.004 or to the address to which absentee and proxy ballots are |
|
mailed. |
|
(c) The property owners' association shall, at the expense |
|
of the owner requesting the recount, retain for the purpose of |
|
performing the recount, the services of a person qualified to |
|
tabulate votes under this subsection. The association shall enter |
|
into a contract for the services of a person who: |
|
(1) is not a member of the association or related to a |
|
member of the association board within the third degree by |
|
consanguinity or affinity, as determined under Chapter 573, |
|
Government Code; and |
|
(2) is: |
|
(A) a current or former: |
|
(i) county judge; |
|
(ii) county elections administrator; |
|
(iii) justice of the peace; or |
|
(iv) county voter registrar; or |
|
(B) a person agreed on by the association and the |
|
persons requesting the recount. |
|
(d) Any recount under Subsection (b) must be performed on or |
|
before the 30th day after the date of receipt of a request and |
|
payment for a recount in accordance with Subsections (b) and (c). |
|
If the recount changes the results of the election, the association |
|
shall reimburse the requesting owner for the cost of the recount. |
|
The association shall provide the results of a recount to the owner |
|
requesting the recount. Any action taken by the board in the period |
|
between the initial election vote tally and the completion of the |
|
recount is not affected by any recount. |
|
SECTION 12. Section 209.006, Property Code, is amended to |
|
read as follows: |
|
Sec. 209.006. NOTICE REQUIRED BEFORE ENFORCEMENT ACTION. |
|
(a) Before a property owners' association may suspend an owner's |
|
right to use a common area, file a suit against an owner to enforce a |
|
nonmonetary obligation [other than a suit to collect a regular or
|
|
special assessment or foreclose under an association's lien], |
|
charge an owner for property damage, or levy a fine for a violation |
|
of the restrictions or bylaws or rules of the association, the |
|
association or its agent must give written notice to the owner by |
|
certified mail, return receipt requested. |
|
(b) The notice required by Subsection (a) must: |
|
(1) describe the violation or property damage that is |
|
the basis for the suspension action, charge, or fine and state any |
|
amount due the association from the owner; [and] |
|
(2) except as provided by Subsection (d), inform the |
|
owner that the owner: |
|
(A) is entitled to a reasonable period to cure |
|
the violation and avoid the fine [or suspension unless the owner was
|
|
given notice and a reasonable opportunity to cure a similar
|
|
violation within the preceding six months]; and |
|
(B) may request a hearing under Section 209.007 |
|
on or before the 30th day after the date notice was mailed to the |
|
owner; and |
|
(3) specify the date by which the owner must cure the |
|
violation if the violation is of a curable nature and does not pose |
|
a threat to public health or safety [receives the notice]. |
|
(c) The date specified in the notice under Subsection (b)(3) |
|
must provide a reasonable period of at least 30 days for the owner |
|
to cure the violation if the violation is of a curable nature. A |
|
shorter notice period is permitted in the case of a threat to public |
|
health or safety. |
|
(d) Subsections (a) and (b) do not apply to: |
|
(1) a violation for which the owner has been |
|
previously given notice under this section and the opportunity to |
|
exercise any rights available under this section in the preceding |
|
six months; or |
|
(2) a violation that is not of a curable nature. |
|
(e) If the property owner does not cure the violation in the |
|
time provided by Subsection (c) and does not request a hearing under |
|
Section 209.007 in the time provided by Subsection (b)(2)(B), the |
|
property owners' association may assess the fine and shall provide |
|
notice of the assessment to the owner. If the violation is of a |
|
curable nature and the property owner cures the violation before |
|
the expiration period for cure specified under Subsection (c), any |
|
fine assessed for the violation is void. |
|
(f) For purposes of this section, a violation is considered |
|
a threat to public health or safety if the violation could |
|
materially affect the physical health or safety of an ordinary |
|
resident. |
|
(g) Before a property owners' association may file a suit |
|
against an owner to collect a regular or special assessment or |
|
foreclose the association's lien on the owner's property, the |
|
association or the association's agent must send written notice to |
|
the owner by certified mail, return receipt requested, that: |
|
(1) describes the amount that is due the association |
|
and that must be paid to avoid further collection actions; and |
|
(2) specifies a date not earlier than the 30th day |
|
after the date the notice is sent by which the owner must cure the |
|
delinquency to avoid further collection actions. |
|
SECTION 13. Chapter 209, Property Code, is amended by |
|
adding Sections 209.0061 and 209.0062 to read as follows: |
|
Sec. 209.0061. ASSESSMENT OF FINES. A fine assessed by the |
|
property owners' association must be reasonable in the context of |
|
the nature and frequency of the violation and the effect of the |
|
violation on the subdivision as a whole. If the association allows |
|
fines for a continuing violation to accumulate against a lot or an |
|
owner, the association must establish a maximum fine amount for a |
|
continuing violation at which point the total fine amount is |
|
capped. A fine may be collected in the same manner as assessments |
|
under the dedicatory instrument. |
|
Sec. 209.0062. ALTERNATIVE PAYMENT SCHEDULE FOR CERTAIN |
|
ASSESSMENTS. (a) This section applies only to a property owners' |
|
association composed of more than 15 lots. |
|
(b) A property owners' association shall adopt reasonable |
|
guidelines to establish an alternative payment schedule by which an |
|
owner may make partial payments to the property owners' association |
|
for delinquent regular or special assessments or any other amount |
|
owed to the association without accruing additional monetary |
|
penalties. For purposes of this section, monetary penalties do not |
|
include reasonable costs associated with administering the payment |
|
plan or interest. |
|
(c) A property owners' association is not required to offer |
|
a payment plan to an owner more than once each year. The minimum |
|
term for a payment plan offered by a property owners' association is |
|
three months. A property owners' association is not required to |
|
allow a payment plan for any amount that extends more than 12 months |
|
from the date of the owner's request for a payment plan or to enter |
|
into a payment plan with an owner who failed to honor the terms of a |
|
previous payment plan during the five years following the owner's |
|
default under the previous payment plan. |
|
SECTION 14. Section 209.007(d), Property Code, is amended |
|
to read as follows: |
|
(d) The notice and hearing provisions of Section 209.006 and |
|
this section do not apply if the association files a suit seeking a |
|
temporary restraining order or temporary injunctive relief or files |
|
a suit that includes foreclosure as a cause of action. The hearing |
|
provisions of Section 209.006 and this section do not apply if the |
|
association files a suit against an owner to collect a regular or |
|
special assessment or foreclose the association's lien on an |
|
owner's property. If a suit is filed relating to a matter to which |
|
Sections 209.006 and this section [those sections] apply, a party |
|
to the suit may file a motion to compel mediation. The notice and |
|
hearing provisions of Section 209.006 and this section do not apply |
|
to a temporary suspension of a person's right to use common areas if |
|
the temporary suspension is the result of a violation that occurred |
|
in a common area and involved a significant and immediate risk of |
|
harm to others in the subdivision. The temporary suspension is |
|
effective until the board makes a final determination on the |
|
suspension action after following the procedures prescribed by this |
|
section. |
|
SECTION 15. Section 209.009, Property Code, is amended to |
|
read as follows: |
|
Sec. 209.009. FORECLOSURE SALE PROHIBITED IN CERTAIN |
|
CIRCUMSTANCES. A property owners' association may not foreclose a |
|
property owners' association's assessment lien if the debt securing |
|
the lien consists solely of: |
|
(1) fines assessed by the association; [or] |
|
(2) attorney's fees incurred by the association solely |
|
associated with fines assessed by the association; or |
|
(3) amounts added to the owner's account as an |
|
assessment under Section 209.005(i). |
|
SECTION 16. (a) Section 82.111(i), Property Code, as |
|
amended by this Act, applies only to payment of costs incurred and a |
|
resolution regarding payment of costs approved on or after the |
|
effective date of this Act. Payment of costs incurred or a |
|
resolution approved before the effective date of this Act is |
|
governed by the law in effect immediately before the effective date |
|
of this Act, and that law is continued in effect for that purpose. |
|
(b) Section 82.113(g), Property Code, as amended by this |
|
Act, applies only to a condominium unit sold at a foreclosure sale |
|
on or after the effective date of this Act. A unit sold at a |
|
foreclosure sale before the effective date of this Act is governed |
|
by the law in effect immediately before the effective date of this |
|
Act, and that law is continued in effect for that purpose. |
|
(c) Sections 207.003 and 209.005, Property Code, as amended |
|
by this Act, apply only to a request for information received by a |
|
property owners' association on or after the effective date of this |
|
Act. A request for information received by a property owners' |
|
association before the effective date of this Act is governed by the |
|
law in effect immediately before the effective date of this Act, and |
|
that law is continued in effect for that purpose. |
|
(d) Section 209.005(m), Property Code, as added by this Act, |
|
applies only with respect to books and records generated on or after |
|
the effective date of this Act. Books and records generated before |
|
the effective date of this Act are governed by the law in effect |
|
immediately before the effective date of this Act, and that law is |
|
continued in effect for that purpose. |
|
(e) Section 209.0056, Property Code, as added by this Act, |
|
applies only to a property owners' association created on or after |
|
January 1, 2012. |
|
(f) Sections 209.006 and 209.007, Property Code, as amended |
|
by this Act, apply only to an enforcement action initiated by a |
|
property owners' association on or after the effective date of this |
|
Act. An enforcement action initiated before the effective date of |
|
this Act is governed by the law in effect immediately before the |
|
effective date of this Act, and that law is continued in effect for |
|
that purpose. |
|
(g) Sections 209.0061 and 209.0062, Property Code, as added |
|
by this Act, apply only to an assessment, fine, or other debt that |
|
becomes due on or after the effective date of this Act. An |
|
assessment, fine, or other debt that becomes due before the |
|
effective date of this Act is governed by the law in effect |
|
immediately before the effective date of this Act, and that law is |
|
continued in effect for that purpose. |
|
SECTION 17. This Act takes effect January 1, 2012. |