82R12452 AJA-F

By: Deshotel H.B. No. 3347

A BILL TO BE ENTITLED

AN ACT

relating to the operation of property owners' associations.

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

SECTION 1. Section 82.003(11), Property Code, is amended to read as follows:

(11) "Declaration" means an [a recorded] instrument, however denominated, that creates a condominium, and any [recorded] amendment to that instrument.

SECTION 2. Section 82.102, Property Code, is amended by amending Subsection (a) and adding Subsection (f) to read as follows:

(a) Unless otherwise provided by the declaration, the association, acting through its board, may:

(1) adopt and amend bylaws;

(2) adopt and amend budgets for revenues, expenditures, and reserves, and collect assessments for common expenses from unit owners;

(3) hire and terminate managing agents and other employees, agents, and independent contractors;

(4) institute, defend, intervene in, settle, or compromise litigation or administrative proceedings in its own name on behalf of itself or two or more unit owners on matters affecting the condominium;

(5) make contracts and incur liabilities relating to the operation of the condominium;

(6) regulate the use, maintenance, repair, replacement, modification, and appearance of the condominium;

(7) adopt and amend rules regulating the use, occupancy, leasing or sale, maintenance, repair, modification, and appearance of units and common elements, to the extent the regulated actions affect common elements or other units;

(8) cause additional improvements to be made as a part of the common elements;

(9) acquire, hold, encumber, and convey in its own name any right, title, or interest to real or personal property, except common elements of the condominium;

(10) grant easements, leases, licenses, and concessions through or over the common elements;

(11) impose and receive payments, fees, or charges for the use, rental, or operation of the common elements and for services provided to unit owners;

(12) impose interest and late charges for late payments of assessments, returned check charges, and, if notice and an opportunity to be heard are given, reasonable fines for violations of the declaration, bylaws, and rules of the association;

(13) adopt and amend rules regulating the collection of delinquent assessments and the application of payments;

(14) adopt and amend rules regulating the termination of utility service to a unit, the owner of which is delinquent in the payment of an assessment that is used, in whole or in part, to pay the cost of that utility;

(15) impose reasonable charges for preparing, recording, or copying declaration amendments, resale certificates, or statements of unpaid assessments;

(16) enter a unit for bona fide emergency purposes when conditions present an imminent risk of harm or damage to the common elements, another unit, or the occupants;

(17) [assign its right to future income, including the right to receive common expense assessments, but only to the extent the declaration so provides;

[(18)] suspend the voting privileges of or the use of certain general common elements by an owner delinquent for more than 30 days in the payment of assessments;

(18) [(19)] purchase insurance and fidelity bonds it considers appropriate or necessary;

(19) [(20)] exercise any other powers conferred by the declaration or bylaws;

(20) [(21)] exercise any other powers that may be exercised in this state by a corporation of the same type as the association; and

(21) [(22)] exercise any other powers necessary and proper for the government and operation of the association.

(f) The association by resolution of the board of directors may borrow money unless prohibited by the declaration, certificate of formation, bylaws, or rules. If the board of directors approves a resolution under this subsection, the association may assign the association's right to future income, including the right to receive common expense assessments and assign the association's lien rights, as collateral for the loan authorized by the resolution. The association shall comply with any member approval requirement in the association's declaration, certificate of formation, bylaws, or rules for borrowing money, except that not more than 67 percent of all outstanding votes are required to approve an authorization to borrow money.

SECTION 3. Sections 82.111(c) and (i), Property Code, are amended to read as follows:

(c) If the insurance described by Subsections (a) and (b) is not reasonably available, the association shall cause notice of that fact to be delivered or mailed to all unit owners and lienholders. The declaration may require the association to carry any other insurance, and the association in any event may carry any other insurance the board considers appropriate to protect the condominium, the association, or the unit owners. Insurance policies carried under Subsections (a) and (b) may provide for deductibles as the board considers appropriate or necessary. This section does not affect the right of a holder of a mortgage on a unit to require a unit owner to acquire insurance in addition to that provided by the association.

(i) Any portion of the condominium for which insurance is required that is damaged or destroyed shall be promptly repaired or replaced by the association unless the condominium is terminated, repair or replacement would be illegal under any state or local health or safety statute or ordinance, or at least 80 percent of the unit owners, including each owner of a unit or assigned limited common element that will not be rebuilt or repaired, vote to not rebuild. A vote to not rebuild does not increase an insurer's liability to loss payment obligation under a policy, and the vote does not cause a presumption of total loss. Costs of repair or replacement incurred before any insurance proceeds are available that are within the association's deductible, or that are in excess of the insurance proceeds and reserves, shall be paid as determined by resolution of the board of directors of the association, or, if the board does not approve a resolution, the costs are a common expense. A resolution regarding payment of costs under this subsection is considered a dedicatory instrument and must be recorded in accordance with Section 202.006. [The cost of repair or replacement in excess of the insurance proceeds and reserves is a common expense.] If the entire condominium is not repaired or replaced, any insurance proceeds attributable to the damaged common elements shall be used to restore the damaged area to a condition compatible with the remainder of the condominium, the insurance proceeds attributable to units and limited common elements that are not rebuilt shall be distributed to the owners of those units and the owners of the units to which those limited common elements were assigned, or to their mortgagees, as their interests may appear, and the remainder of the proceeds shall be distributed to all the unit owners as their interests may appear. If the unit owners vote to not rebuild any unit, that unit's allocated interests shall be automatically reallocated on the vote as if the unit had been condemned, and the association shall prepare, execute, and record an amendment to the declaration reflecting the reallocation. Section 82.068 governs the distribution of insurance proceeds if the condominium is terminated.

SECTION 4. Section 82.113(g), Property Code, is amended to read as follows:

(g) The owner of a unit [used for residential purposes and] purchased [by an association] at a foreclosure sale of the association's lien for assessments may redeem the unit not later than the 90th day after the date of the foreclosure sale. If the association is the purchaser [To redeem the unit], the owner must pay to the association to redeem the unit all amounts due the association at the time of the foreclosure sale, interest from the date of foreclosure sale to the date of redemption at the rate provided by the declaration for delinquent assessments, reasonable attorney's fees, and all costs incurred by the association in foreclosing the lien and in connection with the redemption process, any assessment levied against the unit by the association after the foreclosure sale, and any reasonable cost incurred by the association as owner of the unit, including costs of maintenance, [and] leasing, mortgage payments, taxes, and insurance. If a party other than the association is the purchaser of the unit at the foreclosure sale, the redeeming owner must pay to the purchaser an amount equal to the amount bid at the sale, interest on the bid amount computed from the date of the foreclosure sale to the date of redemption at the rate of six percent, any assessment paid by the purchaser after the date of foreclosure, and any reasonable costs incurred by the purchaser as the owner of the unit, including costs of maintenance, leasing, mortgage payments, taxes, and insurance. The redeeming owner must also pay to the association all assessments that are due as of the date of the redemption and reasonable attorney's fees and all costs incurred by the association in foreclosing the lien. On redemption, the purchaser of the unit at the foreclosure sale [association] shall execute a deed with special warranty to the redeeming unit owner. The exercise of the right of redemption is not effective against a subsequent purchaser or lender for value without notice of the redemption after the redemption period expires unless the redeeming unit owner records the deed from the purchaser of the unit at the foreclosure sale [association] or an affidavit stating that the owner has exercised the right of redemption. A unit that has been redeemed remains subject to all liens and encumbrances on the unit before foreclosure. All rents and other income collected from the unit by the purchaser of the unit at the foreclosure sale [association] from the date of foreclosure sale to the date of redemption belong to the purchaser of the unit at the foreclosure sale [association], but the rents and income shall be credited against the redemption amount. The purchaser of [An association purchasing] a unit at a sale foreclosing an association's assessment [its] lien may not transfer ownership of the unit during the redemption period to a person other than a redeeming owner.

SECTION 5. Section 202.004, Property Code, is amended by adding Subsections (d) and (e) to read as follows:

(d) In evaluating an alleged or potential violation of a restrictive covenant, a property owners' association board or another person with a right or duty to enforce a dedicatory instrument may, notwithstanding any provision in a dedicatory instrument, elect to not enforce the restrictive covenant if the board or other person, in the board's or other person's reasonable judgment, determines:

(1) the association's or other person's position is not sufficiently strong to justify taking any action or further action;

(2) the provision alleged to have been violated may be inconsistent with applicable law;

(3) the alleged violation is not of such a material or visible nature as to be objectionable to a reasonable person or to justify expending the property owners' association's or other person's resources;

(4) enforcement of the provision is not in the association's or other person's best interests, based on hardship, expense, or other reasonable criteria; or

(5) the facts of the particular circumstances, such as topography of the owner's land or unforeseen circumstances unique to the particular owner, justify the election to not enforce the restrictive covenant.

(e) An election to not enforce a restrictive covenant under Subsection (d) may not be considered a waiver of authority to enforce any dedicatory instrument provision in the future.

SECTION 6. Section 207.003, Property Code, is amended by amending Subsections (a), (b), (c), and (f) and adding Subsection (a-1) to read as follows:

(a) Not later than the 10th business day after the date a written request for subdivision information is received from an owner or an[,] owner's agent, a purchaser of property in a subdivision or the purchaser's agent, or a title insurance company or its agent acting on behalf of the owner or purchaser, the property owners' association shall deliver to the owner or the[,] owner's agent, the purchaser or the purchaser's agent, or the title insurance company or its agent:

(1) a current copy of the restrictions applying to the subdivision;

(2) a current copy of the bylaws and rules of the property owners' association; and

(3) a resale certificate that complies with Subsection (b).

(a-1) For a request from a purchaser of property in a subdivision or the purchaser's agent, the property owners' association may require the purchaser or purchaser's agent to provide to the association, before the association delivers the items listed in Subsection (a), reasonable evidence that the purchaser has a contractual or other right to acquire property in the subdivision.

(b) A resale certificate under Subsection (a) must:

(1) be in writing;

(2) be issued, signed, and dated by an officer or authorized agent of the property owners' association; and

(3) contain:

(A) [(1)] a statement of any right of first refusal, other than a right of first refusal that is prohibited by statute, and any [or] other restraint contained in the restrictions or restrictive covenants that restricts the owner's right to transfer the owner's property;

(B) [(2)] the frequency and amount of any regular assessments;

(C) [(3)] the amount of any special assessment that has been approved as of [is due after] the date the resale certificate is prepared;

(D) [(4)] the total of all amounts due and unpaid to the property owners' association that are attributable to the owner's property;

(E) [(5)] capital expenditures, if any, approved by the property owners' association for the property owners' association's current fiscal year;

(F) [(6)] the amount of reserves, if any, for capital expenditures;

(G) [(7)] the property owners' association's current operating budget and balance sheet;

(H) [(8)] the total of any unsatisfied judgments against the property owners' association;

(I) [(9)] the style and cause number of any pending lawsuit in which the property owners' association is a defendant, other than a lawsuit relating to unpaid property taxes of an individual member of the association;

(J) [(10)] a copy of a certificate of insurance showing the property owners' association's property and liability insurance relating to the common areas and common facilities;

(K) [(11)] a description of any conditions on the owner's property that the property owners' association board has actual knowledge are in violation of the restrictions applying to the subdivision or the bylaws or rules of the property owners' association;

(L) [(12)] a summary or copy of notices received by the property owners' association from any governmental authority regarding health or housing code violations existing on the preparation date of the certificate relating to the owner's property or any common areas or common facilities owned or leased by the property owners' association;

(M) [(13)] the amount of any administrative transfer fee charged by the property owners' association for a change of ownership of property in the subdivision;

(N) [(14)] the name, mailing address, and telephone number of the property owners' association's managing agent, if any; [and]

(O) [(15)] a statement indicating whether the restrictions allow foreclosure of a property owners' association's lien on the owner's property for failure to pay assessments; and

(P) a statement of all fees associated with the transfer of ownership, including a description of each fee, to whom each fee is paid, and the amount of each fee.

(c) A property owners' association may charge a reasonable fee to assemble, copy, and deliver the information required by this section and may charge a reasonable fee to prepare and deliver an update of a resale certificate under Subsection (f). The person requesting a resale certificate or an update of a resale certificate is responsible for the payment of any fee charged for the resale certificate or the update of the certificate.

(f) Not later than the seventh business day after the date a written request for an update of [to] a resale certificate delivered under Subsection (a) is received from a person entitled to request a resale certificate under Subsection (a) [an owner, owner's agent, or title insurance company or its agent acting on behalf of the owner], the property owners' association shall deliver to the requestor [owner, owner's agent, or title insurance company or its agent] an updated resale certificate that contains the following information:

(1) if a right of first refusal or other restraint on sale is contained in the restrictions, a statement of whether the property owners' association waives the restraint on sale;

(2) the status of any unpaid special assessments, dues, or other payments attributable to the owner's property; and

(3) any changes to the information provided in the resale certificate issued under Subsection (a).

SECTION 7. Section 209.002, Property Code, is amended by amending Subdivisions (3), (5), and (9) and adding Subdivision (3-a) to read as follows:

(3) "Declarant" means:

(A) any person or group of persons acting in concert that:

(i) as part of a common promotional plan, offers to dispose of the person's or group's interest in a subdivision; and

(ii) files a declaration; and

(B) one or more successors to a person or group described by Paragraph (A) to whom the person's or group's rights as a declarant under the declaration are transferred by a written instrument evidencing the transfer that is recorded in the real property records of each county in which the declaration is recorded.

(3-a) "Declaration" means an instrument filed in the real property records of a county that creates the original [includes] restrictive covenants for a [governing a residential] subdivision, as amended or supplemented.

(5) "Lot" means any designated parcel of land [located in a residential subdivision], including any improvements on the designated parcel.

(9) "Residential subdivision" or "subdivision" means a subdivision, planned unit development, townhouse regime, or similar planned development in which all land has been divided into two or more lots [parts] and is subject to restrictions that:

(A) limit a majority of the land subject to the dedicatory instruments, excluding streets, common areas, and public areas, to residential use for single-family homes, townhomes, or duplexes only;

(B) are recorded in the real property records of the county in which the residential subdivision is located; and

(C) require membership in a property owners' association that has authority to impose regular or special assessments on the property in the subdivision.

SECTION 8. Section 209.003(d), Property Code, is amended to read as follows:

(d) This chapter does not apply to a condominium development governed wholly or partly by Chapter 82.

SECTION 9. Chapter 209, Property Code, is amended by adding Section 209.0041 to read as follows:

Sec. 209.0041. AMENDMENT OF DECLARATION. (a) This section applies only to a residential subdivision in which property owners are subject to mandatory regular or special assessments.

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

(c) This section does not apply to the amendment of a declaration during a development period. For purposes of this subsection, "development period" means a period stated in a declaration during which a declarant reserves:

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

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

(d) Subject to Section 209.013, the declaration and any subsequently enacted declarations may be amended at any time on a vote of at least 67 percent of the total votes entitled to be cast with respect to the declaration amendment. If the declaration provides a lower percentage, the percentage in the declaration controls. During the development period, amendments to the declaration require the joinder of the developer.

(e) This section does not preclude amendment of a declaration under other statutory authority.

SECTION 10. Section 209.005, Property Code, is amended to read as follows:

Sec. 209.005. ASSOCIATION RECORDS. (a) Except as provided by Subsection (b), this section applies to all property owners' associations and controls over other law not specifically applicable to a property owners' association.

(b) 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.

(c) Notwithstanding a provision in a dedicatory instrument, a [A] property owners' association shall make the books and records of the association, including financial records, open to and reasonably available for examination by [to] an owner, or an owner's attorney or certified public accountant, in accordance 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 (Article 1396-2.23, Vernon's Texas Civil Statutes)].

(d) [(a-1)] A property owners' association described by Section 552.0036(2), Government Code, shall make the books and records of the association, including financial records, reasonably available to any person requesting access to the books or records in accordance with Chapter 552, Government Code[. Subsection (a) does not apply to a property owners' association to which this subsection applies].

(e) [(b)] An attorney's files and records relating to the association, excluding invoices requested by an owner under Section 209.008(d), are not:

(1) records of the association;

(2) subject to inspection by the owner; or

(3) subject to production in a legal proceeding.

(f) An owner or the owner's attorney or certified public accountant must submit a written request for access or information under Subsection (c) by certified mail, with sufficient particularity detailing the association's books and records requested, to the mailing address of the association or authorized representative as reflected on the most current management certificate filed under Section 209.004. The request must contain an election either to inspect the books and records before obtaining copies or to have the property owners' association forward copies of the requested books and records and:

(1) if an inspection is requested, the association, on 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 required to be retained by the association; or

(2) if copies of identified books and records are requested, the association shall, to the extent those books and records are required to be retained by the association, produce the requested books and records for the requesting party on or before the 10th business day after the date the association receives the request, except as otherwise provided by this section.

(g) If the property owners' association is unable to produce the books or records requested under Subsection (f) 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 30th business day after the date notice under this subsection is given.

(h) If an inspection is requested or required, the 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.

(i) 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.

(j) An owner is responsible for costs related to compilation and reproduction of the requested information in an amount that reasonably includes all costs related to compilation and reproduction of the information, including costs of materials, labor, and overhead. The association may require advance payment of the estimated costs of compilation and reproduction. If the estimated costs are lesser or greater than 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.

(k) Except as provided in Subsection (l), the association is not required, other than in meeting minutes, 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 12 lots may adopt a document retention policy that supersedes this subsection. In the absence of the adoption of a document retention policy, the property owners' association shall retain books and records as follows:

(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.

SECTION 11. Chapter 209, Property Code, is amended by adding Sections 209.0051, 209.0056, and 209.00593 to read as follows:

Sec. 209.0051. OPEN BOARD MEETINGS. (a) Meetings of the board 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. The general nature of any business to be considered in executive session must first be announced at the open meeting.

(b) Unless the declaration, bylaws, or certificate of formation of the association provide otherwise:

(1) a meeting of the board may be held by any method of communication, including electronic and telephonic, if:

(A) notice of the meeting has been given as required by law;

(B) each director may hear and be heard by every other director; and

(C) the meeting does not involve voting on a fine, damage assessment, appeal from a denial of architectural control approval, or 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; and

(2) the board may act by unanimous written consent of all the directors, without a meeting, if:

(A) the board action does not involve voting on a fine, damage assessment, appeal from a denial of architectural control approval, or 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; and

(B) a record of the board action is filed with the minutes of board meetings.

(c) An association, on the written request of an owner, shall inform the owner of the time and place of the next regular or special meeting of the board. If the association representative to whom the request is made does not know the time and place of the meeting, the association promptly shall obtain the information and disclose it to the owner or inform the owner where the information may be obtained.

(d) This section does not apply to meetings of the board during a development period, as defined by Section 209.0041.

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) 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.

(c) 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."

(d) 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.

(e) 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.

(f) The property owners' association board has the sole authority to prescribe or cause to be prescribed all proxy and ballot forms.

(g) This section supersedes any contrary provision in a dedicatory instrument.

(h) Except as provided by Subsection (i), this section applies to all property owners' associations and controls over any other law not specifically applicable to a property owners' association.

(i) 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.

SECTION 12. Section 209.006, Property Code, is amended by amending Subsection (b) and adding Subsections (c), (d), (e), and (f) to read as follows:

(b) The notice 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.

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 12 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. (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) Section 209.006, Property Code, as amended by this Act, applies 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 15. This Act takes effect January 1, 2012.