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A BILL TO BE ENTITLED
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AN ACT
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relating to the operation of certain condominium unit owners' |
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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 the total votes entitled to be cast are |
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required to 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, Property Code, is amended by |
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adding Subsection (c-1) and amending Subsection (g) to read as |
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follows: |
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(c-1) A lien, lien affidavit, or other instrument |
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evidencing the nonpayment of assessments or other charges owed to |
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an association and filed in the official public records of a county |
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is a legal instrument affecting title to real property. |
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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. (a) Section 82.111(i), Property Code, as amended |
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by this Act, applies only to payment of costs incurred and a |
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resolution regarding payment of costs approved on or after the |
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effective date of this Act. Payment of costs incurred or a |
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resolution approved before the effective date of this Act is |
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governed by the law in effect immediately before the effective date |
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of this Act, and that law is continued in effect for that purpose. |
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(b) Section 82.113(c-1), Property Code, as added by this |
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Act, applies only to an instrument filed on or after the effective |
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date of this Act. An instrument filed before the effective date of |
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this Act is governed by the law applicable to the instrument |
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immediately before that date, and that law is continued in effect |
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for that purpose. |
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(c) Section 82.113(g), Property Code, as amended by this |
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Act, applies only to a condominium unit sold at a foreclosure sale |
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on or after the effective date of this Act. A unit sold at a |
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foreclosure sale before the effective date of this Act is governed |
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by the law in effect immediately before the effective date of this |
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Act, and that law is continued in effect for that purpose. |
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SECTION 6. This Act takes effect January 1, 2012. |