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INTRODUCED
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HOUSE COMMITTEE
SUBSTITUTE
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SECTION 1. Section 82.002(c),
Property Code, is amended to read as follows:
(c) This section and the
following sections apply to a condominium in this state for which the
declaration was recorded before January 1, 1994: Sections 82.005, 82.006,
82.007, 82.053, 82.054, 82.102(a)(1)-(7) and (12)-(21) [(12)-(22)],
82.108, 82.111, 82.113, 82.114, 82.116, 82.118, 82.157, and 82.161. The
definitions prescribed by Section 82.003 apply to a condominium in this
state for which the declaration was recorded before January 1, 1994, to the
extent the definitions do not conflict with the declaration. The sections
listed in this subsection apply only with respect to events and
circumstances occurring on or after January 1, 1994, and do not invalidate
existing provisions of the declaration, bylaws, or plats or plans of a
condominium for which the declaration was recorded before January 1, 1994.
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SECTION 1. Section 82.002(c),
Property Code, is amended to read as follows:
(c) This section and the
following sections apply to a condominium in this state for which the
declaration was recorded before January 1, 1994: Sections 82.005, 82.006,
82.007, 82.053, 82.054, 82.102(a)(1)-(7), (a)(12)-(21), (f), and (g)
[and (12)-(22)], 82.108, 82.111, 82.113, 82.114, 82.116, 82.118,
82.157, and 82.161. The definitions prescribed by Section 82.003 apply to a
condominium in this state for which the declaration was recorded before
January 1, 1994, to the extent the definitions do not conflict with the
declaration. The sections listed in this subsection apply only with respect
to events and circumstances occurring on or after January 1, 1994, and do
not invalidate existing provisions of the declaration, bylaws, or plats or
plans of a condominium for which the declaration was recorded before
January 1, 1994.
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SECTION 2. Section 82.003(a),
Property Code, is amended by adding Subdivision (11-a) to read as follows:
(11-a) "Dedicatory
instrument" means each document governing the establishment,
maintenance, or operation of a condominium regime. The term includes a
declaration or similar instrument subjecting real property to:
(A) restrictive covenants,
bylaws, or similar instruments governing the administration or operation of
a unit owners' association;
(B) properly adopted rules
and regulations of the unit owners' association; or
(C) all lawful amendments
to the covenants, bylaws, instruments, rules, or regulations.
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SECTION 2. Section 82.003(a),
Property Code, is amended by amending Subdivision (11) and adding
Subdivision (11-a) to read as follows:
(11)
"Declaration" means an [a recorded] instrument,
however denominated, that creates a condominium, and any [recorded]
amendment to that instrument.
(11-a) "Dedicatory
instrument" means each document governing the establishment,
maintenance, or operation of a condominium regime. The term includes a
declaration or similar instrument subjecting real property to:
(A) restrictive covenants,
bylaws, or similar instruments governing the administration or operation of
a unit owners' association;
(B) properly adopted rules
and regulations of the unit owners' association; or
(C) all lawful amendments
to the covenants, bylaws, instruments, rules, or regulations.
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SECTION 3. Section 82.102,
Property Code, is amended by amending Subsection (a) and adding Subsections
(f) and (g) 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 in accordance with
Subsection (d), 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) Except as provided by
Subsection (g), the association by resolution of the board of directors
may:
(1) borrow money; and
(2) assign as collateral
for the loan authorized by the resolution:
(A) the association's
right to future income, including the right to receive assessments; and
(B) the association's lien
rights.
(g) If a dedicatory
instrument requires a vote of members of the association to borrow money or
assign the association's right to future income or the association's lien
rights, the loan or assignment must be approved as provided by the
dedicatory instrument. If the dedicatory
instrument does not provide voting procedures, the board may
determine whether a vote for that purpose may be cast electronically, by
absentee ballot, in person or by proxy at a meeting called for that
purpose, or by written consent. If votes are
cast by written consent and a lower approval threshold is not
provided by the dedicatory instrument, approval requires the consent of
owners holding 67 percent of all voting interests. If votes are cast by another method and a lower approval threshold is
not provided by the dedicatory instrument, approval requires 67 percent of
all votes cast.
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SECTION 3. Section 82.102,
Property Code, is amended by amending Subsection (a) and adding Subsections
(f) and (g) 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 in accordance with
Subsection (d), 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) Except as provided by
Subsection (g), the association by resolution of the board of directors
may:
(1) borrow money; and
(2) assign as collateral
for the loan authorized by the resolution:
(A) the association's
right to future income, including the right to receive assessments; and
(B) the association's lien
rights.
(g) If a dedicatory
instrument requires a vote of members of the association to borrow money or
assign the association's right to future income or the association's lien
rights, the loan or assignment must be approved as provided by the dedicatory
instrument.
The board may determine
whether a vote for that purpose may be cast electronically, by absentee
ballot, in person or by proxy at a meeting called for that purpose, or by
written consent. If a lower approval threshold is not provided by the
dedicatory instrument, approval requires the consent of owners holding 67
percent of all voting interests.
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SECTION 4. Section 82.111,
Property Code, is amended by amending Subsections (c), (i), and (j) and
adding Subsections (k), (l), and (m) 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
maintained under Subsection (a) may provide for commercially reasonable
deductibles as the board determines 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) Except as provided by
this section, any [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. Each
owner of a unit may vote, regardless of whether the owner's unit or limited
common element has been damaged or destroyed. A vote may be cast
electronically or by written ballot, including
an absentee ballot, if a meeting is not held for that purpose or in
person or by proxy at a meeting called for that purpose. 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. Except
as provided by this section, the [The] cost of repair or
replacement in excess of the insurance proceeds [and reserves] is a
common expense, and the board may levy an assessment to pay the expenses
in accordance with each owner's allocated
interest. 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.
(j) If the cost to repair
damage to a unit or common element covered by the association's insurance
is less than the amount of the applicable insurance deductible, the party
who would be responsible for the repair in the absence of insurance shall
pay the cost for the repair of the unit or common element.
(k) If the association's
insurance provides coverage for the loss and the cost to repair the damage
to a unit or common element is more than the amount of the applicable
insurance deductible, the dedicatory instruments determine payment for the
cost of the association's deductible and costs incurred before insurance
proceeds are available. If the dedicatory instruments are silent, the board
of directors of the association by resolution shall determine the payment
of those costs, or if the board does not approve a resolution, the costs
are a common expense. A resolution under this subsection is considered a
dedicatory instrument and must be recorded in each location in which the
declaration is recorded.
(l) If damage to a unit or
the common elements is due wholly or partly to an act or omission of any
unit owner or a guest or invitee of the unit owner, the association may
assess the deductible expense and any other expense in excess of insurance
proceeds against the owner and the owner's unit.
(m) The provisions of
this section may be varied or waived if all the units in a condominium are
restricted to nonresidential use.
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SECTION 4. Section 82.111,
Property Code, is amended by amending Subsections (c), (i), and (j) and
adding Subsections (k), (l), and (m) 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
maintained under Subsection (a) may provide for commercially reasonable
deductibles as the board determines 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) Except as provided by
this section, any [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. Each
owner of a unit may vote, regardless of whether the owner's unit or limited
common element has been damaged or destroyed. A vote may be cast
electronically or by written ballot if a meeting is not held for that
purpose or in person or by proxy at a meeting called for that purpose. 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. Except as provided by this section, the [The]
cost of repair or replacement in excess of the insurance proceeds [and
reserves] is a common expense, and the board may levy an assessment
to pay the expenses in accordance with each owner's common expense liability. 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 in
accordance with each owner's undivided interest in the common elements
unless otherwise provided in the declaration [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.
(j) If the cost to repair
damage to a unit or common element covered by the association's insurance
is less than the amount of the applicable insurance deductible, the party
who would be responsible for the repair in the absence of insurance shall
pay the cost for the repair of the unit or common element.
(k) If the association's
insurance provides coverage for the loss and the cost to repair the damage
to a unit or common element is more than the amount of the applicable
insurance deductible, the dedicatory instruments determine payment for the
cost of the association's deductible and costs incurred before insurance
proceeds are available. If the dedicatory instruments are silent, the board
of directors of the association by resolution shall determine the payment
of those costs, or if the board does not approve a resolution, the costs
are a common expense. A resolution under this subsection is considered a
dedicatory instrument and must be recorded in each location in which the
declaration is recorded.
(l) If damage to a unit or
the common elements is due wholly or partly to an act or omission of any
unit owner or a guest or invitee of the unit owner, the association may
assess the deductible expense and any other expense in excess of insurance
proceeds against the owner and the owner's unit.
(m) The provisions of
this section may be varied or waived if all the units in a condominium are
restricted to nonresidential use.
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SECTION 5. Section 82.113(g),
Property Code, is amended.
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SECTION 5. Same as introduced
version.
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SECTION 6. Section 82.116,
Property Code, is amended by adding Subsection (a-1) to read as follows:
(a-1) The county clerk shall file a management certificate in the
real property records of the county under the label "Condominium
Association Management Certificate" and organize the certificates in a
manner that is easily accessible and searchable by the public.
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SECTION 6. Section 82.116,
Property Code, is amended by adding Subsections (a-1) and (a-2) to read as
follows:
(a-1) The county clerk of each county in which a management
certificate is filed as required by this section shall record the
management certificate in the real property records of the county and index
the document as a "Condominium Association Management Certificate."
(See Subdivision (a-2)
below.)
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SECTION 7. (a) The change in
law made by this Act to Section 82.111, Property Code, applies only to
payment of costs incurred on or after the effective date of this Act. Payment
of costs incurred 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
subject to the law in effect immediately before the effective date of this
Act, and that law is continued in effect for that purpose.
(c)
Each condominium unit owners' association that recorded a management
certificate under Section 82.116, Property Code, before the effective date
of this Act shall record a new management certificate under that section on
or before January 1, 2014.
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SECTION 7. (a) The change in
law made by this Act to Section 82.111, Property Code, applies only to
payment of costs incurred on or after the effective date of this Act. Payment
of costs incurred 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
subject to the law in effect immediately before the effective date of this
Act, and that law is continued in effect for that purpose.
(a-2) To ensure that all management certificates are recorded and
indexed as provided by Subsection (a-1), each condominium unit owners'
association that recorded a management certificate under this section
before September 1, 2013, shall record a new management certificate on or
before January 1, 2014. This subsection expires January 1, 2015.
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SECTION 8. This Act takes
effect September 1, 2013.
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SECTION 8. Same as introduced
version.
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