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A BILL TO BE ENTITLED
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AN ACT
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relating to the ability of a property owners' association to |
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contract with an association board member or certain other persons |
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or entities associated with the board member. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 209.002, Property Code, is amended by |
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adding Subdivision (4-a) to read as follows: |
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(4-a) "Development period" means a period stated in a |
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declaration during which a declarant reserves: |
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(A) a right to facilitate the development, |
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construction, and marketing of the subdivision; and |
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(B) a right to direct the size, shape, and |
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composition of the subdivision. |
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SECTION 2. Chapter 209, Property Code, is amended by adding |
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Section 209.0052 to read as follows: |
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Sec. 209.0052. ASSOCIATION CONTRACTS. (a) This section |
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does not apply to a contract entered into by an association during |
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the development period. |
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(b) An association may enter into an enforceable contract |
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with a current association board member, a person related to a |
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current association board member within the third degree by |
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consanguinity or affinity, as determined under Chapter 573, |
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Government Code, a company in which a current association board |
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member has a financial interest in at least 51 percent of profits, |
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or a company in which a person related to a current association |
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board member within the third degree by consanguinity or affinity, |
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as determined under Chapter 573, Government Code, has a financial |
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interest in at least 51 percent of profits only if the following |
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conditions are satisfied: |
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(1) the board member, relative, or company bids on the |
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proposed contract and the association has received at least two |
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other bids for the contract from persons not associated with the |
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board member, relative, or company, if reasonably available in the |
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community; |
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(2) the board member: |
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(A) is not given access to the other bids; |
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(B) does not participate in any board discussion |
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regarding the contract; and |
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(C) does not vote on the award of the contract; |
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(3) the material facts regarding the relationship or |
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interest with respect to the proposed contract are disclosed to or |
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known by the association board and the board, in good faith and with |
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ordinary care, authorizes the contract by an affirmative vote of |
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the majority of the board members who do not have an interest |
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governed by this subsection; and |
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(4) the association board certifies that the other |
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requirements of this subsection have been satisfied by a resolution |
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approved by an affirmative vote of the majority of the board members |
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who do not have an interest governed by this subsection. |
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SECTION 3. The change in law made by this Act applies only |
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to a contract entered into on or after the effective date of this |
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Act. |
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SECTION 4. This Act takes effect September 1, 2013. |
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