83R9157 AJA-D

By: Allen H.B. No. 1933

A BILL TO BE ENTITLED

AN ACT

relating to condominium association records and meetings.

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

SECTION 1. Section 81.209(b), Property Code, is amended to read as follows:

(b) Notwithstanding a provision in a declaration, master deed, or master lease, the books and records of a condominium regime, including [The] accounts and supporting vouchers and any other financial records, [of a condominium regime] shall be made available to the apartment owners in accordance with Section 81.2091 [for examination on working days at convenient, established, and publicly announced hours].

SECTION 2. Subchapter C, Chapter 81, Property Code, is amended by adding Sections 81.2091 and 81.2092 to read as follows:

Sec. 81.2091. AVAILABILITY AND RETENTION OF RECORDS. (a) This section applies to all condominium regimes and controls over other law not specifically applicable to a condominium regime.

(b) A condominium regime's council of owners shall make the books and records of the council, including financial records, open to and reasonably available for examination by an apartment owner, or a person designated in a writing signed by the owner as the owner's agent, attorney, or certified public accountant, in accordance with this section. An owner is entitled to obtain from the council copies of information contained in the books and records.

(c) Except as provided by this subsection, an attorney's files and records relating to the council of owners are not records of the council and are not subject to inspection by an apartment owner or production in a legal proceeding. If a document in an attorney's files and records relating to the council would be responsive to a legally authorized request to inspect or copy council documents, the document shall be produced by using the copy from the attorney's files and records if the council has not maintained a separate copy of the document. This subsection does not require production of a document that constitutes attorney work product or that is privileged as an attorney-client communication.

(d) An apartment owner or the owner's authorized representative described by Subsection (b) must submit a written request for access or information under Subsection (b) by certified mail, with sufficient detail describing the council of owners' books and records requested, to the mailing address of the council or the council's authorized representative. The request must contain an election either to inspect the books and records before obtaining copies or to have the council forward copies of the requested books and records and:

(1) if an inspection is requested, the council, on or before the 10th business day after the date the council receives the request, shall send written notice of dates during normal business hours that the owner may inspect the requested books and records to the extent those books and records are in the possession, custody, or control of the council; or

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

(e) If the council of owners is unable to produce the books or records requested under Subsection (d) on or before the 10th business day after the date the council receives the request, the council must provide to the requestor written notice that:

(1) informs the requestor that the council is unable to produce the information on or before the 10th business day after the date the council received the request; and

(2) states a date by which the information will be sent or made available for inspection to the requesting party that is not later than the 15th business day after the date notice under this subsection is given.

(f) 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 council of owners to copy and forward to the requesting party.

(g) A council of owners may produce books and records requested under this section in hard copy, electronic, or other format reasonably available to the council.

(h) A council of owners must adopt a records production and copying policy that prescribes the costs the council will charge for the compilation, production, and reproduction of information requested under this section. The prescribed charges may include all reasonable costs of materials, labor, and overhead but may not exceed costs that would be applicable for an item under 1 T.A.C. Section 70.3. The policy required by this subsection must be recorded as a dedicatory instrument in accordance with Section 202.006. A council of owners may not charge an apartment owner for the compilation, production, or reproduction of information requested under this section unless the policy prescribing those costs has been recorded as required by this subsection. An owner is responsible for costs related to the compilation, production, and reproduction of the requested information in the amounts prescribed by the policy adopted under this subsection. The council may require advance payment of the estimated costs of compilation, production, and reproduction of the requested information. If the estimated costs are lesser or greater than the actual costs, the council shall submit a final invoice to the owner on or before the 30th business day after the date the information is delivered. If the final invoice includes additional amounts due from the owner, the additional amounts, if not reimbursed to the council 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.

(i) A council of owners must estimate costs under this section using amounts prescribed by the policy adopted under Subsection (h).

(j) Except as provided by Subsection (k) and to the extent the information is provided in the meeting minutes, the council of owners is not required to release or allow inspection of any books or records that identify violation history of an individual apartment owner, an owner's personal financial information, including records of payment or nonpayment of amounts due the council, an owner's contact information, other than the owner's address, or information related to an employee of the council, including personnel files. Information may be released in an aggregate or summary manner that would not identify an individual property owner.

(k) The books and records described by Subsection (j) shall be released or made available for inspection if:

(1) the express written approval of the apartment owner whose records are the subject of the request for inspection is provided to the council of owners; or

(2) a court orders the release of the books and records or orders that the books and records be made available for inspection.

(l) A council of owners of a condominium regime composed of more than 14 apartments shall adopt and comply with a document retention policy that includes, at a minimum, the following requirements:

(1) certificates of formation, bylaws, restrictive covenants, including a declaration, master deed, or master lease, and all amendments to those instruments shall be retained permanently;

(2) financial books and records shall be retained for seven years;

(3) account records of current apartment 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 council of owners or the council's board of administration shall be retained for seven years; and

(6) tax returns and audit records shall be retained for seven years.

(m) A member of a council of owners who is denied access to or copies of council books or records to which the member is entitled under this section may file a petition with the justice of the peace of a justice precinct in which all or part of the property that is included in the condominium regime is located requesting relief in accordance with this subsection. If the justice of the peace finds that the member is entitled to access to or copies of the records, the justice of the peace may grant one or more of the following remedies:

(1) a judgment ordering the council to release or allow access to the books or records;

(2) a judgment against the council for court costs and attorney's fees incurred in connection with seeking a remedy under this section; or

(3) a judgment authorizing the apartment owner or the owner's assignee to deduct the amounts awarded under Subdivision (2) from any future regular or special assessments payable to the council.

(n) If the council of owners prevails in an action under Subsection (m), the council is entitled to a judgment for court costs and attorney's fees incurred by the council in connection with the action.

(o) On or before the 10th business day before the date a person brings an action against a council of owners under this section, the person must send written notice to the council of the person's intent to bring the action. The notice must:

(1) be sent certified mail, return receipt requested, or delivered by the United States Postal Service with signature confirmation service to the mailing address of the council or the council's authorized representative; and

(2) describe with sufficient detail the books and records being requested.

(p) A council of owners may not foreclose an assessment lien if the debt securing the lien consists solely of amounts added to the apartment owner's account as an assessment under Subsection (h).

(q) For the purposes of this section, "business day" means a day other than Saturday, Sunday, or a state or federal holiday.

Sec. 81.2092. MEETINGS. (a) In this section:

(1) "Board" means the board of directors or the body, regardless of name, designated to act on behalf of the council of owners.

(2) "Board meeting":

(A) means a deliberation between a quorum of the voting board of the council of owners, or between a quorum of the voting board and another person, during which council business is considered and the board takes formal action; and

(B) does not include the gathering of a quorum of the board at a social function unrelated to the business of the council or the attendance by a quorum of the board at a regional, state, or national convention, ceremonial event, or press conference, if formal action is not taken and any discussion of council business is incidental to the social function, convention, ceremonial event, or press conference.

(b) Meetings of the council of owners must be held at least once each year. Unless the declaration provides otherwise, special meetings of the council may be called by the president, a majority of the board, or apartment owners having at least 20 percent of the votes in the council.

(c) Meetings of the council and regular and special board meetings must be open to apartment owners, subject to the right of the board to adjourn a meeting of the board and reconvene in closed executive session to consider actions involving personnel, pending or threatened litigation, contract negotiations, enforcement actions, confidential communications with the council's attorney, matters involving the invasion of privacy of individual apartment owners, or matters that are to remain confidential by request of the affected parties and agreement of the board. Following an executive session, any decision made in the executive session must be summarized orally and placed in the minutes, in general terms, without breaching the privacy of individual owners, violating any privilege, or disclosing information that was to remain confidential at the request of the affected parties. The oral summary must include a general explanation of expenditures approved in executive session.

(d) Except for a meeting held by electronic or telephonic means under Subsection (i), a board meeting must be held in a county in which all or part of the condominium is located or in a county adjacent to that county.

(e) The board shall keep a record of each regular or special board meeting in the form of written minutes of the meeting. The board shall make meeting records, including approved minutes, available to a member of the council of owners for inspection and copying on the member's written request to the council's managing agent at the address appearing on the most recently filed management certificate or, if there is not a managing agent, to the board.

(f) Members of the council of owners shall be given notice of the date, hour, place, and general subject of a regular or special board meeting, including a general description of any matter to be brought up for deliberation in executive session. The notice shall be:

(1) mailed to each apartment owner not later than the 10th day or earlier than the 60th day before the date of the meeting; or

(2) provided at least 72 hours before the start of the meeting by:

(A) posting the notice in a conspicuous manner reasonably designed to provide notice to council members:

(i) in a place located on the condominium regime's common property or, with the property owner's consent, on other conspicuously located privately owned property within the condominium regime; or

(ii) on any Internet website maintained by the council or other Internet media; and

(B) sending the notice by e-mail to each owner who has registered an e-mail address with the council.

(g) It is an owner's duty to keep an updated e-mail address registered with the council under Subsection (f)(2)(B).

(h) If the board recesses a regular or special board meeting to continue the following regular business day, the board is not required to post notice of the continued meeting if the recess is taken in good faith and not to circumvent this section. If a regular or special board meeting is continued to the following regular business day, and on that following day the board continues the meeting to another day, the board shall give notice of the continuation in at least one manner prescribed by Subsection (f)(2)(A) within two hours after adjourning the meeting being continued.

(i) A board may meet by any method of communication, including electronic and telephonic, without prior notice to apartment owners under Subsection (f), if each board member may hear and be heard by every other board member, or the board may take action by unanimous written consent to consider routine and administrative matters or a reasonably unforeseen emergency or urgent necessity that requires immediate board action. Any action taken without notice to owners under Subsection (f) must be summarized orally, including an explanation of any known actual or estimated expenditures approved at the meeting, and documented in the minutes of the next regular or special board meeting. The board may not, without prior notice to owners under Subsection (f), consider or vote on:

(1) fines;

(2) damage assessments;

(3) initiation of foreclosure actions;

(4) initiation of enforcement actions, excluding temporary restraining orders or violations involving a threat to health or safety;

(5) increases in assessments;

(6) levying of special assessments;

(7) appeals from a denial of architectural control approval; or

(8) a suspension of a right of a particular council member before the member has an opportunity to attend a board meeting to present the member's position, including any defense, on the issue.

(j) Notice of a meeting of the council of owners must be given as provided by the bylaws, or, if the bylaws do not provide for notice, notice must be given to each apartment owner in the same manner in which notice of a board meeting is given to members under this section.

SECTION 3. Section 82.108, Property Code, is amended to read as follows:

Sec. 82.108. MEETINGS. (a) In this section:

(1) "Board meeting":

(A) means a deliberation between a quorum of the voting board of the association, or between a quorum of the voting board and another person, during which association business is considered and the board takes formal action; and

(B) does not include the gathering of a quorum of the board at a social function unrelated to the business of the association or the attendance by a quorum of the board at a regional, state, or national convention, ceremonial event, or press conference, if formal action is not taken and any discussion of association business is incidental to the social function, convention, ceremonial event, or press conference.

(2) "Development period" means a period of declarant control described by Section 82.103(c).

(b) Meetings of the association must be held at least once each year. Unless the declaration provides otherwise, special meetings of the association may be called by the president, a majority of the board, or unit owners having at least 20 percent of the votes in the association.

(c) [(b)] Meetings of the association and regular and special board meetings must be open to unit owners, subject to the right of the board to adjourn a meeting of the board 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 unit owners, or matters that are to remain confidential by request of the affected parties and agreement of the board. Following an executive session, any decision made in the executive session must be summarized orally and placed in the minutes, in general terms, without breaching the privacy of individual owners, violating any privilege, or disclosing information that was to remain confidential at the request of the affected parties. The oral summary must include a general explanation of expenditures approved in executive session.

(d) Except for a meeting held by electronic or telephonic means under Subsection (i), a board meeting must be held in a county in which all or part of the condominium is located or in a county adjacent to that county.

(e) The board shall keep a record of each regular or special board meeting in the form of written minutes of the meeting. The board shall make meeting records, including approved minutes, available to a member for inspection and copying on the member's written request to the association's managing agent at the address appearing on the most recently filed management certificate or, if there is not a managing agent, to the board.

(f) Members shall be given notice of the date, hour, place, and general subject of a regular or special board meeting, including a general description of any matter to be brought up for deliberation in executive session. The notice shall be:

(1) mailed to each unit owner not later than the 10th day or earlier than the 60th day before the date of the meeting; or

(2) provided at least 72 hours before the start of the meeting by:

(A) posting the notice in a conspicuous manner reasonably designed to provide notice to association members:

(i) in a place located on the association's common property or, with the property owner's consent, on other conspicuously located privately owned property within the condominium regime; or

(ii) on any Internet website maintained by the association or other Internet media; and

(B) sending the notice by e-mail to each owner who has registered an e-mail address with the association.

(g) It is an owner's duty to keep an updated e-mail address registered with the association under Subsection (f)(2)(B).

(h) If the board recesses a regular or special board meeting to continue the following regular business day, the board is not required to post notice of the continued meeting if the recess is taken in good faith and not to circumvent this section. If a regular or special board meeting is continued to the following regular business day, and on that following day the board continues the meeting to another day, the board shall give notice of the continuation in at least one manner prescribed by Subsection (f)(2)(A) within two hours after adjourning the meeting being continued.

(i) A [The general nature of any business to be considered in executive session must first be announced at the open meeting.

[(c) Unless the declaration, bylaws, or articles of incorporation of the association provide otherwise:

[(1) a meeting of the] board may meet [be held] by any method of communication, including electronic and telephonic, without prior notice to owners under Subsection (f), if[:

[(A) notice of the meeting has been given in accordance with Subsection (e);

[(B)] each director may hear and be heard by every other director, or [; 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 association member before the member has an opportunity to attend a board meeting to present the member's position, including any defense, on the issue; and

[(2)] the board may take action [act] by unanimous written consent to consider routine and administrative matters or a reasonably unforeseen emergency or urgent necessity that requires immediate board action. Any action taken without notice to owners under Subsection (f) must be summarized orally, including an explanation of any known actual or estimated expenditures approved at the meeting, and documented in the minutes of the next regular or special board meeting. The board may not [of all the directors], without prior notice to owners under Subsection (f), consider or vote on [a meeting, if]:

(1) fines;

(2) [(A) the board action does not involve voting on a fine,] damage assessments;

(3) initiation of foreclosure actions;

(4) initiation of enforcement actions, excluding temporary restraining orders or violations involving a threat to health or safety;

(5) increases in assessments;

(6) levying of special assessments;

(7) appeals [assessment, appeal] from a denial of architectural control approval; [,] or

(8) a suspension of a right of a particular association member before the member has an opportunity to attend a board meeting to present the member's position, including any defense, on the issue[; and

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

(j) [(d)] Notice of a meeting of the association must be given as provided by the bylaws, or, if the bylaws do not provide for notice, notice must be given to each unit owner in the same manner in which notice of a board meeting is given under this section [to members of a nonprofit corporation under Section A, Article 2.11, Texas Non-Profit Corporation Act (Article 1396-2.11, Vernon's Texas Civil Statutes)].

(k) This section applies to a meeting of an association board during the development period only if the meeting is conducted for the purpose of:

(1) adopting or amending the governing documents, including declarations, bylaws, rules, and regulations of the association;

(2) increasing the amount of regular assessments of the association or adopting or increasing a special assessment;

(3) electing non-developer board members of the association or establishing a process by which those members are elected; or

(4) changing the voting rights of members of the association.

[(e) Notice of a meeting of the board must be given as provided by the bylaws, or, if the bylaws do not provide for notice, notice must be given to each board member in the same manner in which notice is given to members of the board of a nonprofit corporation under Section B, Article 2.19, Texas Non-Profit Corporation Act (Article 1396-2.19, Vernon's Texas Civil Statutes).

[(f) An association, on the written request of a unit owner, shall inform the unit 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 unit owner or inform the unit owner where the information may be obtained.]

SECTION 4. Section 82.114(b), Property Code, is amended to read as follows:

(b) Notwithstanding a provision in a declaration, the books and records of the association, including [All] financial [and other] records, [of the association] shall be made [reasonably] available to the unit owners in accordance with Section 82.1141 [at its registered office or its principal office in this state for examination by a unit owner and the owner's agents. An attorney's files and records relating to the association are not records of the association and are not subject to inspection by unit owners or production in a legal proceeding].

SECTION 5. Subchapter C, Chapter 82, Property Code, is amended by adding Section 82.1141 to read as follows:

Sec. 82.1141. AVAILABILITY AND RETENTION OF RECORDS. (a) This section applies to all condominium unit owners' associations and controls over other law not specifically applicable to a condominium unit owners' association.

(b) Notwithstanding a provision in a declaration, an association shall make the books and records of the association, including financial records, open to and reasonably available for examination by a unit owner, or a person designated in a writing signed by the owner as the owner's agent, 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.

(c) Except as provided by this subsection, an attorney's files and records relating to the association are not records of the association and are not subject to inspection by a unit owner or production in a legal proceeding. If a document in an attorney's files and records relating to the association would be responsive to a legally authorized request to inspect or copy association documents, the document shall be produced by using the copy from the attorney's files and records if the association has not maintained a separate copy of the document. This subsection does not require production of a document that constitutes attorney work product or that is privileged as an attorney-client communication.

(d) A unit owner or the owner's authorized representative described by Subsection (b) must submit a written request for access or information under Subsection (b) by certified mail, with sufficient detail describing 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 82.116. The request must contain an election either to inspect the books and records before obtaining copies or to have the 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 in the possession, custody, or control of the association; or

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

(e) If the association is unable to produce the books or records requested under Subsection (d) on or before the 10th business day after the date the association receives the request, the association must provide to the requestor written notice that:

(1) informs the requestor that the association is unable to produce the information on or before the 10th business day after the date the association received the request; and

(2) states a date by which the information will be sent or made available for inspection to the requesting party that is not later than the 15th business day after the date notice under this subsection is given.

(f) 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.

(g) An association may produce books and records requested under this section in hard copy, electronic, or other format reasonably available to the association.

(h) An association board must adopt a records production and copying policy that prescribes the costs the association will charge for the compilation, production, and reproduction of information requested under this section. The prescribed charges may include all reasonable costs of materials, labor, and overhead but may not exceed costs that would be applicable for an item under 1 T.A.C. Section 70.3. The policy required by this subsection must be recorded as a dedicatory instrument in accordance with Section 202.006. An association may not charge a unit owner for the compilation, production, or reproduction of information requested under this section unless the policy prescribing those costs has been recorded as required by this subsection. An owner is responsible for costs related to the compilation, production, and reproduction of the requested information in the amounts prescribed by the policy adopted under this subsection. The association may require advance payment of the estimated costs of compilation, production, and reproduction of the requested information. If the estimated costs are lesser or greater than the actual costs, the association shall submit a final invoice to the owner on or before the 30th business day after the date the information is delivered. 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.

(i) An association must estimate costs under this section using amounts prescribed by the policy adopted under Subsection (h).

(j) Except as provided by Subsection (k) and to the extent the information is provided in the meeting minutes, the association is not required to release or allow inspection of any books or records that identify the violation history of an individual unit owner, 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 unit owner.

(k) The books and records described by Subsection (j) shall be released or made available for inspection if:

(1) the express written approval of the unit 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.

(l) An association composed of more than 14 units shall adopt and comply with a document retention policy that includes, at a minimum, the following requirements:

(1) certificates of formation, bylaws, restrictive covenants, and all amendments to the certificates of formation, bylaws, and covenants shall be retained permanently;

(2) financial books and records shall be retained for seven years;

(3) account records of current unit 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 unit owners and the board shall be retained for seven years; and

(6) tax returns and audit records shall be retained for seven years.

(m) A member of an association who is denied access to or copies of association books or records to which the member is entitled under this section may file a petition with the justice of the peace of a justice precinct in which all or part of the property that is governed by the association is located requesting relief in accordance with this subsection. If the justice of the peace finds that the member is entitled to access to or copies of the records, the justice of the peace may grant one or more of the following remedies:

(1) a judgment ordering the association to release or allow access to the books or records;

(2) a judgment against the association for court costs and attorney's fees incurred in connection with seeking a remedy under this section; or

(3) a judgment authorizing the unit owner or the owner's assignee to deduct the amounts awarded under Subdivision (2) from any future regular or special assessments payable to the association.

(n) If the association prevails in an action under Subsection (m), the association is entitled to a judgment for court costs and attorney's fees incurred by the association in connection with the action.

(o) On or before the 10th business day before the date a person brings an action against an association under this section, the person must send written notice to the association of the person's intent to bring the action. The notice must:

(1) be sent certified mail, return receipt requested, or delivered by the United States Postal Service with signature confirmation service to the mailing address of the association or authorized representative as reflected on the most current management certificate filed under Section 82.116; and

(2) describe with sufficient detail the books and records being requested.

(p) An association may not foreclose an assessment lien if the debt securing the lien consists solely of amounts added to the unit owner's account as an assessment under Subsection (h).

(q) For the purposes of this section, "business day" means a day other than Saturday, Sunday, or a state or federal holiday.

SECTION 6. (a) Sections 81.209(b) and 82.114(b), Property Code, as amended by this Act, and Sections 81.2091 and 82.1141, Property Code, as added by this Act, apply only with respect to information requested or sought on or after the effective date of this Act. Access to information requested or sought before the effective date of this Act is governed by the law in effect immediately before that date, and that law is continued in effect for that purpose.

(b) The requirements of Sections 81.2091(l) and 82.1141(l), Property Code, as added by this Act, apply 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 applicable to the books and records immediately before the effective date of this Act, and that law is continued in effect for that purpose.

SECTION 7. This Act takes effect January 1, 2014.