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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 82.002(c), Property Code, is amended to |
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read as follows: |
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(c) This section and the following sections apply to a |
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condominium in this state for which the declaration was recorded |
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before January 1, 1994: Sections 82.005, 82.006, 82.007, 82.053, |
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82.054, 82.102(a)(1)-(7), (a)(12)-(21), (f), and (g) [and
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(12)-(22)], 82.108, 82.111, 82.113, 82.114, 82.116, 82.118, |
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82.157, and 82.161. The definitions prescribed by Section 82.003 |
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apply to a condominium in this state for which the declaration was |
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recorded before January 1, 1994, to the extent the definitions do |
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not conflict with the declaration. The sections listed in this |
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subsection apply only with respect to events and circumstances |
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occurring on or after January 1, 1994, and do not invalidate |
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existing provisions of the declaration, bylaws, or plats or plans |
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of a condominium for which the declaration was recorded before |
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January 1, 1994. |
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SECTION 2. Section 82.003(a), Property Code, is amended by |
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amending Subdivision (11) and adding Subdivision (11-a) to read as |
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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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(11-a) "Dedicatory instrument" means each document |
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governing the establishment, maintenance, or operation of a |
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condominium regime. The term includes a declaration or similar |
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instrument subjecting real property to: |
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(A) restrictive covenants, bylaws, or similar |
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instruments governing the administration or operation of a unit |
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owners' association; |
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(B) properly adopted rules and regulations of the |
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unit owners' association; or |
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(C) all lawful amendments to the covenants, |
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bylaws, instruments, rules, or regulations. |
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SECTION 3. Section 82.102, Property Code, is amended by |
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amending Subsection (a) and adding Subsections (f) and (g) to read |
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as 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 in accordance with Subsection |
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(d), reasonable fines for violations of the declaration, bylaws, |
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and rules of the 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) Except as provided by Subsection (g), the association by |
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resolution of the board of directors may: |
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(1) borrow money; and |
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(2) assign as collateral for the loan authorized by |
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the resolution: |
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(A) the association's right to future income, |
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including the right to receive assessments; and |
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(B) the association's lien rights. |
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(g) If a dedicatory instrument requires a vote of members of |
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the association to borrow money or assign the association's right |
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to future income or the association's lien rights, the loan or |
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assignment must be approved as provided by the dedicatory |
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instrument. The board may determine whether a vote for that purpose |
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may be cast electronically, by absentee ballot, in person or by |
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proxy at a meeting called for that purpose, or by written consent. |
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If a lower approval threshold is not provided by the dedicatory |
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instrument, approval requires the consent of owners holding 67 |
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percent of all voting interests. |
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SECTION 4. Section 82.111, Property Code, is amended by |
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amending Subsections (c), (i), and (j) and adding Subsections (k), |
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(l), and (m) 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 maintained under Subsection (a) may provide for |
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commercially reasonable deductibles as the board determines |
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appropriate or necessary. This section does not affect the right of |
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a holder of a mortgage on a unit to require a unit owner to acquire |
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insurance in addition to that provided by the association. |
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(i) Except as provided by this section, any [Any] portion of |
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the condominium for which insurance is required that is damaged or |
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destroyed shall be promptly repaired or replaced by the association |
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unless the condominium is terminated, repair or replacement would |
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be illegal under any state or local health or safety statute or |
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ordinance, or at least 80 percent of the unit owners[, including
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each owner of a unit or assigned limited common element that will
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not be rebuilt or repaired,] vote to not rebuild. Each owner of a |
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unit may vote, regardless of whether the owner's unit or limited |
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common element has been damaged or destroyed. A vote may be cast |
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electronically or by written ballot if a meeting is not held for |
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that purpose or in person or by proxy at a meeting called for that |
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purpose. 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. Except as provided by |
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this section, the [The] cost of repair or replacement in excess of |
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the insurance proceeds [and reserves] is a common expense, and the |
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board may levy an assessment to pay the expenses in accordance with |
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each owner's common expense liability. If the entire condominium is |
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not repaired or replaced, any insurance proceeds attributable to |
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the damaged common elements shall be used to restore the damaged |
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area to a condition compatible with the remainder of the |
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condominium, the insurance proceeds attributable to units and |
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limited common elements that are not rebuilt shall be distributed |
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to the owners of those units and the owners of the units to which |
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those limited common elements were assigned, or to their |
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mortgagees, as their interests may appear, and the remainder of the |
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proceeds shall be distributed to all the unit owners in accordance |
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with each owner's undivided interest in the common elements unless |
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otherwise provided in the declaration [as their interests may
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appear]. If the unit owners vote to not rebuild any unit, that |
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unit's allocated interests shall be automatically reallocated on |
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the vote as if the unit had been condemned, and the association |
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shall prepare, execute, and record an amendment to the declaration |
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reflecting the reallocation. Section 82.068 governs the |
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distribution of insurance proceeds if the condominium is |
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terminated. |
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(j) If the cost to repair damage to a unit or common element |
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covered by the association's insurance is less than the amount of |
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the applicable insurance deductible, the party who would be |
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responsible for the repair in the absence of insurance shall pay the |
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cost for the repair of the unit or common element. |
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(k) If the association's insurance provides coverage for |
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the loss and the cost to repair the damage to a unit or common |
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element is more than the amount of the applicable insurance |
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deductible, the dedicatory instruments determine payment for the |
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cost of the association's deductible and costs incurred before |
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insurance proceeds are available. If the dedicatory instruments |
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are silent, the board of directors of the association by resolution |
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shall determine the payment of those costs, or if the board does not |
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approve a resolution, the costs are a common expense. A resolution |
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under this subsection is considered a dedicatory instrument and |
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must be recorded in each location in which the declaration is |
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recorded. |
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(l) If damage to a unit or the common elements is due wholly |
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or partly to an act or omission of any unit owner or a guest or |
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invitee of the unit owner, the association may assess the |
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deductible expense and any other expense in excess of insurance |
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proceeds against the owner and the owner's unit. |
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(m) The provisions of this section may be varied or waived |
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if all the units in a condominium are restricted to nonresidential |
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use. |
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SECTION 5. Section 82.113(g), Property Code, is amended to |
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read as follows: |
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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 costs incurred by the association in |
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foreclosing the lien, any assessment levied against the unit by the |
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association after the foreclosure sale, and any reasonable cost |
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incurred by the association as owner of the unit, including costs of |
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maintenance and leasing. If a party other than the association is |
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the purchaser, the redeeming owner must pay to the purchaser of the |
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unit at the foreclosure sale an amount equal to the amount bid at |
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the sale, interest on the bid amount computed from the date of the |
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foreclosure sale to the date of redemption at the rate of six |
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percent, any assessment paid by the purchaser after the date of |
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foreclosure, and any reasonable costs incurred by the purchaser as |
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the owner of the unit, including costs of maintenance and leasing. |
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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 costs incurred by the association in |
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foreclosing the lien. On redemption, the purchaser of the unit at |
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the foreclosure sale [association] shall execute a deed with no |
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warranty to the redeeming unit owner. The exercise of the right of |
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redemption is not effective against a subsequent purchaser or |
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lender for value without notice of the redemption after the |
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redemption period expires unless the redeeming unit owner records |
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the deed from the purchaser of the unit at the foreclosure sale |
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[association] or an affidavit stating that the owner has exercised |
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the right of redemption. A unit that has been redeemed remains |
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subject to all liens and encumbrances on the unit before |
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foreclosure. All rents and other income collected from the unit by |
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the purchaser of the unit at the foreclosure sale [association] |
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from the date of foreclosure sale to the date of redemption belong |
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to the purchaser of the unit at the foreclosure sale [association], |
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but the rents and income shall be credited against the redemption |
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amount. The purchaser of [An association purchasing] a unit at a |
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sale foreclosing an association's assessment [its] lien may not |
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transfer ownership of the unit during the redemption period to a |
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person other than a redeeming owner. |
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SECTION 6. Section 82.116, Property Code, is amended by |
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adding Subsections (a-1) and (a-2) to read as follows: |
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(a-1) The county clerk of each county in which a management |
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certificate is filed as required by this section shall record the |
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management certificate in the real property records of the county |
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and index the document as a "Condominium Association Management |
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Certificate." |
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(a-2) To ensure that all management certificates are |
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recorded and indexed as provided by Subsection (a-1), each |
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condominium unit owners' association that recorded a management |
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certificate under this section before September 1, 2013, shall |
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record a new management certificate on or before January 1, 2014. |
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This subsection expires January 1, 2015. |
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SECTION 7. (a) The change in law made by this Act to Section |
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82.111, Property Code, applies only to payment of costs incurred on |
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or after the effective date of this Act. Payment of costs incurred |
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before the effective date of this Act is governed by the law in |
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effect immediately before the effective date of this Act, and that |
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law is continued in effect for that purpose. |
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(b) 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 subject to |
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the law in effect immediately before the effective date of this Act, |
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and that law is continued in effect for that purpose. |
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SECTION 8. This Act takes effect September 1, 2013. |