By: King of Parker H.B. No. 2944

A BILL TO BE ENTITLED

AN ACT

relating to the powers and duties of timeshare owners' associations.

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

SECTION 1. This Act may be cited as the Texas Timeshare Owners' Association Act.

SECTION 2. The following definition is added to Section 221.002 of the Property Code in alphabetical order, and the existing subsections contained in Section 221.002 are renumbered:

(6) "Board" means the governing body of a timeshare association designated in a project instrument to act on behalf of that association.

SECTION 3. Section 221.003(d) of the Property Code is amended to read as follows:

(d) A timeshare property subject to this chapter is not subject to Chapter 209 the following provisions of the Property Code:

(1) Section 5.008;

(2) Section 5.012;

(3) Chapter 202;

(4) Chapter 207; and

(5) Chapter 209 unless an individual owner occupies a single timeshare property as the owner's primary residence 12 months of the year.

SECTION 4. Section 221.011 of the Property Code is amended to read as follows:

(a) The developer of a timeshare plan any part of which is located in this state must record the timeshare instrument in this state. When a person expressly declares an intent to subject the property to a timeshare plan through the recordation of a timeshare instrument that sets forth the information provided in Subsections (b), and (c), that property shall be established thenceforth as a timeshare plan.

(b) The declaration made in a timeshare instrument recorded under this section must include:

(1) a legal description of the timeshare property, including a ground plan indicating the location of each existing or proposed building included in the timeshare plan;

(2) a description of each existing or proposed accommodation, including the location and square footage of each unit and an interior floor plan of each existing or proposed building;

(3) a description of any amenities furnished or to be furnished to the purchaser;

(4) a statement of the fractional or percentage part that each timeshare interest bears to the entire timeshare plan;

(5) if applicable, a statement that the timeshare property is part of a multisite timeshare plan; and

(6) any additional provisions that are consistent with this section.

(c) Unless set forth in other project instruments for the property, the declaration made in the timeshare instrument recorded under this section must also include those matters required by Subchapter I of this chapter to be set forth in a project instrument.

(d) Any timeshare interest created under this section is subject to Section 1101.002(5), Occupations Code, but Sections 1101.351(a)(1) and (c), Occupations Code, do not apply to the acts of an exchange company in exchanging timeshare periods.

SECTION 5. Section 221.025(c) of the Property Code is amended to read as follows:

(c) A timeshare plan subject to Chapter 82 that complies with this chapter is exempt from the requirements of Section 82.0675 relating to club membership and Section 82.103(c)-(e) relating to declarant control.

SECTION 6. The reference in Section 221.071(a) of the Property Code to Texas Deceptive Trade Practices-Consumer Protection Act (Article 17.46 et seq., Business & Commerce Code) is amended to read Texas Deceptive Trade Practices-Consumer Protection Act (Article 17.46 Subchapter E, Chapter 17, Business & Commerce Code).

SECTION 7. A new Subchapter I is added to the Texas Timeshare Act, which subchapter will read as follows:

SUBCHAPTER I. TIMESHARE OWNERS' ASSOCIATIONS

Section 221.081. POWERS OF BOARD AND LIMITATIONS. (a) An association may be governed by a board of directors. Except as provided in the project instrument, Subsection (b) of this section, or other provisions of this chapter, the board may act in all instances on behalf of the association.

(b) Except as expressly authorized in the project instrument or otherwise permitted by the association, the board may not act on behalf of the association to amend the project instrument, terminate the timeshare plan, elect or remove members of the board, or determine the qualifications, powers, duties, or terms of office of directors. The board may fill vacancies in its membership for the unexpired portion of any term, subject to the project instrument.

Section 221.082. PERIOD OF DEVELOPER CONTROL. (a) Except as otherwise provided in this section, the project instrument may provide for a period of developer control of an association during which the developer, or a person designated by the developer, may appoint and remove the officers of the association and the members of the board. Notwithstanding the period provided in the project instrument, the period of developer control of the association terminates no later than the earlier of:

(1) one hundred twenty days after conveyance of ninety-five percent of the timeshare interests that were created by the timeshare instrument to owners other than the developer; or

(2) five years after the developer has ceased to offer timeshare interests for sale in the ordinary course of business, under either the timeshare plan itself or another timeshare plan in which the timeshare interests are included, whichever is later.

(b) A developer may voluntarily surrender the right to appoint and remove officers of the association and members of the board during the period provided for in Subsection (a) by executing a written instrument declaring the surrender and providing a copy of the instrument to the owners. In the developer's surrender instrument, the developer may require that, for the duration of the period of the developer's control, specified actions of the association or board as described in the project instrument be approved by the developer before they become effective. The developer's surrender instrument must be recorded.

(c) If the project instrument provides for a developer control period of shorter duration than any period prescribed by this section, the project instrument controls.

(d) During the period of developer control and subject to the project instrument, the developer may determine all matters governing the association, including whether there will be special or regular meetings of the members and the notices and rules for any such meetings.

Section 221.083. ELECTION OF DIRECTORS AND OFFICERS; REMOVAL OF DIRECTORS. (a) No later than the termination of any period of developer control, the owners, including the developer to the extent of any developer-owned timeshare interests, must elect a board of at least three members, which may include representatives of the developer. The board will elect the officers of the association. The board members and officers of the association take office on election.

(b) Notwithstanding any provision of a project instrument to the contrary, the owners, by a vote representing at least two-thirds of all voting rights of persons present in person or by proxy who are entitled to vote at any meeting of the owners at which a quorum is present, may remove any member of the board, with or without cause, other than a member appointed by the developer during the period of developer control under Section 221.082 so long as the developer remains in control of the association.

Section 221.084. QUORUM. (a) Unless the project instrument provides for a higher quorum requirement, the percentage of voting interests constituting a quorum at a meeting of the members of an association is ten percent of the voting interests of owners who are not delinquent in assessments, in person or by proxy. If a quorum is not present at any meeting of the association at which members of the board are to be elected, the meeting may be adjourned and reconvened within ninety days for the sole purpose of electing members of the board, and the quorum for the adjourned meeting will be ten percent of the voting interests of owners who are not delinquent in assessments, in person or by proxy, unless the project instrument provides for a higher quorum requirement.

(b) Unless the project instrument provides otherwise, a quorum will be deemed to be present throughout a meeting of an association's board if persons entitled to cast a majority of the votes on that board are present at the beginning of the meeting.

Section 221.085. VOTES. (a) If only one of the multiple owners of a timeshare interest is present at a meeting of the association, that owner is entitled to cast all the votes allocated to that timeshare interest. If more than one of the multiple owners are present, the votes allocated to that timeshare interest may be cast only in accordance with the agreement of a majority in interest of the multiple owners unless the timeshare instrument expressly provides otherwise. There is a majority agreement if any one of the multiple owners casts the votes allocated to that timeshare interest without protest being made promptly to the person presiding over the meeting by any of the other owners of the timeshare interest.

(b) Votes allocated to a timeshare interest may be cast pursuant to a proxy duly executed by an owner. A proxy must expressly state its dates of execution and termination. An owner may not revoke a proxy given pursuant to this section except by actual notice of revocation to the person presiding over a meeting of the association. A proxy is revoked on presentation of a later dated proxy or other written revocation executed by the same owner. A proxy terminates twenty-five months after its date of execution, unless it specifies a shorter term or unless it states that it is coupled with an interest and is irrevocable.

(c) The project instrument for a timeshare plan may authorize votes of members of an association to be conducted by mail on compliance with all of the following:

(1) mail ballots are mailed or sent to all members in the manner prescribed for notices of special meetings pursuant to Section 221.087;

(2) the period for return of mail ballots is at least thirty days after the date the ballots are mailed or sent to members; and

(3) the required minimum number of ballots that must be returned by members for the vote to be effective is at least equal to the quorum percentage prescribed in Section 221.084(a).

(d) Except as otherwise provided in the project instrument, owners who are delinquent in assessments do not have the right to cast votes. The right to cast votes is also subject to any additional limitations provided in the project instrument.

(e) Only timeshare interests included in the timeshare plan have voting rights.

Section 221.086. ASSOCIATION OPEN MEETINGS AND EXCEPTIONS. (a) Notwithstanding any provision in the project instrument to the contrary and except as provided in this section, after the period of developer control under Section 221.082, all meetings of the association and board are open to all members of the association and all members so desiring must be permitted to attend and listen to the deliberations and proceedings. Meetings will be conducted as provided in the project instrument. The board may close to the association members any portion of a meeting of the board if that portion of the meeting is limited to consideration of one or more of the following:

(1) legal advice from an attorney for the board or the association;

(2) pending or contemplated litigation;

(3) financial information about an individual member of the association, an individual employee of the association, an individual employee of the managing entity, or an individual employee of a contractor for the association or managing entity; or

(4) matters relating to the job performance of, compensation of, health records of, or specific complaints against an individual employee of the association, an individual employee of the managing entity, or an individual employee of a contractor of the association or managing entity who works under the direction of the association or the managing entity.

(b) If a meeting is closed by the board pursuant to Subsection (a)(1) or Subsection (a)(2) of this section, on final resolution of any matter for which the board received legal advice or that concerned pending or contemplated litigation, the board may disclose information about that matter in an open meeting except for matters that are required to remain confidential by the terms of a settlement agreement or judgment.

Section 221.087. NOTICE. (a) A meeting of the members of the association must be held at least once each year after the period of developer control under Section 221.082. Special meetings of the members of the association may be called by the president, by a majority of the board, or by owners having at least twenty-five percent of the votes in the association or any lower percentage specified in the project instrument. Unless otherwise provided in the project instrument, not fewer than thirty nor more than ninety days in advance of any regular meeting of the owners, and not fewer than ten nor more than sixty days in advance of any special meeting of the owners, the association or managing entity must cause notice of the meeting to be sent or provided to the mailing address of each owner on record with the association. The notice of any meeting of the owners must state the time and place of the meeting. The notice of any special meeting of the owners must also state the purpose for which the meeting is called. Notices of meetings may be in the form of an annual or other list of upcoming meetings and need not be specific to one meeting. The failure of any owner to receive actual notice of a meeting of the owners does not affect the validity of any action taken at that meeting.

(b) Unless otherwise provided in the project instrument, for meetings of the board that are held after the termination of developer control of the association, at least ten days in advance of any meeting of the board, the association or managing entity must cause notice of the meeting to be sent to the mailing address of each owner on record with the association. Notice to owners of meetings of the board is not required if emergency circumstances require action by the board before notice can be given. Any notice of a board meeting must state the time and place of the meeting. Notices of meetings may be in the form of an annual or other list of upcoming meetings and need not be specific to one meeting. The failure of any owner to receive actual notice of a meeting of the board does not affect the validity of any action taken at that meeting.

(c) Notices may be in newsletters or similar mailings. Mailing may occur by prepaid United States mail or electronic mail for those owners who have provided electronic mail addresses or another reasonable method selected by the board. The contrary requirements of Section 221.087(a)-(b) and any other statutes related to associations notwithstanding, notices to owners may also be given by conspicuous disclosure on the association's website for those owners who have consented to that alternative for notice, which consent must be in writing and subject to revocation by each owner at any time. An affidavit of notice by an officer of the association or by the managing entity is prima facie evidence that notice was given as prescribed by this section.

Section 221.088. LIST OF OWNERS. (a) The association or other managing entity must maintain among its records a complete list of the names and addresses of all owners of timeshare interests in the timeshare plan. The association or other managing entity must update this list no less frequently than quarterly. Neither the association nor other managing entity may publish this owners' list or provide a copy of it to any owner or to any third party, except:

(1) for disclosure to a third party reasonably required for the association or other managing entity to conduct legitimate association business, or

(2) as otherwise authorized or required by law.

(b) After the period of developer control under Section 221.082, the association or other managing entity must mail to those persons listed on the owners' list prescribed by Subsection (a) any materials provided by any owner, on the written request of that owner, if the purpose of the mailing is to advance legitimate association business, such as a proxy solicitation for any purpose, including the recall of one or more board members elected by the owners or the discharge of the managing entity. The use of any proxies solicited in this manner must comply with the project instrument and this chapter. A mailing requested for the purpose of advancing legitimate association business must be made within thirty days after receipt of a request from an owner.

(c) The board of the association or the managing entity is responsible for determining the appropriateness of any mailing requested pursuant to Subsection (b) and for establishing reasonable procedures for the exercise of the rights provided in this section. The association or other managing entity does not have an obligation to mail items that the association or other managing entity reasonably believes may be libelous or otherwise actionable based on advice of legal counsel. The owner who requests the mailing must reimburse the association or other managing entity in advance for the actual costs in performing the mailing or a proportionate share of actual costs if the mailing is included in a mailing that includes other items.

(d) After the period of developer control under Section 221.082, if the requesting owner has complied with the reasonable procedures established by the board or managing entity for mailing requests, it is a violation of this chapter for the association or other managing entity to refuse to mail any material requested by the owner to be mailed, if the sole purpose of the materials is to advance legitimate association business and the requesting owner has either tendered to the association or managing entity payment of the cost pursuant to Subsection (c) or has requested an invoice for that cost and has not received an invoice within ten days after delivering that request to the association or managing entity.

(e) Except as otherwise authorized or required by law, the association or other managing entity may not furnish the name, address, telephone number, or electronic mail address of any owner to any other owner or authorized agent of an owner unless the owner whose name, address, phone number, or electronic mail address is requested first approves the disclosure in writing.

Section 221.089. APPLICATION. (a) This Act applies to all timeshare plans, timeshare property, and associations in this state that are established on or after the effective date of this Act.

(b) Except for the amendment to Section 221.025(c) and new Section 221.082, this Act also applies to timeshare plans, timeshare property, and associations in this state that are established at any time before the effective date of this Act, unless the timeshare instrument is amended on or before September 1, 2013, to provide that this Act shall not apply.

(c) The amendment to Section 221.025(c) and new Section 221.082 shall not apply to timeshare plans, timeshare property, and associations in this state that are established at any time before the effective date of this Act, unless, as to either, the association and the developer agree in writing to its application and the timeshare instrument is amended to provide that it applies. Otherwise, any existing developer control provisions contained in the timeshare instrument shall govern, any other statutes related to associations notwithstanding.

(d) Anything to the contrary notwithstanding:

(1) this chapter governs if there is a conflict between this chapter and any other statute related to associations subject to this chapter; and

(2) the provisions of the other chapters of the Property Code relating to property owners' associations do not apply to associations subject to this chapter.

SECTION 8. This Act takes effect September 1, 2013.