Bill Text: TX HB2761 | 2011-2012 | 82nd Legislature | Enrolled

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Bill Title: Relating to meetings, elections, and records of certain property owners' associations.

Spectrum: Bipartisan Bill

Status: (Passed) 2011-06-17 - Effective on 1/1/12 [HB2761 Detail]

Download: Texas-2011-HB2761-Enrolled.html

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H.B. No. 2761

AN ACT
relating to meetings, elections, and records of certain property
owners' associations.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 209.003, Property Code, is amended by
adding Subsection (e) to read as follows:
(e) The following provisions of this chapter do not apply to
a property owners' association that is a mixed-use master
association that existed before January 1, 1974, and that does not
have the authority under a dedicatory instrument or other governing
document to impose fines:
(1) Section 209.005(c);
(2) Section 209.0056;
(3) Section 209.0057;
(4) Section 209.0058; and
(5) Section 209.00592.
SECTION 2. Section 209.005, Property Code, is amended to
read as follows:
Sec. 209.005. ASSOCIATION RECORDS. (a) Except as provided
by Subsection (b), this section applies to all property owners'
associations and controls over other law not specifically
applicable to a property owners' association.
(b) This section does not apply to a property owners'
association that is subject to Chapter 552, Government Code, by
application of Section 552.0036, Government Code.
(c) Notwithstanding a provision in a dedicatory instrument,
a [A] property owners' association shall make the books and records
of the association, including financial records, open to and
reasonably available for examination by [to] an 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 [Section B,
Article 2.23, Texas Non-Profit Corporation Act (Article 1396-2.23,
Vernon's Texas Civil Statutes)].
(d) Except as provided by this subsection, an [(a-1) A
property owners' association described by Section 552.0036(2),
Government Code, shall make the books and records of the
association, including financial records, reasonably available to
any person requesting access to the books or records in accordance
with Chapter 552, Government Code. Subsection (a) does not apply to
a property owners' association to which this subsection applies.
[(b) An] attorney's files and records relating to the
property owners' association, excluding invoices requested by an
owner under Section 209.008(d), are not[:
[(1)] records of the association and are not[;
[(2)] subject to inspection by the owner[;] or
[(3) subject to] 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.
(e) An owner or the owner's authorized representative
described by Subsection (c) must submit a written request for
access or information under Subsection (c) by certified mail, with
sufficient detail describing the property owners' 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 209.004. The
request must contain an election either to inspect the books and
records before obtaining copies or to have the property owners'
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.
(f) If the property owners' association is unable to produce
the books or records requested under Subsection (e) 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.
(g) 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 property owners' association to copy and
forward to the requesting party.
(h) A property owners' association may produce books and
records requested under this section in hard copy, electronic, or
other format reasonably available to the association.
(i) A property owners' 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 an 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.
(j) A property owners' association must estimate costs
under this section using amounts prescribed by the policy adopted
under Subsection (i).
(k) Except as provided by Subsection (l) and to the extent
the information is provided in the meeting minutes, the property
owners' association is not required to release or allow inspection
of any books or records that identify the dedicatory instrument
violation history of an individual owner of an association, 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 property owner.
(l) The books and records described by Subsection (k) shall
be released or made available for inspection if:
(1) the express written approval of the owner whose
records are the subject of the request for inspection is provided to
the property owners' 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.
(m) A property owners' association composed of more than 14
lots 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 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 owners and the board
shall be retained for seven years; and
(6) tax returns and audit records shall be retained
for seven years.
(n) A member of a property owners' 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 property owners'
association to release or allow access to the books or records;
(2) a judgment against the property owners'
association for court costs and attorney's fees incurred in
connection with seeking a remedy under this section; or
(3) a judgment authorizing the owner or the owner's
assignee to deduct the amounts awarded under Subdivision (2) from
any future regular or special assessments payable to the property
owners' association.
(o) If the property owners' association prevails in an
action under Subsection (n), the association is entitled to a
judgment for court costs and attorney's fees incurred by the
association in connection with the action.
(p) On or before the 10th business day before the date a
person brings an action against a property owners' 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 209.004; and
(2) describe with sufficient detail the books and
records being requested.
(q) For the purposes of this section, "business day" means a
day other than Saturday, Sunday, or a state or federal holiday.
SECTION 3. Chapter 209, Property Code, is amended by adding
Sections 209.0051, 209.0056, 209.0057, 209.0058, 209.0059,
209.00591, 209.00592, and 209.00593 to read as follows:
Sec. 209.0051. OPEN BOARD MEETINGS. (a) This section does
not apply to a property owners' association that is subject to
Chapter 551, Government Code, by application of Section 551.0015,
Government Code.
(b) In this section:
(1) "Board meeting":
(A) means a deliberation between a quorum of the
voting board of the property owners' association, or between a
quorum of the voting board and another person, during which
property owners' 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 stated in a
declaration during which a declarant reserves:
(A) a right to facilitate the development,
construction, and marketing of the subdivision; and
(B) a right to direct the size, shape, and
composition of the subdivision.
(c) Regular and special board meetings must be open to
owners, subject to the right of the board to adjourn a board meeting
and reconvene in closed executive session to consider actions
involving personnel, pending or threatened litigation, contract
negotiations, enforcement actions, confidential communications
with the property owners' association's attorney, matters involving
the invasion of privacy of individual 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.
(c-1) Except for a meeting held by electronic or telephonic
means under Subsection (h), a board meeting must be held in a county
in which all or part of the property in the subdivision is located
or in a county adjacent to that county.
(d) 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 property owners' 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.
(e) 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 property 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 property owners'
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
subdivision; 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.
(f) It is an owner's duty to keep an updated e-mail address
registered with the property owners' association under Subsection
(e)(2)(B).
(g) 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
(e)(2)(A) within two hours after adjourning the meeting being
continued.
(h) A board may meet by any method of communication,
including electronic and telephonic, without prior notice to owners
under Subsection (e), if each director may hear and be heard by
every other director, 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 (e) 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 (e), 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 owner
before the owner has an opportunity to attend a board meeting to
present the owner's position, including any defense, on the issue.
(i) This section applies to a meeting of a property owners'
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.
Sec. 209.0056. NOTICE OF ELECTION OR ASSOCIATION VOTE. (a)
Not later than the 10th day or earlier than the 60th day before the
date of an election or vote, a property owners' association shall
give written notice of the election or vote to:
(1) each owner of property in the property owners'
association, for purposes of an association-wide election or vote;
or
(2) each owner of property in the property owners'
association entitled under the dedicatory instruments to vote in a
particular representative election, for purposes of a vote that
involves election of representatives of the association who are
vested under the dedicatory instruments of the property owners'
association with the authority to elect or appoint board members of
the property owners' association.
(b) This section supersedes any contrary requirement in a
dedicatory instrument.
(c) This section does not apply to a property owners'
association that is subject to Chapter 552, Government Code, by
application of Section 552.0036, Government Code.
Sec. 209.0057. RECOUNT OF VOTES. (a) This section does
not apply to a property owners' association that is subject to
Chapter 552, Government Code, by application of Section 552.0036,
Government Code.
(b) Any owner may, not later than the 15th day after the date
of the meeting at which the election was held, require a recount of
the votes. A demand for a recount must be submitted in writing
either:
(1) by certified mail, return receipt requested, or by
delivery by the United States Postal Service with signature
confirmation service to the property owners' association's mailing
address as reflected on the latest management certificate filed
under Section 209.004; or
(2) in person to the property owners' association's
managing agent as reflected on the latest management certificate
filed under Section 209.004 or to the address to which absentee and
proxy ballots are mailed.
(c) The property owners' association shall, at the expense
of the owner requesting the recount, retain for the purpose of
performing the recount, the services of a person qualified to
tabulate votes under this subsection. The association shall enter
into a contract for the services of a person who:
(1) is not a member of the association or related to a
member of the association board within the third degree by
consanguinity or affinity, as determined under Chapter 573,
Government Code; and
(2) is:
(A) a current or former:
(i) county judge;
(ii) county elections administrator;
(iii) justice of the peace; or
(iv) county voter registrar; or
(B) a person agreed on by the association and the
persons requesting the recount.
(d) Any recount under Subsection (b) must be performed on or
before the 30th day after the date of receipt of a request and
payment for a recount in accordance with Subsections (b) and (c).
If the recount changes the results of the election, the property
owners' association shall reimburse the requesting owner for the
cost of the recount. The property owners' association shall
provide the results of the recount to each owner who requested the
recount. Any action taken by the board in the period between the
initial election vote tally and the completion of the recount is not
affected by any recount.
Sec. 209.0058. BALLOTS. (a) Any vote cast in an election
or vote by a member of a property owners' association must be in
writing and signed by the member.
(b) Electronic votes cast under Section 209.00592
constitute written and signed ballots.
(c) In an association-wide election, written and signed
ballots are not required for uncontested races.
Sec. 209.0059. RIGHT TO VOTE. (a) A provision in a
dedicatory instrument that would disqualify a property owner from
voting in a property owners' association election of board members
or on any matter concerning the rights or responsibilities of the
owner is void.
(b) This section does not apply to a property owners'
association that is subject to Chapter 552, Government Code, by
application of Section 552.0036, Government Code.
Sec. 209.00591. BOARD MEMBERSHIP. (a) Except as provided
by this section, a provision in a dedicatory instrument that
restricts a property owner's right to run for a position on the
board of the property owners' association is void.
(b) If a board is presented with written, documented
evidence from a database or other record maintained by a
governmental law enforcement authority that a board member has been
convicted of a felony or crime involving moral turpitude, the board
member is immediately ineligible to serve on the board of the
property owners' association, automatically considered removed
from the board, and prohibited from future service on the board.
(c) The declaration may provide for a period of declarant
control of the association during which a declarant, or persons
designated by the declarant, may appoint and remove board members
and the officers of the association, other than board members or
officers elected by members of the property owners' association.
Regardless of the period of declarant control provided by the
declaration, on or before the 120th day after the date 75 percent of
the lots that may be created and made subject to the declaration are
conveyed to owners other than a declarant, at least one-third of the
board members must be elected by owners other than the declarant.
If the declaration does not include the number of lots that may be
created and made subject to the declaration, at least one-third of
the board members must be elected by owners other than the declarant
not later than the 10th anniversary of the date the declaration was
recorded.
Sec. 209.00592. VOTING; QUORUM. (a) The voting rights of
an owner may be cast or given:
(1) in person or by proxy at a meeting of the property
owners' association;
(2) by absentee ballot in accordance with this
section;
(3) by electronic ballot in accordance with this
section; or
(4) by any method of representative or delegated
voting provided by a dedicatory instrument.
(b) An absentee or electronic ballot:
(1) may be counted as an owner present and voting for
the purpose of establishing a quorum only for items appearing on the
ballot;
(2) may not be counted, even if properly delivered, if
the owner attends any meeting to vote in person, so that any vote
cast at a meeting by a property owner supersedes any vote submitted
by absentee or electronic ballot previously submitted for that
proposal; and
(3) may not be counted on the final vote of a proposal
if the motion was amended at the meeting to be different from the
exact language on the absentee or electronic ballot.
(c) A solicitation for votes by absentee ballot must
include:
(1) an absentee ballot that contains each proposed
action and provides an opportunity to vote for or against each
proposed action;
(2) instructions for delivery of the completed
absentee ballot, including the delivery location; and
(3) the following language: "By casting your vote via
absentee ballot you will forgo the opportunity to consider and vote
on any action from the floor on these proposals, if a meeting is
held. This means that if there are amendments to these proposals
your votes will not be counted on the final vote on these measures.
If you desire to retain this ability, please attend any meeting in
person. You may submit an absentee ballot and later choose to
attend any meeting in person, in which case any in-person vote will
prevail."
(d) For the purposes of this section, "electronic ballot"
means a ballot:
(1) given by:
(A) e-mail;
(B) facsimile; or
(C) posting on an Internet website;
(2) for which the identity of the property owner
submitting the ballot can be confirmed; and
(3) for which the property owner may receive a receipt
of the electronic transmission and receipt of the owner's ballot.
(e) If an electronic ballot is posted on an Internet
website, a notice of the posting shall be sent to each owner that
contains instructions on obtaining access to the posting on the
website.
(f) This section supersedes any contrary provision in a
dedicatory instrument.
(g) This section does not apply to a property owners'
association that is subject to Chapter 552, Government Code, by
application of Section 552.0036, Government Code.
Sec. 209.00593. ELECTION OF BOARD MEMBERS.
(a) Notwithstanding any provision in a dedicatory instrument, any
board member whose term has expired must be elected by owners who
are members of the property owners' association. A board member may
be appointed by the board only to fill a vacancy caused by a
resignation, death, or disability. A board member appointed to
fill a vacant position shall serve the unexpired term of the
predecessor board member.
(b) The board of a property owners' association may amend
the bylaws of the property owners' association to provide for
elections to be held as required by Subsection (a).
(c) The appointment of a board member in violation of this
section is void.
(d) This section does not apply to the appointment of a
board member during a development period. In this subsection,
"development period" means a period stated in a declaration during
which a declarant reserves:
(1) a right to facilitate the development,
construction, and marketing of the subdivision; and
(2) a right to direct the size, shape, and composition
of the subdivision.
(e) This section does not apply to a representative board
whose members or delegates are elected or appointed by
representatives of a property owners' association who are elected
by owner members of a property owners' association.
SECTION 4. Section 209.009, Property Code, is amended to
read as follows:
Sec. 209.009. FORECLOSURE SALE PROHIBITED IN CERTAIN
CIRCUMSTANCES. A property owners' association may not foreclose a
property owners' association's assessment lien if the debt securing
the lien consists solely of:
(1) fines assessed by the association; [or]
(2) attorney's fees incurred by the association solely
associated with fines assessed by the association; or
(3) amounts added to the owner's account as an
assessment under Section 209.005(i).
SECTION 5. Chapter 209, Property Code, is amended by adding
Section 209.014 to read as follows:
Sec. 209.014. MANDATORY ELECTION REQUIRED AFTER FAILURE TO
CALL REGULAR MEETING. (a) Notwithstanding any provision in a
dedicatory instrument, a board of a property owners' association
shall call an annual meeting of the members of the association.
(b) If a board of a property owners' association does not
call an annual meeting of the association members, an owner may
demand that a meeting of the association members be called not later
than the 30th day after the date of the owner's demand. The owner's
demand must be made in writing and sent by certified mail, return
receipt requested, to the registered agent of the property owners'
association and to the association at the address for the
association according to the most recently filed management
certificate. A copy of the notice must be sent to each property
owner who is a member of the association.
(c) If the board does not call a meeting of the members of
the property owners' association on or before the 30th day after the
date of a demand under Subsection (b), three or more owners may form
an election committee. The election committee shall file written
notice of the committee's formation with the county clerk of each
county in which the subdivision is located.
(d) A notice filed by an election committee must contain:
(1) a statement that an election committee has been
formed to call a meeting of owners who are members of the property
owners' association for the sole purpose of electing board members;
(2) the name and residential address of each committee
member; and
(3) the name of the subdivision over which the
property owners' association has jurisdiction under a dedicatory
instrument.
(e) Each committee member must sign and acknowledge the
notice before a notary or other official authorized to take
acknowledgments.
(f) The county clerk shall enter on the notice the date the
notice is filed and record the notice in the county's real property
records.
(g) Only one committee in a subdivision may operate under
this section at one time. If more than one committee in a
subdivision files a notice, the first committee that files a
notice, after having complied with all other requirements of this
section, is the committee with the power to act under this section.
A committee that does not hold or conduct a successful election
within four months after the date the notice is filed with the
county clerk is dissolved by operation of law. An election held or
conducted by a dissolved committee is ineffective for any purpose
under this section.
(h) The election committee may call meetings of the owners
who are members of the property owners' association for the sole
purpose of electing board members. Notice, quorum, and voting
provisions contained in the bylaws of the property owners'
association apply to any meeting called by the election committee.
SECTION 6. (a) Section 209.005, Property Code, as amended
by this Act, applies only to a request for information received by a
property owners' association on or after the effective date of this
Act. A request for information received by a property owners'
association 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) Subsection (m), Section 209.005, Property Code, as
added by this Act, applies 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 in effect immediately before the effective date
of this Act, and that law is continued in effect for that purpose.
(c) Section 209.0059 and Subsection (a), Section 209.00591,
Property Code, as added by this Act, apply to a provision in a
dedicatory instrument or a restrictive covenant enacted before, on,
or after the effective date of this Act.
(d) Section 209.014, Property Code, as added by this Act,
applies to a property owners' association created before, on, or
after the effective date of this Act.
SECTION 7. This Act takes effect January 1, 2012.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 2761 was passed by the House on May 4,
2011, by the following vote: Yeas 137, Nays 3, 2 present, not
voting; and that the House concurred in Senate amendments to H.B.
No. 2761 on May 26, 2011, by the following vote: Yeas 122, Nays 16,
1 present, not voting.
______________________________
Chief Clerk of the House
I certify that H.B. No. 2761 was passed by the Senate, with
amendments, on May 24, 2011, by the following vote: Yeas 30, Nays
0.
______________________________
Secretary of the Senate
APPROVED: __________________
Date
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Governor