Bill Text: TX SB1168 | 2015-2016 | 84th Legislature | Comm Sub

NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Relating to the operation of certain property owners' associations, condominium unit owners' associations, and councils of owners.

Spectrum: Bipartisan Bill

Status: (Passed) 2015-06-19 - Effective on 9/1/15 [SB1168 Detail]

Download: Texas-2015-SB1168-Comm_Sub.html
 
 
  By: West  S.B. No. 1168
         (In the Senate - Filed March 10, 2015; March 17, 2015, read
  first time and referred to Committee on Business and Commerce;
  April 20, 2015, reported favorably by the following vote:  Yeas 7,
  Nays 0; April 20, 2015, sent to printer.)
Click here to see the committee vote
 
 
A BILL TO BE ENTITLED
 
AN ACT
 
  relating to the operation of certain property owners' associations.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 207.001(2), Property Code, is amended to
  read as follows:
               (2)  "Dedicatory instrument," "property owners'
  association," and "restrictive covenant" have the meanings
  assigned by Section 209.002 [202.001].
         SECTION 2.  Section 207.002, Property Code, is amended to
  read as follows:
         Sec. 207.002.  APPLICABILITY. (a)  This chapter applies to
  a subdivision with a property owners' association that is entitled
  to levy regular or special assessments.
         (b)  This chapter does not apply to a condominium council of
  owners governed by Chapter 81 or a condominium unit owners' 
  association governed by Chapter 82.
         SECTION 3.  Section 209.002, Property Code, is amended by
  amending Subdivision (4-a) and adding Subdivision (13) to read as
  follows:
               (4-a) "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; or [and]
                     (B)  a right to direct the size, shape, and
  composition of the subdivision.
               (13)  "Verified mail" means any method of mailing that
  provides evidence of mailing.
         SECTION 4.  Section 209.003(d), Property Code, is amended to
  read as follows:
         (d)  This chapter does not apply to a condominium as defined
  [development governed] by Section 81.002 or 82.003 [Chapter 82].
         SECTION 5.  Section 209.0041, Property Code, is amended by
  amending Subsection (h) and adding Subsection (h-1) to read as
  follows:
         (h)  Except as provided by Subsection (h-1) [this
  subsection], a declaration may be amended only by a vote of:
               (1)  67 percent of the total votes allocated to
  property owners in the property owners' association, in addition to
  any governmental approval required by law; or
               (2)  67 percent of those entitled to vote on the
  amendment of the declaration, in addition to any governmental
  approval required by law.  
         (h-1)  If the declaration contains a lower percentage than
  prescribed by Subsection (h), the percentage in the declaration
  controls.
         SECTION 6.  Section 209.0051, Property Code, is amended by
  amending Subsections (b), (c-1), and (h) and adding Subsection
  (c-2) to read as follows:
         (b)  In this section, "board[:
               [(1)  "Board] meeting":
               (1) [(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
               (2) [(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-1)  Except for a meeting held by electronic or telephonic
  means under Subsection (c-2) [(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.
         (c-2)  A board meeting may be held by electronic or
  telephonic means provided that:
               (1)  all directors may hear and be heard by every other
  director; and
               (2)  except for any portion of the meeting conducted in
  executive session, all owners in attendance at the meeting may hear
  all directors.
         (h)  Except as provided by this subsection, a [A] board may
  take action outside of a meeting [meet by any method of
  communication], including voting by electronic or [and] telephonic
  means, without prior notice to owners under Subsection (e), if each
  director is given a reasonable opportunity to express the
  director's opinion to all other directors and to vote [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.
         SECTION 7.  Section 209.0056, Property Code, is amended by
  amending Subsection (a) and adding Subsection (a-1) to read as
  follows:
         (a)  For an election or vote taken at a meeting of the
  association owners, not [Not] later than the 10th day or earlier
  than the 60th day before the date of the [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.
         (a-1)  For an election or vote of association owners not
  taken at a meeting, the property owners' association shall give
  notice of the election or vote to all owners.
         SECTION 8.  Section 209.0057, Property Code, is amended by
  amending Subsections (b), (c), and (d) and adding Subsections
  (b-1), (b-2), (b-3), and (b-4) to read as follows:
         (b)  Any owner may, not later than the 15th day after the date
  of the meeting of association owners at which the election or vote
  was held or the date of the announcement of the results of the
  election or vote if no meeting was held, require a recount of the
  votes.  A demand for a recount must be submitted in writing either:
               (1)  by verified [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.
         (b-1)  The association must estimate the costs for
  performance of the recount by a person qualified to tabulate votes
  under Subsection (c) and must send an invoice for the estimated
  costs to the requesting owner at the owner's last known address
  according to association records not later than the 20th day after
  the date the association receives the owner's demand for the
  recount.
         (b-2)  The owner demanding a recount under this section must
  pay the invoice described by Subsection (b-1) in full to the
  property owners' association on or before the 30th day after the
  date the invoice is sent to the owner.
         (b-3)  If the invoice described by Subsection (b-1) is not
  paid by the deadline prescribed by Subsection (b-2), the owner's
  demand for a recount is considered withdrawn and a recount is not
  required. 
         (b-4) If the estimated costs under Subsection (b-1) are
  lesser or greater than the actual costs, the association must send a
  final invoice to the owner on or before the 30th business day after
  the date the results of the recount are provided. If the final
  invoice includes additional amounts owed by the owner, any
  additional amounts not paid 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 exceed the final invoice amount, the owner is entitled to a
  refund. The association shall issue the refund to the owner not
  later than the 30th business day after the date the invoice is sent
  to the owner.
         (c)  Following receipt of payment under Subsection (b-2),
  the [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
  each person [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 Subsection (b-2)
  [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.
         SECTION 9.  Sections 209.0058(a) and (c), Property Code, are
  amended to read as follows:
         (a)  Any vote cast by a member of a property owners'
  association in a director [an] election or in a vote on the issue of
  whether to amend a dedicatory instrument, increase a regular
  assessment, adopt a special assessment, or remove a director [or
  vote by a member of a property owners' association] must be in
  writing and signed by the member.
         (c)  In an association [association-wide] election, written
  and signed ballots are not required for uncontested races.
         SECTION 10.  Section 209.00591, Property Code, is amended by
  adding Subsection (b-1) and amending Subsection (c) to read as
  follows:
         (b-1)  Notwithstanding any other provision of this chapter,
  a property owners' association's bylaws may require one or more
  board members to reside in the subdivision subject to the
  dedicatory instruments. A requirement described by this subsection
  is not applicable during the development period.
         (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 or a
  builder in the business of constructing homes who purchased the
  lots from the declarant for the purpose of selling completed homes
  built on the lots, 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.
         SECTION 11.  Section 209.00592, Property Code, is amended by
  amending Subsection (a) and adding Subsections (a-1) and (c-1) to
  read as follows:
         (a)  The voting rights of an owner may be cast or given:
               (1)  if a meeting of the property owners' association is
  held, in person or by proxy at the [a] meeting [of the property
  owners' association];
               (2)  by absentee ballot in accordance with this
  section; or
               (3)  [by electronic ballot in accordance with this
  section; or
               [(4)]  by any method of representative or delegated
  voting provided by a dedicatory instrument.
         (a-1)  The board may in its discretion use electronic ballots
  in accordance with this section as an additional method of voting.
         (c-1)  For purposes of Subsection (b), a nomination taken
  from the floor in an election of directors is not considered an
  amendment to the proposal for the election.
         SECTION 12.  Section 209.00593(d), Property Code, is amended
  to read as follows:
         (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.]
         SECTION 13.  Section 209.00594, Property Code, is amended by
  adding Subsection (b-1) and amending Subsection (c) to read as
  follows:
         (b-1)  A person performing a recount under Section
  209.0057(c) may not disclose to any other person how an individual
  voted.
         (c)  Notwithstanding any other provision of this chapter or
  any other law, only a person [other than a person] who tabulates
  votes under Subsection (b) or who performs a recount under Section
  209.0057(c)[, including a person described by Subsection (a),] may
  be given access to the ballots cast in the election or vote [only as
  part of a recount process authorized by law].
         SECTION 14.  Section 209.006, Property Code, is amended to
  read as follows:
         Sec. 209.006.  NOTICE REQUIRED BEFORE ENFORCEMENT ACTION.
  (a)  Before a property owners' association may suspend an owner's
  right to use a common area, file a suit against an owner other than a
  suit to collect a regular or special assessment or foreclose under
  an association's lien, charge an owner for property damage, or levy
  a fine for a violation of the restrictions or bylaws or rules of the
  association, the association or its agent must give written notice
  to the owner by verified [certified] mail[, return receipt
  requested].
         (b)  The notice must:
               (1)  describe the nature of the violation or property
  damage that is the basis for the suspension action, charge, or fine
  and state any amount due the association from the owner; [and]
               (2)  except as provided in Subsection (d), inform the
  owner that the owner:
                     (A)  is entitled to a reasonable period to cure
  the violation and avoid the fine or suspension [unless the owner was
  given notice and a reasonable opportunity to cure a similar
  violation within the preceding six months];
                     (B)  may request a hearing under Section 209.007
  on or before the 30th day after the date [the owner receives] the
  notice was mailed to the owner; and
                     (C)  may have special rights or relief related to
  the enforcement action under federal law, including the
  Servicemembers Civil Relief Act (50 U.S.C. App. [app.] Section 501
  et seq.), if the owner is serving on active military duty;
               (3)  specify the date by which the owner must cure the
  violation if the violation is of a curable nature and does not pose
  a threat to public health or safety; and
               (4)  be sent by verified mail to the owner at the
  owner's last known address as shown on the association records.
         (c)  The date specified in the notice under Subsection (b)(3)
  must provide a reasonable period to cure the violation if the
  violation is of a curable nature and does not pose a threat to
  public health or safety.
         (d)  Subsections (a) and (b) do not apply to a violation for
  which the owner has been previously given notice under this section
  and the opportunity to exercise any rights available under this
  section in the preceding six months.
         (e)  If the owner cures the violation before the expiration
  of the period for cure described by Subsection (c), any fine
  assessed for the violation is void.
         (f)  For purposes of this section, a violation is considered
  a threat to public health or safety if the violation could
  materially affect the physical health or safety of an ordinary
  resident.
         SECTION 15.  Section 209.0062(c), Property Code, is amended
  to read as follows:
         (c)  A property owners' association is [may] not required to
  allow a payment plan for any amount that extends more than 18 months
  from the date of the owner's request for a payment plan.  The
  association is not required to enter into a payment plan with an
  owner who failed to honor the terms of a previous payment plan
  during the two years following the owner's default under the
  previous payment plan. The association is not required to make a
  payment plan available to an owner after the period for cure
  described by Section 209.0064(b)(3) expires. The association is
  not required to allow an owner to enter into a payment plan more
  than once in any 12-month period.
         SECTION 16.  Section 209.0063, Property Code, is amended by
  amending Subsection (a) and adding Subsection (c) to read as
  follows:
         (a)  Except as provided by Subsections [Subsection] (b) and
  (c), a payment received by a property owners' association from the
  owner shall be applied to the owner's debt in the following order of
  priority:
               (1)  any delinquent assessment;
               (2)  any current assessment;
               (3)  any attorney's fees or third party collection
  costs incurred by the association associated solely with
  assessments or any other charge that could provide the basis for
  foreclosure;
               (4)  any attorney's fees incurred by the association
  that are not subject to Subdivision (3);
               (5)  any fines assessed by the association; and
               (6)  any other amount owed to the association.
         (c)  This section does not apply to a payment made pursuant
  to a final judgment, another binding court order, or any mutual
  agreement of the parties entered into after the 30-day period
  described in Section 209.0064(b)(3).
         SECTION 17.  Section 209.0064(b), Property Code, is amended
  to read as follows:
         (b)  A property owners' association may not hold an owner
  liable for fees of a collection agent retained by the property
  owners' association unless the association first provides written
  notice to the owner by certified mail, return receipt requested,
  that:
               (1)  specifies each delinquent amount and the total
  amount of the payment required to make the account current;
               (2)  if the property owners' association is subject to
  Section 209.0062, describes the options the owner has to avoid
  having the account turned over to a collection agent, including
  information regarding availability of a payment plan through the
  association; and
               (3)  provides a period of at least 30 days for the owner
  to cure the delinquency before further collection action is taken.
         SECTION 18.  Section 209.0091, Property Code, is amended to
  read as follows:
         Sec. 209.0091.  PREREQUISITES TO FORECLOSURE:  NOTICE AND
  OPPORTUNITY TO CURE FOR CERTAIN OTHER LIENHOLDERS. (a)  A property
  owners' association may not sell a property pursuant to a
  foreclosure right [foreclose a property owners' association
  assessment lien on real property by giving notice of sale under
  Section 51.002 or commencing a judicial foreclosure action] unless
  the association has:
               (1)  provided written notice of the total amount of the
  delinquency giving rise to the foreclosure to any other holder of a
  lien of record on the property whose lien is inferior or subordinate
  to the association's lien and is evidenced by a deed of trust; and
               (2)  provided the recipient of the notice an
  opportunity to cure the delinquency before the 61st day after the
  date the association mails [recipient receives] the notice
  described in Subdivision (1).
         (b)  Notice under this section must be sent by verified
  [certified] mail[, return receipt requested,] to the address for
  the lienholder shown in the deed records relating to the property
  that is subject to the property owners' association assessment
  lien.
         (c)  Notwithstanding any other law, notice under this
  section may be provided to any holder of a lien of record on the
  property.
         SECTION 19.  Section 209.0092, Property Code, is amended by
  amending Subsection (a) and adding Subsection (d) to read as
  follows:
         (a)  Except as provided by Subsection (c) or (d) and subject
  to Section 209.009, a property owners' association may not
  foreclose a property owners' association assessment lien unless the
  association first obtains a court order in an application for
  expedited foreclosure under the rules adopted by the supreme court
  under Subsection (b).  A property owners' association may use the
  procedure described by this subsection to foreclose any lien
  described by the association's dedicatory instruments and is
  considered to have with respect to the lien any power of sale
  required by law as a condition of using the procedure described by
  this subsection.
         (d)  The association may in its discretion elect not to use
  the expedited procedure described by Subsection (b) and instead
  foreclose the association's assessment lien under court judgment
  foreclosing the lien and ordering the sale, pursuant to Rules 309
  and 646a, Texas Rules of Civil Procedure.
         SECTION 20.  Section 209.0041(a), Property Code, is
  repealed.
         SECTION 21.  (a)  The changes in law made by this Act to
  Chapter 207, Property Code, apply only to a request for subdivision
  information made on or after the effective date of this Act and any
  resale certificate delivered in response to that request. A
  request for subdivision information made before the effective date
  of this Act, any resale certificate delivered in response to that
  request, and any request for an update of that resale certificate
  are governed by the law as it existed immediately before that date,
  and that law is continued in effect for that purpose.
         (b)  Sections 209.0041, 209.0056, 209.0057, 209.0058,
  209.00592, and 209.00594(c), Property Code, as amended by this Act,
  apply only to an election or vote held on or after the effective
  date of this Act. An election or vote held before the effective
  date of this Act is governed by the law as it existed immediately
  before that date, and that law is continued in effect for that
  purpose.
         (c)  Section 209.006, Property Code, as amended by this Act,
  applies only to an enforcement action taken on or after the
  effective date of this Act. An enforcement action taken before the
  effective date of this Act is governed by the law as it existed
  immediately before that date, and that law is continued in effect
  for that purpose.
         (d)  Section 209.0064, Property Code, as amended by this Act,
  applies only to a collection action taken on or after the effective
  date of this Act. A collection action taken before the effective
  date of this Act is governed by the law as it existed immediately
  before that date, and that law is continued in effect for that
  purpose.
         (e)  Section 209.0091, Property Code, as amended by this Act,
  applies only to a foreclosure sale that takes place on or after the
  effective date of this Act. A foreclosure sale that takes place
  before the effective date of this Act is governed by the law as it
  existed immediately before that date, and that law is continued in
  effect for that purpose.
         SECTION 22.  This Act takes effect September 1, 2015.
 
  * * * * *
feedback