Bill Text: TX SB1231 | 2013-2014 | 83rd Legislature | Introduced
Bill Title: Relating to the operation of certain condominium unit owners' associations.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2013-03-13 - Referred to Intergovernmental Relations [SB1231 Detail]
Download: Texas-2013-SB1231-Introduced.html
83R6285 NC-F | ||
By: West | S.B. No. 1231 |
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relating to the operation of certain condominium unit owners' | ||
associations. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Section 82.002(c), Property Code, is amended to | ||
read as follows: | ||
(c) This section and the following sections apply to a | ||
condominium in this state for which the declaration was recorded | ||
before January 1, 1994: Sections 82.005, 82.006, 82.007, 82.053, | ||
82.054, 82.102(a)(1)-(7) and (12)-(21) [ |
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82.111, 82.113, 82.114, 82.116, 82.118, 82.157, and 82.161. The | ||
definitions prescribed by Section 82.003 apply to a condominium in | ||
this state for which the declaration was recorded before January 1, | ||
1994, to the extent the definitions do not conflict with the | ||
declaration. The sections listed in this subsection apply only | ||
with respect to events and circumstances occurring on or after | ||
January 1, 1994, and do not invalidate existing provisions of the | ||
declaration, bylaws, or plats or plans of a condominium for which | ||
the declaration was recorded before January 1, 1994. | ||
SECTION 2. Section 82.003(a), Property Code, is amended by | ||
adding Subdivision (11-a) to read as follows: | ||
(11-a) "Dedicatory instrument" means each document | ||
governing the establishment, maintenance, or operation of a | ||
condominium regime. The term includes a declaration or similar | ||
instrument subjecting real property to: | ||
(A) restrictive covenants, bylaws, or similar | ||
instruments governing the administration or operation of a unit | ||
owners' association; | ||
(B) properly adopted rules and regulations of the | ||
unit owners' association; or | ||
(C) all lawful amendments to the covenants, | ||
bylaws, instruments, rules, or regulations. | ||
SECTION 3. Section 82.102, Property Code, is amended by | ||
amending Subsection (a) and adding Subsections (f) and (g) to read | ||
as follows: | ||
(a) Unless otherwise provided by the declaration, the | ||
association, acting through its board, may: | ||
(1) adopt and amend bylaws; | ||
(2) adopt and amend budgets for revenues, | ||
expenditures, and reserves, and collect assessments for common | ||
expenses from unit owners; | ||
(3) hire and terminate managing agents and other | ||
employees, agents, and independent contractors; | ||
(4) institute, defend, intervene in, settle, or | ||
compromise litigation or administrative proceedings in its own name | ||
on behalf of itself or two or more unit owners on matters affecting | ||
the condominium; | ||
(5) make contracts and incur liabilities relating to | ||
the operation of the condominium; | ||
(6) regulate the use, maintenance, repair, | ||
replacement, modification, and appearance of the condominium; | ||
(7) adopt and amend rules regulating the use, | ||
occupancy, leasing or sale, maintenance, repair, modification, and | ||
appearance of units and common elements, to the extent the | ||
regulated actions affect common elements or other units; | ||
(8) cause additional improvements to be made as a part | ||
of the common elements; | ||
(9) acquire, hold, encumber, and convey in its own | ||
name any right, title, or interest to real or personal property, | ||
except common elements of the condominium; | ||
(10) grant easements, leases, licenses, and | ||
concessions through or over the common elements; | ||
(11) impose and receive payments, fees, or charges for | ||
the use, rental, or operation of the common elements and for | ||
services provided to unit owners; | ||
(12) impose interest and late charges for late | ||
payments of assessments, returned check charges, and, if notice and | ||
an opportunity to be heard are given in accordance with Subsection | ||
(d), reasonable fines for violations of the declaration, bylaws, | ||
and rules of the association; | ||
(13) adopt and amend rules regulating the collection | ||
of delinquent assessments and the application of payments; | ||
(14) adopt and amend rules regulating the termination | ||
of utility service to a unit, the owner of which is delinquent in | ||
the payment of an assessment that is used, in whole or in part, to | ||
pay the cost of that utility; | ||
(15) impose reasonable charges for preparing, | ||
recording, or copying declaration amendments, resale certificates, | ||
or statements of unpaid assessments; | ||
(16) enter a unit for bona fide emergency purposes | ||
when conditions present an imminent risk of harm or damage to the | ||
common elements, another unit, or the occupants; | ||
(17) [ |
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certain general common elements by an owner delinquent for more | ||
than 30 days in the payment of assessments; | ||
(18) [ |
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considers appropriate or necessary; | ||
(19) [ |
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declaration or bylaws; | ||
(20) [ |
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exercised in this state by a corporation of the same type as the | ||
association; and | ||
(21) [ |
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proper for the government and operation of the association. | ||
(f) Except as provided by Subsection (g), the association by | ||
resolution of the board of directors may: | ||
(1) borrow money; and | ||
(2) assign as collateral for the loan authorized by | ||
the resolution: | ||
(A) the association's right to future income, | ||
including the right to receive assessments; and | ||
(B) the association's lien rights. | ||
(g) If a dedicatory instrument requires a vote of members of | ||
the association to borrow money or assign the association's right | ||
to future income or the association's lien rights, the loan or | ||
assignment must be approved as provided by the dedicatory | ||
instrument. If the dedicatory instrument does not provide voting | ||
procedures, the board may determine whether a vote for that purpose | ||
may be cast electronically, by absentee ballot, in person or by | ||
proxy at a meeting called for that purpose, or by written consent. | ||
If votes are cast by written consent and a lower approval threshold | ||
is not provided by the dedicatory instrument, approval requires the | ||
consent of owners holding 67 percent of all voting interests. If | ||
votes are cast by another method and a lower approval threshold is | ||
not provided by the dedicatory instrument, approval requires 67 | ||
percent of all votes cast. | ||
SECTION 4. Section 82.111, Property Code, is amended by | ||
amending Subsections (c), (i), and (j) and adding Subsections (k), | ||
(l), and (m) to read as follows: | ||
(c) If the insurance described by Subsections (a) and (b) is | ||
not reasonably available, the association shall cause notice of | ||
that fact to be delivered or mailed to all unit owners and | ||
lienholders. The declaration may require the association to carry | ||
any other insurance, and the association in any event may carry any | ||
other insurance the board considers appropriate to protect the | ||
condominium, the association, or the unit owners. Insurance | ||
policies maintained under Subsection (a) may provide for | ||
commercially reasonable deductibles as the board determines | ||
appropriate or necessary. This section does not affect the right of | ||
a holder of a mortgage on a unit to require a unit owner to acquire | ||
insurance in addition to that provided by the association. | ||
(i) Except as provided by this section, any [ |
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the condominium for which insurance is required that is damaged or | ||
destroyed shall be promptly repaired or replaced by the association | ||
unless the condominium is terminated, repair or replacement would | ||
be illegal under any state or local health or safety statute or | ||
ordinance, or at least 80 percent of the unit owners[ |
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unit may vote, regardless of whether the owner's unit or limited | ||
common element has been damaged or destroyed. A vote may be cast | ||
electronically or by written ballot, including an absentee ballot, | ||
if a meeting is not held for that purpose or in person or by proxy at | ||
a meeting called for that purpose. A vote to not rebuild does not | ||
increase an insurer's liability to loss payment obligation under a | ||
policy, and the vote does not cause a presumption of total loss. | ||
Except as provided by this section, the [ |
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replacement in excess of the insurance proceeds [ |
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common expense, and the board may levy an assessment to pay the | ||
expenses in accordance with each owner's allocated interest. If the | ||
entire condominium is not repaired or replaced, any insurance | ||
proceeds attributable to the damaged common elements shall be used | ||
to restore the damaged area to a condition compatible with the | ||
remainder of the condominium, the insurance proceeds attributable | ||
to units and limited common elements that are not rebuilt shall be | ||
distributed to the owners of those units and the owners of the units | ||
to which those limited common elements were assigned, or to their | ||
mortgagees, as their interests may appear, and the remainder of the | ||
proceeds shall be distributed to all the unit owners as their | ||
interests may appear. If the unit owners vote to not rebuild any | ||
unit, that unit's allocated interests shall be automatically | ||
reallocated on the vote as if the unit had been condemned, and the | ||
association shall prepare, execute, and record an amendment to the | ||
declaration reflecting the reallocation. Section 82.068 governs | ||
the distribution of insurance proceeds if the condominium is | ||
terminated. | ||
(j) If the cost to repair damage to a unit or common element | ||
covered by the association's insurance is less than the amount of | ||
the applicable insurance deductible, the party who would be | ||
responsible for the repair in the absence of insurance shall pay the | ||
cost for the repair of the unit or common element. | ||
(k) If the association's insurance provides coverage for | ||
the loss and the cost to repair the damage to a unit or common | ||
element is more than the amount of the applicable insurance | ||
deductible, the dedicatory instruments determine payment for the | ||
cost of the association's deductible and costs incurred before | ||
insurance proceeds are available. If the dedicatory instruments | ||
are silent, the board of directors of the association by resolution | ||
shall determine the payment of those costs, or if the board does not | ||
approve a resolution, the costs are a common expense. A resolution | ||
under this subsection is considered a dedicatory instrument and | ||
must be recorded in each location in which the declaration is | ||
recorded. | ||
(l) If damage to a unit or the common elements is due wholly | ||
or partly to an act or omission of any unit owner or a guest or | ||
invitee of the unit owner, the association may assess the | ||
deductible expense and any other expense in excess of insurance | ||
proceeds against the owner and the owner's unit. | ||
(m) The provisions of this section may be varied or waived | ||
if all the units in a condominium are restricted to nonresidential | ||
use. | ||
SECTION 5. Section 82.113(g), Property Code, is amended to | ||
read as follows: | ||
(g) The owner of a unit [ |
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purchased [ |
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association's lien for assessments may redeem the unit not later | ||
than the 90th day after the date of the foreclosure sale. If the | ||
association is the purchaser [ |
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pay to the association to redeem the unit all amounts due the | ||
association at the time of the foreclosure sale, interest from the | ||
date of foreclosure sale to the date of redemption at the rate | ||
provided by the declaration for delinquent assessments, reasonable | ||
attorney's fees and costs incurred by the association in | ||
foreclosing the lien, any assessment levied against the unit by the | ||
association after the foreclosure sale, and any reasonable cost | ||
incurred by the association as owner of the unit, including costs of | ||
maintenance and leasing. If a party other than the association is | ||
the purchaser, the redeeming owner must pay to the purchaser of the | ||
unit at the foreclosure sale an amount equal to the amount bid at | ||
the sale, interest on the bid amount computed from the date of the | ||
foreclosure sale to the date of redemption at the rate of six | ||
percent, any assessment paid by the purchaser after the date of | ||
foreclosure, and any reasonable costs incurred by the purchaser as | ||
the owner of the unit, including costs of maintenance and leasing. | ||
The redeeming owner must also pay to the association all | ||
assessments that are due as of the date of the redemption and | ||
reasonable attorney's fees and costs incurred by the association in | ||
foreclosing the lien. On redemption, the purchaser of the unit at | ||
the foreclosure sale [ |
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warranty to the redeeming unit owner. The exercise of the right of | ||
redemption is not effective against a subsequent purchaser or | ||
lender for value without notice of the redemption after the | ||
redemption period expires unless the redeeming unit owner records | ||
the deed from the purchaser of the unit at the foreclosure sale | ||
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the right of redemption. A unit that has been redeemed remains | ||
subject to all liens and encumbrances on the unit before | ||
foreclosure. All rents and other income collected from the unit by | ||
the purchaser of the unit at the foreclosure sale [ |
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from the date of foreclosure sale to the date of redemption belong | ||
to the purchaser of the unit at the foreclosure sale [ |
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but the rents and income shall be credited against the redemption | ||
amount. The purchaser of [ |
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sale foreclosing an association's assessment [ |
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transfer ownership of the unit during the redemption period to a | ||
person other than a redeeming owner. | ||
SECTION 6. Section 82.116, Property Code, is amended by | ||
adding Subsection (a-1) to read as follows: | ||
(a-1) The county clerk shall file a management certificate | ||
in the real property records of the county under the label | ||
"Condominium Association Management Certificate" and organize the | ||
certificates in a manner that is easily accessible and searchable | ||
by the public. | ||
SECTION 7. (a) The change in law made by this Act to Section | ||
82.111, Property Code, applies only to payment of costs incurred on | ||
or after the effective date of this Act. Payment of costs incurred | ||
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) Section 82.113(g), Property Code, as amended by this | ||
Act, applies only to a condominium unit sold at a foreclosure sale | ||
on or after the effective date of this Act. A unit sold at a | ||
foreclosure sale before the effective date of this Act is subject to | ||
the law in effect immediately before the effective date of this Act, | ||
and that law is continued in effect for that purpose. | ||
(c) Each condominium unit owners' association that recorded | ||
a management certificate under Section 82.116, Property Code, | ||
before the effective date of this Act shall record a new management | ||
certificate under that section on or before January 1, 2014. | ||
SECTION 8. This Act takes effect September 1, 2013. |