Bill Text: TX SB142 | 2011-2012 | 82nd Legislature | Engrossed

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Bill Title: Relating to real property that is subject to restrictive covenants, including the operation of property owners' associations of subdivisions that are subject to restrictive covenants, and to certain foreclosure actions.

Spectrum: Bipartisan Bill

Status: (Engrossed - Dead) 2011-05-24 - Postponed [SB142 Detail]

Download: Texas-2011-SB142-Engrossed.html

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By: West, Nelson S.B. No. 142
Davis

A BILL TO BE ENTITLED
AN ACT
relating to real property that is subject to restrictive covenants,
including the operation of property owners' associations of
subdivisions that are subject to restrictive covenants, and to
certain foreclosure actions.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subsection (a), Section 5.006, Property Code, is
amended to read as follows:
(a) In an action based on breach of a restrictive covenant
pertaining to real property, the court shall allow to a prevailing
party [who asserted the action] reasonable attorney's fees in
addition to the party's costs and claim.
SECTION 2. Section 5.012, Property Code, is amended by
amending Subsection (a) and adding Subsections (a-1), (f), and (g)
to read as follows:
(a) A seller of residential real property that is subject to
membership in a property owners' association and that comprises not
more than one dwelling unit located in this state shall give to the
purchaser of the property a written notice that reads substantially
similar to the following:
NOTICE OF MEMBERSHIP IN PROPERTY OWNERS' ASSOCIATION CONCERNING THE
PROPERTY AT (street address) (name of residential community)
As a purchaser of property in the residential community in
which this property is located, you are obligated to be a member of
a property owners' association. Restrictive covenants governing
the use and occupancy of the property and all [a] dedicatory
instruments [instrument] governing the establishment, maintenance,
or [and] operation of this residential community have been or will
be recorded in the Real Property Records of the county in which the
property is located. Copies of the restrictive covenants and
dedicatory instruments [instrument] may be obtained from the county
clerk.
You are obligated to pay assessments to the property owners'
association. The amount of the assessments is subject to change.
Your failure to pay the assessments could result in enforcement of
the association's [a] lien on and the foreclosure of your property.
Section 207.003, Property Code, entitles an owner to receive
copies of any document that governs the establishment, maintenance,
or operation of a subdivision, including, but not limited to,
restrictions, bylaws, rules and regulations, and a resale
certificate from a property owners' association. A resale
certificate contains information including, but not limited to,
statements specifying the amount and frequency of regular
assessments and the style and cause number of lawsuits to which the
property owners' association is a party, other than lawsuits
relating to unpaid ad valorem taxes of an individual member of the
association. These documents must be made available to you by the
property owners' association or the association's agent on your
request.
Date: ____________________________________________
Signature of Purchaser
(a-1) The second paragraph of the notice prescribed by
Subsection (a) must be in bold print and underlined.
(f) On the purchaser's request for a resale certificate from
the property owners' association or the association's agent, the
association or its agent shall promptly deliver a copy of the most
recent resale certificate issued for the property under Chapter 207
so long as the resale certificate was prepared not earlier than the
60th day before the date the resale certificate is delivered to the
purchaser and reflects any special assessments approved before and
due after the resale certificate is delivered. If a resale
certificate that meets the requirements of this subsection has not
been issued for the property, the seller shall request the
association or its agent to issue a resale certificate under
Chapter 207, and the association or its agent shall promptly
prepare and deliver a copy of the resale certificate to the
purchaser.
(g) The purchaser shall pay the fee to the property owners'
association or its agent for issuing the resale certificate unless
otherwise agreed by the purchaser and seller of the property. The
property owners' association may not process a payment for a resale
certificate requested under Chapter 207 until the certificate is
available for delivery. The association may not charge a fee if the
certificate is not provided in the time prescribed by Section
207.003(a).
SECTION 3. Section 51.002, Property Code, is amended by
adding Subsection (i) to read as follows:
(i) Notice served under Subsection (b)(3) or (d) must state
the name and address of the sender of the notice and contain a
statement that is conspicuous, printed in boldface or underlined
type, and substantially similar to the following: "Assert and
protect your rights as a member of the armed forces of the United
States. If you are or your spouse is serving on active military
duty, including active military duty as a member of the Texas
National Guard or the National Guard of another state or as a member
of a reserve component of the armed forces of the United States,
please send written notice of the active duty military service to
the sender of this notice immediately."
SECTION 4. Subsection (a), Section 51.015, Property Code,
is amended by adding Subdivision (1-a) to read as follows:
(1-a) "Assessment" and "assessments" have the
meanings assigned by Sections 82.113(a) and 209.002, as applicable.
SECTION 5. Subsection (b), Section 51.015, Property Code,
is amended to read as follows:
(b) This section applies only to an obligation:
(1) that is secured by a mortgage, deed of trust, or
other contract lien, including a lien securing payment of an
assessment or assessments, as applicable, on real property or
personal property that is a dwelling owned by a military
servicemember;
(2) that originates before the date on which the
servicemember's active duty military service commences; and
(3) for which the servicemember is still obligated.
SECTION 6. Subdivision (1), Section 202.001, Property Code,
is amended to read as follows:
(1) "Dedicatory instrument" means each document
governing [instrument covering] the establishment, maintenance, or
[and] operation of a residential subdivision, planned unit
development, condominium or townhouse regime, or any similar
planned development. 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 property
owners' association;
(B)[, to] properly adopted rules and regulations
of the property owners' association; or
(C)[, or to] all lawful amendments to the
covenants, bylaws, instruments, rules, or regulations.
SECTION 7. Subsection (c), Section 202.004, Property Code,
is amended to read as follows:
(c) For a violation of a restrictive covenant of 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, a [A] court may assess civil damages [for the violation of a
restrictive covenant] in an amount not to exceed $200 for each day
of the violation.
SECTION 8. Section 202.006, Property Code, is amended to
read as follows:
Sec. 202.006. PUBLIC RECORDS. (a) A property owners'
association shall file all [the] dedicatory instruments
[instrument] in the real property records of each county in which
the property to which the dedicatory instruments relate [instrument
relates] is located.
(b) A dedicatory instrument has no effect until the
instrument is filed in accordance with this section.
SECTION 9. Chapter 202, Property Code, is amended by adding
Sections 202.011, 202.012, and 202.013 to read as follows:
Sec. 202.011. RIGHT OF FIRST REFUSAL PROHIBITED. (a) In
this section, "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.
(b) To the extent a restrictive covenant provides a right of
first refusal for the sale or lease of a residential unit or
residential lot in favor of the property owners' association or the
association's members, the covenant is void.
(c) This section does not apply to a restrictive covenant
that provides a right of first refusal in favor of a developer or
builder during the development period.
Sec. 202.012. REGULATION OF SOLAR ENERGY DEVICES. (a) In
this section, "solar energy device" has the meaning assigned by
Section 171.107, Tax Code.
(b) Except as otherwise provided by this section, a property
owners' association may not include or enforce a provision in a
dedicatory instrument that prohibits or restricts a property owner
from installing a solar energy device.
(c) A provision that violates Subsection (b) is void.
(d) A property owners' association may include or enforce a
provision in a dedicatory instrument that prohibits a solar energy
device that:
(1) as adjudicated by a court:
(A) threatens the public health or safety; or
(B) violates a law;
(2) is located on property owned or maintained by the
property owners' association;
(3) is located on property owned in common by the
members of the property owners' association;
(4) is located in an area on the property owner's
property other than:
(A) on the roof of the home or of another
structure allowed under a dedicatory instrument; or
(B) in a fenced yard or patio owned and
maintained by the property owner;
(5) if mounted on the roof of the home:
(A) extends higher than or beyond the roofline;
(B) is located in an area other than an area
designated by the property owners' association, unless the
alternate location increases the estimated annual energy
production of the device, as determined by using a publicly
available modeling tool provided by the National Renewable Energy
Laboratory, by more than 10 percent above the energy production of
the device if located in an area designated by the property owners'
association;
(C) does not conform to the slope of the roof and
has a top edge that is not parallel to the roofline; or
(D) has a frame, a support bracket, or visible
piping or wiring that is not in a silver, bronze, or black tone
commonly available in the marketplace;
(6) if located in a fenced yard or patio, is taller
than the fence line;
(7) as installed, voids material warranties; or
(8) was installed without prior approval by the
property owners' association or by a committee created in a
dedicatory instrument for such purposes that provides decisions
within a reasonable period or within a period specified in the
dedicatory instrument.
(e) A property owners' association or the association's
architectural review committee may not withhold approval for
installation of a solar energy device if the provisions of the
dedicatory instruments, to the extent authorized by this section,
are met or exceeded, unless the association or committee, as
applicable, determines in writing that placement of the device as
proposed by the property owner constitutes a condition that
substantially interferes with the use and enjoyment of land by
causing unreasonable discomfort or annoyance to persons of ordinary
sensibilities.
Sec. 202.013. RESTRICTIONS REQUIRING CAPITAL IMPROVEMENTS.
(a) A dedicatory instrument may not be amended to retroactively
require a person who owns property subject to the dedicatory
instrument at the time the amendment is adopted to make a capital
improvement to the owner's property that is not required before the
amendment.
(b) For the purposes of this section, "capital improvement"
means items such as additional tree plantings, additional sodding,
fence construction, hardscape installation, new construction, or
any similar capital improvement. The term does not include repair
or maintenance of existing improvements or the removal of
conditions that are in violation of a dedicatory instrument.
SECTION 10. Subsections (a), (b), and (c), Section 207.003,
Property Code, are amended to read as follows:
(a) Not later than the 10th day after the date a written
request for subdivision information is received from an owner,
owner's agent, or title insurance company or its agent acting on
behalf of the owner, the property owners' association shall deliver
to the owner, owner's agent, or title insurance company or its
agent:
(1) a current copy of the restrictions applying to the
subdivision;
(2) a current copy of the bylaws and rules of the
property owners' association; and
(3) a resale certificate prepared not earlier than the
60th day before the date the certificate is delivered that complies
with Subsection (b).
(b) A resale certificate under Subsection (a) must contain:
(1) a statement of any right of first refusal, other
than a right of first refusal that is prohibited by statute, and any
[or] other restraint contained in the restrictions or restrictive
covenants that restricts the owner's right to transfer the owner's
property;
(2) the frequency and amount of any regular
assessments;
(3) the amount and purpose of any special assessment
that has been approved before and is due after [the date] the resale
certificate is delivered [prepared];
(4) the total of all amounts due and unpaid to the
property owners' association that are attributable to the owner's
property;
(5) capital expenditures, if any, approved by the
property owners' association for the property owners' association's
current fiscal year;
(6) the amount of reserves, if any, for capital
expenditures;
(7) the property owners' association's current
operating budget and balance sheet;
(8) the total of any unsatisfied judgments against the
property owners' association;
(9) the style and cause number of any pending lawsuit
in which the property owners' association is a party, other than a
lawsuit relating to unpaid ad valorem taxes of an individual member
of the association [defendant];
(10) a copy of a certificate of insurance showing the
property owners' association's property and liability insurance
relating to the common areas and common facilities;
(11) a description of any conditions on the owner's
property that the property owners' association board has actual
knowledge are in violation of the restrictions applying to the
subdivision or the bylaws or rules of the property owners'
association;
(12) a summary or copy of notices received by the
property owners' association from any governmental authority
regarding health or housing code violations existing on the
preparation date of the certificate relating to the owner's
property or any common areas or common facilities owned or leased by
the property owners' association;
(13) the amount of any administrative transfer fee
charged by the property owners' association for a change of
ownership of property in the subdivision;
(14) the name, mailing address, and telephone number
of the property owners' association's managing agent, if any; [and]
(15) a statement indicating whether the restrictions
allow foreclosure of a property owners' association's lien on the
owner's property for failure to pay assessments; and
(16) a statement of all fees associated with the
transfer of ownership, including a description of each fee, to whom
each fee is paid, and the amount of each fee.
(c) A property owners' association may charge a reasonable
fee to assemble, copy, and deliver the information required by this
section and may charge a reasonable fee to prepare and deliver an
update of a resale certificate under Subsection (f). A purchaser
requesting a resale certificate under Section 5.012 or on whose
behalf the resale certificate is requested shall pay the fees
charged under this subsection unless otherwise agreed by the
purchaser and seller of the property.
SECTION 11. Chapter 207, Property Code, is amended by
adding Section 207.006 to read as follows:
Sec. 207.006. ONLINE SUBDIVISION INFORMATION REQUIRED. A
property owners' association shall make dedicatory instruments
relating to the association or subdivision and filed in the county
deed records available on a website if the association has, or a
management company on behalf of the association maintains, a
publicly accessible website.
SECTION 12. 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;
(5) Section 209.00592; and
(6) Section 209.0062.
SECTION 13. Chapter 209, Property Code, is amended by
adding Section 209.0041 to read as follows:
Sec. 209.0041. ADOPTION OR AMENDMENT OF CERTAIN DEDICATORY
INSTRUMENTS. (a) This section applies to a residential
subdivision in which property owners are subject to mandatory
membership in 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) This section does not apply to the amendment of a
declaration during a development period, as defined by Section
202.011.
(d) This section applies to a dedicatory instrument
regardless of the date on which the dedicatory instrument was
created.
(e) This section supersedes any contrary requirement in a
dedicatory instrument.
(f) To the extent of any conflict with another provision of
this title, this section prevails.
(g) Except as provided by this subsection, a declaration may
be amended only by a vote of 67 percent of the total votes allocated
to property owners in the property owners' association, in addition
to any governmental approval required by law. If the declaration
contains a lower percentage, the percentage in the declaration
controls.
(h) A bylaw may not be amended to conflict with the
declaration.
SECTION 14. 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 Section 552.261, Government Code. 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; 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 15. 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, "board meeting" 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. The term 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.
(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, as defined by
Section 202.011, 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 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, as defined by Section
202.011.
(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 16. Subsection (b), Section 209.006, Property Code,
is amended to read as follows:
(b) The notice must:
(1) describe 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) 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; and
(B) may request a hearing under Section 209.007
on or before the 30th day after the date notice was delivered to the
owner [receives the notice].
SECTION 17. Chapter 209, Property Code, is amended by
adding Sections 209.0061, 209.0062, 209.0063, and 209.0064 to read
as follows:
Sec. 209.0061. ASSESSMENT OF FINES. (a) A fine assessed
by the property owners' association must be reasonable in the
context of the nature and frequency of the violation and the effect
of the violation on the subdivision as a whole. If the association
allows fines for a continuing violation to accumulate against a lot
or an owner, the association must establish a reasonable maximum
fine amount for a continuing violation at which point the total fine
amount is capped.
(b) If a lot occupant other than the owner violates a
provision of the dedicatory instrument, the property owners'
association, in addition to exercising any of the association's
powers against the owner, may assess a fine directly against the
nonowner occupant in the same manner as provided for an owner but
may not require payment from both the owner and a nonowner occupant
for the same violation.
(c) If the property owners' association assesses a fine
against a nonowner occupant under this section, the notice
provisions of Section 209.006 and the hearing provisions of Section
209.007 apply to the nonowner occupant in the same manner as those
provisions apply to an owner.
Sec. 209.0062. ALTERNATIVE PAYMENT SCHEDULE FOR CERTAIN
ASSESSMENTS. (a) A property owners' association composed of more
than 14 lots shall adopt reasonable guidelines to establish an
alternative payment schedule by which an owner may make partial
payments to the property owners' association for delinquent regular
or special assessments or any other amount owed to the association
without accruing additional monetary penalties. For purposes of
this section, monetary penalties do not include reasonable costs
associated with administering the payment plan or interest.
(b) The minimum term for a payment plan offered by a
property owners' association is three months.
(c) A property owners' association is 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 or 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.
(d) A property owners' association shall file the
association's guidelines under this section in the real property
records of each county in which the subdivision is located.
(e) A property owners' association's failure to file as
required by this section the association's guidelines in the real
property records of each county in which the subdivision is located
does not prohibit a property owner from receiving an alternative
payment schedule by which the owner may make partial payments to the
property owners' association for delinquent regular or special
assessments or any other amount owed to the association without
accruing additional monetary penalties, as defined by Subsection
(a).
Sec. 209.0063. PRIORITY OF PAYMENTS. (a) Except as
provided by Subsection (b), 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.
(b) If, at the time the property owners' association
receives a payment from a property owner, the owner is in default
under a payment plan entered into with the association:
(1) the association is not required to apply the
payment in the order of priority specified by Subsection (a); and
(2) in applying the payment, a fine assessed by the
association may not be given priority over any other amount owed to
the association.
Sec. 209.0064. THIRD PARTY COLLECTIONS. Before a property
owners' association may assess the account of an owner for
reimbursement of reasonable attorney's fees and other reasonable
costs payable by the association to another party or billed by a
third party to the association on a contingency basis and that are
related to collecting assessments or other amounts owed the
association by the owner, the association must provide a 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) describes the options the owner has to avoid
liability for attorney's fees or other costs related to collection
of those amounts, including information regarding the 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 action is taken by the
association.
SECTION 18. 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 19. Chapter 209, Property Code, is amended by
adding Sections 209.0091, 209.0092, and 209.0093 to read as
follows:
Sec. 209.0091. JUDICIAL FORECLOSURE REQUIRED. (a) Except
as provided by Subsection (c) 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.
(b) The supreme court, as an exercise of the court's
authority under Section 74.024, Government Code, shall adopt rules
establishing expedited foreclosure proceedings for use by a
property owners' association in foreclosing an assessment lien of
the association. The rules adopted under this subsection must be
substantially similar to the rules adopted by the supreme court
under Section 50(r), Article XVI, Texas Constitution.
(c) Expedited foreclosure is not required under this
section if the owner of the property that is subject to foreclosure
agrees in writing at the time the foreclosure is sought to waive
expedited foreclosure under this section. A waiver under this
subsection may not be required as a condition of the transfer of
title to real property.
Sec. 209.0092. REMOVAL OR ADOPTION OF FORECLOSURE
AUTHORITY. A provision granting a right to foreclose a lien on real
property for unpaid amounts due to a property owners' association
may be removed from a dedicatory instrument or adopted in a
dedicatory instrument by a vote of at least 67 percent of the total
votes allocated to property owners in the property owners'
association. Owners holding at least 10 percent of all voting
interests in the property owners' association may petition the
association and require a special meeting to be called for the
purposes of taking a vote for the purposes of this section.
Sec. 209.0093. ASSESSMENT LIEN FILING. A lien, lien
affidavit, or other instrument evidencing the nonpayment of
assessments or other charges owed to a property owners' association
and filed in the official public records of a county is a legal
instrument affecting title to real property.
SECTION 20. Subsection (a), Section 209.010, Property Code,
is amended to read as follows:
(a) A property owners' association that conducts a
foreclosure sale of an owner's lot must send to the lot owner and to
each lienholder of record, not later than the 30th day after the
date of the foreclosure sale:
(1) [,] a written notice stating the date and time the
sale occurred and informing the lot owner and each lienholder of
record of the right of the lot owner and lienholder to redeem the
property under Section 209.011; and
(2) a copy of Section 209.011.
SECTION 21. 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 22. Subsection (a), Section 211.002, Property Code,
is amended to read as follows:
(a) This chapter applies only to a residential real estate
subdivision or any unit or parcel of a subdivision to which another
chapter in this title that provides a procedure under which a
subdivision's restrictions may for general purposes be amended does
not apply [located in whole or in part within an unincorporated area
of a county if the county has a population of less than 65,000].
SECTION 23. (a) Subsection (a), Section 5.006, and
Subsection (c), Section 202.004, Property Code, as amended by this
Act, apply only to an action filed on or after the effective date of
this Act. An action filed 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 5.012, Property Code, as amended by this Act,
applies only to a sale of property that occurs on or after the
effective date of this Act. For the purposes of this subsection, a
sale of property occurs before the effective date of this Act if the
executory contract binding the purchaser to purchase the property
is executed before that date. A sale of property that occurs before
the effective date of this Act is governed by the law in effect
immediately before that date, and that law is continued in effect
for that purpose.
(c) Section 51.015, Property Code, as amended by this Act,
applies only to the levy of an assessment or assessments as
described by Section 51.015, Property Code, as amended by this Act,
the effective date of which is on or after the effective date of
this Act. A levy of an assessment or assessments the effective date
of which is before the effective date of this Act is governed by the
law as it existed immediately before the effective date of this Act,
and that law is continued in effect for that purpose.
(d) Section 202.006, Property Code, as amended by this Act,
and Sections 202.011, 202.012, and 209.0059 and Subsection (a),
Section 209.00592, 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, except
that any action taken before the effective date of this Act based on
an unfiled dedicatory instrument is not invalidated by Section
202.006, Property Code, as amended by this Act.
(e) Sections 207.003 and 209.005, Property Code, as amended
by this Act, apply 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.
(f) 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.
(g) Section 209.006, Property Code, as amended by this Act,
applies only to an enforcement action initiated by a property
owners' association on or after the effective date of this Act. An
enforcement action initiated 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.
(h) Section 209.0062, Property Code, as added by this Act,
applies only to an assessment or other debt that becomes due on or
after the effective date of this Act. An assessment or other debt
that becomes due 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.
(i) Section 209.0063, Property Code, as added by this Act,
applies only to a payment received by a property owners'
association on or after the effective date of this Act. A payment
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.
(j) Section 209.0091, Property Code, as added by this Act,
and Subsection (a), Section 209.010, Property Code, as amended by
this Act, apply only to a foreclosure sale conducted on or after the
effective date of this Act. A foreclosure sale conducted 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.
(k) Section 209.0093, Property Code, as added by this Act,
applies only to an instrument filed on or after January 1, 2012. An
instrument filed before January 1, 2012, is governed by the law in
effect on the date the instrument was filed, and that law is
continued in effect for that purpose.
(l) 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 24. Not later than January 1, 2012, each property
owners' association shall present for recording with the county
clerk as prescribed by Section 202.006, Property Code, as amended
by this Act, each dedicatory instrument governing the association
that has not been previously recorded in the real property records
of the county.
SECTION 25. Not later than January 1, 2012, the Supreme
Court of Texas shall adopt rules of civil procedure under Section
209.0091, Property Code, as added by this Act.
SECTION 26. (a) Except as provided by Subsection (b) of
this section, this Act takes effect January 1, 2012.
(b) Subsection (b), Section 209.0091, Property Code, as
added by this Act, takes effect September 1, 2011.