81R6826 AJA-F
By: Solomons H.B. No. 1976
A BILL TO BE ENTITLED
AN ACT
relating to the operation of property owners' associations.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 5.006(a), 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 may [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 (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 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, the property owners' association's operating budget
and balance sheet, and the style and cause number of lawsuits to
which the property owners' association is a party. These documents
must be made available to you by the seller on your request.
Date: ____________________________________________
Signature of Purchaser
(f) On the purchaser's request for a resale certificate from
the seller, the seller shall:
(1) promptly deliver a copy of a current resale
certificate if one has been issued for the property under Chapter
207; or
(2) if the seller does not have a current resale
certificate:
(A) request the property owners' association or
its agent to issue a resale certificate under Chapter 207; and
(B) promptly deliver a copy of the resale
certificate to the purchaser on receipt of the resale certificate
from the property owners' association or its agent.
(g) The seller or the purchaser, as agreed to by the
parties, shall pay the fee to the property owners' association or
its agent for issuing the resale certificate under Chapter 207.
SECTION 3. Section 202.001(1), 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) a declaration or similar instrument
subjecting real property to:
(i) restrictive covenants, bylaws, or
similar instruments governing the administration or operation of a
property owners' association;
(ii)[, to] properly adopted rules and
regulations of the property owners' association; or
(iii)[, or to] all lawful amendments to the
covenants, bylaws, instruments, rules, or regulations;
(B) bylaws, rules, regulations, or guidelines
adopted by a property owners' association under an instrument
described by Paragraph (A); and
(C) any other document that governs the rights,
duties, and responsibilities of a property owners' association or
the association's members.
SECTION 4. Section 202.004, Property Code, is amended by
adding Subsection (d) to read as follows:
(d) In evaluating an alleged violation of a restrictive
covenant, the property owners' association or other representative
designated by an owner of real property may not take action if the
property owners' association determines that under the particular
circumstances:
(1) the property owners' association's position is not
sufficiently strong to justify taking any action or further action;
(2) the provision alleged to have been violated may be
inconsistent with applicable law;
(3) the alleged violation is not of such a material or
visible nature as to be objectionable to a reasonable person or to
justify expending the property owners' association's resources; or
(4) enforcement of the provision is not in the
association's best interests, based on hardship, expense, or other
reasonable criteria.
SECTION 5. 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 that is not filed in accordance
with this section has no effect until filed and cannot be enforced
against a property owner who purchased the property before the
dedicatory instrument was filed.
SECTION 6. Chapter 202, Property Code, is amended by adding
Sections 202.008, 202.010, 202.011, 202.012, and 202.013 to read as
follows:
Sec. 202.008. ASSOCIATION'S RIGHT OF ENTRY. (a) A
provision in a dedicatory instrument that provides a property
owners' association the right or authority to enter onto an owner's
private property to enforce or abate an alleged violation of a
restrictive covenant is void as against public policy.
(b) This section does not prohibit a provision in a
dedicatory instrument allowing a property owners' association a
right of entry on the property of an owner that is limited to a
dedicated access or other easement contained in a final plat.
Sec. 202.010. CERTAIN PARKING RESTRICTIONS PROHIBITED. (a)
A provision in a dedicatory instrument that restricts or prohibits
an owner from parking on a public street is void as against public
policy.
(b) A provision in a dedicatory instrument that restricts or
prohibits an owner from parking the owner's personal, noncommercial
vehicle in the owner's driveway is void as against public policy.
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) This section does not prohibit the inclusion or
enforcement of 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; or
(4) is located in an area on the property owner's
property other than:
(A) on the roof of the home; or
(B) in a fenced yard or patio maintained by the
property owner.
Sec. 202.013. INJUNCTION; DAMAGES. (a) If a property
owners' association or other representative designated by the
property owners' association has violated, is violating, or is
threatening to violate this chapter, a member of the property
owners' association may bring a civil action against the property
owners' association.
(b) A member of a property owners' association bringing an
action under this section may seek:
(1) injunctive relief;
(2) damages in an amount equal to the greater of:
(A) actual damages arising from the violation; or
(B) $1,500 for each violation; or
(3) both injunctive relief and damages as provided in
this subsection.
(c) If a member of the property owners' association prevails
in an action under this section, the member of the property owners'
association is entitled to recover reasonable attorney's fees and
court costs.
(d) The court may increase an award under Subsection (b)(2)
to an amount not to exceed three times the amount awarded under
Subsection (b)(2) if the court finds that violations have occurred
with a frequency that constitutes a pattern or practice.
(e) Each day a violation continues is not considered a
separate violation for purposes of a civil penalty assessment.
SECTION 7. Section 207.003(b), Property Code, is amended to
read as follows:
(b) A resale certificate under Subsection (a) must contain:
(1) a statement of any right of first refusal 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 is due after the date the resale certificate is 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 property taxes of an individual
member of the association [defendant];
(6) [(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;
(7) [(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;
(8) [(14)] the name, mailing address, and telephone
number of the property owners' association's managing agent, if
any; and
(9) 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 [(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].
SECTION 8. Chapter 209, Property Code, is amended by adding
Sections 209.0035, 209.0041, 209.0051, 209.0056, 209.0057,
209.0058, 209.0059, 209.00591, and 209.00592 to read as follows:
Sec. 209.0035. INJUNCTION; DAMAGES. (a) If a property
owners' association or other representative designated by the
property owners' association has violated, is violating, or is
threatening to violate this chapter, a member of the property
owners' association may bring a civil action against the property
owners' association.
(b) A member of a property owners' association bringing an
action under this section may seek:
(1) injunctive relief;
(2) damages in an amount equal to the greater of:
(A) actual damages arising from the violation; or
(B) $1,500 for each violation; or
(3) both injunctive relief and damages as provided in
this subsection.
(c) If a member of the property owners' association prevails
in an action under this section, the member of the property owners'
association is entitled to recover reasonable attorney's fees and
court costs.
(d) The court may increase an award under Subsection (b)(2)
to an amount not to exceed three times the amount awarded under
Subsection (b)(2) if the court finds that violations have occurred
with a frequency that constitutes a pattern or practice.
(e) Each day a violation continues is not considered a
separate violation for purposes of a civil penalty assessment.
Sec. 209.0041. AMENDMENT OF 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 applies to a dedicatory instrument
regardless of the date on which the dedicatory instrument was
created.
(c) This section does not apply to the amendment of a
dedicatory instrument during a development period, as defined by
Section 202.011.
(d) To the extent of any conflict with another provision of
this title, this section prevails.
(e) Each dedicatory instrument and any subsequently enacted
dedicatory instruments may be amended only by a vote of 51 percent
of the total votes allocated to property owners in the property
owners' association.
Sec. 209.0051. OPEN MEETINGS. (a) Each meeting of the
board or a committee of a property owners' association shall be open
to every member of the association and shall be held in a county in
which the property to which the association relates is located.
(b) A property owners' association shall give written
notice to every member of the property owners' association of the
date, hour, place, and subject of each regular or special meeting of
the board or a committee of the property owners' association. The
notice must include a written agenda that states in clear and
precise language the item or items to be addressed and considered at
the meeting and shall be posted:
(1) at least 72 hours before the start of the meeting;
and
(2) in a conspicuous manner or place reasonably
designed to provide notice to the association members.
(c) A property owners' association shall prepare and keep
minutes or make a tape recording of each meeting of the board or a
committee of the property owners' association. The minutes must:
(1) state the subject of each deliberation; and
(2) indicate each vote, order, decision, or other
action taken.
(d) The minutes of the board or a committee meeting of a
property owners' association shall be made available for inspection
and copying by a member of the property owners' association not
later than the seventh day after the date of the meeting.
Sec. 209.0056. NOTICE OF ELECTION OR ASSOCIATION VOTE. On
or before the 30th day before the date an election or vote is held by
a property owners' association, the association shall give each
owner of property in the property owners' association written
notice of the election or vote.
Sec. 209.0057. TABULATION OF VOTES. To tabulate the votes
in any matter subject to a vote of the members of a mandatory
property owners' association, the association shall enter into a
contract for the services of:
(1) a county judge;
(2) a county elections administrator; or
(3) a county voter registrar.
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) Not later than the 10th day after the date of an election
or vote, a property owners' association shall file all ballots cast
in an election or vote that results in the amendment of a dedicatory
instrument of record in the real property records of each county in
which the property is located. The results of an election or vote
subject to this subsection are not valid until the ballots are
filed.
Sec. 209.0059. RIGHT TO VOTE. A provision in a dedicatory
instrument that would disqualify a property owner from voting in an
association election of board members or on any matter concerning
the rights or responsibilities of the owner is void.
Sec. 209.00591. PROXY VOTING. A provision in any
dedicatory instrument that provides for a proxy vote in any matter
subject to a vote of the members of the property owners' association
is void.
Sec. 209.00592. BOARD MEMBERSHIP. (a) Except as provided
by Subsection (b), 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) A dedicatory instrument may restrict the right of a
property owner who has been convicted of a felony or crime involving
moral turpitude to run for a position on the board of the property
owners' association.
SECTION 9. Section 209.005, Property Code, is amended by
amending Subsection (a) and adding Subsections (c) and (d) to read
as follows:
(a) On or before the 30th day after the date a property
owners' association receives a written request, the [A property
owners'] association shall make the books and records of the
association, including financial records, [reasonably] available
to an owner in accordance with Chapter 552, Government Code
[Section B, Article 2.23, Texas Non-Profit Corporation Act (Article
1396-2.23, Vernon's Texas Civil Statutes)].
(c) Except as provided by Subsection (d), if a property
owners' association subject to Subsection (a) fails to comply with
Subsection (a), an owner may seek one or more of the following
remedies:
(1) a court order directing the property owners'
association to provide the required information;
(2) a judgment against the property owners'
association for a penalty of not more than $1,500; or
(3) a judgment against the property owners'
association for court costs and attorney's fees incurred in
connection with seeking a remedy under this section.
(d) An owner who seeks a remedy under Section 209.0035 for a
violation of Subsection (a) may not seek a judgment under
Subsection (c)(2) or (3).
SECTION 10. Section 209.006, Property Code, is amended by
amending Subsection (b) and adding Subsections (c) and (d) 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; and
(3) specify a date certain by which the owner must cure
the violation [receives the notice].
(c) Notice under Subsection (b) must be personally
delivered, sent by certified mail with a return receipt requested,
or delivered by the United States Postal Service with signature
confirmation service to the owner at the owner's last known address
as shown on the association's records.
(d) The date specified in the notice under Subsection (b)(3)
must provide a reasonable period of at least 30 days for the owner
to cure the violation.
SECTION 11. Chapter 209, Property Code, is amended by
adding Sections 209.0061, 209.0062, 209.0063, 209.0064, and
209.0091 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 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
interest or penalties.
(b) A property owners' association shall allow partial
payments for 12 months unless the property owner requests a shorter
payment period in writing at the time the property owner requests an
alternative payment plan.
(c) A property owners' association is not required to allow
a payment plan that extends more than 12 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.
(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 interest or penalties.
Sec. 209.0063. PRIORITY OF PAYMENTS. Unless otherwise
provided in writing by the property owner at the time payment is
made, 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 incurred by the association
associated solely with assessments or any other charge that could
provide the basis for foreclosure;
(4) any fines assessed by the association;
(5) any attorney's fees incurred by the association
that are not subject to Subdivision (3); and
(6) any other amount owed to the association.
Sec. 209.0064. COLLECTIONS. A property owners' association
must bring suit or otherwise initiate against an owner a collection
action authorized by the dedicatory instruments or other law on or
before the 10th anniversary of the date on which the cause of action
for collection of the debt accrues. Section 16.004, Civil Practice
and Remedies Code, does not apply to the collection of a debt owed
by an owner to a property owners' association.
Sec. 209.0091. JUDICIAL FORECLOSURE REQUIRED. (a) Except
as provided by Subsection (b), a property owners' association may
not foreclose a property owners' association's assessment lien
unless the association first obtains a court judgment foreclosing
the lien and providing for issuance of an order of sale.
(b) Judicial 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 judicial
foreclosure under this section.
SECTION 12. Section 209.010(a), 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 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 of the owner's right to redeem
the property under Section 209.011; and
(2) a copy of Section 209.011.
SECTION 13. Chapter 209, Property Code, is amended by
adding Sections 209.014 and 209.015 to read as follows:
Sec. 209.014. VOTE ON CERTAIN ASSESSMENTS REQUIRED. (a) A
vote of 51 percent of the total votes allocated to owners of
property in the property owners' association is required to:
(1) increase by more than 10 percent the amount of
regular assessments due annually; or
(2) impose a special assessment.
(b) An action taken by a board of a property owners'
association in violation of this section is void.
Sec. 209.015. BOARD POWERS. Bylaws adopted by the board of
a property owners' association may not expand the powers of the
association beyond those powers specifically granted in the
declaration. To the extent of any conflict between the bylaws and
any declaration, the declaration prevails.
SECTION 14. Section 211.002(a), 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 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 15. Section 202.004(c), Property Code, is repealed.
SECTION 16. (a) Section 5.006(a), Property Code, as amended
by this Act, and the repeal by this Act of Section 202.004(c),
Property Code, 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 section, 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) Sections 202.013 and 209.0035, Property Code, as added
by this Act, apply only to a cause of action that accrues on or after
the effective date of this Act. A cause of action that accrues
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.
(d) Section 202.006, Property Code, as amended by this Act,
and Sections 202.008, 202.010, 202.011, 202.012, 209.0059,
209.00591, and 209.00592(a), Property Code, as added by this Act,
apply to a deed restriction enacted before, on, or after the
effective date of this Act.
(e) Section 209.005, Property Code, as amended by this Act,
applies only to a request for information received by a property
owners' association on or after the effective date of this Act. A
request for information received by a property owners' association
before the effective date of this Act is governed by the law in
effect immediately before the effective date of this Act, and that
law is continued in effect for that purpose.
(f) Sections 209.0061, 209.0062, and 209.0064, Property
Code, as added by this Act, apply 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.
(g) 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.
(h) Section 209.0091, Property Code, as added by this Act,
applies only to foreclosure of a lien that attaches on or after the
effective date of this Act. Foreclosure of a lien that attaches
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.
(i) Section 209.010(a), Property Code, as amended by this
Act, applies 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.
SECTION 17. Not later than January 1, 2010, 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 18. This Act takes effect January 1, 2010.