81R22910 AJA-D
By: Solomons, et al. H.B. No. 1976
Substitute the following for H.B. No. 1976:
By: Quintanilla C.S.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 or a statute pertaining to real
property subject to a restrictive covenant or to restrictive
covenants to which real property is subject, 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 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. The property owners'
association may not require 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 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; and
(B) bylaws, rules, regulations, or guidelines
adopted by a property owners' association under an instrument
described by Paragraph (A).
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:
(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 unless the unfiled dedicatory
instrument differs from a dedicatory instrument filed at the time
of purchase only with respect to modifications or amendments
necessary to comply with state or federal law.
SECTION 6. Chapter 202, Property Code, is amended by adding
Sections 202.008, 202.010, 202.011, 202.012, 202.013, 202.014, and
202.015 to read as follows:
Sec. 202.008. ASSOCIATION'S RIGHT OF ENTRY. (a) Except as
provided by this section, 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 except for entry in circumstances in which it is
reasonably determined the property has been abandoned and not
maintained for more than 30 days. This subsection does not apply to
an entry for a forced mow or to remove trash or debris if the
dedicatory instrument allows entry for that purpose.
(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.
(c) This section does not apply to:
(1) an association regulated under Title 7; or
(2) a property owners' association that funds through
assessments:
(A) insurance on residences;
(B) one or more utility payments for residences;
or
(C) exterior maintenance of residences.
Sec. 202.010. CERTAIN PARKING RESTRICTIONS PROHIBITED. (a)
A provision in a dedicatory instrument that restricts or prohibits
an owner from parking an operable, noncommercial, and personal
automobile or truck 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 operable,
noncommercial, and personal automobile or truck in the owner's
driveway is void as against public policy.
(c) For the purposes of this section, "noncommercial
automobile" means a motor vehicle that may be legally driven on
public roads under state law and that exhibits no commercial
advertising other than standard dealer or manufacturer
advertising.
(d) For the purposes of this section, a recreational
vehicle, motor home, camper, all-terrain vehicle, trailer, or
watercraft is not considered to be a personal automobile or truck.
(e) This section does not apply to:
(1) an association regulated under Title 7; or
(2) a property owners' association that funds through
assessments:
(A) insurance on residences;
(B) one or more utility payments for residences;
or
(C) exterior maintenance of residences.
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. RENTAL RESTRICTIONS. A property owners'
association may not amend a dedicatory instrument to prohibit the
rental of property subject to the dedicatory instrument without the
consent of 67 percent of all owners of property subject to the
dedicatory instrument, except that a property owners' association
may require an owner to exercise due diligence in not leasing to an
occupant who is a registered sex offender or who has a history of
violent crime.
Sec. 202.014. 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. A provision of a dedicatory instrument requiring an
owner to make a capital improvement to the owner's property may only
be adopted by a vote of 67 percent of all owners of property subject
to the dedicatory instrument and may be applicable only to owners
purchasing property subject to the dedicatory instrument after the
provision is adopted.
(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.
Sec. 202.015. 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 but may not bring an action against an
association's officer or board member individually.
(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) 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.
(d) Each day a violation continues is not considered a
separate violation for purposes of an assessment of damages.
(e) The court may award damages to a property owners'
association for a suit brought by a member of the property owners'
association that the court finds frivolous or groundless in an
amount that is not more than the greater of:
(1) three times the association's actual damages; or
(2) $4,500.
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];
(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.
SECTION 8. Chapter 209, Property Code, is amended by adding
Sections 209.0035 and 209.0041 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 but may not bring an action against an
association's officer or board member individually.
(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) 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.
(d) Each day a violation continues is not considered a
separate violation for purposes of assessment of damages.
(e) The court may award damages to a property owners'
association for a suit brought by a member of the property owners'
association that the court finds frivolous or groundless in an
amount that is not more than the greater of:
(1) three times the association's actual damages; or
(2) $4,500.
Sec. 209.0041. AMENDMENT OF RESTRICTIVE COVENANTS AND
BYLAWS. (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 restrictive covenant or bylaw
regardless of the date on which the restrictive covenant or bylaw
was created.
(c) This section does not apply to the amendment of a
restrictive covenant or bylaw 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) A restrictive covenant or bylaw may be amended only by a
vote of 51 percent of the total votes allocated to property owners
in the property owners' association if the amendment impacts the
use and enjoyment of personal or real property or may result in a
fine or loss of a privilege of a member of the association.
(f) All ballots cast in a vote that results in an amendment
to a restrictive covenant or bylaw are records of the association
subject to inspection under Section 209.005.
SECTION 9. Section 209.005, Property Code, is amended to
read as follows:
Sec. 209.005. ASSOCIATION RECORDS. (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.
(b) 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 [in
accordance with Section B, Article 2.23, Texas Non-Profit
Corporation Act (Article 1396-2.23, Vernon's Texas Civil
Statutes)]. An owner is entitled to copies of information
contained in the books and records.
(c) [(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
association, excluding invoices requested by an owner under Section
209.008(d), are not:
(1) records of the association;
(2) subject to inspection by the owner; or
(3) subject to production in a legal proceeding.
(d) In addition to the requirements of Subsection (b), a
property owners' association shall maintain a copy of the
association's books and records, including financial records and
invoices, in a building:
(1) in which the books and records are appropriately
stored; and
(2) that is:
(A) staffed during normal business hours;
(B) accessible to members of the association
during normal business hours; and
(C) located on property commonly owned by the
association within the boundaries of the subdivision governed by
the association.
(e) If a building described by Subsection (d) does not exist
on property described by Subsection (d), the property owners'
association shall make the books and records available in
accordance with Subsections (g) and (h).
(f) A party requesting association books or records shall
submit the request in writing to a current board member or to the
mailing address of the association or authorized representative as
provided on the most current management certificate filed under
Section 209.004.
(g) A property owners' association shall make books and
records requested under Subsection (b) available to the requesting
party within a reasonable time of the property owners'
association's receipt of the request.
(h) A reasonable time for providing information requested
under Subsection (b) is considered to be 10 business days after the
date the property owners' association receives a request, except as
otherwise provided by this section.
(i) If the property owners' association is unable to produce
a requested book or record on or before the 10th business day after
the date the information is requested, the property owners'
association must provide to the requestor notice that:
(1) informs the requestor that the property owners'
association is unable to produce the information on or before the
10th business day after the date of the request; and
(2) states a date by which the information will be
available for inspection that occurs not later than the 30th day
after the date notice under this subsection is given.
(j) A property owners' association shall make books and
records requested under this section available to the requestor in
one or more of the following formats, as agreed on by the requestor
and the property owners' association:
(1) an electronic format:
(A) delivered to an electronic mail address
provided by the requestor; or
(B) delivered in a disc or other standard
electronic format:
(i) to the mailing address of the
requestor; or
(ii) if the requesting party does not
provide a mailing address, to the address of the requestor's
property in the subdivision; or
(2) a hard-copy format:
(A) delivered to the mailing address of the
requestor; or
(B) if the requesting party does not provide a
mailing address:
(i) mailed to the address of the requestor's
property in the subdivision; or
(ii) made available at a location not more
than 50 miles from the boundary of the county in which the
requestor's property is located.
(k) This section does not require a property owners'
association to staff a building described by Subsection (d).
(l) A property owners' association may charge an owner for
copies of the requested information in an amount that reasonably
includes all costs related to reproducing the information,
including costs of materials, labor, and overhead.
(m) Any information maintained by the association that is
released under this section may not identify an individual member
of an association or an individual's personal financial
information. Information may be released in an aggregate manner
that would not identify an individual property owner.
(n) A property owners' association shall keep all records as
to changes to the dedicatory instruments in perpetuity and shall
maintain records related to financial matters of the association,
including assessments, fines, foreclosures, and enforcement
actions for at least seven years.
(o) 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 shall order the
association to:
(1) provide the access or copies requested by the
member; and
(2) pay the court costs and the member's reasonable
attorney's fees and court costs.
(p) For the purposes of this section, "business day" means a
day other than Saturday, Sunday, or a state or federal holiday.
SECTION 10. 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.
(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 or
policy over which the board has responsibility is discussed or
considered, or during which 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 or workshop, ceremonial event, or press
conference, if formal action is not taken and any discussion of
association business is incidental to the social function,
convention, workshop, ceremonial event, or press conference.
(c) Except as provided by this subsection, a meeting of the
property owners' association board or a committee or subcommittee
of the board is open to members of the property owners' association
and shall be held in a county in which all or part of the property
governed by the association is located.
(d) The board shall keep a record of each regular,
emergency, or special board meeting in the form of written minutes
or an audio recording of the meeting. A record of a meeting must
state the subject of each deliberation and indicate each vote,
order, decision, or other action taken by the board. The board
shall make meeting records available to a member for inspection and
copying on the member's written request to the board or the board's
representative.
(e) The board shall give members notice of the date, hour,
place, and subject of a regular or special board meeting, including
a general description of any matters to be brought up for
deliberation in executive session. The notice shall be posted:
(1) at least 72 hours before the start of the meeting;
and
(2) in a conspicuous manner reasonably designed to
provide notice to association members:
(A) in a place located on the association's
common property; or
(B) on any Internet website maintained by the
association.
(f) 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 written notice as
required by this section of the meeting continued to that other day.
(g) If at a regular, emergency, or special meeting, a member
makes an inquiry regarding a subject for which notice has not been
given as required by this section, the notice provisions of this
section do not apply to:
(1) a statement by the board of specific factual
information given in response to the inquiry; or
(2) a recitation of existing policy in response to the
inquiry.
(h) Any deliberation of or decision relating to the subject
of an inquiry made under Subsection (g) shall be limited to a
proposal to place the subject on the agenda for a subsequent board
meeting.
(i) In the event of an emergency or urgent necessity that
requires immediate board action, the board may meet in an emergency
board meeting to address a reasonably unforeseeable situation.
Notice for an emergency board meeting may be given in the manner
prescribed by Subsection (e) at least two hours before the
emergency session is convened and must clearly identify the
emergency or urgent necessity for which the notice is given. A
board in an emergency meeting may not consider fines, foreclosures,
enforcement actions, increases in assessments, or any other
foreseeable business or policy over which the board has
responsibility. Any action taken in an emergency session must be
ratified by a vote of the board at their next regular board meeting.
(j) Before the board calls an executive session, the board
shall convene in a regular or special board meeting for which notice
has been given as provided by this section. During that board
meeting, the presiding director may call an executive session by
announcing that an executive session will be held to deliberate a
matter described by Subsection (k) and identifying the specific
subdivision of Subsection (k) under which the executive session
will be held.
(k) A board of a property owners' association may meet in
executive session, to which the members do not have access, to
deliberate:
(1) anticipated or pending litigation, settlement
offers, or interpretations of the law with the association's legal
counsel;
(2) complaints or charges against a board member or a
representative of the property owners' association;
(3) a payment plan under Section 209.0062;
(4) a foreclosure under Chapter 51; or
(5) an enforcement action against a member of the
association.
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. (a) This section does
not apply to a property owners' association if:
(1) membership in the property owners' association is
mandatory for owners or for a defined class of owners of private
real property in a defined geographic area in a county with a
population of 2.8 million or more or in a county adjacent to a
county with a population of 2.8 million or more;
(2) the property owners' association has the power to
make mandatory special assessments for capital improvements or
mandatory regular assessments; and
(3) the amount of the mandatory special or regular
assessments is or has ever been based wholly or partly on the value
at which the state or a local governmental body assesses the
property for purposes of ad valorem taxation under Section 20,
Article VIII, Texas Constitution.
(b) 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 a person
who 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 who
is:
(1) a county judge;
(2) a county elections administrator;
(3) a justice of the peace; or
(4) 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 20th day after the date of an election
or vote, a property owners' association shall deposit in the county
clerk's office of each county in which the association's
declaration is recorded all ballots cast in an election or vote that
results in the amendment of a dedicatory instrument.
(c) Ballots deposited with a county clerk under this section
are subject to public inspection.
(d) A county clerk shall retain ballots deposited with the
clerk under this section until the fourth anniversary of the date
the ballots are deposited.
(e) A county clerk may not charge a fee for the deposit of
ballots under this section.
(f) The results of an election or vote subject to this
section are not valid until the ballots are deposited with the
county clerk as provided by this section.
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) 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.
Sec. 209.00593. VOTING. (a) The voting rights of an owner
may be cast or given:
(1) in person at a meeting of the property owners'
association;
(2) by absentee ballot in accordance with this
section; or
(3) by electronic ballot in accordance with this
section.
(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 the 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 forego the opportunity to consider and
vote on any action from the floor on these proposals. 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 the meeting in person.".
(d) For the purposes of this section, "electronic ballot"
means a ballot:
(1) given by:
(A) electronic 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.
SECTION 11. Section 209.006, Property Code, is amended by
amending Subsection (b) and adding Subsections (c), (d), (e), (f),
(g), (h), (i), (j), and (k) 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) except as provided by Subsection (d), inform the
owner that the owner:
(A) is entitled to a reasonable period to cure
the violation and avoid the fine [or suspension unless the owner was
given notice and a reasonable opportunity to cure a similar
violation within the preceding six months]; 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;
(3) specify the date by which the owner must cure the
violation if the violation is of a curable nature and does not pose
a threat to public health or safety;
(4) specify the dollar amount of any fine the
association seeks to levy;
(5) specify each provision of the dedicatory
instrument the owner is alleged to have violated; and
(6) be sent by certified mail, 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 [receives the
notice].
(c) 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 if the violation is of a curable nature and
does not pose a threat to public health or safety.
(d) Subsections (a) and (b) do not apply to a violation for
which the owner has been previously given notice under this section
and the opportunity to exercise any rights available under this
section in the preceding six months.
(e) If the property owner does not cure the violation in the
time provided under Subsection (c), the property owners'
association may assess the fine and shall provide notice of the
assessment to the owner. If the property owner disputes the
violation, the owner may challenge the fine by providing, within
the time prescribed by Subsection (f), written notice to the
property owners' association of the challenge accompanied by a
statement of the grounds on which the owner believes the owner is
not in violation and citations of the dedicatory instrument for
each violation alleged. If the property owner cures the violation
before the expiration period for cure specified under Subsection
(c), any fine assessed for the violation is void.
(f) If the property owner contests the violation on or
before the 30th day after the date the owner receives a notice of an
assessment of a fine but does not cure the violation within the same
30-day period, the property owners' association must file suit to
uphold and enforce the fine in a justice court or small claims court
not later than the 60th day after the expiration of the 30-day
period. The complaint must list each violation and be accompanied
by citation of the dedicatory instrument for each violation. If the
property owners' association does not file suit within the time
prescribed by this subsection, the association's right to collect
the fine is considered waived.
(g) Not later than the 30th day after the date a suit is
filed under Subsection (f), the court shall hold an evidentiary
hearing on the matter. The parties are not entitled to any
discovery.
(h) At the evidentiary hearing, the property owners'
association has the burden of proving by a preponderance of the
evidence that the property owner has violated a restrictive
covenant.
(i) The court shall determine whether a violation has
occurred and if so, whether the fine for the violation is reasonable
considering the type, duration, and severity of the violation.
(j) If the court finds that the position taken by either
party is groundless or made in bad faith, the court may award the
prevailing party its attorney's fees.
(k) For purposes of this section, a violation is considered
a threat to public health or safety if the violation materially
affects the physical health or safety of an ordinary resident.
SECTION 12. 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
monetary penalties. For purposes of this section, monetary
penalties do not include reasonable costs associated with
administering the payment plan or interest.
(b) For any approved special assessment in an amount greater
than the equivalent of the sum of all regular assessments payable in
the year the special assessment is approved, a property owners'
association shall allow partial payments of the special assessment
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. A property owners' association may offer
a reasonable discount for an owner making a one-time lump sum
payment of the special assessment.
(c) For any approved special assessment in an amount greater
than the equivalent of one-half the sum of all regular assessments
payable in the year the special assessment is approved, a property
owners' association shall allow partial payments of the special
assessment for six months unless the property owner requests a
shorter payment period in writing at the time the property owner
requests an alternative payment plan. A property owners'
association may offer a reasonable discount to an owner making a
one-time lump sum payment of the special assessment.
(d) A property owners' association is not required to allow
a payment plan for any amount 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 during the five years following an owner's
default under a previous payment plan.
(e) 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.
(f) 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. 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 (c), 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).
(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.
SECTION 13. 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 14. Chapter 209, Property Code, is amended by
adding Sections 209.014 and 209.015 to read as follows:
Sec. 209.014. 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.
Sec. 209.015. RESTRICTIONS ON OWNERSHIP VOID. A property
owners' association may not include or enforce a provision in a
dedicatory instrument that restricts the number of properties
within the subdivision that an individual may own.
SECTION 15. 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 16. Section 202.004(c), Property Code, is repealed.
SECTION 17. (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 202.015 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, 202.014,
209.0059, 209.00591, 209.00592(a), and 209.015, 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) 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 a foreclosure sale that occurs after January 1,
2010. A foreclosure sale that occurs on or before January 1, 2010,
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 209.010(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 18. 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 19. Not later than January 1, 2010, the Supreme
Court of Texas shall adopt rules of civil procedure under Section
209.0091, Property Code, as added by this Act.
SECTION 20. This Act takes effect January 1, 2010.