81R15536 AJA-F
By: Eiland H.B. No. 2949
Substitute the following for H.B. No. 2949:
By: Elkins C.S.H.B. No. 2949
A BILL TO BE ENTITLED
AN ACT
relating to the operation of condominium associations.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 82.102, Property Code, is amended by
amending Subsection (a) and adding Subsection (f) to read as
follows:
(a) Unless otherwise provided by the declaration, the
association, acting through its board, may:
(1) adopt and amend bylaws;
(2) adopt and amend budgets for revenues,
expenditures, and reserves, and collect assessments for common
expenses from unit owners;
(3) hire and terminate managing agents and other
employees, agents, and independent contractors;
(4) institute, defend, intervene in, settle, or
compromise litigation or administrative proceedings in its own name
on behalf of itself or two or more unit owners on matters affecting
the condominium;
(5) make contracts and incur liabilities relating to
the operation of the condominium;
(6) regulate the use, maintenance, repair,
replacement, modification, and appearance of the condominium;
(7) adopt and amend rules regulating the use,
occupancy, leasing or sale, maintenance, repair, modification, and
appearance of units and common elements, to the extent the
regulated actions affect common elements or other units;
(8) cause additional improvements to be made as a part
of the common elements;
(9) acquire, hold, encumber, and convey in its own
name any right, title, or interest to real or personal property,
except common elements of the condominium;
(10) grant easements, leases, licenses, and
concessions through or over the common elements;
(11) impose and receive payments, fees, or charges for
the use, rental, or operation of the common elements and for
services provided to unit owners;
(12) impose interest and late charges for late
payments of assessments, returned check charges, and, if notice and
an opportunity to be heard are given in accordance with Subsection
(d), reasonable fines for violations of the declaration, bylaws,
and rules of the association;
(13) adopt and amend rules regulating the collection
of delinquent assessments and the application of payments;
(14) adopt and amend rules regulating the termination
of utility service to a unit, the owner of which is delinquent in
the payment of an assessment that is used, in whole or in part, to
pay the cost of that utility;
(15) impose reasonable charges for preparing,
recording, or copying declaration amendments, resale certificates,
or statements of unpaid assessments;
(16) enter a unit for bona fide emergency purposes
when conditions present an imminent risk of harm or damage to the
common elements, another unit, or the occupants;
(17) [assign its right to future income, including the
right to receive common expense assessments, but only to the extent
the declaration so provides;
[(18)] suspend the voting privileges of or the use of
certain general common elements by an owner delinquent for more
than 30 days in the payment of assessments;
(18) [(19)] purchase insurance and fidelity bonds it
considers appropriate or necessary;
(19) [(20)] exercise any other powers conferred by the
declaration or bylaws;
(20) [(21)] exercise any other powers that may be
exercised in this state by a corporation of the same type as the
association; and
(21) [(22)] exercise any other powers necessary and
proper for the government and operation of the association.
(f) The association by resolution of the board of directors
may borrow money unless prohibited by the declaration, articles of
incorporation, bylaws, rules, or other restrictions. If the board
of directors issues a resolution under this subsection, the
association may assign the association's right to future income,
including the right to receive common expense assessments and
assign the association's lien rights, as collateral for the loan
authorized by the resolution. The association shall comply with
any member approval requirement in the association's declaration,
articles of incorporation, bylaws, rules, or other restrictions for
borrowing money, except that not more than 67 percent of all
outstanding votes are required to approve an authorization to
borrow money.
SECTION 2. Sections 82.111(c) and (i), Property Code, are
amended to read as follows:
(c) If the insurance described by Subsections (a) and (b) is
not reasonably available, the association shall cause notice of
that fact to be delivered or mailed to all unit owners and
lienholders. The declaration may require the association to carry
any other insurance, and the association in any event may carry any
other insurance the board considers appropriate to protect the
condominium, the association, or the unit owners. Insurance
policies carried under Subsection (a) may provide for commercially
reasonable deductibles as the board considers appropriate or
necessary. This section does not affect the right of a holder of a
mortgage on a unit to require a unit owner to acquire insurance in
addition to that provided by the association.
(i) Any portion of the condominium for which insurance is
required that is damaged or destroyed shall be promptly repaired or
replaced by the association unless the condominium is terminated,
repair or replacement would be illegal under any state or local
health or safety statute or ordinance, or at least 80 percent of the
unit owners, including each owner of a unit or assigned limited
common element that will not be rebuilt or repaired, vote to not
rebuild. A vote to not rebuild does not increase an insurer's
liability to loss payment obligation under a policy, and the vote
does not cause a presumption of total loss. The cost of repair or
replacement in excess of the insurance proceeds and reserves is a
common expense. Costs of repair or replacement incurred before any
insurance proceeds are available, or that are within the
association's deductible, shall be paid as determined by resolution
of the board of directors of the association, or, if the board does
not approve a resolution, the costs are a common expense. A
resolution regarding payment of costs under this subsection is
considered a dedicatory instrument and must be recorded in each
location in which the declaration is recorded. If the entire
condominium is not repaired or replaced, any insurance proceeds
attributable to the damaged common elements shall be used to
restore the damaged area to a condition compatible with the
remainder of the condominium, the insurance proceeds attributable
to units and limited common elements that are not rebuilt shall be
distributed to the owners of those units and the owners of the units
to which those limited common elements were assigned, or to their
mortgagees, as their interests may appear, and the remainder of the
proceeds shall be distributed to all the unit owners as their
interests may appear. If the unit owners vote to not rebuild any
unit, that unit's allocated interests shall be automatically
reallocated on the vote as if the unit had been condemned, and the
association shall prepare, execute, and record an amendment to the
declaration reflecting the reallocation. Section 82.068 governs
the distribution of insurance proceeds if the condominium is
terminated.
SECTION 3. Section 82.113(g), Property Code, is amended to
read as follows:
(g) The owner of a unit [used for residential purposes and]
purchased [by an association] at a foreclosure sale of the
association's lien for assessments may redeem the unit not later
than the 90th day after the date of the foreclosure sale. If the
association is the purchaser [To redeem the unit], the owner must
pay to the association to redeem the unit all amounts due the
association at the time of the foreclosure sale, interest from the
date of foreclosure sale to the date of redemption at the rate
provided by the declaration for delinquent assessments, reasonable
attorney's fees and costs incurred by the association in
foreclosing the lien, any assessment levied against the unit by the
association after the foreclosure sale, and any reasonable cost
incurred by the association as owner of the unit, including costs of
maintenance and leasing. If a party other than the association is
the purchaser, the redeeming owner must pay to the purchaser of the
unit at the foreclosure sale an amount equal to the amount bid at
the sale, interest on the bid amount computed from the date of the
foreclosure sale to the date of redemption at the rate of six
percent, any assessment paid by the purchaser after the date of
foreclosure, and any reasonable costs incurred by the purchaser as
the owner of the unit, including costs of maintenance and leasing.
The redeeming owner must also pay to the association all
assessments that are due as of the date of the redemption and
reasonable attorney's fees and costs incurred by the association in
foreclosing the lien. On redemption, the purchaser of the unit at
the foreclosure sale [association] shall execute a deed with no
warranty to the redeeming unit owner. The exercise of the right of
redemption is not effective against a subsequent purchaser or
lender for value without notice of the redemption after the
redemption period expires unless the redeeming unit owner records
the deed from the purchaser of the unit at the foreclosure sale
[association] or an affidavit stating that the owner has exercised
the right of redemption. A unit that has been redeemed remains
subject to all liens and encumbrances on the unit before
foreclosure. All rents and other income collected from the unit by
the purchaser of the unit at the foreclosure sale [association]
from the date of foreclosure sale to the date of redemption belong
to the purchaser of the unit at the foreclosure sale [association],
but the rents and income shall be credited against the redemption
amount. The purchaser of [An association purchasing] a unit at a
sale foreclosing an association's assessment [its] lien may not
transfer ownership of the unit during the redemption period to a
person other than a redeeming owner.
SECTION 4. (a) The change in law made by this Act to Section
82.111(i), Property Code, applies only to payment of costs incurred
on or after the effective date of this Act. Payment of costs
incurred before the effective date of this Act 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.
(b) Section 82.113(g), Property Code, as amended by this
Act, applies only to a condominium unit sold at a foreclosure sale
on or after the effective date of this Act. A unit sold at a
foreclosure sale before the effective date of this Act is 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 5. This Act takes effect September 1, 2009.