81R11139 PMO-D
By: Naishtat H.B. No. 4559
A BILL TO BE ENTITLED
AN ACT
relating to regulation of condominium conversions.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Title 7, Property Code, is amended by adding
Chapter 83 to read as follows:
CHAPTER 83. CONDOMINIUM CONVERSIONS
Sec. 83.001. DEFINITIONS. In this chapter:
(1) "Approved structural engineer" means a licensed
professional engineer approved by the commission to provide
services under this chapter.
(2) "Commission" means the Texas Residential
Construction Commission.
(3) "Component parts" of a building include the
mechanical, electrical, plumbing, heating, ventilating, air
conditioning, and structural elements of the building.
(4) "Condominium" means a form of real property with
portions of the real property designated for separate ownership or
occupancy, and the remainder of the real property designated for
common ownership or occupancy solely by the owners of those
portions. Real property is a condominium only if one or more of the
common elements are directly owned in undivided interests by the
unit owners. Real property is not a condominium if all of the
common elements are owned by a legal entity separate from the unit
owners, such as a corporation, even if the separate legal entity is
owned by the unit owners.
(5) "Conversion" means the act of converting the form
of ownership of an improvement into a condominium.
(6) "Conversion building" means a multi-family
residential building that at any time before creation of the
condominium was occupied wholly or partially by persons other than
purchasers of the condominium and persons who occupy with the
consent of purchasers.
(7) "Developer" means a person who converts a
conversion building into a residential condominium.
(8) "Structural" means the load-bearing portion of a
building.
Sec. 83.002. RESERVE STUDY. (a) Before the conversion of a
proposed conversion building, a developer must obtain a study of
the building by an approved structural engineer. The study must
provide an evaluation of the building and must include:
(1) a determination of the age of each component part;
(2) the estimated remaining useful life of each
component part;
(3) the estimated maintenance, repair, and
replacement costs of each component part and other contingencies
for the next one-year period and the next five-year period
expressed as:
(A) a total amount; and
(B) a per-unit amount based on the proportional
share of each unit; and
(4) the structural and functional soundness of each
component part of the conversion building.
(b) The reserve study must also determine a monthly
assessment amount that is sufficient to fund the estimated costs of
maintenance, repair, and replacement of each component part and
other contingencies for a proposed conversion building for a
two-year period.
Sec. 83.003. STRUCTURAL INSPECTION. (a) A developer shall
obtain an inspection of a proposed conversion building, including
the foundation, by an approved structural engineer. The engineer
must certify the inspection as reasonable and accurate.
(b) An inspection of a proposed conversion building under
this section must comply with rules established by the commission
under Section 83.009.
Sec. 83.004. ENERGY AUDIT. (a) A developer shall obtain an
energy audit of a proposed conversion building conducted by a
building performance analyst approved by the commission to conduct
the energy audit under this section.
(b) An energy audit under this section must comply with
rules established by the commission under Section 83.009.
Sec. 83.005. CONVERSION RESERVE FUND. (a) A developer
shall establish a reserve fund for capital expenditures and
deferred maintenance of the proposed conversion building.
(b) The conversion reserve fund must be sufficient to pay
the estimated costs of maintenance, repair, and replacement of each
component part and other contingencies expressed as a total amount
for a two-year period as determined under Section 83.002(b).
Sec. 83.006. BUILDING REQUIREMENTS. (a) A conversion
building:
(1) may not be wood framed;
(2) must have an expected remaining useful life of
more than 35 years; and
(3) must pass all applicable building inspections.
(b) A developer before a conversion must:
(1) obtain all applicable building permits; and
(2) establish a reserve fund as provided by Section
83.005.
Sec. 83.007. EXCEPTION TO BUILDING REQUIREMENTS. (a) A
developer that obtains the approval of the appropriate political
subdivision of a plan to renovate or modify a proposed conversion
building to meet the requirements of Sections 83.006(a) and (b) may
offer for sale residential units in a building not in compliance
with Sections 83.006(a) and (b).
(b) A developer may not convert a proposed conversion
building described by Subsection (a) until the building complies
with Sections 83.006(a) and (b).
Sec. 83.008. MANDATORY DISCLOSURES WITH OFFER FOR SALE. A
developer may not offer for sale a unit of a condominium that is
converted under this chapter unless the developer provides to a
prospective buyer a copy of:
(1) the reserve study prepared under Section 83.002;
(2) the structural inspection prepared under Section
83.003; and
(3) the energy audit prepared under Section 83.004.
Sec. 83.009. RULES. The commission shall adopt rules to
implement this chapter.
SECTION 2. This Act applies only to a conversion building as
defined by Section 83.001, Property Code, as added by this Act,
whose ownership is converted into a condominium on or after the
effective date of this Act. A proposed conversion building whose
ownership is converted into a condominium before the effective date
of this Act is governed by the law as it existed immediately before
the effective date of this Act, and that law is continued in effect
for that purpose.
SECTION 3. This Act takes effect September 1, 2009.