By: West, Davis S.B. No. 237
A BILL TO BE ENTITLED
AN ACT
relating to certain procedures and requirements for the operation
of property owners' associations.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subsection (a), Section 5.006, Property Code, is
amended to read as follows:
(a) In an action based on breach of a restrictive covenant
pertaining to real property 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 process 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. Subdivision (1), Section 202.001, Property Code,
is amended to read as follows:
(1) "Dedicatory instrument" means each document
governing [instrument covering] the establishment, maintenance, or
[and] operation of a residential subdivision, planned unit
development, condominium or townhouse regime, or any similar
planned development. The term includes:
(A) 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 Subsections (d) and (e) to read as follows:
(d) In evaluating an alleged or potential violation of a
restrictive covenant, the property owners' association or other
representative designated by an owner of real property may,
notwithstanding any provision in a dedicatory instrument, grant a
variance and in doing so not enforce the restrictive covenant if the
property owners' association board, in the board's reasonable
judgment, determines:
(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;
(4) enforcement of the provision is not in the
association's best interests, based on hardship, expense, or other
reasonable criteria; or
(5) the facts of the particular circumstances, such as
topography of the owner's land or unforeseen circumstances unique
to the particular owner, justify the variance.
(e) A determination by the property owners' association
board to grant a variance under Subsection (d) may not be considered
a waiver of the association's ability to enforce any dedicatory
instrument provision in the future.
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.
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:
(1) to cure a violation that involves an immediate
threat to persons or property;
(2) after 10 days' written notice, to:
(A) perform a forced mow; or
(B) remove trash or debris; or
(3) in circumstances in which it is reasonably
determined the property has been abandoned and not maintained for
at least 30 days.
(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 or an
easement filed of record.
(c) This section does not apply to:
(1) an association regulated under Title 7;
(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; or
(3) a property owners' association that is a mixed use
master association that existed before January 1, 1974, and that
does not have the authority under a dedicatory instrument or other
governing document to impose fines.
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, a tow truck, cement mixer, or other similar commercial
vehicle, or a vehicle that is more than 30 feet long 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) Except as provided
by Subsection (b), a property owners' association may not amend a
dedicatory instrument to prohibit or restrict the rental of
property subject to the dedicatory instrument without the consent
of at least 51 percent of the total votes allocated to property
owners subject to the dedicatory instrument.
(b) An amendment to a dedicatory instrument may require:
(1) an owner to:
(A) exercise due diligence in not leasing to an
occupant who is a registered sex offender or who has a history of
violent crime; or
(B) terminate the possessory right of any tenant
or occupant who is a registered sex offender or who has a history of
violent crime;
(2) all leases to be subject to the dedicatory
instruments of the property owners' association; or
(3) a minimum lease term of not more than six months.
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 at least 67 percent of the total votes
allocated to property owners 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.
(f) On or before the 30th day before the date a person files
a suit under this section, the person must provide notice to the
other party of the person's intent to file suit under this section.
The notice must be sent certified mail, return receipt requested,
or delivered by the United States Postal Service with signature
confirmation service.
SECTION 7. Subsection (b), Section 207.003, 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, other
than a right of first refusal that is prohibited by statute, and any
[or] other restraint contained in the restrictions or restrictive
covenants that restricts the owner's right to transfer the owner's
property;
(2) the frequency and amount of any regular
assessments;
(3) the amount and purpose of any special assessment
that 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. Section 209.003, Property Code, is amended by
adding Subsection (e) to read as follows:
(e) The following provisions of this chapter do not apply to
a property owners' association that is a mixed use master
association that existed before January 1, 1974, and that does not
have the authority under a dedicatory instrument or other governing
document to impose fines:
(1) Section 209.005(b);
(2) Section 209.0056;
(3) Section 209.0057;
(4) Section 209.0058;
(5) Section 209.00591;
(6) Section 209.006(c);
(7) Section 209.0062; and
(8) Section 209.014.
SECTION 9. 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.
(f) On or before the 30th day before the date a person files
a suit under this section, the person must provide notice to the
other party of the person's intent to file suit under this section.
The notice must be sent certified mail, return receipt requested,
or delivered by the United States Postal Service with signature
confirmation service.
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 all dedicatory instruments
regardless of the date on which the dedicatory instruments were
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) Except as provided by Subsection (f), a dedicatory
instrument may be amended only by a vote of at least 51 percent of
the total votes allocated to property owners in the property
owners' association, in addition to any governmental approval
required by law.
(f) A rule or guideline that affects land owned, leased,
maintained, or otherwise controlled by the property owners'
association may be adopted or amended by majority vote of the
association board. A rule or guideline that impacts the use and
enjoyment of personal or real property owned exclusively by the
owner or that may result in a fine or loss of privilege of a member
of the association may be adopted or amended only by a vote of at
least 51 percent of the total votes allocated to property owners who
cast votes by any permissible method in an association-wide vote.
(g) A property owners' association board by majority vote
may adopt ministerial, office-related procedural policies, such as
payment plan guidelines under Section 209.0062, a collections
policy, an enforcement policy, or other similar ministerial,
office-related procedural policies. The policy may outline
circumstances under which or the manner by which enforcement
remedies may be carried out but may not otherwise impact the use and
enjoyment of personal or real property owned exclusively by the
owner. The policy may not:
(1) create a power to:
(A) levy a fine; or
(B) impose a loss of a privilege on a member of
the association; or
(2) expand the association's powers beyond the powers
granted by any other dedicatory instrument.
(h) All ballots cast in a vote that results in an amendment
to a restrictive covenant, bylaw, or rule are records of the
association subject to inspection under Section 209.005.
(i) This section supersedes any contrary requirement in a
dedicatory instrument.
(j) This section does not apply to a property owners'
association that is subject to Chapter 552, Government Code, by
application of Section 552.0036, Government Code.
SECTION 10. 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,
Government Code.
(b) Notwithstanding a provision in a dedicatory instrument,
a [A] property owners' association shall make the books and records
of the association, including financial records, open to and
reasonably available for examination by [to] an owner [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 obtain from the association
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 make the association's books and
records, including financial records and invoices, available 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:
(1) in person by hand delivery to a current board
member;
(2) to the mailing address of the association or
authorized representative as provided on the most current
management certificate filed under Section 209.004; or
(3) in person to a managing agent as reflected 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 request is received, the property owners' association
must provide to the requestor written 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 receipt 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 specified by the requestor:
(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 25 miles from the boundary of the subdivision governed by the
association.
(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) All ballots cast in an election that results in an
amendment to a dedicatory instrument, as required by Section
209.0041, are records of the property owners' association subject
to inspection under this section.
(o) All ballots cast in an election of property owners'
association board or other committee members are considered records
of the association but may not be made available for inspection
under this section, except for the purposes of a recount under
Section 209.0057(e), without a court order or subpoena. The
association shall take reasonable measures to safeguard the
security and privacy of those ballots.
(p) A property owners' association shall:
(1) keep all records as to changes to the dedicatory
instruments in perpetuity;
(2) maintain and secure all ballots in
association-wide elections for four years; and
(3) maintain records related to financial matters of
the association, including assessments, fines, foreclosures, and
enforcement actions, for at least seven years.
(q) A member of a property owners' association who is denied
access to or copies of association books or records to which the
member is entitled under this section may file a petition with the
justice of the peace of a justice precinct in which all or part of
the property that is governed by the association is located
requesting relief in accordance with this subsection. If the
justice of the peace finds that the member is entitled to access to
or copies of the records, the justice of the peace may grant one or
more of the following remedies:
(1) a judgment against the property owners'
association for a penalty of not more than $1,500;
(2) a judgment against the property owners'
association for court costs and attorney's fees incurred in
connection with seeking a remedy under this section; or
(3) a judgment authorizing the owner or the owner's
assignee to deduct the amounts awarded under Subdivisions (1) and
(2) from any future regular or special assessments payable to the
property owners' association.
(r) For the purposes of this section, "business day" means a
day other than Saturday, Sunday, or a state or federal holiday.
(s) On or before the 10th day before the date a person files
a suit under this section, the person must provide notice to the
other party of the person's intent to file suit under this section.
The notice must be sent certified mail, return receipt requested,
or delivered by the United States Postal Service with signature
confirmation service.
SECTION 11. Chapter 209, Property Code, is amended by
adding Sections 209.0051, 209.0056, 209.0057, 209.0058, 209.0059,
209.00591, 209.00592, and 209.00593 to read as follows:
Sec. 209.0051. OPEN BOARD MEETINGS. (a) This section does
not apply to a property owners' association that is subject to
Chapter 551, Government Code, by application of Section 551.0015,
Government Code.
(b) In this section, "board meeting" means a deliberation
between a quorum of the voting board of the property owners'
association, or between a quorum of the voting board and another
person, during which property owners' association business 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, 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 section, 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 or a county adjacent to that
county.
(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 motion or inquiry, regardless of whether
the board takes action on the motion or inquiry, and indicate each
vote, order, decision, or other action taken by the board. The
board shall make meeting records, including approved minutes,
available to a member for inspection and copying on the member's
written request to the board or the board's representative. The
board shall approve the minutes of a board meeting not later than
the next regular board meeting.
(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 mailed to
each member or:
(1) posted at least 72 hours before the start of the
meeting in a conspicuous manner reasonably designed to provide
notice to association members:
(A) in a place located on the association's
common property or other conspicuously located property within the
association, with the property owner's consent; or
(B) on any Internet website maintained by the
association; and
(2) sent via e-mail to each owner who has registered an
e-mail address with the property owners' association; it is an
owner's duty to keep an e-mail address registered with the property
owners' association updated.
(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 notice as required
by this section of the meeting continued to that other day.
(g) If at a regular, emergency, administrative, 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 a reasonably unforeseen emergency or
urgent necessity that requires immediate board action, the board
may meet in an emergency board meeting. Notice for an emergency
board meeting may be given in at least one manner prescribed by
Subsection (e)(1) 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 board meeting must be summarized orally, including an
explanation of any known actual or estimated expenditures approved
at the meeting, and documented in the minutes or tape recording of
the next regular or special board meeting.
(j) A property owners' association board may hold an
administrative session, and that session is not subject to the
notice requirements of this section. In any administrative
session, the board may not take action regarding issuance of fines,
commencement of foreclosure proceedings, levying of a special
assessment, increases in assessments, or approval of items not
previously approved in the association's budget.
(k) 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 board member may call an executive session
by announcing that an executive session will be held to deliberate a
matter described by Subsection (l) and identifying the specific
subdivision of Subsection (l) under which the executive session
will be held. A vote or other action item may not be taken in
executive session.
(l) 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 or issues regarding
a board member or agent, employee, contractor, or other
representative of the property owners' association;
(3) a payment plan under Section 209.0062;
(4) a foreclosure of a lien;
(5) an enforcement action against a member of the
association, including for nonpayment of amounts due;
(6) the purchase, exchange, lease, or value of real
property, if the board determines in good faith that deliberation
in an open board meeting may have a detrimental effect on the
association;
(7) business and financial issues relating to the
negotiation of a contract, if the board determines in good faith
that deliberation in an open board meeting may have a detrimental
effect on the position of the association; or
(8) matters involving the invasion of privacy of an
individual owner.
Sec. 209.0056. NOTICE OF ELECTION OR ASSOCIATION VOTE.
(a) 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.
(b) This section supersedes any contrary requirement in a
dedicatory instrument.
(c) This section does not apply to a property owners'
association that is subject to Chapter 552, Government Code, by
application of Section 552.0036, Government Code.
Sec. 209.0057. TABULATION OF VOTES. (a) This section does
not apply to a property owners' association that is subject to
Chapter 552, Government Code, by application of Section 552.0036,
Government Code.
(b) On the written petition of owners having at least 10
percent of all voting interests in a property owners' association
for a vote tabulation under this subsection, received by the
association at least 15 days before the first date that votes may be
cast, 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 a current or former:
(1) county judge;
(2) county elections administrator;
(3) justice of the peace; or
(4) county voter registrar.
(c) The name of each person tabulating votes of the members
of a property owners' association and the results of the tabulation
must be reflected in the minutes of the association.
(d) Any owner may, not later than the fifth day after the
date of the initial tabulation of votes, require a recount of the
votes. A demand for a recount must be submitted in writing either:
(1) in person to a property owners' association board
member;
(2) by certified mail, return receipt requested, or by
delivery by the United States Postal Service with signature
confirmation service to the association's mailing address on the
latest management certificate filed under Section 209.004; or
(3) in person to the association's managing agent as
reflected on the latest management certificate filed under Section
209.004.
(e) The property owners' association shall, at the expense
of the owner requesting the recount, retain for the purpose of
performing the recount the services of a person who is not a member
of the association or related to a member of the association board
within the third degree of consanguinity or affinity, as determined
under Chapter 573, Government Code and who is a current or former:
(1) county judge;
(2) county elections administrator;
(3) justice of the peace; or
(4) county voter registrar.
(f) Any recount under Subsection (d) must be performed on or
before the 30th day after the date of receipt of a request for and
payment for a recount in accordance with Subsections (d) and (e).
If the recount changes the results of the election, the association
shall reimburse the requesting owner for the cost of the recount.
Any action taken by the board in the period between the initial
election vote tally and the completion of the recount may not be
affected by any recount.
Sec. 209.0058. BALLOTS. (a) Any vote cast in an election
or vote by a member of a property owners' association must be in
writing and signed by the member.
(b) Electronic votes cast under Section 209.00593
constitute written and signed ballots.
(c) In an association-wide election, written and signed
ballots are not required for uncontested races.
Sec. 209.0059. RIGHT TO VOTE. (a) A provision in a
dedicatory instrument that would disqualify a property owner from
voting in an association election of board members or on any matter
concerning the rights or responsibilities of the owner is void.
(b) This section does not apply to a property owners'
association that is subject to Chapter 552, Government Code, by
application of Section 552.0036, Government Code.
Sec. 209.00591. 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; QUORUM. (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 any meeting to vote in person, so that any vote
cast at a meeting by a property owner supersedes any vote submitted
by absentee or electronic ballot previously submitted for that
proposal; and
(3) may not be counted on the final vote of a proposal
if the motion was amended at the meeting to be different from the
exact language on the absentee or electronic ballot.
(c) A solicitation for votes by absentee ballot must
include:
(1) an absentee ballot that contains each proposed
action and provides an opportunity to vote for or against each
proposed action;
(2) instructions for delivery of the completed
absentee ballot, including the delivery location; and
(3) the following language: "By casting your vote via
absentee ballot you will forgo the opportunity to consider and vote
on any action from the floor on these proposals, if a meeting is
held. This means that if there are amendments to these proposals
your votes will not be counted on the final vote on these measures.
If you desire to retain this ability, please attend any meeting in
person. You may submit an absentee ballot and later choose to
attend any meeting in person, in which case any in-person vote will
prevail."
(d) For the purposes of this section, "electronic ballot"
means a ballot:
(1) given by:
(A) 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.
(f) This section supersedes any contrary provision in a
dedicatory instrument.
(g) This section does not apply to a property owners'
association that is subject to Chapter 552, Government Code, by
application of Section 552.0036, Government Code.
SECTION 12. Section 209.006, Property Code, is amended by
amending Subsection (b) and adding Subsections (c), (d), (e), and
(f) 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) and does not request a hearing
under Subsection (b)(2)(B), the property owners' association may
assess the fine and shall provide notice of the assessment to the
owner. 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) For purposes of this section, a violation is considered
a threat to public health or safety if the violation could
materially affect the physical health or safety of an ordinary
resident.
SECTION 13. Chapter 209, Property Code, is amended by
adding Sections 209.0061, 209.0062, 209.0063, and 209.0064 to read
as follows:
Sec. 209.0061. ASSESSMENT OF FINES. (a) A fine assessed
by the property owners' association must be reasonable in the
context of the nature and frequency of the violation and the effect
of the violation on the subdivision as a whole. If the association
allows fines for a continuing violation to accumulate against a lot
or an owner, the association must establish a reasonable maximum
fine amount for a continuing violation, at which point the total
fine amount is capped.
(b) If a lot occupant other than the owner violates a
provision of the dedicatory instrument, the property owners'
association, in addition to exercising any of the association's
powers against the owner, may assess a fine directly against the
nonowner occupant in the same manner as provided for an owner but
may not require payment from both the owner and a nonowner occupant
for the same violation.
(c) If the property owners' association assesses a fine
against a nonowner occupant under this section, the notice
provisions of Section 209.006 and the hearing provisions of Section
209.007 apply to the nonowner occupant in the same manner as those
provisions apply to an owner.
Sec. 209.0062. ALTERNATIVE PAYMENT SCHEDULE FOR CERTAIN
ASSESSMENTS. (a) A property owners' association 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.
SECTION 14. Section 209.007, Property Code, is amended by
amending Subsection (a) and adding Subsections (f), (g), (h), (i),
and (j) to read as follows:
(a) If the owner is entitled to an opportunity to cure the
violation, the owner has the right to submit a written request for a
hearing to discuss and verify facts and resolve the matter in issue
before a committee appointed by the board of the property owners'
association or before the board if the board does not appoint a
committee. The written request must contain 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.
(f) If the parties fail to reach agreement in or after the
hearing described by this section, the property owners' association
must file suit to uphold and enforce any fine sought to be assessed.
The suit must be filed in a justice court or small claims court not
later than the 180th day after the date of the hearing described by
this section or an appeal under Subsection (b), whichever is later.
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 is taken in bad faith, the court may award
the prevailing party's attorney's fees.
SECTION 15. Chapter 209, Property Code, is amended by
adding Section 209.0091 to read as follows:
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). A property owners' association may use the
procedure described by this subsection to foreclose any lien
described by the association's dedicatory instruments.
(b) The supreme court, as an exercise of the court's
authority under Section 74.024, Government Code, shall adopt rules
establishing expedited foreclosure proceedings for use by a
property owners' association in foreclosing an assessment lien of
the association. The rules adopted under this subsection must be
substantially similar to the rules adopted by the supreme court
under Section 50(r), Article XVI, Texas Constitution.
(c) Expedited foreclosure is not required under this
section if the owner of the property that is subject to foreclosure
agrees in writing at the time the foreclosure is sought to waive
expedited foreclosure under this section. A waiver under this
subsection may not be required as a condition of the transfer of
title to real property.
(d) A provision granting a right to foreclose a lien on real
property for unpaid amounts due to a property owners' association
may be removed from a dedicatory instrument or adopted in a
dedicatory instrument by a vote of at least 51 percent of the total
votes allocated to property owners in the property owners'
association. Owners holding at least 10 percent of all voting
interests in the property owners' association may petition the
association and require a special meeting to be called for the
purposes of taking a vote for the purposes of this section.
SECTION 16. Subsection (a), Section 209.010, Property Code,
is amended to read as follows:
(a) A property owners' association that conducts a
foreclosure sale of an owner's lot must send to the lot owner 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 17. Chapter 209, Property Code, is amended by
adding Section 209.014 to read as follows:
Sec. 209.014. RESTRICTIONS ON OWNERSHIP VOID. A property
owners' association may not prohibit an owner from owning multiple
properties governed by the property owners' association if the
cumulative voting rights of all of that owner's properties are 25
percent or less of all voting interests in the property owners'
association. This section does not apply during a development
period as defined by Section 202.011.
SECTION 18. Subsection (a), Section 211.002, Property Code,
is amended to read as follows:
(a) This chapter applies only to a residential real estate
subdivision or any unit or parcel of a subdivision to which another
chapter in this title that provides a procedure under which a
subdivision's restrictions may 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 19. Subsection (c), Section 202.004, Property Code,
is amended to read as follows:
(c) For a violation of a restrictive covenant of a property
owners' association that is a mixed use master association that
existed before January 1, 1974, and that does not have the authority
under a dedicatory instrument or other governing document to impose
fines, a [A] court may assess civil damages [for the violation of a
restrictive covenant] in an amount not to exceed $200 for each day
of the violation.
SECTION 20. (a) Subsection (a), Section 5.006, Property
Code, as amended by this Act, applies 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) Subsection (c), Section 202.004, Property Code, as
amended by this Act, applies only to an action brought on or after
the effective date of this Act. An action brought 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.
(e) Section 202.006, Property Code, as amended by this Act,
and Sections 202.008, 202.010, 202.011, 202.012, 202.014,
209.0059, and 209.00591 and Subsection (a), Section 209.00592, and
Section 209.014, 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.
(f) 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.
(g) 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.
(h) 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.
(i) 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.
(j) Subsection (a), Section 209.010, 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 21. 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 22. 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 23. This Act takes effect January 1, 2010.