By: Anderson of Dallas (Senate Sponsor - West) H.B. No. 1821
(In the Senate - Received from the House May 6, 2011;
May 9, 2011, read first time and referred to Committee on
Intergovernmental Relations; May 19, 2011, reported adversely,
with favorable Committee Substitute by the following vote: Yeas 5,
Nays 0; May 19, 2011, sent to printer.)
COMMITTEE SUBSTITUTE FOR H.B. No. 1821 By: West
A BILL TO BE ENTITLED
AN ACT
relating to certain information or guidelines provided by or
concerning a property owners' association or concerning
subdivisions that are subject to restrictive covenants.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 5.012, Property Code, is amended by
amending Subsection (a) and adding Subsections (a-1), (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 enforcement of
the association's [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, other than lawsuits
relating to unpaid ad valorem taxes of an individual member of the
association. These documents must be made available to you by the
property owners' association or the association's agent on your
request.
Date: ____________________________________________
Signature of Purchaser
(a-1) The second paragraph of the notice prescribed by
Subsection (a) must be in bold print and underlined.
(f) On the purchaser's request for a resale certificate from
the property owners' association or the association's agent, the
association or its agent shall promptly deliver a copy of the most
recent resale certificate issued for the property under Chapter 207
so long as the resale certificate was prepared not earlier than the
60th day before the date the resale certificate is delivered to the
purchaser and reflects any special assessments approved before and
due after the resale certificate is delivered. If a resale
certificate that meets the requirements of this subsection has not
been issued for the property, the seller shall request the
association or its agent to issue a resale certificate under
Chapter 207, and the association or its agent shall promptly
prepare and deliver a copy of the resale certificate to the
purchaser.
(g) The purchaser shall pay the fee to the property owners'
association or its agent for issuing the resale certificate unless
otherwise agreed by the purchaser and seller of the property. The
property owners' association may require payment before beginning
the process of providing a resale certificate requested under
Chapter 207 but may not process a payment for a resale certificate
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 2. 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 declaration or similar
instrument subjecting real property to:
(A) restrictive covenants, bylaws, or similar
instruments governing the administration or operation of a property
owners' association;
(B)[, to] properly adopted rules and regulations
of the property owners' association; or
(C)[, or to] all lawful amendments to the
covenants, bylaws, instruments, rules, or regulations.
SECTION 3. 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 has no effect until the
instrument is filed in accordance with this section.
SECTION 4. Section 207.003, Property Code, is amended by
amending Subsections (a), (b), and (f) and adding Subsections (a-1)
and (c-1) to read as follows:
(a) Not later than the 10th business day after the date a
written request for subdivision information is received from an
owner or the[,] owner's agent, a purchaser of property in a
subdivision or the purchaser's agent, or a title insurance company
or its agent acting on behalf of the owner or purchaser and the
evidence of the requestor's authority to order a resale certificate
under Subsection (a-1) is received and verified, the property
owners' association shall deliver to the owner or the[,] owner's
agent, the purchaser or the purchaser's agent, or the title
insurance company or its agent:
(1) a current copy of the restrictions applying to the
subdivision;
(2) a current copy of the bylaws and rules of the
property owners' association; and
(3) a resale certificate prepared not earlier than the
60th day before the date the certificate is delivered that complies
with Subsection (b).
(a-1) For a request from a purchaser of property in a
subdivision or the purchaser's agent, the property owners'
association may require the purchaser or purchaser's agent to
provide to the association, before the association begins the
process of preparing or delivers the items listed in Subsection
(a), reasonable evidence that the purchaser has a contractual or
other right to acquire property in the subdivision.
(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 has been approved before and is due after [the date] the resale
certificate is delivered [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 ad valorem 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.
(c-1) The property owners' association may require payment
before beginning the process of providing a resale certificate but
may not process a payment for a resale certificate 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 Subsection (a).
(f) Not later than the seventh business day after the date a
written request for an update of [to] a resale certificate
delivered under Subsection (a) is received from an owner, owner's
agent, or title insurance company or its agent acting on behalf of
the owner, the property owners' association shall deliver to the
owner, owner's agent, or title insurance company or its agent an
updated resale certificate that contains the following
information:
(1) if a right of first refusal or other restraint on
sale is contained in the restrictions, a statement of whether the
property owners' association waives the restraint on sale;
(2) the status of any unpaid special assessments,
dues, or other payments attributable to the owner's property; and
(3) any changes to the information provided in the
resale certificate issued under Subsection (a).
SECTION 5. Chapter 207, Property Code, is amended by adding
Section 207.006 to read as follows:
Sec. 207.006. ONLINE SUBDIVISION INFORMATION REQUIRED. A
property owners' association shall make dedicatory instruments
relating to the association or subdivision and filed in the county
deed records available on a website if the association has, or a
management company on behalf of the association maintains, a
publicly accessible website.
SECTION 6. Section 209.003, Property Code, is amended by
adding Subsection (e) to read as follows:
(e) Section 209.0062 does 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.
SECTION 7. Chapter 209, Property Code, is amended by adding
Section 209.0062 to read as follows:
Sec. 209.0062. ALTERNATIVE PAYMENT SCHEDULE FOR CERTAIN
ASSESSMENTS. (a) A property owners' association shall file the
association's alternative payment schedule guidelines adopted
under this section in the real property records of each county in
which the subdivision is located.
(b) A property owners' association composed of more than 14
lots 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.
(c) The minimum term for a payment plan offered by a
property owners' association is three months.
(d) A property owners' association is not required to allow
a payment plan for any amount that extends more than 18 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 two years following the owner's
default under the previous payment plan.
(e) A property owners' association's failure to file as
required by this section the association's guidelines in the real
property records of each county in which the subdivision is located
does not prohibit a property owner from receiving an alternative
payment schedule by which the owner may make partial payments to the
property owners' association for delinquent regular or special
assessments or any other amount owed to the association without
accruing additional monetary penalties, as defined by Subsection
(b).
SECTION 8. (a) 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
subsection, 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.
(b) Section 202.006, Property Code, as amended by this Act,
applies 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.
(c) Section 207.003, 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.
(d) Section 209.0062, Property Code, as added by this Act,
applies 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.
SECTION 9. Not later than January 1, 2012, 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 10. This Act takes effect January 1, 2012.
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