82R21597 TJS-D
By: McClendon H.B. No. 2328
Substitute the following for H.B. No. 2328:
By: Quintanilla C.S.H.B. No. 2328
A BILL TO BE ENTITLED
AN ACT
relating to the registration, monitoring, and investigation of and
handling of funds by property owners' association boards; providing
administrative penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 14.101, Finance Code, is amended to read
as follows:
Sec. 14.101. GENERAL DUTIES OF COMMISSIONER. The
commissioner shall enforce this chapter, Subtitles B and C of Title
4 of this code, [and] Chapter 394 of this code, and Chapters 82 and
209, Property Code, as provided by Sections 82.1033 and 209.0043,
Property Code, in person or through an assistant commissioner,
examiner, or other employee of the office.
SECTION 2. Section 14.201, Finance Code, is amended to read
as follows:
Sec. 14.201. INVESTIGATION AND ENFORCEMENT AUTHORITY.
Investigative and enforcement authority under this subchapter
applies only to this chapter, Subtitles B and C of Title 4 of this
code, [and] Chapter 394 of this code, and Chapters 82 and 209,
Property Code, as provided by Sections 82.1033 and 209.0043,
Property Code.
SECTION 3. Section 14.2015(a), Finance Code, is amended to
read as follows:
(a) Except as provided by Subsection (b), information or
material obtained or compiled by the commissioner in relation to an
examination or investigation by the commissioner or the
commissioner's representative of a license holder or registrant
under Subtitle B or C, Title 4, of this code, [or] Chapter 394 of
this code, or Chapter 82 or 209, Property Code, is confidential and
may not be disclosed by the commissioner or an officer or employee
of the Office of Consumer Credit Commissioner, including:
(1) information obtained from a license holder or
registrant under Subtitle B or C, Title 4, of this code, [or]
Chapter 394 of this code, or Chapter 82 or 209, Property Code;
(2) work performed by the commissioner or the
commissioner's representative on information obtained from a
license holder or registrant for the purposes of an examination or
investigation conducted under Subtitle B or C, Title 4, of this
code, [or] Chapter 394 of this code, or Chapter 82 or 209, Property
Code;
(3) a report on an examination or investigation of a
license holder or registrant conducted under Subtitle B or C, Title
4, of this code, [or] Chapter 394 of this code, or Chapter 82 or 209,
Property Code; and
(4) any written communications between the license
holder or registrant, as applicable, and the commissioner or the
commissioner's representative relating to or referencing an
examination or investigation conducted under Subtitle B or C, Title
4, of this code, [or] Chapter 394 of this code, or Chapter 82 or 209,
Property Code.
SECTION 4. Section 14.202(a), Finance Code, is amended to
read as follows:
(a) On receipt of a written complaint or other reasonable
cause to believe that a person is violating a statute listed by
Section 14.201, the commissioner may require the person to furnish
information regarding a specific loan, retail transaction, or
business practice or the person's performance of a duty described
by Section 82.1033 or 209.0043, Property Code, to which the
violation relates.
SECTION 5. Section 82.003(a), Property Code, is amended by
adding Subdivisions (4-a) and (4-b) to read as follows:
(4-a) "Commission" means the Finance Commission of
Texas.
(4-b) "Commissioner" means the consumer credit
commissioner.
SECTION 6. Subchapter C, Chapter 82, Property Code, is
amended by adding Sections 82.1031, 82.1032, 82.1033, 82.1034, and
82.1035 to read as follows:
Sec. 82.1031. BOARD REGISTRATION REQUIRED. (a) A board of
a unit owners' association may not act on behalf of the association
unless the board is registered with the commissioner as provided by
this section.
(b) An application for registration must contain:
(1) the information required to be included in a
management certificate under Section 82.116; and
(2) any other information required by the commission
by rule.
(c) An applicant shall promptly supplement or amend an
application to report any material mistake or omission or any
actual or expected change in any document or information contained
in the application.
(d) The application must be sworn to and accompanied by an
initial registration fee in an amount set by the commission by rule.
Sec. 82.1032. RENEWAL OF REGISTRATION. A unit owners'
association board must renew the board's registration annually by
filing a report with the commissioner. The report must be in a form
prescribed by the commission by rule and:
(1) be accompanied by a renewal fee in an amount set by
the commission by rule;
(2) contain a financial statement for the unit owners'
association for the fiscal year preceding the date the report is
filed;
(3) disclose the total amount of assessments received
by the association during the 12 months preceding the date of the
renewal report from or on behalf of unit owners;
(4) disclose, to the best of the registrant's
knowledge, the gross funds accumulated during the 12 months
preceding the date of the renewal report by the association; and
(5) provide any other information that the
commissioner reasonably requires in order to perform the
commissioner's duty under this section.
Sec. 82.1033. MONITORING AND INVESTIGATION BY
COMMISSIONER. (a) The commissioner shall receive written
complaints against any person or unit owners' association board
with respect to a violation of Section 82.1034.
(b) If the commissioner receives a written complaint
against a person or unit owners' association board under this
section or otherwise has reasonable cause to believe that a person
or unit owners' association board has breached or is breaching a
fiduciary duty arising from Section 82.1034, the commissioner shall
investigate the person or unit owners' association board.
(c) Following an investigation conducted under Subsection
(b), if the commissioner finds that a person or unit owners'
association board has breached or is breaching a fiduciary duty
arising from Section 82.1034, the commissioner shall issue a cease
and desist order and, if applicable, impose an administrative
penalty, as provided by Section 14.208, Finance Code.
(d) Except as provided by this section, this chapter does
not authorize the commissioner to issue a cease and desist order or
take other affirmative action against a person or unit owners'
association board for any reason, including a complaint arising
from the imposition of an assessment or the foreclosure of a lien.
Sec. 82.1034. DEPOSITORY ACCOUNT. (a) Within a reasonable
time after receipt, a unit owners' association board shall deposit
all money paid to the board by or on behalf of a unit owner pursuant
to an assessment for common expenses with a financial institution
in a depository account established for the benefit of the
association and insured by the Federal Deposit Insurance
Corporation. The board, on the commissioner's request, shall
inform the commissioner of the name, business address, and
telephone number of the financial institution at which the board
maintains the account under this section and the account number of
the account.
(b) Money held in a depository account by a unit owners'
association board is the property of the association and not of the
board or the board's designee.
(c) A unit owners' association board shall disburse money
paid by or on behalf of a unit owner only to pay for common expenses
as provided by the declaration, articles of incorporation, bylaws,
or rules of the association.
(d) A unit owners' association board may not commingle money
in a depository account established under this section with money
of other persons.
(e) A unit owners' association board shall annually
reconcile a depository account under this section. If the board or
the board's designee has more than one depository account, each
depository account must be individually reconciled.
(f) If a unit owners' association board discovers, or has a
reasonable suspicion of, embezzlement or other unlawful
appropriation of money held in a depository account under this
section, the board immediately shall notify the commissioner by a
method approved by the commission by rule. Unless the commission by
rule provides otherwise, the board shall notify the commissioner of
remedial action that the board intends to take with regard to the
unlawful appropriation or suspected unlawful appropriation not
later than the fifth day after the date on which the board notifies
the commissioner of the appropriation.
(g) On the commissioner's request, a unit owners'
association board shall, before transferring a depository account
from one financial institution to another, inform the commissioner
of the name, business address, and telephone number of the
institution to which the account will be transferred and, as soon as
practicable after the transfer of a depository account under this
subsection, inform the commissioner of the account number at the
transferee institution.
Sec. 82.1035. REGULATION BY CONSUMER CREDIT COMMISSIONER:
EXEMPTION. Sections 82.1031, 82.1032, 82.1033, and 82.1034 do not
apply to a unit owners' association that consists of 15 or fewer
units.
SECTION 7. Section 209.002, Property Code, is amended by
adding Subdivisions (2-a) and (2-b) to read as follows:
(2-a) "Commission" means the Finance Commission of
Texas.
(2-b) "Commissioner" means the consumer credit
commissioner.
SECTION 8. Chapter 209, Property Code, is amended by adding
Sections 209.0041, 209.0042, 209.0043, 209.0044, and 209.0045 to
read as follows:
Sec. 209.0041. BOARD REGISTRATION REQUIRED. (a) A board of
a property owners' association may not act on behalf of the
association unless the board is registered with the commissioner as
provided by this section.
(b) An application for registration must contain:
(1) the information required to be included in a
management certificate under Section 209.004; and
(2) any other information required by the commission
by rule.
(c) An applicant shall promptly supplement or amend an
application to report any material mistake or omission or any
actual or expected change in any document or information contained
in the application.
(d) The application must be sworn to and accompanied by an
initial registration fee in an amount set by the commission by rule.
Sec. 209.0042. RENEWAL OF REGISTRATION. A property owners'
association board must renew the board's registration annually by
filing a report with the commissioner. The report must be in a form
prescribed by the commission by rule and:
(1) be accompanied by a renewal fee in an amount set by
the commission by rule;
(2) contain a financial statement for the property
owners' association for the fiscal year preceding the date the
renewal report is filed;
(3) disclose the total amount of assessments received
by the association during the 12 months preceding the date of the
renewal report from or on behalf of property owners;
(4) disclose, to the best of the registrant's
knowledge, the gross funds accumulated during the 12 months
preceding the date of the renewal report by the association; and
(5) provide any other information that the
commissioner reasonably requires in order to perform the
commissioner's duty under this section.
Sec. 209.0043. MONITORING AND INVESTIGATION BY
COMMISSIONER. (a) The commissioner shall receive written
complaints against any person or property owners' association board
with respect to a violation of Section 209.0044.
(b) If the commissioner receives a written complaint
against a person or property owners' association board under this
section or otherwise has reasonable cause to believe that a person
or property owners' association board has breached or is breaching
a fiduciary duty arising from Section 209.0044, the commissioner
shall investigate the person or property owners' association board.
(c) Following an investigation conducted under Subsection
(b), if the commissioner finds that a person or property owners'
association board has breached or is breaching a fiduciary duty
arising from Section 209.0044, the commissioner shall issue a cease
and desist order and, if applicable, impose an administrative
penalty, as provided by Section 14.208, Finance Code.
(d) Except as provided by this section, this chapter does
not authorize the commissioner to issue a cease and desist order or
take other affirmative action against a person or property owners'
association board for any reason, including a complaint arising
from the imposition of an assessment or the foreclosure of a lien.
Sec. 209.0044. DEPOSITORY ACCOUNT. (a) Within a
reasonable time after receipt, a property owners' association board
shall deposit all money paid to the board by or on behalf of a
property owner pursuant to an assessment for common expenses with a
financial institution in a depository account established for the
benefit of the association and insured by the Federal Deposit
Insurance Corporation. The board, on the commissioner's request,
shall inform the commissioner of the name, business address, and
telephone number of the financial institution at which the board
maintains the account under this section and the account number of
the account.
(b) Money held in a depository account by a property owners'
association board is the property of the association and not of the
board or the board's designee.
(c) A property owners' association board shall disburse
money paid by or on behalf of an owner only to pay for common
expenses as provided by the dedicatory instruments of the
association.
(d) A property owners' association board may not commingle
money in a depository account established under this section with
money of other persons.
(e) A property owners' association board shall annually
reconcile a depository account under this section. If the board or
the board's designee has more than one depository account, each
depository account must be individually reconciled.
(f) If a property owners' association board discovers, or
has a reasonable suspicion of, embezzlement or other unlawful
appropriation of money held in a depository account under this
section, the board immediately shall notify the commissioner by a
method approved by the commission by rule. Unless the commission by
rule provides otherwise, the board shall notify the commissioner of
remedial action that the board intends to take with regard to the
unlawful appropriation or suspected unlawful appropriation not
later than the fifth day after the date on which the board notifies
the commissioner of the appropriation.
(g) On the commissioner's request, a property owners'
association board shall, before transferring a depository account
from one financial institution to another, inform the commissioner
of the name, business address, and telephone number of the
institution to which the account will be transferred and, as soon as
practicable after the transfer of a depository account under this
subsection, inform the commissioner of the account number at the
transferee institution.
Sec. 209.0045. REGULATION BY CONSUMER CREDIT COMMISSIONER:
EXEMPTION. Sections 209.0041, 209.0042, 209.0043, and 209.0044 do
not apply to a property owners' association that consists of 15 or
fewer lots or units.
SECTION 9. (a) The changes in law made by this Act apply to
a unit owners' association or property owners' association
regardless of whether the unit owners' association or property
owners' association was created before, on, or after the effective
date of this Act.
(b) The changes in law made by this Act apply to a unit
owners' association or property owners' association beginning
January 1, 2012.
SECTION 10. This Act takes effect September 1, 2011.