82R13605 T
By: Harper-Brown H.B. No. 2869
A BILL TO BE ENTITLED
AN ACT
relating to the powers and duties of certain master mixed-use
property owners' associations.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Title 11, Property Code, is amended by adding
Chapter 215 to read as follows:
CHAPTER 215. MASTER MIXED-USE PROPERTY OWNERS' ASSOCIATIONS
Sec. 215.001. DEFINITIONS. In this chapter:
(1) "Appraised value" means the property value
determined by the appraisal district that establishes property
values for taxing entities levying taxes on property in a mixed-use
development.
(2) "Property owners' association" or "association"
means, unless otherwise indicated, a master mixed-use property
owners' association.
(3) "Self-help" means the process by which a property
owners' association takes remedial action with regard to property
governed by the association after the exhaustion of traditional
enforcement efforts.
Sec. 215.002. APPLICABILITY OF CHAPTER. (a) This chapter
applies to properties that are:
(1) located in a mixed-use development; and
(2) subject to restrictions or provisions in a
declaration that:
(A) require mandatory membership in a property
owners' association; and
(B) authorize the association to collect regular
or special assessments on all or a majority of the property in the
development.
(b) This chapter applies to a property owners' association
that:
(1) includes:
(A) commercial properties, including hotel and
retail properties, that constitute at least 40 percent of the total
appraised property value of the mixed-use development governed by
the association;
(B) single-family attached and detached
properties that constitute at least 25 percent of the total
appraised property value of the mixed-use development governed by
the association; and
(C) multifamily properties that constitute at
least 10 percent of the total appraised property value of the
mixed-use development governed by the association;
(2) governs at least 6,000 acres of deed-restricted
property;
(3) has at least 10 residential or corporate
commercial property owners' associations that are members of and
subject to the governing documents of the master mixed-use property
owners' association;
(4) has at least 3,500 platted and developed
single-family residential properties and at least 450 separately
platted commercial properties together constituting at least 30
million square feet of available square footage; and
(5) participates in the maintenance of public space,
including parks, medians, and lakefronts, owned by local or state
governmental entities.
(c) Except as otherwise provided by this chapter, this
chapter applies only to a master mixed-use property owners'
association and not to the independent property owners'
associations that are members of the master mixed-use property
owners' association.
Sec. 215.003. APPLICABILITY OF CHAPTER 209. Sections
209.006, 209.007, 209.010, and 209.011 apply only to single-family
residential properties governed by a property owners' association
subject to this chapter.
Sec. 215.004. CONFLICTS OF LAW. Notwithstanding any other
provision of law, the provisions of this chapter prevail over a
conflicting or inconsistent provision of law relating to
independent property owners' associations.
Sec. 215.005. BOARD POWERS. In addition to any other powers
provided by this chapter, and unless otherwise provided by the
governing documents of the property owners' association, the
association, acting through its board of directors, may:
(1) adopt and amend bylaws;
(2) adopt and amend budgets for revenues,
expenditures, and reserves and collect assessments for common
expenses from property owners;
(3) adopt reasonable rules;
(4) hire and terminate managing agents and other
employees, agents, and independent contractors;
(5) institute, defend, intervene in, settle, or
compromise litigation or administrative proceedings on matters
affecting a property governed by the association;
(6) make contracts and incur liabilities relating to
the operation of the association;
(7) regulate the use, maintenance, repair,
replacement, modification, and appearance of the property governed
by the association;
(8) make improvements to be included as a part of the
common area;
(9) acquire, hold, encumber, and convey in its own
name any right, title, or interest to real or personal property;
(10) purchase an investment property that is not part
of the common area;
(11) grant easements, leases, licenses, and
concessions through or over the common elements;
(12) impose and receive payments, fees, or charges for
the use, rental, or operation of the common area and for services
provided to property owners;
(13) impose interest, late charges, and, if
applicable, returned check charges for late payments of regular
assessments or special assessments;
(14) charge costs to an owner's assessment account and
collect the costs in any manner provided in the restrictions for the
collection of assessments;
(15) adopt and amend rules regulating the collection
of delinquent assessments;
(16) impose reasonable charges for preparing,
recording, or copying amendments to resale certificates or
statements of unpaid assessments;
(17) purchase insurance and fidelity bonds, including
directors' and officers' liability insurance, that the board
considers appropriate or necessary;
(18) subject to the requirements of the provisions
described by Section 1.008(d), Business Organizations Code, and by
majority vote of the board, indemnify a director or officer of the
association who was, is, or may be made a named defendant or
respondent in a proceeding because the person is or was a director
or officer;
(19) if the restrictions vest the architectural
control authority in the association:
(A) implement written architectural control
guidelines for its own use, or record the guidelines in the real
property records of the applicable county; and
(B) modify the guidelines as the needs of the
development change;
(20) exercise self-help with regard to property
governed by the association;
(21) exercise other powers conferred by the governing
documents;
(22) exercise other powers necessary and proper for
the governance and operation of the association; and
(23) exercise any other powers that may be exercised
in this state by a corporation of the same type as the association.
Sec. 215.006. OPEN BOARD MEETINGS. (a) 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 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.
(b) Except as provided by this section, a meeting of the
property owners' association board is open to members of the
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.
(c) 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 during the normal
business hours of the association 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.
(d) 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 posted at
least 72 hours before the start of the meeting in a conspicuous
manner reasonably designed to provide notice to association
members:
(1) 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 outside the
association's corporate offices that is accessible to association
members during normal business hours; or
(2) on any Internet website maintained by the
association.
(e) 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.
(f) 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.
(g) Any deliberation of or decision relating to the subject
of an inquiry made under Subsection (f) shall be limited to a
proposal to place the subject on the agenda for a subsequent board
meeting.
(h) 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 (d) 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
other than pending litigation, or increases in assessments. 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.
(i) 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.
(j) 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 (k) and identifying the specific
subdivision of Subsection (k) under which the executive session
will be held. A vote or other action item may not be taken in
executive session. An executive session is not subject to the
requirements of Subsection (c).
(k) A property owners' association board 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 association;
(3) financial matters relating to an individual
property owner;
(4) a payment plan for an association member who is
delinquent in the payment of a financial obligation to the
association;
(5) a foreclosure of a lien;
(6) an enforcement action against an association
member, including for nonpayment of amounts due;
(7) 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;
(8) 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;
(9) matters involving the invasion of privacy of an
individual owner; or
(10) an employee matter.
Sec. 215.007. VOTING. (a) The number of votes to which an
individual or corporation who is a member of a property owners'
association is entitled is determined by the governing documents of
the association.
(b) Each corporation or individual who is a member of the
property owners' association may vote by proxy as provided for
nonprofit corporations under Section 22.160, Business
Organizations Code.
(c) Notwithstanding any provision of the certificate of
formation or bylaws to the contrary, a member vote on any matter may
be conducted by mail, by facsimile transmission, by e-mail, or by
any combination of those methods.
Sec. 215.008. RESTRICTIVE COVENANTS. (a) A property
owners' association may enforce its restrictive covenants as
follows:
(1) by exercising discretionary authority relating to
a restrictive covenant unless a court has determined by a
preponderance of the evidence that the exercise of discretionary
authority was arbitrary, capricious, or discriminatory; and
(2) by initiating, defending, or intervening in
litigation or an administrative proceeding affecting the
enforcement of a restrictive covenant or the protection,
preservation, or operation of property subject to the association's
governing documents.
(b) If the association prevails in an action to enforce
restrictive covenants, the association may recover reasonable
attorney's fees and costs incurred.
(c) Unless prohibited or restricted by municipal ordinance
or county code, an association may use self-help to enforce its
restrictive covenants against a residential or commercial property
owner as necessary to prevent immediate harm to a person or
property, or as otherwise reasonable. If a property owner commits a
subsequent repeat violation of the restrictive covenants within 12
months of the initial violation, the association is not required to
provide the property owner with advance notice before the
association implements self-help.
(d) For purposes of Subsection (c), an advance, annual
notice of maintenance requirements is considered notice to the
extent notice is required.
Sec. 215.009. ATTORNEY'S FEES IN BREACH OF RESTRICTIVE
COVENANT ACTION. In an action based on breach of a restrictive
covenant, the prevailing party is entitled to reasonable attorney's
fees, costs, and actual damages.
Sec. 215.010. COMMON AREAS. A property owners' association
may adopt reasonable rules regulating common areas.
Sec. 215.011. RESALE CERTIFICATES. A property owners'
association shall provide resale certificates only for residential
properties and in the manner provided by Section 207.003.
Sec. 215.012. MANAGEMENT CERTIFICATE. (a) A property
owners' association shall record in each county in which any
portion of the development governed by the association is located a
management certificate, signed and acknowledged by an officer of
the association, stating:
(1) the name of the development;
(2) the name of the association;
(3) the recording data for the declaration and all
supplementary declarations;
(4) the applicability of any supplementary
declarations to residential communities;
(5) the name and mailing address of the association;
and
(6) other information the association considers
appropriate.
(b) A property owners' association shall record an amended
management certificate not later than the 30th day after the date
the association has notice of a change in information in the
recorded certificate required by Subsection (a).
(c) The association and its officers, directors, employees,
and agents are not liable to any person or corporation for delay in
recording or failure to record a management certificate unless the
delay or failure is wilful or caused by gross negligence.
Sec. 215.013. 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. 215.014. FORECLOSURE. A property owners' association
may not foreclose an association assessment lien unless the
association first obtains a court order of sale.
SECTION 2. This Act takes effect September 1, 2011.