82R17027 PMO-F
By: Harper-Brown H.B. No. 2869
Substitute the following for H.B. No. 2869:
By: Quintanilla C.S.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) "Dedicatory instrument" has the meaning assigned
by Section 209.003.
(4) "Self-help" means the process by which a property
owners' association takes remedial action with regard to property
governed by the association.
Sec. 215.002. APPLICABILITY OF CHAPTER. (a) This chapter
applies to a property owners' association that:
(1) includes:
(A) commercial properties, including hotel and
retail properties, that constitute at least 35 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 incorporated residential or
commercial property owners' associations that are members of and
subject to the dedicatory instruments of the master mixed-use
property owners' association;
(4) has at least 3,400 platted and developed
single-family residential properties and at least 400 separately
platted commercial properties, including office, industrial,
hotel, and retail properties, which together constitute at least 30
million square feet of building area available for rental; and
(5) participates in the maintenance of public space,
including parks, medians, and lakefronts, owned by local, including
county, or state governmental entities.
(b) This chapter applies to property that is:
(1) governed by a property owners' association
described by Subsection (a);
(2) located in a master mixed-use development; and
(3) subject to a provision, including a restriction,
in a declaration that:
(A) requires mandatory membership in the
association; and
(B) authorizes the association to collect a
regular or special assessment on all or a majority of the property
in the development.
(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
209.007, 209.008, 209.011, and 209.012 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 applicable law and this chapter, and unless otherwise
provided by the dedicatory instruments 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
agents, employees, 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 dedicatory
instruments;
(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. ANNUAL MEETING OF ASSOCIATION MEMBERS; NOTICE
OF ANNUAL OR SPECIAL MEETING. (a) An annual meeting of members of a
property owners' association must be conducted in accordance with
the association's dedicatory instruments.
(b) Unless otherwise provided by a dedicatory instrument,
an annual meeting of the property owners' association members is
open to association members and must be held in a county in which
all or part of the property governed by the association is located
or in a county adjacent to that county.
(c) Unless otherwise provided by a dedicatory instrument,
the board shall give members notice of the date, time, place, and
subject of an annual or special meeting of the members. The notice
must be delivered to each member not later than the 10th day and not
earlier than the 60th day before the date of the meeting.
(d) A notice under Subsection (c) must be posted in a
conspicuous manner reasonably designed to provide notice to
association members:
(1) in a place located outside the corporate offices
of the association that is accessible by the general membership
during normal business hours; or
(2) on any Internet website maintained by the
association.
(e) Unless otherwise provided by a dedicatory instrument,
any number of the members may attend the meeting by use of
videoconferencing or a similar telecommunication method for
purposes of establishing full participation in the meeting.
Sec. 215.007. BOARD MEETINGS. (a) A meeting of the board
of directors of a property owners' association must be conducted in
accordance with the association's dedicatory instruments.
(b) Unless otherwise provided by a dedicatory instrument,
elected directors who represent the commercial and residential
membership attend and conduct the business of the property owners'
association at a meeting under this section.
(c) In this section, a board meeting has the meaning
assigned by a dedicatory instrument. Notwithstanding this
subsection, the term does not include the gathering of a quorum of
the board at any other venue, including 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.
(d) Unless otherwise provided by a dedicatory instrument,
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, at the member's expense, 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.
(e) Unless otherwise provided by a dedicatory instrument,
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 (f) and identifying the specific
subdivision of Subsection (f) 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 (d).
(f) Unless otherwise provided by a dedicatory instrument, a
property owners' association board may meet in executive session 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 an agent, employee, contractor, or other
representative of the association;
(3) all financial matters concerning a specific
property owner;
(4) a payment plan for an association member who has 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;
(10) an employee matter; and
(11) any other matter the board considers necessary or
reasonable to further assist the association's operation.
Sec. 215.008. 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 dedicatory instruments
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 Sections 22.160(b) and (c), 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. 215.009. 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
dedicatory instruments.
(b) If the association prevails in an action to enforce
restrictive covenants, the association may recover reasonable
attorney's fees and costs incurred.
(c) 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. 215.010. 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. 215.011. COMMON AREAS. A property owners' association
may adopt reasonable rules regulating common areas.
Sec. 215.012. RESALE CERTIFICATES. A property owners'
association shall provide resale certificates only for residential
properties and in the manner provided by Section 207.003.
Sec. 215.013. 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 willful or caused by gross negligence.
Sec. 215.014. 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. 215.015. 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.