By: Deshotel H.B. No. 3348
A BILL TO BE ENTITLED
AN ACT
relating to the operation of property owners' associations.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subdivision (11), Subsection (a), Section
82.003, Property Code, is amended to read as follows:
(11) "Declaration" means an recorded instrument,
however denominated, that creates a condominium and any amendment
to that recorded instrument.
SECTION 2. Subdivision (17), Subsection (a), Section
82.102, Property Code, is amended to read as follows:
(17) assign its right to future income, including the
right to receive common expense assessments, but only to the extent
the declaration so provides; unless the declaration, bylaws, rules,
or certificate of formation prohibit the borrowing of money, borrow
money upon resolution of the board of directors. Except as
otherwise provided by this Section (17), upon such resolution the
association shall have the right to assign its right to future
income, including the right to receive common expense assessments
and assign its lien rights, as collateral for any such loan. If
there is a member approval requirement for the borrowing of money
contained in the declaration, bylaws, rules, or certificate of
formation, the borrowing of money may be approved by a vote of not
less than 67 percent of the total votes entitled to be cast. If the
declaration, bylaws, rules, or certificate of formation provide a
lower percentage, that percentage controls.
SECTION 3. Subsections (c) and (i), Section 82.111,
Property Code, are amended to read as follows:
(c) If the insurance described by Subsections (a) and (b) is
not reasonably available, the association shall cause notice of
that fact to be delivered or mailed to all unit owners and
lienholders. The declaration may require the association to carry
any other insurance, and the association in any event may carry any
other insurance the board considers appropriate to protect the
condominium, the association, or the unit owners. Insurance
policies carried under Subsection (a) and (b) may provide for
deductibles as the board considers appropriate or necessary. This
section does not affect the right of a holder of a mortgage on a unit
to require a unit owner to acquire insurance in addition to that
provided by the association.
(i) Any portion of the condominium for which insurance is
required that is damaged or destroyed shall be promptly repaired or
replaced by the association unless the condominium is terminated,
repair or replacement would be illegal under any state or local
health or safety statute or ordinance, or at least 80 percent of the
unit owners, including each owner of a unit or assigned limited
common element that will not be rebuilt or repaired, vote to not
rebuild. A vote to not rebuild does not increase an insurer's
liability to loss payment obligation under a policy, and the vote
does not cause a presumption of total loss. The cost of repair or
replacement in excess of the insurance proceeds and reserves is a
common expense. The cost of repairs that are incurred before any
insurance proceeds are available, within the association's
deductible, or in excess of the insurance proceeds and reserves
shall be paid as determined by resolution of the board of directors
of the association. However, if the board of directors of the
association has not approved a resolution then these costs shall be
a common expense. Any such resolution shall constitute, and be
filed as, a dedicatory instrument pursuant to Section 202.006. If
the entire condominium is not repaired or replaced, any insurance
proceeds attributable to the damaged common elements shall be used
to restore the damaged area to a condition compatible with the
remainder of the condominium, the insurance proceeds attributable
to units and limited common elements that are not rebuilt shall be
distributed to the owners of those units and the owners of the units
to which those limited common elements were assigned, or to their
mortgagees, as their interests may appear, and the remainder of the
proceeds shall be distributed to all the unit owners as their
interests may appear. If the unit owners vote to not rebuild any
unit, that unit's allocated interests shall be automatically
reallocated on the vote as if the unit had been condemned, and the
association shall prepare, execute, and record an amendment to the
declaration reflecting the reallocation. Section 82.068 governs
the distribution of insurance proceeds if the condominium is
terminated.
SECTION 4. Subsections (g)-(n), Section 82.113, Property
Code, are amended to read as follows:
(g) The owner of a unit used for residential purposes and
purchased by an association at a foreclosure sale of the
association's lien for assessments may redeem the unit not later
than the 90th day after the date of the foreclosure sale. To redeem
the unit, the owner must pay to the association:
(1) if the association is the purchaser, all amounts
due the association at the time of the foreclosure sale, interest
from the date of foreclosure sale to the date of redemption at the
rate provided by the declaration for delinquent assessments,
reasonable attorney's fees, and all costs incurred by the
association in foreclosing the lien and related to the redemption
process, any assessment levied against the unit by the association
after the foreclosure sale, and any reasonable cost incurred by the
association as owner of the unit, including without limitation
costs of maintenance, leasing, mortgage payments, taxes and
insurance.
(2) if a party other than the association is the
purchaser, the redeeming owner shall pay to the party acquiring the
unit at the foreclosure sale the amount bid at the sale, interest
from the date of foreclosure sale to the date of redemption at the
rate of six percent, any assessment paid after the date of the
foreclosure, and any reasonable costs incurred as owner of the
unit, including without limitation costs of maintenance, leasing,
mortgage payments, taxes and insurance. The redeeming owner shall
also pay to the Association all assessments that are due as of the
date of redemption, reasonable attorney's fees, and all costs
incurred by the association in foreclosing the lien.
(h) On redemption, the association or the party acquiring
title at the foreclosure of the association's assessment lien shall
execute a deed with special warranty to the redeeming unit owner.
The exercise of the right of redemption is not effective against a
subsequent purchaser or lender for value without notice of the
redemption after the redemption period expires unless the redeeming
unit owner records the deed from the association or an affidavit
stating that the owner has exercised the right of redemption. A unit
that has been redeemed remains subject to all liens and
encumbrances on the unit before foreclosure. All rents and other
income collected from the unit by the association or other party
that acquires title at the foreclosure of the association's
assessment lien from the date of foreclosure sale to the date of
redemption belong to the association party purchasing the property
at the foreclosure of the association's assessment lien, but the
rents and income shall be credited against the redemption amount.
An association A party purchasing a unit at a sale foreclosing its
lien the foreclosure sale of the association's assessment lien may
not transfer ownership of the unit during the redemption period to a
person other than a redeeming owner.
(h)(i) If a unit owner defaults in the owner's monetary
obligations to the association, the association may notify other
lien holders of the default and the association's intent to
foreclose its lien. The association shall notify any holder of a
recorded lien or duly perfected mechanic's lien against a unit who
has given the association a written request for notification of the
unit owner's monetary default or the association's intent to
foreclose its lien.
(i)(j) This section does not prohibit the association from
taking a deed in lieu of foreclosure or from filing suit to recover
a money judgment for sums that may be secured by the lien.
(j)(k) At any time before a nonjudicial foreclosure sale, a
unit owner may avoid foreclosure by paying all amounts due the
association.
(k) (l) If, on January 1, 1994, a unit is the homestead of
the unit owner and is subject to a declaration that does not contain
a valid assessment lien against the unit, the lien provided by this
section does not attach against the unit until the unit ceases to be
the homestead of the person owning it on January 1, 1994.
(l) (m) Foreclosure of a tax lien attaching against a unit
under Chapter 32, Tax Code, does not discharge the association's
lien for assessments under this section or under a declaration for
amounts becoming due to the association after the date of
foreclosure of the tax lien.
(m) (n) If a unit owner is delinquent in payment of
assessments to an association, at the request of the association a
holder of a recorded lien against the unit may provide the
association with information about the unit owner's debt secured by
the holder's lien against the unit and other relevant information.
At the request of a lien holder, the association may furnish the
lien holder with information about the condominium and the unit
owner's obligations to the association.
SECTION 5. Chapter 82.113, Property Code, is amended by
adding Subsection (o) to read as follows:
(o) A lien or lien affidavit or other instrument evidencing
the non-payment of assessments or other charges owed to an
association and filed in the official public records of a county is
a legal instrument affecting title to real property.
SECTION 6. (a) Subsections (g)-(n), Section 82.113,
Property Code, as amended by this Act apply only to a foreclosure
sale that occurs after January 1, 2012. A foreclosure sale that
occurs before January 1, 2012, is governed by the law immediately in
effect before the effective date of this Act, and the law is
continued in effect for that purpose.
(b) Subsection (o), Section 82.113, Property Code, as added
by this Act, applies only to a lien or lien affidavit that is
prepared or filed after January 1, 2012.
SECTION 7. This Act takes effect January 1, 2012.