Texas 2011 - 82nd Regular

Texas House Bill HB3348 Compare Versions

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1	1	82R17270 AJA-F
2	2	By: Deshotel H.B. No. 3348
3	3	Substitute the following for H.B. No. 3348:
4	4	By: Quintanilla C.S.H.B. No. 3348
5	5
6	6
7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to the operation of certain condominium unit owners'
10	10	associations.
11	11	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
12	12	SECTION 1. Section 82.003(a)(11), Property Code, is amended
13	13	to read as follows:
14	14	(11) "Declaration" means an [a recorded] instrument,
15	15	however denominated, that creates a condominium, and any [recorded]
16	16	amendment to that instrument.
17	17	SECTION 2. Section 82.102, Property Code, is amended by
18	18	amending Subsection (a) and adding Subsection (f) to read as
19	19	follows:
20	20	(a) Unless otherwise provided by the declaration, the
21	21	association, acting through its board, may:
22	22	(1) adopt and amend bylaws;
23	23	(2) adopt and amend budgets for revenues,
24	24	expenditures, and reserves, and collect assessments for common
25	25	expenses from unit owners;
26	26	(3) hire and terminate managing agents and other
27	27	employees, agents, and independent contractors;
28	28	(4) institute, defend, intervene in, settle, or
29	29	compromise litigation or administrative proceedings in its own name
30	30	on behalf of itself or two or more unit owners on matters affecting
31	31	the condominium;
32	32	(5) make contracts and incur liabilities relating to
33	33	the operation of the condominium;
34	34	(6) regulate the use, maintenance, repair,
35	35	replacement, modification, and appearance of the condominium;
36	36	(7) adopt and amend rules regulating the use,
37	37	occupancy, leasing or sale, maintenance, repair, modification, and
38	38	appearance of units and common elements, to the extent the
39	39	regulated actions affect common elements or other units;
40	40	(8) cause additional improvements to be made as a part
41	41	of the common elements;
42	42	(9) acquire, hold, encumber, and convey in its own
43	43	name any right, title, or interest to real or personal property,
44	44	except common elements of the condominium;
45	45	(10) grant easements, leases, licenses, and
46	46	concessions through or over the common elements;
47	47	(11) impose and receive payments, fees, or charges for
48	48	the use, rental, or operation of the common elements and for
49	49	services provided to unit owners;
50	50	(12) impose interest and late charges for late
51	51	payments of assessments, returned check charges, and, if notice and
52	52	an opportunity to be heard are given, reasonable fines for
53	53	violations of the declaration, bylaws, and rules of the
54	54	association;
55	55	(13) adopt and amend rules regulating the collection
56	56	of delinquent assessments and the application of payments;
57	57	(14) adopt and amend rules regulating the termination
58	58	of utility service to a unit, the owner of which is delinquent in
59	59	the payment of an assessment that is used, in whole or in part, to
60	60	pay the cost of that utility;
61	61	(15) impose reasonable charges for preparing,
62	62	recording, or copying declaration amendments, resale certificates,
63	63	or statements of unpaid assessments;
64	64	(16) enter a unit for bona fide emergency purposes
65	65	when conditions present an imminent risk of harm or damage to the
66	66	common elements, another unit, or the occupants;
67	67	(17) [assign its right to future income, including the
68	68	right to receive common expense assessments, but only to the extent
69	69	the declaration so provides;
70	70	[(18)] suspend the voting privileges of or the use of
71	71	certain general common elements by an owner delinquent for more
72	72	than 30 days in the payment of assessments;
73	73	(18) [(19)] purchase insurance and fidelity bonds it
74	74	considers appropriate or necessary;
75	75	(19) [(20)] exercise any other powers conferred by the
76	76	declaration or bylaws;
77	77	(20) [(21)] exercise any other powers that may be
78	78	exercised in this state by a corporation of the same type as the
79	79	association; and
80	80	(21) [(22)] exercise any other powers necessary and
81	81	proper for the government and operation of the association.
82	82	(f) The association by resolution of the board of directors
83	83	may borrow money unless prohibited by the declaration, certificate
84	84	of formation, bylaws, or rules. If the board of directors approves
85	85	a resolution under this subsection, the association may assign the
86	86	association's right to future income, including the right to
87	87	receive common expense assessments and assign the association's
88	88	lien rights, as collateral for the loan authorized by the
89	89	resolution. The association shall comply with any member approval
90	90	requirement in the association's declaration, certificate of
91	91	formation, bylaws, or rules for borrowing money, except that not
92	92	more than 67 percent of the total votes entitled to be cast are
93	93	required to approve an authorization to borrow money.
94	94	SECTION 3. Sections 82.111(c) and (i), Property Code, are
95	95	amended to read as follows:
96	96	(c) If the insurance described by Subsections (a) and (b) is
97	97	not reasonably available, the association shall cause notice of
98	98	that fact to be delivered or mailed to all unit owners and
99	99	lienholders. The declaration may require the association to carry
100	100	any other insurance, and the association in any event may carry any
101	101	other insurance the board considers appropriate to protect the
102	102	condominium, the association, or the unit owners. Insurance
103	103	policies carried under Subsections (a) and (b) may provide for
104	104	deductibles as the board considers appropriate or necessary. This
105	105	section does not affect the right of a holder of a mortgage on a unit
106	106	to require a unit owner to acquire insurance in addition to that
107	107	provided by the association.
108	108	(i) Any portion of the condominium for which insurance is
109	109	required that is damaged or destroyed shall be promptly repaired or
110	110	replaced by the association unless the condominium is terminated,
111	111	repair or replacement would be illegal under any state or local
112	112	health or safety statute or ordinance, or at least 80 percent of the
113	113	unit owners, including each owner of a unit or assigned limited
114	114	common element that will not be rebuilt or repaired, vote to not
115	115	rebuild. A vote to not rebuild does not increase an insurer's
116	116	liability to loss payment obligation under a policy, and the vote
117	117	does not cause a presumption of total loss. Costs of repair or
118	118	replacement incurred before any insurance proceeds are available
119	119	that are within the association's deductible, or that are in excess
120	120	of the insurance proceeds and reserves, shall be paid as determined
121	121	by resolution of the board of directors of the association, or, if
122	122	the board does not approve a resolution, the costs are a common
123	123	expense. A resolution regarding payment of costs under this
124	124	subsection is considered a dedicatory instrument and must be
125	125	recorded in accordance with Section 202.006. [The cost of repair or
126	126	replacement in excess of the insurance proceeds and reserves is a
127	127	common expense.] If the entire condominium is not repaired or
128	128	replaced, any insurance proceeds attributable to the damaged common
129	129	elements shall be used to restore the damaged area to a condition
130	130	compatible with the remainder of the condominium, the insurance
131	131	proceeds attributable to units and limited common elements that are
132	132	not rebuilt shall be distributed to the owners of those units and
133	133	the owners of the units to which those limited common elements were
134	134	assigned, or to their mortgagees, as their interests may appear,
135	135	and the remainder of the proceeds shall be distributed to all the
136	136	unit owners as their interests may appear. If the unit owners vote
137	137	to not rebuild any unit, that unit's allocated interests shall be
138	138	automatically reallocated on the vote as if the unit had been
139	139	condemned, and the association shall prepare, execute, and record
140	140	an amendment to the declaration reflecting the reallocation.
141	141	Section 82.068 governs the distribution of insurance proceeds if
142	142	the condominium is terminated.
143	143	SECTION 4. Section 82.113, Property Code, is amended by
144	144	adding Subsection (c-1) and amending Subsection (g) to read as
145	145	follows:
146	146	(c-1) A lien, lien affidavit, or other instrument
147	147	evidencing the nonpayment of assessments or other charges owed to
148	148	an association and filed in the official public records of a county
149	149	is a legal instrument affecting title to real property.
150	150	(g) The owner of a unit [used for residential purposes and]
151	151	purchased [by an association] at a foreclosure sale of the
152	152	association's lien for assessments may redeem the unit not later
153	153	than the 90th day after the date of the foreclosure sale. If the
154	154	association is the purchaser [To redeem the unit], the owner must
155	155	pay to the association to redeem the unit all amounts due the
156	156	association at the time of the foreclosure sale, interest from the
157	157	date of foreclosure sale to the date of redemption at the rate
158	158	provided by the declaration for delinquent assessments, reasonable
159	159	attorney's fees, and all costs incurred by the association in
160	160	foreclosing the lien and in connection with the redemption process,
161	161	any assessment levied against the unit by the association after the
162	162	foreclosure sale, and any reasonable cost incurred by the
163	163	association as owner of the unit, including costs of maintenance,
164	164	[and] leasing, mortgage payments, taxes, and insurance. If a party
165	165	other than the association is the purchaser of the unit at the
166	166	foreclosure sale, the redeeming owner must pay to the purchaser an
167	167	amount equal to the amount bid at the sale, interest on the bid
168	168	amount computed from the date of the foreclosure sale to the date of
169	169	redemption at the rate of six percent, any assessment paid by the
170	170	purchaser after the date of foreclosure, and any reasonable costs
171	171	incurred by the purchaser as the owner of the unit, including costs
172	172	of maintenance, leasing, mortgage payments, taxes, and insurance.
173	173	The redeeming owner must also pay to the association all
174	174	assessments that are due as of the date of the redemption and
175	175	reasonable attorney's fees and all costs incurred by the
176	176	association in foreclosing the lien. On redemption, the purchaser
177	177	of the unit at the foreclosure sale [association] shall execute a
178	178	deed with special warranty to the redeeming unit owner. The
179	179	exercise of the right of redemption is not effective against a
180	180	subsequent purchaser or lender for value without notice of the
181	181	redemption after the redemption period expires unless the redeeming
182	182	unit owner records the deed from the purchaser of the unit at the
183	183	foreclosure sale [association] or an affidavit stating that the
184	184	owner has exercised the right of redemption. A unit that has been
185	185	redeemed remains subject to all liens and encumbrances on the unit
186	186	before foreclosure. All rents and other income collected from the
187	187	unit by the purchaser of the unit at the foreclosure sale
188	188	[association] from the date of foreclosure sale to the date of
189	189	redemption belong to the purchaser of the unit at the foreclosure
190	190	sale [association], but the rents and income shall be credited
191	191	against the redemption amount. The purchaser of [An association
192	192	purchasing] a unit at a sale foreclosing an association's
193	193	assessment [its] lien may not transfer ownership of the unit during
194	194	the redemption period to a person other than a redeeming owner.
195	195	SECTION 5. (a) Section 82.111(i), Property Code, as amended
196	196	by this Act, applies only to payment of costs incurred and a
197	197	resolution regarding payment of costs approved on or after the
198	198	effective date of this Act. Payment of costs incurred or a
199	199	resolution approved before the effective date of this Act is
200	200	governed by the law in effect immediately before the effective date
201	201	of this Act, and that law is continued in effect for that purpose.
202	202	(b) Section 82.113(c-1), Property Code, as added by this
203	203	Act, applies only to an instrument filed on or after the effective
204	204	date of this Act. An instrument filed before the effective date of
205	205	this Act is governed by the law applicable to the instrument
206	206	immediately before that date, and that law is continued in effect
207	207	for that purpose.
208	208	(c) Section 82.113(g), Property Code, as amended by this
209	209	Act, applies only to a condominium unit sold at a foreclosure sale
210	210	on or after the effective date of this Act. A unit sold at a
211	211	foreclosure sale before the effective date of this Act is governed
212	212	by the law in effect immediately before the effective date of this
213	213	Act, and that law is continued in effect for that purpose.
214	214	SECTION 6. This Act takes effect January 1, 2012.