82R17270 AJA-F
By: Deshotel H.B. No. 3348
Substitute the following for H.B. No. 3348:
By: Quintanilla C.S.H.B. No. 3348
A BILL TO BE ENTITLED
AN ACT
relating to the operation of certain condominium unit owners'
associations.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 82.003(a)(11), Property Code, is amended
to read as follows:
(11) "Declaration" means an [a recorded] instrument,
however denominated, that creates a condominium, and any [recorded]
amendment to that instrument.
SECTION 2. Section 82.102, Property Code, is amended by
amending Subsection (a) and adding Subsection (f) to read as
follows:
(a) Unless otherwise provided by the declaration, the
association, acting through its board, may:
(1) adopt and amend bylaws;
(2) adopt and amend budgets for revenues,
expenditures, and reserves, and collect assessments for common
expenses from unit owners;
(3) hire and terminate managing agents and other
employees, agents, and independent contractors;
(4) institute, defend, intervene in, settle, or
compromise litigation or administrative proceedings in its own name
on behalf of itself or two or more unit owners on matters affecting
the condominium;
(5) make contracts and incur liabilities relating to
the operation of the condominium;
(6) regulate the use, maintenance, repair,
replacement, modification, and appearance of the condominium;
(7) adopt and amend rules regulating the use,
occupancy, leasing or sale, maintenance, repair, modification, and
appearance of units and common elements, to the extent the
regulated actions affect common elements or other units;
(8) cause additional improvements to be made as a part
of the common elements;
(9) acquire, hold, encumber, and convey in its own
name any right, title, or interest to real or personal property,
except common elements of the condominium;
(10) grant easements, leases, licenses, and
concessions through or over the common elements;
(11) impose and receive payments, fees, or charges for
the use, rental, or operation of the common elements and for
services provided to unit owners;
(12) impose interest and late charges for late
payments of assessments, returned check charges, and, if notice and
an opportunity to be heard are given, reasonable fines for
violations of the declaration, bylaws, and rules of the
association;
(13) adopt and amend rules regulating the collection
of delinquent assessments and the application of payments;
(14) adopt and amend rules regulating the termination
of utility service to a unit, the owner of which is delinquent in
the payment of an assessment that is used, in whole or in part, to
pay the cost of that utility;
(15) impose reasonable charges for preparing,
recording, or copying declaration amendments, resale certificates,
or statements of unpaid assessments;
(16) enter a unit for bona fide emergency purposes
when conditions present an imminent risk of harm or damage to the
common elements, another unit, or the occupants;
(17) [assign its right to future income, including the
right to receive common expense assessments, but only to the extent
the declaration so provides;
[(18)] suspend the voting privileges of or the use of
certain general common elements by an owner delinquent for more
than 30 days in the payment of assessments;
(18) [(19)] purchase insurance and fidelity bonds it
considers appropriate or necessary;
(19) [(20)] exercise any other powers conferred by the
declaration or bylaws;
(20) [(21)] exercise any other powers that may be
exercised in this state by a corporation of the same type as the
association; and
(21) [(22)] exercise any other powers necessary and
proper for the government and operation of the association.
(f) The association by resolution of the board of directors
may borrow money unless prohibited by the declaration, certificate
of formation, bylaws, or rules. If the board of directors approves
a resolution under this subsection, the association may assign the
association's right to future income, including the right to
receive common expense assessments and assign the association's
lien rights, as collateral for the loan authorized by the
resolution. The association shall comply with any member approval
requirement in the association's declaration, certificate of
formation, bylaws, or rules for borrowing money, except that not
more than 67 percent of the total votes entitled to be cast are
required to approve an authorization to borrow money.
SECTION 3. Sections 82.111(c) and (i), 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 Subsections (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. Costs of repair or
replacement incurred before any insurance proceeds are available
that are within the association's deductible, or that are in excess
of the insurance proceeds and reserves, shall be paid as determined
by resolution of the board of directors of the association, or, if
the board does not approve a resolution, the costs are a common
expense. A resolution regarding payment of costs under this
subsection is considered a dedicatory instrument and must be
recorded in accordance with Section 202.006. [The cost of repair or
replacement in excess of the insurance proceeds and reserves is a
common expense.] 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. Section 82.113, Property Code, is amended by
adding Subsection (c-1) and amending Subsection (g) to read as
follows:
(c-1) A lien, lien affidavit, or other instrument
evidencing the nonpayment 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.
(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. If the
association is the purchaser [To redeem the unit], the owner must
pay to the association to redeem the unit 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 in connection with 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 costs of maintenance,
[and] leasing, mortgage payments, taxes, and insurance. If a party
other than the association is the purchaser of the unit at the
foreclosure sale, the redeeming owner must pay to the purchaser an
amount equal to the amount bid at the sale, interest on the bid
amount computed from the date of the foreclosure sale to the date of
redemption at the rate of six percent, any assessment paid by the
purchaser after the date of foreclosure, and any reasonable costs
incurred by the purchaser as the owner of the unit, including costs
of maintenance, leasing, mortgage payments, taxes, and insurance.
The redeeming owner must also pay to the association all
assessments that are due as of the date of the redemption and
reasonable attorney's fees and all costs incurred by the
association in foreclosing the lien. On redemption, the purchaser
of the unit at the foreclosure sale [association] 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 purchaser of the unit at the
foreclosure sale [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 purchaser of the unit at the foreclosure sale
[association] from the date of foreclosure sale to the date of
redemption belong to the purchaser of the unit at the foreclosure
sale [association], but the rents and income shall be credited
against the redemption amount. The purchaser of [An association
purchasing] a unit at a sale foreclosing an association's
assessment [its] lien may not transfer ownership of the unit during
the redemption period to a person other than a redeeming owner.
SECTION 5. (a) Section 82.111(i), Property Code, as amended
by this Act, applies only to payment of costs incurred and a
resolution regarding payment of costs approved on or after the
effective date of this Act. Payment of costs incurred or a
resolution approved before the effective date of this Act is
governed by the law in effect immediately before the effective date
of this Act, and that law is continued in effect for that purpose.
(b) Section 82.113(c-1), Property Code, as added by this
Act, applies only to an instrument filed on or after the effective
date of this Act. An instrument filed before the effective date of
this Act is governed by the law applicable to the instrument
immediately before that date, and that law is continued in effect
for that purpose.
(c) Section 82.113(g), Property Code, as amended by this
Act, applies only to a condominium unit sold at a foreclosure sale
on or after the effective date of this Act. A unit sold at a
foreclosure sale before the effective date of this Act is governed
by the law in effect immediately before the effective date of this
Act, and that law is continued in effect for that purpose.
SECTION 6. This Act takes effect January 1, 2012.