82R9254 NC-F
By: West S.B. No. 1235
A BILL TO BE ENTITLED
AN ACT
relating to real property that is subject to restrictive covenants
and the operation of property owners' associations of subdivisions
that are subject to restrictive covenants.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 5.006(a), Property Code, is amended to
read as follows:
(a) In an action based on breach of a restrictive covenant
pertaining to real property or a statute pertaining to real
property subject to a restrictive covenant or to restrictive
covenants to which real property is subject, the court may [shall]
allow to a prevailing party [who asserted the action] reasonable
attorney's fees in addition to the party's costs and claim.
SECTION 2. Section 202.004, Property Code, is amended by
adding Subsections (d), (e), and (f) to read as follows:
(d) In evaluating an alleged or potential violation of a
restrictive covenant, a property owners' association board may,
notwithstanding any provision in a dedicatory instrument, elect to
not enforce the restrictive covenant if the board, in the board's
reasonable judgment, determines:
(1) the property owners' association's position is not
sufficiently strong to justify taking any action or further action;
(2) the provision alleged to have been violated may be
inconsistent with applicable law;
(3) the alleged violation is not of such a material or
visible nature as to be objectionable to a reasonable person or to
justify expending the property owners' association's resources;
(4) enforcement of the provision is not in the
association's best interests, based on hardship, expense, or other
reasonable criteria; or
(5) the facts of the particular circumstances, such as
topography of the owner's land or unforeseen circumstances unique
to the particular owner, justify the board's election to not
enforce the restrictive covenant.
(e) An election by the property owners' association board to
not enforce a restrictive covenant under Subsection (d) may not be
considered a waiver of the association's authority to enforce any
dedicatory instrument provision in the future.
(f) A property owners' association board shall document
each election by the board to not enforce a restrictive covenant
under Subsection (d) by noting in the minutes of the board meeting
at which the election was made:
(1) the person who was not subjected to enforcement of
the covenant;
(2) the specific covenant the board did not enforce;
and
(3) the board's rationale for not enforcing the
covenant.
SECTION 3. Chapter 202, Property Code, is amended by adding
Sections 202.011, 202.012, 202.013, 202.014, and 202.015 to read as
follows:
Sec. 202.011. RIGHT OF FIRST REFUSAL PROHIBITED. (a) In
this section, "development period" means a period stated in a
declaration during which a declarant reserves:
(1) a right to facilitate the development,
construction, and marketing of the subdivision; and
(2) a right to direct the size, shape, and composition
of the subdivision.
(b) To the extent a restrictive covenant provides a right of
first refusal for the sale or lease of a residential unit or
residential lot in favor of the property owners' association or the
association's members, the covenant is void.
(c) This section does not apply to a restrictive covenant
that provides a right of first refusal in favor of a developer or
builder during the development period.
Sec. 202.012. REGULATION OF SOLAR ENERGY DEVICES. (a) In
this section, "solar energy device" has the meaning assigned by
Section 171.107, Tax Code.
(b) Except as otherwise provided by this section, a property
owners' association may not include or enforce a provision in a
dedicatory instrument that prohibits or restricts a property owner
from installing a solar energy device.
(c) A provision that violates Subsection (b) is void.
(d) This section does not prohibit the inclusion or
enforcement of a provision in a dedicatory instrument that
prohibits a solar energy device that:
(1) as adjudicated by a court:
(A) threatens the public health or safety; or
(B) violates a law;
(2) is located on property owned or maintained by the
property owners' association;
(3) is located on property owned in common by the
members of the property owners' association; or
(4) is located in an area on the property owner's
property other than:
(A) on the roof of the home; or
(B) in a fenced yard or patio maintained by the
property owner.
Sec. 202.013. RENTAL RESTRICTIONS. (a) Except as provided
by Subsection (b), a property owners' association may not amend a
dedicatory instrument to prohibit or restrict the rental of
property subject to the dedicatory instrument without the consent
of at least 51 percent of the total votes allocated to property
owners subject to the dedicatory instrument.
(b) An amendment to a dedicatory instrument may require:
(1) an owner to:
(A) exercise due diligence in not leasing to an
occupant who is a registered sex offender or who has a history of
violent crime; or
(B) terminate the possessory right of any tenant
or occupant who is a registered sex offender or who has a history of
violent crime;
(2) all leases to be subject to the dedicatory
instruments of the property owners' association; or
(3) a minimum lease term of not more than six months.
Sec. 202.014. RESTRICTIONS REQUIRING CAPITAL IMPROVEMENTS.
(a) A dedicatory instrument may not be amended to retroactively
require a person who owns property subject to the dedicatory
instrument at the time the amendment is adopted to make a capital
improvement to the owner's property that is not required before the
amendment. A provision of a dedicatory instrument requiring an
owner to make a capital improvement to the owner's property may only
be adopted by a vote of at least 67 percent of the total votes
allocated to property owners subject to the dedicatory instrument
and may be applicable only to owners purchasing property subject to
the dedicatory instrument after the provision is adopted.
(b) For the purposes of this section, "capital improvement"
means items such as additional tree plantings, additional sodding,
fence construction, hardscape installation, new construction, or
any similar capital improvement. The term does not include repair
or maintenance of existing improvements or the removal of
conditions that are in violation of a dedicatory instrument.
Sec. 202.015. INJUNCTION; DAMAGES. (a) If a property
owners' association or other representative designated by the
property owners' association has violated, is violating, or is
threatening to violate this chapter, a member of the property
owners' association may bring a civil action against the property
owners' association but may not bring an action against an
association's officer or board member individually.
(b) A member of a property owners' association bringing an
action under this section may seek:
(1) injunctive relief;
(2) damages in an amount equal to the greater of:
(A) actual damages arising from the violation; or
(B) $1,500 for each violation; or
(3) both injunctive relief and damages as provided in
this subsection.
(c) The court may increase an award under Subsection (b)(2)
to an amount not to exceed three times the amount awarded under
Subsection (b)(2) if the court finds that violations have occurred
with a frequency that constitutes a pattern or practice.
(d) Each day a violation continues is not considered a
separate violation for purposes of an assessment of damages.
(e) The court may award damages to a property owners'
association for an action brought by a member of the property
owners' association that the court finds frivolous or groundless in
an amount that is not more than the greater of:
(1) three times the association's actual damages; or
(2) $4,500.
(f) On or before the 30th day before the date a person brings
an action under this section, the person must provide notice to the
other party of the person's intent to bring an action under this
section. The notice must be sent certified mail, return receipt
requested, or delivered by the United States Postal Service with
signature confirmation service.
SECTION 4. Chapter 209, Property Code, is amended by adding
Sections 209.0035 and 209.0041 to read as follows:
Sec. 209.0035. INJUNCTION; DAMAGES. (a) If a property
owners' association or other representative designated by the
property owners' association has violated, is violating, or is
threatening to violate this chapter, a member of the property
owners' association may bring a civil action against the property
owners' association but may not bring an action against an
association's officer or board member individually.
(b) A member of a property owners' association bringing an
action under this section may seek:
(1) injunctive relief;
(2) damages in an amount equal to the greater of:
(A) actual damages arising from the violation; or
(B) $1,500 for each violation; or
(3) both injunctive relief and damages as provided in
this subsection.
(c) The court may increase an award under Subsection (b)(2)
to an amount not to exceed three times the amount awarded under
Subsection (b)(2) if the court finds that violations have occurred
with a frequency that constitutes a pattern or practice.
(d) Each day a violation continues is not considered a
separate violation for purposes of assessment of damages.
(e) The court may award damages to a property owners'
association for an action brought by a member of the property
owners' association that the court finds frivolous or groundless in
an amount that is not more than the greater of:
(1) three times the association's actual damages; or
(2) $4,500.
(f) On or before the 30th day before the date a person brings
an action under this section, the person must provide notice to the
other party of the person's intent to bring an action under this
section. The notice must be sent certified mail, return receipt
requested, or delivered by the United States Postal Service with
signature confirmation service.
Sec. 209.0041. AMENDMENT OF DEDICATORY INSTRUMENTS. (a)
This section applies to a residential subdivision in which property
owners are subject to mandatory membership in a property owners'
association.
(b) This section applies to all dedicatory instruments
regardless of the date on which the dedicatory instruments were
created.
(c) This section does not apply to the amendment of a
dedicatory instrument during a development period, as defined by
Section 202.011.
(d) To the extent of any conflict with another provision of
this title, this section prevails.
(e) Except as provided by Subsection (f), a dedicatory
instrument may be amended only by a vote of at least 51 percent of
the total votes allocated to property owners in the property
owners' association, in addition to any governmental approval
required by law.
(f) A rule or guideline that affects land owned, leased,
maintained, or otherwise controlled by the property owners'
association may be adopted or amended by majority vote of the
association board. A rule or guideline that impacts the use and
enjoyment of personal or real property owned exclusively by the
owner or that may result in a fine or loss of privilege of a member
of the association may be adopted or amended only by a vote of at
least 51 percent of the total votes allocated to property owners who
cast votes by any permissible method in an association-wide vote.
(g) A property owners' association board by majority vote
may adopt ministerial, office-related procedural policies, such as
payment plan guidelines, a collections policy, an enforcement
policy, or other similar ministerial, office-related procedural
policies. The policy may outline circumstances under which or the
manner by which enforcement remedies may be carried out but may not
otherwise impact the use and enjoyment of personal or real property
owned exclusively by the owner. The policy may not:
(1) create a power to:
(A) levy a fine; or
(B) impose a loss of a privilege on a member of
the association; or
(2) expand the association's powers beyond the powers
granted by any other dedicatory instrument.
(h) All ballots cast in an election that results in an
amendment to a dedicatory instrument under this section are records
of the property owners' association for the purposes of Section
209.005.
(i) This section supersedes any contrary requirement in a
dedicatory instrument.
(j) This section does not apply to a property owners'
association that is subject to Chapter 552, Government Code, by
application of Section 552.0036, Government Code.
SECTION 5. Section 209.006, Property Code, is amended to
read as follows:
Sec. 209.006. NOTICE REQUIRED BEFORE ENFORCEMENT ACTION.
(a) Before a property owners' association may suspend an owner's
right to use a common area, file a suit against an owner other than a
suit to collect a regular or special assessment or foreclose under
an association's lien, charge an owner for property damage, or levy
a fine for a violation of the restrictions or bylaws or rules of the
association, the association or its agent must send [give] written
notice to the owner by certified mail, return receipt requested, or
delivered by the United States Postal Service with signature
confirmation service to the owner at the owner's last known address
as shown on the association's records.
(b) The notice must:
(1) describe the violation or property damage that is
the basis for the suspension action, charge, or fine and state any
amount due the association from the owner; [and]
(2) except as provided by Subsection (d), inform the
owner that the owner:
(A) is entitled to a reasonable period to cure
the violation and avoid the fine [or suspension unless the owner was
given notice and a reasonable opportunity to cure a similar
violation within the preceding six months]; and
(B) may request a hearing under Section 209.007
on or before the 30th day after the date notice was delivered to the
owner;
(3) specify the date by which the owner must cure the
violation if the violation is of a curable nature and does not pose
a threat to public health or safety;
(4) specify the dollar amount of any fine the
association seeks to levy; and
(5) specify each provision of the dedicatory
instrument the owner is alleged to have violated [receives the
notice].
(c) The date specified in the notice under Subsection (b)(3)
must provide a reasonable period of at least 30 days for the owner
to cure the violation if the violation is of a curable nature and
does not pose a threat to public health or safety.
(d) Subsections (a) and (b) do not apply to a violation for
which the owner has been previously given notice under this section
and the opportunity to exercise any rights available under this
section in the preceding six months.
(e) If the property owner does not cure the violation in the
time provided by Subsection (c) and does not request a hearing under
Section 209.007 in the time provided by Subsection (b)(2)(B), the
property owners' association may assess the fine and shall provide
notice of the assessment to the owner. If the property owner cures
the violation before the expiration period for cure specified under
Subsection (c), any fine assessed for the violation is void.
(f) For purposes of this section, a violation is considered
a threat to public health or safety if the violation could
materially affect the physical health or safety of an ordinary
resident.
SECTION 6. Chapter 209, Property Code, is amended by adding
Section 209.0061 to read as follows:
Sec. 209.0061. ASSESSMENT OF FINES. (a) A fine assessed by
the property owners' association must be reasonable in the context
of the nature and frequency of the violation and the effect of the
violation on the subdivision as a whole. If the association allows
fines for a continuing violation to accumulate against a lot or an
owner, the association must establish a reasonable maximum fine
amount for a continuing violation at which point the total fine
amount is capped.
(b) If a lot occupant other than the owner violates a
provision of the dedicatory instrument, the property owners'
association, in addition to exercising any of the association's
powers against the owner, may assess a fine directly against the
nonowner occupant in the same manner as provided for an owner but
may not require payment from both the owner and a nonowner occupant
for the same violation.
(c) If the property owners' association assesses a fine
against a nonowner occupant under this section, the notice
provisions of Section 209.006 and the hearing provisions of Section
209.007 apply to the nonowner occupant in the same manner as those
provisions apply to an owner.
SECTION 7. Section 209.007, Property Code, is amended by
amending Subsection (a) and adding Subsections (f), (g), (h), (i),
and (j) to read as follows:
(a) If the owner is entitled to an opportunity to cure the
violation, the owner has the right to submit a written request for a
hearing to discuss and verify facts and resolve the matter in issue
before a committee appointed by the board of the property owners'
association or before the board if the board does not appoint a
committee. The written request must contain a statement of the
grounds on which the owner believes the owner is not in violation
and citations of the dedicatory instrument for each violation
alleged.
(f) If the parties fail to reach agreement in or after the
hearing described by this section, the property owners' association
must file suit to uphold and enforce any fine sought to be assessed.
The suit must be filed in a justice court or small claims court not
later than the 180th day after the date of the hearing described by
this section or an appeal under Subsection (b), whichever is later.
The complaint must list each violation and be accompanied by
citation of the dedicatory instrument for each violation. If the
property owners' association does not file suit within the time
prescribed by this subsection, the association's right to collect
the fine is considered waived.
(g) Not later than the 30th day after the date a suit is
filed under Subsection (f), the court shall hold an evidentiary
hearing on the matter. The parties are not entitled to any
discovery.
(h) At the evidentiary hearing, the property owners'
association has the burden of proving by a preponderance of the
evidence that the property owner has violated a restrictive
covenant.
(i) The court shall determine whether a violation has
occurred and, if so, whether the fine for the violation is
reasonable considering the type, duration, and severity of the
violation.
(j) If the court finds that the position taken by either
party is groundless or is taken in bad faith, the court may award
the prevailing party's attorney's fees.
SECTION 8. (a) Section 5.006(a), Property Code, as amended
by this Act, applies only to an action filed on or after the
effective date of this Act. An action filed 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) Sections 202.011 and 202.012, Property Code, as added by
this Act, apply to a provision in a dedicatory instrument or a
restrictive covenant enacted before, on, or after the effective
date of this Act.
(c) Sections 202.015 and 209.0035, Property Code, as added
by this Act, apply only to a cause of action that accrues on or after
the effective date of this Act. A cause of action that accrues
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.
(d) Sections 209.006 and 209.007, Property Code, as amended
by this Act, apply only to an enforcement action initiated by a
property owners' association on or after the effective date of this
Act. An enforcement action initiated 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 9. This Act takes effect January 1, 2012.