82R9301 PMO-F
By: West S.B. No. 1370
A BILL TO BE ENTITLED
AN ACT
relating to meetings and records of and certain information
provided by or concerning a property owners' association.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 5.012, Property Code, is amended by
amending Subsection (a) and adding Subsections (a-1), (f), and (g)
to read as follows:
(a) A seller of residential real property that is subject to
membership in a property owners' association and that comprises not
more than one dwelling unit located in this state shall give to the
purchaser of the property a written notice that reads substantially
similar to the following:
NOTICE OF MEMBERSHIP IN PROPERTY OWNERS' ASSOCIATION
CONCERNING THE PROPERTY AT (street address)
(name of residential community)
As a purchaser of property in the residential community in
which this property is located, you are obligated to be a member of
a property owners' association. Restrictive covenants governing
the use and occupancy of the property and all [a] dedicatory
instruments [instrument] governing the establishment, maintenance,
or [and] operation of this residential community have been or will
be recorded in the Real Property Records of the county in which the
property is located. Copies of the restrictive covenants and
dedicatory instruments [instrument] may be obtained from the county
clerk.
You are obligated to pay assessments to the property owners'
association. The amount of the assessments is subject to change.
Your failure to pay the assessments could result in enforcement of
the association's [a] lien on and the foreclosure of your property.
Section 207.003, Property Code, entitles an owner to receive
copies of any document that governs the establishment, maintenance,
or operation of a subdivision, including, but not limited to,
restrictions, bylaws, rules and regulations, and a resale
certificate from a property owners' association. A resale
certificate contains information including, but not limited to,
statements specifying the amount and frequency of regular
assessments and the style and cause number of lawsuits to which the
property owners' association is a party. These documents must be
made available to you by the seller on your request.
Date: ____________________________________________
Signature of Purchaser
(a-1) The second paragraph of the notice prescribed by
Subsection (a) must be in bold print and underlined.
(f) On the purchaser's request for a resale certificate from
the seller, the seller shall:
(1) promptly deliver a copy of a current resale
certificate if one has been issued for the property under Chapter
207; or
(2) if the seller does not have a current resale
certificate:
(A) request the property owners' association or
its agent to issue a resale certificate under Chapter 207; and
(B) promptly deliver a copy of the resale
certificate to the purchaser on receipt of the resale certificate
from the property owners' association or its agent.
(g) The seller or the purchaser, as agreed to by the
parties, shall pay the fee to the property owners' association or
its agent for issuing the resale certificate. The property owners'
association may not process a payment for a resale certificate
requested under Chapter 207 until the certificate is available for
delivery. The association may not charge a fee if the certificate
is not provided in the time prescribed by Section 207.003(a).
SECTION 2. Section 207.003(b), Property Code, is amended to
read as follows:
(b) A resale certificate under Subsection (a) must contain:
(1) a statement of any right of first refusal, other
than a right of first refusal that is prohibited by statute, and any
[or] other restraint contained in the restrictions or restrictive
covenants that restricts the owner's right to transfer the owner's
property;
(2) the frequency and amount of any regular
assessments;
(3) the amount and purpose of any special assessment
that is due after the date the resale certificate is prepared;
(4) the total of all amounts due and unpaid to the
property owners' association that are attributable to the owner's
property;
(5) capital expenditures, if any, approved by the
property owners' association for the property owners' association's
current fiscal year;
(6) the amount of reserves, if any, for capital
expenditures;
(7) the property owners' association's current
operating budget and balance sheet;
(8) the total of any unsatisfied judgments against the
property owners' association;
(9) the style and cause number of any pending lawsuit
in which the property owners' association is a party, other than a
lawsuit relating to unpaid property taxes of an individual member
of the association [defendant];
(10) a copy of a certificate of insurance showing the
property owners' association's property and liability insurance
relating to the common areas and common facilities;
(11) a description of any conditions on the owner's
property that the property owners' association board has actual
knowledge are in violation of the restrictions applying to the
subdivision or the bylaws or rules of the property owners'
association;
(12) a summary or copy of notices received by the
property owners' association from any governmental authority
regarding health or housing code violations existing on the
preparation date of the certificate relating to the owner's
property or any common areas or common facilities owned or leased by
the property owners' association;
(13) the amount of any administrative transfer fee
charged by the property owners' association for a change of
ownership of property in the subdivision;
(14) the name, mailing address, and telephone number
of the property owners' association's managing agent, if any; [and]
(15) a statement indicating whether the restrictions
allow foreclosure of a property owners' association's lien on the
owner's property for failure to pay assessments; and
(16) a statement of all fees associated with the
transfer of ownership, including a description of each fee, to whom
each fee is paid, and the amount of each fee.
SECTION 3. Section 209.005, Property Code, is amended to
read as follows:
Sec. 209.005. ASSOCIATION RECORDS. (a) 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 [A property owners' association shall make the
books and records of the association, including financial records,
reasonably available to an owner in accordance with Section B,
Article 2.23, Texas Non-Profit Corporation Act (Article 1396-2.23,
Vernon's Texas Civil Statutes)].
(b) Notwithstanding a provision in a dedicatory instrument,
a [(a-1) A] property owners' association [described by Section
552.0036(2), Government Code,] shall make the books and records of
the association, including financial records and invoices, open to
and reasonably available for examination by an owner, except as
otherwise provided by this section. An owner is entitled to obtain
from the association copies of the information contained in the
books and records [to any person requesting access to the books or
records in accordance with Chapter 552, Government
Code. Subsection (a) does not apply to a property owners'
association to which this subsection applies].
(c) [(b)] An attorney's files and records relating to the
association, excluding invoices requested by an owner under Section
209.008(d), are not:
(1) records of the association;
(2) subject to inspection by the owner; or
(3) subject to production in a legal proceeding.
(d) In addition to the requirements of Subsection (b), a
property owners' association shall make the association's books and
records, including financial records and invoices, available in a
building:
(1) in which the books and records are appropriately
stored; and
(2) that is:
(A) staffed during normal business hours;
(B) accessible to an owner during normal business
hours; and
(C) located on property commonly owned by the
association within the boundaries of the subdivision governed by
the association.
(e) If a building described by Subsection (d) does not exist
on property described by Subsection (d), the property owners'
association shall make the books and records available in
accordance with Subsections (g) and (h).
(f) A requestor shall submit the request in writing:
(1) in person by hand delivery to a current board
member;
(2) to the mailing address of the association or
authorized representative as provided on the most current
management certificate filed under Section 209.004; or
(3) in person to a managing agent as reflected on the
most current management certificate filed under Section 209.004.
(g) A property owners' association shall make books and
records requested under Subsection (b) available to the requestor
within a reasonable time of the property owners' association's
receipt of the request.
(h) A reasonable time for providing information requested
under Subsection (b) is 10 business days after the date the property
owners' association receives a request, except as otherwise
provided by this section.
(i) If the property owners' association is unable to produce
a requested book or record on or before the 10th business day after
the date the request is received, the property owners' association
shall provide to the requestor written notice that:
(1) informs the requestor that the property owners'
association is unable to produce the information on or before the
10th business day after the date of the receipt of the request; and
(2) states a date by which the information will be
available for inspection that occurs not later than the 30th day
after the date notice under this subsection is given.
(j) A property owners' association shall make books and
records requested under this section available to the requestor in
one or more of the following formats, as specified by the requestor:
(1) an electronic format:
(A) delivered to an e-mail address provided by
the requestor; or
(B) delivered in a disc or other standard
electronic format:
(i) to the mailing address of the
requestor; or
(ii) if the requestor does not provide a
mailing address, to the address of the requestor's property in the
subdivision; or
(2) a hard-copy format:
(A) delivered to the mailing address of the
requestor; or
(B) if the requestor does not provide a mailing
address:
(i) mailed to the address of the requestor's
property in the subdivision; or
(ii) made available at a location not more
than 25 miles from the boundary of the subdivision governed by the
association.
(k) This section does not require a property owners'
association to staff a building described by Subsection (d).
(l) A property owners' association may charge an owner for
copies of the requested information in an amount that reasonably
includes all costs related to reproducing the information,
including costs of materials, labor, and overhead.
(m) Any information maintained by the association that is
released under this section may not identify an individual owner or
an individual owner's personal financial information. Information
may be released in an aggregate manner that would not identify an
individual owner.
(n) All ballots cast in an election that results in an
amendment to a dedicatory instrument are records of the property
owners' association subject to inspection under this section.
(o) All ballots cast in an election of property owners'
association board or other committee members are considered records
of the association but may not be made available for inspection
under this section, except for the purposes of a recount, without a
court order or subpoena. The association shall take reasonable
measures to safeguard the security and privacy of those ballots.
(p) A property owners' association shall:
(1) keep all records as to changes to the dedicatory
instruments in perpetuity;
(2) maintain and secure all ballots in
association-wide elections for four years; and
(3) maintain records related to financial matters of
the association, including assessments, fines, foreclosures, and
enforcement actions, for at least seven years.
(q) An owner who is denied access to or a copy of association
books or records to which the owner is entitled under this section
may file a petition with the justice of the peace of a justice
precinct in which all or part of the subdivision that is governed by
the association is located, requesting relief in accordance with
this subsection. If the justice of the peace finds that the owner
is entitled to access to or copies of the books or records, the
justice of the peace may grant one or more of the following
remedies:
(1) a judgment against the property owners'
association for a penalty of not more than $1,500;
(2) a judgment against the property owners'
association for court costs and attorney's fees incurred in
connection with seeking a remedy under this section; or
(3) a judgment authorizing the owner or the owner's
assignee to deduct the amounts awarded under Subdivisions (1) and
(2) from any future regular or special assessments payable to the
property owners' association.
(r) For the purposes of this section, "business day" means a
day other than Saturday, Sunday, or a state or federal holiday.
(s) On or before the 10th day before the date an owner files
a suit under this section, the owner must provide notice to the
other party of the person's intent to file suit under this section.
The notice must be sent by 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 209.0051 and 209.0056 to read as follows:
Sec. 209.0051. OPEN BOARD MEETINGS. (a) This section does
not apply to a property owners' association that is subject to
Chapter 551, Government Code, by application of Section 551.0015,
Government Code.
(b) In this section:
(1) "Board meeting":
(A) means a deliberation between a quorum of the
voting board of the property owners' association, or between a
quorum of the voting board and another person, during which
property owners' association business or policy over which the
board has responsibility is discussed or considered, or during
which the board takes formal action; and
(B) does not include the gathering of a quorum of
the board 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.
(2) "Development period" means a period stated in a
declaration during which a declarant reserves:
(A) a right to facilitate the development,
construction, and marketing of the subdivision; and
(B) a right to direct the size, shape, and
composition of the subdivision.
(c) This section applies to a meeting of a property owners'
association during the development period only if the meeting is
conducted for the purpose of:
(1) adopting or amending the governing documents,
including declarations, bylaws, rules, and regulations of the
association;
(2) increasing the amount of regular assessments of
the association or adopting or increasing a special assessment;
(3) electing non-developer board members of the
association or establishing a process by which those members are
elected; or
(4) changing the voting rights of members of the
association.
(d) Except as provided by this section, a meeting of the
property owners' association board or a committee or subcommittee
of the board is open to owners and shall be held within the boundary
of the subdivision governed by the association.
(e) 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 an owner for inspection and copying on the owner'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.
(f) The board shall give owners notice of the date, hour,
place, and subject of a regular or special board meeting, including
a general description of any matters to be brought up for
deliberation in executive session. The notice shall be mailed to
each owner or:
(1) posted at least 72 hours before the start of the
meeting in a conspicuous manner reasonably designed to provide
notice to owners:
(A) in a place located on:
(i) the association's common property; or
(ii) other property located within the
boundary of the subdivision governed by the association, with the
property owner's consent; or
(B) on an Internet website maintained by the
association; and
(2) sent by e-mail to each owner who registers an
e-mail address with the property owners' association.
(g) An owner who registers an e-mail address with the
property owners' association as provided by Subsection (f)(2) must
update the e-mail address if the address changes.
(h) If the board recesses a regular or special board meeting
to continue the following regular business day, the board is not
required to post notice of the continued meeting if the recess is
taken in good faith and not to circumvent this section. If a
regular or special board meeting is continued to the following
regular business day, and on that following day the board continues
the meeting to another day, the board shall give notice as required
by this section of the meeting continued to that other day.
(i) If at a regular, emergency, or special meeting, an owner
makes an inquiry regarding a subject for which notice has not been
given as required by this section, the notice provisions of this
section do not apply to:
(1) a statement by the board of specific factual
information given in response to the inquiry; or
(2) a recitation of existing policy in response to the
inquiry.
(j) Any deliberation of or decision relating to the subject
of an inquiry made under Subsection (i) shall be limited to a
proposal to place the subject on the agenda for a subsequent board
meeting.
(k) In the event of a reasonably unforeseen emergency or
urgent necessity that requires immediate board action, the board
may meet in an emergency board meeting. Notice for an emergency
board meeting may be given in at least one manner prescribed by
Subsection (f)(1) at least two hours before the emergency session
is convened and must clearly identify the emergency or urgent
necessity for which the notice is given. A board in an emergency
meeting may not consider fines, foreclosures, enforcement actions,
increases in assessments, or any other foreseeable business or
policy over which the board has responsibility. Any action taken in
an emergency board meeting must be summarized orally, including an
explanation of any known actual or estimated expenditures approved
at the meeting, and documented in the minutes or tape recording of
the next regular or special board meeting.
(l) 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 (m) and identifying the specific
subdivision of Subsection (m) under which the executive session
will be held. A vote or other action item may not be taken in
executive session.
(m) A board of a property owners' association may meet in
executive session, to which the owners do not have access, 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 agent, employee, contractor, or other
representative of the property owners' association;
(3) a payment plan under which an owner may make
partial payments to the property owners' association for delinquent
assessments or other amounts owed without accruing additional
penalties;
(4) a foreclosure of a lien;
(5) an enforcement action against an owner, including
for nonpayment of amounts due;
(6) 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;
(7) 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; or
(8) matters involving the invasion of privacy of an
individual owner.
Sec. 209.0056. NOTICE OF ELECTION OR ASSOCIATION VOTE.
(a) On or before the 30th day before the date an election or vote
is held by a property owners' association, the association shall
give each owner of property in the property owners' association
written notice of the election or vote.
(b) This section supersedes any contrary requirement in a
dedicatory instrument.
(c) 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. (a) Section 5.012, Property Code, as amended by
this Act, applies only to a sale of property that occurs on or after
the effective date of this Act. For the purposes of this section, a
sale of property occurs before the effective date of this Act if the
executory contract binding the purchaser to purchase the property
is executed before that date. A sale of property that occurs before
the effective date of this Act is governed by the law in effect
immediately before that date, and that law is continued in effect
for that purpose.
(b) Sections 207.003 and 209.005, Property Code, as amended
by this Act, apply only to a request for information received by a
property owners' association on or after the effective date of this
Act. A request for information received by a property owners'
association 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.