Texas 2013 - 83rd Regular

Texas House Bill HB2075 Compare Versions

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1	1	By: Anchia (Senate Sponsor - West) H.B. No. 2075
2	2	(In the Senate - Received from the House May 10, 2013;
3	3	May 10, 2013, read first time and referred to Committee on
4	4	Intergovernmental Relations; May 17, 2013, reported favorably by
5	5	the following vote: Yeas 3, Nays 0; May 17, 2013, sent to printer.)
6	6
7	7
8	8	A BILL TO BE ENTITLED
9	9	AN ACT
10	10	relating to the operation of certain condominium unit owners'
11	11	associations.
12	12	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
13	13	SECTION 1. Section 82.002(c), Property Code, is amended to
14	14	read as follows:
15	15	(c) This section and the following sections apply to a
16	16	condominium in this state for which the declaration was recorded
17	17	before January 1, 1994: Sections 82.005, 82.006, 82.007, 82.053,
18	18	82.054, 82.102(a)(1)-(7), (a)(12)-(21), (f), and (g) [and
19	19	(12)-(22)], 82.108, 82.111, 82.113, 82.114, 82.116, 82.118,
20	20	82.157, and 82.161. The definitions prescribed by Section 82.003
21	21	apply to a condominium in this state for which the declaration was
22	22	recorded before January 1, 1994, to the extent the definitions do
23	23	not conflict with the declaration. The sections listed in this
24	24	subsection apply only with respect to events and circumstances
25	25	occurring on or after January 1, 1994, and do not invalidate
26	26	existing provisions of the declaration, bylaws, or plats or plans
27	27	of a condominium for which the declaration was recorded before
28	28	January 1, 1994.
29	29	SECTION 2. Section 82.003(a), Property Code, is amended by
30	30	amending Subdivision (11) and adding Subdivision (11-a) to read as
31	31	follows:
32	32	(11) "Declaration" means an [a recorded] instrument,
33	33	however denominated, that creates a condominium, and any [recorded]
34	34	amendment to that instrument.
35	35	(11-a) "Dedicatory instrument" means each document
36	36	governing the establishment, maintenance, or operation of a
37	37	condominium regime. The term includes a declaration or similar
38	38	instrument subjecting real property to:
39	39	(A) restrictive covenants, bylaws, or similar
40	40	instruments governing the administration or operation of a unit
41	41	owners' association;
42	42	(B) properly adopted rules and regulations of the
43	43	unit owners' association; or
44	44	(C) all lawful amendments to the covenants,
45	45	bylaws, instruments, rules, or regulations.
46	46	SECTION 3. Section 82.102, Property Code, is amended by
47	47	amending Subsection (a) and adding Subsections (f) and (g) to read
48	48	as follows:
49	49	(a) Unless otherwise provided by the declaration, the
50	50	association, acting through its board, may:
51	51	(1) adopt and amend bylaws;
52	52	(2) adopt and amend budgets for revenues,
53	53	expenditures, and reserves, and collect assessments for common
54	54	expenses from unit owners;
55	55	(3) hire and terminate managing agents and other
56	56	employees, agents, and independent contractors;
57	57	(4) institute, defend, intervene in, settle, or
58	58	compromise litigation or administrative proceedings in its own name
59	59	on behalf of itself or two or more unit owners on matters affecting
60	60	the condominium;
61	61	(5) make contracts and incur liabilities relating to
62	62	the operation of the condominium;
63	63	(6) regulate the use, maintenance, repair,
64	64	replacement, modification, and appearance of the condominium;
65	65	(7) adopt and amend rules regulating the use,
66	66	occupancy, leasing or sale, maintenance, repair, modification, and
67	67	appearance of units and common elements, to the extent the
68	68	regulated actions affect common elements or other units;
69	69	(8) cause additional improvements to be made as a part
70	70	of the common elements;
71	71	(9) acquire, hold, encumber, and convey in its own
72	72	name any right, title, or interest to real or personal property,
73	73	except common elements of the condominium;
74	74	(10) grant easements, leases, licenses, and
75	75	concessions through or over the common elements;
76	76	(11) impose and receive payments, fees, or charges for
77	77	the use, rental, or operation of the common elements and for
78	78	services provided to unit owners;
79	79	(12) impose interest and late charges for late
80	80	payments of assessments, returned check charges, and, if notice and
81	81	an opportunity to be heard are given in accordance with Subsection
82	82	(d), reasonable fines for violations of the declaration, bylaws,
83	83	and rules of the association;
84	84	(13) adopt and amend rules regulating the collection
85	85	of delinquent assessments and the application of payments;
86	86	(14) adopt and amend rules regulating the termination
87	87	of utility service to a unit, the owner of which is delinquent in
88	88	the payment of an assessment that is used, in whole or in part, to
89	89	pay the cost of that utility;
90	90	(15) impose reasonable charges for preparing,
91	91	recording, or copying declaration amendments, resale certificates,
92	92	or statements of unpaid assessments;
93	93	(16) enter a unit for bona fide emergency purposes
94	94	when conditions present an imminent risk of harm or damage to the
95	95	common elements, another unit, or the occupants;
96	96	(17) [assign its right to future income, including the
97	97	right to receive common expense assessments, but only to the extent
98	98	the declaration so provides;
99	99	[(18)] suspend the voting privileges of or the use of
100	100	certain general common elements by an owner delinquent for more
101	101	than 30 days in the payment of assessments;
102	102	(18) [(19)] purchase insurance and fidelity bonds it
103	103	considers appropriate or necessary;
104	104	(19) [(20)] exercise any other powers conferred by the
105	105	declaration or bylaws;
106	106	(20) [(21)] exercise any other powers that may be
107	107	exercised in this state by a corporation of the same type as the
108	108	association; and
109	109	(21) [(22)] exercise any other powers necessary and
110	110	proper for the government and operation of the association.
111	111	(f) Except as provided by Subsection (g), the association by
112	112	resolution of the board of directors may:
113	113	(1) borrow money; and
114	114	(2) assign as collateral for the loan authorized by
115	115	the resolution:
116	116	(A) the association's right to future income,
117	117	including the right to receive assessments; and
118	118	(B) the association's lien rights.
119	119	(g) If a dedicatory instrument requires a vote of members of
120	120	the association to borrow money or assign the association's right
121	121	to future income or the association's lien rights, the loan or
122	122	assignment must be approved as provided by the dedicatory
123	123	instrument. The board may determine whether a vote for that purpose
124	124	may be cast electronically, by absentee ballot, in person or by
125	125	proxy at a meeting called for that purpose, or by written consent.
126	126	If a lower approval threshold is not provided by the dedicatory
127	127	instrument, approval requires the consent of owners holding 67
128	128	percent of all voting interests.
129	129	SECTION 4. Section 82.111, Property Code, is amended by
130	130	amending Subsections (c), (i), and (j) and adding Subsections (k),
131	131	(l), and (m) to read as follows:
132	132	(c) If the insurance described by Subsections (a) and (b) is
133	133	not reasonably available, the association shall cause notice of
134	134	that fact to be delivered or mailed to all unit owners and
135	135	lienholders. The declaration may require the association to carry
136	136	any other insurance, and the association in any event may carry any
137	137	other insurance the board considers appropriate to protect the
138	138	condominium, the association, or the unit owners. Insurance
139	139	policies maintained under Subsection (a) may provide for
140	140	commercially reasonable deductibles as the board determines
141	141	appropriate or necessary. This section does not affect the right of
142	142	a holder of a mortgage on a unit to require a unit owner to acquire
143	143	insurance in addition to that provided by the association.
144	144	(i) Except as provided by this section, any [Any] portion of
145	145	the condominium for which insurance is required that is damaged or
146	146	destroyed shall be promptly repaired or replaced by the association
147	147	unless the condominium is terminated, repair or replacement would
148	148	be illegal under any state or local health or safety statute or
149	149	ordinance, or at least 80 percent of the unit owners[, including
150	150	each owner of a unit or assigned limited common element that will
151	151	not be rebuilt or repaired,] vote to not rebuild. Each owner of a
152	152	unit may vote, regardless of whether the owner's unit or limited
153	153	common element has been damaged or destroyed. A vote may be cast
154	154	electronically or by written ballot if a meeting is not held for
155	155	that purpose or in person or by proxy at a meeting called for that
156	156	purpose. A vote to not rebuild does not increase an insurer's
157	157	liability to loss payment obligation under a policy, and the vote
158	158	does not cause a presumption of total loss. Except as provided by
159	159	this section, the [The] cost of repair or replacement in excess of
160	160	the insurance proceeds [and reserves] is a common expense, and the
161	161	board may levy an assessment to pay the expenses in accordance with
162	162	each owner's common expense liability. If the entire condominium is
163	163	not repaired or replaced, any insurance proceeds attributable to
164	164	the damaged common elements shall be used to restore the damaged
165	165	area to a condition compatible with the remainder of the
166	166	condominium, the insurance proceeds attributable to units and
167	167	limited common elements that are not rebuilt shall be distributed
168	168	to the owners of those units and the owners of the units to which
169	169	those limited common elements were assigned, or to their
170	170	mortgagees, as their interests may appear, and the remainder of the
171	171	proceeds shall be distributed to all the unit owners in accordance
172	172	with each owner's undivided interest in the common elements unless
173	173	otherwise provided in the declaration [as their interests may
174	174	appear]. If the unit owners vote to not rebuild any unit, that
175	175	unit's allocated interests shall be automatically reallocated on
176	176	the vote as if the unit had been condemned, and the association
177	177	shall prepare, execute, and record an amendment to the declaration
178	178	reflecting the reallocation. Section 82.068 governs the
179	179	distribution of insurance proceeds if the condominium is
180	180	terminated.
181	181	(j) If the cost to repair damage to a unit or common element
182	182	covered by the association's insurance is less than the amount of
183	183	the applicable insurance deductible, the party who would be
184	184	responsible for the repair in the absence of insurance shall pay the
185	185	cost for the repair of the unit or common element.
186	186	(k) If the association's insurance provides coverage for
187	187	the loss and the cost to repair the damage to a unit or common
188	188	element is more than the amount of the applicable insurance
189	189	deductible, the dedicatory instruments determine payment for the
190	190	cost of the association's deductible and costs incurred before
191	191	insurance proceeds are available. If the dedicatory instruments
192	192	are silent, the board of directors of the association by resolution
193	193	shall determine the payment of those costs, or if the board does not
194	194	approve a resolution, the costs are a common expense. A resolution
195	195	under this subsection is considered a dedicatory instrument and
196	196	must be recorded in each location in which the declaration is
197	197	recorded.
198	198	(l) If damage to a unit or the common elements is due wholly
199	199	or partly to an act or omission of any unit owner or a guest or
200	200	invitee of the unit owner, the association may assess the
201	201	deductible expense and any other expense in excess of insurance
202	202	proceeds against the owner and the owner's unit.
203	203	(m) The provisions of this section may be varied or waived
204	204	if all the units in a condominium are restricted to nonresidential
205	205	use.
206	206	SECTION 5. Section 82.113(g), Property Code, is amended to
207	207	read as follows:
208	208	(g) The owner of a unit [used for residential purposes and]
209	209	purchased [by an association] at a foreclosure sale of the
210	210	association's lien for assessments may redeem the unit not later
211	211	than the 90th day after the date of the foreclosure sale. If the
212	212	association is the purchaser [To redeem the unit], the owner must
213	213	pay to the association to redeem the unit all amounts due the
214	214	association at the time of the foreclosure sale, interest from the
215	215	date of foreclosure sale to the date of redemption at the rate
216	216	provided by the declaration for delinquent assessments, reasonable
217	217	attorney's fees and costs incurred by the association in
218	218	foreclosing the lien, any assessment levied against the unit by the
219	219	association after the foreclosure sale, and any reasonable cost
220	220	incurred by the association as owner of the unit, including costs of
221	221	maintenance and leasing. If a party other than the association is
222	222	the purchaser, the redeeming owner must pay to the purchaser of the
223	223	unit at the foreclosure sale an amount equal to the amount bid at
224	224	the sale, interest on the bid amount computed from the date of the
225	225	foreclosure sale to the date of redemption at the rate of six
226	226	percent, any assessment paid by the purchaser after the date of
227	227	foreclosure, and any reasonable costs incurred by the purchaser as
228	228	the owner of the unit, including costs of maintenance and leasing.
229	229	The redeeming owner must also pay to the association all
230	230	assessments that are due as of the date of the redemption and
231	231	reasonable attorney's fees and costs incurred by the association in
232	232	foreclosing the lien. On redemption, the purchaser of the unit at
233	233	the foreclosure sale [association] shall execute a deed with no
234	234	warranty to the redeeming unit owner. The exercise of the right of
235	235	redemption is not effective against a subsequent purchaser or
236	236	lender for value without notice of the redemption after the
237	237	redemption period expires unless the redeeming unit owner records
238	238	the deed from the purchaser of the unit at the foreclosure sale
239	239	[association] or an affidavit stating that the owner has exercised
240	240	the right of redemption. A unit that has been redeemed remains
241	241	subject to all liens and encumbrances on the unit before
242	242	foreclosure. All rents and other income collected from the unit by
243	243	the purchaser of the unit at the foreclosure sale [association]
244	244	from the date of foreclosure sale to the date of redemption belong
245	245	to the purchaser of the unit at the foreclosure sale [association],
246	246	but the rents and income shall be credited against the redemption
247	247	amount. The purchaser of [An association purchasing] a unit at a
248	248	sale foreclosing an association's assessment [its] lien may not
249	249	transfer ownership of the unit during the redemption period to a
250	250	person other than a redeeming owner.
251	251	SECTION 6. Section 82.116, Property Code, is amended by
252	252	adding Subsections (a-1) and (a-2) to read as follows:
253	253	(a-1) The county clerk of each county in which a management
254	254	certificate is filed as required by this section shall record the
255	255	management certificate in the real property records of the county
256	256	and index the document as a "Condominium Association Management
257	257	Certificate."
258	258	(a-2) To ensure that all management certificates are
259	259	recorded and indexed as provided by Subsection (a-1), each
260	260	condominium unit owners' association that recorded a management
261	261	certificate under this section before September 1, 2013, shall
262	262	record a new management certificate on or before January 1, 2014.
263	263	This subsection expires January 1, 2015.
264	264	SECTION 7. (a) The change in law made by this Act to Section
265	265	82.111, Property Code, applies only to payment of costs incurred on
266	266	or after the effective date of this Act. Payment of costs incurred
267	267	before the effective date of this Act is governed by the law in
268	268	effect immediately before the effective date of this Act, and that
269	269	law is continued in effect for that purpose.
270	270	(b) Section 82.113(g), Property Code, as amended by this
271	271	Act, applies only to a condominium unit sold at a foreclosure sale
272	272	on or after the effective date of this Act. A unit sold at a
273	273	foreclosure sale before the effective date of this Act is subject to
274	274	the law in effect immediately before the effective date of this Act,
275	275	and that law is continued in effect for that purpose.
276	276	SECTION 8. This Act takes effect September 1, 2013.
277	277	* * * * *