By: Hernandez Luna (Senate Sponsor - Garcia) H.B. No. 503
(In the Senate - Received from the House May 10, 2013;
May 10, 2013, read first time and referred to Committee on
Intergovernmental Relations; May 16, 2013, reported favorably by
the following vote: Yeas 5, Nays 0; May 16, 2013, sent to
printer.)
A BILL TO BE ENTITLED
AN ACT
relating to the ability of a property owners' association to
contract with an association board member or certain other persons
or entities associated with the board member.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 209.002, Property Code, is amended by
adding Subdivision (4-a) to read as follows:
(4-a) "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.
SECTION 2. Chapter 209, Property Code, is amended by adding
Section 209.0052 to read as follows:
Sec. 209.0052. ASSOCIATION CONTRACTS. (a) This section
does not apply to a contract entered into by an association during
the development period.
(b) An association may enter into an enforceable contract
with a current association board member, a person related to a
current association board member within the third degree by
consanguinity or affinity, as determined under Chapter 573,
Government Code, a company in which a current association board
member has a financial interest in at least 51 percent of profits,
or a company in which a person related to a current association
board member within the third degree by consanguinity or affinity,
as determined under Chapter 573, Government Code, has a financial
interest in at least 51 percent of profits only if the following
conditions are satisfied:
(1) the board member, relative, or company bids on the
proposed contract and the association has received at least two
other bids for the contract from persons not associated with the
board member, relative, or company, if reasonably available in the
community;
(2) the board member:
(A) is not given access to the other bids;
(B) does not participate in any board discussion
regarding the contract; and
(C) does not vote on the award of the contract;
(3) the material facts regarding the relationship or
interest with respect to the proposed contract are disclosed to or
known by the association board and the board, in good faith and with
ordinary care, authorizes the contract by an affirmative vote of
the majority of the board members who do not have an interest
governed by this subsection; and
(4) the association board certifies that the other
requirements of this subsection have been satisfied by a resolution
approved by an affirmative vote of the majority of the board members
who do not have an interest governed by this subsection.
SECTION 3. The change in law made by this Act applies only
to a contract entered into on or after the effective date of this
Act.
SECTION 4. This Act takes effect September 1, 2013.
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