By: Hinojosa S.B. No. 1372
(In the Senate - Filed March 7, 2013; March 18, 2013, read
first time and referred to Committee on Business and Commerce;
April 4, 2013, reported adversely, with favorable Committee
Substitute by the following vote: Yeas 8, Nays 0; April 4, 2013,
sent to printer.)
COMMITTEE SUBSTITUTE FOR S.B. No. 1372 By: Lucio
A BILL TO BE ENTITLED
AN ACT
relating to timeshare owners' associations.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. This Act shall be known as the Texas Timeshare
Owners' Association Act.
SECTION 2. Chapter 221, Property Code, is amended by adding
Subchapter I to read as follows:
SUBCHAPTER I. TIMESHARE OWNERS' ASSOCIATIONS
Sec. 221.081. CONFLICTS OF LAW. The provisions of this
subchapter prevail over a conflicting or inconsistent provision of
law applicable to timeshare owners' associations.
Sec. 221.082. APPLICABILITY. (a) Except as provided by
this section, this subchapter applies to a timeshare plan and to the
project instrument governing the timeshare property subject to the
timeshare plan regardless of the date on which the timeshare plan
was created.
(b) Except as provided by Section 221.084(f), this
subchapter applies to a timeshare plan and to the project
instrument governing the timeshare property subject to the
timeshare plan created before September 1, 2013, unless the project
instrument is amended before September 1, 2013, to provide that
this subchapter does not apply.
Sec. 221.083. POWERS AND LIMITATIONS OF BOARD. (a) An
association may be governed by a board of directors. Except as
provided in the project instrument, or this subchapter, the board
may act in all instances on behalf of the association.
(b) Except as expressly authorized in the project
instrument or otherwise permitted by the association, the board may
not act on behalf of the association to:
(1) amend the project instrument;
(2) terminate the timeshare plan;
(3) elect or remove board members; or
(4) determine the qualifications, powers, duties, or
terms of office of board members.
(c) Subject to the project instrument, the board may appoint
a member to fill a vacancy on the board and the member appointed
serves for the unexpired portion of the term of the predecessor
board member.
Sec. 221.084. PERIOD OF DEVELOPER CONTROL. (a) Except as
otherwise provided in this section, the project instrument may
provide for a period of developer control of an association during
which the developer, or a person designated by the developer, may
appoint and remove board members and officers of the association.
(b) Regardless of the period of developer control provided
in the project instrument, that period expires not later than the
earlier of:
(1) the 120th day after the date that at least 95
percent of the timeshare interests that were created by the
timeshare instrument are conveyed to owners other than the
developer; or
(2) the fifth anniversary of the date the developer
ceased to offer timeshare interests for sale in the ordinary course
of business under the timeshare plan or under another timeshare
plan in which the timeshare interests are included, whichever date
is later.
(c) A developer may voluntarily surrender the developer's
right to appoint and remove board members and officers of the
association during the period of developer control by executing a
written instrument stating that the developer's rights are
surrendered and providing a copy of the instrument to the owners.
The developer may provide in the surrender instrument that, during
the remaining period otherwise designated for developer control,
specified actions of the association or board as described in the
project instrument are effective only on approval of the developer.
The surrender instrument must be recorded in the real property
records of the county in which the timeshare property is located.
(d) If the project instrument provides for a developer
control period of shorter duration than any period prescribed by
this section, the project instrument controls.
(e) During the period of developer control and subject to
the project instrument, the developer may determine all matters
governing the association, including the occurrence of special or
regular meetings of the members and the notice requirements and
rules for those meetings.
(f) This section applies to a timeshare plan created before
September 1, 2013, and to the project instrument governing the
timeshare property subject to the timeshare plan only if the
developer and the association agree to the application in writing
and the project instrument is amended to provide for that
application. If the conditions provided by this subsection are not
satisfied, a timeshare plan created before September 1, 2013, and
the timeshare property subject to the timeshare plan are governed
by any developer control provisions provided in the project
instrument, notwithstanding any other law.
Sec. 221.085. ELECTION OF INITIAL BOARD MEMBERS AND
OFFICERS. (a) Not later than the termination, by expiration or
surrender, of any period of developer control, the owners,
including the developer to the extent of any developer-owned
timeshare interests, must elect a board of at least three members.
The board may include one or more representatives of the developer.
(b) The board shall elect the officers of the association.
(c) The board members and officers of the association take
office on election.
Sec. 221.086. REMOVAL OF BOARD MEMBERS. Notwithstanding
any provision of a project instrument to the contrary, the owners,
by a vote of at least two-thirds of the voting rights of persons
entitled to vote and voting in person or by proxy at any meeting of
the owners, may remove a member of the board, with or without cause,
other than a member appointed by the developer during the period of
developer control under Section 221.084, provided that the
developer remains in control of the association.
Sec. 221.087. QUORUM. (a) Unless the project instrument
provides for a larger quorum requirement, the percentage of voting
interests constituting a quorum at a meeting of the members of an
association is 10 percent of the voting interests of owners who are
not delinquent in assessments, voting in person or by proxy.
(b) If a quorum is not present at any meeting of the
association at which board members will be elected, the meeting may
be adjourned and reconvened not later than the 90th day after the
date of adjournment for the sole purpose of electing board members.
Unless the project instrument provides for a larger quorum
requirement, the quorum for the reconvened meeting is 10 percent of
the voting interests of owners who are not delinquent in
assessments, voting in person or by proxy.
(c) Unless the project instrument provides otherwise, a
quorum of the board is considered present throughout a board
meeting if the members entitled to cast a majority of the votes are
present at the beginning of the meeting.
Sec. 221.088. VOTES. (a) If only one of the multiple
owners of a timeshare interest is present at a meeting of the
association, that owner may cast all votes allocated to that
timeshare interest. If more than one of the multiple owners are
present, the votes allocated to that timeshare interest may be cast
only in accordance with the agreement of a majority of the timeshare
interest held by the multiple owners unless the timeshare
instrument expressly provides otherwise. For purposes of this
subsection, there is a majority agreement if any one of the multiple
owners casts the votes allocated to that timeshare interest and no
protest is made promptly to the person presiding over the meeting by
any of the other owners of the timeshare interest.
(b) Votes allocated to a timeshare interest may be cast
under a proxy duly executed by an owner. A proxy must expressly
state the dates of execution and termination. An owner may only
revoke a proxy given under this section by actual notice of
revocation to the person presiding over a meeting of the
association. A proxy is revoked on presentation of a later dated
proxy or other written revocation executed by the same owner. A
proxy terminates the 25th month after the date the proxy is
executed, unless the proxy specifies a shorter period or states
that the proxy is coupled with an interest and is irrevocable.
(c) The project instrument for a timeshare plan may
authorize votes of members of an association to be cast by mail only
if:
(1) mail ballots are mailed or sent to each member in
the manner prescribed for a notice of a special meeting under
Section 221.090;
(2) the period for return of mail ballots is not later
than the 30th day after the date the ballots are mailed or sent to
members; and
(3) the required minimum number of ballots that must
be returned by members for the vote to be effective represents at
least the percentage of voting interests required for a quorum as
prescribed by Section 221.087(a).
(d) Only timeshare interests included in the timeshare plan
have voting rights.
(e) Unless the project instrument provides otherwise,
owners who are delinquent in assessments do not have the right to
cast a vote. The right to cast a vote is also subject to any
additional limitations provided in the project instrument.
Sec. 221.089. OPEN MEETINGS; EXCEPTIONS.
(a) Notwithstanding any provision in the project instrument to the
contrary and except as provided in this section, after the period of
developer control under Section 221.084, all meetings of the
association and board are open to all members of the association and
all members must be permitted to attend and listen to the
deliberations and proceedings. Meetings must be conducted as
provided in the project instrument. The board may adjourn a board
meeting and reconvene in a closed executive session to consider:
(1) legal advice from an attorney for the board or the
association;
(2) pending or contemplated litigation;
(3) financial information about an individual member
of the association, an individual employee of the association, an
individual employee of the managing entity, or an individual
employee of a contractor for the association or managing entity; or
(4) matters relating to the job performance of,
compensation of, health records of, or specific complaints against
an individual employee of the association, an individual employee
of the managing entity, or an individual employee of a contractor of
the association or managing entity who works under the direction of
the association or the managing entity.
(b) If a board meeting is closed as provided by Subsection
(a)(1) or (2), the board, on final resolution of any matter for
which the board received legal advice or that concerned pending or
contemplated litigation, may disclose information about that
matter in an open meeting, except to the extent that those matters
are required to remain confidential by the terms of a settlement
agreement or judgment.
Sec. 221.090. NOTICE. (a) A meeting of the members of the
association must be held annually after the termination of the
period of developer control under Section 221.084. Special
meetings of the members of the association may be called by the
president, by a majority of the board, or by owners having at least
25 percent of the votes allocated to timeshare interests in the
association or any lower percentage specified in the project
instrument.
(b) Unless the project instrument provides otherwise, the
association or managing entity must send notice of the meeting to
the mailing address of each owner on record with the association:
(1) not later than the 30th day or earlier than the
90th day before the date of an annual meeting; and
(2) not later than the 10th day or earlier than the
60th day before the date of a special meeting.
(c) The notice of a meeting of the owners must state the
date, time, and place of the meeting. The notice of a special
meeting of the owners must also state the purpose of the meeting. A
notice of a meeting may be included in a list of upcoming meetings
sent to owners, and the list is not required to be specific to one
meeting. The failure of an owner to receive actual notice of a
meeting of the owners does not affect the validity of any action
taken at that meeting.
(d) Unless the project instrument provides otherwise, the
association or managing entity must send notice of a board meeting
held after the date the developer control period terminates to the
mailing address of each owner on record with the association not
later than the 10th day before the date of the meeting. Notice to
owners of a board meeting is not required if emergency
circumstances require action by the board before notice can be
given. A notice of a board meeting must state the date, time, and
place of the meeting. A notice of a meeting may be included in a
list of upcoming meetings sent to owners, and the list is not
required to be specific to one meeting. The failure of an owner to
receive actual notice of a board meeting does not affect the
validity of any action taken at that meeting.
(e) A notice may be provided in a newsletter or a similar
mailing. Notice may be provided by prepaid United States mail,
e-mail for those owners who have provided an e-mail address, or any
other reasonable method selected by the board.
(f) Notwithstanding Subsections (a)-(d) or any other law
related to notice by an association, a notice to an owner may be
provided by conspicuous disclosure on the association's website if
the owner has consented to that alternative notice. Consent to that
alternative notice must be in writing and may be revoked by the
owner at any time.
(g) An affidavit of notice by an officer of the association
or the managing entity is prima facie evidence that notice was
provided under this section.
Sec. 221.091. DUTIES; LIST OF OWNERS. (a) The association
or managing entity of the association must maintain among its
records a complete and current list of the names and addresses of
all owners of timeshare interests in the timeshare plan. The
association or managing entity must update this list not less than
quarterly.
(b) The association or managing entity may not publish the
owners list or provide a copy of the list to any owner or to any
third party, except:
(1) as reasonably required to conduct legitimate
association business; or
(2) as authorized or required by law.
(c) On the termination of the period of developer control
under Section 221.084 and on the written request of an owner, the
association or managing entity shall send by first class mail to
owners on the list described by Subsection (a) any materials
provided by any owner if the purpose of the mailing is for
legitimate association business, including a proxy solicitation
for the recall of a board member elected by the owners, the
discharge of the managing entity, or any other purpose. The use of
the solicited proxies must comply with the project instrument and
this subchapter. Materials required to be provided under this
subsection must be mailed not later than the 30th day after the date
the request is received from an owner.
(d) The board or the managing entity is responsible for
determining the appropriateness of a mailing requested under
Subsection (c) and establishing reasonable procedures for
exercising rights under this section. The association or managing
entity does not have an obligation to mail an item that the board or
managing entity reasonably believes based on advice of legal
counsel may be libelous or otherwise actionable. An owner who
requests the mailing of materials under Subsection (c) must
reimburse the association or managing entity in advance for the
actual costs of performing the mailing or a proportionate share of
actual costs if the mailing is included in a mailing with other
items.
(e) After the termination of the period of developer control
under Section 221.084, it is a violation of this subchapter to
refuse to mail material provided by a requesting owner who has
complied with the reasonable procedures established by the board or
managing entity, if:
(1) the sole purpose of the materials is to advance
legitimate association business; and
(2) the requesting owner has:
(A) tendered to the association or managing
entity payment of the cost under Subsection (d); or
(B) requested an invoice for that cost and has
not received the invoice before the 10th day after the date the
request was delivered to the association or managing entity.
(f) Except as otherwise authorized or required by law, the
association or other managing entity may not furnish the name,
address, telephone number, or e-mail address of any owner to any
other owner or authorized agent of an owner unless the owner whose
name, address, phone number, or e-mail address is requested first
approves the disclosure in writing.
SECTION 3. Section 221.002, Property Code, is amended by
adding Subdivision (5-a) to read as follows:
(5-a) "Board" means the governing body of a timeshare
association designated in a project instrument to act on behalf of
the association.
SECTION 4. Subsection (d), Section 221.003, Property Code,
is amended to read as follows:
(d) A timeshare property subject to this chapter is not
subject to:
(1) Section 5.008 or 5.012;
(2) Chapter 202;
(3) Chapter 207; or
(4) Chapter 209, unless an individual timeshare owner
continuously occupies a single timeshare property as the owner's
primary residence 12 months of the year.
SECTION 5. Subsections (a) and (b), Section 221.011,
Property Code, are amended to read as follows:
(a) The developer of a timeshare plan any part of which is
located in this state must record the timeshare instrument in this
state. When a person expressly declares an intent to subject the
property to a timeshare plan through the recordation of a timeshare
instrument that sets forth the information provided in Subsection
[Subsections] (b) [and (c)], that property shall be established
thenceforth as a timeshare plan.
(b) The declaration made in a timeshare instrument recorded
under this section must include:
(1) a legal description of the timeshare property,
including a ground plan indicating the location of each existing or
proposed building included in the timeshare plan;
(2) a description of each existing or proposed
accommodation, including the location and square footage of each
unit and an interior floor plan of each existing or proposed
building;
(3) a description of any amenities furnished or to be
furnished to the purchaser;
(4) a statement of the fractional or percentage part
that each timeshare interest bears to the entire timeshare plan;
(5) if applicable, a statement that the timeshare
property is part of a multisite timeshare plan; [and]
(6) any additional provisions that are consistent with
this section; and
(7) unless the project instrument provides otherwise,
provisions required by Subchapter I.
SECTION 6. Section 221.025, Property Code, is amended by
amending Subsection (c) and adding Subsection (c-1) to read as
follows:
(c) A timeshare plan subject to Chapter 82 that complies
with this chapter is exempt from the requirements of:
(1) Section 82.0675 relating to club membership; and
(2) Sections 82.103(c)-(e) relating to declarant
control.
(c-1) The exemption provided by Subsection (c)(2) applies
to a timeshare plan created before September 1, 2013, and to the
project instrument governing the timeshare property subject to the
timeshare plan only if the developer and the association agree to
the application of the exemption in writing and the project
instrument is amended to provide for the application of the
exemption. If the conditions provided by this subsection are not
satisfied, a timeshare plan created before September 1, 2013, and
the timeshare property subject to the timeshare plan are governed
by any developer control provisions provided in the project
instrument, notwithstanding any other law.
SECTION 7. Subsection (a), Section 221.071, Property Code,
is amended to read as follows:
(a) A developer or other person commits a false, misleading,
or deceptive act or practice within the meaning of Subchapter E,
Chapter 17 [Subsections (a) and (b) of Section 17.46 of the Texas
Deceptive Trade Practices-Consumer Protection Act (Article 17.46
et seq.], Business & Commerce Code[)], by engaging in any of the
following acts:
(1) failing to disclose information concerning a
timeshare interest required by Subchapter D;
(2) making false or misleading statements of fact
concerning the characteristics of accommodations or amenities
available to a consumer;
(3) predicting specific or immediate increases in the
value of a timeshare interest without a reasonable basis for such
predictions;
(4) making false or misleading statements of fact
concerning the duration that accommodations or amenities will be
available to a consumer;
(5) making false or misleading statements of fact
concerning the conditions under which a purchaser of a timeshare
interest may exchange the right to occupy a unit for the right to
occupy a unit in the same or another timeshare property;
(6) representing that a prize, gift, or other benefit
will be awarded in connection with a promotion with the intent not
to award that prize, gift, or benefit in the manner represented;
(7) failing to provide a copy of the purchase contract
to the purchaser at the time the contract is signed by the
purchaser;
(8) failing to provide the annual statement as
required by Section 221.074(a); or
(9) exceeding a one-to-one purchaser-to-accommodation
ratio for a timeshare plan during a consecutive 12-month period, as
determined under Subsection (c).
SECTION 8. This Act takes effect September 1, 2013.
* * * * *