By: West S.B. No. 1168
(In the Senate - Filed March 10, 2015; March 17, 2015, read
first time and referred to Committee on Business and Commerce;
April 20, 2015, reported favorably by the following vote: Yeas 7,
Nays 0; April 20, 2015, sent to printer.)
Click here to see the committee vote
A BILL TO BE ENTITLED
AN ACT
relating to the operation of certain property owners' associations.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 207.001(2), Property Code, is amended to
read as follows:
(2) "Dedicatory instrument," "property owners'
association," and "restrictive covenant" have the meanings
assigned by Section 209.002 [202.001].
SECTION 2. Section 207.002, Property Code, is amended to
read as follows:
Sec. 207.002. APPLICABILITY. (a) This chapter applies to
a subdivision with a property owners' association that is entitled
to levy regular or special assessments.
(b) This chapter does not apply to a condominium council of
owners governed by Chapter 81 or a condominium unit owners'
association governed by Chapter 82.
SECTION 3. Section 209.002, Property Code, is amended by
amending Subdivision (4-a) and adding Subdivision (13) 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; or [and]
(B) a right to direct the size, shape, and
composition of the subdivision.
(13) "Verified mail" means any method of mailing that
provides evidence of mailing.
SECTION 4. Section 209.003(d), Property Code, is amended to
read as follows:
(d) This chapter does not apply to a condominium as defined
[development governed] by Section 81.002 or 82.003 [Chapter 82].
SECTION 5. Section 209.0041, Property Code, is amended by
amending Subsection (h) and adding Subsection (h-1) to read as
follows:
(h) Except as provided by Subsection (h-1) [this
subsection], a declaration may be amended only by a vote of:
(1) 67 percent of the total votes allocated to
property owners in the property owners' association, in addition to
any governmental approval required by law; or
(2) 67 percent of those entitled to vote on the
amendment of the declaration, in addition to any governmental
approval required by law.
(h-1) If the declaration contains a lower percentage than
prescribed by Subsection (h), the percentage in the declaration
controls.
SECTION 6. Section 209.0051, Property Code, is amended by
amending Subsections (b), (c-1), and (h) and adding Subsection
(c-2) to read as follows:
(b) In this section, "board[:
[(1) "Board] meeting":
(1) [(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 is considered and the board
takes formal action; and
(2) [(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, ceremonial event, or press
conference, if formal action is not taken and any discussion of
association business is incidental to the social function,
convention, 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-1) Except for a meeting held by electronic or telephonic
means under Subsection (c-2) [(h)], a board meeting must be held in
a county in which all or part of the property in the subdivision is
located or in a county adjacent to that county.
(c-2) A board meeting may be held by electronic or
telephonic means provided that:
(1) all directors may hear and be heard by every other
director; and
(2) except for any portion of the meeting conducted in
executive session, all owners in attendance at the meeting may hear
all directors.
(h) Except as provided by this subsection, a [A] board may
take action outside of a meeting [meet by any method of
communication], including voting by electronic or [and] telephonic
means, without prior notice to owners under Subsection (e), if each
director is given a reasonable opportunity to express the
director's opinion to all other directors and to vote [may hear and
be heard by every other director, or the board may take action by
unanimous written consent to consider routine and administrative
matters or a reasonably unforeseen emergency or urgent necessity
that requires immediate board action]. Any action taken without
notice to owners under Subsection (e) must be summarized orally,
including an explanation of any known actual or estimated
expenditures approved at the meeting, and documented in the minutes
of the next regular or special board meeting. The board may not,
without prior notice to owners under Subsection (e), [consider or]
vote on:
(1) fines;
(2) damage assessments;
(3) initiation of foreclosure actions;
(4) initiation of enforcement actions, excluding
temporary restraining orders or violations involving a threat to
health or safety;
(5) increases in assessments;
(6) levying of special assessments;
(7) appeals from a denial of architectural control
approval; or
(8) a suspension of a right of a particular owner
before the owner has an opportunity to attend a board meeting to
present the owner's position, including any defense, on the issue.
SECTION 7. Section 209.0056, Property Code, is amended by
amending Subsection (a) and adding Subsection (a-1) to read as
follows:
(a) For an election or vote taken at a meeting of the
association owners, not [Not] later than the 10th day or earlier
than the 60th day before the date of the [an] election or vote, a
property owners' association shall give written notice of the
election or vote to:
(1) each owner of property in the property owners'
association, for purposes of an association-wide election or vote;
or
(2) each owner of property in the property owners'
association entitled under the dedicatory instruments to vote in a
particular representative election, for purposes of a vote that
involves election of representatives of the association who are
vested under the dedicatory instruments of the property owners'
association with the authority to elect or appoint board members of
the property owners' association.
(a-1) For an election or vote of association owners not
taken at a meeting, the property owners' association shall give
notice of the election or vote to all owners.
SECTION 8. Section 209.0057, Property Code, is amended by
amending Subsections (b), (c), and (d) and adding Subsections
(b-1), (b-2), (b-3), and (b-4) to read as follows:
(b) Any owner may, not later than the 15th day after the date
of the meeting of association owners at which the election or vote
was held or the date of the announcement of the results of the
election or vote if no meeting was held, require a recount of the
votes. A demand for a recount must be submitted in writing either:
(1) by verified [certified] mail[, return receipt
requested, or by delivery by the United States Postal Service with
signature confirmation service] to the property owners'
association's mailing address as reflected on the latest management
certificate filed under Section 209.004; or
(2) in person to the property owners' association's
managing agent as reflected on the latest management certificate
filed under Section 209.004 or to the address to which absentee and
proxy ballots are mailed.
(b-1) The association must estimate the costs for
performance of the recount by a person qualified to tabulate votes
under Subsection (c) and must send an invoice for the estimated
costs to the requesting owner at the owner's last known address
according to association records not later than the 20th day after
the date the association receives the owner's demand for the
recount.
(b-2) The owner demanding a recount under this section must
pay the invoice described by Subsection (b-1) in full to the
property owners' association on or before the 30th day after the
date the invoice is sent to the owner.
(b-3) If the invoice described by Subsection (b-1) is not
paid by the deadline prescribed by Subsection (b-2), the owner's
demand for a recount is considered withdrawn and a recount is not
required.
(b-4) If the estimated costs under Subsection (b-1) are
lesser or greater than the actual costs, the association must send a
final invoice to the owner on or before the 30th business day after
the date the results of the recount are provided. If the final
invoice includes additional amounts owed by the owner, any
additional amounts not paid to the association before the 30th
business day after the date the invoice is sent to the owner may be
added to the owner's account as an assessment. If the estimated
costs exceed the final invoice amount, the owner is entitled to a
refund. The association shall issue the refund to the owner not
later than the 30th business day after the date the invoice is sent
to the owner.
(c) Following receipt of payment under Subsection (b-2),
the [The] property owners' association shall, at the expense of the
owner requesting the recount, retain for the purpose of performing
the recount[,] the services of a person qualified to tabulate votes
under this subsection. The association shall enter into a contract
for the services of a person who:
(1) is not a member of the association or related to a
member of the association board within the third degree by
consanguinity or affinity, as determined under Chapter 573,
Government Code; and
(2) is:
(A) a current or former:
(i) county judge;
(ii) county elections administrator;
(iii) justice of the peace; or
(iv) county voter registrar; or
(B) a person agreed on by the association and
each person [the persons] requesting the recount.
(d) Any recount under Subsection (b) must be performed on or
before the 30th day after the date of receipt of [a request and]
payment for a recount in accordance with Subsection (b-2)
[Subsections (b) and (c)]. If the recount changes the results of
the election, the property owners' association shall reimburse the
requesting owner for the cost of the recount. The property owners'
association shall provide the results of the recount to each owner
who requested the recount. Any action taken by the board in the
period between the initial election vote tally and the completion
of the recount is not affected by any recount.
SECTION 9. Sections 209.0058(a) and (c), Property Code, are
amended to read as follows:
(a) Any vote cast by a member of a property owners'
association in a director [an] election or in a vote on the issue of
whether to amend a dedicatory instrument, increase a regular
assessment, adopt a special assessment, or remove a director [or
vote by a member of a property owners' association] must be in
writing and signed by the member.
(c) In an association [association-wide] election, written
and signed ballots are not required for uncontested races.
SECTION 10. Section 209.00591, Property Code, is amended by
adding Subsection (b-1) and amending Subsection (c) to read as
follows:
(b-1) Notwithstanding any other provision of this chapter,
a property owners' association's bylaws may require one or more
board members to reside in the subdivision subject to the
dedicatory instruments. A requirement described by this subsection
is not applicable during the development period.
(c) The declaration may provide for a period of declarant
control of the association during which a declarant, or persons
designated by the declarant, may appoint and remove board members
and the officers of the association, other than board members or
officers elected by members of the property owners'
association. Regardless of the period of declarant control
provided by the declaration, on or before the 120th day after the
date 75 percent of the lots that may be created and made subject to
the declaration are conveyed to owners other than a declarant or a
builder in the business of constructing homes who purchased the
lots from the declarant for the purpose of selling completed homes
built on the lots, at least one-third of the board members must be
elected by owners other than the declarant. If the declaration
does not include the number of lots that may be created and made
subject to the declaration, at least one-third of the board members
must be elected by owners other than the declarant not later than
the 10th anniversary of the date the declaration was recorded.
SECTION 11. Section 209.00592, Property Code, is amended by
amending Subsection (a) and adding Subsections (a-1) and (c-1) to
read as follows:
(a) The voting rights of an owner may be cast or given:
(1) if a meeting of the property owners' association is
held, in person or by proxy at the [a] meeting [of the property
owners' association];
(2) by absentee ballot in accordance with this
section; or
(3) [by electronic ballot in accordance with this
section; or
[(4)] by any method of representative or delegated
voting provided by a dedicatory instrument.
(a-1) The board may in its discretion use electronic ballots
in accordance with this section as an additional method of voting.
(c-1) For purposes of Subsection (b), a nomination taken
from the floor in an election of directors is not considered an
amendment to the proposal for the election.
SECTION 12. Section 209.00593(d), Property Code, is amended
to read as follows:
(d) This section does not apply to the appointment of a
board member during a development period. [In this subsection,
"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.]
SECTION 13. Section 209.00594, Property Code, is amended by
adding Subsection (b-1) and amending Subsection (c) to read as
follows:
(b-1) A person performing a recount under Section
209.0057(c) may not disclose to any other person how an individual
voted.
(c) Notwithstanding any other provision of this chapter or
any other law, only a person [other than a person] who tabulates
votes under Subsection (b) or who performs a recount under Section
209.0057(c)[, including a person described by Subsection (a),] may
be given access to the ballots cast in the election or vote [only as
part of a recount process authorized by law].
SECTION 14. 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 give written notice
to the owner by verified [certified] mail[, return receipt
requested].
(b) The notice must:
(1) describe the nature of 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 in 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];
(B) may request a hearing under Section 209.007
on or before the 30th day after the date [the owner receives] the
notice was mailed to the owner; and
(C) may have special rights or relief related to
the enforcement action under federal law, including the
Servicemembers Civil Relief Act (50 U.S.C. App. [app.] Section 501
et seq.), if the owner is serving on active military duty;
(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; and
(4) be sent by verified mail to the owner at the
owner's last known address as shown on the association records.
(c) The date specified in the notice under Subsection (b)(3)
must provide a reasonable period 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 owner cures the violation before the expiration
of the period for cure described by 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 15. Section 209.0062(c), Property Code, is amended
to read as follows:
(c) A property owners' association is [may] not required to
allow a payment plan for any amount that extends more than 18 months
from the date of the owner's request for a payment plan. The
association is not required to enter into a payment plan with an
owner who failed to honor the terms of a previous payment plan
during the two years following the owner's default under the
previous payment plan. The association is not required to make a
payment plan available to an owner after the period for cure
described by Section 209.0064(b)(3) expires. The association is
not required to allow an owner to enter into a payment plan more
than once in any 12-month period.
SECTION 16. Section 209.0063, Property Code, is amended by
amending Subsection (a) and adding Subsection (c) to read as
follows:
(a) Except as provided by Subsections [Subsection] (b) and
(c), a payment received by a property owners' association from the
owner shall be applied to the owner's debt in the following order of
priority:
(1) any delinquent assessment;
(2) any current assessment;
(3) any attorney's fees or third party collection
costs incurred by the association associated solely with
assessments or any other charge that could provide the basis for
foreclosure;
(4) any attorney's fees incurred by the association
that are not subject to Subdivision (3);
(5) any fines assessed by the association; and
(6) any other amount owed to the association.
(c) This section does not apply to a payment made pursuant
to a final judgment, another binding court order, or any mutual
agreement of the parties entered into after the 30-day period
described in Section 209.0064(b)(3).
SECTION 17. Section 209.0064(b), Property Code, is amended
to read as follows:
(b) A property owners' association may not hold an owner
liable for fees of a collection agent retained by the property
owners' association unless the association first provides written
notice to the owner by certified mail, return receipt requested,
that:
(1) specifies each delinquent amount and the total
amount of the payment required to make the account current;
(2) if the property owners' association is subject to
Section 209.0062, describes the options the owner has to avoid
having the account turned over to a collection agent, including
information regarding availability of a payment plan through the
association; and
(3) provides a period of at least 30 days for the owner
to cure the delinquency before further collection action is taken.
SECTION 18. Section 209.0091, Property Code, is amended to
read as follows:
Sec. 209.0091. PREREQUISITES TO FORECLOSURE: NOTICE AND
OPPORTUNITY TO CURE FOR CERTAIN OTHER LIENHOLDERS. (a) A property
owners' association may not sell a property pursuant to a
foreclosure right [foreclose a property owners' association
assessment lien on real property by giving notice of sale under
Section 51.002 or commencing a judicial foreclosure action] unless
the association has:
(1) provided written notice of the total amount of the
delinquency giving rise to the foreclosure to any other holder of a
lien of record on the property whose lien is inferior or subordinate
to the association's lien and is evidenced by a deed of trust; and
(2) provided the recipient of the notice an
opportunity to cure the delinquency before the 61st day after the
date the association mails [recipient receives] the notice
described in Subdivision (1).
(b) Notice under this section must be sent by verified
[certified] mail[, return receipt requested,] to the address for
the lienholder shown in the deed records relating to the property
that is subject to the property owners' association assessment
lien.
(c) Notwithstanding any other law, notice under this
section may be provided to any holder of a lien of record on the
property.
SECTION 19. Section 209.0092, Property Code, is amended by
amending Subsection (a) and adding Subsection (d) to read as
follows:
(a) Except as provided by Subsection (c) or (d) and subject
to Section 209.009, a property owners' association may not
foreclose a property owners' association assessment lien unless the
association first obtains a court order in an application for
expedited foreclosure under the rules adopted by the supreme court
under Subsection (b). A property owners' association may use the
procedure described by this subsection to foreclose any lien
described by the association's dedicatory instruments and is
considered to have with respect to the lien any power of sale
required by law as a condition of using the procedure described by
this subsection.
(d) The association may in its discretion elect not to use
the expedited procedure described by Subsection (b) and instead
foreclose the association's assessment lien under court judgment
foreclosing the lien and ordering the sale, pursuant to Rules 309
and 646a, Texas Rules of Civil Procedure.
SECTION 20. Section 209.0041(a), Property Code, is
repealed.
SECTION 21. (a) The changes in law made by this Act to
Chapter 207, Property Code, apply only to a request for subdivision
information made on or after the effective date of this Act and any
resale certificate delivered in response to that request. A
request for subdivision information made before the effective date
of this Act, any resale certificate delivered in response to that
request, and any request for an update of that resale certificate
are governed by the law as it existed immediately before that date,
and that law is continued in effect for that purpose.
(b) Sections 209.0041, 209.0056, 209.0057, 209.0058,
209.00592, and 209.00594(c), Property Code, as amended by this Act,
apply only to an election or vote held on or after the effective
date of this Act. An election or vote held before the effective
date of this Act is governed by the law as it existed immediately
before that date, and that law is continued in effect for that
purpose.
(c) Section 209.006, Property Code, as amended by this Act,
applies only to an enforcement action taken on or after the
effective date of this Act. An enforcement action taken before the
effective date of this Act is governed by the law as it existed
immediately before that date, and that law is continued in effect
for that purpose.
(d) Section 209.0064, Property Code, as amended by this Act,
applies only to a collection action taken on or after the effective
date of this Act. A collection action taken before the effective
date of this Act is governed by the law as it existed immediately
before that date, and that law is continued in effect for that
purpose.
(e) Section 209.0091, Property Code, as amended by this Act,
applies only to a foreclosure sale that takes place on or after the
effective date of this Act. A foreclosure sale that takes place
before the effective date of this Act is governed by the law as it
existed immediately before that date, and that law is continued in
effect for that purpose.
SECTION 22. This Act takes effect September 1, 2015.
* * * * *