H.B. No. 3949
AN ACT
relating to arbitration of certain controversies involving members
of certain nonprofit entities.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The heading to Chapter 173, Civil Practice and
Remedies Code, is amended to read as follows:
CHAPTER 173. ARBITRATION OF CERTAIN CONTROVERSIES INVOLVING
[BETWEEN] MEMBERS OF CERTAIN NONPROFIT ENTITIES
SECTION 2. Section 173.002, Civil Practice and Remedies
Code, is amended to read as follows:
Sec. 173.002. SCOPE OF CHAPTER. (a) This chapter applies
only to the arbitration of a controversy between members of an
association or corporation or between a corporation and its members
if the association or corporation [that] is:
(1) exempt from the payment of federal income taxes
under Section 501(a) of the Internal Revenue Code of 1986 by being
listed as an exempt organization under Section 501(c) of the code;
or
(2) incorporated under:
(A) the Texas Non-Profit Corporation Act
(Article 1396-1.01 et seq., Vernon's Texas Civil Statutes); or
(B) Subchapter C, Chapter 23, Business
Organizations Code.
(b) This chapter does not apply to the arbitration of a
controversy between:
(1) members of:
(A) a property owners' association, as defined by
Section 209.002, Property Code;
(B) a condominium council of owners, as defined
by Section 81.002, Property Code; or
(C) a condominium unit owners' association
organized under Section 82.101, Property Code; or
(2) an association or council of owners described by
Subdivision (1) and a member of that association or council of
owners.
SECTION 3. Section 173.003(c), Civil Practice and Remedies
Code, is amended to read as follows:
(c) A provision in the bylaws of a nonprofit corporation
incorporated under the Texas Non-Profit Corporation Act (Article
1396-1.01 et seq., Vernon's Texas Civil Statutes) or under
Subchapter C, Chapter 23, Business Organizations Code, that
requires a member of the corporation to arbitrate at common law a
controversy that subsequently arises between members or between the
corporation and its members is a valid, enforceable, and
irrevocable agreement by a member of the corporation to arbitrate
the controversy.
SECTION 4. The changes in law made by this Act apply only to
a controversy arising on or after the effective date of this Act. A
controversy arising before the effective date of this Act is
governed by the law in effect on the date the controversy arose, and
that law is continued in effect for that purpose.
SECTION 5. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2023.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 3949 was passed by the House on May
11, 2023, by the following vote: Yeas 142, Nays 1, 2 present, not
voting.
______________________________
Chief Clerk of the House
I certify that H.B. No. 3949 was passed by the Senate on May
24, 2023, by the following vote: Yeas 31, Nays 0.
______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor