Title: Relating to residential subdivisions that require membership in a property owners' association.

Sponsor: Carona

Subjects:
I0595 Property Interests--Real Property
I0618 Property Interests--Property Owners Association
P0151 RESIDENTIAL PROPERTY OWNERS PROTECTION ACT, TEXAS
P0217 WENONAH BLEVINS RESIDENTIAL PROPERTY OWNERS PROTECTION ACT
S0194 FORECLOSURES



Status:
02/01/2001 S Received by the Secretary of the Senate 0
02/01/2001 S Filed 0
02/05/2001 S Read first time 256
02/05/2001 S Referred to State Affairs 256
03/19/2001 S Scheduled for public hearing on . . . . . 0
03/19/2001 S Considered in public hearing 0
03/19/2001 S Testimony taken in committee 0
03/19/2001 S Left pending in committee 0
03/22/2001 S Scheduled for public hearing on . . . . . 0
03/22/2001 S Considered in public hearing 0
03/26/2001 S Reported favorably as substituted 888
03/26/2001 S Committee report printed and distributed 07:13PM 0
03/28/2001 S Placed on intent calendar 0
04/02/2001 S Rules suspended 984
04/02/2001 S Read 2nd time 984
04/02/2001 S Amended FA1 Carona 984
04/02/2001 S Amended FA2 Carona 985
04/02/2001 S Passed to engrossment as amended 985
04/02/2001 S Three day rule suspended 985
04/02/2001 S Record vote 985
04/02/2001 S Read 3rd time 985
04/02/2001 S Passed 985
04/02/2001 S Reported engrossed 0
04/03/2001 H Received from the Senate 949
04/04/2001 H Read first time 981
04/04/2001 H Referred to Business & Industry 981
04/24/2001 H Scheduled for public hearing on . . . . 0
04/24/2001 H Considered in public hearing 0
04/24/2001 H Testimony taken in committee 0
04/24/2001 H Left pending in committee 0
05/03/2001 H Scheduled for formal meeting on . . . . 0
05/03/2001 H Considered in formal meeting 0
05/03/2001 H Committee substitute considered in committee 0
05/03/2001 H Amendment(s) considered in committee 0
05/03/2001 H Reported favorably as substituted 0
05/07/2001 H Committee report filed with Chief Clerk 2800
05/08/2001 H Committee report printed and distributed 09:41AM 0
05/08/2001 H Committee report sent to Calendars 0
05/11/2001 H Considered in Calendars 0
05/14/2001 H Placed on General State Calendar 0
05/15/2001 H Read 2nd time 3261
05/15/2001 H Amended 1-Dutton 3261
05/15/2001 H Amended 2-Nixon+ 3261
05/15/2001 H Amended 3-Nixon+ 3262
05/15/2001 H Amended 4-Bailey 3262
05/15/2001 H Amended 5-Bailey 3262
05/15/2001 H Amended 6-Hamric 3263
05/15/2001 H Amended 7-Woolley 3264
05/15/2001 H Amended 8-Hamric 3267
05/15/2001 H Amended 9-Hamric 3267
05/15/2001 H Amended 10-Bailey 3267
05/15/2001 H Amended 11-Bailey 3267
05/15/2001 H Amendment fails of adoption 12-Yarbrough 3267
05/15/2001 H Record vote RV#441 3268
05/15/2001 H Amended 13-Goolsby 3269
05/15/2001 H Amended 14-Goolsby 3269
05/15/2001 H Amended 15-Goolsby 3269
05/15/2001 H Amended 16-Hamric 3270
05/15/2001 H Amended 17-Hamric 3270
05/15/2001 H Nonrecord vote recorded in Journal 3270
05/15/2001 H Passed to 3rd reading as amended 3270
05/15/2001 H Nonrecord vote recorded in Journal 3270
05/16/2001 H Read 3rd time 3333
05/16/2001 H Passed 3333
05/17/2001 S House passage as amended reported 2226
05/18/2001 S House amendment(s) laid before the Senate 2409
05/18/2001 S Senate refuses to concur 2423
05/18/2001 S Senate requests conference committee 2423
05/18/2001 S Senate appoints conferees 2423
05/18/2001 H Senate refuses to concur-reported 3681
05/18/2001 H Senate requests conference committee-reported 3681
05/18/2001 H Senate appoints conferees-reported 3681
05/21/2001 H House grants request for conference committee 3689
05/21/2001 H House appoints conferees 3689
05/21/2001 S House grants request for conf comm-reported 2671
05/21/2001 S House appoints conferees-reported 2671
05/26/2001 S Conference committee report filed 0
05/27/2001 H Conf. Comm. Report printed and distributed 01:33AM 0
05/27/2001 S Senate adopts resolution to go outside bounds SR 1248 0
05/27/2001 H House adopts resolution to go outside bounds HR 1378 5146
05/27/2001 H Motion to suspend rules fails 5146
05/27/2001 H Record vote RV#645 5146
05/27/2001 H Rules suspended 5158
05/27/2001 H House adopts conference committee report 5159
05/27/2001 S House adopts conf. comm. report-reported 0
05/27/2001 S Senate adopts conference committee report 0
05/27/2001 S Record vote 0
05/28/2001 H Senate adopts conf. comm. report-reported 5208
05/28/2001 S Reported enrolled 0
05/28/2001 S Signed in the Senate 0
05/28/2001 H Signed in the House 0
05/29/2001 E Sent to the Governor 

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Bill Text:
AN ACT
relating to residential subdivisions that require membership in a
property owners' association.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Title 11, Property Code, is amended by adding
Chapter 209 to read as follows:
CHAPTER 209. TEXAS RESIDENTIAL PROPERTY OWNERS PROTECTION ACT
Sec. 209.001. SHORT TITLE. This chapter may be cited as the
Texas Residential Property Owners Protection Act.
Sec. 209.002. DEFINITIONS. In this chapter:
(1) "Assessment" means a regular assessment, special
assessment, or other amount a property owner is required to pay a
property owners' association under the dedicatory instrument or by
law.
(2) "Board" means the governing body of a property
owners' association.
(3) "Declaration" means an instrument filed in the
real property records of a county that includes restrictive
covenants governing a residential subdivision.
(4) "Dedicatory instrument" means each governing
instrument covering the establishment, maintenance, and operation
of a residential subdivision. The term includes restrictions or
similar instruments subjecting property to restrictive covenants,
bylaws, or similar instruments governing the administration or
operation of a property owners' association, to properly adopted
rules and regulations of the property owners' association, and to
all lawful amendments to the covenants, bylaws, rules, or
regulations.
(5) "Lot" means any designated parcel of land located
in a residential subdivision, including any improvements on the
designated parcel.
(6) "Owner" means a person who holds record title to
property in a residential subdivision and includes the personal
representative of a person who holds record title to property in a
residential subdivision.
(7) "Property owners' association" or "association"
means an incorporated or unincorporated association that:
(A) is designated as the representative of the
owners of property in a residential subdivision;
(B) has a membership primarily consisting of the
owners of the property covered by the dedicatory instrument for the
residential subdivision; and
(C) manages or regulates the residential
subdivision for the benefit of the owners of property in the
residential subdivision.
(8) "Regular assessment" means an assessment, a
charge, a fee, or dues that each owner of property within a
residential subdivision is required to pay to the property owners'
association on a regular basis and that is designated for use by
the property owners' association for the benefit of the residential
subdivision as provided by the restrictions.
(9) "Residential subdivision" or "subdivision" means a
subdivision, planned unit development, townhouse regime, or similar
planned development in which all land has been divided into two or
more parts and is subject to restrictions that:
(A) limit a majority of the land subject to the
dedicatory instruments, excluding streets, common areas, and public
areas, to residential use for single-family homes, townhomes, or
duplexes only;
(B) are recorded in the real property records of
the county in which the residential subdivision is located; and
(C) require membership in a property owners'
association that has authority to impose regular or special
assessments on the property in the subdivision.
(10) "Restrictions" means one or more restrictive
covenants contained or incorporated by reference in a properly
recorded map, plat, replat, declaration, or other instrument filed
in the real property records or map or plat records. The term
includes any amendment or extension of the restrictions.
(11) "Restrictive covenant" means any covenant,
condition, or restriction contained in a dedicatory instrument,
whether mandatory, prohibitive, permissive, or administrative.
(12) "Special assessment" means an assessment, a
charge, a fee, or dues, other than a regular assessment, that each
owner of property located in a residential subdivision is required
to pay to the property owners' association, according to procedures
required by the dedicatory instruments, for:
(A) defraying, in whole or in part, the cost,
whether incurred before or after the assessment, of any
construction or reconstruction, unexpected repair, or replacement
of a capital improvement in common areas owned by the property
owners' association, including the necessary fixtures and personal
property related to the common areas;
(B) maintenance and improvement of common areas
owned by the property owners' association; or
(C) other purposes of the property owners'
association as stated in its articles of incorporation or the
dedicatory instrument for the residential subdivision.
Sec. 209.003. APPLICABILITY OF CHAPTER. (a) This chapter
applies only to a residential subdivision that is subject to
restrictions or provisions in a declaration that authorize the
property owners' association to collect regular or special
assessments on all or a majority of the property in the
subdivision.
(b) This chapter applies only to a property owners'
association that requires mandatory membership in the association
for all or a majority of the owners of residential property within
the subdivision subject to the association's dedicatory
instruments.
(c) This chapter applies to a residential property owners'
association regardless of whether the entity is designated as a
"homeowners' association," "community association," or similar
designation in the restrictions or dedicatory instrument.
(d) This chapter does not apply to a condominium development
governed by Chapter 82.
Sec. 209.004. MANAGEMENT CERTIFICATES. (a) A property
owners' association shall record in each county in which any
portion of the residential subdivision is located a management
certificate, signed and acknowledged by an officer or the managing
agent of the association, stating:
(1) the name of the subdivision;
(2) the name of the association;
(3) the recording data for the subdivision;
(4) the recording data for the declaration;
(5) the mailing address of the association or the name
and mailing address of the person managing the association; and
(6) other information the association considers
appropriate.
(b) The property owners' association shall record an amended
management certificate not later than the 30th day after the date
the association has notice of a change in any information in the
recorded certificate required by Subsection (a).
(c) The property owners' association and its officers,
directors, employees, and agents are not subject to liability to
any person for a delay in recording or failure to record a
management certificate, unless the delay or failure is wilful or
caused by gross negligence.
Sec. 209.005. ASSOCIATION RECORDS. (a) A property owners'
association shall make the books and records of the association,
including financial records, reasonably available to an owner in
accordance with Section B, Article 2.23, Texas Non-Profit
Corporation Act (Article 1396-2.23, Vernon's Texas Civil Statutes).
(b) An attorney's files and records relating to the
association, excluding invoices requested by an owner under Section
209.008(d), are not:
(1) records of the association;
(2) subject to inspection by the owner; or
(3) subject to production in a legal proceeding.
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 certified mail, return receipt
requested.
(b) The notice must:
(1) describe 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) 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; and
(B) may request a hearing under Section 209.007
on or before the 30th day after the date the owner receives the
notice.
Sec. 209.007. HEARING BEFORE BOARD; ALTERNATIVE DISPUTE
RESOLUTION. (a) If the owner is entitled to an opportunity to
cure the violation, the owner has the right to submit a written
request for a hearing to discuss and verify facts and resolve the
matter in issue before a committee appointed by the board of the
property owners' association or before the board if the board does
not appoint a committee.
(b) If a hearing is to be held before a committee, the
notice prescribed by Section 209.006 must state that the owner has
the right to appeal the committee's decision to the board by
written notice to the board.
(c) The association shall hold a hearing under this section
not later than the 30th day after the date the board receives the
owner's request for a hearing and shall notify the owner of the
date, time, and place of the hearing not later than the 10th day
before the date of the hearing. The board or the owner may request
a postponement, and, if requested, a postponement shall be granted
for a period of not more than 10 days. Additional postponements
may be granted by agreement of the parties. The owner or the
association may make an audio recording of the meeting.
(d) The notice and hearing provisions of Section 209.006 and
this section do not apply if the association files a suit seeking a
temporary restraining order or temporary injunctive relief or files
a suit that includes foreclosure as a cause of action. If a suit
is filed relating to a matter to which those sections apply, a
party to the suit may file a motion to compel mediation. The
notice and hearing provisions of Section 209.006 and this section
do not apply to a temporary suspension of a person's right to use
common areas if the temporary suspension is the result of a
violation that occurred in a common area and involved a significant
and immediate risk of harm to others in the subdivision. The
temporary suspension is effective until the board makes a final
determination on the suspension action after following the
procedures prescribed by this section.
(e) An owner or property owners' association may use
alternative dispute resolution services.
Sec. 209.008. ATTORNEY'S FEES. (a) A property owners'
association may collect reimbursement of reasonable attorney's fees
and other reasonable costs incurred by the association relating to
collecting amounts, including damages, due the association for
enforcing restrictions or the bylaws or rules of the association
only if the owner is provided a written notice that attorney's fees
and costs will be charged to the owner if the delinquency or
violation continues after a date certain.
(b) An owner is not liable for attorney's fees incurred by
the association relating to a matter described by the notice under
Section 209.006 if the attorney's fees are incurred before the
conclusion of the hearing under Section 209.007 or, if the owner
does not request a hearing under that section, before the date by
which the owner must request a hearing. The owner's presence is
not required to hold a hearing under Section 209.007.
(c) All attorney's fees, costs, and other amounts collected
from an owner shall be deposited into an account maintained at a
financial institution in the name of the association or its
managing agent. Only members of the association's board or its
managing agent or employees of its managing agent may be
signatories on the account.
(d) On written request from the owner, the association shall
provide copies of invoices for attorney's fees and other costs
relating only to the matter for which the association seeks
reimbursement of fees and costs.
(e) The notice provisions of Subsection (a) do not apply to
a counterclaim of an association in a lawsuit brought against the
association by a property owner.
(f) If the dedicatory instrument or restrictions of an
association allow for nonjudicial foreclosure, the amount of
attorney's fees that a property owners' association may include in
a nonjudicial foreclosure sale for an indebtedness covered by a
property owners' association's assessment lien is limited to the
greater of:
(1) one-third of the amount of all actual costs and
assessments, excluding attorney's fees, plus interest and court
costs, if those amounts are permitted to be included by law or by
the restrictive covenants governing the property; or
(2) $2,500.
(g) Subsection (f) does not prevent a property owners'
association from recovering or collecting attorney's fees in excess
of the amounts prescribed by Subsection (f) by other means provided
by law.
Sec. 209.009. FORECLOSURE SALE PROHIBITED IN CERTAIN
CIRCUMSTANCES. A property owners' association may not foreclose a
property owners' association's assessment lien if the debt securing
the lien consists solely of:
(1) fines assessed by the association; or
(2) attorney's fees incurred by the association solely
associated with fines assessed by the association.
Sec. 209.010. NOTICE AFTER FORECLOSURE SALE. (a) A
property owners' association that conducts a foreclosure sale of an
owner's lot must send to the lot owner not later than the 30th day
after the date of the foreclosure sale a written notice stating the
date and time the sale occurred and informing the lot owner of the
owner's right to redeem the property under Section 209.011.
(b) The notice must be sent by certified mail, return
receipt requested, to the lot owner's last known mailing address,
as reflected in the records of the property owners' association.
(c) Not later than the 30th day after the date the
association sends the notice required by Subsection (a), the
association must record an affidavit in the real property records
of the county in which the lot is located, stating the date on
which the notice was sent and containing a legal description of the
lot. Any person is entitled to rely conclusively on the
information contained in the recorded affidavit.
(d) The notice requirements of this section also apply to
the sale of an owner's lot by a sheriff or constable conducted as
provided by a judgment obtained by the property owners'
association.
Sec. 209.011. RIGHT OF REDEMPTION AFTER FORECLOSURE. (a) A
property owners' association or other person who purchases occupied
property at a sale foreclosing a property owners' association's
assessment lien must commence and prosecute a forcible entry and
detainer action under Chapter 24 to recover possession of the
property.
(b) The owner of property in a residential subdivision may
redeem the property from any purchaser at a sale foreclosing a
property owners' association's assessment lien not later than the
180th day after the date the association mails written notice of
the sale to the owner under Section 209.010.
(c) A person who purchases property at a sale foreclosing a
property owners' association's assessment lien may not transfer
ownership of the property to a person other than a redeeming lot
owner during the redemption period.
(d) To redeem property purchased by the property owners'
association at the foreclosure sale, the lot owner must pay to the
association:
(1) all amounts due the association at the time of the
foreclosure sale;
(2) interest from the date of the foreclosure sale to
the date of redemption on all amounts owed the association at the
rate stated in the dedicatory instruments for delinquent
assessments or, if no rate is stated, at an annual interest rate of
10 percent;
(3) costs incurred by the association in foreclosing
the lien and conveying the property to the redeeming lot owner,
including reasonable attorney's fees;
(4) any assessment levied against the property by the
association after the date of the foreclosure sale;
(5) any reasonable cost incurred by the association,
including mortgage payments and costs of repair, maintenance, and
leasing of the property; and
(6) the purchase price paid by the association at the
foreclosure sale less any amounts due the association under
Subdivision (1) that were satisfied out of foreclosure sale
proceeds.
(e) To redeem property purchased at the foreclosure sale by
a person other than the property owners' association, the lot
owner:
(1) must pay to the association:
(A) all amounts due the association at the time
of the foreclosure sale less the foreclosure sales price received
by the association from the purchaser;
(B) interest from the date of the foreclosure
sale through the date of redemption on all amounts owed the
association at the rate stated in the dedicatory instruments for
delinquent assessments or, if no rate is stated, at an annual
interest rate of 10 percent;
(C) costs incurred by the association in
foreclosing the lien and conveying the property to the redeeming
lot owner, including reasonable attorney's fees;
(D) any unpaid assessments levied against the
property by the association after the date of the foreclosure sale;
and
(E) taxable costs incurred in a proceeding
brought under Subsection (a); and
(2) must pay to the person who purchased the property
at the foreclosure sale:
(A) any assessments levied against the property
by the association after the date of the foreclosure sale and paid
by the purchaser;
(B) the purchase price paid by the purchaser at
the foreclosure sale;
(C) the amount of the deed recording fee;
(D) the amount paid by the purchaser as ad
valorem taxes, penalties, and interest on the property after the
date of the foreclosure sale; and
(E) taxable costs incurred in a proceeding
brought under Subsection (a).
(f) If a lot owner redeems the property under this section,
the purchaser of the property at foreclosure shall immediately
execute and deliver to the owner a deed transferring the property
to the redeeming lot owner. If a purchaser fails to comply with
this section, the lot owner may file a cause of action against the
purchaser and may recover reasonable attorney's fees from the
purchaser if the lot owner is the prevailing party in the action.
(g) If, before the expiration of the redemption period, the
redeeming lot owner fails to record the deed from the foreclosing
purchaser or fails to record an affidavit stating that the lot
owner has redeemed the property, the lot owner's right of
redemption as against a bona fide purchaser or lender for value
expires after the redemption period.
(h) The purchaser of the property at the foreclosure sale or
a person to whom the person who purchased the property at the
foreclosure sale transferred the property may presume conclusively
that the lot owner did not redeem the property unless the lot owner
files in the real property records of the county in which the
property is located:
(1) a deed from the purchaser of the property at the
foreclosure sale; or
(2) an affidavit that:
(A) states that the lot owner has redeemed the
property; and
(B) contains a legal description of the
property.
(i) If the property owners' association purchases the
property at foreclosure, all rent and other income collected by the
association from the date of the foreclosure sale to the date of
redemption shall be credited toward the amount owed the association
under Subsection (d), and if there are excess proceeds, they shall
be refunded to the lot owner. If a person other than the
association purchases the property at foreclosure, all rent and
other income collected by the purchaser from the date of the
foreclosure sale to the date of redemption shall be credited toward
the amount owed the purchaser under Subsection (e), and if there
are excess proceeds, those proceeds shall be refunded to the lot
owner.
(j) If a person other than the property owners' association
is the purchaser at the foreclosure sale, before executing a deed
transferring the property to the redeeming lot owner, the purchaser
shall obtain an affidavit from the association or its authorized
agent stating that all amounts owed the association under
Subsection (e) have been paid. The association shall provide the
purchaser with the affidavit not later than the 10th day after the
date the association receives all amounts owed to the association
under Subsection (e). Failure of a purchaser to comply with this
subsection does not affect the validity of a redemption by a
redeeming lot owner.
(k) Property that is redeemed remains subject to all liens
and encumbrances on the property before foreclosure. Any lease
entered into by the purchaser of property at a sale foreclosing an
assessment lien of a property owners' association is subject to the
right of redemption provided by this section and the lot owner's
right to reoccupy the property immediately after the redemption.
(l) If a lot owner makes partial payment of amounts due the
association at any time before the redemption period expires but
fails to pay all amounts necessary to redeem the property before
the redemption period expires, the association shall refund any
partial payments to the lot owner by mailing payment to the owner's
last known address as shown in the association's records not later
than the 30th day after the expiration date of the redemption
period.
(m) If a lot owner sends by certified mail, return receipt
requested, a written request to redeem the property on or before
the last day of the redemption period, the lot owner's right of
redemption is extended until the 10th day after the date the
association and any third party foreclosure purchaser provides
written notice to the lot owner of the amounts that must be paid to
redeem the property.
(n) After the redemption period and any extended redemption
period provided by Subsection (m) expires, the association or third
party foreclosure purchaser shall record an affidavit in the real
property records of the county in which the property is located
stating that the lot owner did not redeem the property during the
redemption period or any extended redemption period.
(o) The association or the person who purchased the property
at the foreclosure sale may file an affidavit in the real property
records of the county in which the property is located that states
the date the citation was served in a suit under Subsection (a) and
contains a legal description of the property. Any person may rely
conclusively on the information contained in the affidavit.
(p) The rights of a lot owner under this section also apply
if the sale of the lot owner's property is conducted by a constable
or sheriff as provided by a judgment obtained by the property
owners' association.
SECTION 2. S.B. No. 507, 77th Legislature, Regular Session,
2001, is enacted in honor of Wenonah Blevins and may be
unofficially referred to as the Wenonah Blevins Residential
Property Owners Protection Act.
SECTION 3. This Act takes effect January 1, 2002.
S.B. No. 507
_______________________________ _______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 507 passed the Senate on
April 2, 2001, by a viva-voce vote; May 18, 2001, Senate refused to
concur in House amendments and requested appointment of Conference
Committee; May 21, 2001, House granted request of the Senate;
May 27, 2001, Senate adopted Conference Committee Report by the
following vote: Yeas 17, Nays 1, one present not voting.
_______________________________
Secretary of the Senate
I hereby certify that S.B. No. 507 passed the House, with
amendments, on May 16, 2001, by a non-record vote; May 21, 2001,
House granted request of the Senate for appointment of Conference
Committee; May 27, 2001, House adopted Conference Committee Report
by a non-record vote.
_______________________________
Chief Clerk of the House
Approved:
_______________________________
Date
_______________________________
Governor