HBA-MPM, NLM H.B. 1956 76(R)BILL ANALYSIS Office of House Bill AnalysisH.B. 1956 By: Danburg Land & Resource Management 8/11/1999 Enrolled BACKGROUND AND PURPOSE Houston Heights was established in 1891 and incorporated as an independent village under Texas law in 1896. No restrictive covenants were included in the initial subdivision map or individual deeds. In 1918 Houston Heights was annexed by the City of Houston, which has no zoning. The Houston Heights Association was incorporated as a Texas nonprofit corporation dedicated to preserve the historic character of Houston Heights. In the 1980s, the association organized a general scheme for preservation of the historic residential structures by voluntary restrictive covenants. Dedicatory instruments providing for the authority of the association to enforce the restrictive covenant were promulgated by the association. However, the formatting of the dedicatory instrument and other procedural aspects caused the association to be concerned with the potential unintended termination or amendment of such instruments. The purpose of this bill is to eliminate technical defenses against the enforcement of dedicatory instruments and to prevent the termination or amendment of dedicatory instruments. H.B. 1956 applies only to a historic neighborhood that is located in whole or in part in a municipality with a population of 1.6 million or more located in a county with a population of 2.8 million or more. This bill provides that a historic neighborhood preservation association must be a Texas nonprofit corporation or limited liability company organized, in part, to encourage the preservation of property in a historic neighborhood, and must open its membership to all owners of property in the historic neighborhood. In addition, this bill authorizes a historic neighborhood preservation association to approve and to submit to a vote of the owners of property that is included in a common scheme for preservation of historic property, an amendment of the restrictive covenants, or the termination of all or part of the restrictive covenants included in the common scheme for preservation of historic property. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Sets forth the purpose of this legislation relating to the certain historic neighborhoods. SECTION 2. Amends Title 11, Property Code, by adding Chapter 207, as follows: CHAPTER 207. AMENDMENT AND TERMINATION OF RESTRICTIVE COVENANTS IN HISTORIC NEIGHBORHOODS Sec. 207.001. DEFINITIONS. Defines "owner," "real property records," "dedicatory instrument," "property owners' association," "petition," "restrictive covenant," "regular assessment," "special assessment," "apartment complex," and "historic neighborhood." Sec. 207.002. APPLICABILITY. (a) Applies this chapter only to a historic neighborhood that is located in whole or in part in a municipality with a population of 1.6 million or more located in a county with a population of 2.8 million or more. (b) Applies this chapter to a restrictive covenant regardless of the date on which it was created. (c) Applies this chapter to property in the area of a historic neighborhood that is zoned for or that contains a commercial structure, an industrial structure, an apartment complex, or a condominium development covered by Title 7 (Condominiums) only if the owner of the property signed a restrictive covenant that includes the property in a common scheme for preservation of historic property as described by Section 207.004. Sec. 207.003. HISTORIC NEIGHBORHOOD PRESERVATION ASSOCIATION. (a) Provides that a historic neighborhood preservation association must be a Texas nonprofit corporation or limited liability company organized, in part, to encourage the preservation of property in a historic neighborhood, and must open its membership to all owners of property in the historic neighborhood. (b) Authorizes a historic neighborhood preservation association to be composed of only a portion of the owners of property in the historic neighborhood. (c) Authorizes a historic neighborhood preservation association to be a property owners' association or an organization that is qualified as a charitable organization under Section 501(c)(3) (relating to exemptions from tax on corporations, certain trusts, etc.), Internal Revenue Code of 1986. (d) Provides that a statement in the articles of incorporation or association, bylaws, regulations, or operating agreement of the historic neighborhood preservation association is prima facie evidence of compliance with Subsection (a). Sec. 207.004. COMMON SCHEME FOR PRESERVATION OF PROPERTY IN HISTORIC NEIGHBORHOOD. (a) Specifies certain instances under which a common scheme for preservation of historic property exists in a historic neighborhood. (b) Provides that a common scheme for preservation of historic property does not include property that is not subject to restrictive covenants that authorize a historic neighborhood preservation association to enforce the restrictive covenants. (c) Provides that restrictive covenants included in a common scheme for preservation of historic property exist for the benefit of all owners of property subject to the common scheme for preservation as if each owner were referenced in each dedicatory instrument. (d) Authorizes each owner of property subject to a common scheme for preservation of historic property to enforce restrictive covenants on other property included in the common scheme for preservation. Sec. 207.005. AMENDMENT OR TERMINATION OF RESTRICTIVE COVENANTS UNDER COMMON SCHEME FOR PRESERVATION. (a) Prohibits a restrictive covenant applicable to property that is included in a common scheme for preservation of historic property from being amended or terminated except as provided by this section. (b) Authorizes a historic neighborhood preservation association to approve and to submit to a vote of the owners of property that is included in a common scheme for preservation of historic property, an amendment of the restrictive covenants, or the termination of all or part of the restrictive covenants included in the common scheme for preservation of historic property. (c) Provides that the amendment or termination of a restrictive covenant is effective and applies to each separately owned parcel or tract as provided by this subsection. (d) Provides that a document certifying that 75 percent of the owners voting on the issue approved the amendment or termination of the restrictive covenant must be recorded as specified in this subsection. Provides that the document is prima facie evidence that the requisite percentage of votes was attained and the required formalities for the action were taken. Sec. 207.006. METHOD OF VOTING. (a) Sets forth certain procedures by which an amendment or termination of a restrictive covenant must be voted on. (b) Requires the historic neighborhood preservation association to perform certain procedures provided by this subsection, if the vote occurs at a meeting of the historic neighborhood preservation association under Subsection (a). (c) Requires the historic neighborhood preservation association to provide certain information for the mailing to each owner. (d) Authorizes the vote of multiple owners of a property to be reflected by signature or vote of one of the owners. (e) Requires the historic neighborhood preservation association to record a copy of the ballot or petition, as applicable, in the real property records of the county in which the historic neighborhood is located before the vote of the owners. Sec. 207.007. REGULAR AND SPECIAL ASSESSMENTS. Prohibits the procedure established by this chapter for the amendment of restrictive covenants from being used to establish a regular or special assessment. Sec. 207.008. BUILDING LINES. Prohibits the procedure established by this chapter for the amendment of restrictive covenants from being used to modify a building line established by a restrictive covenant, municipal map, or subdivision plat. Sec. 207.009. DEFENSE TO ENFORCEMENT OF RESTRICTIVE COVENANT. Prohibits an owner from asserting as a defense to the enforcement of a specified restrictive covenant that the owner or predecessor in title signed a blank signature page or similar procedural defect if the signature page was attached to a dedicatory instrument adopted by a historic neighborhood preservation association and: (1) the dedicatory instrument has been recorded for more than two years; or (2) the restrictive covenant is referenced in the owner's title insurance policy obtained by the owner when the property was purchased. SECTION 3. Emergency clause. Effective date: upon passage.