HBA-ATS H.B. 2224 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 2224
By: Solomons
Business & Industry
3/25/1999
Introduced



BACKGROUND AND PURPOSE 

A purchaser of a home may be unaware that the seller is a member of a
homeowners' association and that the purchase of the home obligates the
seller to be a member of the association. Even if a purchaser is aware of
this fact, the purchaser may not be aware of the extent of the restrictions
governing the maintenance and use of the property and of the
responsibilties associated with membership in the association. 

H.B.  2224 requires a seller of residential real property that is subject
to membership in a property owners' association to give to the purchaser,
before the transfer of the property, a written notice that informs the
purchaser of the restrictions and obligations associated with a purchase of
this kind of home.  This bill sets forth the required form for the notice
and specifies that it must be conspicuous and printed in 14-point
bold-faced type.  The purchaser is entitled to cancel and rescind the
purchase contract and receive a full refund of any purchase payment made to
the seller if the seller fails to provide the notice.  In addition, this
bill requires each county clerk to maintain suitable records called
"Property Owners' Association Records" in which the clerk is required to
record dedicatory instruments governing property owners' associations.  A
property owners' association is required to file the dedicatory instrument
in the real property records of each county in which the property to which
the dedicatory instrument relates is located. 

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.  Amends Subchapter A, Chapter 5, Property Code, by adding
Section 5.012, as follows: 

Sec. 5.012.  NOTICE OF OBLIGATIONS RELATED TO MEMBERSHIP IN PROPERTY
OWNERS' ASSOCIATION.  Requires a seller of residential real property that
is subject to membership in a property owners' association and that
comprises not more than one dwelling unit located in this state to give to
the purchaser before the transfer of the property a written notice as
prescribed by this section.  Specifies that the written notice must be
conspicuous and printed in 14-point bold-faced type.  Sets forth the
required form for the notice, which informs the purchaser of the
restrictions and obligations associated with a purchase of a home that is
subject to membership in a property owners' association.  Entitles the
purchaser to cancel and rescind the purchase contract and receive a full
refund of any purchase payment made to the seller if the seller fails to
provide the notice required by this section. 

SECTION 2.  Amends Chapter 202, Property Code, by adding Section 202.006,
as follows: 

Sec. 202.006.  PUBLIC RECORDS.  Requires each county clerk to maintain
suitable records called "Property Owners' Association Records" in which the
clerk is required to record dedicatory instruments governing property
owners' associations.  Requires a property owners' association to file the
dedicatory instrument in the real property records of each county in which
the property to which the dedicatory instrument relates is located. 

 SECTION 3.  Effective date: September 1, 1999, except for Section 5.012,
Property Code, which takes effect January 1, 2000.  Makes application of
Section 5.012 prospective, beginning January 1, 2000. 

SECTION 4.  Requires the county clerk of each county to establish the
"Property Owners' Association Records" for the county on or before December
1, 1999.   Requires each property owners' association to present for
recording with the county clerk each dedicatory instrument governing the
association that has not been previously recorded in the real property
records of the county by January 1, 2000. 

SECTION 5.  Emergency clause.