HBA-DMD H.B. 2460 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 2460
By: Yarbrough
Business & Industry
3/25/1999
Introduced



BACKGROUND AND PURPOSE 

Over the last decade, there has been a significant growth in the number of
property owners' associations (association) in Texas.  In 1987, the Texas
Supreme Court ruled to allow an association to place a lien and foreclose
on a property if the homeowner fails to pay association dues. Currently,
these associations are without oversight and regulation. If a homeowner
wishes to pursue legal action against an association, the only viable
recourse is to pursue legal action in district court, which is often beyond
the means of the common homeowner. 

H.B. 2460 sets forth that the justice court has original jurisdiction of
disputes between property owners and associations. This bill requires an
association to establish a dispute resolution committee to conduct hearings
on disputes relating to a fine or penalty imposed on a property owner by
the association and to adopt rules relating to hearings conducted by a
dispute resolution committee. It also requires the association to furnish
to the owner a current copy of the restrictive covenants applying to the
subdivision, a current copy of the bylaws and rules of the property owners'
association, and a resale certificate within a certain time period. H.B.
2460 authorizes an owner, if an association does not timely furnish the
information, to seek certain judicial remedies.  

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 Section 27.031, Government Code, as follows:

Sec. 27.031. JURISDICTION. (a)(4) Sets forth that in addition to the
jurisdiction and powers provided by the constitution and other law, the
justice court has original jurisdiction of  disputes between property
owners and property owners' associations (association), including the
enforcement of a lien for failure to pay association dues, in cases in
which the amount in controversy is otherwise within the justice court's
jurisdiction.  

(b) Establishes Subsection (a)(4) as an exception to a suit for the
enforcement of a lien on land over which a justice court does not have
jurisdiction.  

SECTION 2.  Amends Section 41.001, Property Code, by adding Subsection (d),
as follows: 

(d) Provides that an obligation to pay association fees for maintenance and
ownership of common facilities and services is not an encumbrance that may
be properly fixed on or executed against homestead property. Defines
"property owners' association."  

SECTION 3.  Amends Chapter 202, Property Code, by adding Sections 202.006
and 202.007, as follows: 

Sec. 202.006. MEMBERSHIP IN PROPERTY OWNERS' ASSOCIATION. Prohibits a
dedicatory instrument adopted on or after September 1, 1999, from requiring
an owner of real property located within the area covered by the dedicatory
instrument to join an association.  
 
Sec. 202.007. HEARING BEFORE PROPERTY OWNERS' ASSOCIATION. Requires an
association to establish a dispute resolution committee to conduct hearings
on disputes relating to a fine or penalty imposed on a property owner by
the association. Requires an association to adopt rules relating to
hearings conducted by a dispute resolution committee. Specifies the
provisions of the rules. 

SECTION 4.  Amends Title 11, Property Code, by adding Chapter 207, as
follows: 

CHAPTER 207.  DISCLOSURE OF INFORMATION BY PROPERTY 
OWNERS' ASSOCIATIONS

Sec. 207.001. DEFINITIONS. Defines "restrictions," "subdivision," "owner,"
"dedicatory instrument," "property owners' association," "restrictive
covenant," "regular assessment," "special assessment," and "resale
certificate." 

Sec. 207.002. APPLICABILITY. Sets forth that this chapter applies to a
subdivision whose association is entitled to levy regular or special
assessments that are secured by a continuing lien on property in the
subdivision.  

Sec. 207.003. DELIVERY OF SUBDIVISION INFORMATION TO OWNER. (a) Requires
the association, no later than 10 days after a written request for
subdivision information is received from an owner, to furnish to the owner
a current copy of the restrictive covenants applying to the subdivision, a
current copy of the bylaws and rules of the association, and a resale
certificate that complies with Subsection (b).  

(b) Provides that a resale certificate under Subsection (a) must contain
the current operating budget of the association and must state certain
provisions. 

Sec. 207.004. OWNER'S REMEDIES. (a) Authorizes an owner, if an association
does not timely furnish information in accordance with Section 207.003, to
seek certain judicial remedies.  

(b) Provides that the association is not liable to an owner selling
property in the subdivision for delay or failure to furnish a resale
certificate, and an officer or agent of the association is not liable for a
delay or failure to furnish a certificate. 
 
(c) Prohibits an association from denying the validity of any statement in
the certificate.  

(d) Sets forth that a resale certificate does not affect the right of an
association to recover debts or claims that arise or become due after the
date the resale certificate is prepared, or a lien on a property securing
payment of future assessments held by the association.  

(e) Provides that a purchaser, lender, or title insurer who relies on a
resale certificate is not liable for any debt or claim that is not
disclosed in the certificate.  

SECTION 5.Effective date: September 1, 1999. 
  Makes application of Sections 27.031 and 41.001(d) of this Act
prospective. 

SECTION 6.Emergency clause.