HBA-TBM S.B. 1834 77(R)    BILL ANALYSIS


Office of House Bill AnalysisS.B. 1834
By: Lindsay
Business & Industry
5/18/2001
Engrossed



BACKGROUND AND PURPOSE 

Currently, property owners' associations have authority to foreclose on a
homeowner's property if there are unpaid or late dues, fees, and fines.
The property is then sold for just enough to cover the dues, fees, or
fines, along with any attorney's fees or court costs.  Senate Bill 1834
requires an association to set a minimum bid price that must be in an
amount sufficient to recover the amount owed, and prohibits an association
from selling the property for less than the minimum bid price.   

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. 

ANALYSIS

Senate Bill 1834 amends the Property Code to provide that a property
owners' association (association) that forecloses a lien on real property
to secure payment of assessments due the association by the property owner
(owner) is required to establish a minimum bid price and is prohibited from
selling the property for less than the minimum bid price.  The bill sets
forth provisions relating to the establishment of the bid price and notice
of the sale.  The bill requires the association to mail a preforeclosure
notice to the owner not later than the 60th day before the date the notice
of sale is mailed to the owner and sets forth the contents of the notice.
The bill sets forth the responsibilities of the owner and the association
with regard to the foreclosure.  The bill sets forth provisions requiring
the association to contact the owner in person at the owner's residence and
by telephone if the property to be sold is the principal residence of the
owner.  The bill sets forth provisions regarding causes of action against
the association for setting a bid price that is less than what is needed by
the association to recover the amount owed.  The bill sets forth provisions
governing circumstances in which the association fails to sell the property
and if the owner continues to use the property as the principal place of
residence if the property is not sold at the foreclosure sale.  The bill
specifies the method used to distribute the proceeds of a sale of the
property to a party other than the association.  Assessments continue to
accrue against the property after a foreclosure sale, regardless of who
owns the property.   

EFFECTIVE DATE

On passage, or if the Act does not receive the necessary vote, the Act
takes effect September 1, 2001. The Act applies to a foreclosure sale
conducted on or after January 1, 2001.