H.B. No. 2869
 
 
 
 
AN ACT
  relating to the powers and duties of certain master mixed-use
  property owners' associations.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Title 11, Property Code, is amended by adding
  Chapter 215 to read as follows:
  CHAPTER 215. MASTER MIXED-USE PROPERTY OWNERS' ASSOCIATIONS
         Sec. 215.001.  DEFINITIONS. In this chapter:
               (1)  "Appraised value" means the property value
  determined by the appraisal district that establishes property
  values for taxing entities levying taxes on property in a mixed-use
  development.
               (2)  "Property owners' association" or "association"
  means, unless otherwise indicated, a master mixed-use property
  owners' association.
               (3)  "Dedicatory instrument" has the meaning assigned
  by Section 209.002.
               (4)  "Self-help" means the process by which a property
  owners' association takes remedial action with regard to property
  governed by the association.
         Sec. 215.002.  APPLICABILITY OF CHAPTER. (a)  This chapter
  applies to a property owners' association that:
               (1)  includes:
                     (A)  commercial properties, including hotel and
  retail properties, that constitute at least 35 percent of the total
  appraised property value of the mixed-use development governed by
  the association;
                     (B)  single-family attached and detached
  properties that constitute at least 25 percent of the total
  appraised property value of the mixed-use development governed by
  the association; and
                     (C)  multifamily properties that constitute at
  least 10 percent of the total appraised property value of the
  mixed-use development governed by the association;
               (2)  governs at least 6,000 acres of deed-restricted
  property;
               (3)  has at least 10 incorporated residential or
  commercial property owners' associations that are members of and
  subject to the dedicatory instruments of the master mixed-use
  property owners' association;
               (4)  has at least 3,400 platted and developed
  single-family residential properties and at least 400 separately
  platted commercial properties, including office, industrial,
  hotel, and retail properties, which together constitute at least 30
  million square feet of building area available for rental; and
               (5)  participates in the maintenance of public space,
  including parks, medians, and lakefronts, owned by local, including
  county, or state governmental entities.
         (b)  This chapter applies to property that is:
               (1)  governed by a property owners' association
  described by Subsection (a);
               (2)  located in a master mixed-use development; and
               (3)  subject to a provision, including a restriction,
  in a declaration that:
                     (A)  requires mandatory membership in the
  association; and
                     (B)  authorizes the association to collect a
  regular or special assessment on all or a majority of the property
  in the development.
         (c)  Except as otherwise provided by this chapter, this
  chapter applies only to a master mixed-use property owners'
  association and not to the independent property owners'
  associations that are members of the master mixed-use property
  owners' association.
         Sec. 215.003.  APPLICABILITY OF CHAPTER 209. Sections
  209.007, 209.008, 209.011, and 209.012 apply only to single-family
  residential properties governed by a property owners' association
  subject to this chapter.
         Sec. 215.004.  CONFLICTS OF LAW. Notwithstanding any other
  provision of law, the provisions of this chapter prevail over a
  conflicting or inconsistent provision of law relating to
  independent property owners' associations.
         Sec. 215.005.  BOARD POWERS. In addition to any other powers
  provided by applicable law and this chapter, and unless otherwise
  provided by the dedicatory instruments of the property owners'
  association, the association, acting through its board of
  directors, may:
               (1)  adopt and amend bylaws;
               (2)  adopt and amend budgets for revenues,
  expenditures, and reserves and collect assessments for common
  expenses from property owners;
               (3)  adopt reasonable rules;
               (4)  hire and terminate managing agents and other
  agents, employees, and independent contractors;
               (5)  institute, defend, intervene in, settle, or
  compromise litigation or administrative proceedings on matters
  affecting a property governed by the association;
               (6)  make contracts and incur liabilities relating to
  the operation of the association;
               (7)  regulate the use, maintenance, repair,
  replacement, modification, and appearance of the property governed
  by the association;
               (8)  make improvements to be included as a part of the
  common area;
               (9)  acquire, hold, encumber, and convey in its own
  name any right, title, or interest to real or personal property;
               (10)  purchase an investment property that is not part
  of the common area;
               (11)  grant easements, leases, licenses, and
  concessions through or over the common elements;
               (12)  impose and receive payments, fees, or charges for
  the use, rental, or operation of the common area and for services
  provided to property owners;
               (13)  impose interest, late charges, and, if
  applicable, returned check charges for late payments of regular
  assessments or special assessments;
               (14)  charge costs to an owner's assessment account and
  collect the costs in any manner provided in the restrictions for the
  collection of assessments;
               (15)  adopt and amend rules regulating the collection
  of delinquent assessments;
               (16)  impose reasonable charges for preparing,
  recording, or copying amendments to resale certificates or
  statements of unpaid assessments;
               (17)  purchase insurance and fidelity bonds, including
  directors' and officers' liability insurance, that the board
  considers appropriate or necessary;
               (18)  subject to the requirements of the provisions
  described by Section 1.008(d), Business Organizations Code, and by
  majority vote of the board, indemnify a director or officer of the
  association who was, is, or may be made a named defendant or
  respondent in a proceeding because the person is or was a director
  or officer;
               (19)  if the restrictions vest the architectural
  control authority in the association:
                     (A)  implement written architectural control
  guidelines for its own use, or record the guidelines in the real
  property records of the applicable county; and
                     (B)  modify the guidelines as the needs of the
  development change;
               (20)  exercise self-help with regard to property
  governed by the association;
               (21)  exercise other powers conferred by the dedicatory
  instruments;
               (22)  exercise other powers necessary and proper for
  the governance and operation of the association; and
               (23)  exercise any other powers that may be exercised
  in this state by a corporation of the same type as the association.
         Sec. 215.006.  ANNUAL MEETING OF ASSOCIATION MEMBERS; NOTICE
  OF ANNUAL OR SPECIAL MEETING. (a) An annual meeting of members of a
  property owners' association must be conducted in accordance with
  the association's dedicatory instruments.
         (b)  Unless otherwise provided by a dedicatory instrument,
  an annual meeting of the property owners' association members is
  open to association members and must be held in a county in which
  all or part of the property governed by the association is located
  or in a county adjacent to that county.
         (c)  Unless otherwise provided by a dedicatory instrument,
  the board shall give members notice of the date, time, place, and
  subject of an annual or special meeting of the members. The notice
  must be delivered to each member not later than the 10th day and not
  earlier than the 60th day before the date of the meeting.
         (d)  A notice under Subsection (c) must be posted in a
  conspicuous manner reasonably designed to provide notice to
  association members:
               (1)  in a place located outside the corporate offices
  of the association that is accessible by the general membership
  during normal business hours; or
               (2)  on any Internet website maintained by the
  association.
         (e)  Unless otherwise provided by a dedicatory instrument,
  any number of the members may attend the meeting by use of
  videoconferencing or a similar telecommunication method for
  purposes of establishing full participation in the meeting.
         Sec. 215.007.  BOARD MEETINGS. (a)  A meeting of the board
  of directors of a property owners' association must be conducted in
  accordance with the association's dedicatory instruments.
         (b)  Unless otherwise provided by a dedicatory instrument,
  elected directors who represent the commercial and residential
  membership attend and conduct the business of the property owners'
  association at a meeting under this section.
         (c)  In this section, a board meeting has the meaning
  assigned by a dedicatory instrument.  Notwithstanding this
  subsection, the term does not include the gathering of a quorum of
  the board at any other venue, including at a social function
  unrelated to the business of the association, or the attendance by a
  quorum of the board at a regional, state, or national convention,
  workshop, ceremonial event, or press conference, if formal action
  is not taken and any discussion of association business is
  incidental to the social function, convention, workshop,
  ceremonial event, or press conference.
         (d)  Unless otherwise provided by a dedicatory instrument,
  the board shall keep a record of each regular, emergency, or special
  board meeting in the form of written minutes or an audio recording
  of the meeting. A record of a meeting must state the subject of each
  motion or inquiry, regardless of whether the board takes action on
  the motion or inquiry, and indicate each vote, order, decision, or
  other action taken by the board. The board shall make meeting
  records, including approved minutes, available to a member for
  inspection and copying, at the member's expense, during the normal
  business hours of the association on the member's written request
  to the board or the board's representative. The board shall approve
  the minutes of a board meeting not later than the next regular board
  meeting.
         (e)  Unless otherwise provided by a dedicatory instrument,
  before the board calls an executive session, the board shall
  convene in a regular or special board meeting for which notice has
  been given as provided by this section. During that board meeting,
  the presiding board member may call an executive session by
  announcing that an executive session will be held to deliberate a
  matter described by Subsection (f) and identifying the specific
  subdivision of Subsection (f) under which the executive session
  will be held. A vote or other action item may not be taken in
  executive session. An executive session is not subject to the
  requirements of Subsection (d).
         (f)  Unless otherwise provided by a dedicatory instrument, a
  property owners' association board may meet in executive session to
  deliberate:
               (1)  anticipated or pending litigation, settlement
  offers, or interpretations of the law with the association's legal
  counsel;
               (2)  complaints or charges against or issues regarding
  a board member or an agent, employee, contractor, or other
  representative of the association;
               (3)  all financial matters concerning a specific
  property owner;
               (4)  a payment plan for an association member who has a
  financial obligation to the association;
               (5)  a foreclosure of a lien;
               (6)  an enforcement action against an association
  member, including for nonpayment of amounts due;
               (7)  the purchase, exchange, lease, or value of real
  property, if the board determines in good faith that deliberation
  in an open board meeting may have a detrimental effect on the
  association;
               (8)  business and financial issues relating to the
  negotiation of a contract, if the board determines in good faith
  that deliberation in an open board meeting may have a detrimental
  effect on the position of the association;
               (9)  matters involving the invasion of privacy of an
  individual owner;
               (10)  an employee matter;  and
               (11)  any other matter the board considers necessary or
  reasonable to further assist the association's operation.
         Sec. 215.008.  VOTING. (a) The number of votes to which an
  individual or corporation who is a member of a property owners'
  association is entitled is determined by the dedicatory instruments
  of the association.
         (b)  Each corporation or individual who is a member of the
  property owners' association may vote by proxy as provided for
  nonprofit corporations under Sections 22.160(b) and (c), Business
  Organizations Code.
         (c)  Notwithstanding any provision of the certificate of
  formation or bylaws to the contrary, a member vote on any matter may
  be conducted by mail, by facsimile transmission, by e-mail, or by
  any combination of those methods.
         Sec. 215.009.  RESTRICTIVE COVENANTS. (a) A property
  owners' association may enforce its restrictive covenants as
  follows:
               (1)  by exercising discretionary authority relating to
  a restrictive covenant unless a court has determined by a
  preponderance of the evidence that the exercise of discretionary
  authority was arbitrary, capricious, or discriminatory; and
               (2)  by initiating, defending, or intervening in
  litigation or an administrative proceeding affecting the
  enforcement of a restrictive covenant or the protection,
  preservation, or operation of property subject to the association's
  dedicatory instruments.
         (b)  If the association prevails in an action to enforce
  restrictive covenants, the association may recover reasonable
  attorney's fees and costs incurred.
         (c)  An association may use self-help to enforce its
  restrictive covenants against a residential or commercial property
  owner as necessary to prevent immediate harm to a person or
  property, or as otherwise reasonable. If a property owner commits a
  subsequent repeat violation of the restrictive covenants within 12
  months of the initial violation, the association is not required to
  provide the property owner with advance notice before the
  association implements self-help.
         (d)  For purposes of Subsection (c), an advance, annual
  notice of maintenance requirements is considered notice to the
  extent notice is required.
         Sec. 215.010.  ATTORNEY'S FEES IN BREACH OF RESTRICTIVE
  COVENANT ACTION. In an action based on breach of a restrictive
  covenant, the prevailing party is entitled to reasonable attorney's
  fees, costs, and actual damages.
         Sec. 215.011.  COMMON AREAS. A property owners' association
  may adopt reasonable rules regulating common areas.
         Sec. 215.012.  RESALE CERTIFICATES. A property owners'
  association shall provide resale certificates only for residential
  properties and in the manner provided by Section 207.003.
         Sec. 215.013.  MANAGEMENT CERTIFICATE. (a) A property
  owners' association shall record in each county in which any
  portion of the development governed by the association is located a
  management certificate, signed and acknowledged by an officer of
  the association, stating:
               (1)  the name of the development;
               (2)  the name of the association;
               (3)  the recording data for the declaration and all
  supplementary declarations;
               (4)  the applicability of any supplementary
  declarations to residential communities;
               (5)  the name and mailing address of the association;
  and
               (6)  other information the association considers
  appropriate.
         (b)  A 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 information in the
  recorded certificate required by Subsection (a).
         (c)  The association and its officers, directors, employees,
  and agents are not liable to any person or corporation for delay in
  recording or failure to record a management certificate unless the
  delay or failure is willful or caused by gross negligence.
         Sec. 215.014.  PRIORITY OF PAYMENTS. Unless otherwise
  provided in writing by the property owner at the time payment is
  made, a payment received by a property owners' association from the
  owner shall be applied to the owner's debt in the following order of
  priority:
               (1)  any delinquent assessment;
               (2)  any current assessment;
               (3)  any attorney's fees incurred by the association
  associated solely with assessments or any other charge that could
  provide the basis for foreclosure;
               (4)  any fines assessed by the association;
               (5)  any attorney's fees incurred by the association
  that are not subject to Subdivision (3); and
               (6)  any other amount owed to the association.
         Sec. 215.015.  FORECLOSURE. A property owners' association
  may not foreclose an association assessment lien unless the
  association first obtains a court order of sale.
         SECTION 2.  This Act takes effect September 1, 2011.
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
 
         I certify that H.B. No. 2869 was passed by the House on April
  26, 2011, by the following vote:  Yeas 148, Nays 0, 2 present, not
  voting; and that the House concurred in Senate amendments to H.B.
  No. 2869 on May 25, 2011, by the following vote:  Yeas 145, Nays 0,
  3 present, not voting.
 
  ______________________________
  Chief Clerk of the House   
 
         I certify that H.B. No. 2869 was passed by the Senate, with
  amendments, on May 24, 2011, by the following vote:  Yeas 31, Nays
  0
  .
 
  ______________________________
  Secretary of the Senate   
  APPROVED: __________________
                  Date       
   
           __________________
                Governor