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  H.B. No. 2075
 
 
 
 
AN ACT
  relating to the operation of certain condominium unit owners'
  associations.
  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 82.002(c), Property Code, is amended to
  read as follows:
         (c)  This section and the following sections apply to a
  condominium in this state for which the declaration was recorded
  before January 1, 1994:  Sections 82.005, 82.006, 82.007, 82.053,
  82.054, 82.102(a)(1)-(7), (a)(12)-(21), (f), and (g) [and
  (12)-(22)], 82.108, 82.111, 82.113, 82.114, 82.116, 82.118,
  82.157, and 82.161.  The definitions prescribed by Section 82.003
  apply to a condominium in this state for which the declaration was
  recorded before January 1, 1994, to the extent the definitions do
  not conflict with the declaration.  The sections listed in this
  subsection apply only with respect to events and circumstances
  occurring on or after January 1, 1994, and do not invalidate
  existing provisions of the declaration, bylaws, or plats or plans
  of a condominium for which the declaration was recorded before
  January 1, 1994.
         SECTION 2.  Section 82.003(a), Property Code, is amended by
  amending Subdivision (11) and adding Subdivision (11-a) to read as
  follows:
               (11)  "Declaration" means an [a recorded] instrument,
  however denominated, that creates a condominium, and any [recorded]
  amendment to that instrument.
               (11-a) "Dedicatory instrument" means each document
  governing the establishment, maintenance, or operation of a
  condominium regime. The term includes a declaration or similar
  instrument subjecting real property to:
                     (A)  restrictive covenants, bylaws, or similar
  instruments governing the administration or operation of a unit
  owners' association;
                     (B)  properly adopted rules and regulations of the
  unit owners' association; or
                     (C)  all lawful amendments to the covenants,
  bylaws, instruments, rules, or regulations.
         SECTION 3.  Section 82.102, Property Code, is amended by
  amending Subsection (a) and adding Subsections (f) and (g) to read
  as follows:
         (a)  Unless otherwise provided by the declaration, the
  association, acting through its board, may:
               (1)  adopt and amend bylaws;
               (2)  adopt and amend budgets for revenues,
  expenditures, and reserves, and collect assessments for common
  expenses from unit owners;
               (3)  hire and terminate managing agents and other
  employees, agents, and independent contractors;
               (4)  institute, defend, intervene in, settle, or
  compromise litigation or administrative proceedings in its own name
  on behalf of itself or two or more unit owners on matters affecting
  the condominium;
               (5)  make contracts and incur liabilities relating to
  the operation of the condominium;
               (6)  regulate the use, maintenance, repair,
  replacement, modification, and appearance of the condominium;
               (7)  adopt and amend rules regulating the use,
  occupancy, leasing or sale, maintenance, repair, modification, and
  appearance of units and common elements, to the extent the
  regulated actions affect common elements or other units;
               (8)  cause additional improvements to be made as a part
  of the common elements;
               (9)  acquire, hold, encumber, and convey in its own
  name any right, title, or interest to real or personal property,
  except common elements of the condominium;
               (10)  grant easements, leases, licenses, and
  concessions through or over the common elements;
               (11)  impose and receive payments, fees, or charges for
  the use, rental, or operation of the common elements and for
  services provided to unit owners;
               (12)  impose interest and late charges for late
  payments of assessments, returned check charges, and, if notice and
  an opportunity to be heard are given in accordance with Subsection
  (d), reasonable fines for violations of the declaration, bylaws,
  and rules of the association;
               (13)  adopt and amend rules regulating the collection
  of delinquent assessments and the application of payments;
               (14)  adopt and amend rules regulating the termination
  of utility service to a unit, the owner of which is delinquent in
  the payment of an assessment that is used, in whole or in part, to
  pay the cost of that utility;
               (15)  impose reasonable charges for preparing,
  recording, or copying declaration amendments, resale certificates,
  or statements of unpaid assessments;
               (16)  enter a unit for bona fide emergency purposes
  when conditions present an imminent risk of harm or damage to the
  common elements, another unit, or the occupants;
               (17)  [assign its right to future income, including the
  right to receive common expense assessments, but only to the extent
  the declaration so provides;
               [(18)]  suspend the voting privileges of or the use of
  certain general common elements by an owner delinquent for more
  than 30 days in the payment of assessments;
               (18) [(19)]  purchase insurance and fidelity bonds it
  considers appropriate or necessary;
               (19) [(20)]  exercise any other powers conferred by the
  declaration or bylaws;
               (20) [(21)]  exercise any other powers that may be
  exercised in this state by a corporation of the same type as the
  association; and
               (21) [(22)]  exercise any other powers necessary and
  proper for the government and operation of the association.
         (f)  Except as provided by Subsection (g), the association by
  resolution of the board of directors may:
               (1)  borrow money; and
               (2)  assign as collateral for the loan authorized by
  the resolution:
                     (A)  the association's right to future income,
  including the right to receive assessments; and
                     (B)  the association's lien rights.
         (g)  If a dedicatory instrument requires a vote of members of
  the association to borrow money or assign the association's right
  to future income or the association's lien rights, the loan or
  assignment must be approved as provided by the dedicatory
  instrument. The board may determine whether a vote for that purpose
  may be cast electronically, by absentee ballot, in person or by
  proxy at a meeting called for that purpose, or by written consent.
  If a lower approval threshold is not provided by the dedicatory
  instrument, approval requires the consent of owners holding 67
  percent of all voting interests.
         SECTION 4.  Section 82.111, Property Code, is amended by
  amending Subsections (c), (i), and (j) and adding Subsections (k),
  (l), and (m) to read as follows:
         (c)  If the insurance described by Subsections (a) and (b) is
  not reasonably available, the association shall cause notice of
  that fact to be delivered or mailed to all unit owners and
  lienholders. The declaration may require the association to carry
  any other insurance, and the association in any event may carry any
  other insurance the board considers appropriate to protect the
  condominium, the association, or the unit owners. Insurance
  policies maintained under Subsection (a) may provide for
  commercially reasonable deductibles as the board determines
  appropriate or necessary. This section does not affect the right of
  a holder of a mortgage on a unit to require a unit owner to acquire
  insurance in addition to that provided by the association.
         (i)  Except as provided by this section, any [Any] portion of
  the condominium for which insurance is required that is damaged or
  destroyed shall be promptly repaired or replaced by the association
  unless the condominium is terminated, repair or replacement would
  be illegal under any state or local health or safety statute or
  ordinance, or at least 80 percent of the unit owners[, including
  each owner of a unit or assigned limited common element that will
  not be rebuilt or repaired,] vote to not rebuild. Each owner of a
  unit may vote, regardless of whether the owner's unit or limited
  common element has been damaged or destroyed. A vote may be cast
  electronically or by written ballot if a meeting is not held for
  that purpose or in person or by proxy at a meeting called for that
  purpose. A vote to not rebuild does not increase an insurer's
  liability to loss payment obligation under a policy, and the vote
  does not cause a presumption of total loss. Except as provided by
  this section, the [The] cost of repair or replacement in excess of
  the insurance proceeds [and reserves] is a common expense, and the
  board may levy an assessment to pay the expenses in accordance with
  each owner's common expense liability. If the entire condominium is
  not repaired or replaced, any insurance proceeds attributable to
  the damaged common elements shall be used to restore the damaged
  area to a condition compatible with the remainder of the
  condominium, the insurance proceeds attributable to units and
  limited common elements that are not rebuilt shall be distributed
  to the owners of those units and the owners of the units to which
  those limited common elements were assigned, or to their
  mortgagees, as their interests may appear, and the remainder of the
  proceeds shall be distributed to all the unit owners in accordance
  with each owner's undivided interest in the common elements unless
  otherwise provided in the declaration [as their interests may
  appear]. If the unit owners vote to not rebuild any unit, that
  unit's allocated interests shall be automatically reallocated on
  the vote as if the unit had been condemned, and the association
  shall prepare, execute, and record an amendment to the declaration
  reflecting the reallocation. Section 82.068 governs the
  distribution of insurance proceeds if the condominium is
  terminated.
         (j)  If the cost to repair damage to a unit or common element
  covered by the association's insurance is less than the amount of
  the applicable insurance deductible, the party who would be
  responsible for the repair in the absence of insurance shall pay the
  cost for the repair of the unit or common element.
         (k)  If the association's insurance provides coverage for
  the loss and the cost to repair the damage to a unit or common
  element is more than the amount of the applicable insurance
  deductible, the dedicatory instruments determine payment for the
  cost of the association's deductible and costs incurred before
  insurance proceeds are available. If the dedicatory instruments
  are silent, the board of directors of the association by resolution
  shall determine the payment of those costs, or if the board does not
  approve a resolution, the costs are a common expense. A resolution
  under this subsection is considered a dedicatory instrument and
  must be recorded in each location in which the declaration is
  recorded.
         (l)  If damage to a unit or the common elements is due wholly
  or partly to an act or omission of any unit owner or a guest or
  invitee of the unit owner, the association may assess the
  deductible expense and any other expense in excess of insurance
  proceeds against the owner and the owner's unit.
         (m)  The provisions of this section may be varied or waived
  if all the units in a condominium are restricted to nonresidential
  use.
         SECTION 5.  Section 82.113(g), Property Code, is amended to
  read as follows:
         (g)  The owner of a unit [used for residential purposes and]
  purchased [by an association] at a foreclosure sale of the
  association's lien for assessments may redeem the unit not later
  than the 90th day after the date of the foreclosure sale. If the
  association is the purchaser [To redeem the unit], the owner must
  pay to the association to redeem the unit all amounts due the
  association at the time of the foreclosure sale, interest from the
  date of foreclosure sale to the date of redemption at the rate
  provided by the declaration for delinquent assessments, reasonable
  attorney's fees and costs incurred by the association in
  foreclosing the lien, any assessment levied against the unit by the
  association after the foreclosure sale, and any reasonable cost
  incurred by the association as owner of the unit, including costs of
  maintenance and leasing. If a party other than the association is
  the purchaser, the redeeming owner must pay to the purchaser of the
  unit at the foreclosure sale an amount equal to the amount bid at
  the sale, interest on the bid amount computed from the date of the
  foreclosure sale to the date of redemption at the rate of six
  percent, any assessment paid by the purchaser after the date of
  foreclosure, and any reasonable costs incurred by the purchaser as
  the owner of the unit, including costs of maintenance and leasing.
  The redeeming owner must also pay to the association all
  assessments that are due as of the date of the redemption and
  reasonable attorney's fees and costs incurred by the association in
  foreclosing the lien. On redemption, the purchaser of the unit at
  the foreclosure sale [association] shall execute a deed with no
  warranty to the redeeming unit owner. The exercise of the right of
  redemption is not effective against a subsequent purchaser or
  lender for value without notice of the redemption after the
  redemption period expires unless the redeeming unit owner records
  the deed from the purchaser of the unit at the foreclosure sale 
  [association] or an affidavit stating that the owner has exercised
  the right of redemption. A unit that has been redeemed remains
  subject to all liens and encumbrances on the unit before
  foreclosure. All rents and other income collected from the unit by
  the purchaser of the unit at the foreclosure sale [association]
  from the date of foreclosure sale to the date of redemption belong
  to the purchaser of the unit at the foreclosure sale [association],
  but the rents and income shall be credited against the redemption
  amount. The purchaser of [An association purchasing] a unit at a
  sale foreclosing an association's assessment [its] lien may not
  transfer ownership of the unit during the redemption period to a
  person other than a redeeming owner.
         SECTION 6.  Section 82.116, Property Code, is amended by
  adding Subsections (a-1) and (a-2) to read as follows:
         (a-1)  The county clerk of each county in which a management
  certificate is filed as required by this section shall record the
  management certificate in the real property records of the county
  and index the document as a "Condominium Association Management
  Certificate."
         (a-2)  To ensure that all management certificates are
  recorded and indexed as provided by Subsection (a-1), each
  condominium unit owners' association that recorded a management
  certificate under this section before September 1, 2013, shall
  record a new management certificate on or before January 1, 2014.
  This subsection expires January 1, 2015.
         SECTION 7.  (a) The change in law made by this Act to Section
  82.111, Property Code, applies only to payment of costs incurred on
  or after the effective date of this Act. Payment of costs incurred
  before the effective date of this Act is governed by the law in
  effect immediately before the effective date of this Act, and that
  law is continued in effect for that purpose.
         (b)  Section 82.113(g), Property Code, as amended by this
  Act, applies only to a condominium unit sold at a foreclosure sale
  on or after the effective date of this Act. A unit sold at a
  foreclosure sale before the effective date of this Act is subject to
  the law in effect immediately before the effective date of this Act,
  and that law is continued in effect for that purpose.
         SECTION 8.  This Act takes effect September 1, 2013.
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
 
         I certify that H.B. No. 2075 was passed by the House on May 9,
  2013, by the following vote:  Yeas 131, Nays 6, 2 present, not
  voting.
 
  ______________________________
  Chief Clerk of the House   
 
 
         I certify that H.B. No. 2075 was passed by the Senate on May
  22, 2013, by the following vote:  Yeas 31, Nays 0.
 
  ______________________________
  Secretary of the Senate    
  APPROVED:  _____________________
                     Date          
   
            _____________________
                   Governor