H.B. No. 1228
 
 
 
 
AN ACT
  relating to payment and collection of assessments and other charges
  owed to a property owners' association and foreclosure of a
  property owners' association assessment lien.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 209.003, Property Code, is amended by
  adding Subsection (e) to read as follows:
         (e)  Section 209.0062 does not apply to a property owners'
  association that is a mixed-use master association that existed
  before January 1, 1974, and that does not have the authority under a
  dedicatory instrument or other governing document to impose fines.
         SECTION 2.  Chapter 209, Property Code, is amended by adding
  Sections 209.0062, 209.0063, 209.0064, 209.0091, 209.0092,
  209.0093, and 209.0094 to read as follows:
         Sec. 209.0062.  ALTERNATIVE PAYMENT SCHEDULE FOR CERTAIN
  ASSESSMENTS. (a)  A property owners' association composed of more
  than 14 lots shall adopt reasonable guidelines to establish an
  alternative payment schedule by which an owner may make partial
  payments to the property owners' association for delinquent regular
  or special assessments or any other amount owed to the association
  without accruing additional monetary penalties.  For purposes of
  this section, monetary penalties do not include reasonable costs
  associated with administering the payment plan or interest.
         (b)  The minimum term for a payment plan offered by a
  property owners' association is three months.
         (c)  A property owners' association may not allow a payment
  plan for any amount that extends more than 18 months from the date
  of the owner's request for a payment plan. The association is not
  required
  to enter into a payment plan with an owner who failed to
  honor the terms of a previous payment plan during the two years
  following the owner's default under the previous payment plan.
         (d)  A property owners' association shall file the
  association's guidelines under this section in the real property
  records of each county in which the subdivision is located.
         (e)  A property owners' association's failure to file as
  required by this section the association's guidelines in the real
  property records of each county in which the subdivision is located
  does not prohibit a property owner from receiving an alternative
  payment schedule by which the owner may make partial payments to the
  property owners' association for delinquent regular or special
  assessments or any other amount owed to the association without
  accruing additional monetary penalties, as defined by Subsection
  (a).
         Sec. 209.0063.  PRIORITY OF PAYMENTS.  (a)  Except as
  provided by Subsection (b), 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 or third party collection
  costs incurred by the association associated solely with
  assessments or any other charge that could provide the basis for
  foreclosure;
               (4)  any attorney's fees incurred by the association
  that are not subject to Subdivision (3);
               (5)  any fines assessed by the association; and
               (6)  any other amount owed to the association.
         (b)  If, at the time the property owners' association
  receives a payment from a property owner, the owner is in default
  under a payment plan entered into with the association:
               (1)  the association is not required to apply the
  payment in the order of priority specified by Subsection (a); and
               (2)  in applying the payment, a fine assessed by the
  association may not be given priority over any other amount owed to
  the association.
         Sec. 209.0064.  THIRD PARTY COLLECTIONS. (a)  In this
  section, "collection agent" means a debt collector, as defined by
  Section 803 of the federal Fair Debt Collection Practices Act (15
  U.S.C. Section 1692a).
         (b)  A property owners' association may not hold an owner
  liable for fees of a collection agent retained by the property
  owners' association unless the association first provides written
  notice to the owner by certified mail, return receipt requested,
  that:
               (1)  specifies each delinquent amount and the total
  amount of the payment required to make the account current;
               (2)  describes the options the owner has to avoid
  having the account turned over to a collection agent, including
  information regarding availability of a payment plan through the
  association; and
               (3)  provides a period of at least 30 days for the owner
  to cure the delinquency before further collection action is taken.
         (c)  An owner is not liable for fees of a collection agent
  retained by the property owners' association if:
               (1)  the obligation for payment by the association to
  the association's collection agent for fees or costs associated
  with a collection action is in any way dependent or contingent on
  amounts recovered; or
               (2)  the payment agreement between the association and
  the association's collection agent does not require payment by the
  association of all fees to a collection agent for the action
  undertaken by the collection agent.
         (d)  The agreement between the property owners' association
  and the association's collection agent may not prohibit the owner
  from contacting the association board or the association's managing
  agent regarding the owner's delinquency.
         (e)  A property owners' association may not sell or otherwise
  transfer any interest in the association's accounts receivables for
  a purpose other than as collateral for a loan.
         Sec. 209.0091.  PREREQUISITES TO FORECLOSURE: NOTICE AND
  OPPORTUNITY TO CURE FOR CERTAIN OTHER LIENHOLDERS. (a) A property
  owners' association may not foreclose a property owners'
  association assessment lien on real property by giving notice of
  sale under Section 51.002 or commencing a judicial foreclosure
  action unless the association has:
               (1)  provided written notice of the total amount of the
  delinquency giving rise to the foreclosure to any other holder of a
  lien of record on the property whose lien is inferior or subordinate
  to the association's lien and is evidenced by a deed of trust; and
               (2)  provided the recipient of the notice an
  opportunity to cure the delinquency before the 61st day after the
  date the recipient receives the notice.
         (b)  Notice under this section must be sent by certified
  mail, return receipt requested, to the address for the lienholder
  shown in the deed records relating to the property that is subject
  to the property owners' association assessment lien.
         Sec. 209.0092.  JUDICIAL FORECLOSURE REQUIRED. (a)  Except
  as provided by Subsection (c) and subject to Section 209.009, a
  property owners' association may not foreclose a property owners' 
  association assessment lien unless the association first obtains a
  court order in an application for expedited foreclosure under the
  rules adopted by the supreme court under Subsection (b).  A property
  owners' association may use the procedure described by this
  subsection to foreclose any lien described by the association's
  dedicatory instruments.
         (b)  The supreme court, as an exercise of the court's
  authority under Section 74.024, Government Code, shall adopt rules
  establishing expedited foreclosure proceedings for use by a
  property owners' association in foreclosing an assessment lien of
  the association. The rules adopted under this subsection must be
  substantially similar to the rules adopted by the supreme court
  under Section 50(r), Article XVI, Texas Constitution.
         (c)  Expedited foreclosure is not required under this
  section if the owner of the property that is subject to foreclosure
  agrees in writing at the time the foreclosure is sought to waive
  expedited foreclosure under this section. A waiver under this
  subsection may not be required as a condition of the transfer of
  title to real property.
         Sec. 209.0093.  REMOVAL OR ADOPTION OF FORECLOSURE
  AUTHORITY.  A provision granting a right to foreclose a lien on real
  property for unpaid amounts due to a property owners' association
  may be removed from a dedicatory instrument or adopted in a
  dedicatory instrument by a vote of at least 67 percent of the total
  votes allocated to property owners in the property owners'
  association.  Owners holding at least 10 percent of all voting
  interests in the property owners' association may petition the
  association and require a special meeting to be called for the
  purposes of taking a vote for the purposes of this section.
         Sec. 209.0094.  ASSESSMENT LIEN FILING. A lien, lien
  affidavit, or other instrument evidencing the nonpayment of
  assessments or other charges owed to a property owners' association
  and filed in the official public records of a county is a legal
  instrument affecting title to real property.
         SECTION 3.  (a)  Section 209.0062, Property Code, as added by
  this Act, applies only to an assessment or other debt that becomes
  due on or after the effective date of this Act. An assessment or
  other debt that becomes due 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 209.0063, Property Code, as added by this Act,
  applies only to a payment received by a property owners'
  association on or after the effective date of this Act. A payment
  received by a property owners' association 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.
         (c)  Section 209.0091, Property Code, as added by this Act,
  applies only to a notice of sale given under Section 51.002,
  Property Code, on or after the effective date of this Act or a
  judicial foreclosure action commenced on or after the effective
  date of this Act.
         (d)  Section 209.0092, Property Code, as added by this Act,
  applies only to a foreclosure sale conducted on or after the
  effective date of this Act.  A foreclosure sale conducted 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.
         (e)  Section 209.0094, Property Code, as added by this Act,
  applies only to an instrument filed on or after January 1, 2012. An
  instrument filed before January 1, 2012, is governed by the law in
  effect on the date the instrument was filed, and that law is
  continued in effect for that purpose.
         SECTION 4.  Not later than January 1, 2012, the Supreme Court
  of Texas shall adopt rules of civil procedure under Section
  209.0092, Property Code, as added by this Act.
         SECTION 5.  (a)  Except as provided by Subsection (b) of
  this section, this Act takes effect January 1, 2012.
         (b)  Subsection (b), Section 209.0092, Property Code, as
  added by this Act, takes effect September 1, 2011.
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
 
         I certify that H.B. No. 1228 was passed by the House on May
  11, 2011, by the following vote:  Yeas 142, Nays 0, 2 present, not
  voting; and that the House concurred in Senate amendments to H.B.
  No. 1228 on May 26, 2011, by the following vote:  Yeas 133, Nays 7,
  3 present, not voting.
 
  ______________________________
  Chief Clerk of the House   
 
         I certify that H.B. No. 1228 was passed by the Senate, with
  amendments, on May 23, 2011, by the following vote:  Yeas 30, Nays
  1.
 
  ______________________________
  Secretary of the Senate   
  APPROVED: __________________
                  Date       
   
           __________________
                Governor