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