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  H.B. No. 503
 
 
 
 
AN ACT
  relating to the ability of a property owners' association to
  contract with an association board member or certain other persons
  or entities associated with the board member.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 209.002, Property Code, is amended by
  adding Subdivision (4-a) to read as follows:
               (4-a) "Development period" means a period stated in a
  declaration during which a declarant reserves:
                     (A)  a right to facilitate the development,
  construction, and marketing of the subdivision; and
                     (B)  a right to direct the size, shape, and
  composition of the subdivision.
         SECTION 2.  Chapter 209, Property Code, is amended by adding
  Section 209.0052 to read as follows:
         Sec. 209.0052.  ASSOCIATION CONTRACTS.  (a)  This section
  does not apply to a contract entered into by an association during
  the development period.
         (b)  An association may enter into an enforceable contract
  with a current association board member, a person related to a
  current association board member within the third degree by
  consanguinity or affinity, as determined under Chapter 573,
  Government Code, a company in which a current association board
  member has a financial interest in at least 51 percent of profits,
  or a company in which a person related to a current association
  board member within the third degree by consanguinity or affinity,
  as determined under Chapter 573, Government Code, has a financial
  interest in at least 51 percent of profits only if the following
  conditions are satisfied:
               (1)  the board member, relative, or company bids on the
  proposed contract and the association has received at least two
  other bids for the contract from persons not associated with the
  board member, relative, or company, if reasonably available in the
  community;
               (2)  the board member:
                     (A)  is not given access to the other bids;
                     (B)  does not participate in any board discussion
  regarding the contract; and
                     (C)  does not vote on the award of the contract;
               (3)  the material facts regarding the relationship or
  interest with respect to the proposed contract are disclosed to or
  known by the association board and the board, in good faith and with
  ordinary care, authorizes the contract by an affirmative vote of
  the majority of the board members who do not have an interest
  governed by this subsection; and
               (4)  the association board certifies that the other
  requirements of this subsection have been satisfied by a resolution
  approved by an affirmative vote of the majority of the board members
  who do not have an interest governed by this subsection.
         SECTION 3.  The change in law made by this Act applies only
  to a contract entered into on or after the effective date of this
  Act.
         SECTION 4.  This Act takes effect September 1, 2013.
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
 
         I certify that H.B. No. 503 was passed by the House on May 10,
  2013, by the following vote:  Yeas 115, Nays 23, 3 present, not
  voting.
 
  ______________________________
  Chief Clerk of the House   
 
 
         I certify that H.B. No. 503 was passed by the Senate on May
  22, 2013, by the following vote:  Yeas 30, Nays 1.
 
  ______________________________
  Secretary of the Senate    
  APPROVED:  _____________________
                     Date          
   
            _____________________
                   Governor