HBA-ATS H.B. 1017 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 1017 By: Yarbrough Business & Industry 3/25/1999 Introduced BACKGROUND AND PURPOSE In the past decade, the number of property owners' associations in Texas have increased. Because these associations assess dues and fees to their members in exchange for services provided to the community of homeowners, prospective buyers need to be aware of the obligations they may incur before they buy a home. Although an association is required to complete a standard resale certificate for property subject to mandatory assessments, some associations have refused to complete the certificate. H.B. 1017 establishes a new chapter in the Property Code that applies to a subdivision whose property owners' association is entitled to levy regular or special assessments that are secured by a continuing lien on property in the subdivision. The association is required to give an owner, by the 10th day after the association receives the owner's written request, a resale certificate, and current copies of the restrictive covenants applying to the subdivision and of the bylaws and rules of the association. If an association fails to provide the certificate, an owner is authorized to seek legal remedies. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Title 11, Property Code, by adding Chapter 207, as follows: CHAPTER 207. DISCLOSURE OF INFORMATION BY PROPERTY OWNERS' ASSOCIATIONS Sec. 207.001. DEFINITIONS. Defines "restrictions," "subdivision," "owner," "dedicatory instrument," "property owners' association," "restrictive covenant," "regular assessment," "special assessment," and "resale certificate." Sec. 207.002. APPLICABILITY. Provides that Chapter 207 applies to a subdivision whose property owners' association (association) is entitled to levy regular or special assessments that are secured by a continuing lien on property in the subdivision. Sec. 207.003. DELIVERY OF SUBDIVISION INFORMATION TO OWNER. (a) Requires an association to give an owner, by the 10th day after the association receives the owner's written request, a resale certificate (certificate) that complies with Subsection (b), and current copies of the restrictive covenants applying to the subdivision and of the bylaws and rules of the association. (b) Requires a certificate to state the following information: the current operating budget of an association; any right of first refusal or other restraint in the restrictive covenant that restricts an owner's right to transfer property; the frequency and amount of any regular assessment; the amount of any unpaid regular or special assessment or fees currently due and payable by the owner; any capital expenditures approved by an association for a specified project; any unsatisfied judgments against an association; the nature of any pending suits against an association; any insurance coverage provided for the benefit of property owners; whether an association has knowledge that any alterations or improvements to an owner's property violate the restrictive covenants applying to the subdivision or the bylaws or rules of the use of the association; whether an association has received notice from a governmental authority concerning violations of health or building codes with respect to an owner's property or any common areas owned by the association; whether the subdivision is built on leased land; and the name, mailing address, and telephone number of an association's managing agent, if any. Sec. 207.004. OWNER'S REMEDIES. (a) Authorizes an owner, if an association fails to provide the information required by Section 207.003 by the 10th day after it receives the owner's written request, to seek a court order directing the association to furnish the required information, a judgment against the association for $1,000 or less, for court costs and attorney's fees, or a judgment authorizing the owner or the owner's assignee to conduct the amount awarded as damages or court costs and attorney's fees from any further regular or special assessments payable to the association. (b) Establishes the non-liability of an association and its officer or agent to an owner selling property in the subdivision for delay or failure to provide a certificate. (c) Prohibits an association from denying the validity of any statement in the certificate. (d) Provides that a certificate does not affect the right of an association to recover debts or claims that arise or become due after the date the certificate is prepared, or a lien on a property securing payment of future assessments held by the association. (e) Provides that a purchaser, lender, or title insurer who relies on a certificate is not liable for any debt or claim that is not disclosed in the certificate. SECTION 2. Effective date: September 1, 1999. SECTION 3. Emergency clause.