HBA-MPM, CCH H.B. 879 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 879 By: Dutton Business & Industry 4/5/2001 Introduced BACKGROUND AND PURPOSE Under current law, a homeowners' association may foreclose on a homeowners' property if the homeowner fails to pay certain fees assessed by the association. Litigation can increase the homeowner's costs by adding legal fees to the fee already owed. Foreclosures may also cause a homeowner to seek protection under bankruptcy law. Many disputes between homeowners and associations could possibly be resolved without resorting to litigation, conserving the resources of both parties as well as the courts. House Bill 879 prohibits a homeowners' association from filing a lien against the real property of a homeowner without both parties first engaging in an arbitration process. 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. ANALYSIS House Bill 879 amends the Property Code to prohibit a property owners' association (association) from filing a lien on real property for an assessment levied by the association against the real property unless the association submits to binding arbitration to establish the existence and amount of any debt. The bill provides that an association must give written notice of its intention to initiate arbitration proceedings by certified mail with return receipt requested to the property owner's last known mailing address. The property owner is required to notify the association within 10 days after receiving the notice as to whether the owner will participate in arbitration proceedings. If the property owner refuses to participate or fails to provide notice to the association within the 10-day period, the association is not required to withhold filing a lien on the owner's property. The bill authorizes the association and property owner to agree on the appointment of an arbitrator. If the parties fail to reach an agreement before the 30th day after the association notifies the property owner of its intention to initiate arbitration proceedings, either party is authorized to file a petition in a district court in the appropriate county requesting the court to appoint a qualified arbitrator. The bill requires the court to appoint an arbitrator before the 31st day after the date the petition is filed. The cost of arbitration is required to be paid as provided by the arbitrator. EFFECTIVE DATE September 1, 2001.