CHAPTER 204. POWERS OF PROPERTY OWNERS' ASSOCIATION RELATING TO RESTRICTIVE COVENANTS IN CERTAIN SUBDIVISIONS

PROPERTY CODE

TITLE 11. RESTRICTIVE COVENANTS

CHAPTER 204. POWERS OF PROPERTY OWNERS' ASSOCIATION RELATING TO

RESTRICTIVE COVENANTS IN CERTAIN SUBDIVISIONS

Sec. 204.001. DEFINITIONS. In this chapter:

(1) "Restrictions," "residential real estate subdivision,"

"subdivision," "owner," "real property records," and "lienholder"

have the meanings assigned by Section 201.003.

(2) "Dedicatory instrument," "petition," and "restrictive

covenant" have the meanings assigned by Section 202.001.

(3) "Regular assessment" means an assessment, charge, fee, or

dues that each owner of property within a subdivision is required

to pay to the property owners' association on a regular basis and

that are to be used by the association for the benefit of the

subdivision in accordance with the original, extended, added, or

modified restrictions.

(4) "Special assessment" means an assessment, charge, fee, or

dues that each owner of property within a subdivision is required

to pay to the property owners' association, after a vote of the

membership, for the purpose of paying for the costs of capital

improvements to the common areas that are incurred or will be

incurred by the association during the fiscal year. A special

assessment may be assessed before or after the association incurs

the capital improvement costs.

Added by Acts 1995, 74th Leg., ch. 1040, Sec. 2, eff. Aug. 28,

1995.

Sec. 204.002. APPLICATION. (a) This chapter applies only to a

residential real estate subdivision, excluding a condominium

development governed by Title 7, Property Code, that is located

in whole or in part:

(1) in a county with a population of 2.8 million or more;

(2) in a county with a population of 250,000 or more that is

adjacent to the Gulf of Mexico and that is adjacent to a county

having a population of 2.8 million or more; or

(3) in a county with a population of 275,000 or more that:

(A) is adjacent to a county with a population of 3.3 million or

more; and

(B) contains part of a national forest.

(b) This chapter applies to a restriction regardless of its

effective date.

(c) This chapter does not apply to portions of a subdivision

that are zoned for or that contain a commercial structure, an

industrial structure, an apartment complex, or a condominium

development governed by Title 7, Property Code. For purposes of

this subsection, "apartment complex" means two or more dwellings

in one or more buildings that are owned by the same owner,

located on the same lot or tract, and managed by the same owner,

agent, or management company.

Added by Acts 1995, 74th Leg., ch. 1040, Sec. 2, eff. Aug. 28,

1995. Amended by Acts 2003, 78th Leg., ch. 547, Sec. 1, eff.

Sept. 1, 2003.

Amended by:

Acts 2005, 79th Leg., Ch.

1078, Sec. 1, eff. September 1, 2005.

Sec. 204.003. APPLICATION OF PROVISIONS OF RESTRICTIVE COVENANTS

IN CERTAIN CIRCUMSTANCES. (a) An express designation in a

document creating restrictions applicable to a residential real

estate subdivision that provides for the extension of, addition

to, or modification of existing restrictions by a designated

number of owners of real property in the subdivision prevails

over the provisions of this chapter.

(b) Notwithstanding Subsection (a), for a residential

subdivision described by Subsection (c), the provisions of this

chapter prevail over an express designation in a document

described by Subsection (a) if:

(1) the designated number of owners of real property in the

subdivision required for approval of an extension of, addition

to, or modification of the document is more than 75 percent; or

(2) the designation prohibits the extension of, addition to, or

modification of an existing restriction for a certain time period

and that time period has not expired.

(c) Subsection (b) applies to a residential subdivision that is

located in a county described by Section 204.002(a)(3) other than

a gated community with private streets.

(d) A document creating restrictions that provides for the

extension or renewal of restrictions and does not provide for

modification or amendment of restrictions may be modified under

this chapter, including modifying the provision that provides for

extension or renewal of the restrictions.

Added by Acts 1995, 74th Leg., ch. 1040, Sec. 2, eff. Aug. 28,

1995.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

767, Sec. 1, eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

1367, Sec. 5, eff. September 1, 2007.

Reenacted and amended by Acts 2009, 81st Leg., R.S., Ch.

87, Sec. 20.004, eff. September 1, 2009.

Sec. 204.004. PROPERTY OWNERS' ASSOCIATION. (a) A property

owners' association is a designated representative of the owners

of property in a subdivision and may be referred to as a

"homeowners association," "community association," "civic

association," "civic club," "association," "committee," or

similar term contained in the restrictions. The membership of the

association consists of the owners of property within the

subdivision.

(b) The association must be nonprofit and may be incorporated as

a Texas nonprofit corporation. An unincorporated association may

incorporate under the Texas Non-Profit Corporation Act (Article

1396-1.01 et seq., Vernon's Texas Civil Statutes).

(c) The association's board of directors or trustees must be

elected or appointed in accordance with the applicable provisions

of the restrictions and the association's articles of

incorporation or bylaws.

Added by Acts 1995, 74th Leg., ch. 1040, Sec. 2, eff. Aug. 28,

1995.

Sec. 204.005. EXTENSION OF, ADDITION TO, OR MODIFICATION OF

EXISTING RESTRICTIONS. (a) A property owners' association has

authority to approve and circulate a petition relating to the

extension of, addition to, or modification of existing

restrictions. A property owners' association is not required to

comply with Sections 201.009-201.012.

(b) A petition to extend, add to, or modify existing

restrictions approved and circulated by a property owners'

association is effective if:

(1) the petition is approved by the owners, excluding

lienholders, contract purchasers, and the owners of mineral

interests, of at least 75 percent of the real property in the

subdivision or a smaller percentage required by the original

dedicatory instrument; and

(2) the petition is filed as a dedicatory instrument with the

county clerk of the county in which the subdivision is located.

(c) If a subdivision consisting of multiple sections, each with

its own restrictions, is represented by a single property owners'

association, the approval requirement may be satisfied by

obtaining approval of at least 75 percent of the owners on a

section-by-section basis or of the total number of properties in

the property owners' association's jurisdiction.

(d) If approved, the petition is binding on all properties in

the subdivision or section, as applicable.

(e) A property owners' association that circulates a petition

must notify all record owners of property in the subdivision in

writing of the proposed extension, addition to, or modification

of the existing restrictions. Notice may be hand-delivered to

residences within the subdivision or sent by regular mail to the

owner's last known mailing address as reflected in the ownership

records maintained by the property owners' association. The

approval of multiple owners of a property may be reflected by the

signature of a single co-owner.

Added by Acts 1995, 74th Leg., ch. 1040, Sec. 2, eff. Aug. 28,

1995.

Sec. 204.006. CREATION OF PROPERTY OWNERS' ASSOCIATION. (a) If

existing restrictions applicable to a subdivision do not provide

for a property owners' association and require approval of more

than 60 percent of the owners to add to or modify the original

dedicating instrument, a petition to add to or modify the

existing restrictions for the sole purpose of creating and

operating a property owners' association with mandatory

membership, mandatory regular or special assessments, and

equivalent voting rights for each of the owners in the

subdivision is effective if:

(1) a petition committee has been formed as prescribed by

Section 201.005;

(2) the petition is approved by the owners, excluding

lienholders, contract purchasers, and the owners of mineral

interests, of at least 60 percent of the real property in the

subdivision; and

(3) the procedure employed in the circulation and approval of

the petition to add to or amend the existing restrictions for the

specified purpose complies with the requirements of this chapter.

(b) If the circulated petition is not approved by the required

percentage of owners within one year of the creation of the

petition committee, the petition is void and another petition

committee may be formed.

(c) If the petition is approved, the petition is binding on all

properties in the subdivision or section, as applicable.

Added by Acts 1995, 74th Leg., ch. 1040, Sec. 2, eff. Aug. 28,

1995.

Sec. 204.007. EFFECT ON LIENHOLDERS. (a) Extensions of,

additions to, or modifications of restrictions under this chapter

are binding on a lienholder, excluding restrictions relating to

regular or special assessment increases if the assessment is not

subordinated to purchase money or home improvement liens.

(b) If the assessment lien of the property owners' association

is subordinate to purchase money or home improvement liens, the

lienholder is not entitled to notice of the proposed dedicatory

instrument and the lienholder is bound by the instrument if the

instrument is approved. If the assessment lien is not

subordinated, a lienholder who is not a signatory to the

dedicatory instrument and whose lien was established before the

effective date of the dedicatory instrument is not bound by the

portion of the dedicatory instrument that increases the amount of

the regular or special assessment during any period of ownership

by the lienholder.

(c) A person who acquires title to the property at a foreclosure

sale or by deed from a foreclosing lienholder is bound by the

assessment increase.

Added by Acts 1995, 74th Leg., ch. 1040, Sec. 2, eff. Aug. 28,

1995.

Sec. 204.008. METHOD OF ADOPTION. An extension, addition to, or

modification of restrictions proposed by a property owners'

association may be adopted:

(1) by a written ballot that states the substance of the

amendment and specifies the date by which a ballot must be

received to be counted;

(2) at a meeting of the members represented by the property

owners' association if written notice of the meeting stating the

purpose of the meeting is delivered to each owner of property in

the subdivision;

(3) by door-to-door circulation of a petition by the property

owners' association or a person authorized by the property

owners' association;

(4) by a method permitted by the existing restrictions; or

(5) by a combination of the methods described by this section.

Added by Acts 1995, 74th Leg., ch. 1040, Sec. 2, eff. Aug. 28,

1995.

Sec. 204.009. TEXAS NONPROFIT CORPORATIONS. (a) If the

property owners' association is referenced in the existing,

extended, added to, or modified restrictions as a Texas nonprofit

corporation, the instrument contemplates the interaction of a

nonprofit corporation, its articles of incorporation, and its

bylaws.

(b) The property owners' association has the powers and shall

promote the purposes enumerated in the articles of incorporation

and bylaws. These powers and purposes necessarily modify the

express provisions of the restrictions to include the referenced

powers and purposes.

Added by Acts 1995, 74th Leg., ch. 1040, Sec. 2, eff. Aug. 28,

1995.

Sec. 204.010. POWERS OF PROPERTY OWNERS' ASSOCIATION. (a)

Unless otherwise provided by the restrictions or the

association's articles of incorporation or bylaws, the property

owners' association, acting through its board of directors or

trustees, may:

(1) adopt and amend bylaws;

(2) adopt and amend budgets for revenues, expenditures, and

reserves and collect regular assessments or special assessments

for common expenses from property owners;

(3) hire and terminate managing agents and other employees,

agents, and independent contractors;

(4) institute, defend, intervene in, settle, or compromise

litigation or administrative proceedings on matters affecting the

subdivision;

(5) make contracts and incur liabilities relating to the

operation of the subdivision and the property owners'

association;

(6) regulate the use, maintenance, repair, replacement,

modification, and appearance of the subdivision;

(7) make additional improvements to be included as a part of the

common area;

(8) grant easements, leases, licenses, and concessions through

or over the common area;

(9) impose and receive payments, fees, or charges for the use,

rental, or operation of the common area and for services provided

to property owners;

(10) impose interest, late charges, and, if applicable, returned

check charges for late payments of regular assessments or special

assessments;

(11) if notice and an opportunity to be heard are given, collect

reimbursement of actual attorney's fees and other reasonable

costs incurred by the property owners' association relating to

violations of the subdivision's restrictions or the property

owners' association's bylaws and rules;

(12) charge costs to an owner's assessment account and collect

the costs in any manner provided in the restrictions for the

collection of assessments;

(13) adopt and amend rules regulating the collection of

delinquent assessments and the application of payments;

(14) impose reasonable charges for preparing, recording, or

copying amendments to the restrictions, resale certificates, or

statements of unpaid assessments;

(15) purchase insurance and fidelity bonds, including directors'

and officers' liability insurance, that the board considers

appropriate or necessary;

(16) if the restrictions allow for an annual increase in the

maximum regular assessment without a vote of the membership,

assess the increase annually or accumulate and assess the

increase after a number of years;

(17) subject to the requirements of the Texas Non-Profit

Corporation Act (Article 1396-1.01 et seq., Vernon's Texas Civil

Statutes) and by majority vote of its board of directors,

indemnify a director or officer of the property owners'

association who was, is, or may be made a named defendant or

respondent in a proceeding because the person is or was a

director;

(18) if the restrictions vest the architectural control

authority in the property owners' association or if the authority

is vested in the property owners' association under Section

204.011:

(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 subdivision

change;

(19) exercise other powers conferred by the restrictions, its

articles of incorporation, or its bylaws;

(20) exercise other powers that may be exercised in this state

by a corporation of the same type as the property owners'

association; and

(21) exercise other powers necessary and proper for the

governance and operation of the property owners' association.

(b) Powers enumerated by this section are in addition to any

other powers granted to a property owners' association by this

chapter or other law.

Added by Acts 1995, 74th Leg., ch. 1040, Sec. 2, eff. Aug. 28,

1995.

Sec. 204.011. ARCHITECTURAL CONTROL COMMITTEE. (a) This

section applies to restrictions providing for the creation and

operation of an architectural control committee with the power to

approve or deny applications for proposed original construction

or modification of a building, structure, or improvement.

(b) Unless the restrictions applicable to a residential real

estate subdivision vest the architectural control committee

authority in the property owners' association before either of

the following events, the architectural control committee

authority automatically vests in the property owners' association

when:

(1) the term of the architectural control committee authority

expires as prescribed by the restrictions;

(2) a residence on the last available building site is completed

and sold;

(3) the person or entity designated as the architectural control

committee in the restrictions assigns, in writing, authority to

the property owners' association; or

(4) an assignee of the original holder abandons its authority

for more than one year.

(c) If the architectural control committee authority is

transferred to the property owners' association, the authority is

vested in the property owners' association until:

(1) the restrictions are modified to reflect otherwise;

(2) the restrictions are terminated; or

(3) the property owners' association ceases to exist.

(d) If existing restrictions applicable to a subdivision do not

provide for a property owners' association and a property owners'

association has not been formed, the architectural control

committee authority over the entire subdivision vests in a civic

association other than a property owners' association if:

(1) an architectural control committee created by the

restrictions exercised the architectural control committee

authority as provided by the restrictions over all the lots in

the subdivision for at least 10 years and over a majority of the

lots in the subdivision for at least 20 years;

(2) an architectural control committee created by the

restrictions assigned the civic association the architectural

control committee authority over a majority of the lots in the

subdivision;

(3) the civic association was assigned the architectural control

committee authority over a majority of the lots in the

subdivision and has exercised that authority over all the lots in

the subdivision for at least 10 years; and

(4) the architectural control committee authority has lapsed in

the lots in which the civic association lacks authority, and the

lapse is solely the result of:

(A) the automatic termination of the architectural control

committee authority; or

(B) the death of a member of the architectural control committee

or another cause resulting from the inability to locate a member

of the architectural control committee or the member's assigns.

Added by Acts 1995, 74th Leg., ch. 1040, Sec. 2, eff. Aug. 28,

1995.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

711, Sec. 1, eff. September 1, 2007.