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.