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