Before completing this form, the attorney should complete the supplemental checklist (SC), form 24-19 in this chapter. Information called for in this form by item numbers corresponds with the same-numbered items on that checklist.
Explanation of Amendments
The following are brief explanations of the amendments proposed to be adopted by the Unit Owners as the Members of [SC item 44] (the “Association”). These are amendments to the Declaration and the Bylaws. The Declaration requires amendments to be approved by a vote of at least 75 percent of the votes as allocated to the Members by the Declaration. Accompanying the Meeting Notice are the proposed Amendments to the Condominium Declaration and Bylaws (called the “Amendments”).
Background
1.Declaration and Bylaws. [SC item 22] was established as a condominium regime by the execution of a Declaration dated [SC item 40], which is filed for record in the county clerk’s records of [SC item 23] County, Texas. Attached to the Declaration as an exhibit are bylaws for the Association (“Bylaws”). The Declaration created the condominium regime for the Condominiums pursuant to article 1301a of the Texas Revised Civil Statutes, the state statute that was later codified as chapter 81 of the Texas Property Code, which statute is known as the “Texas Condominium Act” and is sometimes referred to as the “first-generation” or “older” condominium act. Subsequent to the Texas Condominium Act, a “second-generation” or “newer” condominium act was adopted by the state of Texas, which is codified as chapter 82 of the Texas Property Code, and which statute is known as the “Texas Uniform Condominium Act,” also referred to as “TUCA.”
2.Proposed Amendments to Declaration. The following are provisions of the Declaration proposed to be amended and the proposed amendments:
A.First Proposed Amendment
A.1.Declaration Before Amendment. The Declaration Article 1 (Definitions) at paragraph 3 (Act) reads as follows:
3. “Act” shall mean the Texas Condominium Act as set forth in article 1301a of the Texas Revised Civil Statutes as amended from time to time.
A.2.First Proposed Amendment. The first proposed amendment (the “Amendment Electing In to Texas Uniform Condominium Act”) is for the Association to elect to come under and be governed by the Texas Uniform Condominium Act as opposed to the Texas Condominium Act and to amend references in the Declaration to the Texas Condominium Act to refer to the Texas Uniform Condominium Act from and after adoptions of the first proposed amendment. The proposed Amendment Electing In to Texas Uniform Condominium Act is as follows:
The Association, acting by its Members pursuant to a special meeting at which a quorum was present and by appropriate vote, has elected and by these Amendments to the Condominium Declaration and Bylaws (the “Amendments”) elects to come under and be governed by chapter 82 of the Texas Property Code and all amendments and successors to it (the “Texas Uniform Condominium Act”), and the Texas Uniform Condominium Act shall apply to the project and the condominium regime created by the Declaration, which is recorded in the public records for [SC item 23] County, Texas (the “Declaration”). Additionally, any references in the Declaration to the “Texas Condominium Act” or to the “Act” shall mean the Texas Uniform Condominium Act from and after the adoption of this Amendment.
B.Second Proposed Set of Amendments
B.1.Declaration Before Amendment. The Declaration provides in Article 8 (Amendments to Declaration; Bylaws), at Section 1 (General Provisions), for amendment of the Declaration by the Members of the Association as follows (called herein the “First Sentence of Article 8, Section 1”):
Except as otherwise provided by law, after the Election Date, the provisions hereof may be amended, with the consent of those First Mortgagees owning first Mortgages against Units whose Owners can vote at least 67 percent of the votes in the Association allocated to Units encumbered by first Mortgages, by an instrument in writing, signed by Members having not less than 75 percent of the votes (based on the Owners’ Percentage Interest) in the Association entitled to vote thereon, but no such amendment shall be effective until a written notice thereof is duly recorded in the office of the county clerk of [SC item 23] County, Texas, ten days or more before a regular or called meeting of the Association.
B.2.Proposed Amendments
B.2.a.Article 8, Section 1, First Sentence. The Declaration is proposed to be amended to delete the first sentence of Article 8, Section 1 of the Declaration (“Amendment Deleting First Sentence of Article 8, Section 1”).
B.2.b.Article 8, Section 1.a. The Texas Uniform Condominium Act provides in subsection (a) to section 82.067 (Amendment of Declaration) a process for amending condominium declarations if the process is included in the condominium declaration. The proposed amendment to the Declaration is to adopt this process.
The proposed amendment is to add this process to Section 1 (General Provisions) of Article 8 (Amendments to Declaration; Bylaws) of the Declaration in replacement of the first sentence that was deleted upon the adoption of the Amendment Deleting First Sentence of Article 8, Section 1 and is to read as follows (“Amendment Adopting Texas Uniform Condominium Act Process for Declaration Amendments”):
Except as provided in subsection (b) to section 82.067 of the Texas Uniform Condominium Act, the Declaration, including the plats and plans, may be amended by vote or agreement of Unit Owners to which at least 67 percent of the votes in the Association are allocated. An amendment to the Declaration may be adopted—
1.by written ballot that states the exact wording or substance of the amendment and that specifies the date by which a ballot must be received to be counted or
2.at a meeting of the Members of the Association after written notice of the meeting has been delivered to an Owner of each Unit stating that a purpose of the meeting is to consider an amendment to the Declaration.
Notice of the meeting is deemed given and delivered as provided in the Bylaws. Notice signed by an officer of the Association of the adoption of an amendment to the Declaration is to be recorded with the county clerk of [SC item 23] County, Texas. The approval of Mortgagees, beneficiaries of deeds of trust, or other lienholders is not required as a condition to the effectiveness of an amendment.
C.Third Proposed Amendment
C.1.Texas Uniform Condominium Act. Section 82.068 (Termination of Condominiums) at subsection (a) of the Texas Uniform Condominium Act provides (emphasis added):
(a) Unless the declaration provides otherwise and except for a taking of all the units by condemnation, a condominium may be terminated only by the agreement of 100 percent of the votes in the association and each holder of a deed of trust or vendor’s lien on a unit. The declaration may not allow a termination by less than 80 percent of the votes in the association if any unit is restricted exclusively to residential uses.
The condominium units in the Condominiums are restricted exclusively to residential uses. In such a circumstance, section 82.068(a) of the Texas Property Code (Texas Uniform Condominium Act) permits a condominium declaration to provide for termination by 80 percent or more of the votes in the Association, which may be done without obtaining the agreement of the holders of deeds of trust or vendor’s liens.
C.2.Proposed Amendment. Article 11 (Miscellaneous) of the Declaration is proposed to be amended to add the following termination provision as Section 10 (Termination) (“Amendment to Condominium Termination Provision”):
Section 10. Termination. Except for a taking of all the Units by condemnation, the Condominium may be terminated by the agreement of not less than the holders of 80 percent of the votes in the Association. The agreement to terminate the Condominium does not require the approval of Mortgagees or lienholders.
D.Fourth Proposed Set of Amendments
D.1.Declaration Before Amendment. The Declaration contains in Article 8, Section 2(a), and Article 11, Section 7(b), provisions for approval by the First Mortgagees for the Unit Owners to terminate the condominium regime and provides that notice be given to each Mortgagee of a proposal to terminate the condominium regime. The Texas Uniform Condominium Act permits residentially restricted condominium regimes to be terminated without obtaining the approval of mortgagees and other lienholders if the condominium declaration does not require their approval. The Fourth Proposed Set of Amendments are to delete from the Declaration those types of requirements. It is a practical problem to obtain the consent of mortgagees and other lienholders for many reasons, including determining the holders of such liens, obtaining addresses for notice purposes, finding persons with authority to execute the consents, obtaining consents for all mortgagees and lienholders, and doing so in a practical time. Lien payoffs can be processed and made within a practical time because lenders typically employ loan servicers that collect payments and payoffs. In the context of a condominium termination arising out of a sale of the condominium project to a purchaser desiring to acquire the property to build a new project on the property, who is paying more than the payoff amounts on the mortgages and liens, the liens of the mortgages and other types of liens are satisfied on closing of the sale to such a purchaser.
D.1.a.Article 8, Section 2(a). The Declaration provides in Article 8 (Amendments to Declaration; Bylaws), Section 2 (Mortgagee Protections) and its subsection (a), the following provision (called herein “Article 8, Section 2(a)”):
Section 2. Mortgagee Protections. Notwithstanding Section 1 above, and notwithstanding any other provisions of this Declaration pertaining to the voting rights or other rights of Owners or Members of the Association, unless 100 percent of the First Mortgagees, based on one vote for each First Mortgage owned, and the Owners have given written approval, neither the Owners nor the Association shall be entitled to—
a. by act or omission, seek to abandon or terminate the condominium regime except for abandonment provided by statute in case of substantial loss to the Units or Common Elements; . . .
D.1.b.Article 11, Section 7(b). The Declaration also provides in subsection (b) to Section 7 (First Lienholders’ Rights) to Article 11 (Miscellaneous) as follows (called herein “Article 11, Section 7(b)”):
Section 7. First Lienholders’ Rights. . . .
b. The Association shall give each Mortgagee written notice of any proposed termination of the condominium regime or of condemnation or eminent domain proceedings affecting the condominium regime or any part thereof.
D.2.Proposed Amendments
D.2.a.Article 8, Section 2(a). The Declaration is proposed to be amended to delete subsection (a) from Section 2 (Mortgagee Protections) to Article 8 (Amendments to Declaration; Bylaws) from the Declaration (“Amendment Removing Requirement of Consent of Mortgagees to Condominium Termination”).
D.2.b.Article 11, Section 7(b). The Declaration is amended to delete subsection (b) from Section 7 (First Lienholders Rights) to Article 11 (Miscellaneous) from the Declaration (“Amendment Removing Notice to Mortgagees”).
E.Fifth Proposed Amendment
E.1.Declaration Before Amendment. The Declaration at Article 9 (Restrictions on Leasing of Units) contains restrictions on leasing of Units.
E.2.Proposed Amendment. The following proposed amendment provides for the following quoted provision to be included in leases to permit their termination if the project is sold to a single purchaser and if the condominium regime is terminated. Article 9 (Restrictions on Leasing of Units) of the Declaration is proposed to be amended to add the following as Section 3 (Provision Added to New Leases and Amendments or Modifications to Existing Leases) (“Amendment to New Leases and Amendments or Modifications of Existing Leases”):
Section 3. Provision Added to New Leases and Amendments or Modifications to Existing Leases. From and after the date of this Amendment, new leases or amendments or modifications to existing leases of any Unit (respectively, a “Lease”) must contain the following provision:
Notwithstanding any provision herein to the contrary, if all Units in the Condominiums are sold or to be sold to a single purchaser and the Declaration, recorded in [SC item 33] of the Official Public Records of [SC item 23] County, Texas (as amended, the “Declaration”), terminated, this Lease shall automatically terminate thirty days after the date the Declaration is terminated. Landlord will provide Tenant with written notice of any proposed termination. After the termination of the Declaration, Landlord is not responsible for any repairs.
F.Sixth Proposed Set of Amendments
F.1.Declaration Before Amendment. The Declaration contains a number of boilerplate provisions.
F.2.Proposed Amendments. The following are amendments proposed to several of these provisions.
F.2.a.Article 8, Section 2. The Declaration is proposed to be amended to add as Section 2 (Amendment by Counterpart Written Instruments) to Article 8 (Amendments to Declaration; Bylaws) the following provision (“Amendment by Counterpart Written Instruments”):
Section 2. Amendment by Counterpart Written Instruments. It shall not be necessary that the signatures of all persons required to bind any party appear on each counterpart. All counterparts shall collectively constitute a single instrument. Any signature page to any counterpart may be detached from that counterpart without impairing the legal effect of the signatures on it and thereafter attached to another counterpart identical thereto except having attached to it additional signature pages.
F.2.b.Article 11, Section 11. The Declaration is proposed to be amended to add as Section 11 (Captions) to Article 11 (Miscellaneous) the following (“Amendment on Captions”):
Section 11. Captions. The captions of articles and sections are only for convenience and are in no way to be construed as defining or modifying the text to which they refer.
G.Proposed Amendments to Bylaws
The Bylaws of the Association are attached as an exhibit to and are a part of the Declaration. Proposed are amendments to the Bylaws. These amendments include provisions permitted by the current version of the Texas Business Organizations Code: provisions for giving notice of meetings by a nationally recognized overnight delivery service or by electronic mail, fax, or another form of electronic transmission consented to by the Member; attendance at meetings by means of a telephone conference, a video conference, or the Internet, if certain statutorily prescribed conditions are met; voting by absentee ballot or by electronic ballot; and action by the board of directors by unanimous written consent.
H.Severability
Invalidation of any one or more of the Amendments or any portions thereof shall not affect any of the other Amendments or other provisions herein contained.