 -> OFFICE OF THE ATTORNEY GENERAL . ST.XTE OF TEXAS

   JOHN     CORNYN




                                               August 1,200l



The Honorable J.E. “Buster” Brown                       Opinion No. JC-0401
Chair, Natural Resources Committee
Texas State Senate                                      Re: Whether a property owner may, by filing an
P. 0. Box 12068                                         acknowledged exclusion statement, exclude the
Austin, Texas 787 1 l-2068                              owner’s     property   from the operation    of
                                                        subdivision    deed restrictions modified under
                                                        chapter 204 of the Property Code (RQ-0358-JC)



Dear Senator Brown:

         On behalf of an individual property owner in Harris County, you ask whether a property
owner may, by filing an acknowledged exclusion statement pursuant to chapter 201 of the Property
Code, exclude the owner’s property from the operation of subdivision deed restrictions modified by
a petition initiated by a property owners’ association under chapter 204 of the Property Code. We
conclude in the negative.

          You provide the following background to your request: In 1979, an individual purchased
property in a residential subdivision in Harris County. In 1998, the subdivision residents formed a
civic association that initiated a petition creating, modifying, and extending the subdivision’s deed
restrictions pursuant to chapter 204 of the Property Code. The revised deed restrictions included a
mandatory dues assessment. The individual property owner attempted to exclude his property from
the changed deed restrictions by filing an exclusion statement provided for by chapter 201 of the
Property Code. The civic association, however, declined to acknowledge the exclusion, relying on
a provision in chapter 204 stating that a property owners’ association is not required to comply with
the amendment and exclusion procedures of chapter 201. A dispute has now “arisen between the
property owner and the civic association as to the effectiveness of the property owner’s exclusion
action and the interplay of Chapters 201 and 204 of the Texas Property Code.“’




       ‘Letter from Honorable J.E. “Buster” Brown, Chair, Senate Natural Resources Committee, to Honorable John
Comyn, Texas Attorney General, at 1 (Feb. 18,200l) (on file with Opinion Committee) [hereinafter Request Letter].
The Honorable    J.E. “Buster” Brown    - Page 2     (JC-0401)




        In view of this controversy,   you ask:

                Does an acknowledged statement filed by a property owner pursuant
                to Sections 201.009(b)(4) and 201.007(a)(9) of the Texas Property
                Code exclude that property owner’s property from changed
                restrictions instituted by a property owners’ association even though
                property owners’ associations are not required to comply with Section
                201.009 based on [section] 204.005(a) of the Property Code?

Request Letter, note 1, at 3. To provide a legal context for your question, we briefly review the
relevant provisions of chapters 201 and 204 of the Property Code.

         Chapter 201, originally enacted by the legislature in 1985, provides a procedure for
extending, creating, or modifying deed restrictions in residential subdivisions located wholly or
partly in a city with a population exceeding 100,000; in the unincorporated area of a county with a
population of 2,400,OOO or more; or in the unincorporated or incorporated area of a county with a
population of 190,000 or more that is adjacent to a county with a population of 2,400,OOO or more.
See TEX. PROP. CODE ANN. 0 201.001(a) (Vernon Supp. 2001) (application); id fj 201.002(b)
(purpose) (Vernon 1995); see also id. 8 201 .OOl(b), (c) (V emon Supp. 2001) (excluding certain
subdivisions); Act of May 24, 1985, 69th Leg., R.S., ch. 309, $ 1, 1985 Tex. Gen. Laws 1364. A
petition to extend, create, or modify restrictions may be filed “by or on behalf of [property] owners.”
TEX. PROP. CODE ANN. 8 201.006(a) (Vernon 1995). The petition is effective if signed and
acknowledged by the requisite number of owners of any one of the several classifications set out in
the statute and filed with the county clerk of each county in which the subdivision is located. See
id. 8 201.006(b), (d). Th e extended, added, or modified restrictions of an effective petition “apply
to and burden all of the property in the subdivision exceptproperty excluded under Section 201.009.”
Id. § 201.004(c) (emph asis added). Section 201.007(a) sets out numerous items that must be
contained in a petition filed under chapter 201, including the following exclusionary statement:

                         (9) a statement that owners who do not sign the petition may
                delete their property from the operation of the extended, created,
                added to, or modified restriction by filing a statement described in the
                fourth listed category in Section 201.009(b) before one year after the
                date on which the owner receives actual notice of the filing of the
                petition authorized by this chapter.

Id. 8 201.007(a)(9).    Section 201.009(b) in turn provides that “[a] restriction added, modified,
created, or extended under this chapter does not affect or encumber property within the subdivision”
in the categories set out, including the following:

                        (4) property of an owner who did not sign the petition and
                who files, before one year after the date on which the owner received
                actual notice of the filing of the petition, an acknowledged statement
The Honorable   J.E. “Buster” Brown     - Page 3      (JC-040   1)




                describing the owner’s property by reference to the recorded map or
                plat of the subdivision and stating that the owner elects to have the
                property deleted and excluded from the operation of the extended,
                modified, changed, or created restriction;

Id. 0 201.009(b)(4).   At issue here is whether a property owner may, by filing the exclusion
statement referenced in sections 201.004(c), 201.007(a)(9), and 201.009(b)(4), exclude the owner’s
property from the operation of deed restrictions extended, created, or modified pursuant to chapter
204 of the Property Code.

         Chapter 204 of the Property Code was enacted in 1995 to “provide a less burdensome
procedure for extending the term of, adding to, or modifying residential real estate restrictions by
approval and circulation of a petition by a property owners’ association.” Act of May 27,1995,74th
Leg., R.S., ch. 1040, 4 l(c)(l), 1995 Tex. Gen. Laws 5 170, 5 171. The statute applies generally to
residential subdivisions, excluding condominium developments governed by title 7 of the Property
Code, that are located wholly or partly in a county with a population of 2.8 million or more. See
TEX. PROP. CODE ANN. 8 204.002 (Vernon Supp. 2001).               It designates a “property owners’
association” as a “representative of the owners of property in a subdivision,”        id. 5 204.004(a);
authorizes the creation of a property owners’ association in a subdivision that has been unable to
create one because of existing property restrictions if the owners of at least sixty percent of the real
property petition to do so, see id. 5 204.006; and sets out the powers the associations may exercise,
see id. 85 204.005, .OlO. In particular, section 204.005 provides that:

                         (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 . . . 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
The Honorable J.E. “Buster” Brown           - Page 4       (JC-0401)




                 basis or of the total number of properties            in the property   owners’
                 association’s jurisdiction.

                          (d) If approved, thepetition is binding on allproperties          in the
                 subdivision or section, as applicable.

Id. 8 204.005(a)-(d)    (emphases added).

          We conclude that a property owner may not exclude the owner’s property from the effects
of deed restrictions modified under chapter 204 by tiling an acknowledged statement of exclusion.
Neither section 204.005 nor another provision in chapter 204 by its terms excludes or provides for
the exclusion of any property from the effects of modified deed restrictions. A chapter 204 petition
if approved is “binding on all properties in the subdivision,” without any exceptions.     See id. 5
204.005(d) (emphasis added). Compare id., with 8 201.004(c) (Vernon 1995) (providing that
modified restrictions “apply to and burden all of the property in the subdivision except property
excluded under Section 201.009”). Furthermore, the exclusionary provisions of chapter 201 are
unavailable with respect to deed restrictions modified under chapter 204 because section 204.005(a)
specifically provides that an “association is not required to comply with Sections 201.009-201.012
[of the Property Code.]” Id. 8 204.005(a) (Vernon Supp. 2001); see also TEX. GOV’T CODE ANN.
9 311.016(7) (V emon 1998) (Code Construction Act) (“‘Is not required to’ negates a duty or
condition precedent.“). Section 201.009(b) sets out categories of property that are not subject to
deed restrictions modified under that chapter, including property of an owner who did not sign the
petition changing the restrictions and who files an acknowledged statement excluding the owner’s
property from those restrictions. See TEX. PROP. CODE ANN. 5 201.009(b) (Vernon 1995). Because
section 201.009(b) deals with property excluded from the modified restrictions, rather than the
powers or duties of a property owners’ association, the only reasonable construction of the section
204.005(a) provision that “[a] property owners’ association is not required to comply with Sections
201.009-201.012” is that the section 201.009 exclusion provisions are not available with respect to
restrictions instituted by a property owners’ association under chapter 204. See TEX. GOV’T CODE
ANN. 8 311.021(2), (4) (V emon 1998) (Code Construction Act) (in construing statute, presume
legislature intended entire statute to be effective and a result feasible of execution).

         We disagree with the property owner’s contention that an owner may exclude property by
filing an exclusion statement because the section 204.005(a) provision, by its terms, applies only to
property owners’ associations and does not prevent property owners from utilizing section
201.009(b)(4) to exclude their property. See Request Letter, supra note 1, at 2. 2 This construction
not only renders the section 204.005(a)‘s language referencing section 201.009 superfluous, but is
also contrary to the intent of the statute as a whole not to exclude property. Again, there is no
provision in chapter 204 excluding property from the effects of a changed restriction if an
acknowledged exclusion statement is filed. If the legislature had intended that certain property be


         ‘See also Brief from Craig E. Ferrell, Jr., to Susan D. Gusky, Chair, Opinion Committee, Office of Attorney
General (Apr. 12,200l) (on fI1e with Opinion Committee) [hereinafter Ferrell Briefl.
The Honorable    J.E. “Buster” Brown     - Page 5      (JC-0401)




excluded, it would have so expressly provided as it did in chapter 201. And, if the legislature had
intended the exclusion provision of chapter 201 to apply by reference, it would have so expressly
provided as it did elsewhere in chapter 204. Section 204.001 defining various terms, for instance,
provides that the terms “restrictions, ” “residential real estate subdivision,” “subdivision,” “owner,”
“real property records,” and “lienholder,” have the “meanings assigned by Section 201.003.” TEX.
PROP. CODE ANN. 5 204.001(l) (Vernon Supp. 2001). Similarly, section 204.006, which authorizes
the creation of property owners’ associations in certain subdivisions unable to create such an
association because of existing deed restrictions, requires a petition committee “formed as prescribed
by Section 201.005.“Id. $204.006(a). Because the legislature in chapter 204 omitted any provision
regarding exclusion of property from the effects of amended deed restrictions, we presume that it
did not intend property to be so excluded.         See In re Ament, 890 S.W.2d 39, 41 (Tex. 1994)
(omissions in an enactment are presumed intentional); Cameron v. Terre11 & Garrett, Inc., 618
S.W.2d 535,540 (Tex. 1981) (“[EJvery word excluded from a statute must. . . be presumed to have
been excluded for a purpose.“).

          That the legislature did not intend property to be excluded pursuant to section 20 1.009(b)(4)
is supported by the legislative history. Apparently, one of the reasons for adopting chapter 204 was
the perceived problems resulting from the “opt-out” provisions of chapter 20 1. A proponent of the
legislation explaining the necessity for chapter 204, testified that:

                The problem with that amendatory process [of chapter 2011 is that it
                has an opt-out provision. . . . Secondly, anybody who votes against
                it isn’t bound by it. So, it creates - basically, if it did pass, it would
                create a checkerboard-square-type     subdivision where you might have
                fifty or sixty percent that voted for [the new restrictions] that would
                be bound by the new set of restrictions and then you might have
                fifteen or twenty percent . . . that voted against it who would not be
                bound by the new restrictions.      So, the HOA would be faced with
                what in essence would be two classes of membership. And that’s the
                problem with the existing statute.

Hearing on Tex. H.B. 2152 Before the House Comm. on Land & Res. Mgmt, 74th Leg., R.S. (Apr.
18, 1995) (statements of Michael Gaines, Cypress Creek United Civic Ass’n).

        Finally, we disagree with the property owner’s alternative contention that property may be
excluded pursuant to section 201.007(a)(9) from which a property owners’ association is not
exempted under section 204:005(a). See Request Letter, supra note 1, at 2; Ferrell Brief, supra note
2, at 2-3. Section 201.007(a)(9) re q uires “[a] petition filed under this chapter” to include “a
statement that owners who do not sign the petition may delete their property from the operation of
the extended, created, added to, or modified restriction by filing a statement described in the fourth
listed category in Section 201.009(b) before one year after the date on which the owner receives
actual notice of the filing of the petition authorized by this chapter.” TEX. PROP. CODE ANN. 5
201.009(a)(9) (V emon 1995) (emphasis added). First, this provision by its terms applies only to a
    The Honorable   J.E. “Buster” Brown   - Page 6     (JC-0401;




    petition under chapter 201, and nothing in chapter 204 requires a petition to conform to the
    requirements of section 201.007. Second, section 201.007(a)(9) is simply an adjunct to the section
.   201.009(b)(4) exclusion provision, rather than a separate and independent exclusion category. Third,
    and more importantly, for the reasons discussed above, we do not believe that the legislature
    intended property to be excluded from the effects of deed restrictions extended, added, or modified
    under chapter 204 by the filing of an acknowledged exclusion statement.
The Honorable   J.E. “Buster” Brown   - Page 7     (JC-0401)




                                         SUMMARY

                         A property owner may not exclude the owner’s property from
                the operation of subdivision deed restrictions added or modified by
                a petition initiated by a property owners’ association under chapter
                204 of the Property Code by filing an acknowledged exclusion
                statement provided for under chapter 201 of the Property Code.




                                              Attorney General of Texas



HOWARD G. BALDWIN, JR.
First Assistant Attorney General

NANCY FULLER
Deputy Attorney General - General Counsel

SUSAN D. GUSKY
Chair, Opinion Committee

Sheela Rai
Assistant Attorney General, Opinion Committee
