An association may contract with certain board members, relatives, or related companies only if specific bidding, disclosure, and board-approval conditions are met; contracts during the development period are excluded, and services contracts over $50,000 require bids or proposals.
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. (c) In addition to the other applicable requirements of this section, an association that proposes to contract for services that will cost more than $50,000 shall solicit bids or proposals using a bid process established by the association. Added by Acts 2013, 83rd Leg., R.S., Ch. 863 (H.B. 503), Sec. 2, eff. September 1, 2013. Amended by: Acts 2021, 87th Leg., R.S., Ch. 951 (S.B. 1588), Sec. 13, eff. September 1, 2021.