ATTORNEY GENERAL OF TEXAS 

GREG ABBOTT 

The Honorable Glenn Hegar 

Chair, Sunset Advisory Commission 

Texas State Senate 

Post Office Box 12068 

Austin, Texas 78711-2068 

Dear Senator Hegar: 

June 10,2010 

Opinion No. GA-0780 

Re: Application and constitutionality of section 

5.017 (b ) of the Texas Property Code with respectto 

restrictive covenants that were in existence and 

recorded in a county's public records prior to the 

statute's effective date (RQ-0843-GA) 

Section 5.017 of the Texas Property Code prohibits and declares void deed restrictions and 

other covenants running with the land that require certain transfer fees. TEx. PROP. CODE ANN. § 

5.017(b) (Vernon Supp. 2009). You ask first whether, as a matter of statutory construction, section 

5.017(b) applies "to restrictive covenants' ... which were recorded and in existence prior to its 

effective date. ,,2 If so, you also ask whether "Section 5.0 17(b) as applied to pre-existing, recorded 

restrictive covenants ... violate[ s 1 the prohibition on retroactive laws and laws impairing the 

obligation of contracts contained in Article I, Section 16 of the Texas Constitution." Request Letter 

at 3. 

While you state your questions separately, a statute's construction and its constitutionality 

are interrelated issues. When considering a statute challenged under article I, section 16, courts 

begin with the presumption that the statute is constitutional and, therefore, attempt "to avoid 

lUnder the Property Code, a "restrictive covenant" includes "any covenant, condition, or restriction contained 

in a dedicatory instrument." TEx. PROP. CODE ANN. § 202.001(4) (Vernon 2007). A "dedicatory instrument" is a 

"governing instrument covering the establishment, maintenance, and operation of a residential subdivision, planned unit 

development, condominium or townhouse regime, or any similar planned development." Id. § 202.001(1). 

'See Request Letter at 3 (available at http://www.texasattorneygeneral.gov) (footnote added). Although you 

ask broadly about section 5.017(b)'s application to restrictive covenants in general, you also ask about the section's 

application to a specific deed restriction that requires owners of property in the Weston Lakes residential development 

to acquire and maintain a membership in the Weston Lakes country club. !d. at 1-2. However, section 5.017(b)'s 

application to a specific deed restriction cannot be determined without first construing the deed restriction, a function 

that is beyond the scope of an attorney general opinion. See Tex. Att'y Gen. Op. No. GA-0594 (2008) at 4 n.5 

(observing that because "[i]nstruments such as dedications and restrictive covenants are subject to the general rules of 

contract construction ... it may not be possible to construe them in an attorney general opinion"). Accordingly, we 

confme our consideration to your broader question as it is stated above. See Tex. Att'y Gen. Op. No. GA-0l76 (2004) 

at 2 (stating that this office generally does not construe the terms of a particular contract but will address applicable 

general legal principles). 
The Honorable Glenn Hegar - Page 2 (GA-0780) 

constitutional problems if possible." Brooks v. Northglen Ass'n, 141 S.W.3d 158, 169-70 (Tex. 

2004) (construing a homeowner association late fee statute in connection with an article I, section 

16 challenge). Article I, section 16 prohibits the Legislature from making a "retroactive law, or any 

law impairing the obligation of contracts." TEx. CONST. art. I, § 16. In general, a statute is 

unconstitutionally retroactive "if it takes away or impairs vested rights acquired under existing law." 

City of Tyler v. Likes, 962 S.W.2d 489,502 (Tex. 1997).3 Also, under article I, section 16, a 

contractual "obligation is impaired when a statute is enacted that releases a part of [an J obligation 

or to any extent or degree amounts to a material change or modifies it." Price Pfister, Inc. v. Moore 

& Kimmey, Inc., 48 S.W.3d 341, 356 (Tex. App.-Houston [14th Dist.J2001, pet. denied). 

Whether a statute operates retrospectively depends on the Legislature's intent. Deacon v. 

City of Euless, 405 S.W.2d 59, 61 (Tex. 1966). However, "[rJetroactive statutes are generally 

regarded with disfavor." Hutchings v. Slemons, 174 S.W.2d 487, 490 (Tex. 1943).4 "Statutes are 

only applied retroactively if the statutory language indicates that the Legislature intended that the 

statute be retroactive." In re MC.C., 187 S.W.3d 383, 384 (Tex. 2006).5 The Code Construction 

Act instructs that "[aJ statute is presumed to be prospective in its operation unless expressly made 

retrospective." TEx. GOV'T CODE ANN. § 311.022 (Vemon 2005) (emphasis added). Any doubts 

about the intended operation of a statute are to be resolved against retroactive application. Ex parte 

Abell, 613 S.W.2d 255, 258 (Tex. 1981); accord City of Houston, 196 S.W.3d at 283 n.15. 

With these principles in mind, we tum to subsection 5.017(b) of the Property Code, which 

provides: 

A deed restriction or other covenant running with the land applicable 

to the conveyance of residential real property that requires a 

transferee of residential real property or the transferee's heirs, 

successors, or assigus to pay a declarant or other person imposing the 

deed restriction or covenant on the property or a third party 

3Detennining whether a statute has retroactive effects is but one step in the analysis of a statute's 

constitutionality under article I, section 16, however. See Subaru of Am., Inc. v. DavidMcDavidNissan, Inc., 84 S. W.3d 

212,219 (Tex. 2002). "A retroactive statute only violates our Constitution if, when applied, it takes away or impairs 

vested rights acquired under existing law." !d. Furthennore, the constitutionality of a retroactive statute may depend 

on other considerations, such as whether the statute is a valid exercise ofthe state's police powers. See, e.g., Barshop 

v. Medina County Underground Waler Conservation Dist., 925 S.W.2d 618,633-35 (Tex. 1996) (stating that "[aj valid 

exercise ofthe police power by the Legislature to safeguard the public safety and welfare can prevail over a fmding that 

a law is unconstitutionally retroactive," and that "the contract clause may yield to statutes which are necessary to 

safeguard the public safety and welfare"). 

4See also City of Houston v. Houston Firefighters' Relief & Ret. Fund, 196 S.W.3d 271, 283 n.15 (Tex. 

App.-Houston [1st Dist.j2006, no pet.) (noting ''that 'Texas law militates strongly against the retroactive application 

of laws"') (quoting Houston Indep. Sch. Dist. v. Houston Chronicle PubZ'g Co., 798 S.W.2d 580, 585 (Tex. 

App.-Houston [1st Dist.jI990, writ denied)). 

'The general presumption that a statute operates prospectively does not apply for a statute that is merely 

procedural or remedial. State v. Fid. & Deposit Co. ofMd., 223 S.W.3d 309, 312 n.2 (Tex. 2007). 
The Honorable Glenn Hegar - Page 3 (GA-0780) 

designated by a transferor ofthe property a fee in connection with a 

future transfer of the property is prohibited. A deed restriction or 

other covenant running with the land that violates this section or a 

lien purporting to encumber the land to secure a right under a deed 

restriction or other covenant running with the land that violates this 

section is void and unenforceable. For purposes of this section, a 

conveyance of real property includes a conveyance or other transfer 

of an interest or estate in residential real property. 

TEx. PROP. CODE ANN. § 5.0 17(b) (Vernon Supp. 2009). Subsection (c) creates exceptions for fees 

that are payable to certain property owners' associations, section 501(c)(3) entities, and 

governmental entities. ld. § 5.017(c). 

Section 5.017(b) broadly prohibits deed restrictions requiring certain transfer fees. 6 The 

section does not state that it applies to deed restrictions in existence prior to the effective date of the 

statute, rendering them void. Nor does the section's transition provision indicate that the statute 

operates retroactively to render existing and recorded restrictive covenants void. The transition 

clause for section 5.017 states: 

The change in law made by this Act applies only to a transfer of 

property that occurs or a contract entered into on or after the effective 

date of this Act. A transfer of property that occurs or a contract 

entered into before the effective date of this Act is governed by the 

law in effect immediately before the effective date of this Act, and 

that law is continued in effect for that purpose. 

Act of May 27, 2007, 80th Leg., R.S., ch. 1056, § 2, 2007 Tex. Gen. Laws 3654, 3655. The first 

sentence of the transition clause states that the statute applies to a property transfer that occurs or a 

contract entered into after the effective date, but does not address deed restrictions existing and 

recorded prior to the statute's effective date. ld. The second sentence preserves the law in effect for 

a contract entered into prior to the statute's effective date. A deed restriction or restrictive covenant 

is a type of contract. See Tien Tao Ass'n v. Kingsbridge Park Cmty. Ass'n, 953 S.W.2d 525, 533 

(Tex. App.-Houston [1st Dist.] 1997, no pet.) (stating that particular "deed restrictions comprise 

a contract between the homeowner and the neighborhood association"). Thus, the transition clause 

appears to preserve the law in effect for a deed restriction established prior to the statute's effective 

date.7 

'While you do not raise them in your request, we are aware that there are additional questions about the proper 

construction ofsectiou 5.017(b). We confme our consideration to the questions as posed by you and, therefore, do not 

address any such collateral questions. Tex. Att'y Gen. Op. No. GA-0762 (20 I 0) at 4 n.5 (attorney general opinions are 

limited to the specific questions asked by an authorized requestor). Nothing in this opinion should be interpreted to limit 

the rights of any party to pursue claims for violations of section 5.017. 

'The transition clause appears in House Bill 2207 of the 80th Legislature, regular session, which added sections 

5.016 and 5.017 to the Property Code. Act of May 27, 2007, 80th Leg., R.S., ch. 1056, § 2, 2007 Tex. Gen. Laws 3654, 

3655. 
The Honorable Glenn Hegar - Page 4 (GA-0780) 

Neither section 5.017 nor the transition clause reveals legislative intent, express or otherwise, 

that would overcome the presumption that the statute is intended to operate prospectively. 

Consequently, we conclude that section 5.0 17(b) of the Property Code does not apply to restrictive 

covenants that were in existence and recorded prior to the statute's effective date. Because we 

conclude that section 5.017(b) operates prospectively only, we do not reach your second question. 
The Honorable Glenn Hegar - Page 5 (GA-0780) 

SUMMARY 

Section 5.017(b) of the Property Code does not apply to 

restrictive covenants that were in existence and recorded prior to the 

statute's effective date. 

ANDREW WEBER 

First Assistant Attorney General 

JONATHAN K. FRELS 

Deputy Attorney General for Legal Counsel 

NANCY S. FULLER 

Chair, Opinion Committee 

William A. Hill 

Assistant Attorney General, Opinion Committee