Texas Property Code 209.0052: HOA Contracts With Board Members, Bids and $50,000 Rule

Quick Answer

Texas Property Code § 209.0052 sets conditions for an association contract with a board member, a close relative, or a company in which either holds at least 51 percent of profits. It requires competing bids, recusal, a disinterested board vote and a certifying resolution, and it calls for a bid process on service contracts costing more than $50,000.

At a Glance

What the Law Says

Subsection (a): the section "does not apply to a contract entered into by an association during the development period."

Subsection (b) says an association "may enter into an enforceable contract" with a current board member, a person related to a board member within the third degree by consanguinity or affinity (as determined under Government Code Chapter 573), or a company in which the board member or such a relative has a financial interest in at least 51 percent of profits, "only if" four conditions are met.

• The board member, relative or company bids, and the association has received at least two other bids from persons not associated with them, "if reasonably available in the community."
• The board member is not given access to the other bids, does not participate in any board discussion of the contract, and does not vote on the award.
• The material facts of the relationship or interest are disclosed to or known by the board, and the board, "in good faith and with ordinary care," authorizes the contract by a majority of the board members who do not have an interest.
• The board certifies by resolution, approved by a majority of the disinterested members, that these requirements were satisfied.

Subsection (c): "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."

What This Means in Practice

For boards

Keep a conflict log of directors, relatives within three degrees, and companies they own. The resolution under (b)(4) is a document the board must create; the minutes should show who left the discussion. See open board meetings for how those discussions fit the open-meeting rules.

For owners

A contract with a director's company is not barred outright, but the conditions are specific. Owners may use the records process in § 209.005 to ask what records exist.

Open questions

• The section does not define what "reasonably available in the community" requires.
• It does not say what bid process an association must adopt for (c), only that it be established by the association.
• Whether the $50,000 figure counts a multi-year total is not stated. Confirm with counsel.
• It does not address management company affiliations, which we did not analyze.

Timeline

Related Texas Law

• Chapter 209
• SB 1588
• § 209.0051
• Business Organizations Code Chapter 22

Board Checklist

• Collect annual conflict disclosures from every director.
• Identify relatives within the third degree and 51 percent companies.
• Require at least two outside bids where reasonably available.
• Keep the interested director out of bids, discussion and vote.
• Record the disinterested vote and the certifying resolution.
• Adopt a written bid process for contracts over $50,000.
• File bids and resolutions with the contract.

Frequently Asked Questions

Can a board member's company be hired?

Subsection (b) says only if the four listed conditions are satisfied.

How many other bids are needed?

At least two from persons not associated with the member, relative or company, if reasonably available in the community.

May the interested director vote?

No. The member may not vote on the award, take part in discussion, or see the other bids.

When must bids be solicited?

For services expected to cost more than $50,000, using a bid process the association establishes.

Does it apply to developer contracts?

Not to contracts entered into during the development period.

Where This Comes From

We read the current text of § 209.0052 and its history note on the Texas.Public.Law mirror, which states it was verified against the official site on May 26, 2025. The official statute site is at statutes.capitol.texas.gov. We did not read court decisions on this section, and the mirror may lag later amendments.

Where We Stand

Our position: we support § 209.0052. Competing bids, recusal and a recorded resolution protect volunteer directors and the community from conflict-of-interest disputes. Tip: adopt a one-page bid policy now, so a $50,000 contract never starts without a process. This is Association Property Managers' operating view as a management company, separate from the legal summary above, and it is not legal advice.

How APM Helps

Association Property Managers provides remote HOA and condo management for associations in Texas, starting at a flat $99/month per community with no per-door fees or long-term contracts. See remote management in Texas, browse every Texas state-law guide, or request a free proposal, delivered within three business days. Laws and licensing rules differ by state, and we confirm the requirements for Texas when we build your proposal.

Legal disclaimer: This article is general information, not legal advice. Laws change and associations differ. Confirm the current statute text and how it applies to your governing documents with a licensed Texas attorney before acting.