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Subject: Charging Community Service Charge per Texas State Property Code Sec 204.010

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BasilH
(Texas)

Posts:8

03/10/2010 11:50 AM
I am a new Board member for a small HOA in Texas. The original by-laws and restrictions limits the maximum the HOA can charge which is now 30 years later very inadequate. The process prescibed by the by-laws and restrictions would require a 95% majority vote of all members to raise the annual assessment fee which will not happen in this community. The HOA legal council recommended using Texas State Property Code Sec 204.010 and charge a "Community Service Fee." My questions are: Opinions if this is legal. Has anyone been using this before and how far back because I am being told it is a "new" technique being used by HOA's? Any other suggestions to generate needed funds for an Texas non-profit corporation HOA in Texas.

MichaelK11
(Texas)

Posts:431

03/10/2010 12:07 PM
Is this a mandatory HOA? What do you need to pay for? Do you have major facilities? Grassy common areas? How far off the mark are you? What happened that recently brought to light the need for more money? Do you need the 95% majority for any increase in dues, or just for increase above a certain percent of current?

BasilH
(Texas)

Posts:8

03/10/2010 12:40 PM
Is a mandatory HOA. Street lights, small park, 2 entrances with sign, light, landscape and irrigation. Small budget but would operate on deficit if not for Community Service Charge. 2 years ago security was dropped to balance budget and it was evident this year was going to be a shortfall and something needed to be done or the street lights might need to be turned off. The lawyer came up with the "new oppurtunity" under the cited code to charge an additonal fee. When questioned why she did not recommend this before being the advisor for many years she replied it was a "new oppurtunity." It appears this has been on the property code and available for years and we just have a weak lawyer. Just curious if anyone has been using this before.

BasilH
(Texas)

Posts:8

03/10/2010 12:48 PM
Sorry - need 95% vote for any change.

MaryA1

Posts:0

03/11/2010 5:00 AM
Basil, Posted below is TX Property Code 204.010. I do not see anything about a "community service fee" in the code. Note that section 204.010(16) only applies if you4 docs do NOT require a vote of the members to raise the assessments. I would ask the attorney to show me, in the statute, what he/she is talking about. IMO, the board's only option is to ask the members to vote on an amendmentment to the CCRs which would allow the board to set the increase up to a particular % of the preceeding year's assessment without a vote of the membership. Sec. 204.010. POWERS OF PROPERTY OWNERS' ASSOCIATION. (a) Unless otherwise provided by the restrictions or the association's articles of incorporation or bylaws, the property owners' association, acting through its board of directors or trustees, may: (1) adopt and amend bylaws; (2) adopt and amend budgets for revenues, expenditures, and reserves and collect regular assessments or special assessments for common expenses from property owners; (3) hire and terminate managing agents and other employees, agents, and independent contractors; (4) institute, defend, intervene in, settle, or compromise litigation or administrative proceedings on matters affecting the subdivision; (5) make contracts and incur liabilities relating to the operation of the subdivision and the property owners' association; (6) regulate the use, maintenance, repair, replacement, modification, and appearance of the subdivision; (7) make additional improvements to be included as a part of the common area; (8) grant easements, leases, licenses, and concessions through or over the common area; (9) impose and receive payments, fees, or charges for the use, rental, or operation of the common area and for services provided to property owners; (10) impose interest, late charges, and, if applicable, returned check charges for late payments of regular assessments or special assessments; (11) if notice and an opportunity to be heard are given, collect reimbursement of actual attorney's fees and other reasonable costs incurred by the property owners' association relating to violations of the subdivision's restrictions or the property owners' association's bylaws and rules; (12) charge costs to an owner's assessment account and collect the costs in any manner provided in the restrictions for the collection of assessments; (13) adopt and amend rules regulating the collection of delinquent assessments and the application of payments; (14) impose reasonable charges for preparing, recording, or copying amendments to the restrictions, resale certificates, or statements of unpaid assessments; (15) purchase insurance and fidelity bonds, including directors' and officers' liability insurance, that the board considers appropriate or necessary; (16) if the restrictions allow for an annual increase in the maximum regular assessment without a vote of the membership, assess the increase annually or accumulate and assess the increase after a number of years; (17) subject to the requirements of the Texas Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's Texas Civil Statutes) and by majority vote of its board of directors, indemnify a director or officer of the property owners' association who was, is, or may be made a named defendant or respondent in a proceeding because the person is or was a director; (18) if the restrictions vest the architectural control authority in the property owners' association or if the authority is vested in the property owners' association under Section 204.011: (A) implement written architectural control guidelines for its own use or record the guidelines in the real property records of the applicable county; and (B) modify the guidelines as the needs of the subdivision change; (19) exercise other powers conferred by the restrictions, its articles of incorporation, or its bylaws; (20) exercise other powers that may be exercised in this state by a corporation of the same type as the property owners' association; and (21) exercise other powers necessary and proper for the governance and operation of the property owners' association. (b) Powers enumerated by this section are in addition to any other powers granted to a property owners' association by this chapter or other law. Added by Acts 1995, 74th Leg., ch. 1040, Sec. 2, eff. Aug. 28, 1995.

BasilH
(Texas)

Posts:8

03/12/2010 7:44 AM
The instructions lawyer gave Managemetn Compnay was to use Texas State Property Code Sec 204.010 (9) on the annual assessment fee and call it a community service fee with funds dedicated to the sreet lights. (9) impose and receive payments, fees, or charges for the use, rental, or operation of the common area and for services provided to property owners;

MaryA1

Posts:0

03/12/2010 4:00 PM
Basil, Well, I think doing that would be a real stretch! But, leave it up to an attorney to think something like that up. You know, attorney's don't always know what they're talking about. I think a better plan would be to amend your CCRs to allow for the BOD to set the annual assessment and to have the authority to increase it up to a certain % w/o a vote of the members. AZ state law allows a 20% increase w/o a member vote.

RobertR1
(South Carolina)

Posts:5164

03/12/2010 5:41 PM
Basil, You posted you were a small HOA, and later mentioned you had a Property Management Company. How small are you, what is the shortfall, anmd why not a special assessment until you can push through what Mary suggests; a change in your documents. It sort of sounds like a special assessment to do what your lawyer is suggesting. Many times those posting here suggest you should get a lawyer, I hope that is taken as get a good lawyer. Is your lawyer on retainer, this advise he/she is giving is not free. So now we see, a small HOA with a major continuing shortfall; that employees a Management Company and uses a lawyer for advise routinely. I am not telling you all what to do, you have to do that, but since I am not privy to all you know, I need to ask these questions.

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