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Subject: Pending Texas POA-HOA legislation for 2021
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RogerJ1
(Texas)

Posts:151


05/17/2021 9:52 AM  
I heard about one of these on a local NPR show this morning, and while searching for it, I found this attorney blog that goes over Texas POA-HOA legislation. Since there are many Texas posters, I wanted to share the latest update: https://www.rmwbh.com/may-legislative-update-the-finish-line-approaches/


Some important bills making their ways through committee and might go the floor for a vote:

1) Ban POA/HOAs from restricting displays of religious symbols - could limit size and other aspects though;
2) Allow a single owner to request County Clerk to remove any discriminatory language in CCRs;
3) Prohibit Board members or their spouses from serving on Architecture Committees;
4) A owner's protest of a restriction violation would be conducted as a "mini-trial" within a POA/HOA meeting;
5) Allow a single owner to bring suit in a Justice of Peace court to remove a Board member for violating Chapter 209 of the Texas Property Code and/or for violating provisions of the Association's CCR;
6) Prohibit a POA/HOA from preventing an owner from putting up perimeter fencing for security reasons (this might lower property values with ugly fencing some paranoid people might install in my opinion.)

These bills have no recent updates but are still possible. I am listing them because they would cause large effects:

7) Texas Attorney General would set up a consumer's affairs department to cover POA/HOA complaints;
8) POA/HOAs would be required to adopt fine schedules for deed restriction violations.
CathyA3
(Ohio)

Posts:2599


05/17/2021 11:42 AM  
Interesting stuff.

A lot of bills like these never make it out of committee, or there will be some significant alterations before they move forward. This is good because at times lawmakers are as confused about HOAs as the average homeowner.

Number 5 (Allow a single owner to bring suit in a Justice of Peace court to remove a Board member for violating Chapter 209 of the Texas Property Code and/or for violating provisions of the Association's CCR) strikes me as being especially problematic:

* Not sure if a Justice of the Peace is the proper venue for this.

* It reflects a common mis-perception; namely, that a single board member is responsible for actions by the entire board.

* The biggie, though, is that it probably violates bylaws and other code because it takes away a right that belongs to all owners, and that is the right to vote to elect or recall directors. That doesn't belong in any one owner's hands, no matter how ticked off that owner is.

BillH10
(Texas)

Posts:783


05/17/2021 2:25 PM  
Roger

Thanks for posting what you did.

If you are a board member, association member, or involved in managing property owner associations in Texas I recommend you join the nearest chapter of CAI--Community Association Institute. Doing so will provide you access to a great deal of information; you will also receive email on subjects such as you described when the Legislature is in session.

The lobbying arm, Texas Community Association Advocates, has been monitoring these bills, and others, since they were introduced. In the last month, TCAA has sent almost daily updates and requests to CAI members asking members contact their legislators to oppose the bills.

You did not cite some of the more onerous provisions of the bills which will increase expenses and overhead for Associations, especially smaller associations.

I support these two aspects of proposed legislation:

7) Texas Attorney General would set up a consumer's affairs department to cover POA/HOA complaints;
8) POA/HOAs would be required to adopt fine schedules for deed restriction violations. (I thought we had to do this as a result of the changes in the Property Code mandated by the Legislature in the 2011 session. Our client at the time spent about $3,000 developing required policies and processes including attorney review and filing documents with the County Clerk.)

BarbaraT1
(Texas)

Posts:589


05/17/2021 9:26 PM  
You left out some biggies:

SB 1588, the one that prohibits two people from the same household from serving on an ARC, would also require HOAs to have a website with governing documents posted on it, cap resale certificate fees, and require HOAs to file management certificates and documents on file with the Texas Real Estate Commission. The realtor lobby is pushing this HARD - no doubt they will charge filing fees and are poised to rake in the bucks for forcing HOAs to file documents that are already on file with the county (and would be on a website). Straight up money grab from TREC.

There’s another one that would prohibit any city or HOA from banning chickens, rabbits and vegetable gardens.

I am opposed to SB1588 over the TREC filing issue. I see no benefit to homeowners, it’s a cash grab for TREC.

I also oppose the chickens/rabbits. Every HOA has a process for amending the documents, people who want chickens should go that route. Homeowners should be able to decide what the community rules are (barring constitutionally protected issues).

I also oppose giving the AG oversight because homeowners will lodge complaints every time they get a late notice or violation letter, and managers will have to divert their attention to responding to the AG every time someone is outraged that they got charged late fees for paying six months late. And because the problem in HOAs is largely homeowner apathy, which will only increase if owners can run to the AG whenever they are unhappy instead of attending a board meeting.

If the state lege wants to protect owners they should provide resources to educate them on HOAs. First time home buyers courses cover how to make an offer and understanding mortgage rates - nobody explains what HOAs are or do. Disclosures that are supposed to be provided during the offer period are given at the closing table, with no explanation as to what they are or what they mean. Realtors and title companies need to step up instead of constantly blaming the HOA.



SheliaH
(Indiana)

Posts:4290


05/18/2021 10:13 AM  
One person’s comments

1 – this could get awkward because the Nazi symbol most of you are familiar with is also a religious symbol in the Hindu religion (check this link - https://www.hinduamerican.org/blog/10-things-you-need-to-know-about-the-swastika/) Just as the Nazis co-opted it, I can see people coming up with all sorts of symbols and say it’s part of their religion.

2 – this may be faster than getting the community to agree to remove discriminatory language (especially when you know there are people who really want to keep it)

3 – While I agree there could be a conflict of interest when board members and spouses serve on the same committees, I don’t think this requires a state law

4 – See my response to #3. On one hand, it might be fascinating to watch a HOA board and homeowner duke it out over a shed, fence, parking, etc. On the other, I can see this becoming really disruptive and getting in the way of regular association business that needs to be addressed.

5 – See my response to #3 (again) – yes, it takes a lot of work to rally together one’s neighbors and call for a special meeting to toss a board member, but ultimately I think that’s appropriate so everyone understands what’s being done and why. I see too many pissing matches ensuing between the Chief POAs (you know what I mean!) and board members who have the gall to actually do what the documents require them to do.

6 – Another concurrence with 3

(Doesn’t the Texas State Legislature have other things to worry about than this??? How about fixing the electrical grid so it doesn’t fail like it did earlier this year – in the middle of winter?)

7 – Our state AG handles some HOA complaints, but it’s limited in the type of action it can take and I know it takes a considerable shitshow for them to get involved. There’s nothing inherently wrong with the idea, but if they don’t establish what is and isn’t a matter for this consumer affairs department, they will get deluged with all types of complaints that probably shouldn’t be there.

8 – I really don’t have a problem with this one, although I would say fines should be limited to the actual expenses the HOA had to incur to resolve the problem and there may need to be a cap on how much could be charged. Any fines schedule should also include an appeals process and perhaps a provision for dispute resolution.

As for the bills Barbara mentioned:

SB 1588 - require HOAs to have a website with governing documents posted on it, cap resale certificate fees, and require HOAs to file management certificates and documents on file with the Texas Real Estate Commission.

You’re probably right about the money grab issue. I can’t comment on resale certificates because I don’t think they’re required in my state. As for the website, does this really have to be a state law? What if you have a teeny tiny HOA (under 15 homes)? Websites are nice in that you can put up information at once and update as needed, but someone needs to maintain it, and not every community will have someone willing to do that unless you pay them. If money’s already tight, that could be a problem.

Barbara also did a great job in summarizing what might happen with a consumer affairs office. I like your suggestion on providing resources to educate homeowners on HOAs, especially for first-time homebuyers. For that matter, how about requiring realtors to take a class or two on HOAs so they know what the hell they’re talking about instead of downplaying or ignoring them altogether?
BarbaraT1
(Texas)

Posts:589


05/18/2021 11:28 AM  
Sheila - yes, the website requirement and the filing with TREC requirement would put a burden on self managed HOAs.

The ARC one is so oddly specific that I seriously wonder if the one of the bill's sponsors had a request turned down by his ARC, where two spouses served, and he's out for revenge.

Resale certificates are a packet of disclosures that the seller of a home in an HOA must provide to the buyer. These include the balance of their account, any open violations, the association's governing documents, most recent financials, and disclosure of any litigation not including collections. In 2011 the legislature passed a whole boatload of HOA reforms, including this one.

The purpose of requiring them was so that potential members would have the opportunity to review the package during the offer period and pull their offer if anything in those disclosures turned them off - deed restrictions they didn't like, financials that suggested the association was unhealthy, etc. But too often, they are given AT closing, instead of before, handed over with a pile of other paperwork that the overwhelmed buyer doesn't look at. I know of title companies who give them out on CD ROMs. With no explanation as to what it is! Of course it gets ignored.

Management companies charge a fee to the seller for compiling this information. Management companies quickly realized this could be a real profit center for them. Boards often don't care (or even know) what amount is charged for resales, and it's being charged to someone who is leaving the association, so they aren't going to be around to complain about it after closing. If your association has ten sales a month, and the management company charges $500 for the resales - they've generated nearly two months of management fees.

Critics of resale fees argue that they are absurdly high for something that is just "pushing a button to generate reports" or "attaching a file". But a human being has to do that, and that person has to get paid and insured and work in an office that rent and utilities are paid for, etc. And I have to go out and inspect each property before it's sold, update the information in the disclosures every month - and my time is worth something too.

I'm not opposed to capping them because the fees my company charges are pretty close to what the proposed cap is and I would prefer to see management companies raise their base rates instead of hiding rate increases in resale fees. In the market I work in, it's a race to the bottom, with big companies low-balling bids and making it up in schedule A fees and resales. But the bill that would cap them also contains a lot of other stuff that doesn't protect homeowners and actively punishes small and self managed associations.

BillH10
(Texas)

Posts:783


05/18/2021 12:05 PM  
Barbara

To add to your description of the Resale Certificate process, the MC is responsible for answering questions from the seller, buyer, both agents, the title company, lenders, inspectors, and anyone else involved in the sale. There is no way members of the Board are at all equipped to manage the process or respond to questions. We also complete documents regarding the Association for the lender if asked.

Our fee provides all the necessary documents to the title company and others and up to five hours of answering questions, email, mileage to and time spent at meetings, etc. Most sales go smoothly, some do not. We have spent 8.5 hours on a pending sale for an owner in one of our client associations, we bill at $90.00 per hour for time over the initial five hours.

If a buyer's inspection results in requests for repairs, we must then convene the Board to consider the repairs so they can make a decision to accept or deny the request. If they accept the request, we sometimes go into bid gathering and securing the services of contractors mode.

I agree with your comments and analyses regarding the legislation. CAI/TCAA has been very direct regarding the underlying motivation of the real estate industry in driving these bills.
BarbaraT1
(Texas)

Posts:589


05/18/2021 12:49 PM  
Posted By BillH10 on 05/18/2021 12:05 PM
Barbara

To add to your description of the Resale Certificate process, the MC is responsible for answering questions from the seller, buyer, both agents, the title company, lenders, inspectors, and anyone else involved in the sale. There is no way members of the Board are at all equipped to manage the process or respond to questions. We also complete documents regarding the Association for the lender if asked.

Our fee provides all the necessary documents to the title company and others and up to five hours of answering questions, email, mileage to and time spent at meetings, etc. Most sales go smoothly, some do not. We have spent 8.5 hours on a pending sale for an owner in one of our client associations, we bill at $90.00 per hour for time over the initial five hours.

If a buyer's inspection results in requests for repairs, we must then convene the Board to consider the repairs so they can make a decision to accept or deny the request. If they accept the request, we sometimes go into bid gathering and securing the services of contractors mode.

I agree with your comments and analyses regarding the legislation. CAI/TCAA has been very direct regarding the underlying motivation of the real estate industry in driving these bills.




You do condos right? Yes, the resale process for condos is much more complicated. I was speaking from the single family perspective. I think this legislation would only affect SFH.

What blows my mind about the TREC requirement is that TREC currently has no platform on which to register! They would have to create one. So they can store documents that are already on file with the secretary of state and county clerk. Utter nonsendse. But TRA is a powerful lobby.

I called every single member of the calendar committee yesterday and bored a lot of assistants with my explanations of why this is a bad bill.

Just once I wish legislators would talk the people in the industry, before they pass laws to change the industry.




BillH10
(Texas)

Posts:783


05/18/2021 1:40 PM  
We do condos at the present time but have managed HOAs in the past; we would not walk away from the opportunity to manage a small HOA of up to 50 homes. Except the one in which we reside. From that, we would run far and fast.

I believe you are correct, all the information I can find indicates the bills would affect Property Code 209 associations only, not condos. (Sigh of relief!!)
RogerJ1
(Texas)

Posts:151


05/18/2021 6:19 PM  
Posted By SheliaH on 05/18/2021 10:13 AM
religion.

2 – this may be faster than getting the community to agree to remove discriminatory language (especially when you know there are people who really want to keep it)




This the proposed law I first heard about during a local NPR story. There are some communities in Texas with discriminatory language still in their CCRs. The example the show gave was a large HOA in Houston that had language in it documents that only Caucasian members had a HOA votes. Most wanted to remove it, and it was not enforceable anyway, but the association could not get the numbers required for such an amendment. Supposedly there are a lot of example across the State like that one. This law is to allow the removal of such language outside of the Association's thresholds etc.
RogerJ1
(Texas)

Posts:151


05/18/2021 6:33 PM  


8 – I really don’t have a problem with this one, although I would say fines should be limited to the actual expenses the HOA had to incur to resolve the problem and there may need to be a cap on how much could be charged. Any fines schedule should also include an appeals process and perhaps a provision for dispute resolution.




Texas allows up to $200 a day fines. The risk to me, even if one might prevail in court, is that without a fine schedule you might get some power hungry Board that issues such outrageous fines. There was an HOA, in Houston, in the news the last few years that did that, $200/day, over landscaping, and a 3 months battle turned into an $18K fine and the homeowner lost home over it.
LaskaS
(Texas)

Posts:536


05/18/2021 6:52 PM  
I am in a condominium association . If these changes pass. they need to apply to condominium associations too!
LaskaS
(Texas)

Posts:536


05/18/2021 6:57 PM  
our condominium association was formed pre 94 so we are governed by texas condo law 81.. not 82.
One of the glaring differences. under 81. the condo board members have no fiduciary duty obligation .

With CAI pushing it's members to oppose the changes in legislation, Does anyone have any information about who condo and home owners can contact to give support to these legislative changes.
BillH10
(Texas)

Posts:783


05/19/2021 1:34 AM  
Laska

Your legislators, but you are most likely too late to have the bills amended to cover Chapter 81 and 82 condominiums.
AugustinD


Posts:1920


05/20/2021 2:22 PM  
Posted By LaskaS on 05/18/2021 6:57 PM
our condominium association was formed pre 94 so we are governed by texas condo law 81.. not 82.
One of the glaring differences. under 81. the condo board members have no fiduciary duty obligation .
Texas case law undoubtedly states a Texas corporation's directors owe a fiduciary duty to the corporation.
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