Platform
The HOA Reform Coalition generated this preliminary platform for the 82nd Texas legislative session (ending June 2011). It is a work in progress. If you want to be a part of the process, contact a member of the coalition.
Introduction. Homeowners associations (HOAs) tax and foreclose if the homeowner does not pay whatever is demanded. HOAs fine and sue if the homeowner does not do whatever is commanded. Some HOAs intervene between utility service providers and the customers and yet are not regulated as utility service providers or governments. The privatization of traditional governmental functions including infrastructure, utilities, and road maintenance has led to many abuses. An HOA has been given governmental powers but without the limitations of a legitimate government. HOAs do not operate under laws designed to protect citizens from government in other contexts (city, county, state, federal).
For example, HOAs conduct elections but don’t follow the same election rules that other governments must follow. HOAs grant exceptions to taxes (HOAs call property taxes “assessments”) or the rules of the community but don’t have to tell the other members about it. HOAs are allowed to play favorites in secret which is unfair, and provides incentives for bribes and inappropriate quid pro quo. HOAs collect information and will release it to whom they want, in the form they want (a critic or person wishing to challenge the HOA cannot get information). HOAs have relationships with private attorneys such that enforcement actions make the attorneys large profits, and impose fees grossly disproportionate to small debts and violations that may exist (and even where violations do not exist, but it is too risky for home owners to dispute). These attorney fee schemes enrich the HOAs and attorneys on the backs of the homeowners. HOAs have more incentives to foreclose with few risks as compared to a lender holding a nonperforming home loan. Management of HOAs is big business, as is the development of subdivisions with HOAs. HOAs managers and attorneys give kickbacks to developers so HOAs are imposed on new developments from the inception.
The HOA Reform Coalition proposes the following platform for the Texas 2011 Legislative Session:
PRIORITY ONE: Increase in procedural protections to prevent wrongful foreclosure. Many members strongly wish to prohibit an HOA from foreclosing in general, but would agree to an exception to the general rule. Members wish that the language be modeled off of what is currently in the homestead protection found in the Texas Constitution (Art. XVI, Section 50(a)) which provides a general rule, but lists specific exceptions. This structure will decrease the use of creative arguments made by clever lawyers trying to foreclose when it was never intended. This, and other new protections, should apply to condominium owners as well as owners of single family homes in HOAs.
The exception allowing foreclosure should only exist if all are true:
(1) if the homeowner is behind in taxes (“assessments”) after applying all payments according to the appropriate priority (funds received apply to the assessments first);
(2) the assessments in default must be a significant specified amount, and that amount must have been in default at least 120 days;
(3) the homeowner has not entered into a payment agreement with the HOA or has materially defaulted on a payment agreement;
(4) the homeowner is not eligible for a deferral under the Tax Code (over 65 or disabled and eligible to receive SSI);
(5) the homeowner has received notice by regular mail and certified mail of the default and been given 120 days to cure or make a payment plan without imposition of attorney fees or other charges;
(6) the board of the HOA has approved the foreclosure by a 2/3 vote of the board at a public meeting; and
(7) the foreclosure was judicially approved.
PRIORITY TWO: Remove Incentives to Foreclosure. There are also other incentives and abuses occurring in the foreclosure process. Insiders can buy even fully paid-for homes for minimal amounts. As compared to a lender, HOAs have more incentive and less disincentive to foreclose. Attorneys representing HOAs similarly have no incentive to prevent a foreclosure and also stand to make more money if they go forward. One way to address it is having minimum prices. Thus, if a HOA posts a property for foreclosure sale, the minimum price for any foreclosure sale must be at least 50 percent of the appraisal value of the property according to the tax records (or more recent professional appraisal) less any debts secured by the home that the buyer takes subject to. In other words, if there is a $100,000 home, and a $30,000 mortgage that will survive the HOA foreclosure sale (the new buyer obtains title subject to a mortgage lien after the HOA foreclosure), then the minimum bid for the home must be $35,000 (Calculation: 100 – 30 = 70, 70 x .5 = 35). Also, if a foreclosure sale occurs there must be a cap on fees if it is uncontested (similar to the FHA cap on foreclosure costs currently applicable to thousands of foreclosures of FHA properties in Texas).
PRIORITY THREE: Payments plans should be available for job loss, family death or illness, divorce or legal separation and other comparable hardship. In certain situations, homeowners deserve a minimum of one year with no administrative charges or attorney fees. Homeowners may need a greater extension upon sufficient showing of reasonable need. HOA assessments are taxes and property taxes have a variety of exceptions, exclusions and deferrals.
PRIORITY FOUR: Attorney fee parity. Clarify homeowner attorney fees and other remedies and defenses. Homeowners need to recover attorney fees if they prevail when sued by a HOA. Homeowner rights to sue their HOAs should not be limited by procedural barriers, whether in deed restrictions or elsewhere. Practices that enable unequal treatment should be forbidden. The court should have discretion to award part or all of the attorneys fees as the court deems just regardless of who wins, as is done under the Declaratory Judgment Act.
PRIORITY FIVE: Clarify the existing law regarding HOA director liability, and statutes of limitations. Currently directors of non-profit associations can only be sued for serious violations, and have special protections shared with all unpaid directors of non-profits. Although this almost never leads to litigation, existence of the potential claim discourages the most egregious violations. Existing limits on powers to amend deed restrictions should be respected (at least up to a stated supermajority), and minimum limits should be set on the power to amend deed restrictions. The current four year statute of limitations is long enough for these governments to start collection and any valid enforcement activities.
PRIORITY SIX: Remove the loophole in Sections 209.006 and 209.007 of the Property Code so homeowners get notice before an HOA can foreclose or fine a homeowner. Homeowners understand the potential need for rapid action if a true emergency exists (one that threatens health, welfare, or safety), thus the time to cure should be limited in these situations, but notice should still be given. Landlords must be given notice of a problem, regardless, so they can try to fix it before tenants can sue them. It makes since for all property owners, not just landlords. Under current law, HOAs can (and routinely do) simply use a lawyer loophole to avoid giving homeowners notice of a problem and opportunity to cure.
PRIORITY SEVEN: Additional limitations on, if not preclusion of, HOA imposed fines and fees, and improper restrictions on private property. The concept of private fines, legislated, enforced, and interpreted by under-the-radar HOA boards is anathema to homeowners. Governments should impose fines only for the serious offenses. If they must be allowed as under proposed Property Code 209.007, they ought to be limited to activities that constitute a nuisance under Texas law, and the Justice Court needs power to enforce statutory caps and to ensure records production that guards against discriminatory enforcement. Some HOAs have begun imposing attorney fees not expressly authorized by deed restrictions, billing homeowners for work purportedly done in response to homeowner actions not forbidden by the deed restrictions, and the law should clarify that such fees amount to forbidden fines. Homeowners oppose restrictions and other rules that require binding arbitration, that limit their ability to criticize the HOA board, and that mandate providers of utilities or other services even after homeowners take the board from developer representatives.
PRIORITY EIGHT: Clarify the rights to open meetings and records. Directors should not be allowed to use semantics (such as “working” or “administrative” sessions) to avoid open meetings, and statutory provisions can clarify notice required for meetings, which should be held near (if not among) homes. While homeowners in some circumstances want disputes heard privately, those who prefer an open session should be allowed that choice so neighbors can hear what may be discussed. Remedies for violations need to be strengthened.
PRIORITY NINE: State Agency Oversight, and a repository for basic information concerning HOAs based on annual reports. Web-based reporting, maintained by an appropriate state agency, benefits both potential homebuyers as well as homeowners who seek to assure that their HOA does not covertly abuse powers. HOAs that have web sites also should include common information required for resale certificates (the costs for which should be capped). Homeowners and other elected officials need to know how many HOAs are in Texas, where they are, who is running them and other basic information. Homeowners also need to be able to complain to one statewide governmental agency that can compile complaints, and distribute basic information to homeowners about their rights, limit HOA abuses so homeowners are not faced with hiring an attorney to protect their home.
PRIORITY TEN: More control for homeowners during development period, and must be an end to development period. While developers have an interest in a development being sold, home owners have an interest in being treated fairly, and have an actual voice in the government that is taxing, fining and foreclosing on them. The right to taxation must come with fair representation. As a development ages, more control and authority must be granted to homeowners, and at some point the development period must end (rather than be perpetually in the development period).
Conclusion. Homeowners seek statewide protection from a host of abuses that have long ago been addressed for all other forms of government. Extraordinary powers given to HOAs should be replaced with more limited powers to address what HOAs really need, as opposed to the power they want.
Comments are closed.
PLEASE HELP SEND CSSB 142 TO THE HOUSE FLOOR. BELOW ARE SOME OF THE REFORMS IN CSSB 142. E-MAIL CALENDERS COMMITTEE AND ASK THEM TO RUSH THIS IMPORTANT REFORM BILL TO THE HOUSE FLOOR
Priority of payment helps Associations and homeowners, the first priority is to pay assessments; the current way all money goes to the attorney and towards management company junk fees. Homeowners can never get caught up, with additional fees being added monthly. ASSOCIATIONS BENEFIT BY RECEIVING THEIR MONEY FIRST.
Recovering attorney fees in litigation may go to the winner, homeowners and Associations will benefit by having less litigation and fewer attorney fees.
Homeowners will be notified about board meetings in advance, everyone will benefit.
Homeowners will be notified and given thirty days notice before their account is turned over to a third party collector (HOA attorney) Associations will benefit by collecting their assessment sooner, and with less cost to all concerned.
Information like deed restrictions, CCRs will be provided to new home owners and made available on HOA websites at no charge, resale certificates will no longer have expensive surprises at the closing table.
Association records will be available to homeowners, at the same cost as other government agencies charge.
Homeowners that are being foreclosed on by their HOA will receive service and notice in advance; and have 30 days before attorney fees and management fees are added.
Homeowners will have a voice when deed restrictions are changed. Board resolutions that would add fining in
associations and other costly practices will be voted on by the homeowner members.
HOAs will no longer be able change CCRs that would require homeowners to make significant and costly changes to pre-existing structures.
Solar power and heat resistant shingles must be approved.
YOU CAN COPY AND PASTE THE E-MAILS FROM BELOW
todd.hunter@house.state.tx.us, dennis.bonnen@house.state.tx.us, dan.branch@house.state.tx.us, garnet.coleman@house.state.tx.us, byron.cook@house.state.tx.us, charlie.geren@house.state.tx.us, jim.keffer@house.state.tx.us, tracy.king@house.state.tx.us, lois.kolkhorst@house.state.tx.us, eddie.lucio_III@house.state.tx.us, allan.ritter@house.state.tx.us, eddie.rodriguez@house.state.tx.us, vicki.truitt@house.state.tx.us, john.zerwas@house.state.tx.us,
As long as financial incentives exist for HOAs to bleed homeowners, they will bleed homeowners to death.
Among the HOA Industries many false claims is that very few foreclosures filed by HOAs actually become “foreclosed homes.” In addition they claim that the HOA is not in the “Real Estate” business. However recent Internet searches have revealed that the attorney’s representing HOAs are very much involved in buying and selling foreclosed homes. Attorney’s that represent HOAs as “Trustee” routinely purchase foreclosed property, in the name of the “Homeowners Association.”
Below please find examples in Harris County:
http://houston.blockshopper.com/search?q=OWNERS+ASSOCIATION&classes%5B%5D=Sale
http://houston.blockshopper.com/search?q=Lisa+A+Willis+&classes%5B%5D=Sale (Butler Hailey)
http://houston.blockshopper.com/search?q=CONDOMINIUM&classes%5B%5D=Sale
http://houston.blockshopper.com/search?q=RICK+S+BUTLER&classes%5B%5D=Sale (Butler Hailey)
http://houston.blockshopper.com/search?q=RUSSELL+HOLT&classes%5B%5D=Sale (Holt and Young)
http://houston.blockshopper.com/search?q=JAMES+R+YOUNG&classes%5B%5D=Sale (Holt and Young)
http://houston.blockshopper.com/search?q=CASEY+LAMBRIGHT&classes%5B%5D=Sale (Lambright and Ass.)
We like this BLOG! We added a link to it from our Website: http://hoaadvocate.homestead.com/What-s-New-.html
Later……….Sam
Public Health is often compromised due to vague, The Board has complete control to decide what is “unsightly” and then make demands on homeowners clauses. (ie. one of our AC units went out the year my husband was laid off after 12 years w/local manufacturer.) We purchased 3 small window units & placed 2 in our kids windows and one in our loft–the one in the loft at the side of the house was “ok” but the two we needed to keep our kids from 104 degree heat were deemed “unsightly” by our HOA (Picadilly Ridge) because they faced our street and were in the FRONT…ours were small, brand new & almost blended in w/our brick…this was a “health” issue & we even covered the units as seasonal decorations…we were met w/threatening letters from their attorney AFTER they sent differing rulings on what covenant we had actually violated! (if no window units allowed, STATE so in the covenants–they won’t as this is a “HEALTH ISSUE” that could result in DEATH for some…they hide behind the “unsightly” rule..oh, the attorney involved TRIED to tell us we were making structural changes & needed Board consent that would have been denied anyway…hmmmm, window unit–structural Change—yea right…it’s REMOVABLE; therefore, NOT STRUCTURAL! And yes, we did get another letter years ago about a car in our driveway w/a SPARE tire on it…REALLY??? Our household votes to DIS-BAND HOA’s altogether! Several of my neighbors have also gotten letters over really mundane things like grass cutting, trash cans and even things set up in their BACK yard out of view!
I have a problem with Priority 1: Why the heck should an HOA ***EVER*** be able to foreclose on a property? Giving property associations this kind of power is ridiculous. Liens serve the interests of the property owners collectively, without the abuses that go along with the foreclosure process.
No comment. I agree with most of what’s posted.
We can go on and on about Home Owners Association however maybe we need to look at the reasons Home Owners Associations were created. The growth of cities into the suburbs caused developers to build homes in areas that did not have a central city government to provide the necessary support for these developments. The State of Texas did not try to limit development but exasperated the situation by allowing further development and creation of another creature known as a Municipal Utility District. Both of these monsters were created and allowed by the Texas Legislature and they should never have been allowed to be created as this is the problem. We need local county land developement regulation and at this time there is very little land control regulation by county government. Home Rule for County Government would allow the counties to regulate land use and could in a sense put a check on Home Owners Associations.
While you may be right about why they flourished in part originally, but more county control will not change HOA’s ability to tax, fine, and control homeowners at this point. If you own a home within the HOA then you are bound under contractual principles. Developers make serious money now when they place developments under the control of an HOA. Management companies are hired by the developers to run the HOA and they throw money back at the developer. Everyone does well except for the homeowners. And just so you know, more county control is not going to happen in the foreseeable future given its recent defeats at the capitol and the political winds at present. Developers and builders do not want government control granted to the counties, and neither do conservatives. See e.g.,
http://www.texaspolicy.com/pdf/2010-12-PB06-CountyAffairs-rb.pdf
I have been a vocal critic of my Association: Courtyards of Three Fountains due to mostly rising maintenance fees and bad management. I have started running for the Board . Every year the Board sends out a mailer informing homeowners of the upcoming elections and the candidates that run for the Board. Since they are afraid I get elected because of my name recognition, they have started omitting all candidate names from the annual letter. At the night of the annual meeting they just fill in the proxies that are sent by unsuspecting homeowners with the name of the people who they want to win and beat me.
There should be a governmental agency that I should be able to file a complaint against the Board and not have to go through expensive litigation.
Robin Klar Lent
robinklar@aol.com
There will be no HOA relief for Texas homeowners this session, unless homeowners unite.
The bottom line is, with rights come responsibility. For decades, HOA Corporations have been wildly irresponsible with their rights. Our lawmakers have ignored their duty to protect homeowners against those HOAs that abuse their rights. Every session, at their own expense, advocates for homeowners make numerous trips to Austin. It is an outrage that session after session Texas homeowners are ignored and insulted by being denied their basic rights. Session after session homeowners plead with Lawmakers for basic fundamental rights; only to be denied because homeowners refused to except more restraints.
It is barbaric that homeowner advocates have to sift through 18 page bills, like TUPCA and HB 1976, that are
loaded with land-mines and loopholes, written by Industry attorneys, that plunder working class homeowners.
Homeowners across Texas need protection from run away HOA Corporations. Do we let drug addicts write laws for drug possession? Does our country let the MAFIA police itself? Does contract law mean that one party can unilaterally amend agreements or extort money? How long will Lawmakers continue to let HOA Corporations justify their abuses, write their own laws and continue this feeding frenzy on homeowner’s assets? When will lawmakers recognize the Industry’s failure to live up to its legal duty and performance expectations?
The Industry attorney’s who have written TUPCA and HB 1976 have deliberately betrayed our Government officials. This is a continued assault on homeowners by an “Evil Empire.” The “Evil Empire” preys on the working class, minorities and our senior citizens. Many residents fail to report abuse,this is especially true about reporting abusive HOA Corporation, for fear of retaliation or the threat to their family and home.
HOA Corporation across the State have failed to comply with the most basic constitutional due process protections by ensuring that homeowners understand the violations against them and have a meaningful
opportunity to be heard. In many foreclosure cases, homeowners are unaware of the real possibility that they are about to lose their home, sometimes for as little as $100.
I have testified numerous times about this growing epidemic. At least twice this year I have pointed out to Lawmakers that Property Code 209 does not give homeowners the fundamental rights to receive notice before legal action is taken by their HOA, this includes foreclosure. I have used the following scenario in my testimony: that after receiving the motions in limine during our litigation the Association attorney wrote…
“The Lents can not mention that no notice was given by their Association, because notification before filing legal action is not required by law…” In all honesty, I never put HB1976 in context with current law, until advocates were given three days to submit objections to HB 1976. What follows describes a sampling of my objections to HB 1976.
HB1976 would require homeowners to give 30 days notice before initiating certain legal action against their HOA. At the same time, in the very same bill, HOA Corporations would still not be required by law to give homeowners any notice or a right to be heard. There are five pages of promises in HB 1976, written notice, right to be heard, priority of payment, fine controls that give the illusion of relief to homeowners. Chapter 209 and HB 1976 were purposely written by Industry attorneys to give the illusion of these rights. The truth is that Chapter 209 and HB 1976 deny all homeowners of these fundamental rights.
The “Evil Empire” continues to use its weapons of influence to control homeowners by selectively presenting the facts to Lawmakers. All lawsuits filed by Homeowner Associations contain at least one of the following;
Foreclosure, Temporary Injunction or Restraining Order.
HB 1976 was deliberately written around 209.006 (a) and 209.007 (d)
These two parts of chapter 209 completely gut HB1976s promises of reform to Texas homeowners.
All (the wording in) needs to be redacted from Capter 209 to give homeowners the promised provisions (in HB1976 meaning.
209.006 starts at HB1976 page 13-69
14-1
§ 209.006. NOTICE REQUIRED BEFORE ENFORCEMENT ACTION.
(a) Before a property owners’ association may suspend an owner’s
right to use a common area, file a suit against an owner ((other than a suit to collect a regular or special assessment or foreclose under
an association’s lien, charge an owner for property damage, or levy
a fine for a violation of the restrictions or bylaws or rules of the
association,)) the association or its agent must give written notice
to the owner by certified mail, return receipt requested.
209.007 starts at HB1976 page number 15-67
§ 209.007. HEARING BEFORE BOARD; ALTERNATIVE DISPUTE
RESOLUTION.
(d) ((The notice and hearing provisions of Section 209.006 and
this section do not apply if the association files a suit seeking a
temporary restraining order or temporary injunctive relief or files
a suit that includes foreclosure as a cause of action.))
We should ask for the “HOA Death Penalty”
The Legislature should render all Fee-enabling restrictive covenants imposed/written by developers valid for not more than 10 years, and any declaration of such covenants that is more than 10 years old be rendered null, void and unenforceable. This includes “transfer fees”, “lien rights”, and any right to fine or impose monetary demands legally upon detached family home properties.
These covenants may only be valid if, and only if, a petition bearing the signatures of at least 75% of the owners affirming their agreement to such fee-covenants. A maximum duration of any such contract/covenant shall be 10 years, renewable only upon written affirmation of not less than 75%.
This “death penalty” would restore the right to a “republican form of government” for homeowners who now live outside of constitutional norms and are not protected from abuse by HOAs.
Texas Constitution
Article 1. Bill of Rights
Sec. 2. INHERENT POLITICAL POWER; REPUBLICAN FORM OF GOVERNMENT. All political power is inherent in the people, and all free governments are founded on their authority, and instituted for their benefit. The faith of the people of Texas stands pledged to the preservation of a republican form of government, and, subject to this limitation only, they have at all times the inalienable right to alter, reform or abolish their government in such manner as they may think expedient.
Automatic renewals of the governing powers granted by developers in CC&Rs violates the rule against perpetuities:
Texas Constitution
Article 1. Bill of Rights
Sec. 26. PERPETUITIES AND MONOPOLIES; PRIMOGENITURE OR ENTAILMENTS. Perpetuities and monopolies are contrary to the genius of a free government, and shall never be allowed, nor shall the law of primogeniture or entailments ever be in force in this State.
This coalition should consider that while this HOA “death penalty” would eliminate all developer-imposed burdens on consumers after the developer control period ends, the consumers have the authority to re-impose these burdens if they choose to do so voluntarily. The property code has, since 1985, provided for the creation of and renewal of these fee-covenants provided that 75% of the owners agree to form such a contract.
The blessings of a democratic choice by the people would insure that these fee- based covenants are imposed ONLY where the people choose to impose them.
We cannot sustain the status quo of unregulated fees being imposed on consumers against their will, in perpetuity. The Death Penalty will get rid of the bad HOAs, and allow the good ones to be renewed by the owners. The industry claims that over 90% of the people living in HOAs “love them” and voluntarily surrendered their constitutional rights in exchange for the protections offered by this form of contract government, so they should support this measure which will give the “silent majority” a voice.
The Universal Declaration of Human Rights demands no less than a periodic vote on this issue of a “contract government” such as the CC&Rs impose.
Article 20.
* (2) No one may be compelled to belong to an association.
Article 21.
* (3) The will of the people shall be the basis of the authority of government; this will shall be expressed in periodic and genuine elections which shall be by universal and equal suffrage and shall be held by secret vote or by equivalent free voting procedures.
Citizens living in developer-imposed HOAs have been deprived of these basic human rights, and it is time to allow these citizens to choose if they want to renew the contracts or allow them to lapse.
The Texas Propert Code does not require HOAs to give notice to a
homeowner before foreclosure or legal action.
Proper notice before foreclosure should be a basic fundemental right.
The section between ***** should be deleted from P.C. 209
§ 209.006. NOTICE REQUIRED BEFORE ENFORCEMENT ACTION.
(a) Before a property owners’ association may suspend an owner’s
right to use a common area, file a suit against an owner *****other than a
suit to collect a regular or special assessment or foreclose under
an association’s lien, charge an owner for property damage, or levy
a fine for a violation of the restrictions or bylaws or rules of the
association***** the association or its agent must give written notice
to the owner by certified mail, return receipt requested.
This is from Robin Klar Lent in Spring, Texas