How can this happen in Texas?
By Beanie Adolph
Many Texas homeowners who face loss of their home or fines from an HOA ask:
How can this happen in Texas?
How can this happen in America?
The short answer is that, since the early 1980s, commercial interests – primarily HOA attorneys and HOA management companies (the “HOA Industry”) – have worked to change Texas laws to allow the HOA Industry to make yet more money from Texas homeowners. Every legislative session, these commercial interests have lobbyists trying to convince Texas legislators to grant more power to the HOA Industry. Since at least the early 1980s, Texas homeowners have lost significant rights of privacy and control, and have become subject to fines, other money judgments, injunctions which control their lives and homes, and foreclosure. This assault, authorized largely in secret, reflects power given to HOAs without voter approval or even voter knowledge. For too many homeowners it is the devastating loss of home and savings.
Some of the major legal events that allow a Texas HOA to exercise its power over homeowners:
1983 – A new HOA weapon – attorney fees
In 1980, a lawsuit between an HOA and a Texas homeowner was on an even playing field with respect to attorney fees – i.e., each party paid its own attorney fees. Today, and in fact, since 1983, a new law granted to a Texas HOA a powerful weapon against a homeowner – the right to recover the HOA’s attorney fees while the homeowner has no complementary right.
From the first time an attorney is involved, the stakes for the homeowner change. The HOA attorney fees add up quickly, usually exceeding the original dispute cost. The longer the suit continues, the bigger the financial risk for the Texas homeowner, but not for the HOA. This one change has forced thousands of Texas homeowners to capitulate in disputes with HOAs because a dispute over an oil spill or a basketball goal just is not worth the risk of thousands of dollars in attorneys’ fees.
1987 – Loss of the homestead protection against HOA foreclosure
In 1980, the Texas Constitutional homestead protection prevented an HOA from foreclosing on a home. Today, and in fact, since a Texas Supreme Court decision in 1987, the Constitutional homestead protection is ignored for all HOA liens for assessments. There was no statewide election on an amendment to the Texas Constitution on whether to eliminate the homestead protection. There was no legislative vote on a new law to eliminate the homestead protection, with the accompanying committee hearings and ultimate governor signature. There was not even a court hearing where Texas homeowners in general or even one Texas homeowner presented arguments against the loss of the homestead protection. Texas homeowners lost their homestead protection in a Texas Supreme Court 3-2 decision, that reversed “judgments upholding the homestead protection by the trial court and the court of appeals”, where only the HOA had an attorney and only the HOA presented arguments. No one argued for the Texas homeowners.
Now, Texas HOAs file thousands of foreclosure actions every year, causing many Texas homeowners either to abandon their homes or to lose their homes at foreclosure sale. HOA attorneys and HOA management companies reap untold profits every year from these foreclosure actions – all taken from Texas homeowners.
1995 – The HOA industry’s special focus on Houston
In 1980, without the consent of the homeowner, a Texas home could never be subjected to an HOA. Today, and in fact, since 1995, a 1995 law allows an HOA in Harris, Galveston, Brazoria, and Montgomery Counties to be forced on a nearby Texas homeowner without the homeowner’s consent. A Texas homeowner can own a home outright for forty years, and then, suddenly, without the homeowner’s consent, the homeowner can be subject to mandatory HOA dues, HOA rules that control the use and appearance of the home, and the risk of HOA fines and foreclosure.
In 1980, a Texas home could never be subjected to new deed restrictions without the homeowner’s consent. Today, and in fact, since 1995, in that same Houston area, that same 1995 law allows an unlimited number of new HOA deed restrictions to be added without a homeowner’s consent.
In 1980, a Texas HOA had only the powers expressly listed in a formation document – powers agreed upon by every homeowner in the HOA. Today, and in fact, since 1995, that same 1995 law grants to a Texas HOA in the four Houston area counties not only its expressly listed powers but also many unidentified additional powers that the HOA may think “necessary and proper” or implied.
In 1980, Texas HOAs generally did not charge homeowners any fees, and in fact, many HOA dues were not mandatory. Today, and in fact, since 1995, that same 1995 law and other more recent laws allow an HOA to charge resale certificate fees, document copy fees, collection fees, inspection fees, violation enforcement fees, transfer fees, and many other fees that an HOA or management company or HOA attorney can dream up. The potential list of fees has no end. HOA attorneys and management companies now earn millions of dollars in revenue from fines and fees charged to homeowners.
The HOA industry won all these new powers by enactment in 1995 of Texas Property Code Chapter 204. The Legislature passed this new law at the 11th hour on the last day of the session, on a voice vote, rules suspended twice, absent public knowledge or media attention. The HOA industry wrote the 1995 bill as a “bracket bill”, i.e., a bill bracketed to a particular, but unnamed geographic area defined only by population (in 1995, just Harris and Galveston Counties). When a bill applies only to a limited geographic area, legislators who are not from that area often pay no attention to the bill or give deference to lawmakers from the specified area. Obviously, the effects of this bill have continued and expanded across the state.
The effects of these many legal changes across the state
The result of this thirty-plus year assault on homeowner rights has been catastrophic for many Texas homeowners. Most Texas home buyers have little choice but to buy a home subject to an HOA. HOA foreclosures have exploded. HOA fines and fees have multiplied.
After 1995, foreclosure filings in Harris County rose from below 500 in 1990 to about 2200 in 2007. In Harris County from 1985 to 2007, HOA foreclosure filings totaled 25,726.
HOA foreclosures in Harris County adversely affect poorer homeowners. The vast majority of HOA foreclosure filings are against lower income homeowners as shown by the table below for 1985-2001 (with 2001 home values).
Many homeowners threatened with foreclosure have little chance to pay off the thousands of dollars in attorney fees that are demanded early in these cases. This has led many homeowners just to abandon their homes.
 Beanie Adolph is associated with hoadata.org and a director of HOA Reform Coalition of Texas
 Developers on occasion also align with the HOA Industry.
 Texas Property Code Section 5.006.
 The statute generally allows only the first party to file the suit to recover attorney fees.
 In the 1987 Texas Supreme Court Inwood decision, three majority justices (against two dissenting justices — Justices Mauzy and Gonzalez) held that the Texas Constitutional homestead protection did not protect a homeowner from foreclosure by an HOA for delinquent assessments, reversing judgments upholding the homestead protection by the trial court and the court of appeals. Justice Mauzy recommended in his dissent in Inwood:
If the Constitution is to be amended to destroy or weaken an individual’s homestead exemption, it should be done as prescribed by the Constitution in article XVII, section 1. What is required is passage of a proposed amendment by at least 100 affirmative votes of the members of the House of Representatives and at least twenty-one affirmative votes of the members of the Senate, and a majority vote of all the people of this State who choose to vote at a public election held for that purpose. TEX. CONST. Art. XVII, § 1 (1845, amended 1972). A strict construction of our Constitution requires this result. I would require no less.
 Texas Property Code Chapter 204.
 Texas Property Code Section 204.01
 In a typical arrangement, a management company contracts with an HOA at below-market rates and makes its profit through fines and fees charged to homeowners. The HOA and the management company benefit at the expense of the homeowner.
 House Bill 2152 passed on the third reading May 27, 1995. The bill was then sent to the Senate. Senator Gallegos moved that Senate Rule 7.18 and the Constitutional Rule requiring bills to be read on three several days be suspended and that H.B. 2152 be placed on its third reading and final passage. The motion prevailed by the following vote: Yeas 31, Nays 0. The bill was read third time and was passed by a viva voce vote. The Senate passed the bill May 27, 1995. The bill was enrolled May 28, 1995, and sent to the Governor May 29, 1995. Texas 1995 Session from January 10 to May 29. http://www.lrl.state.tx.us/scanned/Senatejournals/74/05271995_81_3500.pdf
 The graphic is based on information from HOADATA.ORG.
 This graphic is also from HOADATA.
2017 is fast approaching and that means the Texas Legislature will meet for its 85th session. The regular session begins January 10, 2017, and ends May 29, 2017 – 140 days.
In preparation for the new session, the House Business and Industry Committee held a public Interim Hearing on June 8, 2016 – invited testimony only. Charge #4, which concerned Home Owner Associations, was:
- Examine the regulatory powers of property owners associations and the procedures available to home owners when an association restricts individual or property rights.
- Review current best practices to help clarify the balance of property rights, transparency in governance, and the best interests of property owners in the state.
The Committee included the following representatives:
- Rep. René O. Oliveira (Chair)
- Rep. Ron Simmons (Vice Chair)
- Rep. Nicole Collier (did not attend the hearing)
- Rep. Allen Fletcher
- Rep. Matt Rinaldi
- Rep. Ramon Romero, Jr.
- Rep. Jason Villalba
The four witnesses were:
- CAI/TCAA witnesses Mike Walker and Marta Gore.
- Attorney Gregory Cagle stated that he represented both POAs and homeowners adverse to their POAs.
- Attorney David Kahne stated that he represented homeowners adverse to their POAs.
Texas homeowners must unite to demand their rights which have been taken from them over the past 30+ years. The HOA Reform Coalition is waiting on the results of the November 8, 2016, election, to learn names of all the members of the 2017 Texas House and Senate.
Last October, the Coalition held a workshop to gather input for this upcoming legislative session. The issues that were most important to those in attendance were:
- Require boards to read/follow Governing Documents and require education
- Enforce laws for POAs/HOAs, management companies, and attorneys
- Establish a regulatory body (possibly elected) over POAs
- Expand HOA laws to Condos/Townhomes
- Provide a mechanism to recover attorney fees – mandatory
Several other concerns were brought up during this workshop which the Coalition plans to present during this coming session. The plight of those who live in POAs has too long been ignored.
The Coalition needs Texas homeowners to contact their state Senators and Representatives regarding their own problems and when their support or opposition is needed for proposed bills. The Coalition will send periodic emails during the coming session to alert you to various bills that will need your support or opposition.
Let 2017 be the Year of the Texas Homeowner!
Beanie Adolph– Director
Nancy Kozanecki – Assistant Director
Whew! What a few weeks this has been. Heavy rains. Flash floods. Tornados. And yet we did meet for the HOA Reform Fall Conference on Saturday, October 24. Despite the many last-minute cancellations, some members managed to travel from San Antonio, Austin, and even from the Dallas-Fort Worth area. Good work was accomplished and we had an opportunity to honor Mary Lou Durham who was most helpful in homeowner successes at this past session.
Attorney David Kahne presented a review of the new Texas Legislation which is now available on his website http://texashoas.org/. David and Nancy then discussed preparation for the 2017 legislative session which was followed by members ranking the issues. Their choices are being studied and will be discussed over the next months.
Attorney Bill Davis arrived from the Austin area to explain “The Not-So-Omnipotent HOA – Chapter 1”. Bill has found there are so-called HOAs which exert powers not rightfully theirs.
David and Beanie then described some national issues covered by activists. Shu Bartholomew, who has a weekly radio show, has also established a website Shu@fromthehoatrenches.com and invites homeowners from across the nation to tell their stories. Rodney Gray’s documentary feature film, The HOAX, was screened in downtown Dallas on October 18. Jan Bergemann has the Florida website http://www.ccfj.net Attorney Evan McKenzie is a recognized national authority on HOA issues. His book, PRIVATOPIA revealed the background and intent of the HOA/CAI Industry.
There was strong support at the Conference for single-issue bills, which have been on the homeowner agenda for over a decade. Homeowners prefer single issue bills but inevitably an HOA Omnibus bill includes our issues. Most single-issue bills have no traction and don’t make it out of committee. In this session one bill HB 971, filed by Rep. Dwayne Bohac would confirm officers and directors of pre-TUCA condos (created before 1994) the same fiduciary duty towards the members as applies to condos created under TUCA (created after 1993). This bill required the Officers and Directors to affirm they had read all of the documents and would enforce them. Now we know that all homeowners are expected to have read all of their documents. When cited for a violation, owners are told, you must know the rules, yet here when the “rulers” are told they must know the rules, the bill dies in Calendars because of fierce opposition. The HOA Reform Coalition vigorously supported the bill.
A similarity can be noted here with Attorney Bill Davis’ issue with HOAs which have not adhered to the state HOA requirements yet have been demanding homeowners’ compliance with CC&R’s. “Do as I say, not as I do.”
Another single-issue bill was HB 1335, sponsored by Rep. Gutierrez at the request of The Texas Family Council. HB 1335 would have put a $500 cap on legal fees for which the HOA could demand reimbursement from the homeowner. There is currently NO cap on legal fees in a judicial foreclosure. HB 1335 was referred to Business and Industry and never got out of committee.
The homeowner scene at this point was very bleak although Attorney David Kahne in negotiations with industry representatives, encouraged by Governor Abbott’s office and Senator West, had modified the bill regarding:
Open Meetings 209.00591; Running for director 209.00593; Voting, 209.0058 Also, 209.00592 absentee owner voting rights; Notice of violations 209.006; Priority of Payments.
Go to Attorney Kahne’s website http://texashoas.org/ for full information.
Senator West’s bill SB 1168 (co-sponsored by Rep. Villalba in the House HB 2797) was sailing through with a couple of frightening possibilities. We had asked and been denied the rule for certified mail notice as well as the right of a candidate to have a monitor observe ballot counting.
On May 23, when SB 1168 was presented to the House of Representatives, Rep. Bohac stepped forward and offered Amendment #5 to strike “verified” and insert “certified”. Rep. Villalba moved to table but his motion failed. Certified mail has been the gold standard for mail providing assurance of delivery. Amendment #5 was adopted.
Then Rep. Bohac offered AMENDMENT #6 which provided that each candidate may name one person to observe the counting of the ballots provided that this does not entitle any observer to see the name of the person who cast the ballot, and that any disruptive observer may be removed. The industry had vigorously opposed these two amendments. Amendment #6 was adopted. We already have heard of the law being used to secure observers that enable election of pro-homeowner directors.
Rep. Doug Miller then proposed Amendment #7 stating that a person may not vote in a POA election unless the person is subject to a dedicatory instrument governing the association through which the association exercises its authority. Amendment #7 was adopted. Three homeowner amendments had passed.
Then the bill went back to the Senate. The Senate concurred in the House amendments. SB 1168 was signed by the governor on June 18, 2015, and became effective on September 1, 2015.
Our Coalition is hoping the legislators are becoming aware of the injustice that was perpetrated on Texas homeowners by Property Code 204 and subsequent laws. Total power was given to HOA boards with no accountability. A homeowner’s only recourse is a costly lawsuit, so beneficial to the CAI/HOA attorneys
Beanie Adolph, Director
Nancy Kozanecki, Assistant Director
Legislative Session Update – June 2015
HOA BILLS PASSED BY THE 84th TEXAS LEGISLATURE
Below is a list of the bills that have been passed concerning HOAs. Later we hope to analyze the new laws and their possible effects. Bills that are passed by the legislature are sent to the Governor with these three options:
- Sign, and the bill becomes law.
- Veto, and the bill does not become law.
- Does not sign and the bill becomes law on the date stated in the bill.
You may click on the bill number to obtain a complete copy of the final bill. Also indicated below is the effective date of the bill. Those that were signed by the governor are so indicated.
- HB 745 – Bohac (Uses -Street Signs) Without signature – Effective immediately
- HB 939 – Dale (Uses -Generators) Signed – Effective immediately
- HB 1072 – Thompson (Govern – Board Qual.) Without signature – Effective 9-1-2015
- HB 1455 – King (Condo Litigation) Signed – Effective 9-1-2015
- HB 3089 – Galindo (Hi-Rise Sprinklers) Without signature – Effective 9-1-2015
- SB 862 – Birdwell (Election – Voting) Signed – Effective 9-1-2015
- SB 864 – Birdwell (Election – ballot) Signed – Effective immediately
- SB 1168 – West (Omnibus – SF HOAs) – Signed – Effective 9-1-2015
- SB 1626 – Rodriguez (Solar Devices) – Signed – Effective 9-1-2015
- SB 1852 – Nichols (Documents – Amend) Without signature – Effective immediately
Beanie Adolph – Director Nancy Kozanecki – Assistant Director
It’s Time to Fight
Homeowners had no warning. Homeowners didn’t surrender. Quietly and without fanfare, the Texas legislature took away our property rights and gave them to the HOA Industry: the lawyers who run foreclosure factories, property managers who charge us for their own irresponsible management, and boards that would deny us liberty in our own homes.
Too often, homeowners only learn of the HOA Industry control when they get hit by exorbitant and unlimited attorney fees and fines, liens, and foreclosures, or when a cabal takes over their community, frustrates fair voting, meets secretly, and hides records.
Homeowners want an end to HOA abuse. Now is the time for better laws, in areas such as:
- Fair elections
- Open Meetings
- Open Records
- By-Laws and CC&R (deed restriction) changes by member vote only
- No fines
- All key documents, including financial and history of lawsuits, on the web for easy access
- State Agency Oversight – independent of the HOA Industry
- Member approval required for foreclosure
Yet, even as HOAs increase their control of owners’ daily lives, the HOA industry opposes any change, any regulation labeling it “government control”. They have it exactly backwards. The HOA is the out-of-control agency. We want to end bad statutes that give excessive power to invasive lawyers, property managers, and boards. Our goal is to restore fundamental constitutional rights – to allow all members to have a voice in self-governance and to promote harmony rather than division in communities.
Our goal can only be achieved by the “power of the people”. Texas homeowners must unite in their neighborhoods to reclaim their rights denied by the HOAs. They must demand their representatives in the Texas Senate and House truly represent them and not the HOA lobbyists.
The HOA Industry opposition is always fierce, instilling fear of change. The wanna-be overseers enjoy their power and control and testify at legislative hearings how wonderful HOA life is. Those who rule do have a wonderful life, but they ignore the serious overreaching. The HOA industry is living on your money. Reclaim your rights and your money. Tell us what laws you want changed. Have your neighborhood group ally with the HOA Reform Coalition today!
Please give us your name and contact information so that we can send you alerts from time to time. United with other Texas Homeowners, we can reclaim homeowners’ rights. Click this link Tell Us About Your HOA