On Monday, May 2, 2011, the Texas House of Representatives will consider HB 2761 relating to HOA meetings and records.  A copy of the language of the bill being considered is here.  The bill makes some improvements possibly, but leaves many loopholes for HOAs to abuse.

For example, the bill allows an owner to inspect HOA records, or the owner’s attorney or accountant.  See page 1.  It does not authorize a family member, friend or anyone else to inspect the records of the HOA.  This language was no accident.  HOAs often deny family members from assisting homeowners living in HOAs, and instead forces them to hire a professional to look at the records.  Such a rule is ridiculous and this bill protects this abusive practice.

The bill also only requires the HOA to allow a homeowner to inspect records that are “required to be retained by the association”. Page 2.  An HOA may have records that a homeowner wishes to see, but it does not have to show them to the homeowner unless the HOA is required to have kept them.  Just another loophole.

The homeowner has to request the records by certified mail, and must do so “with sufficient particularity detailing” the books and records to be inspected.  This is another barrier.  HOAs will merely deny requests because they are not detailed enough.  Often homeowners will not know what the HOA has, so it will be impossible to provide a lot of detail.  Again, the bill appears to help, but lets HOAs put up roadblocks.

Under the bill, the HOA has 10 business days (two weeks) to respond, but then the HOA can claim it cannot produce the records that fast and then it gets another 30 business days (six weeks).  So it can take two months to get records — this is just too long.  Keep in mind that many HOA elections and board meetings give homeowners less than six weeks notice.  There is simply no way homeowners can discuss a proposal, consider alternatives and gather information before an election, and this bill provides the HOAs cover to do just that.

The bill protects board members that don’t pay HOA taxes specifically. See page 4.  It is well documented that some board members do not pay their HOA taxes, and this bill lets them get away with this practice.

The bill equally prevents homeowners living in HOAs from watching what their board does.  The bill allows for meetings to be conducted on the phone, and even allows for decisions to be reached without a meeting at all. Page 6.

What little is in the meetings section of the bill does not even apply to builders who are developing the subdivision (called the “development period”).  Builders want to control their developments naturally, but the problem is that they can end up controlling these subdivisions many years while they build them out.  Homeowners would like some hard date that they know board members that are freely elected are in charge, and that then have to meet in public and make decisions.

Another glaring problem with the meetings section of the bill is that it does not even require the meetings to be held in or near the subdivision.  At present some HOAs hold meetings many miles away for whatever reason (probably to deter participation).

This bill has some improvements arguably, but they are few and far between.  The lack of open, transparent operations of HOAs is yet another reason homebuyers should steer clear of buying a home in an HOA.