HB 1821 Passed — resale certificates, information, payment plans

The 82nd Texas Legislature enacted HB 1821 (here) relating to resale certificates, records, payment plans. The governor has yet to make his decision whether to sign it, veto it or let it become law without his signature.  For a listing of the majority of the HOA legislation considered and the status of each bill, go here.

IMPORTANT: This description is NOT intended to be legal advice.  You should review the law yourself or have an attorney review it for you before taking any action.  The law may have changed, may not apply to your HOA, or a court may have altered the meaning of the words.  This website attempts to summarize information concisely which will result in some inaccuracies.  Before investing a lot of money, or risking adverse action by your HOA, you should not merely read what is on any website including this one.  Get fully informed.

RESALE CERTIFICATES

The bill requires that an HOA provide a purchaser of a home with a “resale certificate” upon request.  The certificate must have been prepared not earlier than 60 days before delivery, at the expense of the purchaser.  (The cost of the resale certificate is unlimited and the amount of time the HOA has to prepare it has been extended.)  The bill adds to the items that must be disclosed in the certificate including any pending lawsuit that the HOA is a party to (excluding lawsuits by the government against a homeowner for unpaid property taxes) so purchasers can more easily find out problems the HOA is experiencing or inflicting on its members.  The bill also requires the certificate to include:

A statement of all fees associated with the transfer of ownership, including a description of each fee, to whom each fee is paid, and the amount of each fee. Tex. Prop. Code 207.003(b)(16) (pending effective date and governor review).

The Legislature considered but did not enact any limitation on the transfer fees charged by HOAs for merely selling your home.  So HOAs collect assessments, special assessments, late fees, fines, attorney fees, etc., and charge hundreds of dollars to prepare a simple disclosure telling the purchaser what he or she is really getting into when they buy (but not before they sign an earnest money contract) — and HOAs charge a fee for selling your home just for fun (HB 8 bans transfer fees and was also passed this session and subject to effective date and governor approval, but it carves out exceptions for HOAs).

HOAs REQUIRED TO DISCLOSE MORE INFORMATION

Sec. 207.006.  ONLINE SUBDIVISION INFORMATION REQUIRED. A   property owners’ association shall make dedicatory instruments relating to the association or subdivision and filed in the county deed records available on a website if the association has, or a   management company on behalf of the association maintains, a publicly accessible website.

Tex. Prop. Code 207.006 (subject to effective date and governor review).

The bill also defines most every instrument governing the HOA as a “dedicatory instrument” and that each has to be filed with the county deed records office before they can be effective including: restrictive covenants, bylaws, or similar instruments governing the administration or operation of a property owners’ association; properly adopted rules and regulations of the property owners’ association; and all lawful amendments to the covenants, bylaws, instruments, rules, or regulations. Tex. Prop. Code 202.001, 202.006 (subject to effective date, governor review).

What has been truly disturbing is how hard HOAs resist any effort to expose their practices, charges and policies until after you have bought the house.  (Reminds me of a pyramid scheme.) Resale certificates as described above cost hundreds of dollars, and still cannot be obtained unless the person provides the HOA “reasonable evidence that the purchaser has a contractual or other right to acquire property in the subdivision”. Tex. Prop. Code 207.003(a-1) (subject to effective date and governor review).  However, by requiring more documents to be filed in county records, and requiring information to be only HOA websites, this bill cracks the door open to allow more information to the public and prospective buyers before they sign.

PAYMENT PLANS

A property owners’ association composed of more than 14 lots shall adopt reasonable guidelines to establish an alternative payment schedule by which an owner may make partial payments to the property owners’ association for delinquent regular or special   assessments or any other amount owed to the association without accruing additional monetary penalties.  For purposes of this section, monetary penalties do not include reasonable costs associated with administering the payment plan or interest.  Tex. Prop. Code 209.0062(b) (pending effective date and governor review).

The payment plan is required to be filed with the real property records, and the minimum term is required to be three months.  The payment plan may not be longer than 18 months from the date of the request and the HOA does not have to provide a payment plan to a homeowner who failed to honor the terms of a previous payment plan (if the default was in the previous two years).  This is an improvement from the current law, but not by a lot.  HOAs are still going to charge bogus fees for these plans, and three months is hardly enough time for a struggling homeowner to get on his feet.  The feds bailed out banks, car companies and insurance companies, giving them over a year to work it out, but our Texas Legislature said if a Texas family has a problem with their HOA taxes (sorry “assessments”), they get three months to pay it all back “plus reasonable fees and interest”.

Posted on June 1, 2011, in Newsroom. Bookmark the permalink. Comments Off on HB 1821 Passed — resale certificates, information, payment plans.

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