Author Archives: staff
HOA prohibits small sign that simply says “Jesus” on homeowner’s property
Story by Ken Amaro/WTLV — story with video is here.
JACKSONVILLE, Fla. – Four years ago Sarah Phillips moved into her home in Jacksonville Sutton Lakes neighborhood.
Phillips posted a Jesus sign in her yard and there was no reaction from anyone until she received a letter from the Sutton Lakes Homeowners Association telling her that having it in her yard is a violation of the covenant
“We’ve had it out about a month. We haven’t had any complaints from the neighbors,” said Phillips. “It is basically telling us to remove the sign, under the bylaws,” she says.
Phillips said she did sign the Covenant, Conditions and Restrictions, or CCR, but never agreed to allow the free exercise of her religion to be prohibited.
“I did not give away my freedom of speech, religion, my rights as an American citizen,” says Phillips.
Taiana Marques lives in the same community and has a religious statue in her yard.
Marques said homeowners should have a right to express their faith.
“I think it is ridiculous, it shows who we are, our faith. I think it is just ridiculous they’re coming up with that,” says Marques.
The sign is hardly noticeable, but the violation notice says if Phillips does not remove it in three days, she is subject to fines of $100 a day.
Phillips says she plans to leave it where it is.
Bill Reno, property manager for the Sutton Lakes Homeowners Association said this month he has issued 30 complaints, and only one other for a religious sign.
“No signs are allowed except ‘For Sale’ or ‘For Rent’ signs. Religion has nothing to do with it. It is a deed restricted community, but rules are rules. It does truthfully, break my heart,” he says.
The ACLU says that even though it cannot comment on this specific case, it is entirely possible that the HOA has the authority to take down the sign.
Texas HOAs continue war against animals
Video here. While one HOA in Texas bars Wilbur the pig (here), another allows deer hunting in the community …
LIBERTY HILL, Texas (by Doug Shupe KXAN, full story here) – An activity taking place in a Williamson County community is pitting neighbors against neighbors, and some say it is threatening lives.
Several residents said the Liberty Hill Sundance Ranch Property Owners Association is violating its own rules by allowing bow hunting of deer. Now, one homeowner has filed a lawsuit.
In most respects, Liberty Hill Sundance Ranch is picture-perfect, quiet, countryside living where 277 homes sit on lots ranging from 2.5 to 10 acres.
“It’s a wonderful community,” said homeowner Neina Moore.
Moore brought her family to the community because it seemed safe and secure.
“I moved out here so my boys could play in the yard,” said Moore.
But two years ago, she found an arrow just 10 feet away from her children’s playscape. Since then other neighbors have found arrows, too.
“It was right over there on my property next to my garage, where my son plays basketball,” said homeowner Todd Stephens.
Stephens moved to Liberty Hill Sundance Ranch so his daughter could have horses. After an arrow landed on his property this past November, he rarely puts their horses in the front pasture anymore.
“If an arrow can travel that distance from our street all the way down here then I’m not so sure my daughter on her horses are going to be safe,” said Stephens.
Last November, the association’s board of directors took a survey of residents and decided to allow bow hunting to control the deer population. The board’s deer committee received 60 Managed Land Deer Permits from Texas Parks & Wildlife which give landowners the state’s most flexible seasons and bag limits.
Some neighbors against the bow hunting argue the deer committee is made up of mostly hunters, an actual vote was never taken on bow hunting, a professional deer count was never done, and rules for the wildlife management plan are not being followed.
“It seems to have divided quite a few. I know friends that used to be friends aren’t friends,” said Stephens.
Opponents say the board’s decision was not about controlling deer, but rather giving hunters the right to do what they want on their own property.
“It seems like there is a group of individuals that just want to hunt that’s the perception, I don’t know if that’s reality,” said Stephens.
“I’m worried that the hunting activity will increase to the point where we have an accident cause the acreages are too small,” said Moore.
Bow hunting opponents also say the property owners’ association’s insurance carrier cancelled the policy when it learned bow hunting was taking place.
“It’s an action that’s big enough to cause them not to want to have to spend money if an accident occured and to me, that says it’s dangerous,” said Stephens.
A homeowner has filed suit saying the board’s decision violates the community’s own Declaration of Covenants, Conditions & Restrictions, which states, “No activities shall be conducted on the Property and no improvements shall be constructed or allowed to remain on the Property which are or might be unsafe or haszardous to any person or any property.”
A judge will determine whether bowhunting violates the community’s rules–meanwhile the neighbors hope their peaceful way of country living will return.
“I think the people that hunt are for the most part good people, but accidents happen and it can kill somebody,” said Stephens.
Story continues here, along with comments.
Houston HOA v. Wilbur the pig
Video here. Other information and a petition to keep Wilbur here.
by Courtney Zubowski / KHOU 11 News
HOUSTON—A local homeowner is fighting to keep her precious pet.
Wilbur the pig is beloved by his owner, but not so popular with some neighbors.
“It’s really emotional, because we’ve gotten attached to him,” said Wilbur’s owner, Missy Sardo.
The Sardo family’s home is located in the 3400 block of Fir Forest Dr. in The Thicket subdivision.
Last week, they received a letter from their homeowner’s association informing them their 60-pound, 8-month-old pot-bellied pig would have to go. They were given 30 days to find him a new home.
“I just like playing with him,” said Missy’s 5-year-old son, Michael. “I will feel sad because he’s so cute and I’ll miss him.”
According to their neighborhood’s deed restrictions, no animals or livestock that are raised or bred can be kept on the lot.
The family was told neighbors had complained to Community Asset Management, a property management company, about the pig.
“One of the complaints was that he roots in your backyard, and I said, ‘So? It’s my backyard,’ and he said, ‘The other complaint was that they smell,’ and I said, ‘He doesn’t smell, they have no sweat glands, they smell better than most dogs who’ve been outside,’” said Sardo.
At a homeowner’s association meeting Monday night, Sardo said she was told if she had 51 percent of the 250 homeowners in The Thicket community sign a petition agreeing to allow the pig, they could change the deed restrictions.
Her family plans to go door-to-door to fight for their pet.
“Hopefully, I can get them to change their mind and it will set the way for other people if they want it,” said Sardo.
Most neighbors KHOU 11 News spoke with said they would sign the petition.
“I think it’s stupid,” said neighbor Molly Lesmeister. “It’s a pig. It lives inside. It goes outside to go to the potty. I don’t think it matters.”
The Sardo family has also set up a Facebook page for their pig.
“He has more friends than I do, I think,” said Missy Sardo.
The pig’s 30 days run out in early August. Calls to the Community Asset Management company were not returned.
Neighbor vs. Neighbor as HOA fights get ugly
But that was Inlet House before the rats started chewing through the toilet seats in vacant units and sewage started seeping from the ceiling. Before condos that were worth $79,000 four years ago sold for as little as $3,000. And before the homeowners’ association levied $6,000 assessments on everyone — and then foreclosed on seniors who couldn’t pay the association bill, even if they didn’t owe the bank a dime.
Normally, it’s the bankers who go after delinquent homeowners. But in communities governed by the mighty homeowners’ association, as the sour economy leaves more people unable to pay their fees, it’s neighbor versus neighbor.
“What the board is doing is trying to foreclose on people to force people out the door,” says Mike Silvestri, 75, who stopped paying his dues at Inlet House in protest over what he considers unnecessary and unaffordable assessments.
He and others say there were cheaper ways to deal with the rat infestation and leaky sewage that led the board to order up a costly plumbing overhaul. “They are bamboozling old people. I’m old, but I’m not senile,” he says.
In the past, housing associations have gained infamy for dictating everything from the weight of your dog (one mandated a diet for a hound) to whether you can kiss in your driveway (not if you don’t want a fine). Homeowners’ associations have served as the behavior police, banning lemonade stands, solar panels and hanging out in the garage. One ordered a war hero to take down his flag because of a “nonconforming” pole. Another demanded that residents with brown spots on their lawns dye their grass green.
Now, past the faux regal gates, beyond the clubhouses, many property owners in associations owe more than their homes are worth. Some are struggling to pay their bills after they lose a job. Others have had their pay cut. So they’ve stopped paying their association dues.
To combat the rise in delinquencies, boards are switching off utilities, garnishing income and axing cable. They are yanking pool passes and banning the billiard room. And, in the most extreme cases, they are foreclosing.
“The treacherous part is that homeowners’ associations are acting like a local government without restraints, and they have this extraordinary power,” says Marjorie Murray, a lawyer and founder of the Center for California Homeowner Association Law.
Today, one in five U.S. homeowners is subject to the will of the homeowners’ association, whose boards oversee 24.4 million homes. More than 80 percent of newly constructed homes in the U.S are in association communities.
And of the nation’s 300,000 homeowners’ associations, more than 50 percent now face “serious financial problems,” according to a September survey by the Community Association Institute. An October survey found that 65 percent of homeowners’ associations have delinquency rates higher than 5 percent, up from 19 percent of associations in 2005.
Associations set rules for their communities. They levy monthly dues, typically between $200 and $500, and cover the costs of services that a municipal government usually takes care of: road repair, streetlights, sewage systems. If an association’s budget is strained or major repairs need to be done, the board can levy a “special assessment” on top of those dues. And when one homeowner doesn’t pay those fees, all the other homeowners have to pick up the cost.
The rise in delinquencies comes as banks are taking over foreclosed homes and then leaving them vacant more often than ever. Taken together, these shortfalls are resulting in higher fees for all of the other homeowners — and massive financial angst for association boards.
Before now, associations rarely, if ever, foreclosed on homeowners. But today, encouraged by a new industry of lawyers and consultants, boards are increasingly foreclosing on people 60 days past due on association fees, says Evan McKenzie, a former homeowner association attorney who is now a University of Illinois political science professor and the author of the book “Beyond Privatopia: Rethinking Residential Private Government.”
The government does not keep statistics on how often homeowners’ associations initiate foreclosures. But a nonprofit research group found that association-initiated foreclosures in the Houston area jumped from 500 in 1995 to 2,200 in 2007. Most association-related foreclosures in Texas do not go through the judicial process, so the group’s analysis represented only a fraction of the foreclosures that housing associations have initiated.
In exchange for adhering to the rules, homeowners got safe communities with clubhouses, pools and tennis courts. But what many didn’t realize when they bought their homes was that the fine print gave the association the right to foreclose — even over a few hundred dollars in unpaid dues.
All the association board has to do is alert its attorney to place a lien on the property to start the process. The home can then be auctioned by the board until the bank eventually takes ownership. Homeowners typically have no right to a hearing.
“These are banana republics,” McKenzie says.
The problems in some communities are resulting in more scrutiny. In Nevada, the FBI is investigating corruption in elections of association boards. In Utah and Arizona, legislators are trying to pass bills that would root out the use of debt-collectors who are alleged to have used thug-like tactics to strongarm residents into paying fees.
State legislatures in California, Arizona, North Carolina, Texas and Florida have taken up legislation that would clamp down on foreclosures.
Not everyone thinks the tactics are out of line, though.
“When people are not paying their assessments, they’re not shortchanging some giant multinational corporation. They are taking money directly out of the pockets of their neighbors,” says Andrew Fortin, head of government affairs for the trade group the Community Associations Institute.
So the neighborhood feuds are escalating. At Inlet House, one resident claims her fellow senior citizens have turned into vigilantes, vandalizing her car in retaliation for not paying her dues.
In all, 17 of the 60 units are in various stages of delinquency. Paul Gray, a fastidious budgeter, paid off his mortgage long ago and paid all but $2,500 of the Inlet House assessment. The association initiated foreclosure proceedings. A few days after he received the foreclosure notice, Gray suffered another stroke, three friends say. Now he is in a nursing home. He has since paid off the $2,500. His home, worth $89,000 in 2006, is for sale for $18,500.
In the meantime, the board, facing $172,000 in costs from nonpayers, has had no choice but to raise dues by an extra $50 a month to an average of $375. Between the assessment and increased dues, some residents complain that they pay more than they would to rent a plush oceanfront spread down the street at the posh Fontainebleau condo complex. Association manager Janice Stinnett, who is also an Inlet House resident, says she isn’t to blame, the nonpayers are.
“It’s unfair that everyone is paying extra to cover these deadbeats,” she says.
The board is continuing to make the plumbing repairs that made the assessments necessary to begin with. It will soon issue another special assessment to cover the costs.
To homeowners who opposed the repairs on the grounds that they were too expensive, the entire picture adds up to a crime. Says Silvestri, “What these associations are doing is illegal. It’s a fraud.”
Texas HOA demands green grass in a drought
Story by Joe Conger / KENS 5
SAN ANTONIO –With 100-degree, hot, dry days, Armando Urdiales decided to plant a new lawn.
Well, not really. It was his HOA, he said, that suggested it, after they found patches of dirt amongst the withered blades in his front yard.
Urdiales said, “That was the kicker for me. Really? You’re going to tell me to grow grass in a drought.”
The social studies teacher says after receiving two, threatening letters in the last 60-days, he planted $150 worth of sod and started watering it.
“Isn’t there a better use of our resource–of our precious resource of water–other than maintaning grass?” he said.
The Crown Meadows HOA didn’t return our calls.
SAWS officials say they have yet to see any homeowner deed restrictions that demand homeowners keep their lawns green. And as a public water utility, SAWS has no jurisdiction over HOAs.
But the utility is asking all associations to think of brown grass as the new green, at least for now in stage-2 restrictions.
Marine’s lawsuit spurs one of new HOA laws in Texas
June 13, 2011, story by MIKE MORRIS, HOUSTON CHRONICLE
(a portion of the story appears below with a link to the complete story)
A Marine Corps veteran sued by his Cypress-area homeowners association over a 20-foot flag pole in his backyard is claiming victory as a bill protecting his display of patriotism awaits Gov. Rick Perry’s signature. [An explanation and text of the bill is here.]
The bill, spurred by the lawsuit against former drill sergeant Mike Merola, is one of several on the governor’s desk that would restrict the powers of homeowners associations. Others would increase transparency, bolster owners’ voting rights and prevent the groups from banning solar panels and small religious displays.
The most important reforms, real estate attorney Richard Weaver said, are those dealing with foreclosure and dues, including one that would introduce a “priority of payments” to ensure that payments from owners who have fallen into arrears would be applied to the past-due amounts first.
“In the past, the HOA might have used homeowner funds to pay attorneys instead of delinquent fees and still try to foreclose,” said Weaver, who has represented both HOAs and homeowners for seven years. “By paying the delinquent fees first, a homeowner may avoid foreclosure.”
HOAs also would be required to provide better notice before sending an owner’s account to a collection agency and before foreclosing, and would be forced to let homeowners pay their annual dues in installments over at least three months.
‘Not enough’
Weaver and real estate lawyer David Kahne, who has represented homeowners in suits against HOAs for more than a decade, said the reforms, though an improvement, are insufficient.
“The reforms that appear likely to pass are clearly not enough. Homeowners need more protection,” Kahne said.
“The Legislature has paid an increasing amount of attention to those homeowner associations that have been abusing their powers,” he continued. “By setting limits on some of those powers, the Legislature is directly protecting homeowners and sending a signal to all associations that they need to be more respectful of the rights of homeowners.”
Real estate attorney Bruce Schimmel, who has represented HOAs and homeowners for three decades, disagreed, saying lawmakers had “gone overboard,” though some proposals would clarify years-old legal questions.
“When the Legislature hampers associations’ collection of their fees and requires them to give additional notices and go to court, it adds layers of procedures that are very costly and very time-consuming and which, ultimately, end up being paid for by the delinquent owner,” Schimmel said.
Sen. Royce West, D-Dallas, whose interest in HOA issues began five years ago when his office was flooded with homeowner complaints, said the bills are sufficient to curb HOA abuses.
“We truly have provided a more democratic process for homeowners to govern” HOAs, West said. “What we have to do is just monitor the implementation of the reforms … to determine whether there were any gaps in what we did.”
For the complete article see: http://www.chron.com/disp/story.mpl/metropolitan/7607232.html
New Day for Texas HOAs: training for attorneys on new laws
This training is being put on for lawyers by lawyers, but I would think it possible for non-lawyers to access the training as well. Contact TexasBarCLE here.
New Day for Texas HOAs: Overview of 2011 Reform Legislation for Condos and Owners Associations
LIVE VIA WEBCAST OR PHONE SEMINAR!
Thursday, June 30th
2:00 p.m. to 3:30 p.m.
MCLE Credit: 1.5 hrs (.5 hrs ethics)
MCLE No: 901219435
Registration Fee: $115
The 82nd Texas Legislature adopted sweeping new laws regulating residential property owners associations – new laws that protect homeowners and dramatically reform the environment in which HOAs operate. Getting a handle on the new laws is challenging because Texas did not adopt a single comprehensive act. Instead, we have a grab-bag of law changes which, collectively, spell an end to business-as-usual for HOAs in Texas. The same old advice, forms, and docs won’t work any more.
This 90-minute overview will identify:
- New laws for HOAs that pursue delinquent assessments
- New methods and requirements to foreclose an HOA’s assessment lien
- Consumer protectionsNew laws regulating HOA elections, notices, and voting
- Changes for resale certificates
- Which new laws are already effective, which become effective September 1, and which become effective January 1, 2012
- Which new laws apply to condos, and which don’t
- Which new laws are “duplicates” with different effective dates.
- Which new laws share the same section number of the Property Code, although dealing with different topics.
The written materials provide an indispensable roadmap to the law changes. No matter how your practice touches the world of HOAs – representing residential developers, individual homeowners, HOAs, managers, real estate brokers, title companies, residential lenders – you will find something essential in this overview.
The presenters have extensive experience with HOA law-making, co-presented the 2009 Legislative Update on this topic for the State Bar, and co-authored the “Statutory Evolution of Condominiums and Property Owners Associations in Texas,” published in 2002 by the University of Texas School of Law.
Speakers:
Roy D. Hailey, Houston
Butler|Hailey
Sharon Reuler, Dallas
Sharon Reuler, P.C.
REGISTRATION
Registration is only available online and by using a credit card. Registrations by mail, fax, or phone will not be accepted.
We encourage early registrations for webcasts to give you time to verify that your system is webcast-ready. Our technical support lines are usually extremely busy on the day of a webcast, so please register and test your system a few days ahead of the broadcast date.
INSTRUCTIONS
When you register for a webcast or phone seminar, instructions for accessing the seminar will be sent as part of your email receipt. We also send a final email which repeats these instructions about 30 minutes prior to the start of the seminar. Please contact us if you do not receive your receipt or if you have any questions.
CLAIMING MCLE CREDIT
The MCLE number will be provided to you at the beginning of the seminar, along with instructions on how to claim your participatory MCLE credit online.
ACCESS TO ARCHIVED SEMINAR
About a week after the seminar, the content will be archived at TexasBarCLE.com. To access the archived seminar, select Your Purchases on the left-side menu of TexasBarCLE.com. All registrants will have up to 12 months to finish or review the seminar online, download MP3s of the seminar, and access any written materials online.
HOA Reform Coalition to Begin Implementation
During some or all of the 82nd legislative session, the Texas HOA Reform Coalition was comprised of concerned homeowners and organizations including:
- Texas Housing Justice League, and
- National Homeowners Advocate Group, LLC/The Texas Homeowner’s Advocate Group.
The coalition was formed in 2010 with the intent of bringing a unified voice to the Texas Capitol. Now that the 82nd Texas legislative session has ended, coalition members will begin the process of ensuring implementation of the reforms achieved and continue to work toward additional reforms and consider joining forces once again in 2012 for the 83rd session beginning in 2013. For more information in the interim, contact or join the above organizations directly.
HB 2779 and SB 101 Passed — flags and military foreclosures
The 82nd Texas Legislature enacted HB 2779 (here) and SB 101 (here) relating to flags and military foreclosure procedure. 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.
FLAGS
So HOAs have been messing with homeowners that have flags, even retired veterans. Story here. HB 2779 puts some limits on HOA regulations of homeowners who wish to fly flags on their own property, but there are plenty of ways the HOAs can still harass a homeowner.
Sec. 202.011. FLAG DISPLAY. (a) A property owners’ association may not, except as provided in this section, adopt or enforce a dedicatory instrument provision that prohibits, restricts, or has the effect of prohibiting or restricting an owner from the display of: (1) the flag of the United States of America; (2) the flag of the State of Texas; or (3) an official or replica flag of any branch of the United States armed forces.
Tex. Prop. Code 202.011(a) (subject to effective date and governor review).
EXCEPTIONS
A property owners’ association may adopt or enforce reasonable dedicatory instrument provisions:
(1) that require: (A) the flag of the United States be displayed in accordance with 4 U.S.C. Sections 5-10; (B) the flag of the State of Texas be displayed in accordance with Chapter 3100, Government Code; (C) a flagpole attached to a dwelling or a freestanding flagpole be constructed of permanent, long-lasting materials, with a finish appropriate to the materials used in the construction of the flagpole and harmonious with the dwelling; (D) the display of a flag, or the location and construction of the supporting flagpole, to comply with applicable zoning ordinances, easements, and setbacks of record; and (E) a displayed flag and the flagpole on which it is flown be maintained in good condition and that any deteriorated flag or deteriorated or structurally unsafe flagpole be repaired, replaced, or removed;
(2) that regulate the size, number, and location of flagpoles on which flags are displayed, except that the regulation may not prevent the installation or erection of at least one flagpole per property that is not more than 20 feet in height;
(3) that govern the size of a displayed flag;
(4) that regulate the size, location, and intensity of any lights used to illuminate a displayed flag;
(5) that impose reasonable restrictions to abate noise caused by an external halyard of a flagpole; or
(6) that prohibit a property owner from locating a displayed flag or flagpole on property that is (A) owned or maintained by the property owners’ association; or (B) owned in common by the members of the association.
FORECLOSURE NOTICE UPDATE FOR MILITARY
In response to the HOA foreclosure of a homeowner serving in Iraq (story here), SB 101 was passed to make it clear that HOAs cannot foreclose on homeowners on active duty or nine months following active duty without a court order (unless waived), and improves the notice given to all property owners so military families might know their rights regardless of who intends to foreclose:
Assert and protect your rights as a member of the armed forces of the United States. If you are or your spouse is serving on active military duty, including active military duty as a member of the Texas National Guard or the National Guard of another state or as a member of a reserve component of the armed forces of the United States, please send written notice of the active duty military service to the sender of this notice immediately.
New notice required by Tex. Prop. Code 51.002(i) (subject to effective date and governor review).
HB 1228 Passed – payments, collections, foreclosures
The 82nd Texas Legislature enacted HB 1228 (here) relating to payments, collections and foreclosures. 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.
PAYMENT PLANS
The bill begins with reforms to payment plans. This language is also found in HB 1821 which also passed. The text and a description of that bill can be found here.
PRIORITY OF PAYMENTS
This is probably the single most important issue that determines whether homeowners lose their homes to an HOA, and HB 1228 makes some improvement in this area, but does not fully protect homeowners appropriately.
Sec. 209.0063. PRIORITY OF PAYMENTS. (a) Except as provided by Subsection (b), a payment received by a property owners’ association from the owner shall be applied to the owner’s debt in the following order of priority:
(1) any delinquent assessment;
(2) any current assessment;
(3) any attorney’s fees or third party collection costs incurred by the association associated solely with assessments or any other charge that could provide the basis for foreclosure;
(4) any attorney’s fees incurred by the association that are not subject to Subdivision (3);
(5) any fines assessed by the association; and
(6) any other amount owed to the association.
Tex. Prop. Code 209.0063(a) (pending effective date and governor approval)
This language is a clear improvement if you are living in a subdivision with a HOA that is governed by Chapter 209 of the Texas Property Code, and possibly others depending on their governing instruments. To understand why, you should know that a HOA governed by Chapter 209 cannot foreclose for fines assessed by the association or attorney fees incurred by the association to assess or collect those fines. Tex. Prop. Code 209.009 (current law). (Condo HOAs subject to Chapter 82 of the Texas Property Code are prohibited from foreclosing on fines by Tex. Prop. Code 82.113(e) .)
So if you give the HOA money, under the language in the bill, the HOA first has to apply it to delinquent assessments, current assessments and any attorney fees. In the past the HOA might have applied the money to a fine or the attorney fees associated with a fine you might be disputing, which would mean you still would be liable for assessments and attorney fees which the HOA can foreclose on. The bill essentially prevents foreclosures for fines when coupled with the language in the current 209.009 or 82.113(e) (if either of those provisions apply to your HOA).
Note that the HOA governing documents may also restrict when a foreclosure is authorized and the priority of payments language in the bill will essentially give meaning to that intent because it limits how HOAs apply the money they get to any outstanding accounts.
THE EXCEPTION TO PRIORITY OF PAYMENTS
If, at the time the property owners’ association receives a payment from a property owner, the owner is in default under a payment plan entered into with the association: (1) the association is not required to apply the payment in the order of priority specified by Subsection (a); and (2) in applying the payment, a fine assessed by the association may not be given priority over any other amount owed to the association.
Tex. Prop. Code 209.0063(b) (subject to effective date and governor review).
So the three month window to get caught up using a payment plan is even more critical. Of course homeowners having trouble with their bills are much more likely to have a situation where they cannot pay their HOA everything the HOA claims is owed. Instead of allowing a homeowner pay the assessments and the attorney fees first in order to prevent foreclosure as the first part of 209.0063 requires, HOAs, builders and others insisted on eliminating the priority of payments rubric when the homeowner most needs it – and the Legislature enacted what they demanded. There is simply no logical explanation for this policy other than it gives HOAs the upper hand in these situations. Still, even with this loophole, the priority of payments is a step forward for Texas homeowners to hopefully be built upon in the future.
THIRD PARTY COLLECTIONS
Some clear improvements were made in this area as well.
A property owners’ association may not hold an owner liable for fees of a collection agent retained by the property owners’ association unless the association first provides written notice to the owner by certified mail, return receipt requested, that: (1) specifies each delinquent amount and the total amount of the payment required to make the account current; (2) describes the options the owner has to avoid having the account turned over to a collection agent, including information regarding availability of a payment plan through the association; and (3) provides a period of at least 30 days for the owner to cure the delinquency before further collection action is taken.
Tex. Prop. Code 209.0064(b) (subject to effective date and governor review).
A homeowner is also not liable for collection fees if the HOA pays the collecting agent based on how much is collected (a contingency fee); and to be liable for the fees, the agreement with the HOA must require payment of all fees owed to the collection agent be paid by the HOA. Tex. Prop. Code 209.0064(c).
The agreement between the HOA and the collection agent must not prohibit the homeowner from contacting the HOA board or the management company, and the HOA may not sell or otherwise transfer any interest in the HOA’s accounts receivables (other than for collateral for a loan). Tex. Prop. Code 209.0064(d)-(e).
FORECLOSURES MUST BE JUDICIALLY APPROVED
The bill makes a marked improvement in the law by requiring all HOA foreclosures subject to Chapter 209 to be judicially approved using the expedited foreclosure procedure currently used by lenders to foreclose home equity loans and tax loans (it is not a full blown lawsuit). For a description of the procedure currently in place, see II of article here. Assuming the procedure stays the same, if a homeowner files a separate lawsuit contesting the right of the HOA to foreclose before the foreclosure order is signed, then the foreclosure case is dismissed. The bill also allows a homeowner to waive his right to require court approval, if the waiver is obtained after the foreclosure is sought by the HOA, and so long as the waive is not required as a condition of the sale or transfer of the property. Tex. Prop. Code 209.0092 (subject to effective date and governor review).
REFERENDUM ON FORECLOSURES ALLOWED
The bill also allows a vote to be held to eliminate the HOA’s ability to foreclose if 67 percent of the total votes allocated to the property owners in the association agree. Owners holding at least 10 percent of all the voting interests in the association may petition the HOA to require a vote on such an issue. Homeowners concerned about foreclosures and abusive HOAs subject to Chapter 209 should consider this option. Tex. Prop. Code 209.0093 (subject to effective date and governor review).
HOA Reform Coalition 