We don’t think the Senate version of SB 142 was “spineless,” but this article by Texans for Public Justice here is very interesting in investigating the money the industry threw at the members to kill the meaningful reforms sought by Rep. Solomons in his version of SB 142.  Ultimately, portions of the senate version of SB 142 were split up and added to other bills that passed and will improve the state of the law for Texas homeowners.

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”.

The 82nd Texas Legislature enacted HB 1278 (here) relating to regulation of religious displays. 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.  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.

This bill was principally designed to encourage HOAs to allow homeowners to have a mezuzah on their door frame as apparently some HOAs either did not like Jews or found the symbol of the Jewish faith to be terrible and harmful to property values.  The bill is short, but as with most other HOA reforms, does have some exceptions.

Except as otherwise provided by this section, a  property owners’ association may not enforce or adopt a restrictive covenant that prohibits a property owner or resident from displaying or affixing on the entry to the owner’s or resident’s dwelling one or more religious items the display of which is motivated by the owner’s or resident’s sincere religious belief. Tex. Prop. Code 202.018 (pending effective date and governor review).

And here are the exceptions:

(1)  threatens the public health or safety;

(2)  violates a law;

(3)  contains language, graphics, or any display that is patently offensive to a passerby;

(4)  is in a location other than the entry door or door frame or extends past the outer edge of the door frame of the owner’s or resident’s dwelling; or

(5)  individually or in combination with each other religious item displayed or affixed on the entry door or door frame has a total size of greater than 25 square inches.

But if the law goes into effect, Texas will also authorize HOAs to enter land that is not theirs, and take property without a court order or anything else:

A property owners’ association may remove an item displayed in violation of a restrictive covenant permitted by this section.

So much for being a property rights state.  This bill attempts to help homeowners, but abusive HOAs will now have the power to take property of homeowners.

The 82nd Texas Legislature enacted HB 362 (here) relating to solar energy devices and roofing materials. 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.  Before investing a lot of money on a solar device, or risk adverse action by your HOA, you should not merely read what is on any website including this one.  Get fully informed.

SOLAR ENERGY DEVICES

The bill prohibits a HOA from including or enforcing a provision in its dedicatory instruments that prohibits or restricts a homeowner from installing a solar energy device (definition here). Tex. Prop. Code 202.010(b) (pending effective date and review of governor).

But there are MANY exceptions.  An HOA can prohibit a solar device that:

(1)  as adjudicated by a court:

(A)  threatens the public health or safety; or

(B)  violates a law;

(2)  is located on property owned or maintained by the property owners’ association;

(3)  is located on property owned in common by the members of the property owners’ association;

(4)  is located in an area on the property owner’s property other than:

(A)  on the roof of the home or of another structure allowed under a dedicatory instrument; or

(B)  in a fenced yard or patio owned and maintained by the property owner;

(5)  if mounted on the roof of the home:

(A)  extends higher than or beyond the roofline;

(B)  is located in an area other than an area designated by the property owners’ association, unless the alternate location increases the estimated annual energy production of the device, as determined by using a publicly available modeling tool provided by the National Renewable Energy Laboratory, by more than 10 percent above the energy production of the device if located in an area designated by the property owners’ association;

(C)  does not conform to the slope of the roof and has a top edge that is not parallel to the roofline; or

(D)  has a frame, a support bracket, or visible piping or wiring that is not in a silver, bronze, or black tone commonly available in the marketplace;

(6)  if located in a fenced yard or patio, is taller than the fence line;

(7)  as installed, voids material warranties; or

(8)  was installed without prior approval by the property owners’ association or by a committee created in a dedicatory instrument for such purposes that provides decisions within a reasonable period or within a period specified in the dedicatory instrument.

And even if you do fall into one of the many traps above, the HOA can still stop you from having a solar energy device if:

the association or committee, as applicable, determines in writing that placement of the device as proposed by the property owner constitutes a condition that substantially interferes with the use and enjoyment of land by causing unreasonable discomfort or annoyance to persons of ordinary sensibilities.  For purposes of making a determination under this subsection, the written approval of the proposed placement of the device by all property owners of adjoining property constitutes prima facie evidence that such a condition does not exist.

And of course, as with most of what little homeowners have to protect them from abusive HOA practices, there is an exclusion for builder controlled HOAs still in the developer period.  This is a huge loophole because a subdivision can remain in the developer period indefinitely.  The definition has no hard ending date so a subdivision can be in the process of development for 10 years or longer whenever the developer decides he is done:

“Development period” means a period stated in a declaration during which a declarant reserves:  (A)  a right to facilitate the development, construction, and marketing of the subdivision; and  (B)  a right to direct the size, shape, and composition of the subdivision.

ROOFING MATERIALS

HB 362 also has a small provision regarding roofing materials.  It is unclear if this provision will help because there are few definitions of the terms used, but hopefully more HOAs will allow homeowners freedom to select roofing materials of their choice.  The text of the provision (subject to the effective date and governor review) is here:

Sec. 202.011.  REGULATION OF CERTAIN ROOFING MATERIALS.

A property owners’ association may not include or enforce a provision in a dedicatory instrument that prohibits or restricts a property owner who is otherwise authorized to install shingles on the roof of the owner’s property from installing shingles that:

(1)  are designed primarily to:

(A)  be wind and hail resistant;

(B)  provide heating and cooling efficiencies greater than those provided by customary composite shingles; or

(C)  provide solar generation capabilities; and

(2)  when installed:

(A)  resemble the shingles used or otherwise authorized for use on property in the subdivision;

(B)  are more durable than and are of equal or superior quality to the shingles described by Paragraph (A); and

(C)  match the aesthetics of the property surrounding the owner’s property.

SB 142 was about to be amended by Rep. Phil King to strip out meaningful reforms. Rather than let that happen, Rep. Solomons postponed it to the end of the calendar. It will not likely come up again today, and if it does not pass today it is dead.

The influence of builders and developers, and the HOA management industry is vast, but eventually Texans will merely refuse to buy a home governed by a HOA or reduce the price they are will to pay for a home in a HOA. At present, HOAs and the builders and developers that often control these governmental bodies have unfettered power over Texas homeowners. We are hopeful that some reforms pass this session that can be built on in the future. Senator West has added reform language on core issues in other bills still capable of passage this session and we are hopeful both he and Rep. Solomons continue to put Texas homeowners ahead of government bureaucracies.

Robert Doggett
Texas Housing Justice League

Chairman, Representative Burt Solomons (R-Carrollton) has little to gain, has little to prove, but clearly is taking the road less traveled regarding HOA reform.  Last session he managed to pass HB 1976, but the Senate failed to come through because of reported last minute lobbying from Hillco hired by Perry Homes.  (See history of the bill from last session here.)  This session Chairman Solomons decided to wait to see what happened in the Senate for the most part.  Chairman, Senator Royce West (D-Dallas) was able to strike agreements with Perry Homes and HOA management company industry representatives with SB 142 which made a variety of improvements in the area and sent the bill forward to the House.

In the House, Chairman Solomons decided to remove some of the loopholes in the bill without getting permission from Perry Homes and his friends.  Some insiders were unclear whether SB 142 would even come out of the House Calendars Committee, but it did — and was put on the major state calendar for today receiving much needed precedence on the last day to pass Senate bills of the session.

Perry Homes and others like Texas Community Association Advocates have prepared for an all out war on the bill.  With its lobbyists from Hillco like Neal Jones aka “Buddy” Jones probably leading the way, the opposition has enlisted Rep. Phil King to push an amendment that would remove many improvements in the bill.  (Hosts of others have also been hired like Santos Alliance and appropriately named Trey Blocker to kill or water down the bill.)  It would appear millions are at stake given the amount of money being spent on lobbyists to defeat these reforms.  More on Hillco here and here and don’t forget Hillco PAC here.  If you want to see what money will buy, watch the Texas House of Representatives when it reaches SB 142.  Money does not always buy you access, as some wish to think (or hope).  Money will buy votes.  We will see how many it can buy when this bill is laid out.

By JESSICA MEYERS, Staff Writer, Dallas Morning News

Published 19 May 2011 11:10 PM

Bills to diminish HOA’s power face dwindling hopes in Texas Legislature

AUSTIN — As time runs out in the legislative session, lawmakers’ promises to dampen the influence of homeowners associations may be fading.  The only HOA bill that has passed both chambers did so Thursday, leaving many dead in committees and several awaiting a spot on the agenda in the final 10 days of the session.

Triggered by the experience of a Frisco military family, the bill approved Thursday would safeguard service members against losing their homes to HOAs. Federal law protects military personnel from foreclosure without a court order. But associations say they aren’t always aware of a homeowner’s service status.

That was the case with Michael Clauer, who learned that an HOA had foreclosed on his home while he was stationed in Iraq. The bill would require HOAs to ask in their debt notices whether the homeowner or spouse is in the armed forces.  “I’ve seen what happens to those big HOA bills,” said Sen. Leticia Van de Putte, D-San Antonio, as she applauded her bill being on its way to Gov. Rick Perry’s desk. “I kept this separate because I didn’t want it to get messed up.”

Lawmakers filed about 40 HOA bills this session, crying for change after mounting stories of association abuses and years of stalled attempts.

Their greatest hopes relay the House calendar. A comprehensive HOA bill by Sen. Royce West , D-Dallas, passed the Senate in early April. But it faces both a time crunch and a last-minute backlash from homeowner association representatives, who disliked the revisions made by Rep. Burt Solomons, R-Carrollton, last week.

The bill would broaden association transparency, ensure homeowners pay late dues before attorney fees, restrict HOAs from banning solar panels and require acourt order for foreclosure.

HOA supporters say Solomons’ changes in notifications and paperwork requirements will lead to skyrocketing costs for members and threaten property values.  “We had gotten to the point where it was good reform,” said Judi Phares, chairwoman-elect of the Texas Community Association Advocates. “This is overkill.”

Homeowner advocates now consider it the most substantial bill yet. And Solomons says it offers more balance for people like Clauer, who lived in his district when his home was foreclosed.

Both West and Solomons say they’re confident they can reach a compromise on their bills, if the House can act in time.  “Obviously the clock is ticking and the House is focused on more weighty issues,” West said. “But, yes, we can still get this through.”  Solomons says he has the necessary support in the House. All he needs is time.

“It’s got a better chance to pass than the budget,” he said.

Correction as of 4:10 p.m., May 17, 2011:

Senate IGR did not actually vote out the bills mentioned below. The votes are likely there so it is probable that these bills and others will be voted out with substantial portions of SB 142 included (the version that passed the Senate, “engrossed”).

__________

Senator West is not taking any chances. As Chairman of the Senate Committee on Intergovernmental Relations (IGR), his committee voted out HB 2779 and HB 1228 today that both provide reforms to HOA practices. The Coalition has learned that HB 1228 does not look anything like it did as it left the House — portions of Senator West’s SB 142 was added or substituted in its place. The language will be posted here when available. It is likely this will happen on other individual bills that are waiting to be approved by IGR. It is believed that Senator West is taking these actions in light of the changes that were made to his omnibus HOA reform bill, Senate Bill 142, which was amended by its House sponsor, Chairman Solomons. The changes made to SB 142 appeared to be opposed by the HOA industry and the building industry. See post here. Clearly, Senator West would prefer the best bill he can get for Texas homeowners, but he does not want the session to end with no improvements whatsoever.

Last night the Texas House hit the deadline for House Bills to pass preliminary approval (that are not local or consent bills).  Thus, many HBs are dead.  There are about ten bills that are still alive and have decent chances of passage, and of course members often attempt to add their legislation as amendments to other bills, but there are five main bills to watch for that have the highest chance of passage in our view:

SB 142 – this is the main vehicle for HOA reform this session (there are two different versions of this bill, the Senate version and now there is a House version that passed out of committee, an explanation and more on its progress here).

SB 238 – regulation of solar energy devices by a property owners’ association.

HB 2869 -powers and duties of certain master mixed-use property owners’ associations.

SB 472 – voting practices and elections of property owners’ associations.

SB 101 – Relating to prohibiting nonjudicial foreclosure by a property owners’ association on residences owned by certain members of the military.  (Likely to be the first HOA reform bill that will pass this session.)

A complete listing of all the bills that appear to directly impact HOA reform issues is here.  (No guarantees that this list is complete; we could have missed some.  Members also hide legislation in amendments, especially at the end of session.)

Note that SB 142 is Sen. West’s bill that addresses a host of issues (sometimes referred to as an omnibus bill).  He also is the author of SB 238 and SB 472 in the list of five above.  He is the Chairman of the Senate committee that hears HOA bills (Intergovernmental Relations or IGR).  Chairman West may feel comfortable with his version of HOA reform contained within his three bills and not be as persuaded by other bills making their way to his committee that conflict, are redundant, or are less important.

For example, HB 44, HB 232, HB 362, HB 663, HB 1071, HB 1278, HB 1821, HB 2761, HB 2779, SB 302, SB 446, SB 447, SB 1547, SB 1792, SJR 19 are all alive because they are out of the House (or are Senate Bills), but Sen. West has not yet decided to move them out of his committee.  (Sen. West has some bills himself that he has not moved, e.g. SB 1370, SB 1502, SB 1235, SB 1204.) At some point IGR may move the bills, but so far none of these are set for hearing.  But keep an eye at for them nonetheless as things move fast at the end of session.

Chairman Burt Solomons is the bill sponsor for SB 142 in the Texas House of Representatives.  Today he obtained approval of the House Business and Industry Committee for his committee substitute of the bill.  The House version makes some changes from the version passed from the Texas Senate authored by Chairman West.  (Note that if this version passes the House, the Senate can either vote to accept the new version, or move for a conference committee to attempt to resolve the differences.)  The House version of the bill is here.  The changes from the Senate version as reported by Chairman Solomons are as follows:

1)      Amends subsection (a), Section 5.006, Property Code to a apply additionally to a breach of a statute relating to real property subject to a restrictive covenant and makes the awarding of attorney’s fees for a prevailing party permission rather than required.

2)      Amends Section 5.012, Property Code to amend the language for a notice of membership in a homeowners’ association to include that a current, rather than recent, resale certificate may be requested by the seller.

3)      Amends subsection (b), Section 51.015 to limit an assessment lien under this section applies only to a lawful assessment.

4)      Subdivision (1), Section 202.001, Property Code, is amended to expand the definition of a dedicatory instrument to include bylaws.

5)      Section 202.006, Property Code, is amended to ensure that a dedicatory instrument that has not been filed may not be enforced against a homeowner unless the homeowner agrees to comply with the subsequently filed dedicatory instrument.

6)      Chapter 202, Property Code, is amended by adding 202.013 relating to roofing materials and renumbering 202.014

7)      Chapter 202.012 is amended to change the criteria by which a solar panel must meet to be permissible and to remove a subjective criteria for the architectural review committee in approving a solar panel.

8)       Section 207.003, Property Code, is amended to reflect that a resale certificate must be current and makes changes to the required content of the resale certificate. It also caps the fee for copying and assembling a resale certificate to the amount for a public information request under the Texas Administrative Code.

9)      Section 209.0041 is amended to assert that all ballots which result in a change to a dedicatory instrument is a record of the association.

10)  Section 209.005, Property Code, is amended to remove an exception to the chapter in accordance to a dedicatory instrument and allows the delivery of requested records through other mailing or delivery method which can be evidenced. Amends the requirement that the association notify a homeowner that they will not be able to timely produce requested records to include a reason for the noncompliance and changes the cost estimates and allowances for record requests to actual costs rather than estimates.

11)  Section 209.0051, Property Code, is amended by requiring open meetings compliance for meetings were policies and association business are discussed and not just where formal action is taken. Includes in the required open meetings, emergency meetings and includes a requirement for an audio recording. Makes changes to limit the reason why a board may meet for a meeting without posting advanced notice.

12)  Section 209.00592, Property Code, is amended by removing representative or delegated voting as a method of acceptable voting.

13)  Section 209.00953, Property Code, is amended to remove an exception to the chapter in accordance to a dedicatory instrument and to make other non-substantive changes.

14)  Amends 209.0062, Property Code, to change the ability of a property owners’ association to offer a payment plan for assessments in arrears from permissive to a right for a property owner to make partial payments.

15)  Amends 209.0063, Property Code by switching attorneys’ fees and fines on the priority of payment and removes the exemption for application of priority of payment if a homeowner is in default on a payment plan.

16)  Amends 209.009, Property Code, to include fees for third party debt collection in the types of debt for which a property owners’ association may not foreclosure for solely.

17)  Amends 209.0091, Property Code, to remove a provision allowing judicial foreclosure for any lien which is allowed under the dedicatory instrument, and requires the rules adopted by the Texas Supreme Court under this section to include service upon a property owner by methods prescribed under Rules 106 through 119 Texas Rules of Civil Procedure.

18)  Amends Section 209.014 to reflect a change in reference to a regular meeting to an annual meeting.

19)  Adds Section 209.015 relating to Board Powers.

20)  Makes changes to the applicability sections to reflect the added sections to the bill.