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.

An update has been posted of most HOA related legislation, here.  Please note that clicking the bill numbers will forward you to more information about the bill including its history and text as found on the state’s website.

As you will see, no House Bills have been sent to the House Floor as yet but many have cleared the first committee and are headed to the House Calendars Committee for consideration.  Four Senate Bills have passed the Senate and are headed to the House thus far: SB 101 (Van de Putte) relating to foreclosures on military, SB 142 (West) omnibus, SB 238 (West) relating to solar devices, SB 472 (West) relating to voting.

While there are exceptions to every rule, the main deadline requiring all bills to be filed in the 82nd Legislature expired yesterday and 40 bills were filed to address some problem with HOAs in the Lone Star State.  For a list of bills and the last action on each, see list here.  Senator West (Dallas) has filed no less than seven himself and is leading the charge to make many reforms to the worst abuses that HOAs inflict on their homeowners.  Meanwhile HOA management companies and their attorneys (some of the highest paid government bureaucrats in the state) sound the alarm to mobilize their boards and activists by claiming these bills attack their way of life.  Of course these bills on the whole attempt to institutionalize good government practices — open meetings, open records, fair elections, court approved foreclosures.  While the bureaucrats and their lobbyists try to get their hypnotized board members and members of the Legislature to focus on the cries of a few pushing the total elimination of HOAs, this fight is about reforming abuse of power.   Eventually this will become clear and the answers to these questions obvious.  HOAs are another form of government that must be checked.

Senator West’s SB 472 related to fair elections in HOAs has been set for hearing in the Intergovernmental Relations Committee (IGR) in E1.028 in the Texas Capitol Extension on Wed, March 2, 2011 at 9:30 a.m.  The text of this bill is here (although it is possible the bill will be amended by substitution).  If you are interested in coming to the hearing or testifying, please contact the Coalition.

The House Business and Industry Committee plans to take up and consider a variety of HOA bills on Monday 2/28 at 2:00 pm or upon adjournment in E2.016 in the Texas Capitol Extension.  If you are interested in testifying on one or more please let us know.

HB 663        Kleinschmidt

Relating to procedures for amending restrictions governing certain residential subdivisions.

HB 362        Solomons | et al.

Relating to the regulation by a property owners’ association of the installation of solar energy devices and certain roofing materials on property.

HB 565        Solomons | et al.

Relating to the procedures required for the foreclosure of a property owners’ association’s assessment lien.

HB 44         Menendez

Relating to the authority of a property owners’ association to regulate the use of certain lots for residential purposes.

HB 45         Menendez

Relating to the release of a property owners’ association assessment lien.

The HOA Reform Coalition held a conference on November 3, 2012, At Salem Lutheran Church in Houston, Texas. Speakers at the conference seemed to focus on fiscal issues, varying in some details but sharing the common, related problem that boards still insist on far too much secrecy.  A related problem, increasingly of concern, is that some boards simply refuse to comply with law because they face no effective oversight, including the lack of effective sanctions.  Of course previous problems remain.

            Of particular concern, there is the problem of boards that have sued owners who dare to oppose them.  Homeowners must be strengthened and protected when they exercise their rights to insist on board accountability – not only, but significantly, regarding money; and boards must face stronger laws that ensure they provide information, actually consider issues of concern at open meetings, and follow pro-homeowner policies.  There is a need to develop a list of “Fair and Balanced” reforms.  There is a need to identify particular reforms that merit high priority in the Legislative session, both as to homes still under developer control and those at later stages.

The Coalition is pleased to be able to present testimony to the Texas Senate Committee on Intergovernmental Relations scheduled to meet October 19, 2010.  Senator Royce West chairs the committee with Senator Robert Nichols as vice chair, and Senators Mario Gallegos Jr., Dan Patrick and Jeff Wentworth as members.