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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.
A number of bills are making there way through the Texas Legislature that have a chance a passage:
HB 44, HB 232, HB 362, HB 663, HB 2779, HB 2869, SB 101, SB 142, SB 238, SB 472.
For the text of these bills, and an update on their status, click here.
Do not always trust the caption of the bill because the language of a bill may be different than what you expect and is fluid. The filed version rarely passes as is. Sometimes bills are amended dramatically in committee or on the floor. And once the bill leaves one chamber the process starts over. In other words, the House may pass one version of the bill, and then Senate can then pass another version all within one bill number, and vice versa. For example, HB 44 passed the House in a certain form already, and now is awaiting hearing the Senate. The Senate may substitute in another version or amend it on the floor. If it passes the Senate in a different form then the bill must return to the House. The House can either accept the Senate version or can request that the bill go to a conference committee where members of the two chambers attempt to resolve their differences. If the committee reaches an agreement then the conference committee version goes back to each chamber for approval.
Towards the end of the session other members try to add their bills to bills that are still moving so some amendments can easily change the entire bill.
(The list above is not every bill that could involve HOAs or homeowners that is making its way through the process. There could be other bills pending that could be amended as well that might include a provision impacting an HOA.)
The Texas Legislature is considering a host of legislation to curb clear abuses by HOAs. Of course, HOAs are known to foreclose or threaten foreclosure whenever they like, even for amounts in dispute as little as $150. When homeowners seek to resolve the matter, often the HOAs want thousands because of alleged attorney fees which have been trumped up by their local attorney with a word processor that spills out form lawsuits (story here). The debate on the wisdom of such collection practices continues in Austin while lobbyists are paid with the huge profits that are generated by HOA management companies and their attorneys.
So it should be no surprise that HOAs oppose even filing out a form then they are in the process of foreclosing on Texas homeowners. (Many HOA reform advocates oppose letting HOAs foreclose at all.)
Texas is one of the few states that does not have official statistics on foreclosure activities at all; there are only estimates provided by companies. Of course the process to foreclose already requires papers to be filled out and filed with the county clerk’s office where the property is located. Legislation such as House Bill 3363 merely requires a one page form be given to the clerk at the same time as the foreclosure papers, and the county clerk then forwards the forms to the Texas Department of Housing and Community Affairs. All the major lender associations in Texas support the bill because it is not burdensome and is simply good government. Homeowner advocacy groups support the legislation because it will make sure Texas has official statistics that show when and where residential foreclosures are occurring. The state agency responsible for collecting and compiling the data feels the task of the legislation is appropriate to do as a part of its ongoing functions (and did not claim it would cost any additional resources to complete).
It is appears the only group opposed to the legislation is — you guessed it Homeowners Associations. They do less than one percent of the foreclosures in the state, or so they claim, yet unlike the lenders who do the lion-share of the activity, HOAs are against the bill. The stats the bill intends to collect will not even identify who is doing the foreclosure. What’s the problem? Are HOAs opposed to filling out a form, or are they just afraid of the stats? Or, do they just want to claim they stopped another piece of legislation and send out emails bragging to their members?
Regardless, HOAs are against even reasonable attempts at transparency. While some praise how much HOAs claim to protect property values and provide wonderful services, they hire lobbyists to kill legislation that by all reasonable accounts if helpful to this state. HOAs time and again prove they, and their management companies, attorneys and lobbyists have run amok.
Here is another clip, here.
Behind on property taxes? The government does not sue over a few hundred bucks, ever. The government does not slap the homeowner with thousands in attorney fees even if they file suit to recover. The government is not quick to sue residential homeowners occupying a home.
Not true with HOAs. They have a vastly different property tax (they like to call them “assessment”) collection scheme designed to make even more money. HOAs have a close relationship with private attorneys that result in homeowners getting fleeced. HOA management companies sign up attorneys eager to sue, and charge homeowners thousands when the amount in dispute is a few hundred dollars. HOAs love the money the attorneys collect and turn a blind eye to the fact that the attorney fees dwarf the amount the homeowner is behind. HOA boards may not even realize their management companies and attorneys intentionally design a system to make more money with installment agreements with extra fees and charges added each month. To make matters worse some HOA attorneys pad their bills by charging attorney time when a legal secretary or paralegal merely changes a few names on form lawsuits these HOA attorneys file regularly in court. These billing practices are likely fraudulent, but some courts often protect attorneys who submit such fee requests because these fee awards can come back in campaign contributions. And disputing HOAs over such practices is very dangerous because if you fight, the HOA attorney just adds more time to his bill. Only homeowners willing to take huge risks fight HOAs. The HOA attorneys know they have the upper hand and they are not bashful about exploiting homeowners across the state.
The public would not stand for this scheme if it were standard property tax collection activities — but hopefully the Texas Legislature will weigh in this year on this issue.
Texas Senator Royce West of Dallas accomplished a major victory yesterday for HOA reform with the passage of SB 142 out of the Texas Senate. The bill heads to the Texas House of Representatives for consideration. The text of the engrossed bill is here (which incorporates the amendments).