Some months ago many legislators were invited to participate in an HOA Issues Survey. A large number replied positively but then seemed reluctant to take a position – frequently claiming insufficient knowledge. This is factual confirmation of the problem: Very few legislators are aware of the injustice, abuse, and harassment that homeowners suffer in Homeowner Associations.

Many HOA laws were enacted by the 82nd Texas Legislature – some beneficial to homeowners, but most with loopholes. Industry attorneys held seminars across Texas “informing” boards of the new state requirements. Homeowners have advised that advice to the HOA boards seems to have included other information:

A. The new HOA laws apparently are being circumvented. Recently another association has just decided to change deed restrictions by board resolution. There is great concern about this practice of changing deed restrictions without a member vote. With the new laws, HOAs are now recording all kinds of things in the land records. If such records were not properly adopted; adopted by boards without sufficient board members under governing documents; adopted contrary to deed restrictions, etc., they should not be filed of record. If filed of record, they will have the presumption of being effective. As such, if improper records are filed, what can homeowners do other than filing legal action?

B. Sec. 209.0059 states that a provision in a dedicatory instrument that would disqualify a property owner from voting in a POA election of board members on any matter…is void, yet since 2012 began, contrary to the law, another HOA has introduced a resolution to make the annual dues a pre-condition for household voting in general membership meetings as well as a condition for serving on the board.

C. In HB 1228, Sec. 209.0063 a payment received goes to

(1). Any delinquent assessment

(2). Any current assessment

(3). Any attorney’s fees, etc. (Which is all very good) However – the loophole – if the owner gets into default, the association doesn’t have to follow that law. HOA records reveal that payments are then made first to the attorney.  Again, the goal is not the collection of delinquent HOA fees but a very lucrative business for the CAI industry.

D. Homeowners who live in HOAs should have all of the basic freedoms of those who don’t live in HOAs, but that is not the case. Homeowners in HOAs should have open meetings and open records according to standard open government laws (i.e., Texas Government Codes 551 and 552), yet to obtain records they are subject to special HOA laws with many “conditions” and costs. Financial records are not easy to obtain, and the result is that some exploit this for fraud and embezzlement. Meetings should be open to all, yet “executive sessions” excluding homeowners are the norm for far too many subjects. HB 2761 prescribes the conduct of meetings, notice, agenda, etc., but as one homeowner wrote: So far 2012 board meetings are the same old stuff as 2011 meetings, e.g. no published minutes, no agenda. The executive meeting subjects were never presented at the open board meeting, etc.

E. There needs to be government oversight of HOAs. The legislature enacted the property code granting all power to HOA boards with NO OVERSIGHT. There is a dire need for a state agency oversight that is not controlled by the HOA Industry. Laws need teeth to be effective. HOA laws controlling homeowners have teeth but HOA boards wielding the power are subject to no one. The result is abuse, harassment, and too often fraud and embezzlement.

The HOA Reform Coalition Survey

1. Do you believe that if you are required to be a member of a HOA by simply owning a home in a subdivision, and the HOA can tax, spend and foreclose, the HOA is a government (a political subdivision)?

2. If you believe that a HOA is a form of government, do you believe that homeowners should have at least the same rights to protect them as they do from other forms of government?

3. Do you believe that any of the protections created by recent  Legislatures to protect homeowners from HOAs be rolled back or limited in the future?

4. Should the homeowners living in a subdivision with a HOA have the right to vote on matters affecting their property, or should a developer have absolute control until the developer sells every lot in the subdivision?

5. If a developer has any control at all on a HOA because there are still lots left to sell, can the developer’s control ever end, or should there be a time limit of 2-3 years before the homeowners take over completely?

6. Right now little is officially known about HOAs and there is no one source of information about HOAs, or place that will accept complaints.  Would you support a bill authorizing a state agency to provide basic information about HOAs and where they are located, their rules, and also collect complaints made by homeowners regarding the activities of HOAs?

7. Would you support a bill that would require HOAs to be identified and licensed with a state agency if the HOA mandates membership, and has more than 10 members?

8. Would you support a bill authorizing a state agency to investigate and take action against a HOA if it became clear that the HOA was violating the law repeatedly resulting in abuse?

9. Would you support requiring express authorization from individual homeowners before a HOA can spend HOA assessments (taxes) on contributions to PACs and other lobbying organizations?

10. When a HOA forecloses, it often hires private attorneys who typically charge $150 for each letter they send and $2,000 plus court costs if a lawsuit is filed. Thus, there are incentives for these attorneys to provide perks to HOAs so that they authorize foreclosure for even the smallest amounts owed. If a HOA needs to take legal action to collect on its taxes (assessments), should the attorney’s fees and court costs allowed to be collected be more than the tax owed?

(If HOAs were required to wait to foreclose until the amount owed was at least what it costs to foreclose, then more homes would be saved and unscrupulous attorneys would not reap inordinate profits from filing routine unneeded lawsuits. When counties and cities foreclose for property taxes, private attorneys do not add on thousands to homeowners’ bills.)