Traps For the Unwary: New Texas Property Owners Association Laws
In 2011, the Texas legislature completely overhauled the laws related to the actions of Property Owners Associations (“POAs”) in the state under the provisions of the Texas Residential Property Owners Protection Act. Many POAs had used their assessment lien rights to force homeowners out of their homes for relatively minor infractions of POA rules and regulations. The goals of the overhaul were to create a more transparent relationship between the POAs and their members, to make foreclosure available only through judicial process, to create a six (6) month redemption period, and to require all “Dedicatory Instruments” (which means each governing instrument covering the establishment, maintenance, and operation of a residential subdivision [or the administration or operation of the POA of any such subdivision]) to be filed of record in the real property records of the county where the relevant subdivision is located and also made available on the POAs website, if any.
RECORDING OF DEDICATORY INSTRUMENTS.
Now, if the Dedicatory Instruments are not recorded, the POA cannot enforce their respective terms against the subdivision’s property owners (Texas Property Code Section 202.006). In the past, POAs have typically recorded the Declaration of Covenants, Conditions, and Restrictions for the subdivision and the Bylaws of the POA, but not necessarily the other documents that are included within the scope of the term “Dedicatory Instruments.”
The other documents that should be recorded to be clearly enforceable include:
The Open Records Production and Copying Policy of the POA (which must conform to mandatory ceiling prices)
The Document Retention Policy
Alternative Payment Plan Guidelines for delinquent property owners
The Architectural Control Committee’s Design Guidelines
The POAs Rules and Regulations for the subdivision
OVERRIDE OF CONFLICTING PROVISIONS IN EXISTING DEDICATORY INSTRUMENTS. Several changes to Texas POA law override previous provisions that were slanted heavily in favor of the subdivision developer:
Within 120 days after the date that 75% of the lots have been sold, at least 1/3 of the board must be elected by non-developer owners (versus typical provisions maintaining developer control until 90+% of lots have been sold)
Dedicatory Instruments can now be amended by 67% of the owners, not whatever higher percentage is actually in the Dedicatory Instruments
Board meetings must be open and at least 10 days prior notice must be provided to owners of the meetings
Owners have access to the POA’s records upon request
Assessment lien filings must now be prepared by an attorney not a POA employee
Architectural Control Committee Guidelines with respect to certain items is specified by law (flag displays, rain barrels, religious symbol displays, solar energy devices, and certain roofing materials)
Thus, a POA that relies on the wording of its Dedicatory Instruments may find that it has inadvertently broken the law, may not be able to enforce restrictions against owners, and may even have opened the door to liability for the POA.
All POAs should review their Dedicatory Instruments for compliance with the 2011 laws, record all required documents, and notate any provisions of their Dedicatory Instruments that have been overridden by such laws.