New Bill Proposes Local Government Control and Attorney General Oversight of HOAs

San Antonio HOA Lawsuit Lawyer Trey Wilson wrote:

State Rep. Ruth Jones McClendon of San Antonio has filed legislation that would cede control over Texas Homeowners Associations/Property Owners Associations to cities and counties, with oversight and monitoring to be conducted by the Texas Attorney General's office.

The initiative -- HB 3803 --  is captioned as "Relating to the municipal and county regulation of and the oversight by the attorney general of property owners ’ associations and unit owners ’ associations; providing penalties."

This bill would authorize Texas cities (in city limits and ETJ) and counties (in unincorporated areas) to regulate HOAs on a variety of matters of "municipal concern," and to require registration with the applicable unit of local government. Other portions of the bill affect the way HOA funds are deposited and maintained (in trust accounts) and contain new bonding and insurance requirements for HOAs and their directors. 

Sections 3 and 4 of the bill are particularly dangerous to Texas HOAs because they would require the Texas AG's office to monitor HOAs and investigate complaints about them.  These provisions expressly provide for notification to the AG in the event of embezzlement of HOA funds.   A particularly interesting, if unclear, section of the bill directs the AG to monitor the banking institution where HOAs maintain the newly-required trust accounts. 

The bill was filed on March 8, and was referred to the House Committee on Business & Industry on March 21.

If enacted, this legislation would modify the Texas Local Government Code and Chapter 82 of the Texas Property Code. 

Chief Justice of Texas Supreme Court transmits "Call to Arms" to Legislature

On March 6, 2013, Chief Justice Wallace Jefferson addressed the Texas Legislature in the annual "State of the Judiciary" presentation.  Although traditionally considered a "health and funding" check on our state's courts, Justice Wallace characterized his speech this year as a "Call to Arms."

In his heartfelt address, which can definitely be considered as a departure from tradition, Justice Jefferson focused on a few universally important questions:

Is our system of justice is working for the people it has promised to serve? 

Do we have liberty and justice for all? 

Or have we come to accept liberty and justice only for some? 

With brutal honesty, Jefferson admitted that in many areas, the Texas judiciary falls far short of the standards set by a justice and equality-loving populace:

For those who can afford legal services, we have a top-notch judicial system. Highly qualified lawyers help courts dispense justice fairly and efficiently. But that kind of representation is expensive. A larger swath of litigation exists in which the contestants lack wealth, insurance is absent, and public funding is not available. Some of our most essential rights – those involving families, homes, and livelihoods – are the least protected. Veterans languish for months before their disability, pension, and educational benefits arrive. As a result of the recent financial crisis, lower- and middle-income homeowners and tenants face foreclosure and eviction. Ever-increasing numbers of consumers and small businesses have filed for bankruptcy. And few can afford a lawyer to guide them through these crises. 

The full transcript of the speech can be found HERE. It is most definitely worth a read.

Proposed Law Would Mandate Education for Texas Notary Public Applicants

San Antonio Texas  Attorney Trey Wilson wrote:

**Disclosure: Lest this post be construed as a dig at notaries, I hereby disclose that, in addition to being a lawyer, I am a Texas Notary Public.**

As a Texas lawyer with an active real estate practice, I daily encounter deeds, powers of attorney and other documents that are notarized.  I have also handled several real estate lawsuits where it is alleged that conveyance instruments are improperly notarized, or are outright forgeries.  

Frequently, the Notary Public will become a central witness in the case, with his or her act of notarization being central to the validity of a disputed document.  I have been amazed at how clueless some Notaries have proven to be.  In addition to not sufficiently maintaining records, there seems to be a trend of notaries neither reading nor understanding what they have notarized. Unfortunately, this can be fertile ground for litigation, and can make or break a case.

Obviously, this problem is widesperead.  Thus, two companinon pieces of legislation have been introduced this legislative session. They are SB 1037 and HB 1954.  Their iedntical language provides for an addition to Section 406.005 of the Texas Government Code (which governs the qualifications for notary public qualifications in Texas) to read as follows:

(c)  The applicant shall provide satisfactory proof to the secretary of state that the applicant has completed a course of study of not less that three hours on notary laws, procedures, and ethics. 

Another section of the bills seeks to require the Texas Secretary of State to "establish the standards of, and procedures for approving" the required course of study. 

While this requirement is undeniably vague, I believe that the bills are a good idea, and will improve the quality and reliability of notarized documents.  But my opinion is not global. 

The American Association of Notaries (a group of which I am a member as a Texas Notary Public) has opposed the bills on grounds that they are "vague" and "leave too many unanswered questions about the requirements that notaries will have to fulfill to be commisioned."

In an email that was presumably sent to all members, the AAN  raises another concern, which I believe is valid, but easily solved:

What we do not want to happen is that notaries in rural Texas will be required to drive to a larger city to sit in a classroom for a course of study that costs them $100-$200. If education laws are passed, we want them to be the right ones!   We want the requirements to include courses that are affordable and accessible for all Texas notaries.

 It will be interesting to track the outcome of these bills, and the position of the various interests weighing-in on them.

The (Not So) Long Arm of the Law -- Geographic Limitation of Civil Subpoenas in Texas

San Antonio Texas Real Estate Attorney Trey Wilson wrote:

On more than a few occasions over the years, a client has contacted me after reciving a subpoena to appear or produce documents in a distant texas county they have never heard of.  With 254 counties and 254 corresponding courthouses, chances are that there's more than a few that virtually none of us have heard of.

The question is always the same -- do I really have to spend the time and money to travel from South Texas to Amarillo or Orange?  Fortunately, the Answer is frequently "Probably Not."

This because the Texas Rules of Civil Procedure contain an express geographic / distance limitation on civil subpoenas.  Specifically, Texas Rule of Civil Procedure 176.3(a) provides that subpoenas are not effective if they require the witness to appear or produce documents in a county that is more than 150 miles from where the person resides or is served.  

As with any Rule of Court, however, there are important exceptions to the Rule:

1.  Rule 176 applies only to discovery sought from non-parties. See TEX. R. CIV. P. 199.2(b)(5); see also Tex. R. Civ. P. 199.3. If you are a party to a lawsuit, you can be compelled (even without a subpoena) to appear in the county of suit or a variety of other counties.

2.  Rule 176 does not apply to Criminal subpoenas.  Under the Code of Criminal Procedure Procedure, a defendant charged with a felony or a misdemeanor punishable by confinement is entitled to subpoena out-of- county witnesses. See Tex.Code Crim. Proc. Ann. art. 24.16

3.  Rule 176 may or may not apply to administrative or other qausi-judicial tribunals, such as those before the Texas State Office of Administrative Hearings (SOAH).

Further, no subpoena should ever be ignored.  Even if you believe that you have been served with an ineffective subpoena, it is still imperative that you contact the Court or attorney who issued it to explain why you don't believe you should appear.

After all, lawyers -- and especially judges -- don't handle being ignored very well.

Proposed Legislation Would Give Texas HOAs Power to Foreclose Without Court Assistance

San Antonio HOA Lawsuit Attorney Trey Wilson wrote:

Earlier this month, Rep. Kenneth Sheets (Dallas) introduced HB 2928. If passed, this bill would give Texas Homeowners Associations legal authority to foreclose assessment liens (for HOA dues and similar charges) non-judicially (on the courthouse steps) much like a mortgage lender or other lien holder.  Under current law (Texas Property Code Section 209.0092), Texas homeowners associations can only foreclose liens judicially -- by filing a lawsuit and obtaining a judgment. Obviously, lawsuits give property owners more due process (and consequently take longer and are more costly) than do Sheriff's Sales or similar non-judicial foreclosure processes.

The most significant aspect of HB2928 is that it does not require that a Declaration/CCR contain a provision authorizing a private power of sale as a condition of authorizing non-judicial foreclosure in Texas.  Essentially, the law would grant to Texas HOAs a collection remedy that does not independently exist either as a contractual right (CC&Rs are considered contracts in Texas) or as a covenant running with land in an HOA-governed subdivision.

Another troubling aspect of this Bill is that it seems to directly contradict brand-new law (effective January 1, 2012) concerning HOA foreclosures.  As part of the HOA Reform package of laws passed during the 82nd Legislative Session (2011), property owners were expressly granted the right to democratically  determine whether to amend their Declarations (CC&Rs) to prohibit non-judicial foreclosure: Texas Property Code Section 209.0093  is entitled "REMOVAL OR ADOPTION OF FORECLOSURE AUTHORITY," and provides:

" A provision granting a right to foreclose a lien on real property for unpaid amounts due to a property owners' association may be removed from a dedicatory instrument or adopted in a dedicatory instrument by a vote of at least 67 percent of the total votes allocated to property owners in the property owners' association.  Owners holding at least 10 percent of all voting interests in the property owners' association may petition the association and require a special meeting to be called for the purposes of taking a vote for the purposes of this section."

If adopted, HB 2928 would obviate this right of property owners to determine whether or not to authorize foreclosures by their HOA. In my opinion, HB 2928 favors Texas HOAs, at the expense of rights recently granted to homeowners.

Deviating from Texas Child Support Guidelines

The amount of child support based on the statutory percentage applied to an obligor’s monthly net resources is presumptive, but a court may vary from the guidelines amount – upward or downward – based on a number of different factors.

Relevant factors (not an exhaustive list) may include:

• The age and needs of the child;
• The child’s educational expenses beyond secondary school;
• Payment of health insurance or uninsured medical expenses for the child;
• Extraordinary educational, healthcare or other expenses of the parents or the child
• Whether either parent has managing conservatorship or possession of another child;
• Each party’s period of possession of and access to the child;
• Travel costs for exercising possession of and access to the child;
• Child care expenses;
• Each parent’s respective ability to contribute to the child’s support;
• Debts assumed by either parent;
• The net resources of the obligee (the parent receiving child support); or
• The amount of alimony or spousal maintenance paid  or received by a parent.

The court has broad discretion to vary from the amount of child support under Texas statutory guidelines for any reason it finds in the child’s best interest.  As a result, variation from the Texas statutory guidelines is not automatic, although courts are encouraged to consider the totality of circumstances of the child and the parents in reaching a decision concerning the amount of child support in each case.

By:  Cynthia W. Veidt, Attorney

Texas Employment Law - Avoiding a Retaliation Claim

Retaliation is a common complaint by an employee – and one which employers frequently lose. It is possible for an employer to be guilty of retaliation, even when there was no underlying discrimination or harassment.

“Retaliation” means that an employer may not fire, demote, harass or otherwise adversely impact or retaliate against an employee for: (1) filing a charge of discrimination, (2) participating in a discrimination proceeding, or (3) otherwise opposing discrimination. Essentially, anything that would tend to have a “chilling effect” on an employee’s decision to file a complaint or participate in an investigation is considered “retaliation.”

An employer can help avoid a claim of retaliation by refraining from taking any adverse action or attempting to discourage an employee from the following types of actions:

• filing an internal or external complaint of discrimination or harassment for himself or anyone else;
• serving as a witness in an investigation or proceeding related to another person’s complaint of discrimination or harassment;
• informing another employee of their right to file a complaint of discrimination, harassment or request for a reasonable accommodation;
• encouraging another employee to file a complaint of discrimination or harassment.

However, retaliation claims do not make an employee “fire proof.” A court must still find that the employer acted in retaliation because of the employee’s protected action. If you find yourself in a situation where an employee has engaged in protected activity, but that employee has also engaged in conduct that merits disciplinary action, or you have a business reason to re-assign or terminate that employee (such as a reduction-in-force), you should thoroughly document the non-retaliatory reasons for your decision. If you must take action within a short period of time after the employee’s protected actions (up to three or six months), you should consult with an HR or employment law specialist to determine the best way to proceed.

By: Cynthia W. Veidt, Attorney

Texas Bill Aims to Keep Squatters Out of Homes

A bill has been filed in the Texas Senate aiming to stop squatters from using an obscure law to move into vacant or foreclosed homes.

The Dallas Morning News reports the bill filed last week would require prospective squatters to provide written notice to anyone who has a claim on a property they’re targeting under the “adverse possession” law.

Without proof of notification, county clerks would reject paperwork filed by squatters trying to lay claim to vacated property.

While the proposed legislation wouldn’t outlaw adverse possession, it stipulates that an affidavit of adverse possession is not a property title. Tarrant County Constable Clint Burgess asked Sen. Jane Nelson, a Republican from Flower Mound, to sponsor the legislation. He says it will help prevent misuse of the law.

Texas Bill Aims to Keep Squatters Out of Homes