Senator Royce West Files Multiple HOA Bills in the Texas Legislature

On February 18, 2009, Senator Royce West (D - Dallas) filed a flurry of bills that would impact the way HOAs transact business. The following is a brief summary of the Bills. I will post updates as the bills work their way through the 81st Regular Session of the Texas Legislature.

SB 234 by West
HOAs are intended to maintain common areas in residential neighborhoods and to protect homeowners' investments in their property by enforcing certain aesthetic guidelines. In recent years, however, many homeowners have become dissatisfied with the operation of their association. Disputes between HOA boards and individual homeowners can generate considerable acrimony and expense. This bill attempts to restore balance to the relationship between homeowner's association (HOA) boards and individual homeowners.

As proposed, S.B. 234 requires a court to allow the prevailing party in an action on a breach of a restrictive covenant reasonable attorney's fees and cost and claims. S.B. 234 requires the seller of residential property that is subject to membership in a property owner's association to provide certain information and notice to a buyer, including a resale certificate. S.B. 236 sets forth certain requirements relating to the content of and fees for such resale certificates.

SB 235 by West

HOAs are intended to maintain common areas in residential neighborhoods and to protect homeowners' investments in their property by enforcing certain aesthetic guidelines. Developers often retain control over most aspects of an HOA while construction and sale of houses within the development is still ongoing.

As proposed, S.B. 235 strikes a balance between the developer's interest in the ultimate completion of a development and the need to prevent discriminatory housing practices. The bill provides that a restrictive covenant providing a right of first refusal for the sale or lease of a residential unit or residential lot in favor of the HOA or its members is void.

SB 236 by West

HOAs are intended to maintain common areas in residential neighborhoods and to protect homeowners' investments in their property by enforcing certain aesthetic guidelines. In recent years, individual homeowners have become frustrated with what they perceive as unduly restrictive HOA board policies regarding the installation of solar energy devices.

S.B. 236 strikes a balance between the community's interest in maintaining consistent aesthetics, and the freedom of individual homeowners to make sensible investments in clean energy.

As proposed, S.B. 236 prohibits a property owners' association from imposing or enforcing a restriction against solar energy devices, except under certain listed circumstances. S.B. 236 provides that restrictions that violate the provisions of this Act are void.

SB 237 by West

HOAs are intended to maintain common areas in residential neighborhoods and to protect homeowners' investments in their property by enforcing certain aesthetic guidelines. In recent years, however, many homeowners have become dissatisfied with the operation of their associations. Many homeowners lack confidence in the conduct of board elections. Additionally, some HOAs operate under extremely cumbersome provisions for the amendment of their declarations. S.B. 237 attempts to restore confidence in the HOA election process and to provide a uniform standard for amending a declaration.

As proposed, S.B. 237 provides that a declaration may be amended on a vote of 67 percent of the total votes allocated to owners of property in the subdivision, unless the declaration creating the subdivision specified a lower percentage. It also establishes that the right to vote in board elections cannot be limited and states the conditions under which a person is disqualified from serving on the board. The bill requires the use of a neutral third party to count election ballots under certain circumstances and sets forth the requirements for the conduct of elections. S.B. 237 sets forth certain property owners' associations to which certain provisions of this Act do not apply. S.B. 237 prohibits a person from serving on the board of an HOA if the person has been convicted of certain offenses and requires an HOA to obtain criminal history information on candidates for HOA boards. Finally, S.B. 237 provides for the use and content of an association's bylaws.

SB 238 by West

HOAs are intended to maintain common areas in residential neighborhoods and to protect homeowners' investments in their property by enforcing certain aesthetic guidelines. In recent years, however, many homeowners have become dissatisfied with the operation of their associations. Often, they feel frustrated in attempts to challenge an HOA board decision due to a lack of information. S.B. 238 attempts to restore balance to the relationship between HOA boards and individual homeowners.

As proposed, S.B. 238 sets forth remedies available to a homeowner if an HOA board fails to comply with its statutory duty to make its books and records, including financial records, reasonably available to a homeowner.

SB 239 by West

(HOAs) are intended to maintain common areas in residential neighborhoods and to protect homeowners' investments in their property by enforcing certain aesthetic guidelines. In recent years, however, many homeowners have become dissatisfied with the operation of their HOAs. Disputes between HOA boards and individual homeowners often begin with the imposition of relatively small fines by the board for violations of deed restrictions. The manner in which the board notifies the individual homeowner is at times the subject of some disagreement.

As proposed, S.B. 239 sets forth the required content and manner of delivery of a notice of enforcement action by a property owners' association . The bill also requires that the homeowner be given a date certain by which a violation must be cured.

SB 240 by West

(HOAs) are intended to maintain common areas in residential neighborhoods and to protect homeowners' investments in their property by enforcing certain aesthetic guidelines. In recent years, however, many homeowners have become dissatisfied with the operation of their associations. Disputes between HOA boards and individual homeowners often begin with the imposition of relatively small fines by the board for violations of deed restrictions. The actions of some HOA boards can cause such fines to become insurmountable burdens for the homeowner. Additionally, because foreclosure is a remedy available to an HOA board for delinquent assessments, the order of application by the HOA board of payments received from a homeowner is a critical issue.

As proposed, S.B. 240 sets forth certain requirements and restrictions regarding a fine imposed by a property owners' association. The bill also requires a property owners' association to adopt reasonable guidelines for an alternative payment schedule, sets forth provisions relating to the priority of application of payments by a homeowner, and sets forth time limitations relating to collection actions against a homeowner. S.B. 240 repeals Section 202.004(c), Property Code, relating to an assessment of civil damages by a court for the violation of a restrictive covenant.

SB 241 by West

HOAs) are intended to maintain common areas in residential neighborhoods and to protect homeowners' investments in their property by enforcing certain aesthetic guidelines. In recent years, however, many homeowners have become dissatisfied with the operation of their associations. Disputes between HOA boards and individual homeowners often begin with the imposition of relatively small fines by the HOA board for violations of deed restrictions. Such fines, when combined with assessments and legal fees, can quickly become insurmountable for a homeowner, ultimately resulting in foreclosure. Currently, a homeowner is not guaranteed access to the courts in a proceeding for the foreclosure of an assessment lien.

As proposed, S.B. 241 requires a property owners' association to obtain a court judgment foreclosing an assessment lien and providing for issuance of an order of sale before the foreclosure of the lien, unless judicial foreclosure is waived in writing by the homeowner.

San Antonio HOA Sells Disabled Couple's Home

From WOAI.com

Every day is a struggle for Dan and Elaine Lambert. Dan has a traumatic brain injury and is partially paralyzed. He was struck by a train while working for the railroad. Since the accident, he's had two strokes and four heart attacks. Elaine says she went for six or seven weeks with open sores on her legs. She suffers from a disease that causes painful sores and swelling in her legs and has bouts of severe depression.

With their belongings already packed after getting an eviction notice from the new owner, Dan and Elaine each take some of the blame. The couple says the HOA dues were simply not a priority as they dealt with getting through their illnesses. They say certified letters from the HOA's attorney went unopened or thrown out because they thought it was junk mail.

Still, they think the HOA has gone too far. "There's no way in hell this association should do this to retired people or disabled people," Dan told us.

Homeowners' association usually don't do sell homes of those who owe them money. Instead, if you don't pay your dues, the association slaps a lien on your house. That way you have to pay up before you can sell it.

Instead filing a lien and leaving it at that, the Heritage Hills HOA took the unusual step of foreclosing and selling the house. The Lambert's home sold at a public auction on the steps of the Bexar County Courthouse. The house valued at $156,000 sold for only $2,200. That is the amount the Lamberts owed after late fees, attorneys fees and interest were added.

Tom Newton is the HOA attorney who sold the Lambert's home. "I'm not kicking anybody out of their house," he explained to the Trouble Shooters. "What I'm doing is holding them to the obligation they accepted when they bought the property."

Trouble Shooter Brian Collister asked Newton, "[Do] you feel comfortable kicking a disabled family out of their home for a few hundred dollars in HOA fees?"

Newton replied, "I feel comfortable in taking those steps necessary to enforce my client's legal rights, and if that means that ultimately somebody may go through this foreclosure process, it's unfortunate, but it is a consequence of their own making." During all of this, no one with the HOA or its attorney ever picked up the phone and called or came to the Lambert's home. They never simply knocked on the door and tried to talk to them about why they were not paying their fees.

Collister asked Newton about this; "Don't you think if you're going to take their home away from them you should at least go talk to them face to face?"

"No, I don't," Newton answered, "I don't, and I'll tell you there are some people out there who have whatever sort of issues they have. They become violent when you approach them about their shortcomings or failure to abide by their obligations, and I think it is a dangerous situation."

The Lambert's say they're not dangerous or violent. They're just surprised that a homeowners association can go so far because they owe so little. The HOA says it sent the Lamberts certified letters during the three years they did not pay their dues, and they had plenty of opportunities to pay up and keep their house.

Wednesday, the Lamberts sit down with the HOA and the investment company that bought the house. They're going to try and come up with a way where the Lamberts can keep their home. We'll let you know what happens.

West Oaks Estates HOA and Builder File Suit Against Non-Member Residents Seeking to Compel Them to Join HOA

On November 16, 2008, the West Oak Estates Homeowners Assocaition, Inc. ("HOA"), and McMillin Texas Development (a susidiary of McMillian Homes) filed at least 15 lawsuits in Bexar County District Court against families residing in Unit 2 of San Antonio's West Oak Estates subdivision. The suits, which are identical, were served upon the residents in the days immediately proceeding Thanksgiving -- putting a damper on the holiday spirits of may of the residents of the West Oak Estates subdivision. San Antonio attorney Trey Wilson has been retained to represent 12 of the families, and several others who were not sued, but who are similarly-situated to the Defendants. Wilson has represented homeowners associations and those individuals adverse to them in a variety of lawsuits.

The West Oak Estates HOA lawsuit arises from the fact that the Defendant households are not members of the homeowners association because they purchased their homes prior to the time that McMillin annexed Unit 2 into the Restrictive Covenants. That is, McMillin sold at least 19 homes in the subdivision BEFORE it recorded its Declaration of Covenants, Codes and Restrictions ("CCRs") with the Bexar County Clerk. "Because these homes were sold prior to the developer recording the CCRs (on May 26, 2006), these properties are not burdened by the CCRs, and my clients are neither bound by the CCRs or subject to mandatory membership in the HOA" said Wilson. "it is unfortuante that the HOA and builder have resorted to litigation, as these type of suits generally result in discord between neighbors and a loss of tranquility and goodwill among neighbors." In 2007 Wilson filed suit in Medina County, Texas against the developers of the Valentine Ranch subdivision on grounds that their property owners association was not formed or incorporated until after many of that development's residents purchased their properties and began payment of POA dues and assessments. The 2007 lawsuit was settled at mediation, and resulted in the issuance of Amended CCRs, a Supplemental Declaration, and several changes in the composition of the POA Board.

McMillin recognized its error as far back as July 2006, and began a campaign of letter writing and negotiations seeking to recruit the non-members to voluntarily join the West Oak Estates HOA. When these negotiations failed, it resorted to litigation, and filed suit seeking to have the Court declare that the non-members are subject to the CCRs and subject to mandatory HOA membership. Although the HOA is a named Plaintiff in the suit, the association remains under developer control, and 2of its 3 Board Directors are McMillin employees. The other Board member is a subdivision resident who was appointed by McMillin. The HOA has claimed in the lawsuit that it is a "beneficiary of the contract bewteen Defendants and McMillin."

Wilson maintains that, in addition to several defenses to the builder and HOA's lawsuit, the non-members maintain several affirmative claims against both the HOA and the builder arising from broken promises, breach of the CCRs, and illegal collection of dues and assessments from the non-members. "These claims will be addressed by way of the non-members' counterclaims against the Plaintiffs, and a third-party claim against the HOA's management company."

More to follow as the suit progresses...

San Antonio Homeowners Association Threatens Foreclosure of Military Couple Stationed Overseas from WOAI.com

A San Antonio couple, serving in the military overseas, almost loses their home. Not because they failed to make their mortgage payments, but because they were behind on their homeowners association fees. This military couple was fighting a losing battle, so they asked News 4 Trouble Shooter Jaie Avila for help.

David and Melody Gates admit they fell behind on their homeowners association fees when Melody got sick, but they say when they tried to pay what they owed, the association and its attorney kept sending their checks back and piling on more fees. The couple is stationed at an air force base in Germany.

The Gates say since late last year, they have sent three separate checks to the Westover Crossing Homeowners Association to pay off all the dues they owe for their home. But each time, the checks were returned, because by the time they arrived in the mail, more late fees, and attorneys fees had been added to the total. The attorney for the association refused to accept partial payment.

"Every time they mail it back to me, they tell me I owe them more money," says Melody Gates. "They tell me that I owe them late fees and I also, on top of that, I owe them attorney fees. And I don't understand why a company, knowing that we're so far away, is being so unjust to us."

After six months of this, the Gates' bill grew from $1,100 to more than $1,800.
The homeowners association filed a lien against their home and was threatening foreclosure. So the desperate couple e-mailed the Trouble Shooters.

"I reached out to you, because I don't know what else to do," says Gates. "We have tried very hard to make this bill paid in full."

The Trouble Shooters contacted Spectrum Management, which runs the Westover Crossing Homeowners Association, and its attorney, Tom Newton, Jr., the man who has been sending the Gates' all those intimidating letters. Newton wouldn't comment, but this isn't the first time the Trouble Shooters have come across attorney, Tom Newton.

Last year, Newton, who was working for another homeowners association, foreclosed on an elderly disabled couple, Dan and Elaine lambert, because they hadn't paid $380 in HOA fees. At the time he said he felt justified in foreclosing on struggling homeowners who are only a few hundred dollars behind on their HOA dues.

"I feel comfortable in taking those steps necessary to enforce my client's legal rights," said Newton at the time. "And if that means that ultimately somebody may go through this foreclosure process, it is unfortunate. But it is a consequence of their own making."

Although, he wouldn't talk to us, a few days after we contacted Newton, he and the Westover Crossing Homeowners Association agreed to stop tacking on fees and settled the dispute with the gates for $1,300. Almost $600 less than they had been demanding.

If you fall behind on your HOA fees, they can legally do the same thing to you. Be sure to read your deed restrictions which should explain what kind of notice they have to give you before trying to foreclose. And get them to agree to a re-payment plan in writing, to avoid unexpected fees.


If you feel that you are being harassed or treated unfairly by a Homeowners Association (HOA), contact San Antonio attorney Trey Wilson. Mr. Wilson is an experienced real estate lawyer who routinely represents both individuals under seige by their HOAs, and HOAs with claims agaisnt developers/builders. Trey Wilson was named by Scene in SA Magazine as one of San Antonio's Best real Estate Litigation Attorneys. He may be reached at 210-223-4100 or www.sa-law.com

Restrictive Covenants Are Treated as Contracts Under Texas Law

Read those CCRs before you sign them! Better yet, have an experienced attorney do so.

The Texas Property Code defines a restrictive covenant as “any covenant, condition, or restriction contained in a dedicatory instrument, whether mandatory, prohibitive, permissive or administrative.” TEX. PROP.CODE ANN. § 202.001(4). Black's Law Dictionary defines restrictive covenant as a “private agreement, usu[ally] in a deed or lease, that restricts the use or occupancy of real property, esp[ecially] by specifying lot sizes, building lines, architectural styles, and the uses to which the property may be put.” BLACK'S LAW DICTIONARY 393 (8th Edition 2004). The Restatement (Third) of Property states that a restrictive covenant is “a negative covenant that limits permissible uses of land.” RESTATEMENT (THIRD) OF PROP.: SERVITUDES § 1.3(3) (2000). Clearly, “Declarations of Covenants, Conditions, and Restrictions" or CCRs fall squarely within these definitions, and constitute restrictive covenants.

Texas Courts have long held that restrictive covenant are interpreted according to the rules that govern contract construction. See e.g., Air Park-Dallas Zoning Comm. v. Crow Billingsley Airpark, Ltd., 109 S.W.3d 900, 909 (Tex.App.-Dallas 2003, no pet); Marcus v. Whispering Springs Homeowners Ass'n, Inc., 153 S.W.3d 702 (Tex.App.-Dallas, 2005); VICC Homeowners' Ass'n, Inc. v. Los Campeones, Inc., 143 S.W.3d 832 (Tex.App.-Corpus Christi, 2004). Dyegard Land Partnership v. Hoover, 39 S.W.3d 300 (Tex.App.-Fort Worth 2001, no pet.); Scoville v. SpringPark Homeowner's Ass'n, 784 S.W.2d 498, 502 (Tex.App.-Dallas 1990, writ denied). Further, Courts strictly construe covenants “against the party seeking to enforce it in favor of the free and unrestricted use of the premises.” Munson v. Milton, 948 S.W.2d 813, 816 (Tex.App.-San Antonio 1997, pet. denied). Stated differently, “the right of individuals to use their property in whatever manner they desire remains one of the most fundamental rights an individual property owner possesses.” Rankin v. Covington Oaks Condominium Owners Ass'n, Inc. Not Reported in S.W.3d, 2005 WL 3161039 (Tex.App.-San Antonio, 2005).

Neverthless, the CCRs you receive at time you purchase a home constitute a binding contract -- even if you are not asked to sign them. Prior to closing on your home, you should have an experienced real estate lawyer review and explain the CCRs to you. You can bet that the Homeowners Association and their lawyer are familiar with the CCRs and prepared to enforce them.