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. 

Texas Supreme Court Posts New Rules Regarding Foreclosure of HOA Liens

San Antonio HOA Lawyer Trey Wilson wrote:

Today, the Texas Supreme Court posted the final version of its revisions to Texas Rules of Civil Procedure 735 and 736, governing the foreclosure of certain liens, including HOA assessment liens. The Court's full Order is posted here.

The Texas Legislature directed the Supreme Court to enact new rules relating to judicial foreclosures, when it adopted HB 1228 (82nd Leg., R.S.). That Legislation was one of numerous HOA reform bills adopted last session by Texas lawmakers.

The original analysis of the bill provided the following summary of its purpose.

Currently, a property owners' association may foreclose on real property for the property owner's failure to pay association assessments. In many instances, the foreclosed property is encumbered with a first lien that is not disposed of when the foreclosure sale occurs because there is no requirement to notify the lienholder of the foreclosure or the sale. H.B. 1228 sets out provisions relating to notice and providing the lienholder with an opportunity to cure a delinquency before a foreclosure sale.

Stay tuned to this blog for a future post summarizing the new rules and their practical effect.

Notably, the new Rules apply to foreclosures commenced on or after January 1, 2012.

HOA Fight May Cause Loss Of Services -- from KSAT 12

Northeast Side Complex Faces Water, Electricity, Cable Shutoff

SAN ANTONIO -- The Village at Woodlake Condominiums were once a prime place to live on the city's northeast side off of FM 78. But now, the pool is closed and the complex is in danger of losing some basic services because of a fight involving the homeowners' association.

"Unfortunately, there's gonna be innocent people forced out of their homes," said Denny Huston, the former HOA board president.

The reason is that Travelers Insurance has dropped the insurance that protected the directors and officers of the HOA in case they were sued in their official capacity. Travelers cited the frequency of claims against the HOA as the reason the policy was not being renewed.

"On the tenth of June, at midnight, this HOA basically ceased to exist," said Huston.

In single family home developments, HOAs have more limited duties, but at the Village at Woodlake, the HOA pays for all residents’ water service, basic cable television, outside lighting and landscaping, and if those bills are not paid, then even the electric gate would cease to function. Currently, nobody in the complex is authorized to collect the monthly dues or pay the complex’s bills.

"Our hands are tied as to what's going to happen in the next few weeks," said Huston.

Huston said he’s contacted a number of government offices asking for help, but has been turned down. He produced letters from the Texas Attorney General’s Office and the Texas Secretary of State’s Office, and he said he contacted his county commissioner and the Bexar County District Attorney’s Office. Dee McGee has managed HOAs for more than 30 years and looked into solutions for the Village at Woodlake.

"They will cut their water off," said McGee of Maximum Management Resources.

She could only think of one possible solution. "They'll appoint a receiver who will take over and collect the money and make the payments, get everything sorted out," said McGee.

The problem is that means owners may end up paying a lot more money. She said that people who buy into developments where HOA membership is required should remember that they are co-owners of the HOA, and that if the HOA suffers as a result of continual challenges and lawsuits, they too will suffer.

The Village at Woodlake hopes a government agency will take note of their plight before residents lose water and other basic services.