Enforcement of Restrictive Covenants -- HOA Board Actions are PRESUMED to be Reasonable

Did you know that there is a built-in presumption in the Texas Property Code that an HOA's actions (and the actions of its Board members, attorneys, management companies and other agaents) are PRESUMED to be reasonable? Did you know that in seeking to overcome this presumption, the party challenging the HOA bears the burden of proof? It's true.

Section 202.004(a) of the TPC provides: "An exercise of discretionary authority by a property owners' association or other representative designated by an owner of real property concerning a restrictive covenant is presumed reasonable unless the court determines by a preponderance of the evidence that the exercise of discretionary authority was arbitrary, capricious, or discriminatory."

In order to grasp the import of this provision, understanding presumptions is important. A presumption is not evidence but rather a rule of procedure that is overcome when positive evidence to the contrary is introduced. See Green v. Ransor, Inc., 175 S.W.3d 513, 516 (Tex. App.–Fort Worth 2005, no pet.). The presumption “disappears” when evidence to the contrary is introduced. See Republic Nat’l Life Ins. Co. v. Heyward, 536 S.W.2d 549, 558 (Tex. 1976).

There exist many manners in which to contest the reasonableness of an HOA's actions. One of which is by allleging and proving selective enforcement. Be careful, however, as the Texas Courts have usually sided with the HOA unless their actions are, indeed, arbitrary. That means that proving an HOA's properly-authorized action is tough. However, overly-zealous HOAs and their agents do act "arbitrary, capricious, and/or discriminatory" in many circumstances. With the right facts, careful presentation of evidence, and an attorney knowledgable in HOA law (particularly Title 11 of the Texas Property Code), an owner can porevail in her claims that an HOA's actions are illegal or unsupported by law. In those instances, an owner might well obtain relief from oppressive HOA actions and even recover attorneys' fees and costs.

Battle Brewing in Cadillac Drive Neighborhood Covenant Dispute

For the last several monnths, a battle has been brewing in the Cadillac Drive neighborhood. The picturesque, oak-lined street with estate-sized lots and a country-in-the-city feel is deeply divided. On one side, the Chabad Lubavitch Jewish organization proposes to construct a new 15,000 square foot synagouge on a lot zoned (at least in part) for residential use. On the other, the neigborhood association has cited the plan as a violation of the restrictive covenants, and demanded that the Rabbi cease and desist with efforts to construct any structure which violates the residential-use-only restrictions on the lot.

Of course, it is never that simple...there are factors that complicate both sides of the coin, and their respective arguments. First, the Rabbi lives on Cadillac Drive -- actually right between two members of the CDNA Board of Dirctors. Second, it is claimed that religious services have been performed on the lot for years, with no prior complaints by the Association. Third, the lot in question has dual zoning from the City of San Antonio, and dual classifications under the restrictive covenants -- half )(the back half) is within the neighborhood association's jurisdiction while the other half is exempted. Fourth, and perhaps most interesting, is the fact that the Rabbi and his wife voted many years ago in favor of placing the residential-use only restrictions on the lot where the synagouge is now proposed.

Our firm initially represented the neighborhood association, and issued the letter directing the CL to cease and desist with violations of the restrictions. In addition, we participated in conducting and noticing an election, whereby the membership of the Association could vote whether to make an exception to the restrictions, and authorize construction of the synagouge on the lot in question. This election resulted in an overwhelming denial of the requested amendment.

As of this writing the parties remain locked in a stand-off. The Association and its Board have spoken. However, the Rabbi and his legal team have taken note of a provision in the Restrictive Covenants that allow them to be amended by a majority of the Owners. Thus, there is an effort underway to secure -- by petition -- enough votes to amend the Restrictions in much the manner previously denied by the Association's membership.

Only time will tell...

Farm and ranch groups want special session to toughen eminent domain law

Measure passed by lawmakers calls for election to decide whether to restrict land seizure for economic development
LUBBOCK — Texas farm and ranch groups are glad lawmakers have taken steps to revisit eminent domain law but say it's "nowhere near" what's needed in a state where most land is privately held.

Texas Farm Bureau spokesman Gene Hall said that if voters approve a constitutional amendment in November, it would bring "improved but still bad eminent domain law" to the state.

"It's less than half a loaf," he said, describing the bill that emerged from the recently completed session. "The fight goes on."

A measure approved by lawmakers — House Joint Resolution 18 — puts a constitutional amendment on November's ballot that would prohibit the government from taking private property exclusively for economic development.

The move, negotiated by House and Senate lawmakers, addresses a 2005 Supreme Court decision that gave New Haven, Conn., the right to take private property and turn it over to private developers for retail development.

The Institute for Justice, which represented the property owner in the Connecticut case, Kelo et al v. City of New London, has called the amendment "dangerous" and said it still would allow governments to take land for economic development. The group says eminent domain should only be allowed for public-use projects such as a new courthouse or library, and it supports the House version of the amendment, which it says has stronger protections for property owners.

The proposed amendment would specify what qualifies for eminent domain projects, but allow exceptions with the support of two-thirds of each legislative chamber.

Together with Texas cattle industry groups, the Farm Bureau is hoping that Gov. Rick Perry will call a special session and that eminent domain will be on the list of items to be discussed.

Perry has not said whether he intends to call a special session.

If he does, the additional protections for private property owners that were part of SB18 — a bill that died in the Legislature — should be taken up, said officials with the Farm Bureau, Texas Cattle Feeders Association and the Texas and Southwestern Cattle Raisers Association. Those provisions include offers that represent fair market value, compensation to landowners for diminished access to their property and the right to repurchase the land at the same price for which it was sold if nothing is done with it after 10 years.

Texas leads the nation in private property ownership, having three times more than any other state.

Perry and U.S. Sen. Kay Bailey Hutchison have both indicated that eminent domain probably will be a campaign issue in their 2010 Republican primary.

A spokesman for Sen. Craig Estes, R-Wichita Falls, the author of SB18, said the lawmaker was "very disappointed" that the bill did not survive. But the issue is far from gone, spokesman Jody Withers said.

"I think there's a general agreement that the provisions ... are still needed," he said.

A spokesman for a group outside the agriculture industry that is pushing eminent domain reform came away from the legislative session less distressed than those tied directly to the industry.

"Property rights are very important and always need to be addressed, but I think we've made great progress here, and I don't see an urgency to deal with the issue now that HRJ18 passed," said Bill Peacock, director of the Center for Economic Freedom at the Austin-based Texas Public Policy Foundation.

If Perry doesn't call a special session, projects will go forward quickly while eminent domain restrictions remain the same, said Kirby Brown, executive vice president of the Texas Wildlife Association, a nonprofit that works to conserve, manage and enhance wildlife and its habitat on private land.

"We do expect them to do that," he said. "I think it would be naive of anyone not to fast track projects and use the current eminent domain process to avoid what SB18 would have protected landowners from. I'm not optimistic."

By Betsy Blaney, ASSOCIATED PRESS

Top 10 reasons to mediate

Why should you consider using mediation to resolve your legal problems:

1. usually it's free or inexpensive
2. it is fair and neutral
3. it saves time & money
4. it's confidenial
5. it avoids litigation
6. it encouarges cooperation
7. it improves communication
8. you are actively involved in resolving your conflict
9. it encourages creative solutions to your conflict
10. it is a win-win situation!

Record Keeping and the Standard Property Management Agreement

Are you an Investor with rental properties in Texas currently under management by a broker or other property manager? Or perhaps you are a manager charged with overseeing and manager rental or investment properties owned by another. Chances are, if you own or manage rental properties in San Antonio, you will be confronted with a property manager's record keeping obligations under the standard Texas Association of Realtors ("TAR") Residential Leasing and Property Management Agreement (TAR Form 2201).

This form requires that the property manager remit to the property owner EACH MONTH a statement of receipts, disbursements, and charges. This means that an Owner should be receiving MONTHLY communications from the manager reflecting rental and other income, as well as a statement of disbursements (such as repair/maintenance costs incurred, utilities paid, management fees collected, and general costs of marketing or opertaing the property). Failure to remit these statements could be considered a breach of the Management Agreement, and could invalidate the manager's right to future management fees.

While there is no particular form prescribed for the statement, its required contents (including actual receipts) are fairly straight-forward. The prudent property manager will use the MONTHLY STATEMENT requirement as an effective tool to communicate with the owner/client, and as a tool to analyze whether the property is receiving its maximum return.

Part 4: Public Works Contracts & Subcontractors: Prime Contracts Over $25,000.00 & Retainage

Like in private construction projects, in public works projects, general contractors hold back part of the contract price until the subcontractor fulfills the contract as “retainage.” The amount withheld is a percentage of the total contract price, often around 10%. The retained money is supposed to be paid to the subcontractor after the public works contract (the contract between the governmental entity and the general contractor) is completed. If the general contractor does not pay the retained money, the subcontractor can file a lawsuit to collect on the payment bond; however, the subcontractor must first meet the notice requirements.



The subcontractor must give notice to the general contractor and surety on or before 90 days after final completion of the public works contract. The notice must include the amount of the contract, any amount paid, and the outstanding balance. Tex. Gov’t Code § 2253.046. The notices must be mailed by the proper method and to the proper addresses.



Once again, sending the notices timely, to the correct people, and with the correct content is crucial to perfect a claim retainage.



Texas law governing public projects can be found in Texas Government Code Chapter 2253 (formerly known as the McGregor Act) and Texas Property Code Chapter 53.



Please visit our blog again in a few days for Part 5: Public Works Construction Projects & Subcontractors: Prime Contracts Over $25,000.00 & Rights to Information.



Posted by Sarah F. Berry.

DA Watch: Former Jim Wells County DA Joe Frank Garza Spent Millions in Drug Money on Vegas Trips and 3 Secretaries

Down in Alice, Texas, where US Highway 281 runs through on its way from the US -Mexico border through the heart of Texas up to Dallas and beyond, there's lots of drug busts. Law enforcement in Jim Wells County stops all sorts of vehicles on its patch of US 281, confiscating all kinds of drugs -- as well as cash.

Apparently, lots and lots of cash. We're talking millions.

Over Four Million Dollars in Drug Forfeiture Money Was Spent by Former DA Garza on Trips to Vegas and Other Interesting Stuff

Joe Frank Garza was the District Attorney for Jim Wells County for a number of years, until his opponent campaigned in Alic, and elsewhere on issues regarding Garza's spending habits, and beat him in the last election.

Now, new DA Armando Barrera is beginning to report his findings on what was happening with the drug forfeiture money. First, Barrera is reporting that there was no checks and balances here: Garza spent the cash without anyone double-checking what he was doing with it.

And what was Joe Frank Garza doing with all that cash?

Barrera's reporting that Garza spent lots of money on travel to Vegas.

Garza's response is that there were lots of seminars in Vegas. He and
his employees went on lots of seminars ... legal seminars, to educate
themselves.

Barrera's reporting that Garza spent lots of money on three particular secretaries.

Garza's response is that the cash was for extra pay to lots of folk within his jurisdiction.

The Numbers So Far

The media is reporting these tallies (the audit/investigation is ongoing, this information comes from data provided by Garza to the Attorney General's office) from 2000 - 2007 (excluding 2002) where Garza spent $4.2 million:

1. $2.1 million was spent on "salary supplements", and while Garza had a staff of 15 who did get bonus pay, Barrera (and the county commissioner heading up the investigation) are reporting that most of this total went to just three people, three secretaries who worked for Garza.
2. $267,449 on travel.
3. $581,000 in operating expenses.
4. $19,987 on equipment.
5. $154,213 on supplies.

Has a Law Been Violated by Garza?

Garza is adamant that he has done nothing wrong. It was totally within his power to spend this drug money as he saw fit. Right now, state and county laws are being reviewed to see if this is true, or if Garza has violated either civil or criminal laws by his actions.

Stay tuned.

Sources:

Corpus Christi Caller Times
http://www.caller.com/news/2009/may/27/jim_wells_forfeiture/