New Texas Regulations will affect Homeowners Associations

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New Texas Regulations will affect Homeowners Associations

Homeowners Associations (HOAs) in the Brazos Valley are neighborhoods that have set certain rules, fees and conditions for homeowners. The lack of a regulation policy is primarily due to the independence of the Homeowners Association from the state of Texas. Unlike Florida or California, Texas law has very little regulation regarding Homeowners Associations throughout the state. This is changing, however, thanks to recent bills that were passed through the Texas Legislature meant to monitor the implementation of HOAs.

It is always possible as a Texan homeowner to live in a neighborhood that was not developed under the conditions of an HOA, or perhaps outside of residential living all together. Today, however, over 4.5 million Texans live in residential areas that are affected by or under the influence of Homeowners Associations. That is almost 20% of all Texan properties have been under the power of generally unregulated entities until this point. The recently passed bills through Texas Legislature have changed how HOAs will be governed, including their powers over particular penalties and foreclosures, and provide additional rights to homeowners concerning the use of their property.

Homeowners Associations are set up by real estate developers as a means to market, manage and sell homes in a residential area. They are often viewed positively for their ability to provide neighbors with shared values and the ability to enforce regulations, making neighborhoods safer and more comfortable as a whole. The authority of HOAs is passed down from the real estate developer to new homeowners upon purchase of property within a residential area. Homeowners then establish meetings and select representatives to institute the rules, projects and fees for the entire neighborhood (for instance, they might decide to establish a neighborhood security or the construction of a traffic light, all of which would be privately funded).

What happens due to a lack of governmental regulation is that there is a broad opportunity for HOAs to become particularly selective in their meetings (who will be represented and how much authority they will possess, etc.). The result of such selectivity often results with imposing fees and rules on new homeowners who have yet to establish themselves with the HOA. The new Texas bills are meant to supplement the equality of HOAs so that all homeowners have equal voice and access to these meetings.

The first of these new state regulations pertains to HOA meetings, elections, and directors. Meetings, for instance, must always be announced to all homeowners at least 10 days in advance by mail (but no more than 60), and 72 hours by electronic email. These notifications must include the date, precise time, location, and subject of the meeting. For voting there can be no secret ballots and all homeowners are exempt from disqualification. New regulations have been applied to the procedures of recounting, and any homeowner is allowed to run for director. HOAs are also required to hold annual meetings: if directors fail to do so, owners may demand such a meeting, or call for a new election if directors neglect such demands.

There are also new regulations pertaining to documentation and records. All governing documents (which establish rules, bylaws, etc.) must be recorded with the county if they are to be effective. Otherwise the HOA is not allowed to enforce their governances. All governing documents must also be posted on the HOAs website (if they have one), as well as making all documentation (books, records) open to homeowners. Declarations can only be amended with a vote of 67% or higher (2/3rds majority), and all HOAs with more than 14 lots must adopt new records-retention policies.

New state regulations also affect payment policies, liens, and foreclosures in an attempt to protect homeowners’ rights and property. HOAs with more than 14 lots are required to establish guidelines to structure payment plans, which then must be released to the county. HOAs are not allowed to foreclose on any homes for only charges relating to records production, neither are they allowed to foreclose without providing a prior notice to junior lien-holders allowing a 60-day opportunity to cure. And, perhaps most importantly, non-judicial HOA foreclosures are now officially prohibited. HOAs must obtain a court order to foreclose on a homeowners’ property.

There have been additional, more subtle and less influential regulations set by the state for the purpose of protecting property owners’ rights, like those pertaining to transfer fees for home sales and re-sales. Regardless, the state’s primary motivation has been to establish a set of regulations that will provide homeowners under the direction of Homeowners Associations a level of equality and a new measure of fairness that will protect their property rights and ownership.

These new bills passed by the Texas legislature will no doubt only add to the amount of red-tape endured by the average HOA, and only contributes to the extension of legislatorial control occurring across the nation. Yet, there is a level of comfort that will be gained by numberless homeowners across the state and particularly within the Brazos Valley. HOAs are now required to act more fairly, and the state is willing to enforce this notion with the passing of bills into established Texas law.
PS – Susan Hilton is Bryan College Station, Texas’ real estate specialist in foreclosure sales and real estate agent career building so if you need help

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