| Summer 2015, Special Edition 5|
|Special Edition: Legislative Update 2015|
TEXAS LEGISLATIVE SESSION - 2015
The Texas legislative session concluded in June. On the whole, Texas Community Association Advocates, Inc. was successful in supporting favorable legislation, much of which was passed, and opposing several bills which would have been detrimental to POAs.
While there was much good news for POAs coming out of this session, there was some bad news for Condominium Associations and their ability to hold builders accountable for construction defects.
Thanks to all of you for writing letters and making calls to oppose and defeat HB 971. This bill would have required all board members to read all deed restrictions applicable to the HOA, read all statutes applicable to the HOA, and then sign an affidavit that they had done their reading. Furthermore, the bill would have imposed potential personal liability on a board member if the HOA made an error in not following the deed restrictions or law. With your help, we killed this one!
This special edition recaps some key pieces of legislation. Most of the new laws become effective September 1, 2015, unless otherwise noted.
Please also read a more detailed TCAA summary of key legislation, as well as a review of key provisions which may require action by your association board. (Log in to Board Connection/Legislative Update page on the CMA/Association website).
KNOW THE RULES
A TCAA report outlines several provisions which will potentially change the conduct of board meetings
These laws are not applicable to condominium associations. The new laws apply regardless of what an HOA’s governing documents require in terms of notice. HOA board members should familiarize themselves with the meeting notice requirements to ensure that no inadvertent violations occur.
An HOA’s own legal counsel and association manager will be able to assist associations in helping to make sure these notice requirements are met. The new requirements affect what a board meeting notice must include in the event a board meeting is held electronically, and adds additional items that require 72-hour owner notice before being discussed and/or acted on. The new requirements include the following:
- ALL board meetings may now be held electronically or by telephone;
- A board no longer needs to provide notice of a meeting when the board acts on an item (it’s now immaterial whether it’s “routine and administrative” or “a reasonably unforeseen emergency or urgent necessity”) so long as the item is not one of these items outlined on the left; and
- Several new items now require a board meeting before being discussed or acted on (these items are outlined at left).
Read TCAA's Summary of Board Meeting Requirements here.
State Senator Royce West sponsored TCAA’s 2015 omnibus bill which covered 26 different provisions affecting Texas property associations. If that sounds ominous, most are rather benign clarifications and corrections of ambiguities created by previous legislation. Some of the bill’s more important provisions follow:
- Allows members to attend open board meetings held by video conferencing using the same technology.
- Allows more flexibility for boards to take day-to-day action outside of a meeting while clarifying that certain important votes (e.g. selling land or adopting a deed restriction) must be taken at an open meeting. See the article Changes to Board Meeting Procedures above.
- Provides privacy protection by allowing associations to adopt rules regarding use of secret ballots, and by making clear that any person who tabulates or recounts votes must not disclose to anyone how an individual voted.
- Allows associations more flexibility in offering payment plans. Currently associations cannot offer payment plans for longer than 18 months; the bill removes that restriction.
- Eliminates confusion and grounds for legal dispute by clarifying that Ch. 207 (applicable to homeowner association resale certificates) does not apply to condominiums. The resale certificate provisions applicable to condominiums are already in Chapter 82 of the Property Code.
- Clarifies the manner in which votes may be cast. Although absentee ballots or proxy voting must be allowed, the association may also elect to offer other methods such as online or electronic voting.
- Defines two types of violations – those that are curable in nature and those that are not. Some examples of curable violations include parking violations, maintenance violations, failure to construct improvements in accordance with approved plans, and ongoing noise violations such as a barking dog. Uncurable violations include shooting fireworks, noise violations that are not ongoing (such as a loud party), property damage, removal or alteration of landscaping, and holding a garage sale or other prohibited event.
- Uncurable violations also include those that pose a risk to the health and safety of other residents. If a violation is uncurable, the “209” notice sent to the owner no longer has to give the owner an opportunity to cure the violation.
Action item: Contact your POA attorney to ensure that your violation notices and violation procedures are compliant with the new law. Many POA rules are now drafted to mirror the current (soon to be old) statutory requirements of notice and opportunity to cure in all cases. These rules will likely need to be amended in order to take advantage of the new law’s language regarding uncurable violations.
Read the full list of HOA bills passed and suggested action items on the Legislative Update page of your CMA website.
LEGAL HOOPS FOR CONDO ASSOCIATIONS
The Texas Association of Builders and other powerful interests ramrodded a bill which severely restricts a condo association’s ability to sue a builder for construction defects.
According to the TCAA summary, which is applicable to condos only (not HOAs), this law greatly restricts an association’s ability to file a construction defect lawsuit. In the name of curtailing what some argue are frivolous lawsuits, it requires condo associations to jump through a large number of hoops prior to filing a construction defect lawsuit. Among the hoops are:
- suit must be approved by 50% vote of all owners;
- notice to the potential adverse party (the builder or the developer) prior to any engineering work; opportunity for adverse party to be present when the association’s engineer does its evaluation;
- notice of all engineer opinions must be provided by the association to the adverse party before the association can even vote on filing suit (forces the association to disclose things that are currently not required to be disclosed until the lawsuit discovery process); and
- the association must hire a third party to appraise the likelihood of success of the claim, the amount of costs and fees for which the association may be liable, how the association will fund the costs of the claim, and various other items, and provide this notice to all owners before taking a vote on filing suit.
Please read more details of the law’s provisions if it pertains to your association. You will find the TCAA summary here.