3 things property owners associations can’t do anymore

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The front exterior of a brown two-story home with wide trim and a stone foundation.

07/13/2015 | Author: Editorial Staff

Texans who own property that’s subject to mandatory membership in a property owners association had an important win during this year’s legislative session. For POAs that allow property owners to lease their properties, new legislation limits how much control the POA can have over these rentals. 

Thanks to a new law that went into effect June 19, POAs are no longer allowed to:

  • Require a lease or rental applicant or tenant to be submitted to and approved by the POA or
  • Require a consumer report, credit report, lease application, or rental application that was submitted by the applicant, tenant, or agent to the owner or owner’s agent to be submitted to the POA.

In addition, if a copy of a lease or rental agreement is required by the POA, any sensitive personal information on the document may be redacted or otherwise made unreadable or indecipherable.

Read about more legislative successes for Texas real estate in the July issue of Texas REALTOR® magazine.

Categories: Legal, Homeowners
Tags: legal, legislative issues, legislation, property owners associations, texas realtor magazine, homeowners association


David Davis on 04/05/2017

David Cherbonnier,
I’m curious how you put this on the agent?  Lawsuit after lawsuit have been filed against agents (and won by sellers & buyers) where the agent got involved in the completion of the Seller’s Disclosure Notice.  This document is to be completed by the seller(s) ONLY hence the name or title “SELLER’S DISCLOSURE NOTICE.”  Perhaps you meant to say that if the seller didn’t truthfully disclose a known condition or defect, then perhaps the agent wasn’t acting in the principal’s best interest (it’s never considered a best interest for anyone , for the seller to withhold a known defect, even if the seller thinks it might help the sale of the property).  Or was it the fact that the buyer’s agent perhaps didn’t recommend an inspection to the buyer?  We don’t see/know those facts/details here.  One thing is for certain, it is not on the agent to seek out latent defects (we are not inspectors [my local board {HOUSTON} has a specific form that we use that specifically states that] and are not expected to know every latent defect.  Our job is to refer the buyer, in this case, to a qualified inspector.  Naturally, if the defect is known we are required by law (on both sides of the transaction, even if the buyer is only a Customer and not a Client) to disclose it.

David Cherbonnier on 04/04/2017

Regarding Larry Leonards’s problem.  It would seem that information should have been in the Seller’s Disclosure.  If not then the Agent wasn’t performing in his best interest.  If he was dealing direct with the owner it would seem he should still have some recourse.  Actually if it is a substandard Septic System it makes one wonder how the owner managed to get it approved.

David Davis on 04/04/2017

You need to consult an attorney at law regarding this matter.  Giving advice here would constitute the practice of law, and as REALTORS we are not allowed to do that.

Rem on 04/04/2017

A few years ago our POA voted to stop allowing rent properties in our sub-division , being that I had rental property for years prior to that. they would allow me to continue to rent under the grandfathered in clause.
  Yesterday they put a sign on our entrance gate that said no rental property was allowed and that it was not legal to rent in here.
  I feel that I should still be grandfathered in as I keep my properties clean and nice and have always paid my assessment fees on time and in full the same with taxes.
  Is it legal for them to put that sign on the gate?

David Cherbonnier on 03/05/2017

Has there been a ruling as to whether an HOA can limit the tenancy of a home or unit?  If one has a nice lake front property are they able to rent it weekly if not strictly prohibited by the Deed Restrictions?

Melinda on 02/09/2017

Regarding the point that an POA cannot “Require a lease or rental applicant or tenant to be submitted to and approved by the POA ”  I’m trying to wrap my head around how this impacts what restrictions a POA can put on the lease.  They are trying to pass a lot of new restrictions on rentals in our neighborhood including mandating that lease terms be for at least 1 year.  Could rules regarding lease terms be considered a form of approving the lease and/or how could they enforce this?

David Davis on 01/12/2017

Larry Leonard,
There’s an old saying called “caveat emptor”.  It means let the buyer beware.  I’m afraid if you’ve already closed on the the property you may have little remedy other than to consult an attorney.

Larry Leonard on 01/12/2017

If someone could point me in the right direction. I bought a piece of property in an HOA association, the seller, ” a member of the asso.” Slid me a substanderd septic system. Said it was required that I share this septic with another owner. Had no apparent problems with the said amenity. City water also is shared and is subseqinty mine an on my property. Until the occupants move in and sewer starts backing up into my property. They get use of freeflowing water and I get there sewer in my yard. It’s been mentioned that I would be made to move out and eat the 8000.00 price of property that I own. Now if there is a place I can go for an advocate of my rights to help guide me to recoil my losses. Seems it’s no ones problem but mine. Humm!
move back no

Deborah Danilow on 06/20/2016

Our By Laws clearly say only homeowners who are current on dues have a right to use our amenities which include the pool.  We had a wave of foreclosures and now have considerable rentals but landlords are not informing tenants of rules and regulations.  Homeowners may take two guests but must accompany them to the pool.  Is there any new rule which states renters must be allowed use of amenities or do we follow our By Laws?

Frank Mahnich on 06/03/2016

We live in an area in North Texas which was developed over 45 years ago. The developed filed bankruptcy. The area ahs 12-13 “Sections” each of which has separate deed restrictions. A loosely formed association was created years ago to help fund road repairs and construction. The deed restrictions are silent on any POA. While the POA existed, it was never filed with the county; it did not solicit approval from property owners and its success in securing “dues”  ranged from 30-70% of owners. Now a new “BoD” has been formed and is stating that they are instituting new by-laws that will make the association binding on all home owners. This means, In our opinion, that they are attempting to form this organization without asking the property owners to change their deed restrictions to allow for mandatory “membership”. The question is does Texas Law allow for the imposing of a POA on property where the deed restrictions are silent on the issue? The BoD claims to have contacted an attorney on the issue but they will not release his comments on the issue. Please help!

Jon on 05/19/2016

My biggest concern is limiting the control of the HOA that wants to be their own collective.  The issue with rental properties is the unreliable tenants who generally have the mentality that since it isn’t their property they think it isn’t their problem.  And what can an HOA do against HUD?  I would like to see communities in control of their neighborhoods and people with a voice.  Not a government over stepping and destroying beautiful neighborhoods by forcing them to “deal” with these new problems.

David on 04/02/2016

Nealanna send me ur email and I will see if I can dig it up for you.

.(JavaScript must be enabled to view this email address)

Nealana Patton on 04/02/2016

To David Hartman - I would be interested in seeing the two page Bill you mention. I realize your comment is almost a year old but if you still have or can tell me where to locate it would be greatly appreciated.

Timothy DeWein on 11/10/2015

I agree Carleen, it’s a lot of money for filling out a 2 page form.  All of the attachments are to be provided to a homeowner upon request (required by law last time I checked).  It’s especially annoying to finally receive the resale packet only to find their insurance policy has expired.  Having had this happen a few times, it’s now the first thing I look at when I see the packet.  No exaggeration I swear… about two thirds of the time, it’s expired. 

The trouble is, the law on how much they can charge says, “reasonable fee”.  Too vague if you ask me.  Considering the amount of time that goes in to preparing an appraisal (not to mention the requirements to BE an appraiser), charging the same amount for a resale certificate is clearly UNreasonable.

David Evans on 07/22/2015

I have been managing owner’s properties in a resort community on the coast for the last 5 years.  Last fall the HOA passed an ordinance that 3rd party rental agencies like myself could no longer manage properties.  They have hired their own management company and said that all owners must now rent their properties through their management company.  My owners are obviously livid.  Do they or I have any recourse?!

J.A. Lynn on 07/22/2015

We prefer that renters have more restrictions, not less. They never seem to know the Rules, they let their animals out in their yards loose, they do not clean up after them, they do not put their garage in the cans in bags to prevent debris in the street, they do not bring in their trash cans in a timely manner.  We pay big dues and would prefer that our HOA not even allow short term rentals and make certain that any rentals done by owners or Realtors include making sure the renters get the HOA Rules.  Renters are ruining our neighborhood.

David Davis on 07/19/2015

The article says “3 things property owners associations can’t do anymore”.  Yet I only see two.  What is the third item they can’t do?

David Hartman on 07/17/2015

The article is a bit confusing and misleading.  Here’s a summary:
House Bill 2489
Property Code 209.016
Effective Now

POAs can prohibit leasing altogether IF it’s CCRs restrict it outright.

POA CAN require Landlord who is an owner of property within its subdivision to provide a copy of the lease with sensitive information REDACTED.
“Sensitive information” is always personal numbers, i.e. social security, drivers lic, gov issued ID, account, credit card or debit card numbers.  Basically any financial or personal identifying numbers of the tenant.

POA may NOT: ask for tenants credit report or lease applications, or require that tenant or lease be approved by POA.

(This is very important) This statute does NOT prohibit the enforcement of any rental or occupancy restrictions contained in the governing documents.

I have the two page bill if anyone would like it.

Cheral Carpenter on 07/16/2015

I need clarification. The article says POA can not require a lease or rental agreement.  Then it says in addition, if the POA requires a lease any sensitive personal information on the document may be redacted. So can they require a lease or rental agreement or not? Thanks.

Glenda on 07/16/2015

Being a Broker/owner for 33 years,  it’s my opinion that POA’s are the most disrespecting entities involved in RE.  The majority of POA’s have no clue as to what is lawful or unlawful.  They seemingly break every rule regarding membership, officers, voting & simply make definitive rules based on whether or not they like someone living in the community.  I have personally witnessed many, many owners being targeted due to the board members not wishing them to live in the community.

I’ll be glad when there is a overseeing law applied to POA’s every move as they are definitely out of control.

Marcia Miqueloto on 07/16/2015

In a membership property for sale can the members Board requires for approval a back ground record and credit report inf. from the applicant to become a new member in order to purchase the membership property.

Teresa Morant on 07/16/2015

Our company does a complete background check, credit check, job, income and rental verification on all applicants in order to find the most qualified tenants possible.  As for the resale certificates and transfer fees it is the management companies that actually do the work and certify these documents, therefore the money collected should go to them and not the HOA.

Martha Beaudry on 07/14/2015

What I discovered to be the greatest issue when I came against this situation in Houston was two-fold.  The first was that the HOA’s manager genuinely believed that because they were not Realtors or the owner, that Fair Housing did not apply to them.  I don’t know if I was able to help him understand that they were bound but I sent them a lot of information about it.  They also did not believe that they had to share why a tenant would be rejected and were reluctant to disclose rental criteria; they did finally disclose it to my clients.  Once my clients were able to finally get them to disclose it, they discovered that the HOA was NOT requiring a credit check but was determining only what the income had to be.  They also charged an exorbitant fee for the application.  My opinion is that the HOA completely overstepped their boundaries.  I would think that the better approach would be that the HOA establish criteria regarding what would be acceptable and leave it to the owners to follow those rules.  These days, there are so many programs available to home owners to do appropriate background checks I don’t think it’s as big an issue as it could be.  I’m certain some things will fall through the cracks.

john sheppard on 07/13/2015

I am not an attorney, so therefore not qualified to give legal advice on this, but it would seem that it could be creating a potential liability for a POA or HOA to have access to that confidential information the renter’s—- and also the same for them to be performing background checks and taking actions that may or may not be in compliance with fair housing and other real estate and privacy related laws and ordinances. 
Like many things that we all love when they’re for us, and despise when they’re against us- the vast majority of HOA’s & POA’s operate in a professional manner most of the time- but it’s the abuse of power and/or lack of professionalism by the ones that don’t that cause many in our industry, and many in the public, to dread having to deal with them when you have to.

Bettina Pfeiffenberger on 07/13/2015

How does not running background checks, etc. for homes / condos in an HOA protect the homeowner, the POA, or other homeowners?

John Sheppard on 07/13/2015

we do a background check (income, credit, eviction, criminal) on all the properties that we manage, not just the ones that are in a POA….

Bettina Pfeiffenberger on 07/13/2015

What if .... it is a condo HOA or high end gated community and the owner does not do a back ground check and the tenant has a felony ?  How do you protect the homeowners?

Carleen on 07/13/2015

Now if we could limit the charge for HOA transfer fees and resale certificates.  Typically this money does not go into the HOA funds.  It is a fee that the property management company keeps as profit.  I have seen the total for both as high as $480.

John Sheppard on 07/13/2015

this is another example of how TAR’s work for REALTORS and it’s work for consumers coincide!  This change in the law will not only be appreciated by property managers and rental property owners, but also by the renters themselves!

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