Homeowners associations exist to enhance neighborhoods and increase property values. Increasingly, though, HOAs are taking on functions local governments traditionally provide. The Texas Legislature has addressed HOA issues a number of times over the last 20 years, yet property owners and property buyers still voice concerns over actions taken by HOAs.
Most of the problems with HOAs generally fall into three categories:
- Money or collection issues
- Deed-restriction enforcement
- Lack of responsiveness from the HOA.
What does this mean for the real estate industry?
HOAs can provide a great benefit to property owners by enhancing their quality of life and the enjoyment of their property. However, when the HOA is not managed well, marketing and selling homes in those neighborhoods can be difficult.
The Texas REALTOR® position
Our association supports the Legislature’s continuing effort to reform HOA laws to ensure HOA operations are transparent and consumer-friendly. Any HOA legislation should seek to provide an appropriate balance between private-property rights and community standards while keeping intact property owners’ First Amendment rights.
We support legislation requiring HOAs and related 501(c)3 nonprofits to be registered entities with the real property records of the county in which the property is located, including relevant and current contact information.
Our association also supports legislation to eliminate the exemption for fees paid to 501(c)3 corporations from the transfer fee subchapter of the Texas Property Code.
Homeowner association bills are filed every session, with only a few becoming law each time. Many times, egregious actions by homeowner associations are reported in the news, prompting legislators to file bills intended to address one particular issue.
While the 82nd Texas Legislature did make substantial HOA reforms in 2011, some HOAs continue to restrict certain activities which can violate a person’s First Amendment rights. Expect bills to be filed to protect a property owner’s ability to live their life without intrusion from a quasi-governmental entity.
In 2011, the 82nd Texas Legislature made the most significant pro-homeowner changes in a decade. The most significant applies a priority-of-payment structure, so that a delinquent homeowner’s payments are applied in the following order: delinquent assessments, current assessments, HOA attorney fees, fines, other past-due amounts. There were also changes to HOAs’ foreclosure and notification-of-foreclosure proceedings.
Other laws touch on everything from access to meetings, homeowners’ voting rights, solar panels, rain-harvesting systems, religious displays, flags, and resale certificates.
In 2015, the 84th Texas Legislature passed House Bill 2489, which keeps HOAs out of the property-management business. The resulting law protects property owners’ rights by clarifying that HOAs don’t have the authority to screen, approve, or deny prospective tenants. The law also explicitly states that prospective tenants don’t have to provide a credit report or lease application to the HOA.