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.
Texas REALTORS® position
Texas REALTORS® supports efforts to reform laws governing homeowners associations to ensure HOA operations are transparent and resident friendly. We understand that HOA legislation should seek to provide an appropriate balance between private-property rights and agreed-upon community standards, but any reforms must uphold property owners’ First and Fourteenth Amendment rights.
- We support legislation requiring HOAs and related nonprofit corporations to have regulatory oversight (whether from their county or an agency of the State of Texas), and to be registered entities and make available relevant and current contact information.
- Texas REALTORS® supports first timelines for producing HOA documents related to property sales as well as reasonable and necessary fee limits.
- 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, but few ever make it across the Governor’s desk. 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 made 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 use and enjoy their home 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.