(The following information and musings are gleaned from information supplied by another individual, they have been slightly edited for our membership, but I thought they were so good I wanted to share it with everyone. I think it is great reading from somone who has done a lot of work and followed the legislation very closely. You may not agree with everything stated, but it certainly does provide some great food for thought.) 

Reprinted with permission of author, Dallas attorney Sharon Reuler http://www.txlandlaw.com.

The 2009 Texas Legislature did not pass a single POA regulatory bill. Not the outcome we expected for a Session that started with a record number of significant POA-specific bills, and two L-A-R-G-E "omnibus" POA bills that covered a lots of issues, amending many different parts of the Property Code. With so much new regulatory law being proposed, we expected at least some of it to become law. Also, we could not have predicted this outcome with two such prominent and ardent champions of POA regulatory legislation under the Capitol dome - Senator Royce West in the Senate, and Representative Burt Solomons in the House. Senator West chairs the Senate Intergovernmental Relations Committee, where POA bills are heard in the Senate. Representative Solomons now chairs the House State Affairs Committee, after years of serving on the House Committee on Business & Industry, where POA bills are heard in the House. We had high expectations for Senator West's bills, which were identical to his POA regulatory bill that almost became law in 2007.

 

 

The future of POA laws in Texas is in your hands. Please don't interpret this Session's outcome as a mandate to "stay the course." Please don't resist changes in your POA's governance, enforcement, collections, and property use just because no law says you must. Please use this window before the 2011 Session to create kinder communities in which owners and residents feel respected. It's not enough that a POA document, decision, or policy is "legal." It should also be fair, reasonable, and flexible. Invest in common sense. Banish arrogance. Embrace change. Champion tolerance. Develop a sense of humor. Nurture "community." Make your POA a role model for others. (End of PSA.)

 

Which new laws are most significant?

 

Lienholders can redeem after the POA forecloses

 

I consider HB 3479 by Gallego - a foreclosure bill - to be the most significant. [It does not apply to condos.] Since 2002, home owners in planned communities (not condos) have had a statututory 180-day right to redeem their homes following the POA's foreclosure of its assessment lien, regardless of who buys the home at the foreclosure sale. That has not changed. What's new is that lienholders on the home now have the same right to redeem - but only if the home owner has not redeemed during the first 90 days of the 180-day period. In order for a lienholder to know about the foreclosure against its collateral, the POA must send lienholders of record the same post-foreclosure notice it sends to the former home owner. This additional step may increase the POA's cost of foreclosing, and hence the cost of redeeming.

 

HOA's right to recover delinquent assessments at home closing depends on a current management certificate

 

The second most significant POA law, in my opinion, is SB 1919 by West, which was promoted by the title insurance industry, and supported by HOA managers. [It does not apply to condos.] Texas law already requires HOAs (and condos - under separate laws) to publicly record a notice of how to contact the HOA - the oddly titled "Management Certificate." Too many HOAs in Texas do not have management certificates, or fail to update them when the information changes, or prepare them in ways that make it hard for county clerks to index them. Title companies get frustrated trying to contact the HOA about delinquent assessments so they can insure clean title. HOAs have a hard time keeping up with changes of ownership/membership if they don't hear from the title companies. The management certificate is also a favorite of HOA managers who interpret the title company's estoppel request as a trigger for issuing a resale certificate for which the manager can charge a fee. This new law is intended to help the title companies, HOAs, and managers.

 

This new law does two things.

 

First, it makes a minor change to the required contents of the Management Certificate (not for condos). POAs that exist on September 1, 2009, have 8 months to re-record their management certificates with the revised contents. Their deadline is May 1, 2010.

 

Second, it creates a financial incentive for the HOA to keep the contact information up-to-date in the county records. If it doesn't, the HOA can look only to the Seller for any outstanding assessments at time of sale (even if the title company knows how to reach the HOA from other sources).

 

 

A two-page list of the bills that have become law, or which will become law unless they are vetoed by Governor Perry is on our website under Legislative Matters. The first page has the six laws that are specific to POAs. The second page has eight laws that may be of interest to some POAs.

 

The bills that were not shown on the previous report of new laws are:

 

POA Specific - HB 3479 by Gallego, which gives unit lienholders a right of redemption following foreclosure of the HOA's assessment lien. This does not apply to condos.

 

POA Interest -

SB 1715 by West, regarding smoke detectors in multi-family buildings

SB 968 by West, regarding "interactive water features"

SB 1945 by West, regarding the role of a property manager in receiving service of citation for the owner of real property

SB 978 by West, amending the PID Assessment Act

 

 

All the bills that sought to . . .

++ regulate the governance of POAs - records, meetings, voting, board qualifications.

++ regulate the amendment of governing documents.

++ limit the power of POAs over individual lots and units - for solar panels, flags, access, and capital improvements.

++ prohibit POAs from foreclosing on homesteads, or foreclosing nonjudicially.

++ dictate how POAs apply owners' payments.

++ regulate the rule enforcement and fining powers of POAs.

++ authorize courts to award attorneys fees to the prevailing party.

++ remove the court-ordered cap of $200 per day for penalties in covenant enforcement cases.

++ extend the statute of limitations for assessment collection (from 4 years to 10 years).

++ outlaw rights of first refusal in favor of the HOA or its members.

++ prevent HOAs from interfering with investor purchases of rental units.

++ require payment plans to help owners cure POA debts, or to pay off special assessments.

 

 

Each bill has its own story. Some bills didn't seem to attract attention, perhaps because the POA Omnibus Bill was expected to be the star of the Session. And then there was the news-making "politicking" over the voter ID bill that caused lots of bills (not just the POA bills) to lose precious time - primarily in the House - during the final important weeks of the Session. The Omnibus Bill and the Solar Devices Bill were the two most significant bills that almost made it, but didn't.

 

 

The 40+ page POA Omnibus Bill (HB 1976 and its later companion SB 237) had many parts, many sections, many purposes. Some parts were benign and noncontroversial. Some parts were made "okay" with fixes. A few parts were problematic to one group or another, and resulted in meetings, negotiations, redrafts, substitutes, and amendments - all of which slowed the bill's progress towards becoming law. The Omnbius POA Bill never achieved consensus by all groups that would be affected by it. Although consensus is not required, any opposition or controvery can derail a bill, especially if the bill is being worked in the final anything-can-happen days of the Session.

 

One story making the rounds is that residential developers complained to Senators about some parts of the POA Omnibus Bill as the Senate was poised to take a floor vote on HB 1976. Another is that city officials contacted their Senators with concerns about how cities would be impacted if POAs have trouble collecting money and maintaining common areas. Because the bill was not expected to garner enough votes on the Senate floor, it was not brought up for a vote. It wasn't voted "down," it just wasn't voted on at all. During the final week of the Session, when so many important statewide issues are competing for the attention of Senators, POA bills may have been relatively easy to dismiss because the Senators were not hearing a chorus of "Support HB 1976" from their homeowner constituents who are the intended beneficiaries of the legislation.

 

 

The language that would have prevented POAs from denying homeowners the right to install solar panels on the roofs of their homes was inserted in NINE bills filed this Session. More important, the language had been agreed upon by enough groups that it was considered unchangeable. It was sure to become law via one bill or another - possibly on multiple bills. Another suprise of this Session was that none of the NINE solar bills passed. In the final days of the Session, the solar language was moved from bill to bill in hopes of finding a horse that would make it across the finish line. On April 21, Senator West added the language to Fraser's SB 545 as a floor amendment. On May 27, when SB 545's passage not assured, Sen. Fraser attached the text of his bill (SB 545) as a floor amendment to HB 1243 by Gallego, which was being voted on by the Senate. On May 28, the Senate passed HB 1243 with Fraser's Solar Devices language in place. HB 1243 then went back to the House for approval of the Senate's amendments. It died on the House Floor on May 30 when a "point of order" was raised and sustained. THEN, in a last-ditch effort, the text of HB 1243 was amended onto Fraser's SB 546 on May 30. A conference committee was appointed to work on the changes, and there the bill died when the Session ended on June 1. None of the 9 bills carrying the solar devices language, nor the ones to which it was added, became law. Newspaper reports indicate that the demise of the POA Solar Devices bills had nothing to do with POAs, and everything to do with the power of the traditional energy providers. Certainly, we have not heard the last from supporters of solar energy.

 

 

At the legislative hearings, some lawmakers seemed to hearken back to problems presented at hearings several sessions ago, as if nothing had changed. But, the POA laws have changed - almost every session for the last 11 years (except this one). It takes time for new laws to become institutionalized and for consumers to recognize that things have changed. Perhaps the already-enacted POA regulatory laws are beginning to bear fruit. That may explain why very few homeowners brought their anti-POA grievances to the State Capitol this Session.

 

Which is not to say that we no longer have systemic problems that need fixing. We do. All POAs are not good. All POAs are not bad. Even in the best POA, an individual may have a bad experience. People make mistakes and act stupidly. Stuff happens.

 

Lawmakers who wade into the POA waters discover that POAs are more complicated and more diverse than they imagine. POAs have life cycles. POAs have more players than homeowners, directors, managers, and attorneys. The challenge is to guarantee the rights of individual homeowners while giving the community of homeowners the tools and the flexibility iit needs to fulfill its duties and functions in an ever-changing environment, and giving developers the tools and flexibility they need to build-out and market the entire development that becomes a community of homeowners. Undoubtedly, we'll work on it again next session.

 

 

One of the more interesting aspects of the 2009 Session was watching the evolution of the POA lobbying effort. This Session, the busloads of homeowners who came to testify were HOA leaders who opposed the POA Omnibus Bill, whereas in previous sessions it has been the "anti-HOA" homeowners who came in droves to demand protections. I was fascinated by the testimony of the few "anti-HOA" consumers who testified against the pro-consumer POA Omnibus Bill because it didn't go "far enough," they said. This Session also witnessed a change of behavior by the Texas Chapters of the Community Associations Institute, through its Texas Legislative Action Committee (for acronymphiles, CAI's TLAC). It looked like CAI was trying to change its perception as the "spoiler" - always opposing POA regulatory bills. Instead of trying to kill POA bills, this Session CAI seemed to be negotiating improvements to the bills in exchange for CAI's endorsement. This may be the first Session in which CAI (with 4 professional lobbyists) supported bills that were opposed by the all-volunteer Texas Neighborhoods Together (TNT). My perception is that the two groups have been more like-minded in previous sessions. This Session also saw the Texas Association of Builders testifying and negotiating improvements to the POA bills. (Want to wager on whether the Texas Muncipal League becomes a player next session?) And the crown of "bracket king" has passed from The Woodlands to the Las Colinas Association, whose lobbyist succeeded in getting Las Colinas carved out of several powerful provisions in the POA Omnibus Bills with a bracket based on characteristics other than geography. Every session is different, and this one didn't disappoint.

 

 

Governor Perry may call a Special Session of the Texas Legislature for July. Special Sessions are like special HOA meetings - business is limited to the purposes for which the Session is called. It is highly unlikely that POA legislation will rise to the level of being the business of a Special Session. This time is best spent evaluating what happened in the 2009 Regular Session, and preparing for the 2011 Regular Session, for which the pre-filing of bills starts in November 2010 - just 18 months from now. We know the issues and the players. What we have not yet achieved is a way to address the issues that is helpful to consumers and POAs, and not punitive for anyone.

  

In closing . . . .

 

Every session more Texans become aware of the importance of the POA law-making process and how they can contribute. We benefit from the input of supporters and opponents - the give and take of law-making. So no matter which side you're on, thank you for taking an interest in the POA bills this Session - even if only the interest to read this far.