Can Texas HOAs be reformed by legislation?

By Deborah Goonan, Independent American Communities

Today’s featured HOA issue, featuring proposed Texas HOA legislation is DEFINITELY BLOG WORTHY!

Homeowner advocates Attorney Bill Davis (Dripping Springs), Attorney David Kahne, and Harvella Jones of National Homeowners Advocate Group (based in Texas) say that homeowners associations often abuse their power to assess fines, late fees, and attorney fees to unjustly enforce often petty HOA CC&Rs and rules.

The advocates have also worked with homeowners and tracked thousands of cases where relatively small assessment delinquencies are doubled or tripled – or more – by late charges and attorney fees.

In Texas, unpaid fines are treated as HOA assessment delinquencies. So if a homeowner disputes a fine, claiming the fine is unjustified, and refuses to pay that fine, the situation quickly spirals into an out-of-control collections process, also enabled by state law.

HOAs often use the threat of foreclosure to force owners to pay off HOA liens that can be grossly inflated by unlimited fines, late penalty charges, and attorney or collection fees.

Some would call that extortion.

Side note: some other state laws technically prohibit HOA foreclosure for unpaid fines. However, many of those states also permit a “priority of payment” scheme whereby any monies received from the homeowner for regular assessments are applied first to the unpaid fine. The end result: the homeowner becomes delinquent on HOA assessments – allowing the HOA collections, lien, and foreclosure process to begin – thereby getting around the intent of HOA statute.

Read the following article for some real life examples of just how abusive your HOA board or management team can be, aided and abetted by aggressive HOA attorneys and weak state laws:

Legislature May Address HOA Foreclosure Issues in Upcoming Session

By Hojun Choi
For Reporting Texas

The Texas Legislature may make another run in the 2017 session at curbing the powers of homeowner associations. The likely focus: restricting the ability of associations to hit homeowners who commit even minor violations of community rules with attorney fees that can reach the tens of thousands of dollars and potentially lead to foreclosures.

State Rep. Rene Oliveira, D-Brownsville, the chairman of the House Committee on Business and Industry, said his committee began looking into homeowner association issues this past summer at the request of Speaker Joe Straus, R-San Antonio.

Read more:

http://reportingtexas.com/legislature-may-address-hoa-foreclosure-issues-in-upcoming-session/

 

Did you notice the usual rhetoric from Community Associations Institute (CAI), the trade group for HOA industry service providers – mainly Community Association Managers and Attorneys?

Dawn Bauman exhibits the same old, tired dismissive attitude. Abuse of power by HOA leaders is an “isolated incident.” The homeowner deserves to be penalized for not following the rules. And if you’re someone who doesn’t want to follow those rules – no matter how unreasonable or crazy, no matter how selectively they may be enforced – then you should just move out.

That, dear readers, is what you call an authoritarian governance or management model. It’s nothing more than a “polite” form of bullying homeowners into following rules created and enforced by a minority of “leaders” in control.

Think about it.

Remember when you were growing up, when you encountered a playground or schoolyard bully? Every neighborhood had at least one bossy kid who insisted on making up all the rules of game playing. You know – the mean, annoying kid who told you, if you don’t want to play by those made-up-on-the-spot rules, to “get outta here” and go home or face a beating or relentless verbal abuse.

Well, state Legislatures in Texas and all over the U.S. now actually encourage similar behavior by HOA boards, managers, collection companies, and attorneys.

The only way to end that abuse is for homeowners and residents of Association-Governed Housing to stand up for their rights, and to engage in an “end bullying” campaign.

Can HOA Legislation be amended to prevent abuse of power? That’s highly debatable.

The HOA industry, led by well-funded CAI and homebuilder lobbies, heavily influence the legislative process. The industry writes CC&RS, “crafts” HOA laws to its own benefit, and fiercely fights against consumer/homeowner advocates to prevent even minimal oversight or checks and balances upon governance of these corporate, non-profit associations.

Can homeowners and home buyers simply reject HOAs of all kinds and choose housing not subject to Association  Governance?

In some real estate markets, yes. But in many fast-growing metropolitan areas, more than 80-90% of active real estate listings are located in homeowners, condominium, or cooperative associations. And the 10%-20% that are not are either unaffordable or poorly located. Choice is every bit as limited as it would be in a Communist grocery store. (Click on the link to see the Video)

So perhaps Bill Davis is correct when he says:

“I do not believe there is any amount of reformation that can fix the fundamental structural flaws of these things,” he added. “I want to see them gone.”