…but why is this a big deal?
An estimated 6 million Texans live in homes governed by homeowners associations, which have differing operation procedures, rules, and power dynamics between associations and owners. This month, new HOA changes from Texas Senate Bill 1588 have gone into effect and will immediately start impacting homeowners associations across the state. The purpose of this bill was to better balance power between property owners and HOAs, and it requires extensive changes to make HOA processes and regulations more transparent in support of homeowners.
Here are some of the key highlights from Senate Bill 1588:
- Website & Certification. HOAs will be required to electronically file a certificates through a new, centralized database of Texas HOAs managed by Texas Real Estate Commission. Management certificates and meeting information must also be posted on the HOA’s website.
- Negative Credit Reporting & Fees. Neither associations nor their collection agents may report delinquent fines or fees to credit reporting services if there is an unresolved dispute between an owner and the HOA about the fee. Property owners must also be given the opportunity to start a payment plan and at least 30 business days before HOAs can report. Fees are also capped for subdivision information ($375), resale certificates ($75) and updated resale certificates ($75).
- Architectural Review Authority. Many associations use an architectural review board to review and approve improvements within a subdivision. Owners now have due process protections, such as the ability to present evidence and opportunities to appeal decisions. Certain conflicts of interest are also now prohibited on architectural review boards.
- Lease Agreements. HOAs are not allowed to require access to lease agreements. They may only request the tenant’s contact information and lease start/end dates.
- Bidding Required for Large Projects. For any projects or service contracts over $50K, HOAs now have to solicit bids.
- Advanced Notice for Board Meetings. Owners must be notified of regular board meetings at least 6 days in advance (rather than the prior 3 days).
- Restrictions on Religious Displays, Pool Enclosures, and Security Devices. With a number of stipulations, owners may now place religious items anywhere on their property with no size restrictions. Owners also have new rights around installing swimming pool enclosures and security devices.
Sources: McGarvey PLLC, Texas Realtors®, First Service Residential