April 24, 2017 

CAPITOL ACTIVITIES 

The TCAA Board and advocacy team have devoted most of their energy thus far to identifying and analyzing legislation that might impact community associations in Texas and pursuing amendments to certain bills which are susceptible to improvement. As of the March 10, 2017, deadline to file bills and joint resolutions, 6,654 pieces of legislation had been filed in the House and Senate, which easily surpassed totals from recent sessions.
TCAA also successfully organized its annual Capitol Rally Day on March 28, 2017. Nearly 200 attendees from Houston, Dallas, Austin, San Antonio, and communities across Texas spent the day at the capitol advocating for property owners' associations. Supporters arrived by busloads and carloads and, upon arrival at the capitol, were divided up into regional teams to make legislative visits.
In addition to numerous productive meetings with legislators and staff, the Capitol Rally Day attendees shared lunch and received an in-depth briefing from TCAA leaders, advocates, and communications staff. After lunch, the crowd gathered on the south steps of the capitol for a rally and media event, and then made their rounds to capitol offices to share their support for TCAA and community associations.

BILLS OF NOTE
The following bills are of the most concern so far, and TCAA is working with the bill authors and improve these bills. Here are summaries of the bills as introduced:

HB 522 by Rep. Schofield relates to regulation by a property owners' association of certain religious displays. The bill prevents an association from adopting or enforcing a dedicatory instrument that prohibits the display of one or more religious items on the owner's property except as otherwise provided in the bill. The limitation that religious displays be affixed to "the entry of a dwelling" and the limitation on the size of the display have been removed. An owner may now have a
religious display throughout the owner's entire property. The bill prohibits a religious display that: (1) violates a law other than a law prohibiting the display of religious speech; or (2) contains language or graphics that is patently offensive to a passerby for reasons other than its religious content. TCAA has made significant progress in improving this bill before passage from committee.
HB 561 by Rep. Murphy relates to the registration and operation of golf carts and utility vehicles. The bill separates regulation of utility vehicles "not designed primarily for recreational purposes," and creates a new chapter of code for those vehicles, with additional state regulation. The bill also allows master-planned communities to adopt reasonable safety and maintenance rules for operating these vehicles, but "master-planned community" is not a defined term. TCAA has made significant progress in improving this bill before passage from committee.
HB 923 by Rep. Shaheen relates to excessive property owners' association fines. The bill requires that fines be reasonable, and if the association imposes cumulative fines for a continuing violation, the association must establish a maximum fine amount at which point the total fine amount is capped. There is no stated penalty imposed if the association fails to adopt a cap on cumulative fines. Although TCAA has made significant progress in improving this bill before passage from committee, HB 923 still requires additional revisions.
HB 1053 by Rep. Meyer relates to statutes of repose for certain claims involving the construction or repair of an improvement to real property or the attachment of equipment to real property. This bill reduces from ten years to five years the statutory period to bring a claim against a defendant after substantial completion of an improvement to real property. This legislation would impact suits against persons furnishing construction or repair of improvements, and also architects, engineers, interior designers, and landscape architects furnishing design, planning, or inspection of construction of improvements. TCAA will continue monitoring this potentially troublesome bill, which remains pending in committee.
HB 1341 by Rep. Munoz relates to property owners' associations and imposes a civil penalty. The bill proposes several changes to the administration of and access to property owners' association records, communications, and meetings. The bill as filed does not apply to condominium associations. The legislation allows association members to submit requests for association records via phone or email (records must currently be requested by certified mail). HB 1341 also expressly requires associations to allow member inspection of association records related to management company employees who do work with the association. The bill requires minutes of board meetings to include all communications from members relating to that meeting, including copies of emails submitted to the board for consideration at the meeting. The bill further gives members the right to speak for up to 30 minutes at any board meeting. Finally, the legislation provides that an association is liable for up to $25,000 for each violation of any of the above
provisions or any other provision of Chapter 209 of the Property Code. TCAA hopes to work with the author to improve this legislation if it moves forward.
HB 1572 by Rep. Workman prohibits enforcement of any restrictions that prevent property owners from removing a tree or vegetation on their property if they believe the tree or vegetation to be a fire risk. There are exceptions for trees in an easement and for trees subject to deed restrictions. TCAA has concerns about HB 1572, and will work with the author to protect community associations.
HB 1964 by Rep. Jim Murphy relates to overcharges related to submetering of utilities. This bill does not affect community associations directly, but requires condominium managers to reimburse a tenant for overcharges for utility services. An overcharge occurs when the manager assesses extra charges over and above the actual cost for the utility plus any applicable taxes and surcharges, or a late fee in excess of five percent of the bill. If the condominium manager fails to repay an overcharge in accordance with a utility commission's order, the manager is subject to three times the amount of the overcharge, $100 in civil penalties, attorneys' fees, and court costs. This legislation is still pending in committee, and TCAA continues to work with the author to better protect community associations and managers.
HB 2320 by Rep. Pat Fallon attempts to restrict developer control of property owners' associations, outlining three scenarios whereby a developer would be required to hold elections and allow positions to the homeowners: (1) if a majority of the lots have been sold; (2) if 75% of the lots have been sold; or (3) if a number of lots is not mentioned in the declaration, 10 years from recordation of the declaration.
The bill requires that board meetings must be held within 10 miles of the subdivision for declarant-controlled boards. HB 2320 also mandates that one third of a board be elected by owners other than the declarant when only a simple majority of lots have been sold to owners, and requires that a majority of the board be elected by owners other than the declarant when 75 percent of the lots have been sold. If the relevant declaration does not include the number of lots, the bill stipulates that a majority of the board must be elected by owners not later than the 10th anniversary after the declaration was recorded.
HB 2320 makes these provisions retroactive for all associations that are subject to Chapter 209 and gives a March 1, 2018, deadline for the homeowner board member elections to be accomplished for any association governed by the bill. This bill has been set for hearing on April 24, 2018, before the House Business & Industry Committee , and TCAA will work with interested stakeholders and the author to improve the bill.
SB 1228 by Sen. Jose Menendez requires a property owners' association or its architectural committee to "immediately" approve an application to repair damage to a property owner's property caused by a "weather-related event" or "naturally-
occurring event" if the owner has applied to substantially restore the condition of the property as it existed immediately before the event. TCAA has concerns with the language in this bill, and has worked with the author to improve the legislation going forward.
SB 1506 by Sen. Hinojosa (companion to HB 3065 by Rep. Deshotel), relating to liens by a mechanic, contractor, or materialman, was passed by the State Affairs Committee this month. This legislation primarily addressees the procedures associated with mechanic and materialmen liens, however, it also makes an important change that will affect condominiums and condominium owners.
The proposed legislation provides that a lien for work on the common elements of a property extends to each unit owning an interest in the common elements, apportioning the lien among the units based on their interest in the common elements. This provision has the effect of directly extending the liability for a condominium association's failure to pay a contractor to the unit owners themselves. TCAA is studying the bill and will work with the author as needed to protect condominium owners to the extent this bill conflicts with or changes existing law.
SB 1542 by Sen. Kolkhorst relates to a requirement that a condominium receive prior approval from a county prior to its creation. The bill provides that a county may require the county clerk to obtain prior approval from the county before allowing a developer to create a new condominium in the county. Though the bill gives a county discretion to disapprove the creation of a new condominium, it does not include a list of reasons or examples of why a county may disapprove of a new condominium. TCAA hopes to work with the author to add clarity to the bill.
SB 2234 by Sen. Menendez (and House companion HB 3528 by Rep. Vo) relates to the collection of past due assessments and other charges by a property owners' association. Among its numerous provisions, SB 2234 imposes limitations on interest, late fees, collection costs, methods of payment, and attorney's fees. This bill is problematic for property owners' associations governed by Chapter 209 of the Texas Property Code. The negative economic impact resulting from this bill could be passed onto the homeowners that it is attempting to protect, in the form of increased assessments or reduced amenities and services. It is likely that annual increases in assessments would be necessary to keep landscaping beautiful, maintain amenities, and protect property values. If owners are not incentivized to financially contribute to the betterment of the community, the natural consequence is reduced benefits that families have come to enjoy.
TCAA is concerned that SB 2234 is overly complicated and so vague as to lead to unnecessary disputes and litigation over compliance. Though it seems aimed at protecting consumers from being overcharged, the bill also poses a potential problem in that it attempts to retroactively modify the rights and obligations of the
restrictive covenants to which property owners have consented by accepting title to their property.
The bill also uses an owner's "understanding" as a measure of compliance with association fees and costs, meaning an owner could indefinitely keep requesting documentation because they do not yet "understand" their account. Without an objective standard measuring when the association's duty has been affirmatively met, there is potential for abuse. The legislation also imposes new requirements for the content and manner of delivery of a collection letter sent by an association. Any deficiency in the content of the letter would arguably form the basis for an owner's challenge to an association's authority to collect certain collection costs or to an association's authority to foreclose its assessment lien.
SB 2234 goes on to limit what may be included in a lawsuit to collect past due assessments and caps various amounts that may be collected in such a lawsuit, removing a task historically performed by judges and placing it in the hands of the legislature to be applied with a broad brush. The bill also prohibits foreclosure by an association unless the owner's debt exceeds $5,000, which may have the effect for many associations of ending foreclosure entirely.
HB 3528 is scheduled to be heard before the House Business & Industry Committee on Monday, April 24, 2018

Chapter Executive Director

stephanie@caihouston.org 

Greater Houston Chapter - Community Associations Institute www.caihouston.org