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What Every New (and Experienced) Board Member Needs to Do to Manage Their HOA in Compliance With Texas Law.

The Foundation for Community Association Research estimates that there are at least 18,600 “Homeowners Associations” (or “HOAs” for short)

[1] in the State of Texas, and that the total value of all homes that are governed by a Texas HOA is $264 billion, the total amount of annual assessments paid by Texas homeowners is $3.6 billion, and the total amount of annual reserve fund contributions paid by such homeowners is $1.13 billion.[2] Suffice it to say, the operation of Texas HOAs is a billion dollar industry. The Foundation for Community Association Research further estimates that Texas HOAs are managed by an estimated 128,000 volunteer homeowners who serve on either a HOA’s Board of Directors or some other HOA committee, most of whom are not legal or real estate professionals. Nevertheless, these volunteer homeowners are expected to manage their HOAs in compliance with applicable Texas law and all other governing dedicatory instruments applicable to their HOA, such as a declaration of covenants, conditions and restrictions, articles of incorporation, bylaws, rules and regulations, and design guidelines (often referred to as a HOA’s “Governing Documents”). 

This is no small task. So, what should new (and experienced) board members do to ensure that they are managing their HOAs in compliance with Texas law? That’s a great question, and the following is our list of the 4 most important things new and experienced board members should be doing.

1.  Read Your Governing Documents

The most important thing new and experienced board members should do is read their Governing Documents. A HOA’s Governing Documents establish its authority to administer the development and the scope of its powers, rights and duties, and such documents can vary greatly from one HOA to another. In addition, such documents also establish many of the administrative procedures for operating the HOA, such as the number of directors, terms of office and other procedural requirements for calling and conducting meetings. Thus, in order to understand what a particular HOA has the power and duty to do or not do, and to know what administrative procedures must be followed when operating the HOA, you must read the Governing Documents applicable to your HOA.

2.  Familiarize Yourself with Current Statutory Laws

There are several regulatory statutes that may apply to Texas HOAs. For example, if a HOA governs a condominium that was established prior to 1994, it is governed by the Texas Condominium Act and portions of the Texas Uniform Condominium Act. If the HOA governs a condominium that was established in 1994 or after, it is governed exclusively by the Texas Uniform Condominium Act. If the HOA governs a subdivision development (instead of a condominium), then it is governed by Chapter 209 of the Texas Property Code. In addition, if a HOA (regardless of whether it administers a condominium or a subdivision) is incorporated as a nonprofit corporation (and most are), then the HOA is also governed by the Texas Nonprofit Corporation Law, and other pertinent provisions of the Texas Business Organizations Code.  In addition, there are numerous other statutory regulations that also apply to Texas HOAs.

The applicability of such statutory regulations is in addition to the provisions of the HOA’s Governing Documents. As a result, it is very important that board members familiarize themselves with such statutes because the statutory regulations may restrict the enforcement of conflicting provisions in the HOA’s Governing Documents or impose additional procedural requirements as to the operation of the HOA.

3.  Ensure that All Operational Procedures, Governing Documents and Forms Comply with Current Texas Law

It is not enough to read the Governing Documents and familiarize yourself with current statutory regulations applicable to Texas HOAs, board members must also ensure that their HOA is being operated in compliance with the Governing Documents and the statutory regulations. This can be done by performing a review of the HOA’s current operating procedures, Governing Documents and forms to ensure that such procedures conform to the Governing Documents and current Texas law. If necessary, a HOA may need to modify its operating procedures, amend its Governing Documents and/or revise its forms.

4.  Keep Abreast of Changes in the Law

Finally, just as it is important to be familiar with the statutory regulations applicable to your HOA, it is equally important to be familiar with any changes made to such statutes. The Texas legislature conducts a legislative session during the first six-months of every odd-numbered year. During such legislative sessions, the Texas legislature may enact new laws, or amend or rescind current laws.  In such event, the HOA may also need to modify its operating procedures, amend its Governing Documents and/or revise its forms to comply with such changes. There are many ways to keep abreast of changes in the law, which were discussed in more detail in a prior post entitled “Top 5 Legal Resources for Self-Managed Texas Homeowners Associations.

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[1]  The Foundation for Community Association Research uses the term “community association” as opposed to homeowners association, but the terms have synonymous meanings and include all types of property owners associations, including those that govern subdivision, condominium and townhome communities. Since the term “homeowners association” or “HOA” is more commonly used than “community association”, all residential property owners associations will be referred to as either “Homeowners Associations” or “HOAs.”

[2]  See http://www.cairf.org/research/factbook/Texas.pdf.

The Manager’s Corner is brought to you by Texas HOA Manager, the first and only legal compliance software for Texas HOAs. The posts within the Manager’s Corner provide a brief summary of legal compliance issues applicable to Texas HOAs. Such brief summaries should be used for general information purposes only and may not be construed as a legal opinion or legal advice. For more information about Texas HOA Manager, please go to www.TexasHOAManager.com.

2017-05-20T15:21:15+00:00